<PAGE>
ZAPATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12. FINANCIAL INSTRUMENTS--(CONTINUED)
At September 30, 1995 and 1994 the Company had cash deposits concentrated
primarily in three major banks. In addition, the Company had certificates of
deposits, commercial paper and Eurodollar time deposits with a variety of
companies and financial institutions with strong credit ratings. As a result of
the foregoing, the Company believes that credit risk in such instruments is
minimal.
NOTE 13. BENEFIT PLANS
Qualified Defined Benefit Plans
Zapata has two noncontributory defined benefit pension plans covering certain
U.S. employees. Plan benefits are generally based on employees' years of
service and compensation level. All of the costs of these plans are borne by
Zapata. The plans have adopted an excess benefit formula integrated with
covered compensation. Participants are 100% vested in the accrued benefit after
five years of service.
Net pension credits for 1995, 1994 and 1993 included the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the year... $ 567 $ 692 $ 660
Interest cost on projected benefit obligations.. 2,354 2,278 1,982
Actual loss (gain) on plan assets............... (6,452) (2,730) 1,028
Amortization of transition assets and other
deferrals...................................... 2,864 (546) (5,445)
------ ------ -------
Net pension credit............................ $ (667) $ (306) $(1,775)
====== ====== =======
</TABLE>
The Company's funding policy is to make contributions as required by
applicable regulations. No contributions to the plans have been required since
1984. The plans' funded status and amounts recognized in the Company's balance
sheet at September 30, 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Fair value of plan assets.............................. $43,242 $38,899
------- -------
Actuarial present value of benefit obligations:
Vested benefits...................................... 33,664 31,503
Nonvested benefits................................... 348 782
------- -------
Accumulated benefit obligation....................... 34,012 32,285
Additional benefits based on projected salary
increases........................................... 1,741 2,126
------- -------
Projected benefit obligations........................ 35,753 34,411
------- -------
Excess of plan assets over projected benefit
obligations........................................... 7,489 4,488
Unrecognized transition asset.......................... (5,861) (6,698)
Unrecognized prior service cost........................ 123 151
Unrecognized net loss.................................. 8,404 11,547
------- -------
Prepaid pension cost................................... $10,155 $ 9,488
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</TABLE>
The unrecognized transition assets at October 1, 1987, was $10.6 million,
which is being amortized over 15 years. For 1995 and 1994 the actuarial present
value of the projected benefit obligation was based on a 4.75% weighted average
annual increase in salary levels and a 7.5% discount rate. Pension plan assets
are
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