SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly period ended June 30, 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 November 7, 1995: 29,548,407.
----------
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
ZAPATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(in thousands)
June 30, September 30,
1995 1994
---------- ---------------
Current assets:
Cash and cash equivalents $ 4,081 $ 13,094
Restricted cash 77 779
Receivables 31,228 39,595
Inventories:
Compressor equipment and components 24,174 17,629
Fish products 25,845 34,143
Gas liquids products 656 414
Materials, parts and supplies 3,456 3,601
Prepaid expenses and other current assets 4,269 2,609
--------- --------
Total current assets 93,786 111,864
--------- --------
Investments and other assets:
Notes receivable -- 1,925
Investments 2,100 14,471
Goodwill 25,438 26,105
Deferred income taxes 5,968 2,915
Other assets 18,396 16,149
--------- --------
51,902 61,565
--------- --------
Property and equipment 232,870 217,523
Accumulated depreciation (108,972) (99,913)
--------- --------
123,898 117,610
--------- --------
Total assets $ 269,586 $291,039
========= ========
The accompanying notes are an integral part of the financial statements.
3
ZAPATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands)
June 30, September 30,
1995 1994
---------- ---------------
Current liabilities:
Current maturities of long-term debt $ 8,866 $ 3,009
Accounts payable and accrued liabilities 36,256 48,271
--------- --------
Total current liabilities 45,122 51,280
--------- --------
Long-term debt 61,948 69,078
--------- --------
Other liabilities 19,365 16,139
--------- --------
Stockholders' equity:
Preferred and preference stock 3 2,258
Common stock 7,376 7,930
Capital in excess of par value 129,344 138,293
Reinvested earnings from October 1, 1990 7,168 1,785
Investments unrealized gain (loss),
net of taxes (740) 4,276
--------- --------
143,151 154,542
--------- --------
Total liabilities and stockholders'
equity $269,586 $291,039
========= ========
The accompanying notes are an integral part of the financial statements.
4
ZAPATA CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- ------------------
1995 1994 1995 1994
------- ------- ------- -------
Revenues $ 56,037 $ 86,496 $179,708 $241,924
-------- -------- -------- --------
Expenses:
Operating 45,877 74,214 152,823 209,215
Provisions for asset
write-downs 12,607 18,810 12,607 18,810
Depreciation, depletion
and amortization 3,641 4,475 10,775 11,969
Selling, general and
administrative 3,376 5,055 10,204 14,531
-------- -------- -------- --------
65,501 102,554 186,409 254,525
-------- -------- -------- --------
Operating loss (9,464) (16,058) (6,701) (12,601)
-------- -------- -------- --------
Other income (expense):
Interest income 371 431 1,055 1,628
Interest expense (1,583) (1,869) (4,872) (7,482)
Gain on sales of Tidewater
common stock -- -- 4,811 37,457
Other (92) 3,016 928 (2,859)
-------- -------- -------- --------
(1,304) 1,578 1,922 28,744
-------- -------- -------- --------
Income (loss) from continuing
operations before taxes (10,768) (14,480) (4,779) 16,143
-------- -------- -------- --------
Provision for income taxes
State 217 248 546 717
Federal (3,843) (5,154) (1,862) 5,400
-------- -------- -------- --------
(3,626) (4,906) (1,316) 6,117
-------- -------- -------- --------
Income (loss) from continuing
operations (7,142) (9,574) (3,463) 10,026
Discontinued operations:
Reversal of reserve for loss on
disposition, net of income taxes 8,897 -- 8,897 --
-------- -------- -------- --------
Net income (loss) 1,755 (9,574) 5,434 10,026
-------- -------- -------- --------
Preferred stock dividends -- 101 51 303
-------- -------- -------- --------
Net income (loss) to
common stockholders $ 1,755 $ (9,675) $ 5,383 $ 9,723
======== ======== ======== ========
Per share data:
Income (loss) from continuing
operations $ (0.24) $ (0.31) $ (0.11) $ 0.31
Income from discontinued
operations 0.30 -- 0.28 --
-------- -------- -------- --------
Net income (loss) per share $ 0.06 $ (0.31) $ 0.17 $ 0.31
