<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-6959
MITCHELL ENERGY & DEVELOPMENT CORP.
(Exact name of registrant as specified in its charter)
TEXAS 74-1032912
(State of Incorporation) (I.R.S. Employer Identification No.)
2001 TIMBERLOCH PLACE
THE WOODLANDS, TEXAS 77380
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (713) 377-5500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
Class A Common Stock, $.10 Par Value New York and Pacific
Class B Common Stock, $.10 Par Value New York and Pacific
</TABLE>
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 Section 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] 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]
The aggregate market value of voting stock held by nonaffiliates of the
registrant at February 28, 1998 was approximately $213,923,000.
Shares of common stock outstanding at February 28, 1998:
Class A - 22,321,144
Class B - 26,745,982
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated parts of this report:
Annual Report to Stockholders for the fiscal year ended
January 31, 1998 - Parts I and II.
Definitive Proxy Statement to be filed within 120 days after
January 31, 1998 - Part III.
================================================================================
<PAGE> 2
FORM 10-K/A
AMENDMENT NO. 1
The undersigned registrant hereby amends Exhibit No 99 to its annual
report on Form 10-K for the year ended January 31, 1998 as set forth in the
pages attached hereto:
Exhibit 99 - Form 11-K for the year ended January 31, 1998 for the
Mitchell Energy & Development Corp. Thrift and Savings Plan is hereby
amended to include the financial statements and schedules required by
that form and the related Report of Independent Public Accountants on
such statements and schedules together with their consent to
incorporate such report into previously filed Form S-8 registration
statements.
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
Mitchell Energy & Development Corp.
(Registrant)
By: /s/ Philip S. Smith
--------------------------------------
Philip S. Smith
Senior Vice President - Administration
Chief Financial Officer and
Principal Accounting Officer
Date: June 11, 1998
<PAGE> 3
INDEX TO EXHIBITS
Exhibit
No. Description
------- -----------
Exhibit 99 - Form 11-K for the year ended January 31, 1998 for the Mitchell
Energy & Development Corp. Thrift and Savings Plan is hereby
amended to include the financial statements and schedules required
by that form and the related Report of Independent Public
Accountants on such statements and schedules together with their
consent to incorporate such report into previously filed Form S-8
registration statements.
<PAGE> 1
Exhibit 99
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-6959
------------------------
MITCHELL ENERGY & DEVELOPMENT CORP.
THRIFT AND SAVINGS PLAN
------------------------
MITCHELL ENERGY & DEVELOPMENT CORP.
(Name of issuer of securities held pursuant to the Plan)
P. O. Box 4000, The Woodlands, Texas 77387-4000
(Address of Plan and principal executive office of issuer)
<PAGE> 2
Mitchell Energy & Development Corp. Thrift and Savings Plan
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants...................................... 2
Statement of Net Assets Available for Plan Benefits with Fund Information
January 31, 1998.......................................................... 3
January 31, 1997.......................................................... 4
Statement of Changes in Net Assets Available for
Plan Benefits with Fund Information for the Year Ended
January 31, 1998........................................................ 5
January 31, 1997........................................................ 6
Notes to Financial Statements--January 31, 1998 and 1997...................... 7
Schedule I--Schedule of Assets Held for
Investment Purposes at January 31, 1998................................... 10
Schedule II--Schedule of Reportable Transactions
for the Year Ended January 31, 1998....................................... 11
</TABLE>
-1-
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the Mitchell
Energy & Development Corp. Thrift and Savings Plan:
We have audited the accompanying statements of net assets available for
