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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to .
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Commission File Number 0-14488
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Seitel, Inc.
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(Exact name of registrant as specified in charter)
Delaware 76-0025431
- ------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
50 Briar Hollow Lane
West Building, 7th Floor
Houston, Texas 77027
- -------------------------------- --------------------------
(Address of principal executive (Zip Code)
offices)
(713) 627-1990
--------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
-------------------------------
Former name, former address and
former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of November 11, 1996 there were 10,015,539 shares of the Company's common
stock, par value $.01 per share, outstanding.
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Page 1 of 27
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page
----------
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations (Unaudited) for the Three
Months Ended September 30, 1996 and 1995. . . . . . . . . . . . . . . 4
Consolidated Statements of Operations (Unaudited) for the Nine
Months Ended September 30, 1996 and 1995. . . . . . . . . . . . . . . 5
Consolidated Statements of Stockholders' Equity (Unaudited)
for the Nine Months Ended September 30, 1996. . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . 7
Notes to Consolidated Interim Financial Statements. . . . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . .11
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .14
Page 2 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Cash and equivalents $ 19,721 $ 6,242
Receivables
Trade 44,494 40,992
Notes and other 3,432 1,289
Net assets of discontinued operations 1,165 -
Net data bank 116,032 105,369
Net oil and gas properties, full cost method 83,257 42,424
Net geophysical and other property and equipment 15,188 10,126
Investment in affiliate 3,785 -
Prepaid expenses, deferred charges and other assets 2,694 3,125
--------- ---------
TOTAL ASSETS $ 289,768 $ 209,567
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 28,299 $ 18,422
Income taxes payable 1,128 227
Net liabilities of discontinued operations - 1,105
Debt
Senior Notes 75,000 52,500
Subordinated debentures - 1,989
Term Loans 9,724 3,071
Obligations under capital leases 2,794 3,723
Contingent payables 279 279
Deferred income taxes 10,010 6,472
Deferred revenue 20,690 1,401
--------- ---------
TOTAL LIABILITIES 147,924 89,189
--------- ---------
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share; authorized - -
5,000,000 shares; none issued
Common stock, par value $.01 per share; authorized
20,000,000 shares; issued and outstanding
10,001,690 and 9,436,854 at September 30, 1996
and December 31, 1995, respectively 100 94
Additional paid-in capital 95,955 85,821
Retained earnings 46,997 35,936
Treasury stock, 409 and 414 shares at cost at September
30, 1996 and December 31, 1995, respectively (4) (4)
Notes receivable from officers and employees (1,205) (1,395)
Cumulative translation adjustment 1 (74)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 141,844 120,378
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 289,768 $ 209,567
========= =========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 3 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------------
1996 1995
--------- ---------
<S> <C> <C>
REVENUE $30,307 $17,873
EXPENSES:
Depreciation, depletion and amortization 10,824 5,922
Cost of sales 5,873 3,966
Selling, general and administrative expenses 5,187 4,054
Net interest expense 761 617
------- -------
22,645 14,559
------- -------
Equity in earnings of affiliate 3 -
------- -------
Income from continuing operations before provision
for income taxes 7,665 3,314
Provision for income taxes 2,836 1,226
------- -------
Income from continuing operations 4,829 2,088
Income from discontinued operations, net of
income tax benefit of $55 - 94
------- -------
NET INCOME $ 4,829 $ 2,182
======= =======
Earnings per share:
Primary:
Income from continuing operations $ .45 $ .21
Income from discontinued operations - .01
======= =======
Net income $ .45 $ .22
======= =======
Assuming full dilution:
Income from continuing operations $ .44 $ .21
Income from discontinued operations - .01
======= =======
Net income $ .44 $ .22
======= =======
Weighted average number of common and common
equivalent shares:
Primary 10,825 9,940
======= =======
Assuming full dilution 10,893 10,235
======= =======
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 4 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
REVENUE $ 77,753 $ 56,624
EXPENSES:
Depreciation, depletion and amortization 28,981 20,395
Cost of sales 13,542 8,753
Selling, general and administrative expenses 14,036 12,283
Net interest expense 2,072 2,343
-------- --------
58,631 43,774
-------- --------
Equity in earnings of affiliate 3 -
-------- --------
Income from continuing operations before provision
for income taxes 19,125 12,850
Provision for income taxes 7,076 4,754
-------- --------
Income from continuing operations 12,049 8,096
Income from discontinued operations, net of income
tax expense of $236 - 401
Loss on disposal of discontinued operations, net
of income tax benefit of $580 (988) -
-------- --------
NET INCOME $ 11,061 $ 8,497
======== ========
Earnings per share:
Primary
Income from continuing operations $ 1.16 $ .82
Income from discontinued operations - .04
Loss on disposal of discontinued operations (.09) -
-------- --------
Net income $ 1.07 $ .86
======== ========
Assuming full dilution
Income from continuing operations $ 1.12 $ .81
Income from discontinued operations - .04
Loss on disposal of discontinued operations (.09) -
-------- --------
Net income $ 1.03 $ .85
======== ========
Weighted average number of common and common
equivalent shares:
Primary 10,382 9,853
======== ========
Assuming full dilution 10,705 10,105
