<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, 1999
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:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Class A Common Stock, $.10 Par Value New York and Pacific
Class B Common Stock, $.10 Par Value New York and Pacific
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, 1999 was approximately $89,425,175.
Shares of common stock outstanding at February 28, 1999:
Class A - 22,321,640
Class B - 26,795,627
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, 1999 - Parts I and II.
Definitive Proxy Statement to be filed within 120 days after
January 31, 1999 - 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, 1999 as set forth in the
pages attached hereto:
Exhibit 99 - Form 11-K for the year ended January 31, 1999 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 14, 1999
<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, 1999
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 at
January 31, 1999 ........................................................ 3
January 31, 1998 ........................................................ 4
Statement of Changes in Net Assets Available for
Plan Benefits with Fund Information for the Year Ended
January 31, 1999 ........................................................ 5
January 31, 1998 ........................................................ 6
Notes to Financial Statements - January 31, 1999 and 1998 .................. 7
Schedule I--Schedule of Assets Held for
Investment Purposes at January 31, 1999 .................................. 11
Schedule II--Schedule of Reportable Transactions
for the Year Ended January 31, 1999 ...................................... 12
</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 at January 31, 1999 and 1998, and the related statements of changes in net
assets available for plan benefits for the years then ended. These financial
statements and the supplemental 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
supplemental 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,
1999 and 1998, 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, 1999 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 statements of net assets
available for benefits and the statements 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.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
June 8, 1999
-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, 1999
<TABLE>
<CAPTION>
Mutual Funds
-----------------------------
Merrill
MEDC Merrill Lynch Davis
Common Lynch Retirement New
Stock Equity Index Preservation AIM York
Fund Trust I Trust Value Venture
----------- ------------ ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ............................ $ 7,682,062 $ -- $ -- $ -- $ --
Class B ............................ 8,567,074 -- -- -- --
Common collective trusts .............. -- 4,899,761 54,886,918 -- --
Mutual funds .......................... -- -- -- 9,834,206 9,052,834
Participants' loans ................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------
16,249,136 4,899,761 54,886,918 9,834,206 9,052,834
Other ................................... -- -- 246 -- --
----------- ----------- ----------- ----------- ----------
Net assets available for plan benefits... $16,249,136 $ 4,899,761 $54,887,164 $ 9,834,206 $9,052,834
=========== =========== =========== =========== ==========
Mutual Funds
---------------------------------------------------------------------------------------
John Merrill Merrill
Hancock Lynch Merrill Lynch
Franklin Emerging Basic Lynch Global
Income Growth Value Capital Allocation
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ........................... $ -- $ -- $ -- $ -- $ --
Class B ........................... -- -- -- -- --
Common collective trusts ............. -- -- -- -- --
Mutual funds ......................... 1,506,520 2,929,221 14,568,639 12,284,565 3,198,569
Participants' loans .................. -- -- -- -- --
---------- ----------- ----------- ----------- -----------
1,506,520 2,929,221 14,568,639 12,284,565 3,198,569
Other .................................. -- -- -- -- --
---------- ----------- ----------- ----------- -----------
Net assets available for plan benefits.. $1,506,520 $ 2,929,221 $14,568,639 $12,284,565 $ 3,198,569
========== =========== =========== =========== ===========
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 ............................ $ -- $ -- $ -- $ 7,682,062
Class B ............................ -- -- -- 8,567,074
Common collective trusts .............. -- -- -- 59,786,679
Mutual funds .......................... 8,433,011 2,043,166 -- 63,850,731
Participants' loans ................... -- -- 6,209,830 6,209,830
---------- ---------- ------------ ------------
8,433,011 2,043,166 6,209,830 146,096,376
Other ................................... -- -- -- 246
