ZAPATA CORP - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

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
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ZAPATA CORPORATION
(Exact name of Registrant as specified in its charter)

NEVADA 74-1339132
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

100 MERIDIAN CENTRE, 14618
SUITE 350 (Zip Code)
ROCHESTER, NY
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(585) 242-2000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE.

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] or No [ ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of June 30, 2003 (the last business day of the registrant's
most recently completed second fiscal quarter) was approximately $61,866,000.
For the sole purpose of making this calculation, the term "non-affiliate" has
been interpreted to exclude directors, corporate officers and holders of 10% or
more of the Company's common stock. As of March 5, 2004, the Registrant had
outstanding 2,391,315 shares of common stock, $0.01 par value.

Documents Incorporated By Reference: Portions of the Registrant's
definitive Proxy Statement for its 2004 Annual Meeting of Stockholders, which
the Company plans to file with the Securities and Exchange Commission pursuant
to regulations 14A, on or prior to April 29, 2004, are incorporated by reference
in Part III (Items 10, 11, 12, 13 and 14) of this Form 10-K.

TABLE OF CONTENTS

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FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This document contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and includes this statement for purposes of such
safe harbor provisions. Forward-looking statements, which are based upon certain
assumptions and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words "believes," "expects,",
"intends," "anticipates," "plans," "seeks," "estimates," "projects" or similar
expressions. The ability of the Company to predict results or the actual effect
of future plans, strategies or expectations is inherently uncertain. Important
factors which may cause actual results to differ materially from the
forward-looking statements contained herein or in other public statements by the
Company, Safety Components International, Inc., Omega Protein Corporation and
Zap.Com Corporation are described under the caption "Part II -- Item
7 -- Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Significant Factors That Could Affect Future Performance and
Forward -- Looking Statements" appearing in this Report and other risks
identified from time to time in the Company's filings with the Securities and
Exchange Commission ("SEC"), press releases and other communications. The
Company assumes no obligation to update forward-looking statements or to update
the reasons actual results could differ from those projected in the
forward-looking statements.

PART I

ITEM 1. BUSINESS

GENERAL

Zapata Corporation ("Zapata" or "the Company") was incorporated in Delaware
in 1954 and was reincorporated in Nevada in April 1999. The Company's principal
executive offices are at 100 Meridian Centre, Suite 350, Rochester, New York
14618. Zapata's common stock is listed on the New York Stock Exchange ("NYSE")
and trades under the symbol "ZAP."

Zapata is a holding company which currently has two operating companies,
Safety Components International, Inc. ("Safety Components" or "Safety") and
Omega Protein Corporation ("Omega Protein" or "Omega"). As of December 31, 2003,
the Company had an 83% ownership interest in Safety Components and a 59%
ownership interest in Omega Protein. Safety Components trades on the over-the
counter electronic bulletin board ("OTCBB") under the symbol "SAFY" and Omega
Protein trades on the NYSE under the symbol "OME." In addition, Zapata owns 98%
of Zap.Com Corporation ("Zap.Com"), which is a public shell company and trades
on the OTCBB under the symbol "ZPCM." This report should be read in conjunction
with the registration statements, reports and other items that these
subsidiaries file with the Securities and Exchange Commission ("SEC").

The Company makes certain reports available free of charge on its website
at www.zapatacorp.com as soon as reasonably practicable after this information
is electronically filed, or furnished to, the United States Securities and
Exchange Commission. Information contained on the Company's website is not
incorporated by reference to this annual report on Form 10-K.

As used throughout this report, "Zapata Corporate" is defined as Zapata
Corporation exclusive of its majority owned subsidiaries Safety Components,
Omega Protein and Zap.Com.

ZAPATA CORPORATE

On September 23, 2003, Zapata purchased 2,663,905 shares of Safety
Components International, Inc. common stock for $30.9 million and purchased an
additional 1,498,489 shares of Safety common stock on October 7, 2003. These
additional shares were purchased for $16.9 million and increased the Company's
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ownership percentage of Safety's outstanding common stock to approximately 84%
at that time. The Company accounted for these transactions under the purchase
method and began consolidating amounts related to Safety's assets and
liabilities as of September 30, 2003. Due to the timing of the acquisition, the
Company began consolidating amounts related to Safety's results of operations in
the fourth quarter of 2003.

In November 2003, Zapata informed Safety Components that it would like to
have its nominees elected to a majority of the positions on the Safety
Components Board of Directors. In considering the request, Safety Components'
Board of Directors adjourned the previously scheduled 2004 annual stockholders
meeting. Ultimately, two Zapata nominees, Avram Glazer and Len DiSalvo, were
elected to the Safety Components' Board of Directors. In addition, Safety
Components' Board of Directors invited Zapata to submit a proposal to acquire
Safety's remaining public shares. Safety Components Board of Directors also
advised that it was prepared to elect additional Zapata nominees to a majority
of the Safety Components Board in connection with a transaction in which Zapata
acquired the remaining public shares.

On November 13, 2003, Zapata submitted to Safety Components Board of
Directors a non-binding preliminary indication of interest to acquire the
outstanding shares of Safety Components common stock it did not own at a price
of $11.49 per share. On March 18, 2004, Safety Components and Zapata
concurrently announced that a special committee of Safety Components' Board of
Directors, formed to evaluate the proposal, determined that it could not approve
or recommend the proposed transaction to Safety Components' remaining
shareholders. Following Zapata's further discussions with that special
committee, the parties mutually determined not to proceed with a transaction at
this time.

Upon acquiring more than 80% of the outstanding common stock of Safety
Components, Safety Components and its affiliated group of corporations became
members of Zapata's affiliated tax group. As a result, in the future Zapata will
file tax returns on a consolidated basis with such group. Zapata and Safety
Components have entered into a Tax Sharing and Indemnity Agreement to define
their respective rights and obligations relating to federal, state and other
taxes for taxable periods attributable to the filing of consolidated or combined
income tax returns as part of the Zapata affiliated tax group. Pursuant to the
Tax Sharing and Indemnity Agreement, Safety Components will be required to pay
Zapata its share of federal income taxes, if any. In addition, each party will
be required to reimburse the other party for its use of either party's tax
attributes. Similar provisions apply under the Tax Sharing and Indemnity
Agreement to other taxes, such as state and local income taxes.

Zapata continues to explore ways to enhance Zapata stockholder value
through its 59% owned consolidated subsidiary Omega Protein. Possible
transactions include the sale, merger or another significant strategic
transaction involving Omega, purchases of Omega stock through the open market or
private transactions.

In December 2002, the Board of Directors authorized the Company to purchase
up to 500,000 shares of its outstanding common stock in the open market or
privately negotiated transactions. The shares may be purchased from time to time
as determined by the Company. Any purchased shares would be placed in treasury
and may subsequently be reissued for general corporate purposes. The repurchases
will be made only at such times as are permissible under the federal securities
laws. No time limit has been placed on the duration of the program and no
minimum number or value of shares to be repurchased has been fixed. Zapata
reserves the right to discontinue the repurchase program at any time and there
can be no assurance that any repurchases will be made. As of the date of this
report, no shares have been repurchased under this program.

In addition, Zapata continues to evaluate strategic opportunities for the
use of its capital resources, including the acquisition of other operating
businesses, funding of start-up proposals and possible stock repurchases. The
Company has not focused and does not intend to focus its acquisition efforts
solely on any particular industry or geographical market. While the Company
focuses its attention in the United States, the Company may investigate
acquisition opportunities outside of the United States when management believes
that such opportunities might be attractive. Similarly, the Company does not yet
know the structure of any acquisition. The Company may pay consideration in the
form of cash, securities of the Company or a combination of both. The Company
may raise capital through the issuance of equity or debt and may utilize

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non-investment grade securities as a part of an acquisition strategy. Such
investments often involve a high degree of risk and must be considered highly
speculative.

As of the date of this report, Zapata is not a party to any agreements
related to the acquisition of an operating business, business combination or for
the sale or other transaction related to any of its subsidiaries. There can be
no assurance that any of these possible transactions will occur or that they
will ultimately be advantageous to Zapata or enhance Zapata stockholder value.

Employees. As of December 31, 2003, Zapata Corporate employed 7 employees
who performed management and administrative functions, including managing the
assets of the Company, providing oversight of its subsidiary operating
companies, evaluating potential acquisition candidates, fulfilling various
reporting requirements associated with being a publicly traded company and
various other accounting, tax and administrative matters.

SAFETY COMPONENTS

Due to the timing of Zapata's acquisition of Safety Components common
stock, the Company began consolidating amounts related to Safety's results of
operations in the fourth quarter of 2003. Disclosures in the following section
regarding periods prior to Zapata's acquisition of Safety's common stock are
included to provide additional information regarding Safety Components.

General. Safety Components was incorporated in Delaware in 1994. Safety is
a leading low-cost, independent supplier of automotive airbag fabric and
cushions and technical fabrics with operations in North America and Europe.
Safety sells airbag fabric domestically and cushions worldwide to the major
airbag module integrators that outsource such products. Safety believes that it
is also a leading manufacturer of value-added technical fabrics used in a
variety of niche industrial and commercial applications such as fire service
apparel, ballistics material for luggage, filtration and military tents. The
ability to interchange airbag and specialty technical fabrics using the same
equipment and similar manufacturing processes allows Safety to more effectively
utilize its manufacturing assets and lower per unit overhead costs.

Net sales of automotive airbag cushions, automotive fabrics and technical
fabrics products (the "automotive airbag and fabrics products" business) were
approximately $183.7 million, $244.3 million and $203.3 million in the nine
month period from March 30, 2003 to December 31, 2003, and the years ended March
29, 2003 and March 30, 2002, respectively.

Fiscal Year. Until December 31, 2003, Safety's operations were based on a
fifty-two or fifty-three week fiscal year ending on the Saturday closest to
March 31. On November 12, 2003, Safety's Audit Committee and Board of Directors
determined that it was in Safety's best interest to change Safety's fiscal year
end from the last Saturday in the month of March to December 31 of each year.

The Audit Committee also determined to notify Deloitte & Touche LLP that it
would not be retained to perform the audit of the financial statements of Safety
for the fiscal year ending March 27, 2004 or any transition period and
determined to engage the accounting firm of PricewaterhouseCoopers LLP as
independent auditors to audit Safety's financial statements for the fiscal
period ended December 31, 2003, Safety's new fiscal year end. The Board of
Directors of Safety ratified and approved such decision. As a result of the
foregoing, Safety's fiscal year end and independent accountants are the same as
those of Zapata.

At a meeting on January 26, 2004, Safety's Board of Directors appointed two
designees of Zapata, Avram Glazer and Leonard DiSalvo, as members of Safety's
Board of Directors.

The Woodville Acquisition. On November 2, 2001, Safety's U.K. subsidiary,
Automotive Safety Components International Limited ("ASCIL"), acquired the
airbag business (operated under the name of Woodville Airbag Engineering and
hereafter referred to as "Woodville") of TISPP UK Limited, a subsidiary of
Smiths Group PLC, to expand its European operations. In regards to Safety
Components, such acquisition contributed approximately $7.8 million in sales and
had a negative impact of approximately $1.1 million on

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gross profit and approximately $1.5 million on operating income for the period
from November 3, 2001 to March 30, 2002. The management and business activities
of the Woodville operation were consolidated into the ASCIL operation during the
first quarter of fiscal 2003. The manufacturing process and production assets
were transferred to other European operations of Safety primarily in lower labor
cost facilities and countries.

The 2001 Restructuring. On April 10, 2000 (the "Petition Date"), Safety
and certain of its U.S. subsidiaries (collectively, the "Safety Filing Group"),
filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code
("Chapter 11") with the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). On October 11, 2000 (the "Emergence Date"),
the Safety Filing Group emerged from Chapter 11 pursuant to the Plan of
Reorganization (the "Plan") confirmed by the Bankruptcy Court.

AUTOMOTIVE AIRBAG AND FABRICS PRODUCTS

Structure of the Automotive Airbag Industry. Airbag systems consist of
various airbag modules and an electronic control module, which are currently
integrated by automakers into their respective vehicles. Airbag modules
generally consist of inflators, cushions, housing and possibly trim covers and
are assembled by module integrators, most of whom produce a majority of the
components required for a complete module. As the industry has evolved, module
integrators have outsourced significant portions of non-proprietary components,
such as cushions, to those companies specializing in the production of
individual components. Safety believes that its module integrator customers will
continue to outsource a portion of their cushion requirements as they focus on
the development of proprietary technologies. A majority of the module
integrators purchase fabric from airbag fabric producers such as Safety.

Characteristic for the industry, Safety supplies airbag cushions to module
integrators, most of which also produce a portion of their cushion requirements
internally. As a result, Safety may compete with its customers who supply their
own internal cushion requirements. However, in most cases Safety's customers do
not produce the same cushions for the same car/truck models for which Safety
produces cushions.

Another characteristic of the airbag industry is the qualification process
for new suppliers. New suppliers that wish to produce and supply airbag cushions
or airbag fabric must undergo a rigorous qualification process, which can take
in excess of a year. Safety believes that the existence of this qualification
process can result in significant re-qualification costs for module integrators
that are required to assist the new supplier in meeting automakers'
requirements. Additionally, Safety believes module integrators are, like their
automaker customers, trying to reduce overall industry costs by limiting the
number of suppliers.

Products. Safety's automotive products include passenger, driver and side
(thorax) impact airbag cushions, side protection curtains and knee protection
cushions manufactured for installation in over 200 car and truck models sold
worldwide and airbag fabric for sale to airbag manufacturers. Sales of airbag
related products (inclusive of sales of airbag fabric) accounted for
approximately 90% of Safety's consolidated net sales in the nine month period
from March 30, 2003 to December 31, 2003. Sales of airbag related products
(inclusive of sales of airbag fabric) accounted for approximately 91% and 89% of
Safety's consolidated net sales in the fiscal years ended March 29, 2003 and
March 30, 2002, respectively.

Safety also manufactures a wide array of specialty technical fabrics for
consumer and industrial uses. These fabrics include: (i) protective apparel worn
by firefighters; (ii) filtration fabrics used in the aluminum, coal, steel,
cement, clay and brewing industries; (iii) woven fabrics for use by
manufacturers of coated products; (iv) specialty fabrics used in fuel cells,
bomb and cargo chutes, oil containment booms and gas diaphragms; (v) release
liners used in tire manufacturing; and (vi) protective high-end luggage fabrics,
including "ballistics" fabric used in Hartman and Tumi brands of luggage. Sales
of technical related products accounted for approximately 10% of Safety's
consolidated net sales in the nine month period from March 30, 2003 to December
31, 2003. Sales of technical related products accounted for approximately 9% and
10% of Safety's consolidated net sales in the fiscal years ended March 29, 2003
and March 30, 2002, respectively. The market for Safety's technical related
products is highly segmented by product line. Marketing and sales of Safety's
technical related products is conducted by Safety's marketing and sales staff
based in Greenville, South Carolina. Manufacturing of these products occurs at
the South Carolina facility, using much of the
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same equipment and manufacturing processes that Safety uses to produce airbag
fabric, enabling Safety to take advantage of demand requirements for the various
products by leveraging its expenditures on production retooling costs. By
manufacturing technical products with much of the same machines that weave
airbag fabric, Safety is able to more effectively utilize capacity at its South
Carolina plant and lower per unit overhead costs.

Safety attributes its revenues from external customers based on the
location of its sale. Summarized financial information by product type is as
follows:

Customers. Safety sells its airbag cushions to airbag module integrators
in North America and Europe for inclusion in specified model cars, generally
pursuant to contract requirements. Certain of these customers also manufacture
airbag cushions to be used in their production of airbag modules. Safety markets
and sells airbag cushions through its direct marketing and sales forces based in
South Carolina, California, Mexico, the United Kingdom and Germany.

Safety sells its fabric in North America either directly to a module
integrator or, in some cases, to a fabricator (such as Safety's own operations),
which sells a sewn airbag to the module integrator. In some cases, particularly
when the cushion requires lower air permeability to facilitate more rapid or
prolonged inflation, and to eliminate particulate burn-through caused by hot
inflators, the fabric must be coated before fabrication into airbags. Safety
also sells fabric to coating companies, which then resell the coated fabric to
either an airbag fabricator or module integrator. Sales are either made against
purchase orders, pursuant to releases on open purchase orders, or pursuant to
short-term supply contracts generally having durations of up to twelve months.

Safety has three significant customers -- Autoliv, Takata-Petri and TRW,
listed in alphabetical order -- with which it has contractual relationships.
Safety supplies airbag cushions and/or airbag fabric to each of these customers
based upon releases from formal purchase orders, which typically cover periods
of up to twelve months and are subject to periodic negotiation with respect to
price and quantity. The loss of any of these customers could have a material
adverse effect on Safety.

Suppliers. Safety's principal customers generally require that they
approve all suppliers of major airbag components or airbag fabric raw materials,
as the case may be. These suppliers are approved after undergoing a rigorous
qualification process on their products and manufacturing capabilities. In many
cases, only one approved source of supply exists for certain airbag components.
In the event that a sole source supplier experiences prolonged delays in product
shipments or no longer qualifies as a supplier, Safety would work together with
its customers to identify another qualified source of supply. Although
alternative sources of supply generally exist, a prolonged delay in the approval
by Safety's customers of any such alternative sources of supply could adversely
affect Safety's operating results.

The raw materials for Safety's fabric operations largely consist of
synthetic yarns provided by DuPont, Acordis, Unifi and KoSa, among others. The
primary yarns include nylon, polyester and Nomex. DuPont and

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Acordis are the leading suppliers of airbag fabric yarn to both the market and
Safety. DuPont supplies a majority of the nylon yarn used in Safety's airbag
fabric operations pursuant to purchase orders or releases on open purchase
orders. The loss of DuPont as a supplier could have a material adverse effect on
Safety.

In addition, in connection with its European operations, Safety has entered
into an agreement with a German industrial sewing company and its Romanian
subsidiary under which the Romanian subsidiary serves as a manufacturing
subcontractor for airbag cushions. Under the terms of this agreement, Safety
provides and retains control of the manufacturing equipment, processes and
production materials and the subcontractor provides sewing services for a price
per standard minute of acceptable units basis.

Significant problems with, or the loss of, any key supplier or
subcontractor (see also "Risks Resulting from Foreign Operations" below for
further information) may adversely affect Safety's operating results and ability
to meet customer contracts.

Capacity. Safety manufactured and shipped over 18.4 million airbag
cushions to Safety's North American and European customers during the nine month
period from March 30, 2003 to December 31, 2003. Safety believes it has adequate
capacity to manufacture for the anticipated customer requirements of 2004.

Safety's South Carolina facility produced approximately 16.2 million yards
of fabric in the nine month period from March 30, 2003 to December 31, 2003.
Safety believes it has adequate capacity to manufacture for the anticipated
customer requirements of fiscal 2004. Safety utilizes weaving machines that are
versatile in their ability to produce a broad array of air restraint and
specialty technical fabrics for use in a large number of applications. The
ability to interchange the machines between air restraint fabric and other
specialty technical fabrics allows Safety to leverage its utilization of plant
assets.

Competition. Safety competes with several independent suppliers of airbag
cushions in the United States and Europe for sales to airbag module integrators.
Safety also competes with plants owned by its airbag module integrator
customers, which produce a substantial portion of airbag cushions for their own
consumption, although they do not generally manufacture the same airbag cushions
for the same vehicle models that Safety manufactures. Most airbag module
integrators subcontract a portion of their requirements for airbag cushions.
Safety believes that it has good working relationships with its customers due to
its high volume and low-cost manufacturing capabilities and consistency of
quality products and service.

Safety shares the North American airbag fabric market primarily with
Milliken, Takata-Highland, Mastex, Breed and Autoliv. Takata-Highland, Breed and
Autoliv, all airbag module integrators, produce fabric for use in their own
airbag cushions.

The automotive airbag cushion, airbag fabric and airbag module markets are
highly competitive. Some of Safety's current and potential competitors have
greater financial and other resources than Safety. Safety competes primarily on
the basis of its price, product quality, reliability, and capability to produce
a wide range of models of passenger, driver and side impact airbag cushions. In
addition, Safety's weaving plant in South Carolina has provided it with some
measure of vertical integration, enhancing its ability to compete in the
automotive airbag industry. Increased competition, as well as price reductions
of airbag systems, would adversely affect Safety's revenues and profitability.

Technical Centers. Safety has technical centers in Greenville, South
Carolina, Ensenada, Mexico and Hildesheim, Germany. The center in Hildesheim,
Germany has the ability to conduct static and dynamic deployment testing and
analysis using high-speed video equipment and includes pendulum-testing
capability, a sample shop with manual and CNC sewing equipment, a
production-style laser cutter, volumetric measurement and analysis equipment,
textile welding and other non-sewn fastening equipment. The center also has a
materials laboratory, and can access the services of laboratory and textile
personnel at Safety's facility in Greenville, South Carolina. In North America,
the module integrators customarily perform the majority of advanced cushion
testing; therefore, Safety has not seen a need for an advanced technical center
for cushions in North America. However, all necessary validation testing and
process development testing is performed in Ensenada, Mexico. The Ensenada,
Mexico technical center consists of a testing laboratory and a dedicated
prototype cell, complete with a separate staff and equipment.

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Through its textile laboratory located in Greenville, South Carolina,
Safety has the ability to test and analyze a wide range of fabrics (airbag or
other) under internationally accepted testing standards, including US-ASTM,
Europe-DIN and ISO, Asian-JIS and Underwriters NFPA. The laboratory is A2LA and
QS 9000 certified, the most important certifications for the industry. All
validation testing and analytical testing of fabric is performed at this
laboratory. Additionally, the Greenville facility has prototype-manufacturing
capabilities.

Qualification and Quality Control. Safety's customers require Safety to
meet specific requirements for design validation. Safety and its customers
jointly participate in design and process validations and customers must be
satisfied with the reliability and performance prior to awarding a purchase
order. All standards and requirements relating to product performance are
required to be satisfied before Safety is qualified as a supplier by its
customers.

Safety maintains extensive quality control and quality assurance systems in
its North American and European automotive facilities, including inspection and
testing of all products, and is QS 9000 and ISO 9001 or ISO 9002 certified.
Safety is currently in the process of certification for TS16949 in its various
locations. The Greenville facility has completed TS16949 certification and all
other locations are expected to be certified by December 2004. Safety also
performs process capability studies and design of experiments to determine that
the manufacturing processes meet or exceed the quality levels required by each
customer.

The fabric operation's laboratories have ISO 17025, ASTM, DIN, JIS and
A2LA, as well as UL, accreditation. Safety's fabric operation is also certified
under the environmental and energy quality program ISO 14001. Safety was the
first airbag fabric manufacturer to have its entire business (not just its
manufacturing facility) certified under QS 9000.

Governmental Regulations. Airbag systems installed in automobiles sold in
the United States must comply with certain government regulations, including
Federal Motor Vehicle Safety Standard 208, promulgated by the United States
Department of Transportation. Safety's customers are required to self-certify
that airbag systems installed in vehicles sold in the United States satisfy
these requirements. Safety's operations are subject to various environmental,
employee safety and wage and transportation related statutes and regulations.
Safety believes that it is in substantial compliance with existing laws and
regulations and has obtained or applied for the necessary permits to conduct its
business operations.

Product Liability. Safety is engaged in a business that could expose it to
possible claims for injury resulting from the failure of products sold by it. In
the past, there has been increased public attention to injuries and deaths of
children and small adults due to the force of the inflation of airbags. To date,
however, Safety has not been named as a defendant in any automotive product
liability lawsuit, nor been threatened with any such lawsuit. Safety maintains
product liability insurance coverage, which management believes to be adequate.
However, a successful claim brought against Safety resulting in a product recall
program or a final judgment in excess of its insurance coverage could have a
material adverse effect on Safety.

Seasonality. Safety's airbag cushions and airbag fabric business is
subject to the seasonal characteristics of the automotive industry, in which,
generally, there are seasonal plant shutdowns in the third and fourth quarters
of each calendar year.

Backlog. Safety does not reflect an order for airbag cushions or airbag
fabric in backlog until it has received a purchase order and a material
procurement release that specifies the quantity ordered and specific delivery
dates. Generally, these orders are shipped within two to eight weeks of receipt
of the purchase order and material release. As a result, Safety does not believe
its backlog is a reliable measure of future airbag sales.

Risks Resulting from Foreign Operations. Certain of Safety's consolidated
net sales are generated outside the United States. Foreign operations and
exports to foreign markets are subject to a number of special risks including,
but not limited to, risks with respect to fluctuations in currency exchange
rates, economic and political destabilization and other disruption of markets,
restrictive actions by foreign governments (such as restrictions on transfer of
funds, export duties and quotas, foreign customs and tariffs and unexpected
changes in regulatory environments), changes in foreign laws regarding trade and
investment, difficulty in obtaining
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distribution and support, nationalization, the laws and policies of the United
States affecting trade, foreign investment and loans and foreign tax laws. There
can be no assurance that one or a combination of these factors will not have a
material adverse effect on Safety's ability to increase or maintain its foreign
sales or on its future results of operations.

In addition, Safety has a significant portion of its manufacturing
operations in foreign countries and purchases a portion of its raw materials
from foreign suppliers. The production costs, profit margins and competitive
position of Safety are affected by the strength of the currencies in countries
where it manufactures or purchases goods relative to the strength of the
currencies in countries where its products are sold.

Certain of Safety's operations generate net sales and incur expenses in
foreign currencies. Safety's financial results from international operations may
be affected by fluctuations in currency exchange rates. Future fluctuations in
certain currency exchange rates could adversely affect Safety's financial
results. Safety monitors its risk associated with the volatility of certain
foreign currencies against its functional currency, the U.S. dollar. The impact
of changes in the relationship of other currencies to the U.S. dollar in the
nine month period from March 30, 2003 to December 31, 2003 has resulted in the
recognition of other income of approximately $2.0 million. However, it is
unknown what the effect of foreign currency rate fluctuations will have on
Safety's financial position or results of operations in the future. In certain
situations, Safety utilizes derivative financial instruments designated as cash
flow hedges to reduce exposures to volatility of foreign currencies impacting
the operation of its business. See Note 24 to the Consolidated Financial
Statements included in Item 8 of this report for information regarding
derivatives and hedging.

See "Products" above for additional financial information regarding
Safety's revenues by geographic area. (For a consolidated table of geographical
distribution of revenues, see Note 25 to the Company's Consolidated Financial
Statements included in Item 8 of this report.)

Patents. Safety holds twenty-four patents and approval for nine additional
patents are pending. All patents relate to technical improvements for
enhancement of product performance with respect to Safety's airbag, fabric and
technical related products. Provided that all requisite maintenance fees are
paid, the patents held by Safety will expire between the years 2014 and 2020.