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 5 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Notes
Common Stock Additional Treasury Stock Receivable Cumulative
------------------- Paid-In Retained -------------- from Officers Translation
Shares Amount Capital Earnings Shares Amount & Employees Adjustments
---------- ------- -------- -------- ------ ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 5,976,472 $ 60 $25,672 $12,225 - $ - $(2,150) $ (164)
Proceeds from issuance of common stock 10,916 - 37 - - - - -
Payments received on notes receivable from
officers and employees - - - - (414) (4) 111 -
Foreign currency translation adjustment - - - - - - - 79
Net income - - - 5,717 - - - -
---------- ---- ------- ------- ----- --- ------- ------
Balance, December 31, 1993 5,987,388 60 25,709 17,942 (414) (4) (2,039) (85)
Sale of common stock through public offering 1,061,200 11 31,906 - - - - -
Proceeds from issuance of common stock 770,364 7 7,280 - - - - -
Tax reduction from exercise of stock options - - 1,879 - - - - -
Conversion and exchanges of
subordinated debentures 1,006,667 10 8,837 - - - - -
Payments received on notes receivable
from officers and employees - - - - - - 488 -
Foreign currency translation adjustment - - - - - - - 13
Net income - - - 9,315 - - - -
---------- ---- ------- ------- ----- --- ------- ------
Balance, December 31, 1994 8,825,619 88 75,611 27,257 (414) (4) (1,551) (72)
Proceeds from issuance of common stock 445,939 4 6,894 - - - - -
Tax reduction from exercise of stock options - - 1,900 - - - - -
Conversions and exchanges of
subordinated debentures 165,296 2 1,416 - - - - -
Payments received on notes receivable
from officers and employees - - - - - - 156 -
Foreign currency translation adjustment - - - - - - - (2)
Net income - - - 8,679 - - - -
---------- ---- ------- ------- ----- --- ------- ------
Balance, December 31, 1995 9,436,854 94 85,821 35,936 (414) (4) (1,395) (74)
Proceeds from issuance of common stock 218,457 3 4,105 - 5 - - -
Acquisition of equity interest in affiliate 132,075 1 3,499 - - - - -
Tax reduction from exercise of stock options - - 652 - - - - -
Conversions and exchanges of
subordinated debentures 214,304 2 1,878 - - - - -
Payments received on notes receivable from
officers and employees - - - - - - 190 -
Foreign currency translation adjustment - - - - - - - 75
Net Income - - - 11,061 - - - -
---------- ---- ------- ------- ---- --- ------- ------
Balance, September 30, 1996 (unaudited) 10,001,690 $100 $95,955 $46,997 (409) $(4) $(1,205) $ 1
========== ==== ======= ======= ==== === ======= ======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
Page 6 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 75,366 $ 55,547
Proceeds from volumetric production payment 19,000 -
Cash paid to suppliers and employees (30,590) (26,981)
Interest paid (2,031) (978)
Interest received 810 81
Income taxes paid (1,500) (2,452)
-------- --------
Net cash provided by operating activities 61,055 25,217
-------- --------
Cash flows from investing activities:
Cash invested in seismic data (28,420) (32,653)
Cash invested in oil and gas properties (41,215) (15,606)
Cash paid to acquire property and equipment (8,070) (935)
Cash from disposal of property and equipment 59 -
Advances made to oil and gas joint venture partner - (1,142)
Collections on loans made 208 -
Loan made to unconsolidated affiliate (2,000) -
Cost of investment made in unconsolidated affiliate (109) -
-------- --------
Net cash used in investing activities (79,547) (50,336)
-------- --------
Cash flows from financing activities:
Borrowings under line of credit agreements - 66,524
Principal payments under line of credit - (44,985)
Borrowings under term loans 7,697 -
Principal payments on term loans (1,044) (636)
Principal payments on capital lease obligations (970) (1,057)
Proceeds from issuance of senior notes 22,500 -
Proceeds from issuance of common stock 4,134 5,499
Costs of debt and equity transactions (851) (62)
Payments on receivables from officers and employees 190 88
-------- --------
Net cash provided by financing activities 31,656 25,371
-------- --------
Effect of exchange rate changes 81 -
-------- --------
Net increase in cash and equivalents 13,245 252
Cash and cash equivalents at beginning of period:
Continuing operations 6,242 846
Discontinued operations 234 695
-------- --------
Total cash and equivalents at beginning of period 6,476 1,541
-------- --------
Cash and cash equivalents at end of period:
Continuing operations 19,721 1,506
Discontinued operations - 287
-------- --------
Total cash and equivalents at end of period $ 19,721 $ 1,793
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 7 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $ 11,061 $ 8,497
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss (income) from discontinued operations, net of tax 988 (401)
Equity in earnings of affiliate (3) -
Depreciation, depletion and amortization 29,713 20,834
Non-cash sales (Note F) - (1,404)
Gain on sale of property and equipment (22) -
Amortization of deferred revenue (2,925) -
Increase in receivables (3,000) (8,895)
Decrease (increase) in other assets 378 (1,315)
Proceeds from volumetric production payment 19,000 -
Increase in other liabilities 9,356 8,393
-------- --------
Total adjustments 53,485 17,212
Net cash provided by (used in) operating activities of:
Continuing operations 64,546 25,709
Discontinued operations (3,491) (492)
-------- --------
$ 61,055 $ 25,217
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
Page 8 of 27
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
September 30, 1996
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Regulation S-X. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Certain reclassifications
have been made to the amounts in the prior year's financial statements to
conform to the current year's presentation. Operating results for the nine
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. For further
information, refer to the financial statements and notes thereto for the year
ended December 31, 1995.