plan benefits of the Mitchell Energy & Development Corp. Thrift and Savings Plan
as of January 31, 1998 and 1997, and the related statements of changes in net
assets available for plan benefits for the years then ended. These financial
statements and the schedules referred to below are the responsibility of
Mitchell Energy & Development Corp.'s management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
Mitchell Energy & Development Corp. Thrift and Savings Plan at January 31, 1998
and 1997, and the changes in net assets available for plan benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at January 31, 1998 and reportable transactions for the
year then ended are presented for purposes of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statement of net assets available for benefits
and the statement of changes in net assets available for benefits is presented
for purposes of additional analysis rather than to present the net assets
available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, are fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
Houston, Texas
May 29, 1998
-2-
<PAGE> 4
Mitchell Energy & Development Corp. Thrift and Savings Plan
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AT JANUARY 31, 1998
<TABLE>
<CAPTION>
Mutual Funds
Merrill ------------------------------------------------------
MEDC Lynch Davis John
Common Retirement New Hancock
Stock Preservation AIM York Franklin Emerging
Fund Trust Value Venture Income Growth
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ............................... $ 11,244,989 $ -- $ -- $ -- $ -- $ --
Class B ............................... 11,667,464 -- -- -- -- --
Merrill Lynch Retirement
Preservation Trust .................... -- 53,767,341 -- -- -- --
Mutual funds ............................ -- -- 6,900,156 8,554,070 1,677,513 2,434,704
Participants' loans ..................... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
22,912,453 53,767,341 6,900,156 8,554,070 1,677,513 2,434,704
Other ..................................... 2,317 155,767 999 1,110 264 412
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for plan benefits .... $ 22,914,770 $ 53,923,108 $ 6,901,155 $ 8,555,180 $ 1,677,777 $ 2,435,116
============ ============ ============ ============ ============ ============
<CAPTION>
Mutual Funds
------------------------------------------------------
Merrill Merrill Merrill
Lynch Merrill Lynch Lynch
Basic Lynch Equity Index Global
Value Capital Trust I Allocation
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ............................... $ -- $ -- $ -- $ --
Class B ............................... -- -- -- --
Merrill Lynch Retirement
Preservation Trust .................... -- -- -- --
Mutual funds ............................ 13,827,886 12,185,838 2,384,470 3,640,289
Participants' loans ..................... -- -- -- --
------------ ------------ ------------ ------------
13,827,886 12,185,838 2,384,470 3,640,289
Other ..................................... 1,462 1,567 292 661
------------ ------------ ------------ ------------
Net assets available for plan benefits .... $ 13,829,348 $ 12,187,405 $ 2,384,762 $ 3,640,950
============ ============ ============ ============
<CAPTION>
Mutual Funds
--------------------------
Oppenheimer
Main Street Tem-
Income and pleton Loan
Growth Foreign Fund Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ............................... $ -- $ -- $ -- $ 11,244,989
Class B ............................... -- -- -- 11,667,464
Merrill Lynch Retirement
Preservation Trust .................... -- -- -- 53,767,341
Mutual funds ............................ 7,150,383 2,724,618 -- 61,479,927
Participants' loans ..................... -- -- 6,149,635 6,149,635
------------ ------------ ------------ ------------
7,150,383 2,724,618 6,149,635 144,309,356
Other ..................................... 1,045 462 -- 166,358
------------ ------------ ------------ ------------
Net assets available for plan benefits .... $ 7,151,428 $ 2,725,080 $ 6,149,635 $144,475,714
============ ============ ============ ============
</TABLE>
- -------------------------------
The accompanying notes are an integral part of this statement.
