- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
- -------
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1998
OR
- -------
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period to .
---------- ----------
Commission File Number 0-14488
A. Full title of the plan and the address of the plan, if different from
that of the issuer name below:
SEITEL, INC. 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
SEITEL, INC.
50 Briar Hollow Lane West
Houston, Texas 77027
- --------------------------------------------------------------------------------
<PAGE>
SEITEL, INC. 401(k) PLAN
INDEX
Page
----
Report of Independent Public Accountants......................................1
Statement of Net Assets Available for Plan Benefits, With Fund
Information, as of December 31, 1998..........................................2
Statement of Net Assets Available for Plan Benefits, With Fund
Information, as of December 31, 1997..........................................3
Statement of Changes in Net Assets Available for Plan Benefits, With
Fund Information, for the Year Ended December 31, 1998........................4
Notes to Financial Statements as of December 31, 1998 and 1997................7
Schedule I--Item 27(a) - Schedule of Assets Held for Investment
Purposes as of December 31, 1998.............................................15
Schedule II--Item 27(d) - Schedule of Reportable Transactions for the
Year Ended December 31, 1998.................................................16
Schedule III - Item 27(e) - Schedule of Nonexempt Transactions for the
Year Ended December 31, 1998.................................................21
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Investment Committee of the
Seitel, Inc. 401(k) Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Seitel, Inc. 401(k) Plan (the Plan) as of December 31, 1998 and
1997, and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 1998. These financial statements and
supplemental schedules referred to below are the responsibility of the Plan
administrator. 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 Plan as
of December 31, 1998 and 1997, and the changes in net assets available for plan
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed 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 as of December 31, 1998, reportable transactions for the
year ended December 31, 1998 and non-exempt transactions for the year ended
December 31, 1998, are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor 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 plan
benefits and the statement of changes in net assets available for plan 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 the audits 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.
ARTHUR ANDERSEN LLP
Houston, Texas
June 23, 1999
<PAGE>
<TABLE>
SEITEL, INC. 401(k) PLAN
- ------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------
AS OF DECEMBER 31, 1998
- -----------------------
<CAPTION>
Participant-Directed Funds
-----------------------------------------------------------------------------------------------
Seitel, Merrill Oppen- Van Merrill Merrill
Inc. Lynch MFS heimer Kampen Lynch Merrill Lynch
Stock Retire- Emerging Main Real Basic Lynch Global
Fund ment Growth Street Estate Value Capital Allocation
---------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair
market value $1,390,759 $ 399,533 $ 18,560 $ 319,221 $ 3,652 $ 418,759 $ 18,909 $ 15,009
Employee contributions
receivable 4,153 1,344 395 611 44 603 606 85
Employer contributions
receivable 36,223 11,716 3,448 5,330 381 5,254 5,297 739
Interest receivable 305 2,407 1 2 -- 57 1 1
---------- --------- --------- --------- --------- --------- --------- ---------
Total assets 1,431,440 415,000 22,404 325,164 4,077 424,673 24,813 15,834
---------- --------- --------- --------- --------- --------- --------- ---------
INTERFUND RECEIVABLE/
(PAYABLE) 666 207 1 12 -- 189 2 2
---------- --------- --------- --------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $1,432,106 $ 415,207 $ 22,405 $ 325,176 $ 4,077 $ 424,862 $ 24,815 $ 15,836
========== ========= ========= ========= ========= ========= ========= =========
Participant-Directed Funds
----------------------------------------------------------------------------------------------
Merrill AIM Oppen-
Lynch Merrill Inter- AIM heimer Davis Oppen-
Corp Lynch national Constell- AIM Quest New York heimer
Bond S&P 500 Equity ation Balanced Global Venture Capital
---------- --------- --------- --------- --------- --------- --------- ---------
ASSETS:
Investments, at fair
market value $ 230,622 $ 469,245 $ 80,823 $ 109,137 $ 17,395 $ 4,432 $ 68,694 $ 2,345
Employee contributions
receivable 511 1,730 319 159 115 36 1,761 --
Employer contributions
receivable 4,460 15,087 2,785 1,382 1,001 315 15,362 --
Interest receivable 9 52 2 -- 2 1 3 --
---------- --------- --------- --------- --------- --------- --------- ---------
Total assets 235,602 486,114 83,929 110,678 18,513 4,784 85,820 2,345