NOTE B-EARNINGS PER SHARE
Earnings per share is based on the weighted average number of
outstanding shares of common stock during the respective periods, including
common equivalent shares applicable to assumed exercise of stock options and
warrants when such common stock equivalents are dilutive, and the Company's
other potentially dilutive securities.
For the 1996 periods, there were no adjustments to net income to
determine earnings per share. For the 1995 periods, earnings per share was
determined by dividing net income, as adjusted below, by applicable shares
outstanding (in thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1995 1995
--------- ---------
<S> <C> <C>
Net income as reported $ 2,182 $ 8,497
Interest eliminated on assumed conversion of 9%
convertible subordinated debentures 24 72
------- -------
Total income used for fully diluted earnings per share $ 2,206 $ 8,569
======= =======
Weighted average number of common and
common equivalent shares 9,940 9,853
======= =======
Weighted average number of common shares-
assuming full dilution 10,235 10,105
======= =======
</TABLE>
NOTE C-DATA BANK
Costs incurred in the creation of proprietary seismic data are
capitalized. Seismic data costs are amortized for each seismic data program in
the proportion that the program's revenue for a period relates to management's
estimate of the program's ultimate revenue. Since inception, management has
established guidelines regarding its annual charge for amortization. Under these
guidelines, 90% of the cost incurred in the creation of proprietary seismic data
is amortized within five years of inception for two-dimensional seismic data and
Page 9 of 27
<PAGE>
within seven years of inception for three-dimensional seismic data, and the
final 10% is amortized on a straight-line basis over the next fifteen years.
Costs of existing seismic data libraries purchased by the Company are fully
amortized within ten years from date of purchase. On a periodic basis, the
carrying value of seismic data programs are compared to their estimated future
revenue and, if appropriate, are reduced to their estimated net realizable
value.
NOTE D-OIL AND GAS PROPERTIES
The Company accounts for its oil and gas exploration and production
activities using the full-cost method of accounting. Under this method, all
costs associated with acquisition, exploration and development of oil and gas
reserves are capitalized, including directly related overhead costs and interest
costs related to its unevaluated properties and certain properties under
development which are not currently being amortized. For the nine months ended
September 30, 1996 and 1995, general and administrative costs of $800,000 and
$628,000 respectively, have been capitalized to oil and gas properties. For the
nine months ended September 30, 1996 and 1995, interest costs of $1,074,000 and
$543,000, respectively, have been capitalized to oil and gas properties.
In June 1996, the Company's exploration and production subsidiary
acquired an additional 28.5% working interest in certain oil and gas properties
for approximately $25.2 million in cash. The Company previously owned a 19%
working interest in such properties. At the same time, the Company sold a
volumetric production payment for $19 million to certain limited partnerships.
Under the terms of the production payment agreements, the Company conveyed a
real property interest of approximately 7.6 billion cubic feet of certain
natural gas and approximately 360,000 barrels of other hydrocarbons to the
purchasers. The Company retains responsibility for its working interest share of
the cost of operations. The proceeds of the sale were applied toward the
acquisition cost of the oil and gas properties. The Company accounted for the
proceeds received in the transaction as deferred revenue which will be amortized
into revenue and income as natural gas and other hydrocarbons are produced and
delivered during the term of the volumetric production payment agreements.
NOTE E--DISCONTINUED OPERATIONS
On March 22, 1996, the Company's Board of Directors unanimously adopted
a plan of disposal to discontinue the Company's gas marketing operations.
Accordingly, the Company's consolidated financial statements as of December 31,
1995, were restated to reflect the discontinued operations. Effective August 1,
1996, the Company assigned substantially all of its contracts to purchase and
supply natural gas to a retail energy marketer. During the nine months ended
September 30, 1996, the Company recorded an additional loss from discontinued
operations of $988,000, which is net of an income tax benefit of $580,000,
primarily due to changes in market prices to purchase gas supply. The net assets
of discontinued operations at September 30, 1996, consist primarily of trade
receivables and income tax benefits offset by accounts payable and accrued
liabilities.
NOTE F-SUPPLEMENTAL CASH FLOW INFORMATION
Significant non-cash investing and financing activities are as follows:
1. During the first nine months of 1996 and 1995, the Company issued
214,304 and 161,526 shares, respectively, of its common stock upon the
conversion and exchange of $1,989,000 and $1,499,000 respectively, of
its 9% convertible subordinated debentures. In connection with these
conversions and exchanges, unamortized bond issue costs totaling
$109,000 and $95,000 during the first nine months of 1996 and 1995,
respectively, have been charged to additional paid-in-capital.
2. During the first nine months of 1996, the Company issued 132,075
shares of its common stock in exchange for a 50% equity interest in a
marine seismic company.
3. During the first nine months of 1995, the Company licensed seismic
data valued at $1,404,000 in exchange for the purchase of seismic data
for its library.
4. During the first nine months of 1995, the Company acquired $330,000 of
property and equipment by incurring a directly related note payable.
Page 10 of 27
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Total revenue increased 70% and 37% during the third quarter and first
nine months of 1996, respectively, as compared to the third quarter and first
nine months of 1995. Revenue primarily consists of revenue generated from the
seismic business and oil and gas production.