Engineering, Research & Development. Safety's fabric and airbag cushions
operations have maintained an active design and development effort focused
toward new and enhanced products and manufacturing processes. Safety designs and
engineers its fabrics to meet its customers' specific applications and needs.
While the component manufacturer originates most design requirements, Safety is
dedicated to improving the quality of existing products, as well as developing
new products for all applications. Costs associated with design and development
for fabric and airbag cushions were approximately $1.2 million, $1.2 million and
$899,000 in the nine month period from March 30, 2003 to December 31, 2003 and
the years ended March 29, 2003 and March 30, 2002, respectively.

Employees. At December 31, 2003, Safety employed approximately 2,800
employees. Safety's hourly employees in Mexico are entitled to a federally
regulated minimum wage, which is adjusted annually. Safety's employees at its
Mexican facility are unionized. In addition, Automotive Safety Components
International GmbH & Co. KG, Safety's wholly owned German subsidiary, has a
workers' council pursuant to German statutory labor law. Safety has not
experienced any work stoppages related to its work force and considers its
relations with its employees and all unions currently representing its employees
to be good.

OMEGA PROTEIN

General. Omega Protein is the largest processor, marketer and distributor
of fish meal and fish oil products in the United States. Omega produces and
sells a variety of protein and oil products derived from menhaden, a species of
wild herring-like fish found along the Gulf of Mexico and Atlantic coasts. The
fish is not genetically modified or genetically enhanced. Omega processes
several grades of fish meal (regular or "FAQ" meal and specialty meals), as well
as fish oil and fish solubles. Omega's fish meal products are primarily used as
a protein ingredient in animal feed for swine, cattle, aquaculture and household
pets. Fish oil is utilized for animal and aquaculture feeds, industrial
applications, and additives to human food products.

9

Omega's fish solubles are sold primarily to livestock feed manufacturers,
aquaculture feed manufacturers and for use as an organic fertilizer. See
"-- Products -- Fish Meal" and "Fish Oil."

All of Omega's products contain healthy long-chain Omega-3 fatty acids.
Omega-3 fatty acids are commonly referred to as "essential fatty acids" because
the human body does not produce them. Instead, essential fatty acids must be
obtained from outside sources, such as food or special supplements. Long-chain
Omega-3's are also commonly referred to as a "good fat" for their health
benefits, as opposed to the "bad fats" that create or aggravate health
conditions through long-term consumption. Scientific research suggest that
long-chain Omega-3's as part of a balanced diet may provide significant benefits
for health issues such as cardiovascular disease, inflammatory conditions and
other ailments.

Under its patented production process, Omega Protein produces
OmegaPure(TM), a taste-free, odorless refined fish oil that is the only marine
source of long-chain Omega-3's directly affirmed by the U.S. Food and Drug
Administration ("FDA") as a food ingredient which is Generally Recognized as
Safe ("GRAS"). See "-- Products -- Refined Fish Oil -- Food Grade Oils."

Omega Protein operates four menhaden processing plants: two in Louisiana,
one in Mississippi and one in Virginia, as well as a fish oil processing
facility also located in Virginia. The four plants have an aggregate annual
processing capacity as of December 31, 2003 of 950,000 tons of fish. Omega is
also currently constructing a new 100-metric ton per day fish oil processing
facility in Reedville, Virginia that is expected to be completed in mid-2004 and
will replace its existing oil processing facility. See "-- Company Overview --
Meal and Oil Processing Plants" and "Food Grade Oil Processing Plant."

Omega Protein operates through three material subsidiaries: Omega Protein,
Inc., Omega Shipyard, Inc. and Omega Protein Mexico, S. de R.L. de C.V. ("Omega
Mexico"). Omega Protein, Inc. is Omega's principal operating subsidiary for its
menhaden processing business and is the successor to a business conducted since
1913. Omega Shipyard, Inc. owns a drydock facility in Moss Point, Mississippi,
which is used to provide shoreside maintenance for Omega's fishing fleet and,
subject to outside demand and excess capacity, third-party vessels. Revenues
from shipyard work for third-party vessels in 2003 were not material. Omega
Mexico is a new subsidiary formed in 2002 for Omega's meal and oil sales and
purchases in Mexico. Omega also has a number of other immaterial direct and
indirect subsidiaries. Three former subsidiaries, Protein Operating Company,
Protein USA Company and Protein Securities Company, were merged into Omega
Protein, Inc. in 2003.

Until April 1998, Omega Protein, including its predecessors, was a
wholly-owned subsidiary of Zapata. In April 1998, Omega completed an initial
public offering of its common stock. Zapata currently owns 59% of Omega's
outstanding common stock.

Geographic Information. Omega Protein operates within one industry
segment, menhaden fishing, for the production and sale of fish meal, fish
solubles and fish oil. Export sales of fish oil and fish meal were approximately
$46.0 million, $44.0 million and $35.7 million in 2003, 2002 and 2001,
respectively. Such sales were made primarily to European and Asian markets. In
2003, 2002 and 2001, sales to one customer were approximately $10.8 million,
$10.5 million and $7.9 million, respectively. This customer differed from year
to year.

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The following table shows the geographical distribution of Omega Protein's
revenues (in thousands) based on location of customers. (For a consolidated
table of geographical distribution of revenues, see Note 25 to the Company's
Consolidated Financial Statements included in Item 8 of this report.)

Fishing. During 2003, Omega Protein owned a fleet of 66 fishing vessels
and 31 spotter aircraft for use in its fishing operations and also leased
additional aircraft where necessary to facilitate operations. During the 2003
fishing season in the Gulf of Mexico, which runs from mid-April through October,
Omega operated 30 fishing vessels and 27 spotter aircraft. The fishing area in
the Gulf is generally located along the Gulf Coast, with a concentration off the
Louisiana and Mississippi coasts. The fishing season along the Atlantic coast
begins in early May and usually extends into December. Omega operated 10 fishing
vessels and 7 spotter aircraft along the Mid-Atlantic coast, concentrated
primarily in and around Virginia and North Carolina. The remaining fleet of
fishing vessels and spotter aircraft are not routinely operated during the
fishing season and are back-up to the active fleet, used for other
transportation purposes or may be in the process of refurbishment in Omega's
shipyard. Subsequent to the 1999 fishing season, Omega Protein embarked on a
program of cost-cutting measures which included, among other items, utilization
of carry vessels and a reduction in the number of fishing vessels and spotter
planes deployed. Since 1999, the deployment of fishing vessels and spotter
planes has been reduced by 13 vessels and 8 planes.

Menhaden usually school in large, tight clusters and are commonly found in
warm, shallow waters. Spotter aircraft locate the schools and direct the fishing
vessels to them. The principal fishing vessels transport two 40-foot purse
boats, each carrying several fishermen and one end of a 1,500-foot net. The
purse boats encircle the school and capture the fish in the net. The fish are
then pumped from the net into refrigerated holds of the fishing vessel or onto a
carry vessel, and then are unloaded at Omega's processing plants.

Meal and Oil Processing Plants. During 2003, Omega operated four
processing plants, two in Louisiana, one in Mississippi and one in Virginia,
where the menhaden are processed into three general products types: fish meal,
fish oil and fish solubles. As of December 31, 2003, Omega's four active
processing plants had an aggregate annual capacity to process approximately
950,000 tons of fish. Omega's processing plants are located in coastal areas
near Omega's fishing fleet. Annual volume processed varies depending upon
menhaden catch and demand. Each plant maintains a dedicated dock to unload fish,
fish processing equipment and storage capacity.

The fish are unloaded from the fishing vessels into storage boxes and then
conveyed into steam cookers. The fish are then passed through presses to remove
most of the oil and water. The solid portions of the fish are dried and ground
into fish meal. The liquid that is produced in the cooking and pressing
operations contains oil, water, dissolved protein and some fish solids. This
liquid is decanted to remove the solids and is put through a centrifugal oil and
water separation process. The separated fish oil is a finished product called
crude oil. The separated water and protein mixture is further processed through
evaporators to recover the soluble protein, which can be sold as a finished
product or added to the solid portions of the fish for processing into fish
meal.

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Food-Grade Oil Processing Plant. In April 2003, Omega Protein commenced
building a new 100-metric ton per day fish oil processing facility at its
Reedville, Virginia plant. The project is expected to be completed by mid-2004.
The food-grade facility will include state-of-the-art processing equipment and
controls that will allow Omega to refine, bleach, winterize and deodorize its
menhaden fish oil and results in refined oil and will more than triple its
existing refined fish oil production capacity. The new facility will provide
Omega with automated packaging and refrigerated on-site storage capacity. The
new complex also will have a new fully equipped lipids laboratory which will
enhance the development of Omega-3 oils and food products. Overall, Omega
expects to invest approximately $16 million in the new facility. Omega's
existing oil processing facility in Reedville will continue in operation until
the new facility is operational.

Products. Omega Protein sells three general types of products: fish meal,
fish oil and fish solubles.

Fish Meal. Fish meal, the principal product made from menhaden, is sold
primarily as a high-protein feed ingredient. It is used as a protein supplement
in feed formulated for pigs and other livestock, aquaculture and household pets.
Each use requires certain standards to be met regarding quality and protein
content, which are determined by the freshness of the fish and by processing
conditions such as speed and temperatures. Omega produces fish meal of several
different types:

Special Select(TM). Special Select(TM) is a premium grade low
temperature processed fish meal. The quality control guidelines are very
stringent, producing a higher protein level and higher digestibility and a
lower total volatile nitrogen ("TVN") and histamine count. These guidelines
require that only the freshest fish and the most gentle drying process be
used. Special Select(TM) is targeted for monogastrics, including baby pigs,
turkey poults, mink, shrimp and trout.

SeaLac(TM). SeaLac(TM) is similar to Special Select(TM) in its
freshness (low TVN) and gentle drying (high digestibility). During the
processing however, Omega Protein removes most of the soluble protein. This
step allows the amount of rumen undegradable protein to be maximized while
still maintaining excellent digestibility. This product is made
specifically for dairy and beef cattle, sheep, goats and other ruminants
requiring bypass protein.

FAQ Meal. FAQ (Fair Average Quality) Meal, Omega's commodity grade
fish meal, guarantees a protein content of at least 60%. This product
typically is used in protein blends for poultry, catfish, pets and other
animals.

Fish Oil. Omega Protein produces crude unrefined fish oil, refined fish
oil and food grade oils.

Unrefined Fish Oil. Unrefined fish oil (also referred to as crude
fish oil) is Omega's basic fish oil product. This grade of fish oil has not
undergone any portion of the refining process. Omega Protein's markets for
crude fish oil have changed over the past decade. In the early 1990's,
Omega's main crude fish oil market, which accounted for greater than 90% of
Omega's production, was utilized by manufacturers of hydrogenated oils for
human consumption such as margarine and shortening. In 2003, Omega
estimates that approximately 60% of its crude fish oil was sold as a feed
ingredient to the aquaculture industry. The growth of the worldwide
aquaculture industry has resulted in increasing demand for fish oils in
order to improve feed efficiency, survivability and health of farm-raised
fish species.

Refined Fish Oil. Omega Protein's refined fish oils come in three
basic grades and also includes crude fish oils of special quality or that
may require custom packaging or special additives.

Feed Grade Oils. Feed grade menhaden oil is processed and refined to
offer a high Omega-3 oil for use in premium pet, aquaculture and livestock
feeds, as well as agricultural and attractant applications. The processing
reduces oxidation while enhancing stable Omega-3 fatty acids for
incorporation in the final feed to enhance skin and coat conditioning,
reproductive performance, and increasing immunity. Both kosher and organic
products are available.

SeaCide(TM). One new product that Omega has developed from refined
fish oil is SeaCide(TM) . SeaCide(TM) is a unique blend of refined menhaden
oil, cottonseed oil and an organic emulsifier developed for use against
target pests and diseases that occur in a variety of field crops, orchards,
vineyards and
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greenhouse operations. SeaCide(TM) is an all natural organic alternative to
chemical insecticides and fungicides, is less phytotoxic than petroleum
based oils, is compatible with most fertilizers, and is versatile enough
for use on virtually any crop.

Food Grade Oils. Omega Protein has developed a patented process to
fully refine menhaden oil to remove flavor, odor, and pro-oxidants and
offer a naturally high long-chain Omega-3 content. Omega's main product in
this grade is OmegaPure(TM). Food applications for OmegaPure(TM) are
designed to deliver a stable, odorless, flavorless source of Omega-3 fatty
acids to enhance human nutrition. These applications include mainstream
consumer foods, medical care foods and dietary supplements. OmegaPure(TM)
also is kosher-certified and organic.

Omega-3 fatty acids exist in two forms: long-chain and short-chain.
Short-chain Omega-3's (or alpha-linolenic acid ("ALA")), are generally found in
canola oil, soy beans and flaxseed, and generally require five to ten times as
much concentration to approach the same benefit levels as long-chain Omega-3's.
Long-chain Omega-3 fatty acids are generally found in marine sources and consist
of two main types: eicosapentaenoic acid ("EPA") and docosahexaenic acid
("DHA"). EPA is a fatty acid that generally reduces inflammatory responses and
has been linked to the alleviation of symptoms from asthma, arthritis, psoriasis
and other inflammatory conditions. DHA is a major structural fatty acid in the
brain and the eye's retina. DHA is important for proper brain and eye
development in infants and has been shown to support cardiovascular health in
adults.

Various scientific studies have linked consumption of Omega-3 fatty acids
to a number of nutritional and health benefits, such as heart health, treatment
of arthritis and other inflammatory diseases, improving brain and eye function
and treatment of depression. For example, in November 2002, the American Heart
Association ("AHA") issued a Scientific Statement entitled "Fish Consumption,
Fish Oil, Omega-3 Fatty Acids, and Cardiovascular Disease." The Scientific
Statement outlines the findings of a comprehensive report that examined the
cardiovascular health benefit of Omega-3 fatty acids from fish sources,
specifically DHA and EPA. The report concluded that consumption of such Omega-3
fatty acids, either through diet or supplements, reduces the incidence of
cardiovascular disease. The statement refers to studies that have indicated the
following to be associated with the intake of Omega-3 fatty acids: decreased
risk of sudden death and arrhythmia, decreased thrombosis (blood clot),
decreased triglyceride levels, decreased growth of atherosclerotic plaque,
improved arterial health and lower blood pressure. The Scientific Statement
concludes that Omega-3 fatty acids have been shown in epidemiological and
clinical trials to reduce the incidence of heart disease.

Menhaden oil currently is the only marine source of long-chain Omega-3's
directly affirmed by the FDA as a Generally Recognized As Safe (or "GRAS") food
ingredient for direct human consumption. The FDA has approved menhaden oil use
in 17 different food categories such as margarine, salad dressings, condiments,
yogurt, ice cream, cheese, prepared meats, sauces, soups, crackers, cookies,
cereals and bakery products. In February 2002, the FDA posted for public comment
a proposed regulation that would add additional food categories to the list
already approved for the inclusion of rich menhaden oil. In January 2004, the
FDA published a tentative final rule for public comment which would increase to
30 the number of food categories approved for inclusion of menhaden oil, subject
to the condition that menhaden oil is not used in combination with other oils
that are a significant source of EPA and DHA.

Several additional developments have occurred over the last year that Omega
believes could also benefit its sales efforts for OmegaPure(TM).

- In May 2003, the White House Office of Management and Budget requested
that the U.S. Department of Agriculture ("USDA") and the Department of
Health and Human Services further incorporate the large body of recent
public health evidence linking food consumption patterns to health and
disease as the USDA's Dietary Guidelines for Americans is revised for its
scheduled 2005 release and to update the USDA's Food Guide Pyramid, which
was introduced in 1992. The letter stated that "Both epidemiologic and
clinical studies find that an increase in consumption of Omega-3 fatty
acids results in reduced deaths due to Coronary Heart Disease ("CHD").
The recent revision of the American Heart Association's (AHA's) dietary
guidelines recognizes this evidence by recommending consuming
13

fish, which is high in Omega-3 fatty acids, at least twice weekly to
reduce the risk of CHD. In addition, the AHA recommends the inclusion of
oils and other food sources high in Omega-3 fatty acids."

- In July 2003, a U.S. Senate committee report stated that "learning
disabilities and behavioral disorders have been linked to low serum
levels of Omega-3 fatty acids. Therefore, particular attention should be
paid to developing food choices that are high in Omega-3 fatty acids."

- Omega was successful in working with a large supplier of school meals to
make available OmegaPure(TM) fortified foods in 38 school districts in
south Texas starting in February 2004. Omega hopes to expand the
availability of these and additional OmegaPure(TM) fortified products
into other school systems in other states.

Industrial Grade Oils. Industrial grade menhaden oil is refined and
processed to enhance the unique fatty acid range, making it desirable for a
number of drying and lubricating applications including coolant transfer,
chemical raw material, drying and rustproofing paints, drilling fluids and
leather treatment chemicals.

Fish Solubles. Fish solubles are a liquid protein product used as an
additive in fish meal and are also marketed as an independent product to animal
feed formulators and the fertilizer industry. Omega's soluble-based products
are:

Neptune(TM) Fish Concentrate. This aqua grade liquid protein is
composed of low molecular weight, water-soluble compounds such as free
amino acids, peptides and nucleotides that are attractants for a variety of
aquaculture feeds. The product is utilized in both shrimp and finfish diets
to improve attractability and thus consumption and conversion. Neptune(TM)
Fish Concentrate also can be added directly to grow-out ponds as a
fertilizer to help feed plankton and other natural food sources.

OmegaGrow(TM). OmegaGrow(TM) is a liquid soil or foliar-applied
fertilizer for plant nutrition. OmegaGrow(TM) is approved for organic uses
by the Organic Materials Review Institute ("OMRI"). OmegaGrow(TM) is a
free-flowing product that has been filtered through an 80-mesh screen and
can be applied by sprayers or through irrigation systems.

OmegaGrow Plus(TM). OmegaGrow Plus(TM) is a liquid foliar-applied
fertilizer for plant nutrition that also helps to control insect and fungus
problems. This product has additional oil content of 25% to 30% which is
greater than the 7% to 10% oil content typically found in OmegaGrow(TM).
These higher levels are detrimental to soft-bodied insects, as well as
fungal diseases in citrus and vegetable crops. OmegaGrow Plus(TM) can be
used as a replacement for petroleum-based oil sprays.

Distribution System. Omega Protein's distribution system of warehouses,
tank storage facilities, vessel loading facilities, trucks, barges and railcars
allows Omega to service customers throughout the United States and also foreign
locations. Omega owns and leases warehouses and tank storage space for storage
of its products, generally at terminals along the Mississippi River and
Tennessee River. See "-- Properties." Omega generally contracts with third-party
trucking, vessel, barge and railcar companies to transport its products to and
from warehouses and tank storage facilities and directly to its customers.

Historically, approximately 35% to 40% of Omega's FAQ grade fish meal was
sold on a two-to-twelve-month forward contract basis. The balance of FAQ grade
fish meal and other products was substantially sold on a spot basis through
purchase orders. In 2002, Omega Protein began a similar forward sales program
for its specialty grade meals and crude fish oil due to increasing demand for
these products. During 2003, approximately 50% of its specialty meals and crude
fish oil had been sold on a forward contract basis. Omega's annual revenues are
highly dependent on both annual fish catch and inventories and, in addition,
inventory is generally carried over from one year to the next year. Omega
determines the level of inventory to be carried over based on prevailing market
prices of the products, and sales volumes that will fluctuate from quarter to
quarter and year to year. Omega's fish meal products have a useable life of
approximately one year from date of production; however, Omega Protein typically
attempts to empty its warehouses of the previous season's meal products by the
second or third month of the new fishing season. Omega's crude fish oil products
do not lose efficacy unless exposed to oxygen and, therefore, their storage life
typically is longer than that of fish meal.

14

Customers and Marketing. Most of Omega Protein's marine protein products
are sold directly to about 400 customers by Omega's marketing department, while
a smaller amount is sold through independent sales agents. Product inventory was
$30.2 million as of December 31, 2003 versus $32.0 million on December 31, 2002.

Omega's fish meal is sold primarily to domestic feed producers for
utilization as a high-protein ingredient for the swine, aquaculture, dairy and
pet food industries. Fish oil sales primarily involve export markets where the
fish oil is used for aquaculture feeds and is refined for use as a hydrogenated
edible oil.

Omega Protein's products are sold both in the U.S. and internationally.
International sales consist mainly of fish oil sales to Norway, Canada, China,
Chile and Mexico. Omega's sales in these foreign markets are denominated in U.S.
dollars and not directly affected by currency fluctuations. Such sales could be
adversely affected by changes in demand resulting from fluctuations in currency
exchange rates.

A number of countries in which Omega currently sells products impose
various tariffs and duties, none of which have a significant impact on Omega's
foreign sales. Certain of these duties are being reduced annually for certain
countries under the North American Free Trade Agreement and the Uruguay Round
Agreement of the General Agreement on Tariffs and Trade. In all cases, Omega's
products are shipped to its customers either by FOB shipping point or CIF terms,
and therefore, the customer is responsible for any tariffs, duties or other
levies imposed on Omega's products sold into these markets.

During the off season, Omega fills purchase orders from the inventory it
has accumulated during the fishing season. Prices for Omega Protein's products
tend to be lower during the fishing season when product is more abundant than in
the off season. Throughout the entire year, prices are often significantly
influenced by supply and demand in world markets for competing products,
primarily other global sources of fish meal and oil, and also soybean meal for
its fish meal products, and vegetable oils for its fish oil products when used
as an alternative to vegetable oils.

Quality Control. Omega Protein believes that maintaining high standards of
quality in all aspects of its manufacturing operations play an important part in
its ability to attract and retain customers and maintain its competitive
position. To that end, Omega has adopted strict quality control systems and
procedures designed to test the quality aspects of its products, such as protein
content and digestibility. Omega Protein regularly reviews, updates and modifies
these systems and procedures as appropriate.

Purchases and Sales of Third-Party Meal and Oils. Omega has from time to
time purchased fish meal and fish oil from other domestic and international
manufacturers. Omega has generally resold those products to international
customers. These purchase and resale transactions have been ancillary to Omega
Protein's base manufacturing and sales business and revenues resulting from
these activities have historically not been material.

During 2002, Omega developed a business plan to expand its purchase and
resale of other manufacturers' fish meal and fish oil products and engaged a
full-time consultant to implement a business plan which focused initially on the
purchase and resale of Mexican fish meal and fish oil. In 2002, revenues
generated from these types of transactions represented less than 1% of total
Company revenues. During 2003, Omega's fish catch and resultant product
inventories were reduced, primarily due to adverse weather conditions. Omega
supplemented its inventories and subsequent sales by purchasing other fish meal
products (primarily Panamanian and Mexican fish meal and U.S. menhaden oil).
Although operating margins from these activities are less than the margins
typically generated from Omega's base domestic production, these operations
provide Omega with a source of fish meal and oil to sell into other markets
where it has not historically had a presence. During 2003, Omega purchased
products totaling approximately 12,500 tons, or approximately 5% of total volume
sales.

Insurance. Omega Protein maintains insurance against physical loss and
damage to its assets, coverage against liabilities to third parties it may incur
in the course of its operations, as well as workers' compensation, United States
Longshoremen's and Harbor Workers' Compensation Act and Jones Act coverage.
Assets are insured at replacement cost, market value or assessed earning power.
Omega Protein's limits for liability coverage are statutory or $50 million. The
$50 million limit is comprised of several excess liability policies,
15

which are subject to deductibles, underlying limits and exclusions. Omega
believes its insurance coverage to be in such form, against such risks, for such
amounts and subject to such deductibles and self-retentions as are prudent and
normal for its operations. Omega does not carry insurance against terrorist
attacks, or against business interruption, in large part because of the high
costs of such insurance. A general hardening of the world insurance markets in
recent years has made insurance more costly and is likely to continue to
increase Omega's cost of insurance. Depending on the magnitude of the increase
in insurance premiums, Omega may elect to increase its deductibles and
self-retentions in order to achieve lower insurance premium costs. These higher
deductibles and self-retentions will expose Omega to greater risk of loss if
claims occur.

Competition. The marine protein and oil business is subject to significant
competition from producers of vegetable and other animal protein products and
oil products such as Archer Daniels Midland and Cargill. In addition, but to a
lesser extent, Omega Protein competes with smaller domestic privately-owned
menhaden fishing companies and international marine protein and oil producers,
including Scandinavian herring processors and South American anchovy and sardine
processors. Many of these competitors have greater financial resources and more
extensive operations than Omega.

Omega competes on price, quality and performance characteristics of its
products, such as protein level and amino acid profile in the case of fish meal.
The principal competition for Omega's fish meal and fish solubles is from other
global production of marine proteins as well as other protein sources such as
soybean meal and other vegetable or animal protein products. Omega believes,
however, that these other non-marine sources are not complete substitutes
because fish meal offers nutritional values not contained in such other sources.
Other globally produced fish oils provide the primary market competition for
Omega Protein's fish oil, as well as soybean and palm oil, from time to time.

Fish meal prices have historically borne a relationship to prevailing
soybean meal prices, while prices for fish oil are generally influenced by
prices for vegetable fats and oils, such as soybean and palm oils. Thus, the
prices for Omega's products are established by worldwide supply and demand
relationships over which Omega has no control and tend to fluctuate
significantly over the course of a year and from year to year.

Regulation. Omega Protein's operations are subject to federal, state and
local laws and regulations relating to the locations and periods in which
fishing may be conducted as well as environmental and safety matters. At the
state and local level, certain state and local government agencies have either
enacted legislation and to prohibit, restrict or regulate menhaden fishing
within their jurisdictional waters. In January 2002, the State of New Jersey
enacted legislation which extended an existing 1.2 mile no-fishing zone for
menhaden an additional 1.8 miles offshore. Omega historically has caught an
immaterial amount of its fish catch in the newly closed area and believes that
this restriction will have no material effect on Omega's operations or financial
results. Omega remains able to conduct its fishing operations off the New Jersey
coast outside this new three-mile limit.

Omega Protein, through its operation of fishing vessels, is subject to the
jurisdiction of the U.S. Coast Guard, the National Transportation Safety Board
and the U.S. Customs Service. The U.S. Coast Guard and the National
Transportation Safety Board set safety standards and are authorized to
investigate vessel accidents and recommend improved safety standards. The U.S.
Customs Service is authorized to inspect vessels at will.

Omega Protein's operations are subject to federal, state and local laws and
regulations relating to the protection of the environment, including the federal
Clean Water Act, which imposes strict controls against the discharge of
pollutants in reportable quantities, and along with the Oil Pollution Act,
imposes substantial liability for the costs of oil removal, remediation and
damages. Omega's operations also are subject to the federal Clean Air Act, as
amended; the federal Comprehensive Environmental Response, Compensation, and
Liability Act, which imposes liability, without regard to fault, on certain
classes of persons that contributed to the release of any "hazardous substances"
into the environment; and the federal Occupational Safety and Health Act
("OSHA"). The implementation of continuing safety and environmental regulations
from these authorities could result in additional requirements and procedures
for Omega and it is possible that the costs of these requirements and procedures
could be material.