======== ======== ======== ========
Average common shares and
equivalents outstanding 29,824 31,671 31,120 31,708
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
5
ZAPATA CORPORATION
DIVISIONAL REVENUES AND OPERATING RESULTS
(in thousands)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- ------------------
1995 1994 1995 1994
------- ------- ------- -------
Revenues:
Natural gas compression $ 19,329 $ 21,810 $ 53,086 $ 49,874
Marine protein 21,737 19,703 61,311 62,307
Natural gas gathering and
processing 12,509 41,957 57,829 120,456
Oil and gas 2,462 3,026 7,482 9,287
-------- -------- -------- --------
$ 56,037 $ 86,496 $179,708 $241,924
======== ======== ======== ========
Operating income (loss):
Natural gas compression $ 1,704 $ 2,460 $ 4,801 $ 4,842
Marine protein (10,428) 2,122 (8,599) 6,016
Natural gas gathering and
processing (39) (473) (482) (696)
Oil and gas 310 (18,743) 528 (18,103)
Corporate (1,011) (1,424) (2,949) (4,660)
-------- -------- -------- --------
$ (9,464) $(16,058) $ (6,701) $(12,601)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
6
ZAPATA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Nine Months Ended
June 30,
------------------
1995 1994
------- -------
Cash flow provided (used) by operating activities:
Continuing operations:
Net income (loss) from continuing operations $ (3,463) $ 10,026
-------- --------
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation, amortization and valuation provisions 23,382 30,779
Gain on sale of assets (5,268) (37,457)
Changes in other assets and liabilities (6,009) (6,282)
-------- --------
Total adjustments 12,105 (12,960)
-------- --------
Cash flow provided (used) by continuing operations 8,642 (2,934)
-------- --------
Discontinued operations:
Reversal of reserve for loss from discontinued
operations 8,897 --
Change in net assets of discontinued operations (12,607) --
-------- --------
Cash flow used by discontinued operations (3,710) --
-------- --------
Net cash provided (used) by operating activities 4,932 (2,934)
-------- --------
Cash flow provided (used) by investing activities:
Proceeds from dispositions of investments and other 12,381 88,533
Proceeds from restricted cash investments 702 75,083
Proceeds from notes receivable 5,495 1,061
Business acquisitions, net of cash acquired -- (73,222)
Capital expenditures (18,339) (20,049)
-------- --------
Net cash provided by investing activities 239 71,406
-------- --------
Cash flow used by financing activities:
Borrowings 12,864 --
Principal payments of long-term obligations (14,137) (69,360)
Preferred stock redemption and common stock buybacks (11,758) (2,245)
Dividend payments (1,153) (404)
-------- --------
Net cash used by financing activities (14,184) (72,009)
-------- --------
Net decrease in cash and cash equivalents (9,013) (3,537)
Cash and cash equivalents at beginning of period 13,094 15,273
-------- --------
Cash and cash equivalents at end of period $ 4,081 $ 11,736
======== ========
The accompanying notes are an integral part of the financial statements.
7
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 April 1995, Zapata adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 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. As a result of adopting
SFAS 121, the Company recorded a $12.6 million pretax provision for asset
impairment to reduce its marine protein assets to their estimated fair market
value. The fair market value of the marine protein assets was determined based
upon the highest third-party competitive bid which had been received by the
Company.
NOTE 2. SALE OF NATURAL GAS COMPRESSION OPERATIONS
- ---------------------------------------------------
In April 1995, Zapata announced that the Company was considering the sale
of its natural gas compression operations. In June 1995, Zapata announced that
it had entered into an agreement to sell the assets of its natural gas
compression division for $130 million to Enterra Corporation. The sale is
subject to stockholder approval and certain governmental approvals.
