<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly period ended March 31, 1995
-----------------------------------------------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission file number 1-4219
------
ZAPATA CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter
DELAWARE C-74-1339132
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 4240, Houston, Texas 77210
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (713) 940-6100
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Number of shares outstanding of the registrant's Common Stock, par value $.25
per share, on May 10, 1995: 29,502,407.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Zapata Corporation
Condensed Consolidated Balance Sheet
Condensed Consolidated Income Statement
Divisional Revenues and Operating Results
Condensed Consolidated Statement of Cash Flows
Notes to Financial Statements
2
<PAGE>
ZAPATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1995 1994
-------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,598 $ 14,386
Restricted cash 12,704 779
Receivables 20,650 27,591
Inventories:
Compressor equipment and components 25,757 17,629
Gas liquids products 557 414
Prepaid expenses and other current assets 2,391 2,049
Net assets of discontinued operations 55,000 55,000
-------- --------
Total current assets 123,657 117,848
-------- --------
Investments and other assets:
Notes receivable 914 1,925
Investment in equity securities --- 14,471
Goodwill 25,385 25,812
Deferred income taxes 6,288 3,315
Other assets 8,502 8,420
-------- --------
41,089 53,943
-------- --------
Property and equipment 163,965 157,335
Accumulated depreciation (74,841) (70,252)
-------- --------
89,124 87,083
-------- --------
Total assets $253,870 $258,874
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
ZAPATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1995 1994
--------- -------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 15,187 $ 2,478
Accounts payable and accrued liabilities 22,617 27,258
-------- --------
Total current liabilities 37,804 29,736
-------- --------
Long-term debt 51,346 59,860
-------- --------
Other liabilities 14,421 14,736
-------- --------
Stockholders' equity:
Preferred and preference stock 3 2,258
Common stock 7,939 7,930
Capital in excess of par value 137,782 138,293
Reinvested earnings from October 1, 1990 4,575 1,785
Investment in equity securities-unrealized
gain, net of taxes --- 4,276
-------- --------
150,299 154,542
-------- --------
Total liabilities and stockholders' equity $253,870 $258,874
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
ZAPATA CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1995 1994 1995 1994
------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues $38,127 $53,285 $84,097 $112,824
Expenses:
Operating 33,138 47,294 72,359 100,678
Depreciation, depletion and
amortization 2,864 2,832 5,741 5,246
Selling, general and administrative 2,521 3,934 5,063 7,337
------- ------- ------- --------
38,523 54,060 83,163 113,261
------- ------- ------- --------
Operating income (loss) (396) (775) 934 (437)
------- ------- ------- --------
Other income (expense):
Interest income 331 391 684 1,197
Interest expense (1,455) (1,189) (2,904) (3,707)
Gain on sale of Tidewater common
stock 4,811 3,605 4,811 37,457
Other 595 306 1,085 (5,967)
------- ------- ------- --------
4,282 3,113 3,676 28,980
------- ------- ------- --------
Income from continuing operations
before taxes 3,886 2,338 4,610 28,543
------- ------- ------- --------
Provision for income taxes
State 120 254 240 283
Federal 1,318 730 1,529 9,891
------- ------- ------- --------
1,438 984 1,769 10,174
------- ------- ------- --------
Income from continuing operations 2,448 1,354 2,841 18,369
------- ------- ------- --------
Income from discontinued operations,
net of income taxes --- 918 --- 1,231
------- ------- ------- --------
Net income 2,448 2,272 2,841 19,600
------- ------- ------- --------
Preferred stock dividends --- 101 51 202
------- ------- ------- --------
Net income to common stockholders $ 2,448 $ 2,171 $ 2,790 $ 19,398
======= ======= ======= ========
Per share data:
Income from continuing operations $ 0.08 $ 0.04 $ 0.09 $ 0.57
Income from discontinued operations --- 0.03 --- 0.04
------- ------- ------- --------
Net income per share $ 0.08 $ 0.07 $ 0.09 $ 0.61
======= ======= ======= ========
Average common shares and equivalents
outstanding 31,779 32,140 31,768 31,565
======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
ZAPATA CORPORATION
DIVISIONAL REVENUES AND OPERATING RESULTS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1995 1994 1995 1994