16

The OSHA hazard communications standard, the Environmental Protection
Agency community right-to-know regulations under Title III of the federal
Superfund Amendment and Reauthorization Act and similar state statutes require
Omega to organize information about hazardous materials used or produced in its
operations. Certain of this information must be provided to employees, state and
local governmental authorities and local citizens. Numerous other environmental
laws and regulations, along with similar state laws, also apply to the
operations of Omega, and all such laws and regulations are subject to change.

Omega Protein has made, and anticipates that it will make in the future,
expenditures in the ordinary course of its business in connection with
environmental matters. Such expenditures have not been material in the past and
are not expected to be material in the future. However, there is no assurance
that environmental laws and regulations enacted in the future will not require
material expenditures or otherwise adversely affect Omega Protein's operations.

Omega Protein continually monitors regulations which affect fish meal and
fish oil in the United States and in those foreign jurisdictions where its sells
its products. In some cases, particularly in Europe, regulators have mandated
various environmental contaminant levels which, on occasion, certain of Omega's
products do not meet. In those instances, Omega has either negotiated a lower
price with the customer for that product lot or has sold the product lot in
another market where the regulatory standards are met. To date, such regulations
have not had a material adverse effect on Omega's business, but it is possible
they may do so in the future. In that event, Omega would likely install
contaminant cleaning technology which would involve undetermined amounts of
capital expenditures and possibly higher costs to produce its product.

Omega Protein's harvesting operations are subject to the Shipping Act of
1916 and the regulations promulgated thereunder by the Department of
Transportation, Maritime Administration which require, among other things, that
Omega Protein be incorporated under the laws of the U.S. or a state, Omega's
chief executive officer be a U.S. citizen, no more of Omega's directors be
non-citizens than a minority of the number necessary to constitute a quorum and
at least 75% of Omega's outstanding capital stock (including a majority of
Omega's voting capital stock) be owned by U.S. citizens. If Omega fails to
observe any of these requirements, it will not be eligible to conduct its
harvesting activities in U.S. jurisdictional waters. Such a loss of eligibility
would have a material adverse effect on Omega's business, results of operations
and financial condition.

To protect against such loss of eligibility, Omega's Articles of
Incorporation (i) contain provisions limiting the aggregate percentage ownership
by non-citizens of each class of Omega's capital stock to no more than 25% of
the outstanding shares of each such class (the "Permitted Percentage") so that
any purported transfer to non-citizens of shares in excess of the Permitted
Percentage will be ineffective as against Omega for all purposes (including for
purposes of voting, dividends and any other distribution, upon liquidation or
otherwise), (ii) provide for a dual stock certificate system to determine such
ownership pursuant to which certificates representing shares of Company Common
Stock bear legends that designate such certificates as either "citizen" or
"non-citizen" depending on the citizenship of the owner, and (iii) permit
Omega's Board of Directors to make such determinations as may reasonably be
necessary to ascertain such ownership and implement restrictive limitations on
those shares that exceed the Permitted Percentage (the "Excess Shares"). For
example, Omega's Board is authorized, among other things, to redeem for cash
(upon written notice) any Excess Shares in order to reduce the aggregate
ownership by non-citizens to the Permitted Percentage.

Omega Protein believes that during the past five years it has substantially
complied with all material statutes and regulations applicable to its
operations, the failure to comply with which would have had a material adverse
impact on its operations.

Employees. As of December 31, 2003, during its off-season, Omega Protein
employed approximately 450 persons. As of August 31, 2003, during the peak of
the 2003 fishing season, Omega employed approximately 950 persons. Approximately
140 employees at Omega's Virginia facility are represented by an affiliate of
the United Food and Commercial Workers Union. During the past five years Omega
has not experienced any strike or work stoppage which has had a material impact
on its operations. Omega considers its employee relations to be generally
satisfactory.
17

ZAP.COM

In December 2000, Zap.Com exited the Internet business and terminated all
salaried employees and third party contractual relationships. Currently, Zap.Com
does not have any existing business operations, other than maintaining its
status as a public shell company. Zap.Com is likely to search for assets or
businesses that it can acquire so that it can become an operating company.
Zap.Com may also consider developing a new business suitable for its situation.

Employees. As of December 31, 2003, Zap.Com had two employees, Avram
Glazer, President and CEO, and Leonard DiSalvo, VP-Finance and Chief Financial
Officer. Neither Mr. Glazer nor Mr. DiSalvo receive a salary from Zap.Com and
currently devote a significant portion of their business time to Zapata, where
they hold the same offices. Both of these officers, however, devote such time to
Zap.Com's affairs as is required to perform their duties to Zap.Com.

FINANCIAL INFORMATION ABOUT SEGMENTS

Information required by this section is incorporated by reference from Note
25 to the Company's Consolidated Financial Statements included in Item 8 of this
Report.

ITEM 2. PROPERTIES

ZAPATA CORPORATE

Zapata's corporate headquarters are located in Rochester, New York where
the Company leases approximately 3,000 square feet of office space. Additional
leased space includes 5,000 square feet of office space located in New York City
which had been previously used by a former subsidiary of the Company. Due to the
termination of all Internet operations, Zapata is in the process of finding a
third party to sublease the New York City office space. Zapata believes its
facilities and those of its subsidiaries are adequate and suitable for its
current level of operations.

SAFETY COMPONENTS

Safety's corporate headquarters are located in Greenville, South Carolina
in a facility owned by the Company, adjacent to its Safety Components Fabric
Technologies, Inc. ("SCFTI") manufacturing facility. Safety owns or leases five
facilities in which it manufactures airbag and technical fabrics related
products, with total plant area of approximately 1.2 million square feet
(including administrative, warehouse, engineering and research and development
areas housed at its locations). Below is an overview of Safety's properties at
its airbag and technical fabrics related products facilities as of December 31,
2003.

- ---------------

(1) Manufacturing, research and development and office space

(2) Lease also provides for five-year renewal option

(3) Location of corporate offices

(4) Manufacturing and office space

(5) Finished goods distribution center and office space

18

(6) Research and development and office space

(7) Location of marketing and sales offices

OMEGA PROTEIN

Administrative and Executive Offices. Omega leases office space from
unaffiliated third parties in Hammond, Louisiana for its administrative offices
and in Houston, Texas for its executive offices.

Plants. Omega owns its plants in Reedville, Virginia, Moss Point,
Mississippi and Abbeville, Louisiana (except for a small leased portion of the
Abbeville facility), as well as its Morgan City, Louisiana property which was
formerly operated as a plant. Omega leases from unaffiliated third parties the
real estate on which its Cameron, Louisiana plant is located. The Cameron plant
lease provides for a 10 year term ending on June 30, 2012 (with one 10-year
renewal option) and annual rent of $64,000.

Warehouse and Storage. Omega owns, as well as leases from unaffiliated
third parties, warehouses and tank space for storage of its products, generally
at terminals located along the Mississippi River and Tennessee River. Omega's
material storage facilities are located at:

Shipyard. Omega owns a 49.4 acre shipyard facility in Moss Point,
Mississippi which includes two dry docks, each with a capacity of 1,300 tons.
The shipyard is used for routine maintenance and vessel refurbishment on its
fishing vessels and for shoreside maintenance services to third-party vessels if
excess capacity exists.

ZAP.COM

Zap.Com's headquarters are located in Rochester, New York, in space
subleased to it by Zapata on a month-to month basis. Zapata has advised Zap.Com
that it will not charge rent or other fees for the use of this space for future
periods until further notice.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

Zapata and Omega Protein were named as defendants in a lawsuit instituted
on March 10, 2003 in the District Court of Clark County, Nevada by Omega Protein
shareholder Robert Strougo. Plaintiff brought the action individually and as a
putative class action on behalf of all Omega Protein stockholders. No class
period was identified. Also named as defendants in the lawsuit were Avram A.
Glazer, Chairman, President and CEO of Zapata and Darcie Glazer, a director of
Zapata, both of whom are also directors of Omega Protein, and all other Omega
Protein directors. Plaintiff claims that the individual defendants and Zapata
breached their fiduciary duties to Omega Protein's stockholders by not properly
considering a so-called offer sent via e-mail to Zapata by Hollingsworth,
Rothwell & Roxford, a Florida partnership. On July 30, 2003, the court granted
Zapata's motion to dismiss the Complaint and denied the Plaintiffs' cross-motion
for leave to amend.

19

On October 20, 2003 an order of dismissal signed by Judge Leavitt was filed in
the district court for Clark County, Nevada dismissing its claims against Zapata
pursuant to NRCP 12(b)(5), for failure to state a claim upon which relevancy may
be granted and deny its countermotion to amend on the basis of futility. Zapata
filed applications to recover its costs and attorney fees. Plaintiff appealed
the court's decision on November 20, 2003. Thereafter, Plaintiff and Zapata
agreed that Plaintiff would withdraw his appeal in exchange for Zapata
withdrawing its claim for attorney fees and costs. On February 10, 2004, the
Court, based on the stipulation of the parties, dismissed the appeal and
directed each party to bear their own costs and attorney fees. Accordingly, this
matter is now concluded.

Omega Protein and each of its directors were named as defendants in a
lawsuit instituted in September 2003 in a Texas state court by purported Omega
stockholder Joseph Chaput. The lawsuit alleged that the defendants breached
their fiduciary duties to Omega's stockholders by not properly considering an
acquisition offer sent in August 2003 by Ferrari Investments and requested
injunctive relief. In December 2003, the plaintiff dismissed the lawsuit
voluntarily with no cost to Omega or its directors.

Zapata is involved in litigation relating to claims arising out of its past
and current operations in the normal course of business. Zapata maintains
insurance coverage against such potential ordinary course claims in an amount in
which it believes to be adequate. While the results of any ultimate resolution
cannot be predicted, in the opinion of Zapata's management, based upon
discussions with counsel, any losses resulting from these matters will not have
a material adverse effect on Zapata's results of operations, cash flow or
financial position.

ENVIRONMENTAL MATTERS

Like similar companies, the operations and properties of Zapata's
subsidiaries are subject to a wide variety of increasingly complex and stringent
federal, state, local and international laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials, substances and wastes, the
remediation of contaminated soil and groundwater, and the health and safety of
employees (collectively, "Environmental Laws"). Such laws may impose joint and
several liability and may apply to conditions at properties presently or
formerly owned or operated by an entity or its predecessor as well as to
conditions of properties at which wastes or other contamination attributable to
an entity or its predecessor have been sent or otherwise come to be located. The
nature of the operations of Zapata's operating subsidiaries exposes them to the
risk of claims with respect to such matters and there can be no assurance that
violations of such laws have not occurred or will not occur or that material
costs or liabilities will not be incurred in connection with such claims. Based
upon its experience to date, Zapata believes that the future cost of compliance
with existing Environmental Laws and liability for known environmental claims
pursuant to such Environmental Laws, will not have a material adverse effect on
Zapata's financial position, results of operations or cash flows. However,
future events, such as new information, changes in existing Environmental Laws
or their interpretation, and more vigorous enforcement policies of regulatory
agencies, may give rise to additional expenditures or liabilities that could be
material.

Low levels of contaminants were found at Safety's facility in Greenville,
South Carolina (the "Greenville facility") during groundwater sampling in 1998.
In February 1999, the Greenville facility received a notice letter from the
South Carolina Department of Health and Environmental Control ("DHEC") regarding
the groundwater contamination. Over the past four years Safety Components has
performed groundwater monitoring and implemented a program for in-site
remediation of the groundwater. As a result, Safety received a "no further
action" letter from DHEC in its fiscal year ended March 29, 2003, ending the
DHEC investigation. An undiscounted reserve of $277,000 has been included in
"other long-term liabilities" on the accompanying consolidated balance sheets
for estimated future environmental expenditures related to the Greenville
facility for conditions existing prior to Safety's ownership of the facility.
Such reserve was established at the time Safety acquired the facility, and the
amount was determined by reference to the results of a Phase II study performed
at the Greenville facility. The Greenville facility has also been identified
along with numerous other parties as a Potentially Responsible Party at the
Aquatech Environmental, Inc. Superfund Site. Safety believes that it is a de
minimis party with respect to the site and that future clean-up costs incurred
will not be material.
20

Although no assurances can be given in this regard, in the opinion of
Safety's management, no material expenditures beyond those accrued will be
required for Safety's environmental control efforts and the final outcome of
these matters will not have a material adverse effect on Safety's financial
position or results of future operations. Safety believes that it currently is
in compliance with applicable environmental regulations in all material
respects. Safety's management's opinion is based on the advice of independent
consultants on environmental matters.

Zapata and its subsidiaries are subject to various possible claims and
lawsuits regarding environmental matters in addition to those discussed above.
Zapata's management believes that costs, if any, related to these matters will
not have a material adverse effect on the consolidated results of operations,
cash flows or financial position of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of Zapata's stockholders during the
fourth quarter of 2003.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Zapata's common stock is listed on the New York Stock Exchange ("NYSE") and
trades under the symbol "ZAP." The high and low sales prices for the common
stock, as reported in the consolidated transactions reporting system, for each
quarterly period for the last two fiscal years, are shown in the following
table.

The Company has not declared any dividends since the Company's Board of
Directors determined in 1998 to discontinue dividend payments. The Company may
use all or a significant portion of its cash assets in the acquisition of new
operating businesses or for the repurchase of stock as discussed below. See
"Item 1 -- Description of Business -- Zapata Corporate Business Acquisitions."
In deciding whether to declare dividends, the Company's Board of Directors will
consider the Company's operating results, cash flow, financial condition,
capital requirements, general business condition of its future operating
businesses and such other factors, as the Board deems relevant. The rights of
the holders of common stock to receive dividends or other payments with respect
thereto in the future will be subject to the prior and superior rights of
holders of Zapata's Preferred Stock and Preference Stock then outstanding.
Zapata has authorized Preferred Stock and Preference Stock, none of which are
outstanding as of the date of this report.

On December 6, 2002, the Board of Directors authorized the Company to
purchase up to 500,000 shares of its outstanding common stock in the open market
or privately negotiated transactions. The shares may be purchased from time to
time as determined by the Company. Any purchased shares would be placed in
treasury and may subsequently be reissued for general corporate purposes. The
repurchases will be made only at such times as are permissible under the federal
securities laws. No time limit has been placed on the

21

duration of the program and no minimum number or value of shares to be
repurchased has been fixed. Zapata reserves the right to discontinue the
repurchase program at any time and there can be no assurance that any
repurchases will be made. As of the date of this report, no shares have been
repurchased under this program.

As of March 5, 2004, there were approximately 2,950 holders of record of
common stock. This number does not include the stockholders for whom shares are
held in a "nominee" or "street" name.

The following table sets forth information as of December 31, 2003, with
respect to compensation plans under which equity securities of the Company are
authorized for issuance:

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected historic consolidated
financial information of the Company for the periods and as of the dates
presented and should be read in conjunction with the Company's Consolidated
Financial Statements and the related notes thereto included in Item 8 of this
Report and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Item 7 of this Report. All amounts are in
thousands, except for per share amounts.

22

- ---------------

(1) During 2003, the Company purchased approximately 84% of the common stock of
Safety Components. Accordingly, balance sheet data related to Safety has
been included in the Company's consolidated balance sheet since the date of
acquisition. The Company began consolidating amounts related to Safety's
income statement and cash flow in the fourth quarter of 2003.

(2) During 2002, the Company received a federal tax refund of approximately
$17.3 million primarily related to losses realized on the sale in 2001 of
certain non-investment grade securities and the Company's Viskase shares.

(3) Based on adverse market conditions and the sale of non-investment grade
securities during 2001, the Company recognized impairment charges of
approximately $11.8 million.

(4) The Company sold its Viskase shares September 2001. See Note 2 above.

(5) In connection with the termination of its Internet businesses in December
2000, Zap.Com recorded the necessary charges to write down applicable
investments in long-lived assets (which consisted mainly of its capitalized
software costs) to fair value, and to record estimated liabilities,
including costs associated with the termination of various contracts. These
charges totaled $1.5 million. In addition, Charged Productions, Inc. (a
former subsidiary of the Company) incurred a one-time charge of
approximately $434,000 related to asset write-downs and approximately
$182,000 related to contract termination expenses.

(6) Based on adverse market conditions, the Company recorded impairment losses
of $13.2 million during 2000 related to its non-investment grade holdings.

(7) During 2000, Omega Protein recorded inventory write-downs of $18.1 million
for market declines in the inventory values of Omega Protein's fish meal and
fish oil.

(8) During 1999, Omega Protein recorded inventory write-downs of $18.2 million
for market declines in the inventory values of Omega Protein's fish meal and
fish oil. Omega also recorded a pre-tax charge of $2.3 million during 1999
for the write-down of certain impaired in-line processing assets at its
Morgan City, Louisiana plant.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following is a discussion of the Company's financial condition and
results of operations. This discussion should be read in conjunction with the
Company's Consolidated Financial Statements included in Item 8 of this Report.
This discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below in "Significant Factors
That Could Affect Future Performance and Forward-Looking Statements," as well as
those discussed in this section and elsewhere in this report.

GENERAL

Zapata is a holding company which currently has two operating companies,
Safety Components International, Inc. ("Safety Components" or "Safety") and
Omega Protein Corporation ("Omega Protein" or "Omega"). As of December 31, 2003,
the Company had an 83% ownership interest in Safety Components and a 59%
ownership interest in Omega Protein. Safety Components trades on the over-the
counter electronic bulletin board under the symbol "SAFY" and Omega Protein
trades on the New York Stock Exchange under the symbol "OME." In addition,
Zapata owns 98% of Zap.Com Corporation ("Zap.Com"), which is a public shell
company and trades on the over-the-counter electronic bulletin board under the
symbol "ZPCM."

ZAPATA CORPORATE

On September 23, 2003, Zapata purchased 2,663,905 shares of Safety
Components International, Inc. common stock in privately negotiated transactions
for $30.9 million. On October 7, 2003, Zapata purchased an additional 1,498,489
shares of Safety common stock in privately negotiated transactions. These
additional shares were purchased for $16.9 million and increased the Company's
ownership percentage of Safety's outstanding common stock to approximately 84%
at that time. The Company accounted for these transactions

23

under the purchase method and began consolidating amounts related to Safety's
assets and liabilities as of September 30, 2003 and operational information in
the fourth quarter of 2003.

Under the SEC rules, financial statements filed with the SEC companies
following a more than 95% change in ownership have to be restated to reflect the
purchaser's push-down basis of accounting. Push down accounting is the
establishment of a new accounting and reporting basis for a subsidiary company
in its separate financial statements based on the purchase price paid by the
parent company to acquire a controlling interest in the outstanding voting stock
of the subsidiary company. Push-down is not allowed in the event of a less than
80% change in control. If 80% or more, but no more than 95% change in control
occurred, application of the push-down basis is at the company's discretion.
Because Zapata acquired more than 80%, but less than 95% of Safety's shares and
voting power, Zapata had the choice of whether to apply push-down basis of
accounting, and has elected not to do so. Accordingly, all of the purchase
accounting adjustments are maintained on Zapata's books and records and are
reflected in our "Safety Components" segment. If push-down basis had been
applied, all of the purchase accounting fair value adjustments would have been
made on the separate books and records of Safety Components.

Zapata continues to explore ways to enhance Zapata stockholder value
through its 59% owned consolidated subsidiary Omega Protein. Possible
transactions include the sale, merger or another significant strategic
transaction involving Omega, purchases of Omega stock through the open market or
private transactions.

In December 2002, the Board of Directors authorized the Company to purchase
up to 500,000 shares of its outstanding common stock in the open market or
privately negotiated transactions. No time limit has been placed on the duration
of the program and no minimum number or value of shares to be repurchased has
been fixed. As of the date of this report, no shares have been repurchased under
this program.

Zapata continues to evaluate strategic opportunities for the use of its
capital resources, including the acquisition of other operating businesses,
funding of start-up proposals and possible stock repurchases. As of the date of
this report, Zapata is not a party to any agreements related to the acquisition
of an operating business, business combination or for the sale or other
transaction related to any of its subsidiaries. There can be no assurance that
any of these possible transactions will occur or that they will ultimately be
advantageous to Zapata or enhance Zapata stockholder value.

SAFETY COMPONENTS

Safety Components is a leading, low-cost, independent supplier of
automotive airbag fabric and cushions and technical fabrics with operations in
North America and Europe. Safety Components sells airbag fabric domestically and
cushions worldwide to the major airbag module integrators that outsource such
products. Safety Components also manufactures value-added technical fabrics used
in a variety of niche industrial and commercial applications such as ballistics
material for luggage, filtration, military tents and fire service apparel. The
ability to interchange airbag and specialty technical fabrics using the same
equipment and similar manufacturing processes allows Safety to more effectively
utilize its manufacturing assets and lower per unit overhead costs.

As the automotive airbag industry has evolved, module integrators have
outsourced significant portions of non-proprietary components, such as cushions,
to companies like Safety Components specializing in the production of individual
components. Safety believes that its module integrator customers will continue
to outsource a portion of their cushion requirements as they focus on the
development of proprietary technologies. Safety also believes that a majority of
the module integrators purchase fabric from airbag fabric producers such as
Safety. Like the automotive supply industry generally, Safety continues to
experience significant competitive pressure. For example, Safety supplies airbag
cushions and/or airbag fabric to its three most significant customers based upon
releases from formal purchase orders, which typically cover periods of up to
twelve months and are subject to periodic negotiation with respect to price and
quantity. Safety expects that its customers, including these significant
customers, will continue to seek to negotiate lower prices for our products.
Although Safety believes that it has good working relationships with its
customers due to its high

24

volume and low-cost manufacturing capabilities and consistency of quality
products and service, it cannot give assurances that purchases by its module
integrator customers will continue at their current levels.

OMEGA PROTEIN

Omega Protein is the largest U.S. producer of protein-rich meal and oil
derived from marine sources. Omega's products are produced from menhaden (a
herring-like fish found in commercial quantities), and include FAQ grade and
value-added specialty fish meals, crude and refined fish oils and regular and
value-added fish solubles. Omega's fish meal products are used as nutritional
feed additives by animal feed manufacturers and by commercial livestock
producers. Omega's crude fish oil is sold to food producers and feed
manufacturers and its refined fish oil products are used in food production and
certain industrial applications. Fish solubles are sold as protein additives for
animal feed and as fertilizers.

Omega's harvesting season generally extends from May through December on
the mid-Atlantic coast and from April through October on the Gulf coast. During
the off season and the first few months of each fishing season, Omega fills
purchase orders from the inventory it has accumulated during the previous
fishing season. Prices for Omega's products tend to be lower during the fishing
season when product is more abundant than in the off season. Throughout the
entire year, prices are significantly influenced by supply and demand in world
markets for competing products, particularly other globally produced fish meal
and fish oil as well as other animal proteins and soybean meal for its fish meal
products and vegetable fats and oils for its fish oil products when used as an
alternative to vegetable fats and oils.

The fish catch is processed into FAQ grade fish meal, specialty fish meals,
fish oils and fish solubles at Omega's four operating plants located in
Virginia, Mississippi and Louisiana. Omega utilized 40 fishing vessels and 34
spotter craft in the harvesting operations during 2003. Menhaden are harvested
offshore the U.S. mid-Atlantic and Gulf of Mexico coasts. In 2000, Omega
converted several of its fishing vessels to "carry vessels" which do not engage
in active fishing but instead carry fish from Omega's offshore fishing vessels
to its plants. Utilization of carry vessels increases the amount of time that
certain of Omega's fishing vessels remain offshore fishing productive waters and
therefore increases Omega's fish catch per vessel employed. The carry vessels
have reduced crews and crew expenses and incur less maintenance cost then the
actual fishing vessels.

HARVESTING AND PRODUCTION. The following table summarizes Omega's
harvesting and production for the indicated periods:

- ---------------

(1) Fish catch has been converted to tons using the National Marine Fisheries
Service ("NMFS") fish catch conversion ratio of 670 pounds per 1,000 fish.

During 2003, Omega experienced a poor fish catch (approximately 11% below
expectations and a similar reduction from 2002), combined with poor oil yields.
The reduced fish catch was primarily attributable to

25

adverse weather conditions and the poor oil yields due to the reduced fat
content of the fish. As a result of the poor fish catch and reduced yields,
Omega experienced significantly higher per unit product costs, (approximately
15% increase) during 2003 compared to 2002. The impact of higher cost
inventories and fewer volumes available for sale will be carried forward and
will adversely affect Omega's earnings through the first and second quarter of
2004.

Markets. During 1999 and continuing through 2000, world grain and oilseed
markets were burdened by excess supplies relative to demand which, in turn,
resulted in prices for most major commodities being sharply lower than in
previous years. Correspondingly, Omega's product prices were adversely impacted
during these periods, resulting in decreased gross margins. During 1999 and
again during 2000, Omega determined that the costs of its fish meal and fish oil
product inventories were in excess of those products' realization value by
approximately $18.2 million and $18.1 million, respectively. This realization
was due mainly to the continuing depressed market values of world protein
markets and particularly, animal and oilseed oil markets. The average prices
received for Omega's fish meal and fish oil products were approximately 28% and
48% lower, respectively, during 1999 as compared to 1998. Price decreases
continued during 2000 and fish meal and fish oil prices were approximately 7%
and 20%, respectively, lower than 1999 average prices. Also impacting 2000 and
contributing to the write-down of inventories was the reduced crude fish oil
production yields (approximately 38% lower yields compared to 1999) experienced
during the majority of the 2000 fishing season in the Gulf of Mexico. These
reduced yields were primarily a result of the reduced fat content in the fish.

The depressed pricing conditions of years 1999 and 2000 continued into the
early months of 2001 before making significant improvements late in 2001 and
continuing throughout 2002 and 2003. These price increases were the result of
diminished global fish meal and fish oil inventories as opposed to a weaker
world demand for other competing products. Management believes that it is
possible that these price increases have reached a plateau and stabilized at
this time. Future product price volatility will depend upon the perceived
international availability of fish meal and fish oil inventories. Accordingly,
gross profit margins may vary in the future.

Pricing for Omega's products has been volatile in the past several years
and is attributable mainly to the international availability, or the perceived
international availability, of fish meal and fish oil inventories. In an effort
to reduce price volatility and to generate higher, more consistent profit
margins, in fiscal 2000 Omega embarked on a quality control program designed to
increase its capability of producing higher quality fish meal products and, in
conjunction therewith, enhanced it sales efforts to penetrate premium product
markets. Since 2000, Omega's sales volumes of specialty meal products have
increased approximately 18%. Future volumetric growth in specialty meal sales
will be dependant upon increased harvesting efforts and market demand.
Additionally, Omega is attempting to introduce its refined fish oil into the
food market. Omega has made sales, which to date have not been material, of its
refined fish oil, trademarked OmegaPure(TM), to food manufacturers in the United
States and Canada at prices that provide substantially improved margins over the
margins that can be obtained from selling non-refined crude fish oil. Omega
cannot estimate, however, the size of the actual domestic or international
markets for Omega Pure(TM) or how long it may take to develop these markets.