NOTE 3. DISCONTINUED MARINE PROTEIN OPERATIONS SUBSEQUENTLY RETAINED
- ---------------------------------------------------------------------
Zapata has decided to retain the marine protein operations which had
previously been reported as a discontinued operation. In April 1995, the
Company announced the cancellation of the sale of the marine protein division.
Zapata had previously announced that an agreement to sell its marine protein
operations had been reached. However, the acquisition group failed to close the
transaction.
The Company has concluded that the value of its marine protein
operations could be more effectively realized by retaining these operations as
part of Zapata's ongoing operations, rather than pursuing another sale
transaction. As a result, marine protein's net assets and results of operations
for all periods have been reclassified from discontinued operations to
continuing operations. Marine protein's results of operations from October 1994
through March 1995 had previously been offset against an after-tax reserve of
$8.9 million established in the fourth quarter of fiscal 1994 for the
8
estimated loss on disposition. As a result of the Company's decision to retain
the marine protein operations, the $8.9 million reserve has been reversed in the
current quarter. Marine protein revenues of $39.6 million and operating income
of $1.8 million for the first six months of fiscal 1995 have been reclassified
to continuing operations. Also, marine protein assets and liabilities of $80.7
million and $23.9 million, respectively, as of June 30, 1995 and assets and
liabilities of $100.2 million and $32.6 million, respectively, as of September
30, 1994 have been reclassified to continuing operations.
As a result of adopting SFAS 121, Zapata recorded a $12.6 million
pretax provision for asset impairment to reduce its marine protein assets. The
provision was based on the estimated fair market value of the marine protein
assets. The fair market value of the marine protein assets was determined based
upon the highest third-party competitive bid which had been received by the
Company.
NOTE 4. RESTATED FISCAL 1995 RESULTS OF OPERATIONS
- ---------------------------------------------------
Zapata's first and second quarter income statements for fiscal 1995
have been restated as follows to reclassify the marine protein operating results
to continuing operations, amounts in thousands.
Three Months Ended
------------------------
December 31, March 31,
1994 1995
------------- ----------
Revenues $65,551 $58,120
Operating income (loss) 2,064 699
Net income $ 748 $ 2,931
NOTE 5. SUBSEQUENT EVENT
- -------------------------
In August 1995, Zapata completed the sale of its remaining U.S.
offshore oil and gas properties. The Company received cash, a production
payment entitling Zapata to a share of future revenues derived from the
properties and other contract consideration. No gain or loss was recognized
from the sale.
In August 1995, Zapata announced that it had acquired 31% of the
outstanding common stock of Envirodyne Industries, Inc. ("Envirodyne") for $18.8
million from Malcolm Glazer, Chairman of the Board of Zapata and a director of
Envirodyne. Zapata paid the purchase price by issuing to the seller a
subordinated promissory note bearing interest at prime and maturing in August
1997. Envirodyne is one of the world's major suppliers of food packaging
products and food service supplies.. This acquisition is the first major step
in the transformation of Zapata away from the energy business and into food-
related businesses. Zapata is evaluating acquiring additional shares or
proposing a merger with, or acquisition of, Envirodyne in the future.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
- --------
In April 1995, Zapata announced that the Company was 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 was based on the belief that businesses
outside the energy industry may provide better opportunities for the Company to
pursue. 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 stockholders' capital.
In August 1995, Zapata announced that it had acquired 31% of the
outstanding common stock of Envirodyne Industries, Inc. ("Envirodyne"), a
manufacturer of food packaging and food service supplies for $18.8 million.
This acquisition is the first major step in the transformation of Zapata away
from the energy business and into food-related businesses. Zapata is evaluating
acquiring additional shares or proposing a merger with, or acquisition of,
Envirodyne in the future. Zapata is also looking at other opportunities in food-
related areas.
In June 1995, Zapata announced that it had entered into an agreement to
sell the assets of its natural gas compression division for $130 million. The
sale is subject to stockholder approval and certain governmental approvals. Due
to the preliminary nature of the decision process regarding the possible sale of
the natural gas gathering and processing operation, the financial statement
impact of the ultimate disposition of this business cannot be determined at this
time.