------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
Natural gas compression $15,594 $15,433 $33,757 $ 28,064
Natural gas gathering and processing 20,289 35,028 45,320 78,499
Oil and gas 2,244 2,824 5,020 6,261
------- ------- ------- --------
$38,127 $53,285 $84,097 $112,824
======= ======= ======= ========
Operating income (loss):
Natural gas compression $ 1,174 $ 1,395 $ 3,097 $ 2,382
Natural gas gathering and processing (273) (784) (443) (223)
Oil and gas (192) 432 218 640
Corporate (1,105) (1,818) (1,938) (3,236)
------- ------- ------- --------
$ (396) $ (775) $ 934 $ (437)
======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
ZAPATA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
-----------------
1995 1994
-------- --------
<S> <C> <C>
Cash flow used by operating activities:
Continuing operations:
Net income from continuing operations $ 2,841 $ 18,369
-------- --------
Adjustments to reconcile net income to net cash used
by operating activities:
Depreciation and amortization 5,741 5,246
Gain on sale of assets (5,720) (37,457)
Changes in other assets and liabilities (6,657) 6,642
-------- --------
Total adjustments (6,636) (25,569)
-------- --------
Cash flow used by continuing operations (3,795) (7,200)
-------- --------
Discontinued operations:
Income from discontinued operations --- 1,231
Decrease in net assets of discontinued operations --- 5,207
-------- --------
Cash flow provided by discontinued operations --- 6,438
-------- --------
Net cash used by operating activities (3,795) (762)
-------- --------
Cash flow provided (used) by investing activities:
Proceeds from dispositions of investments and other 15,957 88,533
Restricted cash investments (11,925) 74,733
Proceeds from notes receivable 920 967
Business acquisitions, net of cash acquired --- (73,622)
Capital expenditures (9,229) (7,969)
-------- --------
Net cash provided (used) by investing activities (4,277) 82,642
-------- --------
Cash flow provided (used) by financing activities:
Principal borrowing (payments) of long-term obligations 4,195 (68,962)
Preferred stock redemption and common stock buyback (2,758) ---
Dividend payments (1,153) (303)
-------- --------
Net cash provided (used) by financing activities 284 (69,265)
-------- --------
Net increase (decrease) in cash and cash equivalents (7,788) 12,615
Cash and cash equivalents at beginning of period 14,386 16,008
-------- --------
Cash and cash equivalents at end of period $ 6,598 $ 28,623
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
ZAPATA CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by Zapata Corporation ("Zapata" or the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The financial statements reflect all adjustments that are, in the opinion of
management, necessary to fairly present such information. All such adjustments
are of a normal recurring nature. Although Zapata believes that the disclosures
are adequate to make the information presented not misleading, certain
information and footnote disclosures, including significant accounting policies,
normally included in financial statements prepared in accordance with generally
accepted accounting principles, have been condensed or omitted pursuant to such
rules and regulations. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and the notes thereto
included in Zapata's latest annual report on Form 10-K.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of," which established
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used, and for long-lived assets and certain identifiable intangibles to be
disposed of. Adoption of the new standard by the Company is required no later
than the fiscal year ending September 30, 1997. Based on existing conditions and
a preliminary review, management believes adoption of the new standard will not
have a material impact on the Company's results of operations or financial
position.
In April 1995, Zapata announced that the Company is considering the sale of
its two natural gas services businesses: the natural gas compression operation
and the natural gas gathering and processing operation. The decision to consider
exiting the energy industry is based on the belief that businesses outside the
energy industry may provide better opportunities for the Company to pursue. Due
to the preliminary nature of this decision process, the financial statement
impact of the ultimate disposition or retention of these businesses cannot be
determined at this time. The decision to consider redirecting operations away
from the energy industry does not imply a decision to liquidate Zapata. The
Company is evaluating opportunities to reinvest the shareholders' capital.