---------- ---------- ------------ ------------
Net assets available for plan benefits... $8,433,011 $2,043,166 $ 6,209,830 $146,096,622
========== ========== ============ ============
</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, 1998
<TABLE>
<CAPTION>
Mutual Funds
Merrill --------------
MEDC Merrill Lynch
Common Lynch Retirement
Stock Equity Index Preservation AIM
Fund Trust I Trust Value
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ....................... $11,244,989 $ -- $ -- $ --
Class B ....................... 11,667,464 -- -- --
Common Collective Trusts......... -- 2,384,470 53,767,341 --
Mutual funds .................... -- -- -- 6,900,156
Participants' loans ............. -- -- -- --
----------- ----------- ----------- ------------
22,912,453 2,384,470 53,767,341 6,900,156
Other ................................ 2,317 292 155,767 999
----------- ----------- ----------- ------------
Net assets available for plan
benefits............................ $22,914,770 $ 2,384,762 $53,923,108 $ 6,901,155
=========== =========== =========== ============
<CAPTION>
Mutual Funds
-------------------------------------------------------------------------------------
Davis John Merrill
New Hancock Lynch Merrill
York Franklin Emerging Basic Lynch
Venture Income Growth Value Capital
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ....................... $ -- $ -- $ -- $ -- $ --
Class B ....................... -- -- -- -- --
Common Collective Trusts......... -- -- -- -- --
Mutual funds .................... 8,554,070 1,677,513 2,434,704 13,827,886 12,185,838
Participants' loans ............. -- -- -- -- --
---------- ---------- ----------- ----------- -----------
8,554,070 1,677,513 2,434,704 13,827,886 12,185,838
Other ................................ 1,110 264 412 1,462 1,567
---------- ---------- ----------- ----------- -----------
Net assets available for plan
benefits............................ $8,555,180 $1,677,777 $ 2,435,116 $13,829,348 $12,187,405
========== ========== =========== =========== ===========
<CAPTION>
Mutual Funds
-----------------------------------------------
Merrill Oppenheimer
Lynch Main Street Tem-
Global Income and pleton Loan
Allocation Growth Foreign Fund Total
----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Investments (at current values)
MEDC Common Stock
Class A ....................... $ -- $ -- $ -- $ -- $ 11,244,989
Class B ....................... -- -- -- -- 11,667,464
Common Collective Trusts......... -- -- -- -- 56,151,811
Mutual funds .................... 3,640,289 7,150,383 2,724,618 -- 59,095,457
Participants' loans ............. -- -- -- 6,149,635 6,149,635
---------- ---------- ---------- ---------- ------------
3,640,289 7,150,383 2,724,618 6,149,635 144,309,356
Other ................................ 661 1,045 462 -- 166,358
---------- ---------- ---------- ---------- ------------
Net assets available for plan
benefits............................ $3,640,950 $7,151,428 $2,725,080 $6,149,635 $144,475,714
========== ========== ========== ========== ============
</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, 1999
<TABLE>
<CAPTION>
Mutual Funds
Merrill ------------
MEDC Merrill Lynch
Common Lynch Retirement
Stock Equity Index Preservation AIM
Fund Trust I Trust Value
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Earnings on investments
Interest income ............... $ -- $ -- $ 3,411,906 $ --
Mutual fund distributions ..... -- -- -- 577,771
Cash dividends ................ 501,234 -- -- --
Net appreciation
(depreciation) of
investments.................. (13,429,042) 1,012,562 -- 2,049,323
Contributions
Members ....................... 527,715 165,992 1,598,038 309,143
Company ....................... 418,834 97,209 1,071,538 192,092
Participants' loans
New loans made ................ (347,282) -- (1,445,078) (103,735)
Principal payments received ... 429,129 38,319 1,114,719 99,412
Loan administration fees ...... (959) (335) (3,896) (251)
Distributions to
withdrawing members ........... (562,650) (371,429) (2,919,621) (274,187)
Interfund transfer.................. 5,797,387 1,572,681 (1,863,550) 83,483
------------ ----------- ------------ -----------
Increase (decrease) in net assets... (6,665,634) 2,514,999 964,056 2,933,051
Net assets available for plan
benefits, beginning of year ... 22,914,770 2,384,762 53,923,108 6,901,155
------------ ----------- ------------ -----------
Net assets available for
plan benefits, end of year .... $ 16,249,136 $ 4,899,761 $ 54,887,164 $ 9,834,206
============ =========== ============ ===========
Mutual Funds
------------------------------------------------------------------------------------------
Davis John Merrill
New Hancock Lynch Merrill
York Franklin Emerging Basic Lynch
Venture Income Growth Value Capital