-3-
<PAGE> 5
Mitchell Energy & Development Corp. Thrift and Savings Plan
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AT JANUARY 31, 1997
<TABLE>
<CAPTION>
Mutual Funds
Merrill ------------------------------------------------------
MEDC Lynch Davis John
Common Retirement New Hancock
Stock Preservation AIM York Franklin Emerging
Fund Trust Value Venture Income Growth
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A .............................. $ 10,590,796 $ -- $ -- $ -- $ -- $ --
Class B .............................. 10,431,616 -- -- -- -- --
Merrill Lynch Retirement
Preservation Trust ................... -- 51,963,637 -- -- -- --
Mutual funds ........................... -- -- 5,230,020 5,171,304 1,229,982 2,755,250
Participants' loans .................... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
21,022,412 51,963,637 5,230,020 5,171,304 1,229,982 2,755,250
Other ..................................... 2,460 178,208 1,108 675 203 369
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for plan benefits .... $ 21,024,872 $ 52,141,845 $ 5,231,128 $ 5,171,979 $ 1,230,185 $ 2,755,619
============ ============ ============ ============ ============ ============
<CAPTION>
Mutual Funds
----------------------------------------------------------------------------------
Merrill Merrill Merrill Oppenheimer
Lynch Merrill Lynch Lynch Main Street Tem-
Basic Lynch Equity Index Global Income and pleton
Value Capital Trust I Allocation Growth Foreign
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A .............................. $ -- $ -- $ -- $ -- $ -- $ --
Class B .............................. -- -- -- -- -- --
Merrill Lynch Retirement
Preservation Trust ................... -- -- -- -- -- --
Mutual funds ........................... 10,979,510 10,569,529 640,492 3,192,550 6,097,082 2,268,405
Participants' loans .................... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
10,979,510 10,569,529 640,492 3,192,550 6,097,082 2,268,405
Other ..................................... 1,419 1,610 111 542 886 350
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for plan benefits .... $ 10,980,929 $ 10,571,139 $ 640,603 $ 3,193,092 $ 6,097,968 $ 2,268,755
============ ============ ============ ============ ============ ============
<CAPTION>
Loan
Fund Total
------------ ------------
<S> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A .............................. $ -- $ 10,590,796
Class B .............................. -- 10,431,616
Merrill Lynch Retirement
Preservation Trust ................... -- 51,963,637
Mutual funds ........................... -- 48,134,124
Participants' loans .................... 5,796,126 5,796,126
------------ ------------
5,796,126 126,916,299
Other ..................................... -- 187,941
------------ ------------
Net assets available for plan benefits .... $ 5,796,126 $127,104,240
============ ============
</TABLE>
- -------------------
The accompanying notes are an integral part of this statement.
-4-
<PAGE> 6
Mitchell Energy & Development Corp. Thrift and Savings Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED JANUARY 31, 1998
<TABLE>
<CAPTION>
Mutual Funds
Merrill ---------------------------------------------
MEDC Lynch Davis
Common Retirement New
Stock Preservation AIM York Franklin
Fund Trust Value Venture Income
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ......................... $ -- $ 3,273,989 $ -- $ -- $ --
Mutual fund distributions ............... -- -- 700,381 383,486 123,031
Cash dividends .......................... 696,586 -- -- -- --
Realized and unrealized appreciation
(depreciation) of investments ......... 3,733,658 -- 441,562 999,360 65,060
------------- ------------- ------------- ------------- -------------
4,430,244 3,273,989 1,141,943 1,382,846 188,091
Contributions
Members (Note 2) ........................ 566,197 2,578,077 459,377 591,568 180,226
Company ................................. 393,211 1,115,057 169,603 188,474 44,767
Participants' loans
New loans made .......................... (457,032) (1,534,720) (110,799) (181,328) (23,651)
Principal payments received ............. 378,366 1,190,642 97,010 108,051 29,374
Loan administration fees ................ (1,048) (4,217) (393) (441) (78)
Distributions to
withdrawing members (Note 2) ............ (1,220,287) (4,738,956) (443,756) (570,718) (85,429)
Interfund transfers ....................... (2,199,753) (98,609) 357,042 1,864,749 114,292
------------- ------------- ------------- ------------- -------------
Increase (decrease) in net assets ......... 1,889,898 1,781,263 1,670,027 3,383,201 447,592
Net assets available for plan
benefits, beginning of year ............. 21,024,872 52,141,845 5,231,128 5,171,979 1,230,185