The Company has cancelled the sale of the marine protein division. Zapata
had previously announced that an agreement to sell its marine protein operations
for $56 million in cash and approximately $11 million in assumed obligations had
been reached with a group led by current management of the marine protein
operation. However, the acquisition group was unable to close the transaction
by the scheduled closing date after all conditions precedent to the closing had
been met. The acquisition group's inability to close was apparently due to the
inability of its financing source to provide proper funding on a timely basis.
The Company is studying alternatives for the marine protein operation at this
time.
8
<PAGE>
NOTE 2. ACQUISITION
In November 1993, Zapata purchased the natural gas compression business of
Energy Industries, Inc. and certain other affiliated companies ("Energy
Industries"), as well as certain real estate used by the business ("Energy
Industries Acquisition"). The following pro forma information for Zapata for
the six months ended March 31, 1994 includes the historical results of Zapata,
adjusted for the results of Energy Industries as if the Energy Industries
Acquisition had been consummated on October 1, 1993 (unaudited) (in thousands,
except per share amounts).
<TABLE>
<S> <C>
Revenues $118,838
Income from continuing operations before taxes 28,841
Income from continuing operations 18,563
Income per share from continuing operations 0.58
</TABLE>
The pro forma adjustments to Zapata's results for the six months ended
March 31, 1994 to reflect the Energy Industries Acquisition increased revenues
by $6,014,000, as well as income from continuing operations before taxes by
$174,000. Additional pro forma adjustments for the first six months of fiscal
1994 included the elimination of $124,000 of various operating and
administrative expenses that were charged to Energy Industries from an
affiliate, additional depreciation of $120,000 and $41,000 of goodwill
amortization, a reduction in net interest expense of $161,000 related to notes
receivable and payable that were not acquired by Zapata and a federal tax
provision of $104,000.
The pro forma amounts presented above may not be indicative of the results
that would have actually resulted if the transactions had occurred on the date
indicated or that may be obtained in the future.
NOTE 3. RESTRICTED CASH
In accordance with terms of a debt covenant, $12.7 million from the sale of
the Company's Tidewater Inc. ("Tidewater") common stock was held in a restricted
account at March 31, 1995. At September 30, 1994, restricted cash held in
short-term investments to collateralize letters of credit totalled $779,000.
NOTE 4. SUBSEQUENT EVENTS
In April 1995, Zapata reduced its $17.5 million in notes to Norex America,
Inc. by $12.7 million. The Company used the restricted cash received in the
March 1995 sale of its remaining shares of Tidewater common stock to reduce this
indebtedness.
Also, in April 1995, Zapata Corporation repurchased 2.25 million shares of
Zapata's common stock from Norex America, Inc. for $4.00 per share. The shares
repurchased by Zapata represented 7% of the Company's then outstanding common
stock. Following the repurchase of the shares, Zapata had approximately 29.5
million shares outstanding.
9
<PAGE>
I
TEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, Zapata's long-term debt of $51.3 million compared
favorably to working capital of $85.9 million and stockholders' equity of $150.3
million. During March 1995, Zapata sold its remaining 673,077 shares of
Tidewater Inc. ("Tidewater") common stock for $12.7 million. In April 1995,
Zapata used the proceeds from this sale to reduce the Company's $17.5 million in
notes due to Norex America, Inc. in May 1996. Remaining mandatory principal
payments for the next twelve months total $2.5 million.
Cash used by operating activities increased to $3.8 million during the
first six months of fiscal 1995 from $762,000 during the corresponding prior-
year period. This increase was primarily due to increases in working capital.
Cash used by investing activities totalled $4.3 million during the first six
months of fiscal 1995 as compared to the $82.6 million provided during the first
six months of fiscal 1994. The fiscal 1994 period included $85.9 million from
the sale of 4.13 million shares of Zapata's Tidewater common stock. Net cash
provided by financing activities totalled $284,000 during the first six months
of fiscal 1995 as compared to a net use of $69.3 million in the corresponding
prior-year period, which included a $68.5 million prepayment of senior debt.
In April 1995, Zapata repurchased 2.25 million shares of
Zapata's common stock from Norex America, Inc. for $4.00 per share. The shares
repurchased by Zapata represented 7% of the Company's then outstanding common
stock. Following the repurchase of these shares, Zapata had approximately 29.5
million shares of common stock outstanding.
