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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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)
STATE OF DELAWARE C-74-1339132
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1717 ST. JAMES PLACE, SUITE 550
HOUSTON, TEXAS 77056
(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 FOR 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 $0.25 PER SHARE, ON FEBRUARY 13, 1997: 29,549,707.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Zapata Corporation
Condensed Consolidated Balance Sheet . . . . . . . . . . . . 3
Condensed Consolidated Statement of Operations . . . . . . . 4
Condensed Consolidated Statement of Cash Flows . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . 6
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ZAPATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
DECEMBER 31, SEPTEMBER 30,
ASSETS 1996 1996
------------- -------------
Current assets:
Cash and cash equivalents $101,930 $ 99,601
Restricted cash 337 337
Receivables 8,345 11,839
Inventories:
Fish products 25,911 26,522
Materials, parts and supplies 3,421 3,397
Prepaid expenses and other current assets 3,007 2,852
-------- --------
Total current assets 142,951 144,548
-------- --------
Investments and other assets:
Investments in unconsolidated affiliates 20,748 22,061
Production payment receivable 3,087 3,237
Deferred income taxes 5,093 5,641
Other assets 14,541 15,501
-------- --------
43,469 46,440
-------- --------
Property and Equipment 80,171 78,586
Accumulated depreciation (37,435) (36,431)
-------- --------
42,736 42,155
-------- --------
Total assets $229,156 $233,143
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 16,188 $ 16,108
Accounts payable and accrued liabilities 21,411 29,113
-------- --------
Total current liabilities 37,599 45,221
-------- --------
Long-term debt 19,929 18,159
-------- --------
Other liabilities 17,371 17,450
-------- --------
Stockholders' equity:
Preference stock ($1.00 par); 2,627 issued and outstanding 3 3
Common stock ($0.25 par); 165,000,000 shares authorized;
29,548,707 shares issued and outstanding at
December 31, 1996 and September 30, 1996 7,387 7,387
Capital in excess of par value 131,963 131,963
Reinvested earnings from October 1, 1990 14,904 12,960
-------- --------
154,257 152,313
-------- --------
Total liabilities and stockholders' equity $229,156 $233,143
======== ========
The accompanying notes are an integral part of the financial statements.
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ZAPATA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
THREE MONTHS ENDED
DECEMBER 31,
--------------------------
1996 1995
--------------------------
Revenues $ 25,983 $ 23,942
-------- --------
Expenses:
Operating 20,132 19,235
Depreciation, depletion and amortization 1,016 775
Selling, general and administrative 1,637 1,565
-------- --------
22,785 21,575
-------- --------
Operating income 3,198 2,367
-------- --------
Other income (expense):
Interest income 1,254 279
Interest expense (876) (1,010)
Equity in loss of unconsolidated affiliates (1,283) (719)
Other 806 126
-------- --------
(99) (1,324)
-------- --------
Income from continuing operations
before income taxes 3,099 1,043
-------- --------
Provision for income taxes
State 108 87
Federal 1,047 334
-------- --------
1,155 421
-------- --------
Income from continuing operations 1,944 622
Discontinued operations:
Loss from discontinued operations,
net of income taxes --- (42)
Gain on disposition of discontinued operations,
net of income taxes --- 13,228
-------- --------
--- 13,186
-------- --------
Income before cumulative effect of change in
accounting principle 1,944 13,808
-------- --------
Cumulative effect of change in accounting
principle, net of income taxes --- 467
-------- --------
Net income to common stockholders $ 1,944 $ 14,275
======== ========
Per share data:
Income from continuing operations $ 0.07 $ 0.02
Income from discontinued operations --- 0.44
Cumulative effect of change in accounting principle --- 0.02
-------- --------
Net income per share $ 0.07 $ 0.48
======== ========
Average common shares and common share
equivalents outstanding 29,566 29,566
======== ========
The accompanying notes are an integral part of the financial statements.