----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ............... $ -- $ -- $ -- $ -- $ --
Mutual fund distributions ..... 207,544 127,396 55,116 1,229,380 798,991
Cash dividends ................ -- -- -- -- --
Net appreciation
(depreciation) of
investments.................. 1,244,291 (122,431) 352,010 406,759 (17,612)
Contributions
Members ....................... 424,745 99,577 136,521 400,832 418,217
Company ....................... 244,073 52,613 67,171 277,133 274,508
Participants' loans
New loans made ................ (146,535) (45,540) (72,769) (234,888) (350,231)
Principal payments received ... 136,463 38,523 35,271 185,634 254,304
Loan administration fees ...... (562) (72) (153) (375) (775)
Distributions to
withdrawing members ........... (348,700) (26,766) (137,977) (889,525) (666,524)
Interfund transfer.................. (1,263,665) (294,557) 58,915 (635,659) (613,718)
----------- ----------- ----------- ------------ ------------
Increase (decrease) in net assets... 497,654 (171,257) 494,105 739,291 97,160
Net assets available for plan
benefits, beginning of year ... 8,555,180 1,677,777 2,435,116 13,829,348 12,187,405
----------- ----------- ----------- ------------ ------------
Net assets available for
plan benefits, end of year .... $ 9,052,834 $ 1,506,520 $ 2,929,221 $ 14,568,639 $ 12,284,565
=========== =========== =========== ============ ============
Mutual Funds
----------------------------------------------------
Merrill Oppenheimer
Lynch Main Street Tem-
Global Income and pleton Loan
Allocation Growth Foreign Fund Total
------------ ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ............... $ -- $ -- $ -- $ 631,579 $ 4,043,485
Mutual fund distributions ..... 397,072 358,022 246,337 -- 3,997,629
Cash dividends ................ -- -- -- -- 501,234
Net appreciation
(depreciation) of
investments.................. (413,157) 1,651,336 (415,146) -- (7,681,107)
Contributions
Members ....................... 182,458 332,018 144,689 -- 4,739,945
Company ....................... 113,584 187,831 79,400 -- 3,075,986
Participants' loans
New loans made ................ (81,977) (134,165) (55,874) 3,018,074 --
Principal payments received ... 84,913 113,287 40,972 (2,570,946) --
Loan administration fees ...... (243) (220) (159) -- (8,000)
Distributions to
withdrawing members ........... (90,784) (311,759) (61,409) (386,933) (7,048,264)
Interfund transfer.................. (634,247) (914,767) (660,724) (631,579) --
----------- ----------- ----------- ----------- -------------
Increase (decrease) in net assets... (442,381) 1,281,583 (681,914) 60,195 1,620,908
Net assets available for plan
benefits, beginning of year ... 3,640,950 7,151,428 2,725,080 6,149,635 144,475,714
----------- ----------- ----------- ----------- -------------
Net assets available for
plan benefits, end of year .... $ 3,198,569 $ 8,433,011 $ 2,043,166 $ 6,209,830 $ 146,096,622
=========== =========== =========== =========== =============
</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, 1998
<TABLE>
<CAPTION>
Mutual Funds
------------
Merrill
MEDC Merrill Lynch
Common Lynch Retirement
Stock Equity Index Preservation AIM
Fund Trust I Trust Value
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Earnings on investments
Interest income ................ $ -- $ 26 $ 3,273,989 $ --
Mutual fund distributions ...... -- -- -- 700,381
Cash dividends ................. 696,586 -- -- --
Net appreciation
(depreciation) of
investments................... 3,733,658 362,210 -- 441,562
Contributions
Members (Note 2) ............... 566,197 215,726 2,578,077 459,377
Company ........................ 393,211 49,534 1,115,057 169,603
Participants' loans
New loans made ................. (457,032) -- (1,534,720) (110,799)
Principal payments received .... 378,366 44,787 1,190,642 97,010
Loan administration fees ....... (1,048) -- (4,217) (393)
Distributions to
withdrawing members (Note 2) ... (1,220,287) (216,715) (4,738,956) (443,756)
Interfund transfers ................. (2,199,753) 1,288,591 (98,609) 357,042
------------ ----------- ------------ -----------
Increase (decrease) in net assets ... 1,889,898 1,744,159 1,781,263 1,670,027
Net assets available for plan
benefits, beginning of year .... 21,024,872 640,603 52,141,845 5,231,128
------------ ----------- ------------ -----------
Net assets available for
plan benefits, end of year ..... $ 22,914,770 $ 2,384,762 $ 53,923,108 $ 6,901,155
============ =========== ============ ===========
<CAPTION>
Mutual Funds
-----------------------------------------------------------------------------------------
Davis John Merrill
New Hancock Lynch Merrill
York Franklin Emerging Basic Lynch
Venture Income Growth Value Capital
----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ................ $ -- $ -- $ -- $ -- $ --
Mutual fund distributions ...... 383,486 123,031 530,051 1,060,373 1,034,768