Historically, approximately 35% to 40% of Omega's FAQ fish meal was sold on
a two-to-twelve-month forward contract basis. The balance of regular grade and
other products was substantially sold on a spot basis through purchase orders.
Omega began a similar forward sales program for its specialty grade meals and
crude fish oil for 2002 due to increasing demand for these products. During
2003, approximately 50% of its specialty meals and crude fish oil had been sold
on a forward contract basis. Omega's annual revenues are highly dependent on
both annual fish catch and inventories and, in addition, inventory is generally
carried over from one year to another year. Omega determines the level of
inventory to be carried over based on prevailing market prices of the products
and anticipated customer usage and demand during the off season. Thus,
production volume does not necessarily correlate with sales volume in the same
year and sales volumes will fluctuate from quarter to quarter. Omega's fish meal
products have a useable life of approximately one year from date of production.
Practically, however, Omega typically attempts to empty its warehouses of the
previous season's products by the second or third month of the new fishing
season. Omega's crude fish oil products do not lose efficacy unless exposed to
oxygen and therefore, their storage life typically is longer than that of fish
meal.
26

The following table sets forth Omega's revenues by product (in millions)
and the approximate percentage of total revenues represented thereby, for the
indicated periods:

Omega Protein announced in April 2003, that it had committed to build a new
100 metric ton per day fish oil processing facility at its Reedville, Virginia
location. Construction on the project began in June 2003, with projected
completion in the summer of 2004 and will cost approximately $16 million. Omega
currently anticipates that it will fund the project through its available cash
balances.

Omega's principal raw material is menhaden, a species of fish that inhabits
coastal and inland tidal waters in the United States. Menhaden are undesirable
for direct human consumption due to their small size, prominent bones and high
oil content. Certain state agencies impose resource depletion restrictions on
menhaden pursuant to fisheries management legislation or regulations. To date,
Omega has not experienced any material adverse impact on its fish catch or
results of operations as a result of these restrictions.

Omega from time to time considers potential transactions including, but not
limited to, enhancement of physical facilities to improve production
capabilities and the acquisition of other businesses. Certain of the potential
transactions reviewed by Omega would, if completed, result in its entering new
lines of business (generally including certain businesses to which Omega sells
its products such as pet food manufacturers, aquaculture feed manufacturers,
fertilizer companies and organic foods distributors) although historically,
reviewed opportunities have been generally related in some manner to Omega's
existing operations. Although Omega does not, as of the date hereof, have any
commitment with respect to a material acquisition or transaction (other than the
previously announced fish oil processing facility in Reedville, Virginia), it
could enter into such agreements in the future.

A general hardening of the world insurance markets in recent years has made
Omega's insurance more costly in recent years and is likely to continue to
increase the Company's cost of insurance. In response, the Company has elected
to increase its deductibles and self-retentions in order to achieve lower
insurance premium costs. These higher deductibles and self-retentions will
expose Omega Protein to greater risk of loss if claims occur.

Seasonal and Quarterly Results. Omega's menhaden harvesting and processing
business is seasonal in nature. Omega generally has higher sales during the
menhaden harvesting season (which includes the second and third quarter of each
year) due to increased product availability, but prices during the fishing
season tend to be lower than during the off-season. As a result, Omega's
quarterly operating results have fluctuated in the past and may fluctuate in the
future. In addition, from time to time Omega defers sales of inventory based on
worldwide prices for competing products that affect prices for Omega's products
which may affect comparable period comparisons.

ZAP.COM

In December 2000, Zap.Com exited the Internet business and terminated all
salaried employees and third party contractual relationships. Currently, Zap.Com
does not have any existing business operations, other

27

than maintaining its status as a public shell company. Zap.Com is likely to
search for assets or businesses that it can acquire so that it can become an
operating company. Zap.Com may also consider developing a new business suitable
for its situation.

CONSOLIDATED RESULTS OF OPERATIONS

The following tables summarize Zapata's consolidating results of operations
(in thousands):

- ---------------

(1) Due to the timing of the acquisition, Safety's revenues have been included
in Zapata's consolidated results only for the quarter ended December 31,
2003. Safety's fourth quarter contribution to Zapata's consolidated net
income was impacted by purchase accounting adjustments, the largest of which
related to inventory. As of the date of the acquisition, and consistent with
the purchase method of accounting, Zapata recorded Safety's inventory at
fair value. This fair value was approximately $2.8 million greater than the
carrying value recorded by Safety. As all of the related inventory was sold
by December 31, 2003, Zapata recorded the entire amount of the fair value
mark-up as a charge to cost of goods sold during the fourth quarter of 2003.
Net of tax effects, this charge reduced Zapata's consolidated net income by
approximately $1.7 million.

(2) Minority interest represents the minority stockholders' interest in the net
income (loss) of each segment.

For more information concerning segments, see Note 25 to the Company's
Consolidated Financial Statements included in Item 8 of this Report.

2003 COMPARED TO 2002

Zapata reported consolidated net income of $892,000 or $0.37 per share on
revenues of $181.4 million for the year ended December 31, 2003 as compared to
consolidated net income of $6.5 million or $2.71 per share on revenues of $117.0
million in 2002. The increase in revenues is a result of the consolidation of
Safety's revenues for the quarter ended December 31, 2003 into Zapata's
consolidated results. On a consolidated basis, the decrease in consolidated net
income is a result of decreased net income at Omega Protein, partially offset by
the consolidation of one quarter of Safety's net income.

The following presents a more detailed discussion of the consolidated
operating results:

Revenues. Consolidated revenues increased $64.4 million from $117.0
million in 2002 to $181.4 million in 2003. This increase was attributable to the
acquisition of Safety Components and the consolidation of Safety's revenues of
$63.5 million for the quarter ended December 31, 2003. Omega's revenues
increased $918,000 or 1%, from $117.0 million in 2002 to $117.9 million in 2003.
The increase in revenues was primarily

29

due to higher selling prices of 7% and 1% for Omega's fish meal and fish oil,
respectively. Omega attributes the higher fish meal and oil prices to lower
available world supplies of fish meal and fish oil and higher prices for other
competing proteins and fats. 2003 sales volumes for Omega's fish meal held
constant, whereas fish oil volumes declined 12% respectively. Omega attributes
the lower 2003 sales volumes to a 11% reduction in fish catch and a 14%
reduction in total fish meal and fish oil production during 2003, partially
offset by purchased products.

Cost of revenues. Zapata's consolidated cost of revenues for the year
ended December 31, 2002 was $154.6 million, a $65.3 million increase from $89.3
million in 2002. This increase was primarily attributable to the acquisition of
Safety Components and the consolidation of Safety's cost of revenues for the
quarter ended December 31, 2003. In addition, as of the date of the acquisition,
and consistent with the purchase method of accounting, Zapata recorded Safety's
inventory at fair value. The fair value was approximately $2.8 million greater
than the carrying value recorded by Safety. As all of the related inventory was
sold by December 31, 2003, the entire amount of the fair value mark-up was
recorded as a charge to cost of goods sold during the fourth quarter of 2003.
Additionally, Omega's cost of sales increased as a percentage of revenues to 84%
in 2003 as compared to 76% in 2002. Omega's increase in cost of sales as a
percentage of revenues was primarily due to higher 2003 cost of production due
to reduced fish catch brought about by adverse weather conditions along the
Atlantic Coast and Gulf of Mexico, combined with lower oil yields for Gulf of
Mexico fish. Omega's purchased meal and crude fish oil products (approximately
5% of sold volumes) were purchased at prices higher than Omega's cost of
production.

Selling, general and administrative. Consolidated selling, general, and
administrative expenses increased $8.2 million from $11.9 million in 2002 to
$20.1 million in 2003. This increase was primarily attributable to the
acquisition of Safety Components and the consolidation of $6.9 million of
selling, general and administrative costs related to Safety for the quarter
ended December 31, 2003. In addition, Zapata's pension expense increased over
the prior year, partially offset by a decrease in expenses under a consultancy
and retirement agreement entered into in 1981 with a former executive officer of
the Company. Due to recent market conditions and plan assumptions, Zapata
Corporate recorded pension expense of approximately $508,000 for the year ended
December 31, 2003 as compared to pension income of approximately $703,000 in the
prior year. Additionally, Omega's selling, general and administrative expenses
increased $444,000 over the prior year and was attributable to increases in
employee-related costs and marketing expenses.

Interest income, net. Net interest income decreased $1.2 million from
interest income of $822,000 in 2002 to net interest expense of $329,000 in 2003.
This decrease was primarily attributable to the acquisition of Safety Components
and the consolidation of Safety's net interest expense of $409,000 for the
quarter ended December 31, 2003. In addition, interest income at Zapata
Corporate and Omega Protein decreased as a result of lower interest rates on
cash, cash equivalents and short-term investments as compared to 2002.

Income taxes. The Company recorded a consolidated provision for income
taxes of $3.7 million for the year ended December 31, 2003 as compared to a
provision of $5.1 million for the year ended December 31, 2002. The consolidated
provision for the year ended December 31, 2003 was primarily the result of
Omega's provision of $2.8 million resulting from the generation of operating
income. The current year's decrease in the income tax provision was primarily
the result in the decrease in taxable income generated by Omega Protein during
the current year as compared to the prior year. Additionally, during 2003 Zapata
finalized its audit with the Internal Revenue Service for the tax years ended
September 30, 1997 through 2001. This resulted in a net tax benefit of
approximately $3.1 million relating to a federal refund and the elimination of
certain tax contingencies. This benefit was offset by the recognition of a
deferred tax liability of approximately $4.5 million associated with the excess
of book basis over tax basis attributable to Zapata's investment in Omega
Protein.

Minority interest. Minority interest from the consolidated statements of
operations represents the minority stockholders' interest in the net income of
the Company's subsidiaries (approximately 16% of Safety Components,
approximately 41% of Omega Protein and approximately 2% of Zap.Com). In 2003,
minority interest was a $2.8 million reduction to net income for Zapata's share
in the net incomes of Safety Components and Omega Protein, partially offset by
Zapata's share in the net loss of Zap.Com.

30

2002 COMPARED TO 2001

Zapata reported consolidated net income of $6.5 million or $2.71 per share
on revenues of $117.0 million for the year ended December 31, 2002 compared to
consolidated net income of $4.4 million or $1.85 per share on revenues of $98.8
million in 2001. Increased consolidated revenues and consolidated income
resulted primarily from the improved performance of Omega Protein. Omega's net
income for the year ended December 31, 2002 was $12.2 million as compared to
$3.9 million in the prior year. On a consolidated basis, Omega Protein's
improved operating performance was offset by a reduction in interest income
recognized by Zapata Corporate.

The following presents a more detailed discussion of the consolidated
operating results:

Revenues. Consolidated revenues increased $18.2 million from $98.8 million
in 2001 to $117.0 million in 2002. This increase was primarily attributable to
higher selling prices of 15% and 41% of Omega Protein's fish meal and fish oil,
respectively. Omega attributes the higher fish meal and oil prices to strong
worldwide demand for fish meal and competing fish oil markets rebounding from
historic low levels.

Cost of revenues. Zapata's consolidated cost of revenues for the year
ended December 31, 2002 was $89.3 million, a $4.6 million increase, or 5% from
$84.7 million in 2001. Cost of sales as a percentage of revenues was 76% for
2002 as compared to 86% in 2001. The 10% decrease in cost of revenues as a
percentage of revenue was due primarily to an increase in the selling price of
Omega's fish meal and fish oil products, respectively.

Selling, general and administrative. Consolidated selling, general, and
administrative expenses decreased $727,000 or 6%, from $12.6 million in 2001 to
$11.9 million in 2002. This decrease was primarily due to a reduction in
expenses recognized for Directors and Officers Liability Insurance at Zap.Com of
$447,000 and reduced insurance receivables write-offs at Omega. These decreases
were partially offset by expenses related to the terminated self-tender offer at
Zapata Corporate and Omega's increased employee related costs attributable to
health care and retirement programs.

Impairment of long-lived assets. The Company recorded no impairment
charges on long-lived assets for the year ended December 31, 2002, as compared
to $232,000 in the prior year consisting primarily of the write-down to zero of
Charged's investment in the LLC.

Contract termination (settlement) expense. The Company recorded no
contract termination (settlement) expense for the year ended December 31, 2002.
For the year ended December 31, 2001, Zap.Com favorably settled its disputes
over two of its contracts and reversed previous accruals into income of $403,000
resulting from the settlement amounts being less than the associated accrued
liabilities recognized in 2000. These contracts had no future value to Zap.Com
after they ceased Internet operations.

Interest income, net. Net interest income decreased $2.7 million from net
interest income of $3.5 million in 2001 to $822,000 in 2002. This decrease was a
result of decreased interest income at Zapata Corporate and Omega Protein
resulting from significantly lower interest rates on short-term U.S. Government
Agency securities as compared to rates in 2001. Omega incurred interest expense,
net of $595,000 in 2002 as compared to $485,000 in the prior year.

Realized loss on non-investment grade securities. The Company held no
investment grade securities during 2002. Realized loss on non-investment grade
securities for the year ended December 31, 2001 was $11.8 million, resulting
from the sale of non-investment grade securities.

Income taxes. The Company recorded a consolidated provision for income
taxes of $5.1 million in 2002 as compared to a consolidated benefit of $12.8
million in 2001. The consolidated provision was comprised primarily of Omega's
provision of $5.7 million resulting from increased taxable income, partially
offset by a $557,000 benefit at Zapata Corporate. The consolidated benefit in
2001 resulted from the sale of the Company's non-investment grade securities and
its Viskase shares, partially offset by Omega's tax provision.

Minority interest. Minority interest from the consolidated statements of
operations represents the minority stockholders' interest in the net income of
the Company's subsidiaries (approximately 40% in Omega

31

Protein and approximately 2% in Zap.Com). In 2002, minority interest was a $4.9
million reduction of Zapata's share in the net income of Omega Protein, offset
by a reduction in Zapata's share in the net loss of Zap.Com. In 2001, minority
interest was a $1.5 million reduction of Zapata's share in the net income of
Omega Protein, offset by a reduction in Zapata's share in the net loss of
Zap.Com.

LIQUIDITY AND CAPITAL RESOURCES

Zapata, Safety Components, Omega Protein and Zap.Com are separate public
companies. Accordingly, the capital resources and liquidity of Safety
Components, Omega Protein and Zap.Com are legally independent of Zapata. The
working capital and other assets of Safety Components, Omega Protein and Zap.Com
are dedicated to their respective operations and are not expected to be readily
available for the general corporate purposes of Zapata, except for any dividends
that may be declared and paid to their respective stockholders. The credit
facilities of Safety Components and Omega Protein prohibit any dividends from
being declared or paid with respect to its outstanding capital stock, including
the shares held by Zapata. For the foreseeable future, Zapata does not expect to
receive cash dividends on its Safety Components, Omega Protein or Zap.Com
shares.

The following tables summarizes information about Zapata's consolidated
contractual obligations (in thousands) as of December 31, 2003 and the effect
such obligations are expected to have on its consolidated liquidity and cash
flow in future periods:

- ---------------

(1) As of December 31, 2003, Zapata had $34.2 million in consolidated
indebtedness, of which $15.0 and $19.2 related to Safety Components and
Omega Protein, respectively. Zapata has neither guaranteed nor otherwise
agreed to be liable for the repayment of this debt. For more information
concerning debt, see Note 12 to the Company's Consolidated Financial
Statements included in Item 8 of this Report.

(2) As of December 31, 2003, Zapata had $1.0 million in consolidated capital
lease obligations, all of which related to Safety Components. Zapata has
neither guaranteed nor otherwise agreed to be liable for the repayment of
these obligations. For more information concerning capital lease obligations
see Note 17 to the Company's Consolidated Financial Statements included in
Item 8 of this Report.

(3) For more information concerning operating leases, see Note 17 to the
Company's Consolidated Financial Statements included in Item 8 of this
Report.

(4) For more information concerning the consulting agreement with Malcolm
Glazer, see Note 22 to the Company's Consolidated Financial Statements
included in Item 8 of this Report. Other amounts in this category are
related to a consultancy and retirement agreement entered into in 1981 with
a former executive officer of the Company.

(5) For more information concerning minimum pension liabilities, see Note 13 to
the Company's Consolidated Financial Statements included in Item 8 of this
Report.

(6) Omega announced on April 15, 2003 that it had committed to build a new
100-metric ton per day fish oil processing facility at its Reedville,
Virginia location. Construction on the project began in June 2003, with

32

projected completion in summer of 2004 and a projected cost of approximately
$16 million. Omega currently anticipates that it will fund the project
through its available cash balances. As of December 31, 2003 Omega had
incurred $6.7 million related to its Reedville processing facility.

(7) Amount represents Safety's remaining notional amounts of their outstanding
derivative foreign contracts. For more information concerning derivatives,
see Note 24 to the Company's Consolidated Financial Statements included in
Item 8 of this Report.

Omega Protein anticipates making approximately $18.4 million of capital
expenditures during 2004, a significant portion of which will be used to build a
new 100 metric ton per day fish oil processing facility and to refurbish vessels
and plant assets and to repair certain equipment. Safety Components anticipates
making approximately $8.3 million of capital expenditures during 2004. These
expenditures will be made to sustain Safety's growth of operations.

ZAPATA CORPORATE

Because Zapata does not guarantee or otherwise assume the liabilities of
Safety Components, Omega Protein or Zap.Com or have any investment commitments
to these majority-owned subsidiaries, it is useful to separately review the cash
obligations of Zapata exclusive of its majority-owned subsidiaries ("Zapata
Corporate").

Zapata Corporate's current source of liquidity is its cash, cash
equivalents and short-term investments and the interest income it earns on these
funds. Zapata expects these assets to continue to be a source of liquidity
except to the extent that they may be used to fund any acquisitions of operating
companies, the minority interest of controlled subsidiaries, or repurchases of
Zapata stock. Zapata Corporate's investments consist of U.S. Government agency
securities and cash equivalents. As of December 31, 2003, Zapata Corporate's
cash, cash equivalents and short- and long-term investments were $31.6 million
as compared to $85.0 million as of December 31, 2002. This decline resulted
primarily from the purchase of Safety Components common stock for $47.8 million
during 2003. Due to the purchase of Safety common stock, interest income is
expected to be lower in the future, depending on market conditions and other
factors.

In addition to its cash, cash equivalents, short-term investments and
interest income, Zapata Corporate has a potential secondary source of liquidity
in its publicly traded securities of Safety Components, Omega Protein and
Zap.Com. These holdings constitute "restricted stock" under SEC Rule 144 and may
only be sold in the public market pursuant to an effective registration
statement under the Securities Act of 1933 and under any required state
securities laws or pursuant to an available exemption. These and other
securities law restrictions could prevent or delay any sale by Zapata of these
securities or reduce the amount of proceeds that might otherwise be realized
therefrom. Currently, all of Zapata's equity securities holdings are eligible
for sale under Rule 144. Zapata also has demand and piggyback registration
rights for its Omega Protein and Zap.Com shares. The low trading volumes for
Safety Components, Omega Protein and Zap.Com common stock may make it difficult
for Zapata to sell any significant number of shares in the public market.

Zapata Corporate's liquidity needs are primarily for operating expenses,
litigation, insurance costs and possible Zapata stock repurchases. Zapata
Corporate may also invest a significant portion of its cash, cash equivalents
and short-term investments in the purchase of operating companies. Zapata
management believes that, based on current levels of operations and anticipated
growth, cash flow from operations, together with other available sources of
funds, will be adequate to fund its operational and capital requirements for at
least the next twelve months. Depending on the size and terms of future
acquisitions of operating companies or of the minority interest of controlled
subsidiaries, Zapata may raise additional capital through the issuance of equity
or debt. There is no assurance, however, that such capital will be available at
the time, in the amounts necessary or with terms satisfactory to Zapata.

33

The following table summarizes information about Zapata Corporate's
contractual obligations (in thousands) as of December 31, 2003, and the effects
such obligations are expected to have on Zapata Corporate's liquidity and cash
flow in future periods:

- ---------------

(1) For more information concerning operating leases, see Note 17 to the
Company's Consolidated Financial Statements included in Item 8 of this
Report.

(2) For more information concerning the consulting agreement with Malcolm
Glazer, see Note 22 to the Company's Consolidated Financial Statements
included in Item 8 of this Report. Other amounts in this category are
related to a consultancy and retirement agreement entered into in 1981 with
a former executive officer of the Company.

(3) For more information concerning minimum pension liabilities, see Note 13 to
the Company's Consolidated Financial Statements included in Item 8 of this
Report.

In the absence of unforeseen developments, Zapata believes that it has
sufficient liquidity to fund Zapata Corporate's operating expenses and other
operational requirements at least for the 12 months following the date of this
report. For more information concerning debt, see Note 12 to the Company's
Condensed Consolidated Unaudited Financial Statements included in Item 1 of this
report.

OFF-BALANCE SHEET ARRANGEMENTS

The Company and its subsidiaries do not have any off-balance sheet
arrangements that are material to its financial position, results of operations
or cash flows. The Company is a party to guarantees to its officers, directors
and to certain outside parties. For further discussion of these guarantees, see
Note 17 to the Consolidated Financial Statements included in Item 8 of this
report. In addition, Safety enters into derivative foreign contracts. See Note
24 to the Consolidated Financial Statements included in Item 8 of this report
for additional information related to derivatives and hedging.

SUMMARY OF CASH FLOWS

The following table summarizes Zapata's consolidating cash flow information
(in thousands):

- ---------------

(1) Due to the timing of the acquisition, Safety's cash flow information has
been included in Zapata's consolidated cash flows for the quarter ended
December 31, 2003. In 2004, the Company will consolidate Safety's cash flow
information for the full year which may have a material affect on the
Company's consolidated cash flows.

Net cash provided by operating activities. Consolidated cash provided by
operating activities was $14.1 million and $33.1 million for the years ended
December 31, 2003 and 2002 respectively. The decrease in consolidated cash
provided by operating activities was primarily due to a federal income tax
refund of $17.3 million that was received during 2002 by Zapata Corporate. This
refund caused Zapata Corporate to have a significant amount of cash provided by
operating activities during 2002. The decrease in cash provided by Omega
Protein's operating activities was primarily due the timing of changes in the
balances of certain assets and liabilities and lower net income. On a
consolidated basis, this decrease was largely offset by cash provided by Safety
Component's operating activities.

Consolidated cash provided by operating activities was $33.1 million for
the year ended December 31, 2002 as compared to $16.6 million for the prior
year. The increase was primarily due to Zapata's receipt of a federal income tax
refund of $17.3 million during 2002 and Omega Protein's increase in net income
for the year ended December 31, 2002 as compared to year ended December 31,
2001.

Net cash used in investing activities. Consolidated cash used in investing
activities was $46.8 million and $13.7 million for the years ended December 31,
2003 and 2002 respectively. The increase in consolidated cash used in investing
activities was primarily due to the Company's purchase of 84% of Safety
Components common stock for $47.8 million in 2003. Omega Protein anticipates
making approximately $18.4 million of capital expenditures during 2004, a
significant portion of which will be used to build a new 100 metric ton per day
fish oil processing facility and to refurbish vessels and plant assets and to
repair certain equipment. Omega anticipates that it will fund these expenditures
through its available cash balances. Safety Components anticipates making
approximately $8.3 million of capital expenditures during 2004. These
expenditures will be made to sustain Safety's growth of operations. Safety
anticipates that it will fund these expenditures through a combination of cash
flows from operations, equipment financing and the use of its line of credit.

On a consolidated basis, Zapata had net cash used in investing activities
of $13.7 million for the year ended December 31, 2002 as compared to net cash
provided by investing activities of $25.9 million for the year ended December
31, 2001. Variations in the Company's consolidated net cash (used in) provided
by investing activities are typically the result of the change in the mix of
cash and cash equivalents and short and long-term investments during the period.
All highly liquid investments with original maturities of three months or less

35

are considered to be cash equivalents and all investments with original
maturities of greater than three months are classified as either short or
long-term investments. Accordingly, the net cash usage was primarily due to the
increase in purchases of short-term investments during 2002 as compared to 2001,
the purchase of long-term investments during 2002, and Omega's increase in
capital expenditures during 2002.

Net cash used in financing activities. Consolidated cash used in financing
activities was $4.6 million and $1.3 million for the years ended December 31,
2003 and 2002 respectively. The increase in consolidated cash used in financing
activities was primarily due to Safety's net repayment on borrowings, partially
offset by Omega's net borrowings and cash proceeds from the exercise of stock
options.

On a consolidated basis, Zapata had net cash used in financing activities
of $1.3 million for the year ended December 31, 2002 as compared to net cash
provided by financing activities of $752,000 for the year ended December 31,
2001. The change from net cash provided by operating activities to net cash used
in financing activities was due to Omega's debt repayments during 2002 and the
lack of Omega Protein borrowings during 2002 as compared to 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2003, the Financial Accounting Standards Board ("FASB") revised
Statement on Financial Accounting Standard ("SFAS") No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." It does not
change the measurement or recognition of pension and other postretirement
benefit plans. It requires additional disclosures to those in the original SFAS
No. 132 about the assets, obligations, cash flows, and net periodic benefit cost
of defined benefit pension plans and other defined benefit postretirement plans.
It also requires disclosure of the components of net periodic benefit cost in
interim financial statements. The revised disclosure requirements are required
for financial statements with fiscal years ending after December 15, 2003 and
the interim-period requirements are effective for interim periods beginning
after December 15, 2003. The adoption of this statement did not have an effect
on the Company's financial position, results of operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
statement establishes standards for the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within it scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. This statement is
effective for financial instruments entered into or modified after May 31, 2003
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of this statement did not have a
material impact on the Company's financial position, results of operations or
cash flows.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement is effective for contracts entered into or modified after June 30,
2003 and for hedging relationships designated after June 30, 2003. In addition,
all provisions of this statement should be applied prospectively. The provisions
of this statement that relate to SFAS No. 133 implementation issues that have
been effective for fiscal quarters that began prior to June 15, 2003, should
continue to be applied in accordance with their respective effective dates. The
adoption of this statement did not have a material effect on the Company's
financial position, results of operations or cash flows.

In January 2003, the FASB issued FIN No. 46 (Revised December 2003),
"Consolidated of Variable Interest Entities." This standard clarifies the
application of Accounting Research Bulletin No. 51, Consolidated Financial
Statements, and addresses consolidation by business enterprises of variable
interest entities (more commonly known as Special Purpose Entities of SPE's).
FIN No. 46R requires existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries if the entities do not effectively
disperse risk among the parties involved. FIN No. 46R also enhances the
disclosure requirements related to variable interest entities. The disclosure
requirements of this interpretation are effective for all financial
36

statements issued after January 31, 2003. The consolidation requirements of this
interpretation are effective for the first reporting period ending after
December 15, 2003. The adoption of this statement did not have a material impact
on the Company's financial position, results of operations or cash flows.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN No. 45), which expands previously
issued accounting guidance and disclosure requirements for certain guarantees.
The Interpretation requires an entity to recognize an initial liability for the
fair value of an obligation assumed by issuing a guarantee. The provision for
initial recognition and measurement of the liability will be applied on a
prospective basis to guarantees issued or modified after December 31, 2002. The
adoption of FIN No. 45 did not have a material impact on the Company's financial
position, results of operations or cash flows.