------------- ------------- ------------- ------------- -------------
Net assets available for plan
benefits, end of year ................... $ 22,914,770 $ 53,923,108 $ 6,901,155 $ 8,555,180 $ 1,677,777
============= ============= ============= ============= =============
<CAPTION>
Mutual Funds
-----------------------------------------------------------------------------
John Merrill Merrill Merrill
Hancock Lynch Merrill Lynch Lynch
Emerging Basic Lynch Equity Index Global
Growth Value Capital Trust I Allocation
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ......................... $ -- $ -- $ -- $ -- $ --
Mutual fund distributions ............... 530,051 1,060,373 1,034,768 26 466,355
Cash dividends .......................... -- -- -- -- --
Realized and unrealized appreciation
(depreciation) of investments ......... (351,330) 1,496,023 949,986 362,210 (89,514)
------------- ------------- ------------- ------------- -------------
178,721 2,556,396 1,984,754 362,236 376,841
Contributions
Members (Note 2) ........................ 156,164 562,599 498,173 215,726 311,191
Company ................................. 69,997 248,101 265,981 49,534 112,203
Participants' loans
New loans made .......................... (50,415) (294,083) (348,626) -- (98,776)
Principal payments received ............. 48,204 210,280 243,773 44,787 88,144
Loan administration fees ................ (163) (644) (819) -- (302)
Distributions to
withdrawing members (Note 2) ............ (37,375) (604,944) (921,388) (216,715) (115,873)
Interfund transfers ....................... (685,636) 170,714 (105,582) 1,288,591 (225,570)
------------- ------------- ------------- ------------- -------------
Increase (decrease) in net assets ......... (320,503) 2,848,419 1,616,266 1,744,159 447,858
Net assets available for plan
benefits, beginning of year ............. 2,755,619 10,980,929 10,571,139 640,603 3,193,092
------------- ------------- ------------- ------------- -------------
Net assets available for plan
benefits, end of year ................... $ 2,435,116 $ 13,829,348 $ 12,187,405 $ 2,384,762 $ 3,640,950
============= ============= ============= ============= =============
<CAPTION>
Mutual Funds
-----------------------------
Oppenheimer
Main Street Tem-
Income and pleton Loan
Growth Foreign Fund Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings on investments
Interest income ......................... $ -- $ -- $ 565,244 $ 3,839,233
Mutual fund distributions ............... 602,213 287,823 -- 5,188,507
Cash dividends .......................... -- -- -- 696,586
Realized and unrealized appreciation
(depreciation) of investments ......... 558,011 (166,841) -- 7,998,185
------------- ------------- ------------- -------------
1,160,224 120,982 565,244 17,722,511
Contributions
Members (Note 2) ........................ 336,695 181,597 6,022 6,643,612
Company ................................. 177,395 78,415 -- 2,912,738
Participants' loans
New loans made .......................... (133,647) (55,192) 3,288,269 --
Principal payments received ............. 117,985 52,927 (2,609,543) --
Loan administration fees ................ (361) (84) -- (8,550)
Distributions to
withdrawing members (Note 2) ............ (487,354) (124,803) (331,239) (9,898,837)
Interfund transfers ....................... (117,477) 202,483 (565,244) --
------------- ------------- ------------- -------------
Increase (decrease) in net assets ......... 1,053,460 456,325 353,509 17,371,474
Net assets available for plan
benefits, beginning of year ............. 6,097,968 2,268,755 5,796,126 127,104,240
------------- ------------- ------------- -------------
Net assets available for plan
benefits, end of year ................... $ 7,151,428 $ 2,725,080 $ 6,149,635 $ 144,475,714
============= ============= ============= =============
</TABLE>
- -------------------
The accompanying notes are an integral part of this statement.
-5-
<PAGE> 7
Mitchell Energy & Development Corp. Thrift and Savings Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED JANUARY 31, 1997
<TABLE>
<CAPTION>
Mutual Funds
Merrill ---------------------------------------------
MEDC Lynch Davis
Common Retirement New
Stock Preservation AIM York Franklin
Fund Trust Value Venture Income
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ........................ $ -- $ 3,049,188 $ -- $ -- $ --
Mutual fund distributions .............. -- -- 250,174 213,037 90,795
Cash dividends ......................... 538,939 -- -- -- --
Realized and unrealized
appreciation of investments .......... 4,992,262 -- 575,071 821,114 22,461
Contributions
Members ................................ 585,269 1,765,286 289,431 173,229 56,545
