<PAGE>
 
                               ZAPATA CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 13. BENEFIT PLANS--(CONTINUED)
invested in cash, common and preferred stocks, short-term investments and
insurance contracts. The projected long-term rate of return on plan assets was
9.0% in 1995 and 1994. The unrecognized net loss of $8.4 million at September
30, 1995 is expected to be reduced by future returns on plan assets and through
decreases in future net pension credits.
 
  In 1986, Zapata terminated the Dredging Pension Plan (the "Dredging Plan") in
connection with the sale of the assets of its dredging operations. Annuities
were purchased with Executive Life Insurance Co. ("Executive Life") for
terminated participants of the Dredging Plan. Subsequently Executive Life
experienced financial difficulties resulting in a reduction of payments to the
former participants of the Dredging Plan. The Company has negotiated a
settlement with the U.S. Department of Labor that the Zapata Corporation
Pension Plan would assume the liability associated with the reduction in
benefits of the Dredging Plan participants. The settlement is subject to
approval of the Internal Revenue Service. The accumulated benefit obligation at
September 30, 1995 that would be assumed by the plan is estimated to be $2.3
million, of which $1.4 million has been expensed in the 1994 income statement
as other expense.
 
 Supplemental Retirement Plan
 
  Effective April 1, 1992, Zapata adopted a supplemental pension plan, which
provides supplemental retirement payments to senior executives of Zapata. The
amounts of such payments will be equal to the difference between the amounts
received under the applicable pension plan, and the amounts that would
otherwise be received if pension plan payments were not reduced as the result
of the limitations upon compensation and benefits imposed by federal law.
Effective December 1994, the supplemental pension plan was frozen.
 
  For 1994 and 1993, the actuarial present value of the projected benefit
obligations was based on weighted-average annual increase in salary levels of
2.1%. For 1995, 1994 and 1993 the discount rate was 7.5%.
 
  Net pension expense 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............. $--  $ 68 $ 86
      Interest cost on projected benefit obligations............  67    72   53
      Amortization of prior service cost........................  --   487   87
                                                                 ---  ---- ----
        Net pension expense..................................... $67  $627 $226
                                                                 ===  ==== ====
</TABLE>

 
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