In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of that Statement to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. Finally, this Statement amends APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure about those effects in interim
financial information. Although the Company continues to account for stock-based
compensation according to APB 25, the Company has adopted the required
disclosure provisions for interim financial reporting under SFAS No. 148. As a
result of the Company's continued use of the intrinsic value method of
accounting for stock-based compensation, the transition provisions did not have
an effect of the Company's financial position, results of operations or cash
flows upon adoption of SFAS 148.

At the end of June 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations." SFAS No. 143 requires that obligations associated
with the retirement of a tangible long-lived asset be recorded as a liability
when those obligations are incurred, with the amount of the liability initially
measured at fair value. Upon initially recognizing a liability for an asset
retirement obligation, an entity must capitalize the cost by recognizing an
increase in the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. The Company adopted SFAS No. 143 on
January 1, 2003. The adoption of this standard did not have a material impact on
the Company's financial position, results of operations or cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of Zapata's financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect amounts reported
therein. The following lists our current accounting policies involving
significant management judgment and provides a brief description of these
policies:

Acquisition Accounting. The Company accounts for acquisitions using the
purchase method of accounting in accordance with SFAS No. 141, "Business
Combinations." Under the purchase method, the Company is required to record the
net assets acquired at the estimated fair value at the date of acquisition. The
determination of the fair value of the assets acquired and liabilities assumed
requires the Company to make estimates and assumptions that affect the Company's
financial statements. In addition, depending on the specific facts and
circumstances, goodwill and other intangible assets, including those intangible
assets with finite lives could result from an acquisition. Different estimates
and assumptions regarding these assets, specifically the estimated fair values
and lives, could result in materially different amortization expense over the
estimated lives of such assets.

37

For example, the Company's acquisition Safety Components resulted in the
creation of a customer relationship intangible asset valued at approximately
$7.8 million. While the useful life of this customer relationship asset is not
limited by contract or any other economic, regulatory or other known factors, a
useful life of 4 years was determined based on the average duration of
established airbag programs in place as of the date of acquisition. As it
related to this specific asset, if a useful life of 3 years was estimated, the
Company would have recognized an additional $162,000 of amortization expense
during 2003 and would recognize an additional $648,000 in 2004 and 2005, no
difference during 2006, and $1.5 million less amortization expense during 2007.

Litigation reserves. The establishment of litigation reserves requires
judgments concerning the ultimate outcome of pending litigation against the
Company and its subsidiaries. In applying judgment, management utilizes opinions
and estimates obtained from outside legal counsel to apply the standards of SFAS
No. 5 "Accounting for Contingencies." Accordingly, estimated amounts relating to
certain litigation have met the criteria for the recognition of a liability
under SFAS No. 5. Other litigation for which a liability has not been recognized
is reviewed on an ongoing basis in conjunction with the standards of SFAS No. 5.
A liability is recognized for all associated legal costs as incurred.
Liabilities for litigation settlements, legal fees and changes in these
estimated amounts may have a material impact on the Company's financial
position, results of operations or cash flows.

For example, in a recently settled claim against Zapata and a non-operating
wholly-owned subsidiary of Zapata which commenced during the 1990's, the Company
had been carrying a reserve of $1.0 million due to the uncertainty regarding the
Company's insurance coverage as it related to the claim. During July 2003, a
court granted summary judgment to Zapata and our subsidiary holding that the
insurance carrier owed a duty to defend and indemnify both Zapata and our
subsidiary in this matter. Based on the court's decision, Zapata reversed the
entire $1.0 million reserve into income during 2003.

Deferred income taxes. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which the temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in the tax rates is
recognized in earnings in the period that includes the enactment date.
Additionally, taxing jurisdictions could retroactively disagree with the
Company's tax treatment of certain items, and some historical transactions have
income tax effects going forward. Accounting rules require these future effects
to be evaluated using current laws, rules and regulations, each of which can
change at any time and in an unpredictable manner.

The Company reduces its deferred tax assets to an amount that it believes
is more likely than not to be realized. In so doing, the Company estimates
future taxable income in determining if any valuation allowance is necessary.
While the Company believes it is more likely than not that it will be able to
realize its amount of estimated net deferred income tax assets, it is possible
that the facts and circumstances on which the Company's estimates and judgments
are based could change, which could result in additional income tax expense in
the future to recognize or increase the associated valuation allowances.

Benefit plan assumptions. On a consolidated basis, the Company has three
defined benefit plans, under which participants earn a retirement benefit based
upon a formula set forth in each plan. The Company records income or expense
related to these plans using actuarially determined amounts that are calculated
under the provisions of SFAS No. 87, "Employers' Accounting for Pensions." Key
assumptions used in the actuarial valuations include the discount rate and the
anticipated rate of return on plan assets. These rates are based on market
interest rates, and therefore fluctuations in market interest rates could impact
the amount of pension income or expense recorded for these plans. Despite the
Company's belief that its estimates are reasonable for these key actuarial
assumptions, future actual results will likely differ from the Company's
estimates, and these differences could materially affect the Company's future
financial statements either unfavorably or favorably.

The discount rate enables a company to state expected future cash flows at
a present value on the measurement date. Both Zapata and Omega Protein have
little latitude in selecting this rate; it is based on the
38

yield on high-quality fixed income investments at the measurement date. A lower
discount rate increases the present value of benefit obligations and increases
pension expense. On a consolidated basis, a 50 basis point reduction in the
discount rate would increase pension expense by $87,000 in 2004.

To determine the expected long-term rate of return on pension plan assets,
Zapata and Omega Protein consider a variety of factors including historical
returns and asset class return expectations based on each Company's plan's
current asset allocation. On a consolidated basis, a 50 basis point reduction in
the expected return on assets would increase pension expense by $183,000 in
2004.

Safety's Foreign Currency Translation. Financial statements of
substantially all of Safety's foreign operations are prepared using the local
currency as the functional currency. In accordance with SFAS No. 52, "Foreign
Currency Translation," translation of these foreign operations to United States
dollars occurs using the current exchange rate for balance sheet accounts and a
weighted average exchange rate for results of foreign operations. Translation
gains or losses are recognized in "accumulated other comprehensive loss" as a
component of stockholders' equity in the accompanying consolidated balance
sheets. For Safety's subsidiary in Mexico, whose financial statements are
prepared using the United States dollar as the functional currency, the
translation effects of the financial statements are included in the results of
operations.

Safety's operations in Mexico, Germany, the United Kingdom and the Czech
Republic expose Safety to currency exchange rate risks associated with the
volatility of certain foreign currencies against its functional currency, the
U.S. dollar. In the quarter ended December 31, 2003, the nine month period from
March 30, 2003 to December 31, 2003 and the year ended March 29, 2003 the impact
of changes in the relationship of other currencies to the U.S. dollar resulted
in the recognition of other income of approximately $739,000, $2.0 million and
$3.5 million, respectively. In prior years, the relationship of other currencies
to the U.S. dollar has not had a material effect on Safety's Consolidated
Financial Statements. It is unknown what effect foreign currency rate
fluctuations will have on Safety's financial position or results of operations
in the future. If, however, there were a sustained decline of these currencies
versus the U.S. dollar, the Consolidated Financial Statements could be
materially adversely affected.

Omega's lower-of-cost-or-market inventory analysis. Inventory is stated at
the lower of cost or market. Omega Protein's fishing season runs from mid-April
to the first of November in the Gulf of Mexico and from the beginning of May
into December in the Atlantic. Government regulations generally preclude Omega
Protein from fishing during the off-seasons.

Omega Protein's inventory cost system considers all costs associated with
an annual fish catch and its processing, both variable and fixed and including
both costs incurred during the off-season and during the fishing season. Omega
Protein's costing system allocates cost to inventory quantities on a per unit
basis as calculated by a formula that considers total estimated inventoriable
costs for a fishing season (including off-season costs) to total estimated fish
catch and the relative fair market value of the individual products produced.
Omega Protein adjusts the cost of sales, off-season costs and inventory balances
at the end of each quarter based on revised estimates of total inventoriable
costs and fish catch. Omega Protein's lower-of-cost-or-market-value analyses at
year-end and at interim periods compare the total estimated per unit production
cost of Omega's expected production to the projected per unit market prices of
the products. The impairment analyses involve estimates of, among other things,
future fish catches and related costs, and expected commodity prices for the
fish products. These estimates, which management believes are reasonable and
supportable, involve estimates of future activities and events which are
inherently imprecise and for which actual results may differ materially.
Revisions in such estimates or actual results could materially impact Omega
Protein's results of operation and financial position.

Omega's deferral of off-season costs. During the off-seasons, in
connection with the upcoming fishing seasons, Omega Protein incurs costs (i.e.,
plant and vessel related labor, utilities, rent and depreciation) that are
directly related to Omega's infrastructure. These costs accumulate in inventory
and are applied as elements of the cost of production of Omega Protein's
products throughout the fishing season ratably based on Omega's monthly fish
catch and the expected total fish catch for the season.

39

Omega's accounting for self-insurance retentions. Omega Protein carries
insurance for certain losses relating to its vessels and Jones Act liabilities
for employees aboard its vessels (collectively, "Vessel Claims Insurance"). The
typical Vessel Claims Insurance policy contains an annual aggregate deductible
("AAD") for which Omega remains responsible, while the insurance carrier is
responsible for all applicable amounts which exceed the AAD. It is Omega's
policy to accrue current amounts due and record amounts paid out on each claim.
Once payments exceed the AAD, Omega records an insurance receivable for a given
policy year. Omega Protein provides reserves for those portions of the AAD for
which Omega remains responsible by using an estimation process that considers
Omega Protein, Inc. specific and industry data as well as Omega Protein
management's experience assumptions and consultation with outside counsel. Omega
Protein management's current estimated range of liabilities related to such
cases is based on claims for which Omega's management can estimate the amount
and range of loss. Omega Protein has recorded the minimum estimated liability
related to those claims, where there is a range of loss. As additional
information becomes available, Omega will assess the potential liability related
to its pending litigation and revise its estimates. Such revisions in estimates
of the potential liability could materially impact Omega Protein's results of
operation and financial position.

The Company continually updates and assesses the facts and circumstances
regarding these critical accounting matters and other significant accounting
matters affecting estimates in its financial statements. See "Significant
Factors That Could Affect Future Performance and Forward-Looking Statements."

SIGNIFICANT FACTORS THAT COULD AFFECT FUTURE PERFORMANCE AND FORWARD-LOOKING
STATEMENTS

1. Zapata believes that its results of operations, cash flows and financial
condition could be negatively impacted by certain risks and uncertainties,
including, without limitation, the risks and uncertainties identified in
Zapata's other public reports and filings made with the SEC, press releases and
public statements made by authorized officers of Zapata from time to time and
those risks and uncertainties set forth below.

- Risks associated with the fact that a significant portion of Zapata's
assets have consisted of securities, including equity and other interests
in its operating companies. This could subject Zapata to the registration
requirements of the Investment Company Act of 1940 (the "Investment
Company Act"). The Investment Company Act requires registration of, and
imposes substantial restrictions on, certain companies that engage, or
propose to engage, primarily in the business of investing, reinvesting,
owning, holding or trading in securities, or that fail certain
statistical tests concerning a company's asset composition and sources of
income. Zapata intends to actively participate in the management of its
operating companies, consistent with applicable laws, contractual
arrangements and other requirements. Accordingly, Zapata believes that it
is primarily engaged in a business other than investing, reinvesting,
owning, holding or trading in securities. Further, Zapata endeavors to
ensure that its holdings of investment securities constitute less than
40% of its total assets (excluding Government securities and cash) on an
unconsolidated basis. Zapata intends to monitor and attempt to adjust the
nature of its interests in and involvement with operating companies in
order to avoid subjecting Zapata to the registration requirements of the
Investment Company Act. There can be no assurance, however, that Zapata's
business activities will not ultimately subject Zapata to the Investment
Company Act. If Zapata were required to register as an investment company
under the Investment Company Act, it would become subject to regulations
that would have a material adverse impact on its financial position,
results of operations and cash flows.

- Risks associated with the personal holding company penalty tax. Section
541 of the Internal Revenue Code of 1986, as amended (the "IRC"),
subjects a corporation, which is a "personal holding company" as defined
in the IRC, to a 15% penalty tax on "undistributed personal holding
company income" in addition to the corporation's normal income tax.
Generally, undistributed personal holding company income is based on
taxable income, subject to certain adjustments, most notably a reduction
for Federal incomes taxes. Personal holding company income is comprised
primarily of passive investment income plus, under certain circumstances,
personal service income. Zapata and its domestic subsidiaries (other than
Omega) could become subject to the penalty tax if (i) 60% or more of its
adjusted ordinary gross income is personal holding company income and
(ii) 50% or more of its
40

outstanding common stock is owned, directly or indirectly, by five or
fewer individuals at any time during the last half of the taxable year.
The Company believes that five or fewer of Zapata's stockholders hold 50%
or more of its outstanding common stock for purposes of IRC Section 541.
However, as of December 31, 2003, Zapata and its domestic subsidiaries
(other than Omega) had no undistributed personal holding company income
and therefore has not recorded a personal holding company tax liability.
There can be no assurance that Zapata will not be subject to this tax in
the future, that in turn may materially and adversely impact the
Company's financial position, results of operations and cash flows.

- Risks associated with a change of ownership pursuant to Section 382 of
the Internal Revenue Code. Such risks could significantly or possibly
eliminate Zapata's utilization of its net operating losses and/or
alternative minimum tax credits. An ownership change for this purpose is
generally a change in the majority ownership of a company over a three
year period.

- Risk that our officers, directors and majority stockholder exert
substantial influence over Zapata. Members of our Board of Directors, our
executive officers together with members of their families and entities
that may be deemed affiliates of or related to such persons or entities,
and our majority stockholder beneficially own approximately 47% of our
outstanding common shares. Accordingly, these stockholders may be able to
elect all members of our Board of Directors and determine the outcome of
certain corporate actions requiring stockholder approval, such as any
future issuances of common stock or other securities, merger and
acquisition decisions, declaration of dividends, and the election of
directors. This level of ownership may have a significant effect in
delaying, deferring, or preventing a change in control of Zapata and may
adversely affect the voting and other rights of other holders of our
common shares.

In addition, should our majority stockholder obtain 50% or more of the
voting interests of our common stock, any action requiring a
simple-majority stockholder vote could be determined solely by our
majority stockholder. If 50% or more of the voting interests of our common
stock is held by one individual or group, the Company may also be eligible
for the NYSE's "controlled company" exemption. As a controlled company,
Zapata would not be required to comply with certain NYSE regulations, such
as the new requirement to have a majority of independent directors on the
Company's Board of Directors.

- Risks related to the costs of defending litigation and the risk of
unanticipated material adverse outcomes in such litigation or any other
unfavorable outcomes or settlements. There can be no assurance that
Zapata will prevail in any pending litigation and to the extent that the
Company sustains losses growing out of any pending litigation which are
not presently reserved or otherwise provided for or insured against, its
business, results of operation and/or financial condition could be
adversely affected.

- Risks associated with future acquisitions of operating companies. Any
future acquisitions could be material in size and scope, an since the
Company has not yet identified any additional assets, property or
business that it may acquire or develop, potential investors in the
Company will have virtually no substantive information about any such new
business upon which to base a decision whether to invest in the Company.
In any event depending upon the size and structure of any future
acquisitions, stockholders may not have the opportunity to vote on the
transaction, or access to any information about any new business until
such time as a transaction is completed and the Company files a report
with the SEC disclosing the nature of such transaction and/or business.
For example, during September and October, 2003, stockholders were
informed through press releases and SEC filings that the Company had
acquired a significant stake in Safety Components. Such transactions
materially affect the Company's financial position, results of operations
and cash flows. In the Safety Components acquisition, the Company
utilized approximately $47.8 million of its cash, cash equivalents and
short-term investments and the acquisition contributed an additional
$63.5 million to the Company's consolidated revenues for the fourth
quarter of 2003.

41

There is no assurance that the Company will be successful in identifying
any suitable future acquisition opportunities. If the Company does
identify any additional potential acquisition opportunities, there is no
assurance that the acquisition will be consummated, and if the acquisition
does occur, there is no assurance that it will be successful in enhancing
the Company's business or will increase the Company's earnings or not
materially adversely affect the Company's financial condition. The Company
faces significant competition for acquisition opportunities, which may
inhibit its ability to complete suitable transactions or increase the cost
that must be paid. Future acquisitions could also divert substantial
management time, result in short term reductions in earnings or special
transactions or other charges and may be difficult to integrate with
existing operations or assets. We may, in the future, issue additional
shares of common stock or other securities in connection with one or more
acquisitions, which may dilute our stockholders. Depending upon the size
and number of any future acquisitions, the Company may also borrow money
to fund its acquisitions. In that event, the Company's stockholders would
be subject to the risks normally associated with leveraged transactions,
including the inability to service the debt or the dedication of a
significant amount of cash flow to service the debt, limitations on the
Company's ability to secure future financing and the imposition of certain
operating restrictions.

2. Risks associated with Safety Components that may impact Zapata include
the following, any of which could have a material adverse impact on Safety's
financial position, results of operations and cash flows:

- The impact of competitive products and pricing, dependence of revenues
upon several major module suppliers; worldwide economic conditions; the
results of cost savings programs being implemented; domestic and
international automotive industry trends, including the marketplace for
airbag related products; the ability of Safety Components to effectively
control costs and to satisfy customers on timeliness and quality;
approval by automobile manufacturers of airbag cushions currently in
production; pricing pressures and labor strikes.

- Our nominees on the Safety Components' Board of Directors do not comprise
a majority of the board members. Therefore, we do not have the ability to
directly influence the management of Safety Components and cannot be
assured that the actions taken by the Safety Components Board of
Directors will necessarily be consistent with Zapata's best interest.

3. Risks associated with Omega Protein that may impact Zapata include the
following, any of which could have a material adverse impact on Omega's
financial position, results of operations and cash flows:

- Omega's ability to meet its raw material requirements through its annual
menhaden harvest, which is subject to fluctuation due to natural
conditions over which Omega has no control, such as varying fish
population, adverse weather conditions and disease.

- The impact on Omega if its spotter aircraft are prohibited or restricted
from operating in their normal manner during Omega's fishing season. For
example, as a direct result of the September 11, 2001 terrorist attacks,
the Secretary of Transportation issued a federal ground stop order that
grounded certain aircraft (including Omega's fish-spotting aircraft) for
approximately nine days. This loss of spotter aircraft coverage severely
hampered Omega's ability to locate menhaden fish during this nine-day
period and thereby reduced its amount of saleable product.

- The impact on the prices for Omega's products of worldwide supply and
demand relationships over which Omega has no control and which tend to
fluctuate to a significant extent over the course of a year and from year
to year. The products that influence the supply and demand relationship
are world supplies of fish meal made from other fish species, animal
proteins and fats, palm oil, soy meal and oil, and other edible oils.

- The impact of a violation by the Company of federal, state and local laws
and regulations relating to menhaden fishing and the protection of the
environment and the health and safety of its employees or of the adoption
of new laws or regulations at federal, state or local levels that
restrict or prohibit menhaden or purse-seine fishing, or stricter
interpretations of existing laws or regulations that materially adversely
affect the Company's business.
42

- The impact of the enactment of increasingly stringent regulations
regarding contaminants in fish meal or fish oil by foreign countries or
the United States. More stringent regulations may result in: (1) Omega's
incurrence of additional capital expenditures on contaminant reduction
technology in order to meet the requirements of those jurisdictions, and
possibly higher production costs for its products, or (2) Omega's
withdrawal from marketing its products in those jurisdictions.

- The impact on Omega if it cannot harvest menhaden in U.S. jurisdictional
waters if Omega fails to comply with U.S. citizenship ownership
requirements.

- Risks inherent in Omega's attempt to expand into sales of refined, food
grade fish oils for consumption in the U.S., including the unproven
market for this product.

- Fluctuations in Omega's quarterly operating results due to the
seasonality of Omega's business and Omega's deferral of sales of
inventory based on worldwide prices for competing products.

- The ability of Omega to retain and recruit key officers and qualified
personnel, vessel captains and crewmembers.

- Risks associated with the strength of local currencies of the countries
in which its products are sold, changes in social, political and economic
conditions inherent in foreign operations and international trade,
including changes in the law and policies that govern foreign investment
and international trade in such countries, changes in U.S. laws and
regulations relating to foreign investment and trade, changes in tax or
other laws, partial or total expatriation, currency exchange rate
fluctuations and restrictions on currency repatriation, the disruption of
labor, political disturbances, insurrection or war and the effect of
requirements of partial local ownership of operations in certain
countries.

- Risks related to unanticipated material adverse outcomes in any pending
litigation or any other unfavorable outcomes or settlements. There can be
no assurance that Omega will prevail in any pending litigation and to the
extent that Omega sustains losses growing out of any pending litigation
which are not presently reserved or otherwise provided for or insured
against, its business, results of operation and financial condition could
be adversely affected.

- In the future the Company may undertake acquisitions, although there is
no assurance this will occur. Further, there can be no assurance that the
Company will be able to profitably manage future businesses it may
acquire or successfully integrate future businesses it may acquire into
the Company without substantial costs, delays or other problems which
could have a material adverse effect on the Company's business, results
of operations and financial condition.

- A general hardening of the world insurance markets in recent years has
made the Company's insurance more costly and is likely to continue to
increase the Company's cost of insurance. The Company has elected to
increase its deductibles and self-retentions in order to achieve lower
insurance premium costs. These higher deductibles and self-retentions
will expose the Company to greater risk of loss if claims occur.

4. Risks associated with the foreign operations of our controlled
subsidiaries that may impact Zapata include the following, any of which could
have a material adverse impact on any such subsidiary's financial position,
results of operations and cash flows: the strength of local currencies of the
countries in which its products are sold, changes in social, political and
economic conditions inherent in foreign operations and international trade,
including changes in the law and policies that govern foreign investment and
international trade in such countries, changes in U.S. laws and regulations
relating to foreign investment and trade, changes in tax or other laws, partial
or total expatriation, currency exchange rate fluctuations and restrictions on
currency repatriation, the disruption of labor, political disturbances,
insurrection or war and the effect of requirements of partial local ownership of
operations in certain countries.

43

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

EQUITY PRICE RISK

As the Company considers its holdings of Safety Components, Omega Protein
and Zap.Com common stock to be a potential source of secondary liquidity, the
Company is subject to equity price risk to the extent of fluctuations in the
market prices and trading volumes of these securities. Fluctuation in the market
price of a security may result from perceived changes in the underlying economic
characteristics of the investee, the relative price of alternative investments
and general market conditions. Furthermore, amounts realized in the sale of a
particular security may be affected by the relative quantity of the security
being sold.

INTEREST RATE RISK

Zapata Corporate and Zap.Com hold investment grade securities including a
mix of U.S. Government or Government agency obligations, certificates of
deposit, money market deposits and commercial paper rated A-1 or P-1. In
addition, Omega Protein holds certificates of deposit and commercial quality
grade investments rated A-2 P-2 or better with companies and financial
institutions. As the majority of the Company's consolidated investment grade
securities constitute short-term U.S. Government agency securities, the Company
does not believe that the value of these instruments have a material exposure to
interest rate risk. However, changes in interest rates do affect the investment
income the Company earns on its cash equivalents and marketable securities and,
therefore, impacts its cash flows and results of operations. Accordingly, there
is inherent roll-over risk for the Company's investment grade securities as they
mature and are renewed at current market rates. Using the Company's consolidated
investment grade security balance of $73.3 million at December 31, 2003 as a
hypothetical constant cash balance, an adverse change of 1% in interest rates
would decrease interest income by approximately $733,000 during a twelve-month
period.

MARKET RISK

To the extent that amounts borrowed under Safety's Amended Congress
Facilities and certain other facilities are outstanding, Safety has market risk
relating to such amounts because the interest rates under the Amended Congress
Facilities and those certain other facilities are variable. As of December 31,
2003, Safety's interest rate, inclusive of credit fees under the Amended
Congress Facilities approximated 4.00%. Due to the variability of the interest
rates, a hypothetical increase or decrease in the interest rates of 100 basis
points relating to the Amended Congress Facilities may result in an addition to
or reduction in interest expense of approximately $200,000 on an annual basis.
Omega Protein is exposed to minimal market risk associated with interest rate
movements on its borrowings. A one percent increase or decrease in the levels of
interest rates on Omega's variable rate debt would not result in a material
change to the Company's results of operations.

CURRENCY EXCHANGE RATES AND FORWARD CONTRACTS

Safety's operations in Mexico, Germany, the United Kingdom and the Czech
Republic expose Safety to currency exchange rate risks. Safety monitors its risk
associated with the volatility of certain foreign currencies against its
functional currency, the U.S. dollar. The impact of changes in the relationship
of other currencies to the U.S. dollar in the period from March 30, 2003 to
December 31, 2003 has resulted in Safety's recognition of other income of
approximately $2.0 million. It is unknown what the effect of foreign currency
rate fluctuations will have on Safety's financial position or results of
operations in the future. If, however, there were a sustained decline of these
currencies versus the U.S. dollar, the consolidated financial statements could
be materially adversely affected.

Derivative financial instruments are utilized by Safety to reduce exposures
to volatility of foreign currencies impacting the operations of its business.
Safety does not enter into financial instruments for trading or speculative
purposes.

Certain operating expenses at Safety's Mexican facilities are paid in
Mexican pesos. To reduce exposure to fluctuations in the U.S. dollar and Mexican
peso exchange rates, Safety periodically enters into forward contracts to buy
Mexican pesos for periods and amounts consistent with the related, underlying
forecasted

44

cash outflows. These contracts are designated as hedges at inception and are
monitored for effectiveness on a routine basis. At December 31, 2003, Safety had
outstanding forward exchange contracts that mature between January and March
2004 to purchase Mexican pesos with an aggregate notional amount of
approximately $2.7 million. The fair values of these contracts at December 31,
2003, totaled approximately $52,000, which is recorded as a liability on
Safety's balance sheet in "other current liabilities." Safety recorded a credit
to earnings of approximately $47,000 for the nine month period from March 30,
2003 to December 31, 2003 and the unrealized loss on these forward contracts of
approximately $52,000 was included in "accumulated other comprehensive income"
at December 31, 2003.