Seismic revenue increased from $16,002,000 during the third quarter of
1995 to $24,090,000 during the third quarter of 1996 and increased from
$52,993,000 during the first nine months of 1995 to $65,390,000 during the first
nine months of 1996. These increases are primarily attributable to an increase
in demand for three-dimensional seismic data resulting in an increase in
proprietary data acquisition performed for non-affiliated parties by the
Company's crew subsidiary and licensing of data from the Company's data bank.
Oil and gas revenue increased from $1,871,000 during the third quarter
of 1995 to $6,217,000 during the third quarter of 1996 and increased from
$3,631,000 during the first nine months of 1995 to $12,363,000 during the first
nine months of 1996. These increases in oil and gas revenue are primarily due to
higher production resulting from more wells being on line in the 1996 periods
(87 wells at September 30, 1996) as compared to the 1995 periods (61 wells at
September 30, 1995), and increased revenue interest in certain wells. Net
production of oil and gas increased from 81,000 barrels and 542 million cubic
feet (mmcf) for the third quarter of 1995 to 129,000 barrels and 1,813 mmcf for
the third quarter of 1996 and increased from 165,000 barrels and 851 mmcf for
the first nine months of 1995 to 261,000 barrels and 3,310 mmcf for the first
nine months of 1996. Additionally, average oil prices increased from $13.06 to
$17.49 per barrel for the third quarter of 1995 and 1996, respectively, and
increased from $12.83 to $18.91 per barrel for the first nine months of 1995 and
1996, respectively. Average gas prices increased from $1.27 to $2.13 per mcf for
the third quarter of 1995 and 1996, respectively, and increased from $1.39 to
$2.16 per mcf for the first nine months of 1995 and 1996, respectively.
Depreciation, depletion and amortization consists primarily of data
bank amortization. Refer to Note C for a description of the Company's
amortization policy. Data bank amortization increased from $5,149,000 during the
third quarter of 1995 to $8,220,000 during the third quarter of 1996 and
increased from $18,529,000 to $23,708,000 for the first nine months of 1995 and
1996, respectively. As a percentage of revenue from licensing seismic data, data
bank amortization was 44% and 47% for the third quarter of 1995 and 1996,
respectively, and 44% and 48% for the first nine months of 1995 and 1996,
respectively. These changes are primarily due to the mix of sales of 2D and 3D
data amortized at varying percentages based on each data program's current and
expected future revenue stream.
Cost of sales consists of expenses associated with the acquisition of
seismic data for non-affiliated parties, seismic resale support services, and
oil and gas production. The increase in cost of sales from $3,966,000 to
$5,873,000 for the third quarter of 1995 and 1996, respectively, and from
$8,753,000 to $13,542,000 for the first nine months of 1995 and 1996,
respectively, is due to the corresponding increase in revenues from these areas.
Revenues from these areas increased from $5,951,000, to $12,511,000 during the
third quarter of 1995 and 1996, respectively, and increased from $13,795,000 to
$27,547,000 during the first nine months of 1995 and 1996, respectively.
The Company's selling, general and administrative expenses increased
during the 1996 periods as compared to the 1995 periods primarily as a result of
variable expenses related to the increased volume of business. As a percentage
of total revenue, these expenses decreased from 23% for the third quarter of
1995 to 17% for the third quarter of 1996, and from 22% for the first nine
months of 1995 to 18% for the first nine months of 1996. These decreases are
primarily due to ongoing cost reduction programs.
Page 11 of 27
<PAGE>
The decrease in net interest expense during the first nine months of
1996 as compared to the first nine months of 1995 is primarily due to an
increase in interest income earned on the investment of increased cash balances.
On July 3, 1996, the Company acquired a 50% equity interest in Energy
Research International ("ERI"), a holding company which wholly owns two marine
seismic companies, Horizon Exploration Limited and Horizon Seismic Inc. This
investment provides the Company with greater access to offshore vessels to
better meet the demand for new marine seismic data. When ERI performs work for
Seitel, the intercompany profits earned by ERI will be eliminated in order to
determine Seitel's share of ERI's earnings. This elimination of intercompany
profits will reduce Seitel's data bank costs which should ultimately result in a
higher return on the seismic data. During the third quarter of 1996, ERI was
acquiring seismic data in the Gulf of Mexico for the Company's seismic data
subsidiary. Consequently, the profits earned by ERI on this work were eliminated
to determine the Company's share of ERI's earnings for the third quarter. The
Company's data bank costs were also reduced by the amount of the intercompany
profit. The Company's equity interest in the earnings of ERI since July 3, 1996,
was immaterial after elimination of all intercompany transactions.
On March 22, 1996, the Company's Board of Directors unanimously adopted
a plan of disposal to discontinue the Company's gas marketing operations.
Accordingly, the Company's consolidated financial statements as of December 31,
1995, were restated to reflect the discontinued operations. Effective August 1,
1996, the Company assigned substantially all of its contracts to purchase and
supply natural gas to a retail energy marketer. During the nine months ended
September 30, 1996, the Company recorded an additional loss from discontinued
operations of $988,000, which is net of an income tax benefit of $580,000,
primarily due to changes in market prices to purchase gas supply; such loss
represents the final charge related to the discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On December 28, 1995, the Company completed a private placement of
three series of unsecured Senior Notes totaling $75 million. The Company
contemporaneously issued its Series A Notes and Series B Notes, which total
$52.5 million and bear interest at a fixed rate of 7.17%. On April 9, 1996, the
Company issued its Series C Notes, which total $22.5 million and bear interest
at a fixed rate of 7.48%. The Series A Notes mature on December 30, 2001, and
require annual principal payments of $8.333 million beginning December 30, 1999.