Company ................................ 451,817 1,245,497 215,783 131,556 39,483
Participants' loans
New loans made ......................... (434,542) (1,609,586) (132,756) (84,440) (27,014)
Principal payments received ............ 382,468 1,211,235 85,878 68,373 20,769
Loan administration fees ............... (1,053) (4,603) (264) (241) (50)
Distributions to
withdrawing members .................... (1,355,002) (3,561,507) (118,633) (161,849) (42,116)
Transfers from (to) MND Hospitality,
Inc. Thrift and Savings Plan ........... 516 (9,276) -- -- --
Interfund transfers ....................... (6,468,138) 2,822,627 (476,739) 1,046,648 225,402
------------- ------------- ------------- ------------- -------------
Increase (decrease) in net assets ......... (1,307,464) 4,908,861 687,945 2,207,427 386,275
Net assets available for plan
benefits, beginning of year ............ 22,332,336 47,232,984 4,543,183 2,964,552 843,910
------------- ------------- ------------- ------------- -------------
Net assets available for plan
benefits, end of year .................. $ 21,024,872 $ 52,141,845 $ 5,231,128 $ 5,171,979 $ 1,230,185
============= ============= ============= ============= =============
<CAPTION>
Mutual Funds
-----------------------------------------------------------------------------
John Merrill Merrill Merrill
Hancock Lynch Merrill Lynch Lynch
Emerging Basic Lynch Equity Index Global
Growth Value Capital Trust I Allocation
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ........................ $ -- $ -- $ -- $ -- $ --
Mutual fund distributions .............. 51,460 684,767 1,031,159 66 298,234
Cash dividends ......................... -- -- -- -- --
Realized and unrealized
appreciation of investments .......... 236,149 1,015,693 215,842 53,944 107,487
Contributions
Members ................................ 96,410 349,289 378,127 9,771 144,149
Company ................................ 71,899 276,478 313,715 8,857 105,578
Participants' loans
New loans made ......................... (33,987) (259,699) (287,683) -- (69,994)
Principal payments received ............ 37,478 157,464 216,789 8,253 62,480
Loan administration fees ............... (159) (501) (640) -- (170)
Distributions to
withdrawing members .................... (20,576) (377,897) (545,375) (11) (53,294)
Transfers from (to) MND Hospitality,
Inc. Thrift and Savings Plan ........... -- -- 630 -- --
Interfund transfers ....................... 1,201,999 501,895 (682,175) 559,723 274,147
------------- ------------- ------------- ------------- -------------
Increase (decrease) in net assets ......... 1,640,673 2,347,489 640,389 640,603 868,617
Net assets available for plan
benefits, beginning of year ............ 1,114,946 8,633,440 9,930,750 -- 2,324,475
------------- ------------- ------------- ------------- -------------
Net assets available for plan
benefits, end of year .................. $ 2,755,619 $ 10,980,929 $ 10,571,139 $ 640,603 $ 3,193,092
============= ============= ============= ============= =============
<CAPTION>
Mutual Funds
-----------------------------
Oppenheimer
Main Street Tem-
Income and pleton Loan
Growth Foreign Fund Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings on investments
Interest income ........................ $ -- $ -- $ 536,445 $ 3,585,633
Mutual fund distributions .............. 406,051 94,467 -- 3,120,210
Cash dividends ......................... -- -- -- 538,939
Realized and unrealized
appreciation of investments .......... 484,665 205,628 -- 8,730,316
Contributions
Members ................................ 238,004 93,872 -- 4,179,382
Company ................................ 172,721 68,259 -- 3,101,643
Participants' loans
New loans made ......................... (111,084) (52,855) 3,103,640 --
Principal payments received ............ 84,935 43,751 (2,379,873) --
Loan administration fees ............... (311) (204) -- (8,196)
Distributions to
withdrawing members .................... (176,408) (33,855) (324,702) (6,771,225)
Transfers from (to) MND Hospitality,
Inc. Thrift and Savings Plan ........... -- -- -- (8,130)
Interfund transfers ....................... 1,293,585 237,471 (536,445) --
------------- ------------- ------------- -------------
Increase (decrease) in net assets ......... 2,392,158 656,534 399,065 16,468,572
Net assets available for plan
benefits, beginning of year ............ 3,705,810 1,612,221 5,397,061 110,635,668
------------- ------------- ------------- -------------
Net assets available for plan
benefits, end of year .................. $ 6,097,968 $ 2,268,755 $ 5,796,126 $ 127,104,240
============= ============= ============= =============
</TABLE>
- ---------------------------------------------------
The accompanying notes are an integral part of this statement.