Certain intercompany sales at Safety's Czech facility are denominated and
settled in Euros. To reduce exposure to fluctuation in the Euro and Czech Koruna
exchange rates, Safety periodically enters into forward contracts to buy Czech
Korunas for periods and amounts consistent with the related, underlying
forecasted cash inflows associated with the intercompany sales. These contracts
are designated as hedges at inception and are monitored for effectiveness on a
routine basis. At December 31, 2003, Safety had outstanding forward exchange
contracts that mature between January and March 2004 to purchase Czech Korunas
with an aggregate notional amount of approximately $2.1 million. The fair values
of these contracts at December 31, 2003 totaled approximately $100,000, which is
recorded as a liability on Safety's balance sheet in "other current
liabilities." Safety recorded a charge to earnings of approximately $47,000 for
the nine month period from March 30, 2003 to December 31, 2003 and the
unrealized loss on these forward contracts of approximately $89,000 was included
in "accumulated other comprehensive income" at December 31, 2003.

45

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of Zapata Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholders' equity and cash
flows present fairly, in all material respects, the financial position of Zapata
Corporation and its subsidiaries at December 31, 2003 and 2002, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

Rochester, New York
March 16, 2004

46

ZAPATA CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

The accompanying notes are an integral part of the consolidated financial
statements.
47

ZAPATA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of the consolidated financial
statements
48

ZAPATA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

The accompanying notes are an integral part of the consolidated financial
statements.

49

ZAPATA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

The accompanying notes are an integral part of the consolidated financial
statements
50

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND ORGANIZATION

Zapata Corporation ("Zapata" or "the Company") is a holding company which
currently has two operating companies, Safety Components International, Inc.
("Safety Components" or "Safety") and Omega Protein Corporation ("Omega Protein"
or "Omega"). As of December 31, 2003, Zapata had an 83% ownership interest in
Safety and a 59% ownership interest in Omega. In addition, Zapata owns 98% of
Zap.Com Corporation ("Zap.Com"), a public shell company.

Safety Components is a leading, low-cost, independent supplier of
automotive airbag fabric and cushions and technical fabrics with operations in
North America and Europe. Safety Components sells airbag fabric domestically and
cushions worldwide to the major airbag module integrators that outsource such
products. Safety Components also manufactures value-added technical fabrics used
in a variety of niche industrial and commercial applications such as ballistics
material for luggage, filtration, military tents and fire service apparel. The
ability to interchange airbag and specialty technical fabrics using the same
equipment and similar manufacturing processes allows Safety to more effectively
utilize its manufacturing assets and lower per unit overhead costs. Safety
Components trades on the over-the counter electronic bulletin board under the
symbol "SAFY."

Omega Protein produces and markets a variety of products produced from
menhaden (a herring-like species of fish found in commercial quantities in the
U.S. coastal waters of the Atlantic Ocean and Gulf of Mexico), including regular
grade and value-added specialty fish meals, crude and refined fish oils and
regular and value-added fish solubles. Omega's fish meal products are primarily
used as a protein ingredient in animal feed for swine, cattle, aquaculture and
household pets. Fish oil is utilized for animal and aquaculture feeds,
industrial applications, as well as for additives to human food products.
Omega's fish solubles are sold primarily to livestock feed manufacturers,
aquaculture feed manufacturers and for use as an organic fertilizer. Omega
Protein trades on the New York Stock Exchange under the symbol "OME."

In December 2000, Zap.Com exited the Internet business and terminated all
salaried employees and third party contractual relationships. Currently, Zap.Com
does not have any existing business operations, other than maintaining its
status as a public shell company. Zap.Com is likely to search for assets or
businesses that it can acquire so that it can become an operating company.
Zap.Com may also consider developing a new business suitable for its situation.
Zap.Com trades on the over-the-counter electronic bulletin board under the
symbol "ZPCM."

As used throughout this report, "Zapata Corporate" is defined as Zapata
Corporation exclusive of its majority owned subsidiaries Safety Components,
Omega Protein and Zap.Com.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include Zapata and its wholly and
majority-owned domestic and foreign subsidiaries (collectively, "Zapata" or the
"Company"). Consolidated financial statements are financial statements of a
parent company and its subsidiaries presented as if the entities were a single
economic unit. Although the assets, liabilities, revenues, and expenses of all
entities are combined to provide a single set of financial statements, certain
eliminations and adjustments are made. These eliminations are necessary to
ensure that only arm's-length transactions between independent parties are
reflected in the consolidated statements; transactions between related parties
are eliminated. In addition, when the parent company consolidates non-wholly
owned subsidiaries, minority interest on the consolidated balance sheets and
statements of operations represents the minority stockholders' (those other than
the parent company) interest in the net assets and net income of such
subsidiaries.

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FISCAL YEAR

Zapata and its consolidated subsidiaries have fiscal years ending on
December 31st with calendar quarter-end dates. Safety's operations were formerly
based on a fifty-two or fifty-three week fiscal year ending on the Saturday
closest to March 31st. Subsequent to the Company's purchase of Safety, Safety
changed its fiscal year to end on December 31 to coincide with Zapata's fiscal
year end.

CASH AND CASH EQUIVALENTS

The Company invests certain of its excess cash in government and corporate
debt instruments. All highly liquid investments with original maturities of
three months or less are considered to be cash equivalents. The recorded amounts
for cash equivalents approximate fair market value due to the short-term nature
of these financial instruments.

SHORT-TERM INVESTMENTS

The Company invests certain of its excess cash in government debt
instruments. All highly liquid investments with original maturities of greater
than three months but not longer than one year are considered short-term
investments, available for sale. Accrued interest receivable is recorded on
short-term investments so that the original cost plus accrued interest
approximates fair market value due to the short-term nature of these
investments. As such, no unrealized holding gains or losses are recorded as a
separate component of accumulated other comprehensive (loss) income.

INVENTORIES

Safety Components' inventories represent direct materials, labor and
overhead costs incurred for products not yet delivered and are stated at the
lower of cost (first-in, first-out) or market.

Omega Protein's inventory is stated at the lower of cost or market. Omega
Protein's fishing season runs from mid-April to the first of November in the
Gulf of Mexico and from the beginning of May into December in the Atlantic.
Government regulations preclude Omega Protein from fishing during the
off-seasons.

Omega Protein's inventory cost system considers all costs associated with
an annual fish catch and its processing, both variable and fixed, including both
costs incurred during the off-season and during the fishing season. Omega
Protein's costing system allocates cost to inventory quantities on a per unit
basis as calculated by a formula that considers total estimated inventoriable
costs for a fishing season (including off-season costs) to total estimated fish
catch and the relative fair market value of the individual products produced.
Omega Protein adjusts the cost of sales, off-season costs and inventory balances
at the end of each quarter based on revised estimates of total inventoriable
costs and fish catch. Omega Protein's lower-of-cost-or-market-value analyses at
year-end and at interim periods compares the total estimated per unit production
cost of expected production to the projected per unit market prices of the
products. The impairment analyses involve estimates of, among other things,
future fish catches and related costs, and expected commodity prices for the
fish products. These estimates, which management believes are reasonable and
supportable, involve estimates of future activities and events which are
inherently imprecise and from which actual results may differ materially.

During the off-seasons, in connection with the upcoming fishing seasons,
Omega Protein incurs costs (i.e., plant and vessel related labor, utilities,
rent, repairs, and depreciation) that are directly related to Omega's
infrastructure. These costs accumulate in inventory and are applied as elements
of the cost of production of Omega Protein's products throughout the fishing
season ratably based on Omega's monthly fish catch and the expected total fish
catch for the season.

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LONG-TERM INVESTMENTS

The Company accounts for its long-term investments in marketable securities
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115
establishes the accounting and reporting requirements for all debt securities
and for investments in equity securities that have readily determinable fair
values. All marketable securities must be classified as one of the following:
held-to-maturity, available-for-sale or trading. The Company classifies its
marketable securities as available-for-sale and, as such, carries the
investments at fair value, with unrealized holding gains and losses reported in
stockholders' equity as a separate component of accumulated other comprehensive
(loss) income. The cost of securities sold is based on the specific
identification method. Realized gains and losses, and declines in value
determined to be other than temporary, are included in interest income (expense)
in the statement of operations.

INTANGIBLES ASSETS

Intangible assets consist of Safety Components' patents and customer
intangibles related to the Company's acquisition of Safety Components common
stock. Both patents and customer intangibles are stated at fair value less
accumulated amortization. At December 31, 2003, all patents were held by Safety
Components. These patents relate to technical improvements for enhancement of
product performance with respect to Safety's airbag, fabric and technical
related products. Relationship intangibles represent the present value of the
projected future earnings associated with business expected to be generated from
Safety's existing customers as of the date of acquisition. This asset is being
amortized over 4 years which represents the average duration of established
airbag programs in place as of the date of acquisition.

ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for impairments and disposals of long-lived assets in
accordance with Statement of Financial Accounting Standards ("SFAAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." Pursuant to
the provisions of SFAS No. 144, the Company reviews the recoverability of its
long-lived assets when events or changes in circumstances occur that indicate
that the carrying value of the asset or asset group may not be recoverable. The
assessment of possible impairment is based on the Company's ability to recover
the carrying value of the asset or asset group from the expected future cash
flows. If these cash flows are less than the carry amount of the asset or asset
group, an impairment loss is recognized for the difference between estimated
fair value and carrying value. Fair values are based on assumptions and
estimates of future cash flows and the fair value of long-lived assets.

PENSION PLANS

Annual costs of pension plans are determined actuarially based on SFAS No.
87, "Employers' Accounting for Pensions." The Company applies revised SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits"
disclosure requirements for its pensions and other postretirement benefit plans.

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Consolidated property, plant and equipment is recorded at cost and
depreciated over the estimated useful lives of the assets using the
straight-line method. Estimated useful lives of assets acquired, determined as
of the date of acquisition, are as follows:

Buildings................................................... 20 - 40 years
Fishing vessels............................................. 15 - 20 years
Machinery and equipment..................................... 4 - 10 years
Furniture and fixtures...................................... 3 - 10 years

Leasehold improvements are depreciated over the lesser of their useful life
or the lease term; replacements and major improvements are capitalized;
maintenance and repairs are charged to expense as incurred. Upon sale or
retirement, the costs and related accumulated depreciation are eliminated from
the accounts. Any resulting gains or losses are included in the statement of
operations.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The consolidated financial statements include financial instruments whereby
the fair market value of such instruments may differ from amounts reflected on a
historical basis. Financial instruments of the Company consist of cash deposits,
accounts receivable, advances to affiliates, accounts payable, certain accrued
liabilities and long-term debt. The carrying amount of the Company's long-term
debt at December 31, 2003 and 2003 approximated fair market value based on
prevailing market rates. The Company's other financial instruments generally
approximate their fair values based on the short-term nature of these
instruments.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company accounts for derivative financial instruments in accordance
with SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", which, as amended, establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. It requires the recognition of all
derivative instruments as either assets or liabilities in the statement of
financial position and measurement of those instruments at fair value. The
accounting treatment of changes in fair value is dependent upon whether or not a
derivative instrument is designated as a hedge and, if so, the type of hedge.
For derivatives designated as cash flow hedges, to the extent effective, changes
in fair value are recognized in accumulated other comprehensive loss until the
hedged item is recognized in earnings. Ineffectiveness is recognized immediately
in earnings. For derivatives designated as fair value hedges, changes in fair
value are recognized in earnings.

Safety Components utilizes derivative financial instruments to reduce
exposures to volatility of foreign currencies impacting the operations of its
business. Safety does not enter into financial instruments for trading or
speculative purposes. See Note 24 for further information regarding derivative
instruments.

DEFERRED FINANCING COSTS

Costs incurred in connection with financing activities are deferred and
amortized over the lives of the respective debt instruments using the
straight-line method (which approximates the effective interest method), and are
charged to interest expense in the accompanying consolidated statements of
operations.

COMPREHENSIVE INCOME

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
the reporting and display of comprehensive income and its components within the
financial statements. Other comprehensive income is comprised of charges to
stockholders' equity, other than contributions from or distributions to
stockholders,

54

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

excluded from the determination of net income. The Company's other comprehensive
income is comprised of foreign currency translations, gain or loss on
derivatives, unrealized holding gains and losses on the Company's long-term
investments and additional minimum pension liability adjustment.

REVENUE RECOGNITION

Safety Components and Omega Protein recognize revenue from product sales
when goods have been shipped and the risk of loss has passed. Additionally,
Safety accrues for sales returns and other allowances at the time of shipment
based upon historical experience.

ADVERTISING COSTS

The costs of advertising are expensed as incurred in accordance with
Statement of Position 93-7 "Reporting on Advertising Costs" and are included as
a component of selling, general and administrative expenses in the accompanying
consolidated statements of operations.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs are charged to operations when incurred and
are included as a component of selling, general and administrative expenses in
the accompanying consolidated statements of operations.

INSURANCE

Omega Protein carries insurance for certain losses relating to its vessels
and Jones Act liabilities for employees aboard its vessel. Omega provides
reserves for those portions of the annual aggregate deductible for which Omega
remains responsible by using an estimation process that considers Omega
Protein-specific and industry data as well as management's experience,
assumptions and consultation with outside counsel. Omega Protein management's
current estimated range of liabilities related to such cases is based on claims
for which management can estimate the amount and range of loss. Omega has
recorded the minimum estimated liability related to those claims where there is
a range of loss. As additional information becomes available, Omega Protein will
assess the potential liability related to its pending litigation and revise its
estimates. Such revisions in estimates of the potential liability could
materially impact Omega Protein's results of operation and financial position.

INCOME TAXES

Zapata and Omega each file a separate consolidated U.S. federal income tax
return. Zapata's consolidated U.S. federal income tax return includes
subsidiaries in which Zapata owns in excess of 80% of the voting interests.
Accordingly, Zap.Com and Safety Components (beginning with the fourth quarter of
2003) will be included in Zapata's consolidated U.S. federal income tax return.

The Company utilizes the liability method to account for income taxes. This
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of existing temporary differences between the
financial reporting and tax reporting basis of assets and liabilities, and
operating loss and tax credit carry-forwards for tax purposes. Valuation
allowances are recognized to reduce deferred tax assets to an amount that is
more likely than not to be realized. As Safety Components will be included in
the consolidated federal return of Zapata, the assessment of Safety's tax
liabilities, deferred tax assets and liabilities, and valuation allowance are
calculated on a consolidated basis that includes Zapata's and Zap.Com's
activities and results of operations. With respect to Safety's foreign
operations, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial

55

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carry-forwards.

ENVIRONMENTAL EXPENDITURES

Environmental expenditures that result from the remediation of an existing
condition caused by past operations that will not contribute to current or
future revenues are expensed. Expenditures that extend the life of the related
property or prevent future environmental contamination are capitalized.
Undiscounted liabilities are recognized for remedial activities when the cleanup
is probable and the cost can be reasonably estimated.

FOREIGN CURRENCY TRANSLATION

Financial statements of substantially all of Safety's foreign operations
are prepared using the local currency as the functional currency. Translation of
these foreign operations to United States dollars occurs using the current
exchange rate for balance sheet accounts and a weighted average exchange rate
for results of foreign operations.

Translation gains or losses are recognized in "accumulated other
comprehensive income (loss)" as a component of stockholders' equity in the
accompanying consolidated balance sheets.

Safety's subsidiary in Mexico prepares its financial statements using the
United States dollar as the functional currency. Since the Mexican subsidiary
does not have external sales and does not own significant amounts of inventory
or fixed assets, Safety has determined that the United States dollar is the
appropriate functional currency. Accordingly, the translation effects of the
financial statements are included in the results of operations. During the
periods presented herein, such amounts were not significant.

STOCK-BASED COMPENSATION

The Company accounts for stock- based compensation according to Accounting
Principles Board Opinion No. 25 and the related interpretations under Financial
Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." The Company adopted the
required disclosure provisions under Statement of Financial Accounting Standards
No. 148 and continues to use the intrinsic value method of accounting for
stock-based compensation. Had compensation expense for the Company's stock
option grants been determined based on fair value at the grant date using the

56

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Black-Scholes option-pricing model, the Company's net income and earnings per
share (basic and diluted) would have been as follows:

Due to the timing of the acquisition, Safety's stock-based employee
compensation expense has been included in Zapata's amounts beginning in the
fourth quarter of 2003. However, Safety reported no stock-based employee
compensation expense for the fourth quarter of 2003.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principals generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Due to the inherent uncertainty involved
in making estimates, actual results in future periods could differ from these
estimates.

CONCENTRATIONS OF CREDIT RISK

Zapata invests the majority of its excess cash, cash equivalents and
short-term investments in U.S. Government Agency Securities and therefore has
significantly reduced its future exposure to market risk.

Safety Components is subject to a concentration of credit risk consisting
of its trade receivables and typically has a limited customer base that accounts
for a significant portion of its trade receivables. Safety performs ongoing
credit evaluations of its customers and generally does not require collateral.
Safety evaluates potential losses for uncollectible accounts and such losses
have historically been immaterial and within management's expectations.

57

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Omega Protein has cash deposits concentrated primarily in one major bank.
Also, Omega has Certificates of Deposit and commercial quality grade investments
rated A-2 P-2 or better with companies and financial institutions. As a result
of the forgoing, Omega believes that credit risk in such investments is minimal.

Omega's customer base generally remains consistent from year to year. Omega
performs ongoing credit evaluations of its customers and generally does not
require material collateral. Omega maintains reserves for potential credit
losses and such losses have historically been within management's expectations.

RECLASSIFICATION

Certain reclassifications of prior year information have been made to
conform to the current presentation.

NOTE 3. ACQUISITIONS

On September 23, 2003, Zapata purchased 2,663,905 shares of Safety
Components International, Inc. common stock for $30.9 million and purchased an
additional 1,498,489 shares of Safety common stock on October 7, 2003. These
additional shares were purchased for $16.9 million and increased the Company's
ownership percentage of Safety's outstanding common stock to approximately 84%
at the time.

The Company accounted for these transactions under the purchase method and
began consolidating amounts related to Safety's assets and liabilities as of
September 30, 2003. Due to the timing of the acquisition, the Company began
consolidating amounts related to Safety's results of operations in the fourth
quarter of 2003. The Company engaged a third-party valuation firm to assist in
the assessment of the fair values of the assets and liabilities acquired to
determine the allocation of the total purchase price.

The following represents the final purchase price allocation associated
with the 84% acquisition of Safety Components common stock:

In accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets", and as clarified by Emerging Issues Task
Force Issue 02-17, "Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination," contract and relationship intangibles were
recognized in conjunction with the assessment of the fair values of the assets
acquired. The value of contract intangibles was determined based on purchase
orders on hand as of the date of acquisition. Consistent with Safety's
historical experience, contractual purchase orders are established each week
based on the following week's requirements. Accordingly, the value of the
contract intangible asset was determined based on purchase orders which
represented approximately one week's sales. Based on the short-term nature of
these purchase orders, contract intangibles were fully amortized as of December
31, 2003. Customer relationship intangibles represent the present value of the
projected future earnings associated with business expected to be

58

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

generated from Safety's existing customers as of the date of acquisition. The
discount rate utilized in the calculation of customer relationship intangibles
incorporated a company specific risk factor to account for the uncertainty of
future results duplicating historical performance and to account for general
market uncertainties. While the useful life of this customer relationship asset
is not limited by contract or any other economic, regulatory or other known
factors, a useful life of 4 years was determined based on the average duration
of established airbag programs in place as of the date of acquisition.

The following table sets forth the unaudited pro forma condensed
consolidated summary financial information for the years ended December 31, 2003
and 2002. This information gives effect to the acquisition of 84% of Safety
Components common stock as if it had occurred as of the beginning of each of the
periods presented. These statements are presented after giving effect to certain
adjustments for compensation agreements, forgone interest and related income tax
effects which are based upon currently available information and upon certain
assumptions that the Company believes are reasonable. These pro forma amounts do
not purport to present what the Company's consolidated results of operations
would have been if the aforementioned transaction had in fact occurred at the
beginning of the periods indicated, nor do they project the Company's
consolidated results of operations for any future period.

NOTE 4. SHORT-TERM INVESTMENTS

Short-term investments are summarized as follows:

Interest rates on these investments ranged from 0.99% -- 1.06% and
1.26% -- 1.88% at December 31, 2003 and 2002, respectively.

59

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5. ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

As a result of the 2003 acquisition, consolidated accounts receivable as of
December 31, 2003 include amounts attributable to Safety Components.
Accordingly, no such amounts are included as of December 31, 2002.

As a result of the completion of Zapata's Internal Revenue Service audit of
the tax fiscal years ended September 30, 1997-2001, the Company recorded a net
income tax receivable of $974,000 during 2003.

NOTE 6. INVENTORIES

Inventories are summarized as follows:

As a result of the 2003 acquisition, consolidated inventory as of December
31, 2003 includes amounts attributable to Safety Components. Accordingly, no
such amounts are included as of December 31, 2002.

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7. LONG-TERM INVESTMENTS

The Company held no long-term investments as of December 31, 2003. As of
December 31, 2002, Zapata Corporate held available for sale securities with a
total cost of approximately $4.0 million, market value of approximately $4.0
million and an unrealized gain of $22,000, which was reflected as a component of
accumulated other comprehensive income, net of tax. These investment grade
securities were obligations of the Federal Home Loan Bank, an agency of the U.S.
Government and matured in 2003.

NOTE 8. INTANGIBLE ASSETS

Intangible assets, net are summarized as follows:

As a result of the 2003 acquisition, consolidated intangible assets as of
December 31, 2003 include amounts attributable to Safety Components.
Accordingly, no such amounts are included as of December 31, 2002.

Amortization expense for the years ended December 31, 2003, 2002 and 2001
was approximately $714,000, $0 and $0, respectively. Estimated amortization
expense for each of the next five fiscal years is as follows (in thousands):

2004........................................................ 2,024
2005........................................................ 2,024
2006........................................................ 2,024
2007........................................................ 1,538
2008........................................................ 81

As of December 31, 2003, all patents were held by Safety Components. These
patents relate to technical improvements for enhancement of product performance
with respect to Safety's airbag, fabric and technical related products.

Customer relationship intangibles represent the present value of the
projected future earnings associated with business expected to be generated from
Safety's existing customers as of the date of acquisition. The discount rate
utilized in the calculation of customer relationship intangibles incorporated a
company specific risk factor to account for the uncertainty of future results
duplicating historical performance and to account for general market
uncertainties.

61

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net are summarized as follows:

As a result of the 2003 acquisition, consolidated property, plant and
equipment as of December 31, 2003 include amounts attributable to Safety
Components. Additionally, Safety's depreciation expense has been included in
Zapata's consolidated results only for the quarter ended December 31, 2003.
Depreciation expense for years ended December 31, 2003, 2002 and 2001 was $12.8
million, $9.2 million, and $8.6 million, respectively.

NOTE 10. OTHER ASSETS

Other assets are summarized as follows:

As a result of the 2003 acquisition, consolidated other assets as of
December 31, 2003 include amounts attributable to Safety Components.
Accordingly, no such amounts are included as of December 31, 2002.

Omega Protein's amortization expense for fishing nets amounted to
approximately $985,000, $688,000 and $732,000 for the years ended December 31,
2003, 2002 and 2001, respectively.

Omega carries insurance for certain losses relating to its vessels and
Jones Act liability for employees aboard its vessels (collectively, "Vessel
Claims Insurance"). The typical Vessel Claims Insurance policy contains an
annual aggregate deductible ("AAD") for which Omega remains responsible, while
the insurance carrier is responsible for all applicable amounts which exceed the
AAD. It is Omega's policy to accrue current amounts due and record amounts paid
out on each claim. Once payments exceed the AAD, Omega records an insurance
receivable for a given policy year.

62

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For more information concerning the Safety Components International, Inc.
Executive Deferral Program, see Note 20.

NOTE 11. ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities are summarized as follows:

As a result of the 2003 acquisition, consolidated accrued and other current
liabilities as of December 31, 2003 include amounts attributable to Safety
Components. Accordingly, no such amounts are included as of December 31, 2002.

63

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12. DEBT

Long-term debt consisted of the following:

As a result of the 2003 acquisition, consolidated long-term debt as of
December 31, 2003 includes amounts attributable to Safety Components.
Accordingly, no such amounts are included as of December 31, 2002. As of
December 31, 2003 and 2002, the estimated fair value of debt obligations
approximated book value.

SAFETY COMPONENTS

On October 8, 2003, Safety executed an amendment to its credit facility
(the "Congress Facility") with Congress Financial Corporation (Southern), a
subsidiary of Wachovia Bank, National Association ("Congress"). As amended,
Safety has an aggregate, $35.0 million revolving credit facility with Congress
(the "Congress Revolver") expiring October 8, 2006. Under the Congress Revolver,
Safety may borrow up to the lesser of (a) $35.0 million or (b) 85% of eligible
accounts receivable, plus 60% of eligible finished goods, plus

64

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

50% of eligible raw materials. The amount borrowed under the Congress Revolver
at December 31, 2003 was $4.6 million. The Congress Revolver also includes a
$5.0 million letter of credit facility, under which Safety had $497,000
outstanding pursuant to letters of credit at December 31, 2003.

In addition, the amendment provided for a term facility (the "Congress Term
A loan") under which $4.2 million was borrowed at December 31, 2003. The
Congress Term A loan is payable in equal monthly installments of approximately
$72,000, with the unpaid principal amount due on October 8, 2006. Additional
amounts are not available for borrowing under the Congress Term A loan. In
addition to the Congress Revolver and Congress Term A, the amendment also
provided for an additional $4.5 million term loan (the "Congress Term B loan"
and, collectively with the Congress Revolver and the Congress Term A loan, the
"Amended Congress Facilities") which is undrawn and is currently fully
available. At December 31, 2003, Safety's availability for additional borrowings
(based on the maximum allowable limit) under the Congress Revolver and the
Congress Term B loan was approximately $34.9 million.

The interest rate on the Congress Revolver and Congress Term A is variable,
depending on the amount of Safety's Excess Availability (as defined in the
Amended Congress Facilities) at any particular time and the ratio of Safety's
EBITDA, less certain capital expenditures made by Safety, to certain fixed
charges of Safety (the "Fixed Charge Coverage Ratio"). Safety may make
borrowings based on the prime rate as described in the Amended Congress
Facilities (the "Prime Rate") or the LIBOR rate as described in the Amended
Congress Facilities, in each case with an applicable margin applied to the rate.
The Congress Term B loan bears interest at the Prime Rate plus 3%. At December
31, 2003, the margin on Prime Rate loans was 0.0% and the margin on LIBOR rate
loans was 2.0%. Safety is required to pay a monthly unused line fee of 0.25% on
the unutilized portion of the Congress Revolver and a monthly fee equal to 1.75%
of the amount of any outstanding letters of credit.

Under the Congress Revolver and Congress Term A facilities, Safety is
subject to a covenant that requires it to maintain a certain tangible net worth.
To the extent that Safety has borrowings outstanding under the Congress Term B
loan, it is subject to additional financial covenants that require Safety: (i)
to maintain EBITDA of no less than certain specified amounts, (ii) to maintain a
Fixed Charge Coverage Ratio of no less that a specified amount, (iii) to
maintain a ratio of certain indebtedness to EBITDA not in excess of a specified
amount, and (iv) not to make capital expenditures in excess of specified
amounts. In addition, Safety would be required to repay the Congress Term B loan
to the extent of certain excess cash flow.