Zapata has decided to retain the marine protein operations which had
previously been reported as a discontinued operation. In April 1995, the
Company announced the cancellation of the sale of the marine protein division.
Zapata had previously announced that an agreement to sell its marine protein
operations had been reached. However, the acquisition group failed to close the
transaction. The Company has concluded that the value of the marine protein
operations could be more effectively realized by retaining these operations as
part of Zapata's ongoing operations, rather than pursuing another sale
transaction. As a result, marine protein's net assets and results of operations
for all periods have been reclassified from discontinued operations to
continuing operations.
In August 1995, Zapata completed the sale of its remaining U.S. offshore
oil and gas properties. The Company received cash, a production payment
entitling Zapata to a share of future revenues derived from the properties and
other contract considerations. The Company currently plans to retain its
Bolivian oil and gas operations.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
In April 1995, Zapata used the proceeds of $12.7 million from the sale of
its remaining 673,077 shares of Tidewater Inc. ("Tidewater") common stock to
reduce the Company's $17.5 million in notes due to Norex America, Inc.
Remaining mandatory principal payments for the next twelve months total $8.4
million. In July 1995, a subsidiary of the Company, Zapata Protein, Inc.,
arranged a $15.0 million bank credit facility.
10
Cash provided by operating activities totalled $4.9 million during the
first nine months of fiscal 1995 as compared to a $2.9 million use of cash
during the corresponding prior-year period. The use of cash in fiscal 1994 was
primarily due to increases in working capital. Cash provided by investing
activities totalled $239,000 during the first nine months of fiscal 1995 as
compared to $71.4 million during the first nine months of fiscal 1994. The
fiscal 1994 period included proceeds of $85.9 million from the sale of 4.13
million shares of Zapata's Tidewater common stock. Net cash used by financing
activities totalled $14.2 million during the first nine months of fiscal 1995 as
compared to $72.0 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 June 1995, Zapata announced that its board of directors had authorized
the repurchase of up to 7.5 million shares of its common stock depending on
market conditions.
In August 1995, Zapata announced that it had acquired 31% of the
outstanding common stock of Envirodyne Industries, Inc. ("Envirodyne") for $18.8
million from Malcolm Glazer, Chairman of the Board of Zapata and a director of
Envirodyne. Zapata paid the purchase price by issuing to the seller a
subordinated promissory note bearing interest at prime and maturing in August
1997. Envirodyne is one of the world's major suppliers of food packaging
products and food service supplies. This acquisition is the first major step in
the transformation of Zapata away from the energy business and into food-related
businesses. Zapata is evaluating acquiring additional shares or proposing a
merger with, or acquisition of, Envirodyne in the future.
RESULTS OF OPERATIONS
- ---------------------
Zapata's net income of $1.8 million for the third quarter of fiscal 1995
compared favorably to the fiscal 1994 third quarter net loss of $9.6 million.
The fiscal 1995 third quarter net income included net income of $8.9 million
from discontinued operations as a result of the reversal of an estimated loss on
the disposition of the marine protein operations which was recorded in fiscal
1994.
The Company's net loss from continuing operations of $7.1 million for the
three months ended June 30, 1995 compared favorably to a net loss of $9.6
million for the corresponding 1994 period. The fiscal 1995 results include a
$12.6 million pretax provision for asset impairment of the Company's marine
protein assets as a result of adopting Statement of Financial Accounting
Standards No. 121 ("SFAS 121") while the fiscal 1994 results include a pretax
valuation provision of $18.8 million associated with the Company's oil and gas
operations. Revenues of $56.0 million and an operating loss of $9.5 million in
the fiscal 1995 third quarter compared to revenues of $86.5 million and an
operating loss of $16.1 million in the 1994 third quarter. The decrease in
revenues from the prior year reflects the Company's decision to decrease natural
gas trading activity in its gathering and processing operations.