-6-
<PAGE> 8
Mitchell Energy & Development Corp. Thrift and Savings Plan
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
(1) SUMMARY OF THE PLAN
GENERAL
The Mitchell Energy & Development Corp. Thrift and Savings Plan (the
Plan) was adopted by Mitchell Energy & Development Corp. (MEDC) and certain of
its subsidiaries (collectively the Company) to encourage their employees to
provide additional security for their retirement. Full-time employees of the
Company are eligible to become members of the Plan on the first of the month
following their completion of a one-month eligibility period. Other employees
are eligible to become members after completing one year of participation
service as defined in the Plan's provisions. Members should refer to the Plan
document for a complete description of the Plan's provisions.
ADMINISTRATION
The Plan is administered by an administrative committee appointed by
MEDC's Board of Directors. The committee has broad responsibilities regarding
the supervision and administration of the Plan. Members of the administrative
committee receive no compensation from the Plan for their services. Except for
loan processing fees charged to members who have more than one loan outstanding,
administrative expenses have been paid by the Company. Should the Company choose
not to pay such expenses in the future, however, they would be paid by the Plan
and charged to the members' accounts.
TRUSTEE
Plan investments are held by Merrill Lynch Trust Company of Somerset,
New Jersey (Trustee), as trustee of the Plan. The Trustee receives
contributions, makes payments to members in accordance with the terms of the
Plan.
BASIS OF ACCOUNTING
The records of the Plan are maintained on the accrual basis of
accounting for financial reporting purposes. Purchases and sales of securities
are recorded on a trade-date basis. For financial statement purposes, Plan
investments other than the Merrill Lynch Retirement Preservation Trust and
participant loans are carried at market values which are determined based upon
published market quotations supplied by the Trustee. The Merrill Lynch
Retirement Preservation Trust, which is a common collective trust, is valued at
a unit value of $1 per unit while participant loans are valued at their
principal amounts which approximate market.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the accompanying financial statements and disclosures. Actual
results could differ from those estimates.
CONTRIBUTIONS AND INVESTMENT OPTIONS
Members may elect, with certain limitations, to reduce their
compensation by instructing the Company to contribute from 1% to 14% of their
base salary to the Plan on a pretax basis. Amounts so deferred, as limited by
applicable Federal income tax regulations, are not included in a member's
adjusted gross income for Federal income tax purposes in the year the income is
deferred and contributed to the Plan. Members may also make after-tax
contributions to the Plan. After-tax contributions are included in the member's
adjusted gross income for Federal income tax purposes in the year the income is
earned and contributed to the Plan. The total of a member's pretax and after-tax
contributions may not exceed 14% of base salary.
-7-
<PAGE> 9
The Company makes contributions to the Plan of an amount equal to 100%
of a member's contributions, up to 6% of base salary.
Each participant's account is credited with his or her contributions
and the applicable matching contributions and an allocation of the Plan's
earnings. Allocations of earnings are based on the proportion that each
participant's account balance bears to the total of all participant account
balances.
Members may direct the Trustee to invest their contributions in one or
more of the investment funds listed below. The investment objectives of the
various funds are as follows:
<TABLE>
<CAPTION>
Fund Investment Objective(s)
---------------------- ---------------------------------------------------
<S> <C>
MEDC Common Stock Fund Invest in Class A and Class B Common Stock of MEDC.
Merrill Lynch Retirement Income, invests in U.S. Government Agency securities,
Preservation Trust bank and insurance company guaranteed investment contracts
and money market instruments. Effective yields approximated
6.6% and 6.4% for the years ended January 31, 1998 and 1997.
Investments are recorded at contract values, which approximate
market values.
Mutual Funds
AIM Value Fund Capital appreciation, invests primarily in equity securities.
Davis New York Capital appreciation, invests in equity and convertible
Venture Fund, Inc. securities.
Franklin Income Fund Income, invests in equity and debt securities and
cash equivalents.
John Hancock Emerging Capital appreciation, invests in equity securities of rapidly
Growth Fund growing small and medium sized companies.
Merrill Lynch Basic Capital appreciation, invests primarily in equity securities.
Value Fund, Inc.