The Amended Congress Facilities also impose limitations upon Safety's
ability to, among other things, incur indebtedness (including capitalized lease
arrangements); become or remain liable with respect to any guaranty; make loans;
acquire investments; declare or make dividends or other distributions; merge,
consolidate, liquidate or dispose of assets or indebtedness; incur liens; issue
capital stock; or change its business. At December 31, 2003, Safety was in
compliance with all financial and non-financial covenants. Substantially all
assets of Safety are pledged as collateral for the borrowings under the Amended
Congress Facilities.

Safety's subordinated secured note facility with KeyBank National
Association and Fleet Bank ("KeyBank subordinated secured note") was paid in
full on October 8, 2003 with proceeds from the Amended Congress Facilities.

On March 28, 2002, Safety's Czech Republic subsidiary and HVB Bank Czech
Republic, successor to Bank Austria, entered into an amendment to its $7.5
million mortgage note facility dated June 4, 1997. This amendment extends the
mortgage facility for five years, establishes an interest rate of 1.7% over
EURIBOR (EURIBOR was 2.31% at December 31, 2003), requires monthly payments of
approximately $89,000 and is secured by the real estate assets of Safety's
subsidiary in the Czech Republic. Safety has guaranteed the repayment of up to
$500,000 of the obligations of this subsidiary with respect to this facility.

65

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On April 1, 1999, Safety's German subsidiary secured a $2.9 million
mortgage note facility with Deutsche Bank to purchase a facility in Germany. The
note was secured by the real estate in Germany acquired through the mortgage. On
October 31, 2003, the mortgage was paid in full.

On July 10, 1998, Safety entered into a $10.0 million financing arrangement
with KeyCorp Leasing, a division of Key Corporate Capital Inc. ("KeyCorp"). The
KeyCorp financing agreement has a seven-year term, bears interest at a rate of
1.25% over LIBOR (LIBOR was 2.56% at December 31, 2003), requires monthly
payments of approximately $150,000 and is secured by certain equipment located
at Safety's Greenville, South Carolina facility.

The annual maturities of Safety's long-term debt for the five years ending
December 31, 2008 and thereafter are as follows (in thousands):

2004........................................................ 4,214
2005........................................................ 3,063
2006........................................................ 7,837
2007........................................................ 830
2008........................................................ 87
Thereafter.................................................. --
-------
$16,031
=======

All debt in the above chart consists of the obligations of Safety
Components. Zapata Corporate has neither guaranteed nor otherwise agreed to be
liable for the repayment of this debt.

OMEGA PROTEIN

Omega was initially authorized to receive up to $20.6 million in loans
under the Title XI program, and has borrowed the entire amount authorized under
such program. The Title XI loans are secured by liens on certain of Omega's
fishing vessels and mortgages on Omega's Reedville, Virginia and Abbeville,
Louisiana plants. Loans are now available under similar terms pursuant to the
Title XI program without intervening lenders.

On October 1, 2003, pursuant to the Title XI program, the United States
Department of Commerce approved the fiscal 2003 financing application made by
Omega in the amount of $5.3 million. Omega closed on the $5.3 million Title XI
loan on December 30, 2003.

On December 20, 2000 Omega entered into a three-year $20 million revolving
credit agreement with Bank of America, N.A. (the "Credit Facility"). Borrowings
under this facility may be used for working capital and capital expenditures. On
May 19, 2003, Omega amended the existing Credit Facility and among other things,
these amendments extended the maturity until December 20, 2006, deleted certain
existing financial covenants and added certain affirmative covenants such as, a
Leverage Ratio covenant not to exceed 3.0 to 1 at any time and a Fixed Charge
Coverage Ratio covenant not to be less than 1.0 as of the end of each month,
measured for the twelve-month period then ended. Omega is required to comply
with the financial covenants from and after the last day of any month in which
the Credit Facility's availability is less than $3,000,000 on any date or the
Credit Facility's availability averages less than $6,000,000 for any calendar
month. A commitment fee of 50 basis points per annum is payable on the unused
portion of the Credit Facility. If at any time Omega's loan outstanding under
the Credit Facility is $5,000,000 or greater, the commitment fee on the unused
portion shall be 25 basis points per annum. Applicable interest is payable at
alternative rates of LIBOR plus 2.25% or Prime plus 0%. The applicable interest
note will be adjusted (up or down) prospectively on a quarter basis from LIBOR
plus 2.25% to LIBOR plus 2.75% or at Omega's option Prime plus 0% to Prime plus
0.25% depending upon the Fixed Charge Coverage Ratio being greater than 2.5
times to less than or equal

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to 1.5 times, respectively. The Credit Facility is collateralized by all of
Omega's trade receivables, inventory and equipment. In addition, the Credit
Facility does not allow for the payment of cash dividends or stock repurchases
and also limits capital expenditures and investments. Omega was in compliance
with the Credit Facility covenants at December 31, 2003. As of December 31,
2003, Omega had no borrowings outstanding under the Credit Facility. At December
31, 2003 and December 31, 2002, Omega had outstanding letters of credit totaling
approximately $2.6 million and $2.1 million, respectively, issued primarily in
support of worker's compensation insurance programs.

The annual maturities of Omega's long-term debt for the five years ending
December 31, 2008 and thereafter are as follows (in thousands):

2004........................................................ 1,566
2005........................................................ 1,662
2006........................................................ 1,751
2007........................................................ 1,865
2008........................................................ 1,960
Thereafter.................................................. 10,367
-------
$19,171
=======

All debt in the above chart consists of the obligations of Omega Protein.
Zapata Corporate has neither guaranteed nor otherwise agreed to be liable for
the repayment of this debt.

NOTE 13. PENSION LIABILITIES

Pension liabilities are summarized as follows:

Pension liabilities are primarily derived from the additional minimum
pension liability requirements of SFAS No. 87 which requires the recognition of
an additional minimum pension liability in the amount of the unfunded
accumulated benefit obligation in excess of accrued pension cost with an equal
amount to be recognized net of the associated tax benefits in accumulated other
comprehensive income. Increases in the additional minimum liability do not
impact earnings or cash flow, and could reverse in future periods should either
interest rates increase or market performance and plan returns improve.

As it is Omega Protein's policy to fund U.S. pension plans at amounts not
less than the minimum requirements of the Employee Retirement Income Security
Act of 1974, Omega may continue to be required to make contributions to its
pension plan to meet the minimum funding requirements as required by law. Omega
expects to contribute $939,000 to its pension plan in 2004. Zapata is not
responsible for any funding of Omega's plan.

Zapata's supplemental retirement plan is an unfunded plan whereby plan
contributions are not required. Fixed plan benefits are paid on a monthly basis
to certain former senior executives of Zapata. The amounts of such payments
equal the difference between the amounts received under the applicable pension
plan and the

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

amounts that would otherwise be received if pension plan payments were not
reduced as the result of the limitations upon compensation and benefits imposed
by federal law.

For more information on benefit plans, see Note 18 Qualified Defined
Benefit Plans.

NOTE 14. STOCKHOLDERS' EQUITY

COMMON STOCK

On November 13, 2002, the Board of Directors approved and authorized Zapata
to make a cash tender offer of $28 per share, for up to 500,000 shares of its
common stock, or approximately 20.9% of its outstanding common stock. In
connection with the approval of this tender offer, the Board of Directors
terminated the existing authorization for the repurchase of up to 500,000 shares
in open market or private transactions. At the time of such termination, no
shares had been repurchased under this program.

On December 6, 2002, the Board of Directors terminated the self-tender
offer in light of its rejection of an unsolicited proposal to acquire the
Company at a price of $35 per share and the fact that the Company's stock had
consistently traded above the tender offer price following the self-tender offer
announcement. Additionally on December 6, 2002, the Board of Directors further
authorized the Company to purchase up to 500,000 shares of its outstanding
common stock in the open market or privately negotiated transactions. The shares
may be purchased from time to time as determined by the Company. Any purchased
shares would be placed in treasury and may subsequently be reissued for general
corporate purposes. The repurchases will be made only at such times as are
permissible under the federal securities laws. No time limit has been placed on
the duration of the program and no minimum number or value of shares to be
repurchased has been fixed. Zapata reserves the right to discontinue the
repurchase program at any time and there can be no assurance that any
repurchases will be made. As of December 31, 2003, no shares had been
repurchased under this program.

On January 30, 2001, the Company effected a one-for-ten reverse split of
its outstanding shares of common stock resulting in there then being
approximately 2.4 million common shares outstanding. In addition, the Company's
authorized shares were reduced to approximately 16.5 million common shares,
200,000 preferred shares and 1.8 million preference shares. The preferred stock
and preference shares are undesignated "blank check" shares. All share and per
share amounts have been retroactively restated for the reverse split.

ACCUMULATED OTHER COMPREHENSIVE INCOME

Components of accumulated other comprehensive (loss) income in stockholders
equity (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 15. EARNINGS PER SHARE INFORMATION

The following reconciles amounts used in the computations of basic and
diluted income per common share (in thousands, except per share amounts):

69

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table details the potential common shares excluded from the
calculation of diluted earnings per share because their exercise price was
greater than the average market price for the period (in thousands, except per
share amounts):

NOTE 16. INCOME TAXES

Domestic and foreign income (loss) before income taxes and minority
interest are as follows:

Safety's results of operations have been included in the Company's
consolidated amounts for the fourth quarter of 2003.

The combined income tax (provision) benefit from continuing operations
consisted of the following:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table reconciles the income tax provisions for all periods
computed using the U.S. statutory rate of 35% to the provisions from continuing
operations as reflected in the financial statements:

No taxes have been provided relating to the possible distribution of
approximately $19.6 million of Safety's undistributed earnings considered to be
permanently reinvested in foreign operations.

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Temporary differences and tax credit carryforwards that gave rise to
significant portions of deferred tax assets and liabilities are as follows:

The last remaining portion of investment tax credits, approximately
$851,000, expired on September 30, 2001. The Company has $14.9 million in net
operating loss carry-forwards for federal income tax purposes, of which $7.5
million is attributable to Omega and the remaining $7.4 is attributable to
Zapata. Since the two companies cannot currently file a consolidated federal
income tax return, the ability for each of these companies to utilize its own
net operating losses is dependent on the future taxable income that each company
separately generates. Net operating loss carry-forwards have a 20 year
carry-forward period. For Zapata and Omega, the net operating losses will begin
to expire in 2020 and 2019, respectively. Additionally, Zapata has approximately
$6.6 million and Omega has approximately $1.2 in federal alternative minimum tax
credits which can be used to offset future federal tax liabilities. Alternative
minimum tax credits do not expire.

On a consolidated basis, the Company has a valuation allowance of $852,000
related to Safety Component's capital loss carryover. To the extent that the
capital loss is ultimately utilized, the recognized tax benefit will be
allocated to reduce non-current intangible assets of Safety Components. With the
exception of this valuation allowance, the Company believes it is more likely
than not that its remaining net deferred tax assets as of December 31, 2003 and
2002 will be realized. The ultimate realization of deferred tax assets could be
negatively impacted by market conditions and other variables not known or
anticipated at this time.

72

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During 2003 Zapata finalized its audit with the Internal Revenue Service
for the tax years ended September 30, 1997 through 2001. This resulted in a net
tax benefit of approximately $3.1 million relating to a federal refund and the
elimination of certain tax contingencies. This benefit was offset by the
recognition of a deferred tax liability of approximately $4.5 million associated
with the excess of book basis over tax basis attributable to Zapata's investment
in Omega Protein.

Effective December 31, 2002 Zapata changed its tax year-end from September
30 to a calendar year ending on December 31. Safety Components will be included
in the consolidated federal tax return of Zapata beginning in the fourth quarter
of 2003. Accordingly, the income (loss) from each of Zapata and Safety
Components will be combined for purposes of calculating the annual federal tax
liability. The determination of whether Zapata and Safety Components will file
on a combined or consolidated basis for state purposes will be made on a state
by state basis.

If Zapata or Omega has a change of ownership pursuant to Section 382 of the
Internal Revenue Code, utilization of their respective net operating losses or
alternative minimum tax credits could be significantly limited or, in Zapata's
case, possibly eliminated. An ownership change for this purpose is generally a
change in the majority ownership of a company over a three year period. As a
result of a prior change of ownership, Zapata's use of approximately $6.3
million of its alternative minimum tax credits will be limited to a maximum of
up to approximately $1.5 million per year.

Section 541 of the Internal Revenue Code of 1986, as amended (the "IRC"),
subjects a corporation, which is a "personal holding company" as defined in the
IRC, to a 15% penalty tax on "undistributed personal holding company income" in
addition to the corporation's normal income tax. Generally, undistributed
personal holding company income is based on taxable income, subject to certain
adjustments, most notably a reduction for Federal incomes taxes. Personal
holding company income is comprised primarily of passive investment income plus,
under certain circumstances, personal service income. Zapata and its domestic
subsidiaries (other than Omega) could become subject to the penalty tax if (i)
60% or more of its adjusted ordinary gross income is personal holding company
income and (ii) 50% or more of its outstanding common stock is owned, directly
or indirectly, by five or fewer individuals at any time during the last half of
the taxable year. The Company believes that five or fewer of Zapata's
stockholders hold 50% or more of its outstanding common stock for purposes of
IRC Section 541. However, as of December 31, 2003, Zapata and its domestic
subsidiaries (other than Omega) had no undistributed personal holding company
income due to losses generated by the consolidated tax filing group and
therefore has not recorded a personal holding company tax liability. There can
be no assurance that Zapata will not be subject to this tax in the future, that
in turn may materially and adversely impact the Company's financial position,
results of operations and cash flows.

73

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 17. COMMITMENTS AND CONTINGENCIES

LEASES PAYABLE

Future annual minimum payments under non-cancelable lease obligations as of
December 31, 2003 are as follows (in thousands):

Rental expenses for leases were $1.1 million, $868,000 and $923,000 in
2003, 2002 and 2001, respectively. Due to the timing of the acquisition,
Safety's rental expenses have been included in Zapata's consolidated results
only for the quarter ended December 31, 2003.

LITIGATION

Zapata and Omega Protein were named as defendants in a lawsuit instituted
on March 10, 2003 in the District Court of Clark County, Nevada by Omega Protein
shareholder Robert Strougo. Plaintiff brought the action individually and as a
putative class action on behalf of all Omega Protein stockholders. No class
period was identified. Also named as defendants in the lawsuit were Avram A.
Glazer, Chairman, President and CEO of Zapata and Darcie Glazer, a director of
Zapata, both of whom are also directors of Omega Protein, and all other Omega
Protein directors. Plaintiff claims that the individual defendants and Zapata
breached their fiduciary duties to Omega Protein's stockholders by not properly
considering a so-called offer sent via e-mail to Zapata by Hollingsworth,
Rothwell & Roxford, a Florida partnership. On July 30, 2003, the court granted
Zapata's motion to dismiss the Complaint and denied the Plaintiffs' cross-motion
for leave to amend. On October 20, 2003 an order of dismissal signed by Judge
Leavitt was filed in the district court for Clark County, Nevada dismissing its
claims against Zapata pursuant to NRCP 12(b)(5), for failure to state a claim
upon which relevancy may be granted and deny its countermotion to amend on the
basis of futility. Zapata filed applications to recover its costs and attorney
fees. Plaintiff appealed the court's decision on November 20, 2003. Thereafter,
Plaintiff and Zapata agreed that Plaintiff would withdraw his appeal in exchange
for Zapata withdrawing its claim for attorney fees and costs. On February 10,
2004, the Court, based on the stipulation of the parties, dismissed the appeal
and directed each party to bear their own costs and attorney fees. Accordingly,
this matter is now concluded.

Omega Protein and each of its directors were named as defendants in a
lawsuit instituted in September 2003 in a Texas state court by purported Omega
stockholder Joseph Chaput. The lawsuit alleged that the defendants breached
their fiduciary duties to Omega's stockholders by not properly considering an
acquisition offer sent in August 2003 by Ferrari Investments and requested
injunctive relief. In December 2003, the plaintiff dismissed the lawsuit
voluntarily with no cost to Omega or its directors.

Zapata is involved in litigation relating to claims arising out of its past
and current operations in the normal course of business. Zapata maintains
insurance coverage against such potential ordinary course claims

74

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in an amount in which it believes to be adequate. While the results of any
ultimate resolution cannot be predicted, in the opinion of Zapata's management,
based upon discussions with counsel, any losses resulting from these matters
will not have a material adverse effect on Zapata's results of operations, cash
flow or financial position.

ENVIRONMENTAL MATTERS

Like similar companies, the operations and properties of Zapata's operating
subsidiaries are subject to a wide variety of increasingly complex and stringent
federal, state, local and international laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials, substances and wastes, the
remediation of contaminated soil and groundwater, and the health and safety of
employees (collectively, "Environmental Laws"). Such laws may impose joint and
several liability and may apply to conditions at properties presently or
formerly owned or operated by an entity or its predecessor as well as to
conditions of properties at which wastes or other contamination attributable to
an entity or its predecessor have been sent or otherwise come to be located. The
nature of the operations of Zapata's operating subsidiaries exposes them to the
risk of claims with respect to such matters and there can be no assurance that
violations of such laws have not occurred or will not occur or that material
costs or liabilities will not be incurred in connection with such claims. Based
upon its experience to date, Zapata believes that the future cost of compliance
with existing Environmental Laws and liability for known environmental claims
pursuant to such Environmental Laws, will not have a material adverse effect on
Zapata's financial position, results of operations or cash flows. However,
future events, such as new information, changes in existing Environmental Laws
or their interpretation, and more vigorous enforcement policies of regulatory
agencies, may give rise to additional expenditures or liabilities that could be
material.

Low levels of contaminants were found at the Company's facility in
Greenville, South Carolina (the "Greenville facility") during groundwater
sampling in 1998. In February 1999, the facility received a notice letter from
the South Carolina Department of Health and Environmental Control ("DHEC")
regarding the groundwater contamination. Over the past four years Safety
Components has performed groundwater monitoring and implemented a program for
in-site remediation of the groundwater. As a result, Safety received a "no
further action" letter from DHEC in its fiscal year ended March 29, 2003, ending
the DHEC investigation. An undiscounted reserve of $277,000 has been included in
"other long-term liabilities" on the accompanying consolidated balance sheets
for estimated future environmental expenditures related to the Greenville
facility for conditions existing prior to Safety's ownership of the facility.
Such reserve was established at the time Safety acquired the facility, and the
amount was determined by reference to the results of a Phase II study performed
at the Greenville facility. The Greenville facility has also been identified
along with numerous other parties as a Potentially Responsible Party at the
Aquatech Environmental, Inc. Superfund Site. Safety believes that it is a de
minimis party with respect to the site and that future clean-up costs incurred
will not be material.

Although no assurances can be given in this regard, in the opinion of
Safety's management, no material expenditures beyond those accrued will be
required for Safety's environmental control efforts and the final outcome of
these matters will not have a material adverse effect on Safety's financial
position or results of future operations. Safety believes that it currently is
in compliance with applicable environmental regulations in all material
respects. Safety's management's opinion is based on the advice of independent
consultants on environmental matters.

Zapata and its subsidiaries are subject to various possible claims and
lawsuits regarding environmental matters in addition to those discussed above.
Zapata's management believes that costs, if any, related to these matters will
not have a material adverse effect on the consolidated results of operations,
cash flows or financial position of the Company.

75

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SAFETY COMPONENTS BANKRUPTCY

Safety Components emerged from bankruptcy on October 11, 2000, and an order
entering the final decree and closing the Chapter 11 cases was signed on
November 21, 2003. The final decree is subject to a "Limited Reservation of
Jurisdiction" for a "Reporting/Fee Dispute" with the U.S. Trustee Office over
administrative matters associated with the cases. Safety has reserved $275,000
for any potential exposure associated with the Reporting/Fee Dispute. Although
no assurances can be given in this regard, in the opinion of Safety's
management, no material expenditures beyond those accrued will be required for
the Reporting/ Fee Dispute.

CAPITAL COMMITMENTS

Omega Protein has committed approximately $16 million to build a new 100
metric ton per day fish oil processing facility at its Reedville, Virginia
location. As of December 31, 2003, Omega has incurred $6.7 million related to
its Reedville processing facility.

GUARANTEES

The Company has applied the disclosure provisions of FASB Interpretation
No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others," to its
agreements containing guarantee or indemnification clauses. These disclosure
provisions expand those required by SFAS No. 5, "Accounting for Contingencies,"
by requiring a guarantor to disclose certain types of guarantees, even if the
likelihood of requiring the guarantor's performance is remote. The following is
a description of arrangements in which the Company is the guarantor.

Zapata's articles of incorporation, bylaws and certain other agreements
contain indemnification clauses for its officers, directors and certain
consultants for losses incurred as a result of claims made against such
individuals arising out of, or because of their service to the Company. The
maximum potential amount of future payments the Company could be required to
make under these indemnification agreements is unlimited; however, Zapata
maintains Director and Officer Liability insurance that limits this exposure. As
a result of this insurance coverage, it is the opinion of Zapata's management
that the estimated fair value of any liabilities under these indemnification
agreements is minimal and should not materially impact the Company's financial
position, results of operations or cash flows. These indemnification obligations
were in effect prior to December 31, 2002 and are therefore grandfathered under
the provisions of FIN No. 45. Accordingly, no liabilities have been recorded for
the indemnification clauses in these agreements.

During February 2003, Zapata's directors and officers entered into
indemnification agreements with the Company. These agreements provide additional
rights to persons entitled to indemnification that is currently provided under
the Company's Articles of Incorporation and By-laws and will protect the
officers and directors from losses incurred as a result of claims made against
such individuals arising out of, or because of their service to the Company. The
maximum potential amount of future payments the Company could be required to
make under these indemnification agreements is unlimited; however, Zapata
maintains Director and Officer Liability insurance to limit potential exposure.
As a result of this insurance coverage, it is the opinion of Zapata's management
that the estimated fair value of any liabilities under these indemnification
agreements is minimal and accordingly, no liabilities have been recorded under
the provisions of FIN 45.

Throughout its history, the Company has entered into numerous transactions
relating to the sale, disposal or spin-off of past operations. Pursuant to
certain of these transactions, the Company may be obligated to indemnify other
parties to these agreements. These obligations include indemnifications for
losses incurred by such parties arising out of the operations of such businesses
prior to these transactions or the inaccuracy of representations of information
supplied by the Company in connection with such transactions. These
indemnification obligations were in effect prior to December 31, 2002 and are
therefore grandfathered under

76

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the provisions of FIN No. 45. Accordingly, no liabilities have been recorded for
the indemnification clauses in these agreements.

In addition, Safety Components, Omega Protein and Zap.Com have articles of
incorporation, bylaws and certain other agreements containing indemnification
clauses for their officers and directors. The estimated fair values of any
liabilities under these indemnification agreements are limited by insurance
coverages and should not materially impact the Company's financial position,
results of operations or cash flows. No liabilities have been recorded for the
indemnification clauses in these agreements.

NOTE 18. QUALIFIED DEFINED BENEFIT PLANS

GENERAL

Zapata and Omega Protein have separate and independent noncontributory
defined benefit pension plans covering certain U.S. employees. Benefits are
generally based on employees' years of service and compensation level. All of
the costs of these plans are borne by Zapata and Omega. Each plan has adopted an
excess benefit formula integrated with covered compensation. Both plan's
participants are 100% vested in the accrued benefit after five years of service.
The funding policy of each plan is to make contributions as required by
applicable regulations. All plans use a December 31 measurement date.

In 2002, Omega Protein's Board of Directors authorized a plan to freeze the
Omega pension plan in accordance with ERISA rules and regulations so that new
employees, after July 31, 2002, will not be eligible to participate in the
pension plan and further benefits will no longer accrue for existing
participants. The freezing of the pension plan had the effect of vesting all
existing participants in their pension benefits in the plan.

Additionally, Effective April 1, 1992, Zapata adopted a supplemental
pension plan, which provides supplemental retirement payments to certain former
senior executives of Zapata. The amounts of such payments equal the difference
between the amounts received under the applicable pension plan and the amounts
that would otherwise be received if pension plan payments were not reduced as
the result of the limitations upon compensation and benefits imposed by federal
law. Effective December 1994, the supplemental pension plan was frozen.

CONSOLIDATED OBLIGATIONS AND FUNDED STATUS

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ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ZAPATA CORPORATE PENSION PLAN INFORMATION

As of December 31, 2003, Zapata's fair value of plan assets of $20.5
million were in excess of accumulated benefit obligations of $17.9 million.
Zapata's unrecognized transition assets of $10.6 million at October 1, 1987 were
amortized over 15 years.

The Board of Directors has established a Pension Committee to oversee plan
assets. The Pension Committee is comprised of two members of management and is
responsible for establishing objectives and policies for the investment of Plan
assets with assistance from the Plan's investment consultant. As the obligations
of the Plan are relatively long-term in nature, the Plan's investment strategy
has been to maximize long-term capital appreciation. The Plan has historically
invested within and among equity and fixed income asset classes in a manner that
sought to achieve the highest rate of return consistent with a moderate amount
of volatility. At the same time, the Plan maintained a sufficient amount
invested in highly liquid investments to meet the Plan's immediate and projected
cash flow needs. To achieve these objectives, the Committee developed guidelines
for the composition of investments to be held by the Plan. Due to varying rates
of return among asset classes, the actual asset mix may vary somewhat from these
guidelines but are generally rebalanced as soon as practical.

Plan Assets. The Zapata Pension Plan asset allocations and target Plan
asset allocations by asset category are as follows:

As of December 31, 2003 and 2002, no plan assets were invested in Zapata
common stock.

79

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's ownership of approximately 83% of Safety's common stock has
resulted in the creation of a parent-subsidiary controlled group for purposes of
the provisions of the Internal Revenue Code applicable to qualified retirement
plans. Based on requirements for controlled groups which would require the Plan
to cover substantially all of the employees of Safety Components, the Company is
likely to freeze and/or ultimately terminate the Plan when Company specific, and
market conditions would be most advantageous to do so. Such modifications would
be made on a timely basis in accordance with the applicable transition rules
pertaining to business acquisitions which do not require such changes to be made
until January 1, 2005. Accordingly, based on the aforementioned acquisition of
Safety common stock and recent favorable market conditions, the Committee
modified the Plan's investment composition to decrease the volatility of the
Plan's assets. The Committee will continue to monitor the strategy to be
consistent with the Company's intentions for the Plan.