In April 1995, Zapata announced that the Company is considering
the sale of its two natural gas services businesses: the natural gas compression
operation and the natural gas gathering and processing operation. The decision
to consider exiting the energy industry is based on the belief that businesses
outside the energy industry may provide better opportunities for the Company to
pursue. Due to the preliminary nature of this decision process, the financial
statement impact of the ultimate disposition or retention of these businesses
cannot be determined at this time. The decision to consider redirecting
operations away from the energy industry does not imply a decision to liquidate
Zapata. The Company is evaluating opportunities to reinvest the shareholders'
capital.
The Company has cancelled the sale of the marine protein division. Zapata
had previously announced that an agreement to sell its marine protein operations
for $56 million in cash and approximately $11 million in assumed obligations had
been reached with a group led by current management of the marine protein
operation. However, the acquisition group was unable to close the transaction
by the scheduled closing date after all conditions precedent to the closing had
been met. The acquisition group's inability to close was apparently due to the
inability of its financing source to provide proper funding on a timely basis.
The Company is studying alternatives for the marine protein operation at this
time.
10
<PAGE>
RESULTS OF OPERATIONS
Zapata reported net income of $2.4 million for the second quarter of fiscal
1995 as compared to net income of $2.3 million for the same period in fiscal
1994. The fiscal 1995 second quarter results included a $4.8 million pretax gain
from the sale of 673,077 shares of Tidewater common stock, while the
corresponding fiscal 1994 period results included a $3.6 million pretax gain
from the sale of 375,175 shares of Tidewater stock. The fiscal 1994 second
quarter net income also included $918,000 from the Company's discontinued marine
protein operations.
The Company's operating loss of $396,000 for the second quarter of fiscal
1995 compared favorably to the operating loss of $775,000 for the corresponding
fiscal 1994 period. The improvement was primarily attributable to reduced
general and administrative expenses associated with the Company's corporate
headquarters and improved results from the Company's natural gas gathering,
processing and marketing operations. These improvements were partially offset by
the effects of significantly lower natural gas prices that negatively impacted
the operating results of the Company's natural gas compression and domestic oil
and gas divisions. Revenues for the second quarter of fiscal 1995 totalled $38.1
million as compared to $53.3 million for the second quarter of fiscal 1994.
For the first six months of fiscal 1995, Zapata's net income of $2.8
million was significantly lower than the $19.6 million for the corresponding
1994 period as a result of pretax gains totalling $37.5 million realized from
the sales of Tidewater common stock in 1994. Revenues of $84.1 million and
operating income of $934,000 for the 1995 period compared to the 1994-period
revenues of $112.8 million and operating loss of $437,000.
NATURAL GAS COMPRESSION - In November 1993, Zapata purchased Energy Industries,
Inc. ("Energy Industries"), a participant in all segments of the natural gas
compression industry. During the second quarter of fiscal 1995, Energy
Industries acquired 59 additional compressor units in two separate transactions
for $3.4 million. Energy Industries operates one of the ten largest rental
fleets of natural gas compressor packages in the United States. Its compressor
fleet is located in Texas, Louisiana, Arkansas, Oklahoma and New Mexico, as well
as offshore in the Gulf of Mexico.
Energy Industries primarily supplies natural gas compressor packages in
natural gas production and processing applications. In natural gas production
applications, natural gas compression is used to increase the flow rate of gas
wells with low reservoir pressures. In natural gas processing applications,
natural gas compression is used in the process of separating the various
hydrocarbon components of the wellhead natural gas stream. In interstate
natural gas pipeline applications, natural gas compression is used to increase
the pressure of natural gas from reservoir levels to interstate pipeline
standards. Energy Industries maintains an inventory of compressor and engine
components to support the fabrication, service and repair of natural gas
compressor packages.
11
<PAGE>
The major segments of Energy Industries' natural gas compression revenues
and operating results for the three- and six-month periods ended March 31, 1995
and the three- and five-month periods ended March 31, 1994, in thousands, are
identified below.
