<PAGE>
 
                               ZAPATA CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 8. CASH FLOW INFORMATION
 
  For purposes of the statement of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents.
 
  Net cash provided (used) by operating activities reflects cash payments of
interest and income taxes.
 

<TABLE>
<CAPTION>
                                                           1995   1994   1993
                                                          ------ ------ -------
                                                             (IN THOUSANDS)
      <S>                                                 <C>    <C>    <C>
      Cash paid during the fiscal year for:
        Interest......................................... $6,609 $7,142 $12,836
        Income tax payments (refund).....................    544  4,507     (10)
</TABLE>

 
  In fiscal 1994 and 1993, interest expense of $1.3 million and $1.7 million,
respectively, associated with the Norex senior secured and convertible notes,
was deferred to the maturity date of such notes. As discussed in Note 7, these
notes were prepaid in full in fiscal 1994.
 
  During fiscal 1995, the Company exchanged certain other assets held for sale
for property and equipment and also exercised an option to purchase certain
real estate resulting in the reclassification of a deposit from other assets to
property and equipment. These transactions resulted in the reclassification of
approximately $2.0 million from other assets to property and equipment.
 
NOTE 9. PREFERRED, PREFERENCE AND COMMON STOCK
 
 Preferred stock
 
  Zapata has authorized two million shares of preferred stock issuable in one
or more series. In 1994, Zapata redeemed one-half of the approximately 45,000
outstanding shares of the Company's preferred stock and redeemed the balance of
its outstanding preferred stock in January 1995. The preferred stock was
redeemed at $100 a share. Quarterly dividends of $2.25 per share were declared
and paid in fiscal 1995 and 1994.
 
 Preference stock
 
  Zapata has authorized 18 million shares of preference stock issuable in one
or more series. The 2,627 outstanding shares are entitled to vote on all
matters submitted to stockholders, are redeemable at $80.00 per share and
$30.00 per share in liquidation. The stated quarterly dividend, which is
noncumulative, is $.50 per share. Dividends were paid July 1, 1994 and October
1, 1994, the first such quarterly dividends since the second quarter of 1986.
Each outstanding share is convertible at any time into 2.1 shares of Common
Stock. The Company announced in December 1994 that its Board of Directors had
determined to discontinue the payment of dividends on its preference stock.
 
 Common stock
 
  Zapata has authorized 165 million shares of Common Stock, of which 29,548,407
were issued and outstanding at September 30, 1995.
 
                                       42