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ZAPATA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1996 1995
--------- -----------
Cash flows provided (used) by operating activities:
Net income $ 1,944 $ 14,275
--------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,016 775
Gain on sale of assets (750) ---
Cumulative effect of change in accounting principle,
net of income taxes --- (467)
Gain on sale of discontinued assets, net of income taxes --- (13,228)
Equity in loss of unconsolidated affiliates 1,283 719
Changes in other assets and liabilities (3,240) 4,579
--------- ---------
Total adjustments (1,691) (7,622)
--------- ---------
Net cash provided by operating activities 253 6,653
--------- ---------
Cash flows provided (used) by investing activities:
Proceeds from dispositions 1,661 104,689
Proceeds from note receivable 150 ---
Capital expenditures (1,465) (675)
--------- ---------
Net cash provided by investing activities 346 104,014
--------- ---------
Cash flows provided (used) by financing activities:
Borrowings 1,849 ---
Repayments of long-term obligations (119) (11,080)
--------- ---------
Net cash provided (used) by financing activities 1,730 (11,080)
--------- ---------
Net increase in cash and cash equivalents 2,329 99,587
Cash and cash equivalents at beginning of period 99,601 2,488
--------- ---------
Cash and cash equivalents at end of period $ 101,930 $ 102,075
========= =========
The accompanying notes are an integral part of the financial statements.
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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 a description of
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. These condensed
financial statements should be read in conjunction with the financial
statements and the notes thereto included in Zapata's latest Annual Report on
Form 10-K.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). The Company does not intend to adopt
the recognition provisions of SFAS 123, but will adopt its disclosure
requirements in fiscal year 1997.
NOTE 2. UNCONSOLIDATED AFFILIATES
In August 1995, Zapata acquired 4,189,298 shares of Envirodyne
Industries, Inc. ("Envirodyne") common stock, representing 31% of the then
outstanding common stock of Envirodyne, for $18.8 million from a trust
controlled by Malcolm I. Glazer, Chairman of the Board of Zapata and a director
of Envirodyne. In June and July 1996, Zapata purchased 1,688,006 additional
shares of Envirodyne common stock in brokerage and privately negotiated
transactions for aggregate consideration of approximately $7.0 million. As a
result of these transactions, Zapata currently owns approximately 40.6% of the
outstanding shares of Envirodyne common stock.
Effective October 1, 1995, Zapata changed its method of accounting for
its equity interest in Envirodyne. Zapata began reporting its equity in
Envirodyne's results of operations on a three-month delayed basis since
Envirodyne's financial statements are not available to the Company on a basis
that would permit concurrent reporting. The Company's equity loss of $719,000
for the first quarter of fiscal 1996 includes Zapata's equity interest in
Envirodyne for Envirodyne's three-month period ending September 28, 1995,
prorated to Zapata's August 1995 acquisition, offset by the cumulative effect
of the change in accounting principle which includes the reversal of the
Company's equity loss reported in the fourth quarter of fiscal 1995.
Therefore, Zapata's other expense for the first quarter of fiscal 1996 includes
an equity loss of $719,000 based on Zapata's ownership interest in Envirodyne's
results and the cumulative effect of change in accounting principle includes an
offsetting $719,000 (before taxes).
Due to the significance of the Company's investment, the unaudited
financial position and results of operations of Envirodyne are summarized
below. The financial statement information presented below for
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Envirodyne is based upon its interim report for the quarter ended September 26,
1996 (unaudited, in millions, except per share amounts):
ENVIRODYNE INDUSTRIES, INC.