---------- --------- --------- --------- --------- --------- --------- ---------
INTERFUND RECEIVABLE/
(PAYABLE) 45 152 3 -- 3 5 41 --
---------- --------- --------- --------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 235,647 $ 486,266 $ 83,932 $ 110,678 $ 18,516 $ 4,789 $ 85,861 $ 2,345
========== ========= ========= ========= ========= ========= ========= =========
Participant-Directed Funds
------------
Partici-
pant
Loan
Fund Total
--------- ----------
ASSETS:
Investments, at fair
market value $ 175,480 $3,742,575
Employee contributions
receivable -- 12,472
Employer contributions
receivable -- 108,780
Interest receivable -- 2,843
--------- ----------
Total assets 175,480 3,866,670
--------- ----------
INTERFUND RECEIVABLE/
(PAYABLE) (1,328) --
--------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 174,152 $3,866,670
========= ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
<TABLE>
SEITEL, INC. 401(k) PLAN
- ------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- --------------------------------------------------------------------------
AS OF DECEMBER 31, 1997
- -----------------------
<CAPTION>
Participant-Directed Funds
----------------------------------------------------------------------------------------
International Large Limited Prime
Seitel, Inc. Disciplined Income Equity Company Volatility Money
Stock Value Equity Index Growth Bond Market
Fund Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair market value $1,795,919 $ 268,477 $ 308,708 $ 78,357 $ 292,403 $ 121,376 $ 365,296
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 1,795,919 268,477 308,708 78,357 292,403 121,376 365,296
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $1,795,919 $ 268,477 $ 308,708 $ 78,357 $ 292,403 $ 121,376 $ 365,296
========== ========== ========== ========== ========== ========== ==========
Participant-Directed Funds
--------------------------------------------------------------
Large
Government Income Company Growth Participant
Bond Bond Value Opportunities Loan
Fund Fund Fund Fund Fund Total
---------- ---------- ---------- ---------- ---------- ----------
ASSETS:
Investments, at fair market value $ 37,578 $ 30,485 $ 166,904 $ 83,376 $ 108,192 $3,657,071
---------- ---------- ---------- ---------- ---------- ----------
Total assets 37,578 30,485 166,904 83,376 108,192 3,657,071
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 37,578 $ 30,485 $ 166,904 $ 83,376 $ 108,192 $3,657,071
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
<TABLE>
SEITEL, INC. 401(k) PLAN
- ------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
- -------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Participant-Directed Funds
---------------------------------------------------------------------------------------------------------
Seitel, Merrill Oppen- Van Merrill Merrill Merrill
Inc. Lynch MFS heimer Kampen Lynch Merrill Lynch Lynch
Stock Retire- Emerging Main Real Basic Lynch Global Corp
Fund ment Growth Street Estate Value Capital Allocation Bond
---------- --------- --------- --------- --------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO
NET ASSETS
ATTRIBUTED TO:
Interest
and dividends $ 5,043 $ 24,846 $ 167 $ 13,605 $ 65 $ 33,675 $ 1,126 $ 1,642 $ 12,502
Employee
contributions 162,051 51,491 11,546 33,810 1,961 43,692 5,565 2,826 21,611
Employer
contributions 75,701 24,204 6,238 13,632 862 16,029 6,546 1,434 9,743
Net appreciation
(depreciation)
in fair market
value of
investments (453,877) -- 2,833 47,085 (269) 6,694 (1,020) (2,165) 1,411
Other income 1,196 973 15 132 3 258 17 15 165
---------- --------- --------- --------- --------- --------- --------- ---------- --------
Total additions (209,886) 101,514 20,799 108,264 2,622 100,348 12,234 3,752 45,432
---------- --------- --------- --------- --------- --------- --------- ---------- --------
DEDUCTIONS FROM
NET ASSETS
ATTRIBUTED TO:
Benefits paid to
participants
and beneficiaries (102,307) (24,038) (95) (2,034) -- (23,504) -- -- (17,181)
Administration fees (200) (139) (3) -- -- (51) (7) (7) (21)
---------- --------- --------- --------- --------- --------- --------- ---------- --------
Total deductions (102,507) (24,177) (98) (2,034) -- (23,555) (7) (7) (17,202)
---------- --------- --------- --------- --------- --------- --------- ---------- --------
INTERFUND
TRANSFERS, Net (51,420) 337,870 1,704 218,946 1,455 348,069 12,588 12,091 207,417
NET INCREASE
(DECREASE) (363,813) 415,207 22,405 325,176 4,077 424,862 24,815 15,836 235,647
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year 1,795,919 -- -- -- -- -- -- -- --
---------- --------- --------- --------- --------- --------- --------- ---------- --------
End of year $1,432,106 $ 415,207 $ 22,405 $ 325,176 $ 4,077 $ 424,862 $ 24,815 $ 15,836 $ 235,647
========== ========= ========= ========= ========= ========= ========= ========== ========
<PAGE>
Participant-Directed Funds
---------------------------------------------------------------------------------------------------------
AIM Oppen- Partici- Dis-
