ZAPATA ENERGY INDUSTRIES
CONDENSED COMBINED BALANCE SHEETS
(unaudited, in thousands)
June 30, September 30,
1995 1994
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ASSETS
Current assets:
Cash $ 2,202 $ 1,678
Receivables 10,198 11,389
Inventories 24,173 17,629
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Total current assets 36,573 30,696
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Intangible and other assets 20,015 19,434
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Property and equipment, net 59,497 52,496
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Total assets $116,085 $102,626
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LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 27,228 $ 94
Accounts payable 3,558 2,745
Accrued liabilities 4,743 3,995
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Total current liabilities 35,529 6,834
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Long-term debt 763 15,106
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Deferred income taxes 1,651 1,422
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Due to parent 52,842 55,677
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Stockholder's equity:
Common stock ($1.00 par value) authorized,
issued and outstanding: 3,000 shares 3 3
Capital in excess of par value 20,787 20,787
Reinvested earnings 4,510 2,797
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25,300 23,587
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Total liabilities and stockholder's equity $116,085 $102,626
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The accompanying notes are an integral part of the financial statements.
ZAPATA ENERGY INDUSTRIES
CONDENSED COMBINED INCOME STATEMENTS
(unaudited, in thousands)
Nine Months Eight Months
Ended Ended
June 30, 1995 June 30, 1994
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Revenues $53,086 $49,874
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Expenses:
Operating expenses 40,221 36,480
Depreciation and amortization 4,322 3,600
Selling, general and administrative 3,742 4,952
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48,285 45,032
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Operating income 4,801 4,842
Interest expense, net (2,208) (2,549)
Other income 474 --
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Income before income taxes 3,067 2,293
Provision for income taxes 1,354 941
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Net income $ 1,713 $ 1,352
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The accompanying notes are an integral part of the financial statements.
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ZAPATA ENERGY INDUSTRIES
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Eight Months
Ended Ended
June 30, 1995 June 30, 1994
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Cash flow provided by operating activities:
Net income $ 1,713 $ 1,352
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Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 4,322 3,600
Changes in other assets and liabilities (3,973) (4,121)
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Total adjustments 349 (521)
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Net cash provided by operating activities 2,062 831
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Cash flow used by investing activities:
Capital expenditures (11,495) (4,995)
Business acqusitions, net of cash acquired -- (73,222)
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Net cash used by investing activities (11,495) (78,217)
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Cash flow provided (used) by financing activities:
Borrowings 12,864 --
Principal payments of long-term obligations (72) (98)
Proceeds from issuance of common stock
to Parent -- 20,790
Advances from (repayments to) Parent (2,835) 60,812
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Net cash provided by financing activities 9,957 81,504
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Net increase in cash and cash equivalents 524 4,118
Cash and cash equivalents at beginning of period 1,678 --
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Cash and cash equivalents at end of period $ 2,202 $ 4,118
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The accompanying notes are an integral part of the financial statements.
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ZAPATA ENERGY INDUSTRIES
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)
NOTE 1. ORGANIZATION
The combined financial statements of Zapata Energy Industries ("Zapata
Energy Industries" or the "Company") include Zapata Rentals, Inc., Zapata
Compression Investments, Inc. and Energy Industries, Inc., three wholly-owned
subsidiaries of Zapata Corporation ("Zapata"). Zapata Energy Industries is
engaged in the business of renting, fabricating, selling, and servicing
natural gas compressor packages used in the oil and gas industry.
NOTE 2. FINANCIAL STATEMENTS
The condensed combined financial statements included herein have been
prepared by Zapata Energy Industries, 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 the Company 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 audited combined
financial statements as of September 30, 1994 and the notes thereto.
NOTE 3. INTEREST EXPENSE
The Company's interest expense includes an allocation of interest
expense from Zapata totaling $1,243,000 for the nine months ended June 30,
1995 and $2,709,000 for the eight months ended June 30, 1994. Interest
expense of Zapata that was not directly attributable to or related to other
operations of Zapata was allocated to the Company based on net assets.
NOTE 4. INVENTORIES
The Company maintains inventories to support package fabrication in the
Corpus Christi, Texas headquarters, as well as repair and maintenance
operations in the branch offices. Inventories as of June 30, 1995 are
comprised of the following components (in thousands):
Major fabrication components $ 9,480
Parts to support fabrication 6,164
Parts to support field service 5,808
Used parts and equipment 2,680
Labor in process 41
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$24,173
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NOTE 5. SUBSEQUENT EVENT
On June 30, 1995, Zapata announced that it had entered into an
agreement to sell the assets of Zapata Energy Industries for $130 million to
Enterra Corporation. The agreement is subject to the signing of a definitive
agreement containing customary and reasonable representations and warranties
and indemnification provisions and certain government approvals.
As of June 30, 1995, the Company was not in compliance with certain
cash flow covenants related to its Texas Commerce Bank loan. As a result of
the covenant violation, the total balance outstanding of $26,800,000 at June
30, 1995 related to this loan is reflected as a current liability.
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