The Series B and Series C Notes mature on December 30, 2002, and require annual
principal payments of $10 million beginning December 30, 1998. Interest on all
series of the notes is payable semi-annually on June 30 and December 30. The
Company used the majority of the proceeds of the Series A and Series B Notes to
repay amounts outstanding under a $25 million revolving line of credit, amounts
outstanding under a wholly-owned subsidiary's $75 million reducing revolving
line of credit, and amounts owed to a seismic contractor. The proceeds of the
Series C Notes are being used primarily to fund petroleum exploration and
development activities of its wholly-owned subsidiary and for other working
capital or general corporate purposes.
The Company filed a registration statement on Form S-3 (the "Shelf
Registration Statement") in June 1994 to offer from time to time in one or more
series (i) unsecured debt securities, which may be senior or subordinated, (ii)
preferred stock, par value $0.01 per share, and (iii) common stock, par value
$.01 per share, or any combination of the foregoing, at an aggregate initial
offering price not to exceed $75,000,000. The Shelf Registration Statement was
declared effective by the Securities and Exchange Commission on June 30, 1994.
In August 1994, the Company completed a public offering of 1,061,200 shares of
its common stock priced at $32 per share pursuant to the Shelf Registration
Statement. The net proceeds from the offering (after underwriting commission and
offering expenses) totaled $31,917,000. After this sale of common stock at an
initial aggregate offering price of $33,958,400, the Company may offer
additional securities in the future for up to an aggregate initial offering
price of $41,041,600 pursuant to the Shelf Registration Statement.
On July 22, 1996, the Company entered into an agreement with The First
National Bank of Chicago for a $25,000,000 unsecured revolving line of credit
facility. The facility bears interest at a rate determined by the ratio of the
Page 12 of 27
<PAGE>
Company's debt to cash flow from operations. While the company has no amounts
outstanding under the facility at this time, pursuant to the interest rate
pricing structure, $25,000,000 currently could be borrowed at LIBOR plus 3/4%,
the bank's prevailing prime rate, or the sum of the Federal Funds effective rate
for such day plus 1/2%. The facility matures on July 22, 1999.
On July 9, 1996, a wholly-owned subsidiary of the Company obtained two
term loans aggregating $7,264,000 for the purchase of land and marine seismic
equipment which secures the debt. The first term loan has a principal amount of
$5,902,000, is for a term of five years and bears interest at the rate of 8%.
Monthly principal and interest payments total $120,000. The balance outstanding
on this loan at November 11, 1996 was $5,660,000. The second term loan has a
principal amount of $1,362,000, is for a term of three years and bears interest
at the rate of 8.06%. Monthly principal and interest payments on the second term
loan total $43,000. The balance outstanding on this loan at November 11, 1996
was $1,294,000.
Prior to the second quarter of 1996, the Company and two of its
wholly-owned subsidiaries obtained four separate term loans totaling $5,449,000,
three of which have a three year term and one which has a five year term. Two of
the loans bear interest at the rate of 8.413%, one at the rate of 7.61% and one
at the rate of 7.52%. The proceeds were used for the purchase of certain
property and equipment which secures the debt. Monthly principal and interest
payments total approximately $121,000. The balance outstanding on the loans at
November 11, 1996, was $2,410,000.
During 1994 and 1995, the Company and one of its wholly-owned
subsidiaries entered into three capital leases which relate to the purchase of a
3D seismic recording system and a seismic data processing center. These lease
agreements are for terms of three to five years. Monthly principal and interest
payments total approximately $125,000. The balance outstanding under these
capital lease obligations was $2,669,000 at November 11, 1996.
From January 1, 1996 through November 11, 1996, the Company received
$4,438,000 from the exercise of common stock purchase warrants and options and
the Company's 401(k) stock purchases. In connection with the exercises, the
Company will also receive approximately $730,000 in tax savings.
In February 1996, the Company called for the March 31, 1996 redemption
of its 9% convertible subordinated debentures, thereby eliminating future
interest and sinking fund payments. All remaining outstanding debentures
converted to common stock.
During the first nine months of 1996, cash from operations and proceeds
from its Senior Notes, the exercise of common stock purchase warrants and
options, and the volumetric production payment funded the third party seismic
data creation costs borne by the Company and oil and gas exploration and
development costs, as well as taxes, interest expenses, cost of sales and
general and administrative expenses. The Company believes its revenues from
operating sources, remaining proceeds from its Senior Notes and proceeds from
the exercise of warrants and options, combined with its available line of
credit, should be sufficient to fund its capital expenditures for 1996, along
with expenditures for operating and general and administrative expenses. To the
extent these sources are not sufficient to cover the Company's expenses, it
would be necessary for the Company to arrange for additional debt or equity
financing. There can be no assurance that the Company would be able to
accomplish any such debt or equity financing on terms satisfactory to it.
Page 13 of 27
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- -------------------------
There have been no material developments in the legal proceedings reported in
Item 1. of the Company's 10-Q for the quarter ended June 30, 1996.
Items 2., 3., and 5. Not applicable.
- -------------------
Item 4. Submission of Matters to a Vote of Security Holders.
- -----------------------------------------------------------
The Company's Annual Meeting of Stockholders was held on July 25, 1996.