SEPTEMBER 26,
1996
--------------
BALANCE SHEET
Current assets . . . . . . . . . . . . . . . . . . . . . . . . $247.9
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 175.8
Property and equipment, net . . . . . . . . . . . . . . . . . 455.3
-------
Total assets . . . . . . . . . . . . . . . . . . . . . $879.0
======
Current liabilities . . . . . . . . . . . . . . . . . . . . . $132.3
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 522.6
Deferred income taxes and other . . . . . . . . . . . . . . . 122.6
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . 101.5
------
Total liabilities and stockholders' equity . . . . . . $879.0
======
THREE MONTHS
ENDED
SEPTEMBER 26,
1996
-------------
INCOME STATEMENT
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 163.8
=======
Loss before income taxes . . . . . . . . . . . . . . . . . . . $ (6.5)
========
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3.9)
========
Net loss per share . . . . . . . . . . . . . . . . . . . . . . $ (0.27)
========
NOTE 3. DIVISIONAL REVENUES AND OPERATING RESULTS
The Company's divisional revenues and operating results for the three
months ended December 31, 1996 and 1995 are as follows:
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ---------
(in thousands)
Revenues:
Marine protein $ 25,623 $ 23,466
Oil and gas 360 476
-------- --------
$ 25,983 $ 23,942
======== ========
Operating income (loss):
Marine protein $ 3,792 $ 3,063
Oil and gas 36 (71)
Corporate (630) (625)
-------- --------
$ 3,198 $ 2,367
======== ========
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NOTE 4. LITIGATION
Zapata has been named as a defendant in various derivative and
stockholder class actions alleging, among other things, that Zapata's Board of
Directors engaged in conduct constituting breach of fiduciary duty and waste of
Zapata's assets in connection with Zapata's investment in Envirodyne, the
decision to shift Zapata's business focus from energy to food services and a
proposed, but subsequently abandoned, merger with Houlihan's Restaurant Group,
Inc. ("Houlihan's). The complaints variously allege that Zapata's purchase of
Envirodyne common stock was designed to permit Malcolm I. Glazer to obtain
personal financial advantage to the detriment of Zapata and that the merger
consideration in the transaction with Houlihan's was excessive and would result
in voting power dilution, unfairly benefitting Malcolm I. Glazer. The
complaints seek injunctive and various forms of monetary relief. In one of the
actions, the plaintiff sought an injunction to prevent consummation of the
merger with Houlihan's based on the contention that it would violate a
supermajority vote requirement in Zapata's Restated Certificate of
Incorporation. A hearing on this issue was held before the Court of Chancery of
the State of Delaware on September 6, 1996 and, on September 24, 1996, the
Court of Chancery decided that the supermajority vote requirement applied to
the merger. Zapata has filed a notice of appeal with the Supreme Court of the
State of Delaware regarding the decision of the Court of Chancery interpreting
Zapata's Restated Certificate of Incorporation. The Company's appeal has been
set for oral argument in the Supreme Court on March 11, 1997. Zapata denies
the substantive allegations of the complaints and intends to defend these cases
vigorously.
On November 16, 1995, a petition was filed in the 148th Judicial
District Court of Nueces County, Texas by Peter M. Holt, a former director of
the Company, and certain of his affiliates who sold their interests in Energy
Industries, Inc. ("Energy Industries") to the Company in November 1993
(collectively, with Mr. Holt, the "Holt Affiliates"). The petition names the
Company, Malcolm I. Glazer and Avram A. Glazer as defendants and alleges
several causes of action based on alleged misrepresentations on the part of the
Company and the other defendants concerning the Company's intent to follow a
long-term development strategy focusing its efforts on the natural gas services
business. The petition does not allege a breach of any provision of the
purchase agreement pursuant to which the Company acquired Energy Industries
from the Holt Affiliates, but alleges that various representatives of Zapata
and Malcolm I. Glazer made representations to Mr. Holt regarding Zapata's
intention to continue in the natural gas services industry. Among the remedies
sought by the petition are the following requests: (i) the Company's
repurchase of the approximately 2.7 million shares of Zapata common stock owned
by the Holt Affiliates for $15.6 million (which relief is no longer possible
because the Holt Affiliates sold most of their common stock in March and April
1996); (ii) the disgorgement to the Holt Affiliates of Zapata's profit to be
made on its sale of Energy Industries; or (iii) money damages based on the
alleged lower value of the common stock had the alleged misrepresentations not
been made. The case has been set for trial beginning April 28, 1997. The
Company believes that the petition and the allegations made therein are without
merit and intends to defend the case vigorously.
On January 24, 1997 Zapata announced that a lawsuit had been filed
against the Company and its directors in the Court of Chancery of Delaware
seeking injunctive relief against the Company's offer to purchase up to
15,000,000 shares of its Common Stock (the "Offer"). The lawsuit, filed by
Hawley Opportunity Fund ("Hawley"), alleges, among other things, that the Offer
is unfair and that the Offer documents fail to disclose material facts
concerning pending patent litigation in which a subsidiary of Envirodyne is the
plaintiff and concerning the Company's investment in oil and gas assets in
Bolivia. The
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complaint also alleges that the Offer was structured so that Malcolm I.