The Company currently has a prepaid pension asset of approximately $16.3
million as of December 31, 2003. If the Company decides to terminate the Plan,
at the time of this decision, the Company would be required to incur a non-cash
charge through earnings in an amount equal to the remaining balance of its
prepaid pension asset. If the Company decides to freeze the Plan, the Plan would
continue to be subject to the additional minimum liability requirements of SFAS
No. 87. Such requirements require the recognition of an additional pension
liability in the amount of the unfunded accumulated benefit obligation in excess
of accrued pension with an equal amount to be recognized net of the associated
tax benefits in accumulated other comprehensive (loss) income. Accordingly,
depending on market conditions, the Company may have to reverse its prepaid
pension balance and record a pension liability through a non-cash charge to
equity. As the Company has not determined if it will freeze and/or terminate the
Plan, and due to the uncertainty of market conditions, the Company can provide
no assurances as to the ultimate financial statement impact that Plan
modifications may have.

Based on volatile market conditions leading up to and during 2002, actual
asset allocations varied from Plan guidelines. Based on these conditions, the
Committee decided to temporarily deviate from the Plan's target investment mix
to allow for a gradual return to the stated target asset allocation guidelines.
Subsequent to this decision, and until the Company purchased approximately 84%
of Safety Components, the Committee strategically and gradually returned the
Plan's investment composition to a mix that was within the guidelines of the
plan.

For 2003, the Company assumed a long-term asset rate of return of 8%. In
developing this rate of return assumption, the Company obtained input from our
third party pension plan investment advisor which included a review of
historical returns and asset class return expectations based on the Plan's
current asset allocation. Despite the Company's belief that this assumption is
reasonable, future actual results may differ from this estimate.

Contributions. Zapata plans to make no contributions to its pension plan
in 2004.

OMEGA PROTEIN PENSION PLAN INFORMATION

Omega's funding policy is to make contributions as required by applicable
regulations. The Company uses a December 31 measurement date for its pension
plan. The accumulated benefit obligation for the pension plan was $24.2 and
$25.5 million in excess of plan assets of $14.5 million and $19.3 million as of
December 31, 2003 and 2002, respectively. The unrecognized transition asset at
October 1, 1987 was $5.2 million which is being amortized over 15 years. The
unrecognized net loss of $8.9 million at

80

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 2003 is expected to be reduced by future returns on plan assets and
through decreases in future net pension credits.

Omega Protein, in consultations with its actuarial firm, employs a building
block approach in determining the assumed long-term rate of return for plan
assets. Omega reviews historical market data and long-term historical
relationships between equities and fixed income in accordance with the
widely-accepted capital market principle that assets with higher volatility
generally generate greater returns over the long run. Omega also evaluates
current market factors such as inflation and interest rates before it determines
long-term capital market assumptions. After taking into account diversification
of asset classes and the need to periodically re-balance asset classes, Omega
establishes the assumed long-term portfolio rate of return by a building block
approach. Omega also reviews peer data and historical returns to check its
long-term rate of return for reasonability and appropriateness

Plan Assets. Omega's pension plan weighted-average asset allocations at
December 31, 2003, and 2002, by asset category are as follows:

As of December 31, 2003 and 2002, no plan assets were invested in Omega
Protein common stock.

Contributions. Omega Protein expects to contribute $939,000 to its pension
plan in 2004.

ZAPATA CORPORATE SUPPLEMENTAL PENSION PLAN INFORMATION

Zapata's supplemental pension plan's accumulated benefit obligations of
$849,000 and $852,000 were in excess of plan assets of $0 as of December 31,
2003 and 2002, respectively. Zapata's supplemental plan is subject to the
additional minimum liability requirements of SFAS No. 87. Accordingly, based
upon plan actuarial and asset information, the Company recorded an additional
pension liability of $271,000 and

81

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$230,000, in 2003 and 2002 respectively. Amounts listed as minimum pension
liability adjustments under the caption "Comprehensive (Loss) Income" on the
Consolidated Statements of Stockholders' Equity represent the net change in the
portion of the additional pension liability recorded under accumulated other
comprehensive loss on the Consolidated Balance Sheets.

Plan Assets. Due to the nature of the plan, the Zapata Supplemental
Pension Plan has no plan assets.

Contributions. Zapata plans to make no contributions to its supplemental
pension plan in 2004.

NOTE 19. QUALIFIED DEFINED CONTRIBUTION PLANS

Effective May 31, 2001, the Company established the Zapata 401(k) Plan (the
"Zapata Plan") and simultaneously revoked its participation in the Omega Protein
401(k) Retirement and Savings Plan, (the "Profit Sharing Plan"). All amounts
held by the Profit Sharing Plan on behalf of current and former employees of the
Company were transferred to the Zapata Plan. Participants may defer a fixed
amount or a percentage of their eligible compensation, subject to limitations of
the Zapata Plan. The Company makes a discretionary matching contribution of 100%
of the employee's contribution up to 3% of eligible compensation and 50% of the
employee's contribution between 3% and 5% of eligible compensation. Employer
contributions are discretionary. The Company's contribution to the Zapata Plan
totaled approximately $9,000, $18,000 and $18,000 in 2003, 2002 and 2001
respectively.

Safety has a defined contribution plan qualified under Section 401(k) of
the Internal Revenue Code for eligible employees. The Safety Components
International, Inc. 401(k) Plan (the "Safety 401(k) Plan") provides for
discretionary employer contributions. The Safety 401(k) Plan provides for a
company match equal to 50% of the employee's contribution up to 6% of the
employee's salary. Employer contributions become 100% vested after two years of
service. Safety contributed approximately $171,000 and $254,000 during the nine
months ended December 31, 2003 and the year ended March 29, 2003, respectively,
to the Safety 401(k) Plan.

All qualified employees of Omega are covered under the Omega Protein 401(k)
Savings and Retirement Plan (the "Omega Plan"). Prior to 2001, Omega contributed
matching contributions to the Omega Plan based on employee contributions and
compensation. Omega suspended its matching contributions to the Omega Plan for
2001. In 2002, Omega's Board of Directors authorized the reinstatement of the
matching cash contribution to the Omega Plan, effective January 1, 2002, at
levels previously in place prior to the suspension of the match in 2001. Omega's
matching contributions to the Omega Plan were approximately $553,000 and
$627,000 during 2003 and 2002, respectively.

82

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's ownership of approximately 83% of Safety's common stock has
resulted in the creation of a parent-subsidiary controlled group for purposes of
the provisions of the Internal Revenue Code applicable to qualified retirement
plans. As a result the application of certain nondiscrimination requirements
that apply on a controlled group basis, it may be necessary to modify the
qualified retirement plans maintained be each of the members of the group to
preserve the tax-qualified status of the plans. The applicable transition rules
pertaining to business acquisitions do not require such changes until January 1,
2005.

NOTE 20. OTHER EMPLOYEE BENEFIT PLANS

Safety established the Safety Components International, Inc. Executive
Deferral Program (the "Deferral Program") for the benefit of certain key
executive employees. The Deferral Program provides for participants to defer any
portion of their cash compensation until some future point in time. The
participants' contributions to the Deferral Program are immediately 100% vested.
Under the provisions of the Deferral Program, a trust was established to
maintain the amounts deferred by the participants. Additionally, Safety
contributes an amount equal to the exercise price of the options associated with
the deferred compensation. The assets of the trust are included in "other
assets" and the related amounts due to the participants are included in "other
long-term liabilities" in the accompanying consolidated balance sheets. The
amounts included in "other assets" was $3.3 million and the amount included in
"other long-term liabilities" was $2.8 million at December 31, 2003.

NOTE 21. STOCK OPTION PLANS

Zapata's Amended and Restated Special Incentive Plan (the "1987 Plan")
provides for the granting of stock options and the awarding of restricted stock.
Under the 1987 Plan, options may be granted at prices equivalent to the market
value of the common stock at the date of grant. Options become exercisable on
dates as determined by the Zapata Board of Director's Compensation Committee,
provided that the earliest such date cannot occur before six months after the
date of grant. Unexercised options will expire on varying dates, up to a maximum
of ten years from the date of grant. All options granted vest ratably over three
years beginning on the first anniversary of the date of grant and have an
exercise price equal to the fair market value of the stock at grant date. The
awards of restricted stock have a restriction period of not less than six months
and not more than five years. The 1987 Plan provided for the issuance of up to
60,000 shares of the common stock. During 1992, the stockholders approved an
amendment to the 1987 Plan that provides for the automatic grant of a
nonqualified stock option to directors of Zapata who are not employees of Zapata
or any subsidiary of Zapata. As of December 31, 2003, stock options covering a
total of 3,333 shares had been exercised. No shares of common stock are
available for future stock options or other awards under the Plan. As of
December 31, 2003, there were options for the purchase of up to 6,667 shares
outstanding under the 1987 plan.

On December 5, 1996, the Company's stockholders approved a long-term
incentive plan (the "1996 Plan"). The 1996 Plan provides for the granting of
restricted stock, stock appreciation rights, stock options and other types of
awards to key employees of the Company. Under the 1996 Plan, options may be
granted by the Committee at prices equivalent to the market value of the common
stock on the date of grant. Options become exercisable in one or more
installments on such dates as the Committee may determine. Unexercised options
will expire on varying dates up to a maximum of ten years from the date of
grant. All options granted vest ratably over three years beginning on the first
anniversary of the date of grant and have an exercise price equal to the fair
market value of the stock at grant date. The 1996 Plan provides for the issuance
of options to purchase up to 500,000 shares of common stock. During 1999, the
stockholders approved an amendment to the 1996 Plan which increased the number
of shares available for options granted under the plan to 1,000,000 shares. At
December 31, 2003, stock options covering a total of 104,566 shares had been
exercised and a total of 738,550 shares of common stock are available for future
stock options or other awards under the Plan. As of December 31, 2003 there were
options for the purchase of up to 156,884 shares outstanding under the 1996
plan.
83

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In May 2002, the Stockholders approved specific stock option grants of
1,000 options to each of the six non-employee directors of the Company. These
grants had been approved by the Board of Directors and awarded by the Company in
March of 2002. These grants are non-qualified options with a ten year life and
are exercisable in cumulative one-third installments vesting annually beginning
on the first anniversary of the date of grant.

A summary of the status of the Company's stock options is presented below:

Options outstanding and exercisable as of December 31, 2003 are summarized
below:

84

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table gives the weighted-average assumptions used in the
determination of fair value of each stock option granted using the Black-Scholes
option-pricing model. Zap.Com reported no pro forma expense for options in the
past three years and Safety Components reported no pro forma expense since the
acquisition; therefore, no expenses related to Zap.Com or Safety are included in
the consolidated pro forma expense for the years ended December 31, 2003, 2002
or 2001.

NOTE 22. RELATED PARTY TRANSACTIONS

SAFETY COMPONENTS

The Company has entered into a tax sharing and indemnity agreement with
Safety Components, included as Exhibit 10(s) to this report on Form 10-K.
Because the Company now owns in excess of 80% of the voting interests of Safety,
Safety (beginning with the fourth quarter of 2003) will be included in Zapata's
consolidated U.S. federal income tax return.

OMEGA PROTEIN CORPORATION

Upon completion of Omega's initial public offering in 1998, Omega and
Zapata entered into certain agreements including the Administrative Services
Agreement, which covers certain administrative services Omega provides to
Zapata. The Administrative Services Agreement allows Omega to provide certain
administrative services to Zapata at Omega's estimated cost. For the years ended
December 31, 2003, 2002 and 2001, Zapata reimbursed Omega $17,000, $15,000 and
$16,000, respectively for services provided under the plan.

Zapata and Omega also entered into a Sublease Agreement which provided for
Omega to lease its principal corporate offices in Houston, Texas from Zapata
Corporation of Texas, Inc., a non-operating wholly-owned subsidiary of Zapata,
and provided Omega with the ability to utilize telephone equipment worth
approximately $21,000 for no additional charge. In May 2003, Zapata Corporation
of Texas, Inc. assigned the lease to Omega who assumed all obligations under the
lease with the third party landlord.

ZAP.COM CORPORATION

Since its inception, Zap.Com has utilized the services of the Zapata's
management and staff under a shared services agreement that allocated these
costs on a percentage of time basis. Zap. Com also subleases its office space in
Rochester, New York from Zapata. Under the sublease agreement, annual rental
payments are allocated on a cost basis. Zapata has waived its rights under the
shared services agreement to be reimbursed

85

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for these expenses since May 1, 2000. For the year ended December 31, 2003,
approximately $12,000 was recorded as contributed capital for these services.

OTHER

During 2002, the Company finalized the terms of a consulting agreement with
its former Chairman of the Board of Directors, Malcolm Glazer. Subject to the
terms of the agreement, the Company pays Malcolm Glazer $122,500 per month until
April 30, 2006. The agreement also provides for health and other medical
benefits for Mr. Glazer and his wife. This agreement will terminate in the event
of Mr. Glazer's death or permanent disability.

For the years ended December 31, 2003 and 2002, the Company incurred legal
fees of approximately $34,000 and $40,000, respectively, related to a previously
dismissed action against Malcolm I. Glazer, the Malcolm I. Glazer Family Limited
Partnership, and Malcolm I. Glazer GP, Inc.

NOTE 23. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2003, the FASB revised SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." It does not change the
measurement or recognition of pension and other postretirement benefit plans. It
requires additional disclosures to those in the original SFAS No. 132 about the
assets, obligations, cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans. It also
requires disclosure of the components of net periodic benefit cost in interim
financial statements. The revised disclosure requirements are required for
financial statements with fiscal years ending after December 15, 2003 and the
interim-period requirements are effective for interim periods beginning after
December 15, 2003. The adoption of this statement did not have a material impact
on the Company's financial position, results of operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
statement establishes standards for the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances).
Many of those instruments were previously classified as equity. This statement
is effective for financial instruments entered into or modified after May 31,
2003 and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of this statement did not have a
material impact on the Company's financial position, results of operations or
cash flows.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement is effective for contracts entered into or modified after June 30,
2003 and for hedging relationships designated after June 30, 2003. In addition,
all provisions of this statement should be applied prospectively. The provisions
of this statement that relate to SFAS No. 133 implementation issues that have
been effective for fiscal quarters that began prior to June 15, 2003, should
continue to be applied in accordance with their respective effective dates. The
adoption of this statement did not have a material impact on the Company's
financial position, results of operations or cash flows.

In January 2003, the FASB issued FIN No. 46 (Revised December 2003),
"Consolidated of Variable Interest Entities." This standard clarifies the
application of Accounting Research Bulletin No. 51, Consolidated Financial
Statements, and addresses consolidation by business enterprises of variable
interest entities (more commonly known as Special Purpose Entities of SPE's).
FIN No. 46R requires existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries if the entities do not effectively

86

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

disperse risk among the parties involved. FIN No. 46R also enhances the
disclosure requirements related to variable interest entities. The disclosure
requirements of this interpretation are effective for all financial statements
issued after January 31, 2003. The consolidation requirements of this
interpretation are effective for the first reporting period ending after
December 15, 2003. The adoption of this statement did not have a material impact
on the Company's financial position, results of operations or cash flows.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN No. 45), which expands previously
issued accounting guidance and disclosure requirements for certain guarantees.
The Interpretation requires an entity to recognize an initial liability for the
fair value of an obligation assumed by issuing a guarantee. The provision for
initial recognition and measurement of the liability will be applied on a
prospective basis to guarantees issued or modified after December 31, 2002. The
Company adopted SFAS No. 143 on January 1, 2003. The adoption of this standard
did not have a material impact on the Company's financial position, results of
operations or cash flows.

In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of that Statement to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. Finally, this Statement amends APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure about those effects in interim
financial information. Although the Company continues to account for stock-
based compensation according to APB 25, the Company has adopted the required
disclosure provisions for interim financial reporting under SFAS No. 148. As a
result of the Company's continued use of the intrinsic value method of
accounting for stock-based compensation, the transition provisions did not have
an effect of the Company's financial position, results of operations or cash
flows upon adoption of SFAS 148.

At the end of June 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations." SFAS No. 143 requires that obligations associated
with the retirement of a tangible long-lived asset be recorded as a liability
when those obligations are incurred, with the amount of the liability initially
measured at fair value. Upon initially recognizing a liability for an asset
retirement obligation, an entity must capitalize the cost by recognizing an
increase in the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. The Company adopted SFAS No. 143 as of
January 1, 2003. The adoption of this standard did not have a material impact on
the Company's financial position, results of operations or cash flows.

NOTE 24. DERIVATIVES AND HEDGING

Safety monitors its risk associated with the volatility of certain foreign
currencies against its functional currency, the U.S. dollar. Safety uses certain
derivative financial instruments to reduce exposure to volatility of foreign
currencies. Safety has formally documented all relationships between hedging
instruments and hedged items, as well as risk management objectives and
strategies for undertaking various hedge transactions. Derivative financial
instruments are not entered into for speculative purposes.

Certain operating expenses at Safety's Mexican facilities are paid in
Mexican pesos. To reduce exposure to fluctuations in the U.S. dollar and Mexican
peso exchange rates, Safety periodically enters into forward contracts to buy
Mexican pesos for periods and amounts consistent with the related, underlying
forecasted cash outflows. These contracts are designated as hedges at inception
and are monitored for effectiveness on a
87

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

routine basis. At December 31, 2003, Safety had outstanding forward exchange
contracts that mature between January and March 2004 to purchase Mexican pesos
with an aggregate notional amount of approximately $2.7 million. The fair values
of these contracts at December 31, 2003, totaled approximately $52,000, which is
recorded as a liability on Safety's balance sheet in "other current
liabilities." Safety recorded a credit to earnings of approximately $47,000 for
the nine months ended December 31, 2003 and the unrealized loss on these forward
contracts of approximately $52,000 was included in "accumulated other
comprehensive income" at December 31, 2003.

Certain intercompany sales at Safety's Czech facility are denominated and
settled in Euros. To reduce exposure to fluctuation in the Euro and Czech Koruna
exchange rates, Safety periodically enters into forward contracts to buy Czech
Korunas for periods and amounts consistent with the related, underlying
forecasted cash inflows associated with the intercompany sales. These contracts
are designated as hedges at inception and are monitored for effectiveness on a
routine basis. At December 31, 2003, Safety had outstanding forward exchange
contracts that mature between January and March 2004 to purchase Czech Korunas
with an aggregate notional amount of approximately $2.1 million. The fair values
of these contracts at December 31, 2003 totaled approximately $100,000, which is
recorded as a liability on Safety's balance sheet in "other current
liabilities." Safety recorded a charge to earnings of approximately $47,000 for
the nine months ended December 31, 2003 and the unrealized loss on these forward
contracts of approximately $89,000 was included in "accumulated other
comprehensive income" at December 31, 2003.

NOTE 25. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

Prior to the sale of the Company's Viskase shares, Zapata primarily
operated in two industry segments: the Food segment, consisting of Omega Protein
and Viskase, and the Internet segment, consisting of Charged and Zap.Com.

Since the sale of the Company's Viskase shares, the Food segment has been
exclusive to Omega Protein. Accordingly, as of January 1, 2003, all activity
related to Omega Protein is reported as a separate segment. Costs incurred
during 2001 related to Zap.Com and Charged were primarily associated with
wind-down and reporting activities. Accordingly, these costs were included
within the Company's Internet segment for 2001. As of January 1, 2002, all
activity related to Zap.Com is reported as a separate segment.

Since the acquisition of Safety Components in September 2003, all financial
results from Safety are reported as a separate segment. Safety's results of
operations have been included in the Company's consolidated amounts only for the
fourth quarter of 2003. Additionally, total assets include amounts attributable
to Safety as of December 31, 2003. Accordingly, no such amounts are included as
of December 31, 2002 or 2001.

The following summarizes certain financial information of each segment for
the years ended December 31, 2003, 2002 and 2001:

88

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Omega Protein is engaged in menhaden fishing for the production and sale of
fish meal and fish oil. Export sales of fish oil and fish meal were
approximately $46.0 million, $44.0 million and $35.7 million in 2003, 2002, and
2001, respectively. Such sales were made primarily to European and Asian
markets. In 2003, 2002, and 2001, sales to one customer were approximately $10.8
million, $10.5 million and $7.9 million, respectively. This customer differed
from year to year.

The following table shows the geographical distribution of consolidated
revenues (in thousands) based on location of customers:

The following table shows the geographical distribution of consolidated
long-lived assets (in thousands) based on location of the assets:

89

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 26. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents certain unaudited consolidated operating
results for each of the Company's preceding eight quarters. The Company believes
that the following information includes all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation in accordance
with accounting principles generally accepted in the United States of America.
The operating results for any interim period are not necessarily indicative of
results for any other period.

As a result of the 2003 acquisition, Safety's results only for the quarter
ended December 31, 2003 have been included in Zapata's consolidated results of
operations.

Omega Protein's menhaden harvesting and processing business is seasonal in
nature. Omega generally has higher sales during the menhaden harvesting season
(which includes the second and third quarter of each year) due to increased
product availability, but prices during the fishing season tend to be lower than
during the off-season. As a result, Omega's quarterly operating results have
fluctuated in the past and may fluctuate in the future. In addition, from time
to time Omega defers sales of inventory based on worldwide prices for competing
products that affect prices for Omega's products which may affect comparable
period comparisons.

90

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision of the Company's
management, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Securities Exchange Act of
1934 (the "Exchange Act") Rules 13a-15(e) and 15-d-15(e)) as of the end of the
period covered by this report. Based on that evaluation, the Company's
management, including the CEO and CFO, concluded that the Company's disclosure
controls and procedures were effective to provide reasonable assurance that
information we are required to disclose in reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.

Notwithstanding the foregoing, there can be no assurance that the Company's
disclosure controls and procedures will detect or uncover all failures of
persons within the Company and its consolidated subsidiaries to disclose
material information otherwise required to be set forth in the Company's
periodic reports. There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of human
error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable, not absolute, assurance of achieving their control objectives.

No changes in internal control over financial reporting occurred during the
quarter ended December 31, 2003 that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Pursuant to General Instruction G on Form 10-K, the information called for
by Item 10 of Part III of Form 10-K is incorporated by reference to the
information set forth in the Company's definitive proxy statement relating to
its 2004 Annual Meeting of Stockholders (the "2004 Proxy Statement") to be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in response to Items 401 and 405 of Regulation S-K under
the Securities Act of 1933, as amended, and the Exchange Act ("Regulation S-K").

ITEM 11. EXECUTIVE COMPENSATION.

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 11 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2004 Proxy Statement in response to Item 402 of
Regulation S-K, excluding the material concerning the report on executive
compensation and the performance graph specified by paragraphs (k) and (l) of
such Item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 12 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2004 Proxy Statement in response to Item 403 of
Regulation S-K.

91

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 13 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2004 Proxy Statement in response to Item 404 of
Regulation S-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 14 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2004 Proxy Statement in response to Item 9(e) of
Schedule 14A.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) LIST OF DOCUMENTS FILED.

(1) Financial Statements

Financial Statements, Zapata Corporation.

Report of Independent Auditors.

Consolidated Balance Sheets as of December 31, 2003 and 2003.

Consolidated Statements of Operations for the years ended December 31,
2003, 2002, and 2001.

Consolidated Statements of Cash Flows for the years ended December 31,
2003, 2002, and 2001.

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2003, 2002, and 2001.

Notes to Consolidated Financial Statements.

(2) Financial Statement Schedules

Schedule I -- Condensed Financial Information of the Registrant.

Schedule II -- Valuation and Qualifying Accounts.

92

(B) CURRENT REPORTS ON FORM 8-K

None.

(C) EXHIBITS

The exhibit list attached to this report is incorporated herein in its
entirety by reference as if fully set forth herein. The exhibits indicated by an
asterisk (*) are incorporated by reference.

- ---------------

+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to the requirements of Item 15(a)(3) of Form 10-K.

94

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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)

By: /s/ LEONARD DISALVO
------------------------------------
(Leonard DiSalvo Vice President)

March 26, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

95

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

ZAPATA CORPORATION

CONDENSED BALANCE SHEETS
(PARENT COMPANY ONLY)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

The accompanying notes are an integral part of the condensed financial
statements.
96

ZAPATA CORPORATION

CONDENSED STATEMENTS OF OPERATIONS
(PARENT COMPANY ONLY)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of the condensed financial
statements.
97

ZAPATA CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS
(PARENT COMPANY ONLY)
(IN THOUSANDS)

The accompanying notes are an integral part of the condensed financial
statements.
98

ZAPATA CORPORATION

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The Company's investment in subsidiaries in the parent company only
financial statements is stated at cost, plus equity in earnings of subsidiaries.
The parent company only financials should be read in conjunction with Zapata's
consolidated financial statements.

NOTE 2. RESTRICTED NET ASSETS

As discussed in Note 12 to the Consolidated Financial Statements included
in Item 8 of this report, the terms of the Safety Components and Omega Protein
debt and credit facilities prohibit or place restrictions on each of these
subsidiaries' ability to transfer funds to Zapata in the form of cash dividends,
loans or advances. Due to the nature of the restrictions contained in Safety's
and Omega's debt and credit agreements, all of each company's respective net
assets are considered restricted. Zap.Com is not a party to any agreement which
restricts the use of its assets. Accordingly, none of Zap.Com's net assets are
considered restricted.

NOTE 3. COMMITMENTS AND CONTINGENCIES

LEASES PAYABLE

Future annual minimum payments under non-cancelable operating lease
obligations for Zapata Corporate as of December 31, 2003 are as follows (in
thousands):

Rental expenses for Zapata Corporate leases were approximately $275,000,
$270,000 and $276,000 in 2003, 2002 and 2001, respectively.

LITIGATION

See Note 17 to the Consolidated Financial Statements included in Item 8 of
this report for information regarding Zapata Corporate's litigation matters.

GUARANTEES

See Note 17 to the Consolidated Financial Statements included in Item 8 of
this report for information regarding Zapata's guarantees.

99

SCHEDULE II

ZAPATA CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

- ---------------

(A) Allowance for Doubtful Accounts -- uncollectible accounts written off

100

REPORT OF INDEPENDENT AUDITORS
ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of Zapata Corporation:

Our audits of the consolidated financial statements referred to in our
report dated March 16, 2004 appearing in this Form 10-K, also included an audit
of the consolidated financial statement schedules listed in Item 15(a)(2) of
this Form 10-K. In our opinion, these consolidated financial statement schedules
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP

Rochester, New York
March 16, 2004

101

INDEX TO EXHIBITS

10(s) Tax Sharing and Indemnity Agreement dated March 19, 2004
between Zapata and Safety Components International, Inc.

21 Subsidiaries of the Registrant.

23 Consent of PricewaterhouseCoopers LLP.

24 Powers of attorney.

31.1 Certification of CEO as required by Rule 13a-14(a), as
adopted Pursuant to Section 304 of the Sarbanes-Oxley Act of
2002.

31.2 Certification of CFO as required by Rule 13a-14(a), as
adopted Pursuant to Section 304 of the Sarbanes-Oxley Act of
2002.

32.1 Certification of CEO Pursuant to 18 U.S.C Section 1350, as
adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

32.2 Certification of CFO Pursuant to 18 U.S.C Section 1350, as
adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

102