11
Year-to-date, fiscal 1995 revenues of $179.7 million, an operating loss of
$6.7 million and net income of $5.4 million compared to fiscal 1994 revenues of
$241.9 million, an operating loss of $12.6 million and net income of $10.0
million.
MARINE PROTEIN - As a result of the Company's decision to retain the marine
- --------------
protein operations, the net assets and results of marine protein's operations
for all periods have been reclassified from discontinued operations to
continuing operations and the $8.9 million after-tax loss on disposition
recorded September 1994 has been reversed in the current quarter. As a result
of adopting SFAS 121, the Company recorded a $12.6 million pretax provision for
asset impairment to reduce its marine protein assets to their estimated fair
market value. The fair market value of the marine protein assets was determined
based upon the highest third-party competitive bid which had been received by
the Company. SFAS 121 requires companies to write down assets to their
estimated fair market value when assets are determined to be impaired.
Reflecting the provision for asset impairment, revenues of $21.7 million
and operating loss of $10.4 million in the third quarter of fiscal 1995 compared
unfavorably to revenues of $19.7 million and operating income of $2.1 million in
the third quarter of 1994. Current quarter sales volume of fish oil was double
the prior-year period level while fish meal sales volume was 14% lower in the
current quarter as compared to the prior-year quarter. The average price for
fish oil increased to $349 per ton in the third quarter of fiscal 1995 from $302
per ton in the 1994 third quarter; fish meal prices averaged $355 per ton in the
1995 period and $346 per ton in the 1994 period. The fiscal 1995 fish catch is
approximately 22% lower than the fiscal 1994 fish catch due principally to
inclement weather conditions that hampered fishing during the current quarter.
Reflecting the effects of the provision for asset impairment and the lower
fish catch, year-to-date fiscal 1995 revenues of $61.3 million and operating
loss of $8.6 million compared unfavorably to fiscal 1994 revenues of $62.3
million and operating income of $6.0 million. Fiscal 1995 sales volume of fish
oil was 6% higher than the fiscal 1994 sales volume while fiscal 1995 fish meal
sales volume declined 3% as compared to fiscal 1994. Year-to-date, fiscal 1995
fish oil prices have averaged $301 per ton versus $317 per ton in fiscal 1994.
Likewise, fiscal 1995 fish meal prices have averaged $347 per ton versus $353
per ton in fiscal 1994.
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-month and nine-month periods
ended June 30, 1995 and 1994 are presented in the following table by major
category, in thousands.
12
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- -------------------
1995 1994 1995 1994
---------- -------- -------- ---------
Revenues
- ----------
Gathering & Processing $ 4,420 $ 7,255 $14,010 $ 18,458
NGL Marketing 8,089 34,702 43,819 101,998
------- ------- ------- --------
$12,509 $41,957 $57,829 $120,456
======= ======= ======= ========
Operating Results
- --------------------------
Gathering & Processing $ 203 $ (164) $ 357 $ 148
NGL Marketing 35 147 63 696
Selling & Administrative (277) (456) (902) (1,540)
------- ------- ------- --------
$ (39) $ (473) $ (482) $ (696)
======= ======= ======= ========
For the third quarter of fiscal 1995, gathering and processing revenues
were lower than the prior year as a result of the negative impact of lower
natural gas prices, while operating results improved, reflecting increased
processing margins. However, marketing revenues and operating income have
declined in fiscal 1995 as compared to 1994, due to the Company's decision to
reduce its natural gas trading activities.
A comparison of average daily volumes of gas, measured in millions of
cubic feet, gathered and processed during the three-month and nine-month periods
ended June 30, 1995 and 1994 is shown below.