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Five Months
March 31, Ended March 31,
--------------------- ------------------------
1995 1994 1995 1994
------- ------- ------- -------
Revenues
Compressor Rental $ 4,246 $ 3,989 $ 8,575 $ 6,903
Fabrication and Sales 6,045 4,385 12,890 7,878
Parts & Service 4,804 4,770 10,188 8,936
Other 499 2,289 2,104 4,347
------- ------- ------- -------
$15,594 $15,433 $33,757 $28,064
======= ======= ======= =======
Operating Results
Compressor Rental $ 969 $ 1,385 $ 2,417 $ 2,350
Fabrication and Sales 625 466 1,546 556
Parts & Service 960 873 1,968 1,608
Other (26) 433 150 525
Selling & Administrative (1,354) (1,762) (2,984) (2,657)
------- ------- ------- -------
$ 1,174 $ 1,395 $ 3,097 $ 2,382
======= ======= ======= =======
</TABLE>
(The Other segment includes the results of the heat exchanger manufacturing
operation and used equipment sales.)
During the second quarter of fiscal 1995, Energy Industries disposed of its
heat exchanger manufacturing operation for $1.5 million, resulting in a gain of
$452,000. The heat exchanger operation was not material to the operating results
or financial position of the Company.
Natural gas compressor package rental utilization is affected primarily by
the number and age of producing oil and gas wells, the volume of natural gas
consumed and natural gas prices. Rental rates are determined primarily by the
demand for compressor packages and vary by size and horsepower of a compressor
package. Energy Industries' utilization, rental rates and fleet size as of March
31, 1995 and 1994 are compared in the following table.
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
--------------- ---------------
<S> <C> <C>
Fleet utilization:
Horsepower 80.0% 76.2%
Monthly rental rate, based on:
Horsepower $ 16.07 $ 17.26
Fleet size:
Number of units 766 662
Horsepower 121,693 108,316
</TABLE>
12
<PAGE>
Reflecting the effects of generally lower natural gas prices, Energy
Industries' compressor rental rates and used equipment sales were negatively
impacted during the second quarter of fiscal 1995. As a result, Energy
Industries' operating income during the second quarter of fiscal 1995 compared
unfavorably to the second quarter fiscal 1994.
In addition to operating a fleet of natural gas compressor packages
for rental purposes, Energy Industries designs, fabricates and sells natural gas
compressor packages to customer specifications. Energy Industries sells
compressor packages to natural gas producers, gatherers and transmission
companies that expect the long life of their associated reserves or pipeline to
justify the capital cost of acquiring, rather than renting, a natural gas
compressor package. Most of Energy Industries' natural gas compressor package
sales are for larger, high horsepower packages.
NATURAL GAS GATHERING, PROCESSING AND MARKETING - Zapata's natural gas
gathering, processing and marketing operations are conducted through Cimarron
Gas Holding Company and its subsidiaries (collectively, "Cimarron"), which were
acquired early in fiscal 1993. As a division of Zapata, Cimarron's operations
involve two major categories of business activities: the gathering and
processing of natural gas and its constituent products and the marketing and
trading of natural gas liquids (NGL's).
Revenues and operating results for the three- and six-month periods
ended March 31, 1995 and 1994 are presented in the following table by major
category, in thousands.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
-----------------------------------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues
Gathering & Processing $ 4,284 $ 5,123 $ 8,589 $11,203
NGL Marketing 16,005 29,905 36,731 67,296
------- ------- ------- -------
$20,289 $35,028 $45,320 $78,499
======= ======= ======= =======
Operating Results
Gathering & Processing $ 68 $ (246) $ 155 $ 312
NGL Marketing (30) 14 28 549
Selling & Administrative (311) (552) (626) (1,084)
------- ------- ------- -------
$ (273) $ (784) $ (443) $ (223)
======= ======= ======= =======
</TABLE>
For the second quarter of fiscal 1995, gathering and processing revenues
were lower than the prior year as a result of the negative impact of
significantly lower natural gas prices, while operating results improved,
reflecting increased processing margins. However, marketing revenues and
operating income declined in fiscal 1995 as compared to 1994, reflecting the
Company's decision to reduce its natural gas trading activities.
