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million shares of its Tidewater common stock for a net price of $20.75 per
share or $77.8 million and in March 1994, Zapata sold 375,175 additional shares
of its Tidewater stock for a net price of $21.34 per share or $8.0 million. The
fiscal 1994 sales generated pretax gains totaling $37.5 million. In March 1995,
the Company sold its remaining 673,077 shares of Tidewater common stock for a
net price of $18.87 per share or $12.7 million resulting in a $4.8 million
pretax gain. All gains from the sales of Tidewater common stock are reflected
on the statement of operations as other income.
 
  As a result of its decision to sell a portion of its Tidewater common stock,
effective January 1, 1993, Zapata changed from the equity to the cost method of
accounting for its investment in Tidewater. Consequently, Zapata has not
included its percentage of Tidewater's results as equity income since December
31, 1992. Instead, Tidewater dividends to Zapata have been included as other
income when declared. For fiscal 1993, Zapata's reported equity income of $1.1
million was based on 15.6% of Tidewater's results for the three months ended
December 31, 1992. Such percentage represented Zapata's ownership percentage of
Tidewater.
 
 Envirodyne
 
  For fiscal 1995, Zapata's reported equity loss of $719,000 was based on 31%
of Envirodyne's results for the three months ended September 28, 1995 prorated
to Zapata's August 1995 acquisition.
 
OTHER INCOME (EXPENSE)
 
  Other expense of $2.1 million in fiscal 1995 includes a $2.8 million loss
related to an investment in subordinated debentures of Wherehouse
Entertainment, Inc. This loss was partially offset by a $453,000 gain from the
sale of the Company's corporate aircraft and the receipt of $595,000 from a
note that was written down in previous years.
 
  Other expense of $4.3 million in fiscal 1994 includes expenses of $7.4
million related to the prepayment of the Norex indebtedness, a $2.8 million
gain related to the settlement of a coal note receivable that had previously
been written off and $719,000 dividend income from Zapata's Tidewater common
stock. Also, fiscal 1994 other expense includes a $1.4 million expense related
to a terminated pension plan.
 
  Other expense of $10.5 million incurred during fiscal 1993 includes three
significant items: a $6.4 million prepayment penalty incurred in connection
with the refinancing of the Company's senior debt in May 1993, a $5.7 million
loss resulting from the disposition of the Company's investment in Arethusa
which Zapata was required to make when the Company's offshore drilling rig
fleet was sold, and $1.3 million dividend income generated by Tidewater common
stock.
 
TAXES
 
  The provisions for U.S. income tax for 1995 and 1994 reflect a benefit
resulting from pretax losses from consolidated operations. In 1993, the
provision reflects expense resulting from pretax consolidated income.
 
DISCONTINUED OPERATIONS--NATURAL GAS SERVICES OPERATIONS--COMPRESSION
 
  In June 1995, Zapata announced that it had entered into an agreement to sell
the assets of its natural gas compression division for $130 million. The sale
(which was approved by Zapata's stockholders) was finalized in December 1995.
As a result, these operations are reflected as a discontinued operation in the
Company financial statements. The gain from the sale will be reflected in the
Company's fiscal 1996 financial statements.
 
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