Matters voted upon at the Annual Meeting, and the results of those votes are as
follows:
1. The election of nine directors to serve until the 1996 Annual Meeting.
No. of
Name No. of Votes For Votes Withheld
-------------------- ---------------- ---------------
Herbert M. Pearlman 8,226,775 242,294
Paul A. Frame 8,218,275 250,794
Horace A. Calvert 8,318,035 151,034
David S. Lawi 8,226,325 242,744
Walter M. Craig, Jr. 8,222,925 246,144
William Lerner 8,225,725 243,344
William L. Lurie 8,316,930 152,139
John E. Stieglitz 8,224,575 244,494
Debra D. Valice 8,329,530 139,539
2. Approval of certain amendments to the Seitel, Inc. 1993 Incentive Stock
Option Plan.
No. of Votes For No. of Votes Against No. of Votes Abstained
---------------- -------------------- ----------------------
6,949,197 1,172,997 98,717
3. Approval of the Seitel, Inc. Non-Employee Directors' Deferred Compensation
Plan.
No. of Votes For No. of Votes Against No. of Votes Abstained
---------------- -------------------- ----------------------
7,548,536 568,463 103,912
4. Approval of the appointment of the public accounting firm of Arthur
Andersen LLP to act as the Company's independent Certified Public
Accountants for the year of 1996.
No. of Votes For No. of Votes Against No. of Votes Abstained
---------------- -------------------- ----------------------
8,372,205 60,415 36,449
Page 14 of 27
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) 10.1 First Amendment to Seitel, Inc. Revolving Credit Agreement dated
as of August 30, 1996 among the Company and The First National
Bank of Chicago
10.2 Seitel, Inc. Amended and Restated 1995 Warrant Reload Plan
(b) Reports on Form 8-K
The Registrant filed a Form 8-K on July 9, 1996, as amended by Form 8-K/A
Amendment No. 1 filed on August 16, 1996, and Form 8-K/A Amendment No. 2
filed on September 6, 1996, disclosing the acquisition of certain oil and
gas properties including (i) Statements of Revenue and Direct Operating
Expenses for the acquired properties for the year ended December 31, 1995
and for the six months ended June 30, 1996 and 1995 (unaudited) and (ii)
Pro Forma Condensed Consolidated Statements of Operations for Seitel, Inc.
(unaudited) for the year ended December 31, 1995 and for the six months
ended June 30, 1996.
Page 15 of 27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEITEL, INC.
Dated: November 12, 1996 /s/ Paul A. Frame
---------------------------------
Paul A. Frame
President and
Chief Executive Officer
Dated: November 12, 1996 /s/ Debra D. Valice
---------------------------------
Debra D. Valice
Chief Financial Officer
Dated: November 12, 1996 /s/ Marcia H. Kendrick
---------------------------------
Marcia H. Kendrick
Chief Accounting Officer
Page 16 of 27
<PAGE>
EXHIBIT INDEX Page
10.1 First Amendment to Seitel, Inc. Revolving Credit Agreement 18
dated as of August 30, 1996 among 18 the Company and The
First National Bank of Chicago
10.2 Seitel, Inc. Amended and Restated 1995 Warrant Reload Plan 23
Page 17 of 27
EXHIBIT 10.1
Page 18 of 27
<PAGE>
FIRST AMENDMENT TO
SEITEL, INC. REVOLVING CREDIT AGREEMENT
This First Amendment to Seitel, Inc. Revolving Credit Agreement dated as of
August 30, 1996 (this "First Amendment") is among Seitel, Inc., a Delaware
corporation (the "Borrower"), the lenders set forth on the signature pages
hereto (the "Lenders") and The First National Bank of Chicago, individually and
as agent for the Lenders (in such capacity, the "Agent").
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless amended pursuant hereto or unless the context
otherwise requires, all terms used herein which are defined in the Revolving
Credit Agreement dated as of July 22, 1996 (the "Credit Agreement") among the
Borrower, the Agent and the Lenders shall have the meanings assigned to them in
the Credit Agreement.
2. Amendments. Upon the satisfaction of the conditions precedent set forth
in Section 4 of this First Amendment and effective as of July 22, 1996 (the
"Effective Date"), the Credit Agreement shall be amended as follows:
(a) The definition of "Debt to Cash Flow from Operations Ratio" set
forth in Article I of the Credit Agreement is hereby amended to read in its
entirety as follows:
"'Debt to Cash Flow from Operations Ratio' means, as measured on the
last day of any fiscal quarter of the Borrower and its Restricted
Subsidiaries on a consolidated basis, the ratio of (i) Debt outstanding on
the last day of such quarter to (ii) the sum of (a) Consolidated Net Income
for the most recently ended four fiscal quarters (including such quarter),
plus (b) to the extent deducted in determining Consolidated Net Income, the
amount of all depreciation, depletion and amortization allowances of the
Borrower and the Restricted Subsidiaries for such four quarters, plus (c)
to the extent deducted in determining Consolidated Net Income, deferred
taxes of the Borrower and Restricted Subsidiaries for such four quarters."
(b) The definitions of "Level 1 Period," "Level 2 Period" and "Level 3
Period" are hereby amended to read in their entirety as follows:
"'Level 1 Period' means any period during which the Debt to Cash Flow
from Operations Ratio measured as of the end of the most recent fiscal
quarter was less than 1.0 to 1.0."