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- -----------------
Average Daily Volumes 1995 1994 1995 1994
- ----------------------- ---------- ------- ------ ---------
(MMCF)
Gathering 57.0 47.7 53.5 44.9
Processing 26.5 25.0 26.6 21.9
In April 1995, Zapata announced that the Company was considering the sale
of its natural gas gathering and processing operation. Due to the preliminary
nature of the decision process regarding the possible sale of the natural gas
gathering and processing operation, the financial statement impact of the
ultimate disposition of this business cannot be determined at this time.
OIL AND GAS - Revenues of $2.5 million and operating income of $310,000 for the
- -----------
third quarter of fiscal 1995 compared favorably to the corresponding fiscal 1994
period's revenues of $3.0 million and operating loss of $18.7 million. The
fiscal 1994 period loss included an $18.8 million property valuation provision.
Although the Company's U.S. natural gas prices improved during the third quarter
of fiscal 1995, current quarter prices were lower than the prior-year quarter
prices. Zapata's domestic natural gas production for the third quarter of
fiscal 1995 approximated the level of production in the corresponding fiscal
1994 period. The Company's Bolivian operations contributed $399,000 to
operating income in the third quarter of fiscal 1995 as compared to $483,000 in
the third quarter of fiscal 1994.
13
Year-to-date, fiscal 1995 revenues of $7.5 million and operating income
of $528,000 compared favorably to the fiscal 1994 revenues of $9.3 million and
operating loss of $18.1 million due primarily to the 1994 property write-down.
Bolivian operations contributed operating income of $1.2 million in fiscal 1995
and $2.4 million in fiscal 1994.
NATURAL GAS COMPRESSION
- -----------------------
In April 1995, Zapata announced that the Company was considering the sale
of its natural gas compression operations. In June 1995, Zapata announced that
it had entered into an agreement to sell the assets of its natural gas
compression division for $130 million to Enterra Corporation. The sale is
subject to stockholder approval and certain governmental approvals.
The major segments of Energy Industries' natural gas compression revenues
and operating results for the three-month and nine-month periods ended June 30,
1995 and the three-month and eight-month periods ended June 30, 1994, in
thousands, are identified below.
Three Months Ended Nine Months Eight Months
June 30, Ended June 30,
---------------------- -----------------------------
1995 1994 1995 1994
---------- --------- ------------ ----------
Revenues
- --------------------------
Compressor Rental $ 4,403 $ 5,163 $12,978 $12,066
Fabrication and Sales 8,989 9,272 21,879 17,150
Parts & Service 4,731 5,187 14,919 14,123
Other 1,206 2,188 3,310 6,535
------- ------- ------- -------
$19,329 $21,810 $53,086 $49,874
======= ======= ======= =======
Operating Results
- --------------------------
Compressor Rental $ 1,175 $ 1,336 $ 3,592 $ 3,686
Fabrication and Sales 875 1,206 2,421 1,762
Parts & Service 850 1,152 2,818 2,760
Other 198 383 348 908
Selling & Administrative (1,394) (1,617) (4,378) (4,274)
------- ------- ------- -------
$ 1,704 $ 2,460 $ 4,801 $ 4,842
======= ======= ======= =======
(The Other segment includes the results of the heat exchanger
manufacturing operation which was sold during the second quarter of fiscal 1995
and used equipment sales.)
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 June 30, 1995 and 1994 are compared in the following table.
14
June 30, 1995 June 30, 1994
------------------- --------------
Fleet utilization:
- -------------------
Horsepower 81.5% 77.8%
Monthly rental rate, based on:
- -----------------------------------------
Horsepower $ 15.54 $ 17.43
Fleet size:
- -----------------------------------------
Number of units 771 701
Horsepower 129,467 107,494
Reflecting the effects of low natural gas prices, Energy Industries'
operating results continued to be negatively impacted during the third quarter
of fiscal 1995. As a result, Energy Industries' operating income during the
third quarter of fiscal 1995 compared unfavorably to the third quarter income of
fiscal 1994.