Merrill Lynch Income and capital appreciation, invests in equity, debt
Capital Fund, Inc. and convertible securities.
Merrill Lynch Equity Capital appreciation, invests primarily in equity securities.
Index Trust I Fund
Merrill Lynch Global Income and capital appreciation, invests in United States
Allocation Fund, Inc. and foreign equity, debt and money market securities.
Oppenheimer Main Street Income and capital appreciation, invests in equity and
Income and Growth Fund debt securities.
Templeton Foreign Fund Capital appreciation, invests in stock and debt securities of companies
outside the United States.
</TABLE>
VESTING
A member becomes vested in the Company's matching contributions upon
completing five years of vesting service. A year of vesting service is defined
as the performance of 1,000 hours of service in a Plan year.
FORFEITURES
When a member who has not yet vested terminates employment, the value
of his/her share of Company contributions is forfeited and used to reduce future
Company contributions. During the Plan years ended January 31, 1998 and 1997,
forfeitures of $39,277 and $44,366 occurred, and forfeitures of
-8-
<PAGE> 10
$38,602 and $91,335 were used to reduce the Company's contributions. At January
31, 1998, an additional $17,161 was available to reduce the Company's future
contributions. For members reemployed before completing a break in service, as
defined by the Plan, Company contributions are reinstated upon the member's
reinvestment of applicable amounts in the Plan.
DISTRIBUTIONS, WITHDRAWALS AND LOANS
A withdrawing member is entitled to receive the value of his/her
contributions and, upon retirement, death, permanent disability or termination
after having completed five years of vesting service, is also entitled to
receive 100% of the value of applicable Company contributions.
Distributions of member account balances invested in the MEDC Common
Stock Fund are made in kind with fractional shares paid in cash. Distributions
from all other investment funds are paid in cash. Members may request that
distributions from the MEDC Common Stock Fund be in cash (rather than stock),
subject to procedures established by the administrative committee.
Withdrawals of members' pretax contributions are limited by Section
1.401(k)-1 of the Internal Revenue Code to instances of a member's death,
retirement, disability, separation from service, attainment of age 59-1/2 or
conditions of severe hardship. One withdrawal may be made during a twelve-month
period. Fund balances arising from a member's rollover of balances from other
plans may be withdrawn at any time.
Members are eligible to borrow up to the lesser of 50% of the vested
value of their total Plan investments or $50,000. Such loans are evidenced by
promissory notes, which are secured by the member's account and bear interest at
a quoted prime rate plus two percent. Participant loans are reported as assets
of the Loan Fund and payments received, including interest, are transferred to
the investment funds based on members' current contribution elections. Account
balances pledged to secure loans may not be withdrawn from the Plan.
TERMINATION
The Plan may be terminated, amended or modified by MEDC's Board of
Directors at its option. If the Plan is terminated, and after all expenses are
paid, any unallocated contributions, forfeitures, income and expenses will be
allocated among the members' accounts. All members would then be fully vested
and would be entitled to receive all of their then-existing account balances.
(2) CONTRIBUTIONS AND DISTRIBUTIONS ASSOCIATED WITH THE SALE OF THE
WOODLANDS CORPORATION
On July 31, 1997, MEDC sold its real estate subsidiary, The Woodlands
Corporation. As part of this transaction, substantially all of MEDC's real
estate employees were transferred to and became employees of the purchaser. In
connection with this, such former employees who were not vested in the Company's
matching contributions to their respective accounts were vested. Also, the
former employees were given an opportunity to withdraw from the Plan;
distributions of approximately $3,500,000 were made to those who chose to
withdraw. Concurrently, the Company's Retirement Plan was amended to offer the
former employees a one-time election to receive a lump-sum distribution equal to
the present value of their vested accrued benefits. Contributions of
approximately $2,400,000 were received by the Plan from individuals who elected
to receive such lump-sum distributions and roll them over into the Plan.
(3) FEDERAL INCOME TAX STATUS
The Plan is designed to operate as a non-tax-paying entity, and income
taxes have not been provided in its financial statements. The Plan obtained its
latest determination letter on December 29, 1995, in which the Internal Revenue
Service stated that the Plan, as then designed, was in compliance with the
applicable requirements of the Internal Revenue Code (the Code). Although the
Plan has been amended since receiving the determination letter, the
administrative committee believes that it continues to operate in compliance
with the applicable requirements of the Code.