13
<PAGE>
A comparison of average daily volumes of gas, measured in millions of
cubic feet, gathered and processed during the three- and six-month periods ended
March 31, 1995 and 1994 is shown below.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
Average Daily Volumes 1995 1994 1995 1994
- --------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
(MMCF)
Gathering 54.1 46.4 52.5 43.6
Processing 26.4 21.2 26.6 20.1
</TABLE>
Gas gathering is the collection of natural gas from various individual
wells, combining it into a single gas stream and delivering it into a major
transmission line for transportation to market. A gathering system sometimes
includes an associated processing plant for the removal of gas liquids,
depending on the content of liquefiable hydrocarbons in the gas streams and the
capabilities of transmission lines.
OIL AND GAS - Revenues of $2.2 million and an operating loss of $192,000 for
the second quarter of fiscal 1995 compared unfavorably to the corresponding
fiscal 1994 period's revenues of $2.8 million and operating income of $432,000.
The decline was attributable to significantly lower natural gas prices, as well
as reduced income from the Bolivian operations ($116,000 in 1995 as compared to
$876,000 in 1994). Zapata's domestic natural gas production was approximately
58% higher in the second quarter of fiscal 1995 as compared to the level of
production in fiscal 1994 when the Company encountered production difficulties
at the Wisdom gas field, the Company's most significant domestic oil and gas
property.
Similarly, year-to-date fiscal 1995 revenues of $5.0 million and operating
income of $218,000 compared unfavorably to the fiscal 1994 revenues of $6.3
million and operating income of $640,000, reflecting lower natural gas prices
and reduced receipts from the Bolivian operations.
RECENTLY ISSUED ACCOUNTING STANDARDS
In April 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used, and for long-lived assets and certain identifiable intangibles to
be disposed of. Adoption of the new standard by the Company is required no
later than the fiscal year ending September 30, 1997. Based on existing
conditions and a preliminary review, management believes adoption of the new
standard will not have a material impact on the Company's results of operations
or financial position.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits indicated by an asterisk (*) are incorporated by
reference to the Zapata Corporation Annual Report on Form 10-K for
the fiscal year ended September 30, 1994.
3(a)* --Restated Certificate of Incorporation of Zapata filed
with Secretary of State of Delaware May 3, 1994 (Exhibit
3(a) to Current Report on Form 8-K dated April 27, 1994
(File No. 1-4219)).
3(b)* --Certificate of Designation, Preferences and Rights of $1
Preference Stock (Exhibit 3(c) to Zapata's Quarterly
Report on Form 10-Q for the fiscal quarter ended March
31, 1993 (File No. 1-4219)).
3(c)* --Certificate of Designation, Preferences and Rights of
$100 Preference Stock (Exhibit 3(d) to Zapata's Quarterly
Report on Form 10-Q for the fiscal quarter ended March
31, 1993 (File No. 1-4219)).
3(d)* --By-laws of Zapata, as amended effective August 17, 1994.
4(a)* --Second Amended and Restated Master Restructuring
Agreement, dated as of April 16, 1993 between Zapata and
Norex Drilling Ltd. (Exhibit 12 to Zapata's Amendment No.
3 to Schedule 13D dated April 30, 1993).
4(b)* --First Amendment to Second Amended and Restated Master
Restructuring Agreement, dated as of May 17, 1993 between
Zapata and Norex Drilling, Ltd. (Exhibit 4(c) to Zapata's
Registration Statement on Form S-1 (No. 33-68034)).
4(c)* --Second Amendment to Second Amended and Restated Master
Restructuring Agreement, dated as of December 17, 1993
between Zapata and Norex Drilling, Ltd. (Exhibit 4(c) to
Zapata's Annual Report on Form 10-K for the fiscal year
ended September 30, 1993 (File No. 1-4219)).
4(d)* --Securities Liquidity Agreement, dated as of December 19,
1990, and among Zapata and each of the securities holders
parties thereto (Exhibit 4(b) to Zapata's Annual Report
on Form 10-K for the fiscal year ended September 30, 1990
(File No. 1-4219)).
4(e) --Consent Letter and Waiver dated as of March 7, 1995 by
and between Norex America, Inc. and Zapata Corporation.
10(a) --Zapata Corporation and ZP Acquisition Corp. Stock
Purchase Agreement dated as of February 14, 1995.