"'Level 2 Period' means any period which does not qualify as a Level 1
Period during which the Debt to Cash Flow from Operations Ratio measured as
of the end of the most recent fiscal quarter was less than 2.0 to 1.0."
"'Level 3 Period' means any period which does not qualify as a Level 1
Period or a Level 2 Period during which the Debt to Cash Flow from
Operations Ratio measured as of the end of the most recent fiscal quarter
was less than 2.5 to 1.0."
3. Representations and Warranties. The Borrower hereby confirms, reaffirms
and restates as of the date hereof the representations and warranties set forth
in Article V of the Credit Agreement.
4. Conditions Precedent. This First Amendment and the amendments to the
Credit Agreement provided for in Section 2 hereof shall be effective as of the
Effective Date when all of the following conditions precedent shall have been
satisfied:
(a) The Agenda shall have received counterparts of this First
Amendment duly executed and delivered by the Borrower and by the Required
Lenders.
Page 19 of 27
<PAGE>
(b) On the Effective Date and after giving effect to the terms of this
First Amendment, no Default or Unmatured Default shall have occurred and be
continuing.
5. Effect on the Credit Agreement. Except to the extent of the amendments
and waiver expressly provided for herein, all of the representations,
warranties, terms, covenants and conditions of the Loan Documents (a) shall
remain unaltered, (b) shall continue to be, and shall remain, in full force and
effect in accordance with their respective terms, and (c) are hereby ratified
and confirmed in all respects. Upon the effectiveness of this First Amendment,
all references in the Credit Agreement (including references in the Credit
Agreement as amended and otherwise modified by this First Amendment) to "this
Agreement" (and all indirect references such as "hereby", "herein", "hereof" and
"hereunder") shall be deemed to be references to the Credit Agreement as amended
and otherwise modified by this First Amendment.
6. Entire Agreement. This First Amendment, the Credit Agreement as amended
and otherwise modified by this First Amendment and the other loan Documents
embody the entire agreement and understanding among the parties hereto and
supersede any and all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
7. APPLICABLE LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
-----------------------------------------------------------------------
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
- --------------------------------------------------------------------------------
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
- ---------------------------------------------------------------------------
8. Headings. The headings, captions and recitals used in this first
Amendment are for convenience only and shall not affect the interpretation of
this First Amendment.
9. Counterparts. This First Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instruments.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed as of the date first above written.
SEITEL, INC.
By: /s/ Debra D. Valice
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Agent
By: /s/ Helen Carr
Title: Attorney in Fact
Page 20 of 27
<PAGE>
ACKNOWLEDGMENT AND CONSENT BY SUBSIDIARY GUARANTORS
Each of the undersigned Subsidiary Guarantors (i) acknowledges its receipt
of a copy of and hereby consents to all of the terms and conditions of the
foregoing First Amendment and (ii) reaffirms its obligations under the
Subsidiary Guaranty dated as of July 22, 1996 in favor of The First National
Bank of Chicago, as agent.
SEITEL DATA CORP.
By: /s/ Barbara J. Steen
Title: Vice President
SEITEL DELAWARE, INC.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL MANAGEMENT, INC.
By: /s/ Debra D. Valice
Title: President
SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
Title: Vice President
DDD ENERGY, INC.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL GAS & ENERGY CORP.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL POWER CORP.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL NATURAL GAS, INC.
By: /s/ Debra D. Valice
Title: Vice President
MATRIX GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
Title: Vice President
EXSOL, INC.
By: /s/ Debra D. Valice
Title: Vice President
DATATEL, INC.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL OFFSHORE CORP.
By: /s/ Debra D. Valice
Title: Vice President
Page 21 of 27
<PAGE>
GEO-BANK, INC.
By: /s/ Debra D. Valice
Title: Vice President
ALTERNATIVE COMMUNICATIONS
ENTERPRISES, INC.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL INTERNATIONAL, INC.
By: /s/ Debra D. Valice
Title: Vice President
AFRICAN GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
Title: Vice President
SEITEL DATA LTD.
By: SEITEL DELAWARE, INC.,
its general partner
By: /s/ Debra D. Valice
Title: Vice President
Page 22 of 27
EXHIBIT 10.2
Page 23 of 27
<PAGE>
SEITEL, INC.
AMENDED AND RESTATED 1995 WARRANT RELOAD PLAN
The Board of Directors of Seitel, Inc. (the "Company") has adopted this
1995 Warrant Reload Plan (the "Plan"), effective as of January 1, 1995. The Plan
applies only to the 61 warrantholders (the "Warrantholders") and the warrants to
purchase common stock of the Company held by the Warrantholders as of the
effective date hereof (the "Warrants"), which Warrantholders and Warrants are
listed on Exhibit A hereto.
The Company shall, on exercise of any Warrant by a Warrantholder according
to the terms thereof at any time prior to expiration thereof, grant replacement
warrants ("Replacement Warrants") to the exercising Warrantholder. Such
Replacement Warrants shall be granted effective on the later of (i) the exercise
of the applicable Warrant, (ii) confirmation from the New York Stock Exchange
that stockholder approval of this Plan is not required, or (iii) at the request
of any Warrantholder, such later date as may be required to avoid the imposition
of short-swing profits liability under Section 16 of the Securities Exchange Act
of 1934, and the regulations thereunder.