-9-
<PAGE> 11
SCHEDULE I
Mitchell Energy & Development Corp. Thrift and Savings Plan
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT JANUARY 31, 1998
<TABLE>
<CAPTION>
Shares/ Current
Identity of Issue/Description Units Cost Value
---------------------------------------------------------------------- ------------- --------------- -------------
<S> <C> <C> <C>
Mitchell Energy & Development Corp. (a)
Class A Common Stock.............................................. 422,347 $ 7,937,903 $ 11,244,989
Class B Common Stock.............................................. 432,128 8,045,528 11,667,464
-------------- -------------
15,983,431 22,912,453
-------------- -------------
Merrill Lynch Retirement Preservation Trust (a)(b)(c)................. 53,767,341 53,767,341
-------------- -------------
Mutual Funds
AIM Value Fund.................................................... 211,402 5,956,150 6,900,156
Davis New York Venture Fund, Inc.................................. 389,530 6,884,380 8,554,070
Frankin Income Fund............................................... 673,700 1,575,372 1,677,513
John Hancock Emerging Growth Fund................................. 65,856 2,579,440 2,434,704
Merrill Lynch Basic Value Fund, Inc............................... 373,424 10,079,836 13,827,886
Merrill Lynch Capital Fund, Inc................................... 352,497 10,198,186 12,185,838
Merrill Lynch Equity Index Trust I Fund........................... 36,080 2,068,116 2,384,470
Merrill Lynch Global Allocation Fund, Inc......................... 253,149 3,606,452 3,640,289
Oppenheimer Main Street Income and Growth Fund.................... 216,613 6,042,969 7,150,383
Templeton Foreign Fund............................................ 272,735 2,778,484 2,724,618
-------------- -------------
51,769,385 61,479,927
-------------- -------------
Participants' loans, at interest rates ranging from 8% to 11%... -- 6,149,635
-------------- -------------
$ 121,520,157 $ 144,309,356
============== =============
</TABLE>
- ----------------------------------------------------------------------
(a) Party-in-interest to the Plan.
(b) Unit value of $1.00.
(c) The average yield for this trust was approximately 6.6% for the year
ended January 31, 1998.
<PAGE> 12
SCHEDULE II
Mitchell Energy & Development Corp. Thrift and Savings Plan
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JANUARY 31, 1998
<TABLE>
<CAPTION>
Purchases Sales
------------------------ ---------------------------------------------------
Number Total Number Total Total Cost
of Trans- Purchase of Trans- Selling of Assets Net
Identity of Party Involved/Description actions Price (a) actions Price (a) Sold (b) Gain
---------------------------------------------- --------- -------------- -------- ---------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mitchell Energy & Development Corp.
Class A Common Stock...................... 459 $4,774,078 311 $5,706,055 $4,715,353 $990,702
Class B Common Stock...................... 446 4,697,118 308 5,608,758 4,643,346 965,412
Merrill Lynch Retirement Preservation Trust... 764 21,822,375 477 23,285,632 23,285,632 -
Merrill Lynch Basic Value Fund, Inc........... 461 4,482,847 179 3,130,494 2,562,188 568,306
Davis New York Venture Fund, Inc.............. 478 5,065,259 175 2,681,853 2,352,192 329,661
</TABLE>
- -------------------------------------------------
(a) Purchase and selling prices were equal to current market values on the
dates of the transactions and included (were net of) applicable
expenses incurred in connection with the transactions.
(b) Weighted average historical cost was used to determine the cost of
assets sold.
<PAGE> 13
Exhibit
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated May 29, 1998, on the financial statements of
the Mitchell Energy & Development Corp. Thrift and Savings Plan included in this
Form 10-K/A, Amendment No. 1 (which relates to such Plan's Form 11-K for the
year ended January 31, 1998) into the previously filed Form S-8 Registration
Statement Nos. 33-26276, 2-86550 and 333-24335.
ARTHUR ANDERSEN LLP
Houston, Texas
May 29, 1998