15
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
---------------------------------------------------
The Company held its 1995 Annual Meeting of Stockholders on July 27, 1995 (the
"1995 Annual Meeting"). An aggregate of 29,505,034 shares of the Company's
equity securities were outstanding and entitled to vote at the 1995 Annual
Meeting as follows: 29,502,407 shares of Common Stock and 2,627 shares of $2
Noncumulative Convertible Preference Stock. At this meeting, the stockholders
voted on the following matters:
Election of Class III Directors
-------------------------------
For Against
--- -------
Robert V. Leffler, Jr. 23,515,741 1,523,931
W. George Loar 23,510,424 1,529,248
In addition to the Class III Directors elected at the 1995 Annual Meeting,
Malcolm I. Glazer and Ronald C. Lassiter continue to serve as Class I Directors
until the 1996 Annual Meeting of Stockholders, and Avram A. Glazer and Peter M.
Holt continue to serve as Class II Directors until the 1997 Annual Meeting of
Stockholders.
Ratification of the Appointment
of Coopers & Lybrand L.L.P. as
Independent Public Accountants
--------------------------------
Broker
For Against Abstained Non-Vote
--- ------- --------- --------
24,603,811 329,905 108,067 91,175
Subject to stockholder approval, the Board of Directors of the Company appointed
Coopers & Lybrand L.L.P. to serve as the Company's independent public
accountants for the year ending September 30, 1995.
Stockholder Proposal on Cumulative Voting
-----------------------------------------
Broker
For Against Abstained Non-Vote
--- ------- --------- --------
1,874,627 15,385,521 234,018 8,250,338
Mr. Martin Glotzer, a stockholder of the Company, presented the stockholder
proposal to be voted on at the 1995 Annual Meeting in which he requested that
the stockholders of the Company amend the Company's Restated Certificate of
Incorporation, as amended, to provide for cumulative voting on the election of
directors of the Company.
16
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. The exhibits indicated by double asterisk (**) were filed on
Form 10-Q for quarter ended June 30, 1995.
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,
by 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. (Exhibit 4(e)
to Zapata's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 (File No. 1-4219)).
10(a)** -- Letter Agreement dated June 29, 1995 by and between
Enterra Corporation and Zapata Corporation.
17
10(b)** -- Assignment and Assumption of Consulting Agreement
effective as of July 1, 1995 by and between Zapata Corporation and
Zapata Protein, Inc.
27 -- Financial Data Schedule.
(b) Reports on Form 8-K
Current report on Form 8-K dated June 9, 1995 (Item 5. Other events -reported
the election of Robert V. Leffler, Jr. and W. George Loar to serve as Class III
Directors, filling the vacancies left by the resignations of Myrl S. Gelb and
Luther W. Miller).
18
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
November 7, 1995 By: /s/ JOSEPH L. VON ROSENBERG III
------------------------------------
Joseph L. von Rosenberg III
Vice President, General Counsel
and Corporate Secretary
November 7, 1995 By: /s/ LAMAR C. MCINTYRE
-------------------------------------------
Lamar C. McIntyre
Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
19
EXHIBIT INDEX
NUMBER EXHIBIT
- ------ -------
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, by
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. (Exhibit 4(e)
to Zapata's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 (File No. 1-4219)).
10(a)** -- Letter Agreement dated June 29, 1995 by and between
Enterra Corporation and Zapata Corporation.
10(b)** -- Assignment and Assumption of Consulting Agreement effective as
of July 1, 1995 by and between Zapata Corporation and
Zapata Protein, Inc.
27 -- Financial Data Schedule.
* Incorporated by reference to the Zapata Corporation Annual Report on Form
10-K for the fiscal year ended September 30, 1994.
** Filed with Form 10-Q for quarter ended June 30, 1995.
20
5
1,000
9-mos
SEP-30-1995
OCT-01-1994
JUN-30-1995
4,158
0
31,228
0
54,131
93,786
232,870
108,972
269,586
45,122
61,948
7,376
0
3
135,772
269,586
179,708
179,708
186,409
186,409
(6,794)
0
4,872
(4,779)
(1,316)
(3,463)
8,897
0
0
5,434
.17
.17
