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ZAPATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. UNCONSOLIDATED AFFILIATES--(CONTINUED)
Zapata followed the equity method of accounting for its investment in Tidewater
based on its percentage ownership and proxies that allowed the Company to have
voting control of 20% of the total shares of Tidewater common stock
outstanding.
Effective January 1, 1993, Zapata changed from the equity to the cost method
of accounting for its investment in Tidewater as a result of Zapata's decision
to sell 3.5 million of its shares of Tidewater common stock. Consequently,
Zapata has not reported its percentage of Tidewater's results since such time.
Instead, Tidewater's dividends of approximately $135,000, $719,000 and $1.3
million were included in other income in 1995, 1994 and 1993, respectively.
Zapata received dividends from Tidewater totalling $135,000, $719,000 and $2.5
million in fiscal 1995, 1994 and 1993, respectively.
The Company was also engaged directly in the offshore drilling business until
October 31, 1990, when its offshore drilling rigs were sold to Arethusa
(Offshore) Limited ("Arethusa"). In conjunction with the sale, the Company made
a $17.5 million investment in Arethusa. In fiscal 1993, the Company disposed of
its investment in Arethusa for $11.8 million, resulting in a pretax loss of
$5.7 million. The Company accounted for its investment in Arethusa using the
cost method of accounting.
A summary of equity in net income (loss) of and investments in unconsolidated
affiliates is shown below:
<TABLE>
<CAPTION>
INVESTMENTS
EQUITY IN NET AS OF
INCOME (LOSS) SEPTEMBER 30
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
1995
Envirodyne..................................... $ (719) $18,235
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1994
Tidewater...................................... $ ---- $14,471
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1993
Tidewater...................................... $1,125 $56,289
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</TABLE>
In June 1993, Zapata completed a sale of 3.5 million shares of its Tidewater
stock through an underwritten public offering. The Tidewater shares were sold
at a net price of $21.25 per share, or $73.5 million, and the sale generated a
third-quarter 1993 pretax gain of $32.9 million. In November 1993, Zapata sold
3.75 million shares of its Tidewater common stock through an underwritten
public offering for a net price of $20.75 per share, or $77.8 million, and the
sale resulted in a pretax gain of $33.9 million. Additionally, in March 1994,
Zapata sold 375,175 shares of its Tidewater common stock for a net price of
$21.34 per share, or $8.0 million, resulting in a pretax gain of $3.6 million.
In March 1995, Zapata 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
pretax gain of $4.8 million. These gains are reflected on the statement of
operations as other income.
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