Cash dividends ................. -- -- -- -- --
Net appreciation
(depreciation) of
investments................... 999,360 65,060 (351,330) 1,496,023 949,986
Contributions
Members (Note 2) ............... 591,568 180,226 156,164 562,599 498,173
Company ........................ 188,474 44,767 69,997 248,101 265,981
Participants' loans
New loans made ................. (181,328) (23,651) (50,415) (294,083) (348,626)
Principal payments received .... 108,051 29,374 48,204 210,280 243,773
Loan administration fees ....... (441) (78) (163) (644) (819)
Distributions to
withdrawing members (Note 2) ... (570,718) (85,429) (37,375) (604,944) (921,388)
Interfund transfers ................. 1,864,749 114,292 (685,636) 170,714 (105,582)
----------- ----------- ----------- ------------ ------------
Increase (decrease) in net assets ... 3,383,201 447,592 (320,503) 2,848,419 1,616,266
Net assets available for plan
benefits, beginning of year .... 5,171,979 1,230,185 2,755,619 10,980,929 10,571,139
----------- ----------- ----------- ------------ ------------
Net assets available for
plan benefits, end of year ..... $ 8,555,180 $ 1,677,777 $ 2,435,116 $ 13,829,348 $ 12,187,405
=========== =========== =========== ============ ============
<CAPTION>
Mutual Funds
-------------------------------------------------
Merrill Oppenheimer
Lynch Main Street Tem-
Global Income and pleton Loan
Allocation Growth Foreign Fund Total
----------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Earnings on investments
Interest income ................ $ -- $ -- $ -- $ 565,244 $ 3,839,259
Mutual fund distributions ...... 466,355 602,213 287,823 -- 5,188,481
Cash dividends ................. -- -- -- -- 696,586
Net appreciation
(depreciation) of
investments................... (89,514) 558,011 (166,841) -- 7,998,185
Contributions
Members (Note 2) ............... 311,191 336,695 181,597 6,022 6,643,612
Company ........................ 112,203 177,395 78,415 -- 2,912,738
Participants' loans
New loans made ................. (98,776) (133,647) (55,192) 3,288,269 --
Principal payments received .... 88,144 117,985 52,927 (2,609,543) --
Loan administration fees ....... (302) (361) (84) -- (8,550)
Distributions to
withdrawing members (Note 2) ... (115,873) (487,354) (124,803) (331,239) (9,898,837)
Interfund transfers ................. (225,570) (117,477) 202,483 (565,244) --
----------- ----------- ----------- ------------ -------------
Increase (decrease) in net assets ... 447,858 1,053,460 456,325 353,509 17,371,474
Net assets available for plan
benefits, beginning of year .... 3,193,092 6,097,968 2,268,755 5,796,126 127,104,240
----------- ----------- ----------- ------------ -------------
Net assets available for plan
benefits, end of year.......... $ 3,640,950 $ 7,151,428 $ 2,725,080 $ 6,149,635 $ 144,475,714
=========== =========== =========== ============ =============
</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, 1999 AND 1998
(1) SUMMARY OF THE PLAN AND ACCOUNTING POLICIES
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 and 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. Purchases and sales of securities are recorded on a trade-date
basis. Certain prior year amounts have been reclassified to conform with the
current year presentation.
INVESTMENT VALUATION
For financial statement purposes, mutual funds and MEDC common stock
(Class A and B) are carried at market values which are determined based upon
published market quotations. The Merrill Lynch Retirement Preservation Trust is
valued at $1 per unit, the Merrill Lynch Equity Index Trust I fund is valued at
quoted market prices of its underlying investments and 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.
RISKS AND UNCERTAINTIES
The Plan provides for various investments in common collective trusts,
mutual funds and common stocks. Investment securities, in general, are exposed
to various risks, including interest rate, credit and overall market volatility
risks. Because of the risks associated with investment securities, it is
reasonably possible that changes in their values will occur in the near term
that could materially affect the amounts reported in the statements of net
assets available for plan benefits as well as individual participant account
balances.
-7-
<PAGE> 9
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.
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 Capital appreciation, invests 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 fund yields approximated
6.6% for the years ended January 31, 1999 and 1998. Insurance
company guaranteed investment contracts are recorded at contract
values, which approximate market values.
Merrill Lynch Equity Capital appreciation, invests primarily in equity securities.
Index Trust I Fund
Mutual Funds
AIM Value Fund Capital appreciation, invests primarily in equity securities.