10(b) --Termination Letter dated as of April 20, 1995 relating to
the Zapata Corporation and ZP Acquisition Corp. Stock
Purchase Agreement dated as of February 14, 1995.
10(c) --Purchase Agreement dated as of April 10, 1995 by and
between Norex America, Inc. and Zapata Corporation
relating to 2,250,000 shares of Zapata Corporation Common
Stock.
27 --Financial Data Schedule.
(b) Reports on Form 8-K
Current report on Form 8-K dated March 1, 1995 (Item 5. Other
Events-reported the execution of a Stock Purchase Agreement
relating to the proposed sale of Zapata Protein, Inc. and the
appointment of Avram A. Glazer as President and Chief Executive
Officer of the Company).
Current report on Form 8-K dated March 31, 1995 (Item 5. Other
Events-reported (i) the sale of the Company's remaining shares of
Tidewater common stock and the application of the proceeds thereof
to reduce indebtedness and (ii) the acquisition of additional gas
compression assets).
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZAPATA CORPORATION
May 15, 1995 By: /s/ JOSEPH L. VON ROSENBERG III
------------------------------------
Joseph L. von Rosenberg III
Vice President, General Counsel
and Corporate Secretary
May 15, 1995 /s/ LAMAR C. MCINTYRE
---------------------------------------
Lamar C. McIntyre
Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
16
<PAGE>
EXHIBIT INDEX
3(a)* --Restated Certificate of Incorporation of Zapata filed
with Secretary of State of Delaware May 3, 1994 (Exhibit
3(a) to Current Report on Form 8-K dated April 27, 1994
(File No. 1-4219)).
3(b)* --Certificate of Designation, Preferences and Rights of $1
Preference Stock (Exhibit 3(c) to Zapata's Quarterly
Report on Form 10-Q for the fiscal quarter ended March
31, 1993 (File No. 1-4219)).
3(c)* --Certificate of Designation, Preferences and Rights of
$100 Preference Stock (Exhibit 3(d) to Zapata's Quarterly
Report on Form 10-Q for the fiscal quarter ended March
31, 1993 (File No. 1-4219)).
3(d)* --By-laws of Zapata, as amended effective August 17, 1994.
4(a)* --Second Amended and Restated Master Restructuring Agreement,
dated as of April 16, 1993 between Zapata and Norex
Drilling Ltd. (Exhibit 12 to Zapata's Amendment No. 3 to
Schedule 13D dated April 30, 1993).
4(b)* --First Amendment to Second Amended and Restated Master
Restructuring Agreement, dated as of May 17, 1993
between Zapata and Norex Drilling, Ltd. (Exhibit 4(c) to
Zapata's Registration Statement on Form S-1
(No. 33-68034)).
4(c)* --Second Amendment to Second Amended and Restated Master
Restructuring Agreement, dated as of December 17, 1993
between Zapata and Norex Drilling, Ltd. (Exhibit 4(c) to
Zapata's Annual Report on Form 10-K for the fiscal year
ended September 30, 1993 (File No. 1-4219)).
4(d)* --Securities Liquidity Agreement, dated as of December 19,
1990, and among Zapata and each of the securities holders
parties thereto (Exhibit 4(b) to Zapata's Annual Report
on Form 10-K for the fiscal year ended September 30, 1990
(File No. 1-4219)).
4(e) --Consent Letter and Waiver dated as of March 7, 1995 by
and between Norex America, Inc. and Zapata Corporation.
10(a) --Zapata Corporation and ZP Acquisition Corp. Stock
Purchase Agreement dated as of February 14, 1995.
10(b) --Termination Letter dated as of April 20, 1995 relating to
the Zapata Corporation and ZP Acquisition Corp. Stock
Purchase Agreement dated as of February 14, 1995.
10(c) --Purchase Agreement dated as of April 10, 1995 by and
between Norex America, Inc. and Zapata Corporation
relating to 2,250,000 shares of Zapata Corporation Common
Stock.
27 --Financial Data Schedule.
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* Incorporated by reference to the Zapata Corporation Annual Report on Form 10-K
for the fiscal year ended September 30, 1994.