Glazer's percentage equity interest in the Company will increase and that the
Company's Board of Directors has wrongfully refused to make a recommendation as
to whether the Company's stockholders should tender shares in the Offer. The
Company believes that the Offer properly discloses all material information
required to be disclosed concerning the matters referred to in Hawley's
complaint and that Hawley's allegations as to unfairness of the Offer are
unfounded. The Company has filed an answer denying the substantive allegations
of Hawley's complaint. A hearing on Hawley's motion to enjoin consummation of
the Offer is scheduled in the Court of Chancery on February 18, 1997.
Zapata is defending various claims and litigation arising from
continuing and discontinued operations. In the opinion of management,
uninsured losses, if any, resulting from these matters and from the matters
discussed above will not have a material adverse effect on Zapata's results of
operations, cash flows or financial position.
NOTE 5. DISPOSITION
In December 1996, Zapata completed the sale of certain real estate for
approximately $1.2 million. The sale resulted in a pretax gain of $750,000
that is included as other income in the Company's statement of operations.
NOTE 6. SUBSEQUENT EVENT
On February 10, 1997, the Company redeemed the entire $15.6 million
principal amount of its 10 1/4% subordinated debentures due March 15, 1997, at
the redemption price of 100% of the principal amount thereof, together with
accrued and unpaid interest.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-looking statements in this Form 10-Q, future filings by the
Company with the Securities and Exchange Commission, the Company's press
releases and oral statements by authorized officers of the Company are intended
to be subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the risk of a significant natural disaster, the inability of the
Company to insure against certain risks, the adequacy of its loss reserves,
fluctuations in commodity prices that affect the prices for fish meal and fish
oil, weather and other factors affecting fish catch levels, the inherent
limitations in the ability to estimate oil and gas reserves, changing
government regulations, political risks of operations in foreign countries, as
well as general market conditions, competition and pricing. The Company
believes that forward-looking statements made by it are based on reasonable
expectations. However, no assurances can be given that actual results will not
differ materially from those contained in such forward-looking statements. The
words "estimate," "project," "anticipate," "expect," "predict," "believe" and
similar expressions are intended to identify forward-looking statements.
LIQUIDITY AND CAPITAL RESOURCES
Zapata's cash and cash equivalents balance increased $2.3 million
during the first quarter of fiscal 1997 and totaled $101.9 million at December
31, 1996. The Company's working capital increased to $105.4 million at
December 31, 1996 from $99.3 million at September 30, 1996.
Cash flows from operating activities decreased to $253,000 for the
three-month period ended December 31, 1996 from $6.7 million for the
corresponding prior-year period. The decrease was primarily attributable to an
increase in working capital requirements during the current period. Cash flows
from investing activities totalled $346,000 during the first quarter of fiscal
1997 as compared to $104.0 million during the first quarter of fiscal 1996 when
the Company received proceeds of $104.7 million from the sale of its natural
gas compression operations assets. Cash flows from financing activities
provided $1.7 million in the current quarter as compared to an $11.1 million
use of cash in the corresponding prior-year period. The use of cash in the
fiscal 1996 period was the result of higher debt repayments that included a
$7.0 million working capital loan payment and a $3.2 million prepayment of
indebtedness owed to the Malcolm I. Glazer Trust in connection with the
Company's acquisition of common stock of Envirodyne Industries, Inc.
("Envirodyne") in August 1995.
On December 30, 1996, the Company announced its intention to commence
an offer to purchase for cash up to 15,000,000 shares of the Company's common
stock for a price of $4.50 per share. The offer (the "Offer") was commenced
on January 14, 1997. The Offer is conditioned upon a minimum of 10 million
shares of common stock being tendered and is made upon the terms and subject to
the conditions set forth in the Company's Offer to Purchase dated January 14,
1997. Malcolm I. Glazer, Chairman of the Board of the Company and, through his
beneficial ownership of a trust, the owner of 10,395,384 shares of common
stock, has stated that he intends to participate in the Offer by tendering
3,000,000 shares of common stock. The Company intends to use a portion of its
available cash to purchase common stock pursuant to the Offer.