Davis New York Capital appreciation, invests in equity and convertible securities.
Venture Fund, Inc.
Franklin Income Fund Income, invests in equity and debt securities and cash equivalents.
John Hancock Emerging Capital appreciation, invests in equity securities of rapidly growing
Growth Fund 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 and convertible
Capital Fund, Inc. securities.
Merrill Lynch Global Income and capital appreciation, invests in United States and foreign
Allocation Fund, Inc. equity, debt and money market securities.
Oppenheimer Main Street Income and capital appreciation, invests in equity and debt securities.
Income and Growth Fund
Templeton Foreign Fund Capital appreciation, invests in stock and debt securities of companies
outside the United States.
</TABLE>
-8-
<PAGE> 10
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. Members whose
employment was terminated due to a reduction in force implemented during the
fourth quarter of fiscal 1999 who were not vested in the Company's matching
contributions to their respective accounts were fully vested.
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, 1999 and
1998, forfeitures of $18,861 and $39,277 occurred, and forfeitures of $35,404
and $38,602 were used to reduce the Company's contributions. At January 31,
1999, an additional $770 was available to reduce the Company's future
contributions. For members re-employed 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. 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.
-9-
<PAGE> 11
(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.
-10-
<PAGE> 12
SCHEDULE I
Mitchell Energy & Development Corp. Thrift and Savings Plan
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT JANUARY 31, 1999
<TABLE>
<CAPTION>
Shares/ Current
Identity of Issue/Description Units Cost Value
---------------------------------------------------------- ---------- ------------ -------------
<S> <C> <C> <C>
Mitchell Energy & Development Corp. *
Class A Common Stock ................................ 653,792 $ 10,894,519 $ 7,682,062
Class B Common Stock ................................ 678,580 11,491,275 8,567,074
------------ -------------
22,385,794 16,249,136
============ -------------
Common Collective Trusts
Merrill Lynch Equity Index Trust I Fund ............. 56,107 3,914,580 4,899,761
Merrill Lynch Retirement Preservation Trust * ....... 54,886,918 54,886,918 54,886,918
------------ -------------
58,801,498 59,786,679
============ -------------
Mutual Funds
AIM Value Fund ...................................... 231,013 7,097,918 9,834,206
Davis New York Venture Fund, Inc. ................... 356,832 6,635,067 9,052,834
Franklin Income Fund ................................ 652,173 1,532,298 1,506,520
John Hancock Emerging Growth Fund ................... 274,272 2,661,933 2,929,221
Merrill Lynch Basic Value Fund, Inc. ................ 381,578 10,913,099 14,568,639
Merrill Lynch Capital Fund, Inc. .................... 354,533 10,581,259 12,284,565
Merrill Lynch Global Allocation Fund, Inc. .......... 251,065 3,533,481 3,198,569
Oppenheimer Main Street Income and Growth Fund ...... 206,590 6,130,213 8,433,011
Templeton Foreign Fund .............................. 247,657 2,416,196 2,043,166
------------ -------------
$ 51,501,464 63,850,731
============ -------------
Participants' loans, at interest rates ranging from 8% to 10.5% ......................... 6,209,830
-------------
$ 146,096,376
==============
</TABLE>
- -----------------------------------
* Party-in-interest to the Plan.
-11-
<PAGE> 13
SCHEDULE II
Mitchell Energy & Development Corp. Thrift and Savings Plan
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JANUARY 31, 1999
<TABLE>
<CAPTION>
Total Total Total Cost
Purchase Selling of Assets Net
Identity of Issue/Description Price (a) Price (a) Sold (b) Gain
-------------------------------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
AIM Value Fund ................................... $ 4,116,740 $ 3,232,013 $ 2,974,972 $ 257,041
Merrill Lynch Equity Index Trust I Fund .......... 5,223,871 3,721,142 3,377,407 343,735
Merrill Lynch Retirement Preservation Trust ...... 21,962,144 20,842,567 20,842,567 --
</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) Computed using weighted average historical cost.
This schedule includes series of transactions in
securities of the same issue in excess of 5 percent of
the value of Plan assets at the beginning of the year.
-12-
<PAGE> 14
EXHIBIT
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated June 8, 1999, 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, 1999) into the previously filed Form S-8 Registration
Statement Nos. 33-26276, 2-86550 and 333-24335.
ARTHUR ANDERSEN LLP
Houston, Texas
June 14, 1999