Warrantholders who are not a director or employee of the Company or a
majority-owned subsidiary as of the date of exercise of a Warrant shall not be
entitled to be granted Replacement Warrants under this Plan with respect to such
exercise. Warrantholders will not be entitled to any grant of Replacement
Warrants under this Plan upon exercise of Replacement Warrants.
The Replacement Warrants shall expire on the later of (i) the date five (5)
years after the date that the exercised Warrant is exercised, or (ii) the
expiration date of the exercised Warrant, and shall entitle the Warrantholder to
purchased the same number of shares of Company common stock as the Warrantholder
purchased upon exercise of such Warrant. The Replacement Warrants shall have an
exercise price equal to either (i) the closing price of Company common stock as
reported on the New York Stock Exchange on the effective date of grant of the
Replacement Warrant, or (ii) at the request of the Warrantholder, such greater
exercise price as may be required to avoid the imposition of short-swing profits
liability under Section 16 of the Securities Exchange Act of 1934, and the
regulations thereunder.
No Replacement Warrant shall be exercisable until the Company has received
notice from the New York Stock Exchange that the shares issuable upon exercise
of the Replacement Warrants have been approved for listing on the Exchange
subject to issuance. The Company may place other restrictions on the
exercisability of the Replacement Warrants as may be required to comply with
applicable laws, including but not limited to restrictions limiting or
prohibiting exercise prior to registration pursuant to applicable securities
laws of the shares issuable upon exercise.
The Replacement Warrants shall not be sold, transferred, pledged, assigned,
hypothecated or otherwise disposed of in any manner by any Warrantholder except
by will or by the laws of descent and distribution, and shall not be assignable
by operation of law or subject to execution, attachment or similar process.
Except as set forth in this Plan, the Replacement Warrants will contain
substantially the same terms and conditions as the Warrants.
The Board of Directors reserves the right to terminate this Plan at any
time upon notice to the Warrantholders, and no Warrantholder shall have any
rights or claims against the Company upon such termination, it being the
intention of this Plan that the right to any grant of Replacement Warrants shall
not vest in any Warrantholder until exercise of a Warrant, and shall then vest
only as to the grant of a Replacement Warrant with respect to such exercise of
such Warrant.
Page 24 of 27
<PAGE>
Exhibit A
SEITEL, INC.
1995 Warrant Reload Plan
Listing of Warrant Holders and
Warrants Outstanding as of
January 1, 1995
Warrants
Employee Outstanding
------------------- -----------
Brian Adsit 4,569
Linda Diane Allison 418
Debra Bartholowmew 85
Richard Boespflug 302
James Bowers 270
Peter Bryant 340
William Burke 1,443
Horace Calvert 345,399
Margaret Carpenter 532
Robert Choate 2,585
John Cox 405
Walter Craig 30,652
Angela Cunningham 133
Twana Dryer 559
Karen Duxbury 8,882
Otis Elmore 510
Juan Falcon 253
Allan Filipov 2,419
Paul Frame 345,399
Arthur Freeman 4,513
Jay Green 24,271
James Harley 6,461
Cheryl Heath 944
Mary Hopping 99
Wanda Jones 281
Tammy Holbrook 455
Marcia Kendrick 952
Philip Koine 460
David Lawi 202,863
David Scott Lemke 537
Doreen Lorenzo 4,846
Jesse Marion 10,577
Allana Ruby 20,963
Kathy McCarty 523
James McGinnis 1,752
Joe Morgan 26,324
Page 25 of 27
<PAGE>
Exhibit A, continued...
SEITEL, INC.
1995 Warrant Reload Plan
Listing of Warrant Holders and
Warrants Outstanding as of
January 1, 1995
Warrants
Employee Outstanding
------------------- -----------
Juan Nieto 26
Thomas Norton 375
Michael Oline 457
Charles Patterson 1,418
Herbert Pearlman 245,291
Cathryn Penn 196
Charles Puckett 352
Paul Richard 4,908
Jay Rives 123,463
Steven Sahinen 2,583
Charles Scalf 155
Rick Schmid 2,623
Lori Segeth 2,458
Jay Silverman 3,282
Robert Simon 34,229
Samuel Sloan 625
Christopher Talbot 6,080
Kyle Tillman 3,794
Karen Underwood 791
Debra Valice 78,666
Richard Veazy 349
Ysidro Villarreal 834
David Wegner 80,627
James Cortis Wilson 69
Phillip Worsham 495
==========
1,646,122
==========
Page 26 of 27
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 19,721
<SECURITIES> 0
<RECEIVABLES> 48,801
<ALLOWANCES> 875
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 114,508<F2>
<DEPRECIATION> 16,063
<TOTAL-ASSETS> 289,768
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 87,518
0
0
<COMMON> 100
<OTHER-SE> 141,744
<TOTAL-LIABILITY-AND-EQUITY> 289,768
<SALES> 77,753
<TOTAL-REVENUES> 77,753
<CGS> 13,542
<TOTAL-COSTS> 13,542
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,072
<INCOME-PRETAX> 19,125
<INCOME-TAX> 7,076
<INCOME-CONTINUING> 12,049
<DISCONTINUED> (988)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,061
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.03
<FN>
<F1> The Company does not present a classified balance sheet; therefore, current
assets and current liabilities are not reflected in the Company's financial
statement.
<F2> PP&E does not include seismic data bank assets with a cost of $267,075,000
and related accumulated amortization of $151,043,000.
Page 27 of 27
</FN>
</TABLE>