On January 24, 1997 Zapata announced that a lawsuit has been filed
against the Company and its directors in the Court of Chancery of Delaware
seeking injunctive relief against the Offer. The lawsuit, filed
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by Hawley Opportunity Fund ("Hawley"), alleges, among other things, that the
Offer is unfair and that the Offer documents fail to disclose material facts
concerning pending patent litigation in which a subsidiary of Envirodyne is the
plaintiff and concerning the Company's investment in oil and gas assets in
Bolivia. The complaint also alleges that the Offer was structured so that
Malcolm I. Glazer's percentage equity interest in the Company will increase and
that the Company's Board of Directors has wrongfully refused to make a
recommendation as to whether the Company's stockholders should tender shares in
the Offer. The Company believes that the Offer properly discloses all material
information required to be disclosed concerning the matters referred to in
Hawley's complaint and that Hawley's allegations as to unfairness of the Offer
are unfounded. The Company has filed an answer denying the substantive
allegations of Hawley's complaint. A hearing on Hawley's motion to enjoin
consummation of the Offer is scheduled in the Court of Chancery on February 18,
1997.
On February 10, 1997, Zapata redeemed the entire $15.6 million
principal amount of its 10 1/4% subordinated debentures due March 15, 1997, at
the redemption price of 100% of the principal amount thereof, together with
accrued and unpaid interest.
RESULTS OF OPERATIONS
For the first three months of fiscal 1997, Zapata reported revenues
of $26.0 million and net income of $1.9 million compared to revenues of $23.9
million and net income of $14.3 million for the first three months of fiscal
1996. The Company's net income in the fiscal 1996 period includes the $13.2
million after-tax gain from the disposition of the Company's discontinued
natural gas compression business. Zapata's net income from continuing
operations for the first quarter of fiscal 1997 improved to $1.9 million from
$622,000 for the first quarter of fiscal 1996. This improvement is
attributable to the following: (1) Zapata's operating income increased to $3.2
million for the three-month period ended December 31, 1996 from $2.4 million
for the three-month period ended December 31, 1995 due primarily to an increase
in the Company's marine protein operations that benefited from substantially
higher prices for its fish meal products; (2) Zapata's continuing operations
for the first quarter of fiscal 1997 include a pretax gain of $750,000 that the
Company realized from the sale of certain real estate; and (3) Zapata recorded
net interest income of $378,000 for the first three months of fiscal 1997 as
compared to net interest expense of $731,000 in the corresponding prior-year
period, reflecting the Company's reduced level of indebtedness and higher cash
balance.
Zapata's results from continuing operations also include the Company's
equity interest in Envirodyne. Effective October 1, 1995, Zapata changed its
method of accounting for its equity interest in Envirodyne. Zapata began
reporting its equity in Envirodyne's results of operations on a three-month
delayed basis since Envirodyne's financial statements are not available to the
Company on a basis that would permit concurrent reporting. The Company's
equity loss of $1.3 million for first quarter of fiscal 1997 includes Zapata's
equity interest in Envirodyne for Envirodyne's three-month period ending
September 26, 1996. The Company's equity loss of $719,000 for the first
quarter of fiscal 1996 includes Zapata's equity interest in Envirodyne for
Envirodyne's three-month period ending September 28, 1995 prorated to Zapata's
August 1995 acquisition. The fiscal 1996 equity loss is offset by the
cumulative effect of the change in accounting principle that includes the
reversal of the Company's equity loss as reported in the fourth quarter of
fiscal 1995.