Merrill Inter- AIM heimer Davis Oppen- pant continued
Lynch national Constell- AIM Quest New York heimer Loan Bank One
S&P 500 Equity ation Balanced Global Venture Capital Fund Funds
-------- --------- ---------- --------- --------- ---------- --------- --------- ---------
ADDITIONS TO
NET ASSETS
ATTRIBUTED TO:
Interest
and dividends $ 24,158 $ 1,361 $ 2,699 $ 272 $ 267 $ 1,516 $ 143 $ -- $ 2,859
Employee
contributions 52,256 24,717 6,032 3,082 1,760 16,324 32 -- --
Employer
contributions 27,721 8,887 2,853 1,753 748 19,004 8 -- --
Net appreciation
(depreciation)
in fair market
value of
investments 50,114 5,644 12,592 941 (241) 2,288 688 -- 34,661
Other income 191 56 54 22 3 38 9 -- --
-------- --------- ---------- --------- --------- ---------- --------- --------- ---------
Total additions 154,440 40,665 24,230 6,070 2,537 39,170 880 -- 37,520
-------- --------- ---------- --------- --------- ---------- --------- --------- ---------
DEDUCTIONS FROM
NET ASSETS
ATTRIBUTED TO:
Benefits paid to
participants
and beneficiaries (29,009) (17,073) (1,060) -- -- -- -- (12,640) (51,549)
Administration fees (45) (16) -- (8) -- (5) -- -- --
-------- --------- ---------- --------- --------- ---------- --------- --------- ---------
Total deductions (29,054) (17,089) (1,060) (8) -- (5) -- (12,640) (51,549)
-------- --------- ---------- --------- --------- ---------- --------- --------- ---------
INTERFUND
TRANSFERS, Net 360,880 60,356 87,508 12,454 2,252 46,696 1,465 78,600 (1,738,931)
NET INCREASE
(DECREASE) 486,266 83,932 110,678 18,516 4,789 85,861 2,345 65,960 (1,752,960)
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year -- -- -- -- -- -- -- 108,192 1,752,960
-------- --------- ---------- --------- --------- ---------- --------- --------- ---------
End of year $486,266 $ 83,932 $ 110,678 $ 18,516 $ 4,789 $ 85,861 $ 2,345 $174,152 $ --
======== ========= ========== ========= ========= ========== ========= ========= =========
<PAGE>
Total
----------
ADDITIONS TO
NET ASSETS
ATTRIBUTED TO:
Interest
and dividends $ 125,946
Employee
contributions 438,756
Employer
contributions 215,363
Net appreciation
(depreciation)
in fair market
value of
investments (292,621)
Other income 3,147
----------
Total additions 490,591
----------
DEDUCTIONS FROM
NET ASSETS
ATTRIBUTED TO:
Benefits paid to
participants
and beneficiaries (280,490)
Administration fees (502)
----------
Total deductions (280,992)
----------
INTERFUND
TRANSFERS, Net --
NET INCREASE
(DECREASE) 209,599
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS:
Beginning of year 3,657,071
----------
End of year $3,866,670
==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
SEITEL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. DESCRIPTION OF THE PLAN:
GENERAL
The following description of the Seitel, Inc. 401(k) Plan (the Plan) is provided
for general information purposes only. Participants should refer to the Plan
document for more complete information. The Plan is for the exclusive benefit of
employees of Seitel, Inc. (the Company). The Plan is a defined contribution plan
which covers eligible employees of the Company. It is subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
ADMINISTRATION
Overall responsibility for administering the Plan rests with the Plan
administrator who is appointed by the board of directors. Effective January 1,
1998, the Company formed an investment committee ("the Committee") for the Plan.
The Committee, which consists of four Seitel, Inc. employees, is responsible for
the general administration of the Plan.
The Plan's prior trustee, Bank One Trust Group (Bank One), was responsible for
the management and control of the Plan's assets through February 5, 1998.
Effective January 1, 1998, the Company adopted the Merrill Lynch Special
Prototype Defined Contribution Plan. Merrill Lynch Trust Company of Texas
("Merrill Lynch" or "Trustee") was named as trustee of the Plan and assumed
responsibility for the management and control of the Plan's assets on February
5, 1998.
ELIGIBILITY
An employee becomes eligible to participate in the Plan following the completion
of one-half year of service, as defined, and attaining age 21.
CONTRIBUTIONS AND ALLOCATIONS
Participants can contribute from 1 percent to 17 percent of their compensation
in before tax dollars not to exceed $10,000 in 1998. The Company will make a
matching contribution for each participant based on the participant's
contribution in a percentage set by the Company prior to the end of each Plan
year. During 1998, the Company elected to make a matching contribution equal to
25 percent of the participant's contribution. At year-end, the Company elected
to make an additional matching contribution to all participants employed on the
last day of the Plan year equal to 25 percent of the participant's contributions
made during 1998. In addition, the Company may elect to make an additional
profit-sharing contribution in such an amount, if any, as determined by the
Company. During 1998, the Company made no profit-sharing contributions.