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Marine Protein
Revenues of $25.6 million and operating income of $3.8 million for the
first quarter of fiscal 1997 compared favorably to revenues of $23.5 million
and operating income of $3.1 million for the first quarter of fiscal 1996. The
improvement in the current period is primarily attributable to higher prices
for the Company's fish meal products. The average price for fish meal, the
division's primary product, increased to $496 per ton in the first quarter of
fiscal 1997 from $387 per ton in the first quarter of fiscal 1996, while the
average price of fish oil decreased to $410 per ton in the 1997 period from
$453 per ton in the 1996 period. Reflecting a lower carryover inventory from
the prior year, sales volumes of fish meal and fish oil were lower by
approximately 18% and 21%, respectively, in the current quarter as compared to
the prior-year quarter.
The price for fish meal generally bears a relationship to prevailing
soybean meal prices, while prices for fish oil are usually based on prices for
vegetable fats and oils, such as soybean and palm oils. Thus, the prices for
the Company's products are significantly influenced by worldwide supply and
demand relationships over which the Company has no control and which tend to
fluctuate to a significant extent over the course of a year and from year to
year.
Oil and Gas
In fiscal 1995, the Company sold its U.S. natural gas producing
properties. As a result, the Company's only significant remaining oil and gas
activity is the production of natural gas through a joint venture in Bolivia in
which the Company has a 25% interest. Revenues of $360,000 and operating
income of $36,000 in the first quarter of fiscal 1997 compared to revenues of
$476,000 and an operating loss of $71,000 in the comparable fiscal 1996
quarter.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported in a Current Report on Form 8-K filed with the
Commission on January 27, 1997, a complaint was filed on January 22, 1997 by
Hawley Opportunity Fund ("Hawley") against the Company and its directors in the
Court of Chancery of the State of Delaware seeking injunctive relief against the
Company's offer to purchase up to 15,000,000 shares of its common stock (the
"Offer"). The complaint alleges, among other things, that the Offer is unfair
and that the Offer documents fail to disclose material facts concerning pending
patent litigation to which a subsidiary of Envirodyne is the plaintiff and
concerning the Company's investment in oil and gas assets in Bolivia. The
complaint also alleges that the Offer was structured so that Malcolm I. Glazer's
percentage equity interest in the Company will increase and that the Company's
Board of Directors has wrongfully refused to make a recommendation as to whether
the Company's stockholders should tender shares in the Offer. The Company
believes that the Offer properly discloses all material information required to
be disclosed concerning the matters referred to in Hawley's complaint and that
Hawley's allegations as to unfairness of the Offer are unfounded. The Company
has filed an answer denying the substantive allegations of Hawley's complaint.
A hearing on Hawley's motion to enjoin consummation of the Offer is scheduled in
the Court of Chancery on February 18, 1997.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits indicated by an asterisk (*) are incorporated by reference.
3(a)* -- Restated Certificate of Incorporation of Zapata filed with
Secretary of State of Delaware on May 3, 1994 (Exhibit 3(a)
to Zapata's 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 November 11, 1996
(Exhibit 3(d) to Zapata's Annual Report on Form 10-K for
the fiscal year ended September 30, 1996 (File No.
1-4219)).
27 -- Financial Data Schedule
(b) Reports on Form 8-K:
None.
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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
(Registrant)
February 14, 1997 By: /s/ JOSEPH L. VON ROSENBERG III
------------------------------------------
(Joseph L. von Rosenberg III,
Executive Vice President, General Counsel
and Corporate Secretary)
February 14, 1997 By: /s/ ROBERT A. GARDINER
------------------------------------------
(Robert A. Gardiner,
Vice President and Chief Financial Officer)
14
15
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
3(a)* -- Restated Certificate of Incorporation of Zapata filed
with Secretary of State of Delaware on May 3, 1994
(Exhibit 3(a) to Zapata's 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 November 11,
1996 (Exhibit 3(d) to Zapata's Annual Report on Form
10-K for the fiscal year ended September 30, 1996
(File No. 1-4219)).
27 -- Financial Data Schedule
(b) Reports on Form 8-K:
None.
5
1,000
3-MOS
SEP-30-1997
OCT-01-1996
DEC-31-1996
102,267
0
8,345
0
29,332
142,951
80,171
37,435
229,156
37,599
19,929
7,387
0
3
146,867
229,156
25,983
25,983
20,132
22,785
777
0
876
3,099
1,155
1,944
0
0
0
1,944
0.07
0.07