Each participant's account is credited daily with an allocation of Plan earnings
for each investment option based on the participant's account balance in
relation to total participants' account balances.
<PAGE>
VESTING
Participants are immediately vested in their participant contributions and any
earnings therein. Vesting in the Company matching and profit-sharing
contributions, if any, and related earnings is based on years of service as
follows:
YEARS OF SERVICE PERCENT VESTED
---------------- --------------
Less than 1 0%
1 20
2 40
3 60
4 80
5 or more 100
Vesting, however, can also be attained by reaching retirement age, disability,
death or termination of the Plan.
FORFEITURES
As a result of termination, a participant forfeits the nonvested portion of the
Company matching and profit-sharing contributions and related earnings, if any,
in his or her account. The forfeited amounts of matching contributions and
related earnings are used to reduce Company contributions for the succeeding
Plan year. The forfeited amounts of profit-sharing contributions and related
earnings, if any, are allocated in the succeeding Plan year to participants in
the proportion that the compensation paid to each participant during the Plan
year bears to the compensation paid to all such participants, subject to
limitations.
PAYMENT OF BENEFITS
Participant benefits are payable to participants or to a designated beneficiary
in the event of their retirement, death, disability or termination of
employment. In-service distributions may be made from any of the participant's
vested account balance upon attainment of age 59 1/2 or for financial hardship
in accordance with the Plan. Benefit payments to withdrawing employees are made
in the form of a single sum cash payment, an annuity payment or some combination
of the two.
INVESTMENT OPTIONS
Through February 5, 1998, participants could direct their contributions into any
one or more of the seven individual fund selections (six - The One Group mutual
funds and the Seitel, Inc. Stock Fund) or participants could select one of the
six fully managed portfolios. The fully managed portfolios were actively managed
and reviewed by Bank One Investment Advisors Corporation. A description of each
investment option is provided below:
<PAGE>
INDIVIDUAL FUNDS (Available through February 5, 1998):
SEITEL, INC. STOCK FUND - Invests in Seitel, Inc. common stock.
DISCIPLINED VALUE FUND - Sought capital appreciation, with income as a secondary
consideration. The Disciplined Value Fund primarily invested in equity
securities.
INCOME EQUITY FUND - Sought current income through investing in dividend-paying
equity securities. Capital appreciation was a secondary consideration.
INTERNATIONAL EQUITY INDEX FUND - Sought to provide the investment results that
correspond to the aggregate price and dividend performance of the securities in
the gross domestic product weighted Morgan Stanley Capital International Europe,
Australia and Far East Index.
LARGE COMPANY GROWTH FUND - Sought capital appreciation, with income as a
secondary consideration. The Large Company Growth Fund primarily invested in
stocks from large companies.
LIMITED VOLATILITY BOND FUND - Sought current income by investing at least 80
percent of the value of its total assets in debt securities of all types.
PRIME MONEY MARKET FUND - Sought current income with liquidity and stability of
principal.
FULLY MANAGED PORTFOLIOS (Available through February 5, 1998):
BUILDER AGGRESSIVE GROWTH MODEL - Sought maximum capital appreciation by
allocating more than half its assets to the most aggressive funds within The One
Group's mutual funds. Fixed income funds accounted for only a small portion of
assets. At December 31, 1997, the model was comprised of the following mutual
funds: 15 percent Disciplined Value Fund, 14 percent International Equity Index
Fund, 23 percent Large Company Growth Fund, 8 percent Prime Money Market Fund,
28 percent Large Company Value Fund and 12 percent Growth Opportunities Fund.
BUILDER GROWTH MODEL - Sought long-term growth of capital by investing in The
One Group's equity funds. Fixed income funds were also included in an effort to
provide stability when stock prices were trending down. At December 31, 1997,
the model was comprised of the following mutual funds: 15 percent Disciplined
Value Fund, 9 percent International Equity Index Fund, 22 percent Large Company
Growth Fund, 3 percent Limited Volatility Bond Fund, 1 percent Prime Money
Market Fund, 6 percent Government Bond Fund, 5 percent Income Bond Fund, 27
percent Large Company Value Fund and 12 percent Growth Opportunities Fund.
PROVIDER GROWTH AND INCOME MODEL - Sought growth of capital and conservative
total return by investing in The One Group's equity and fixed income funds. The
emphasis in this model was on the equity funds. At December 31, 1997, the model
was comprised of the following mutual funds: 11 percent Disciplined Value Fund,
7 percent International Equity Index Fund, 17 percent Large Company Growth Fund,
8 percent Limited Volatility Bond Fund, 2 percent Prime Money Market Fund, 14
percent Government Bond Fund, 11 percent Income Bond Fund, 21 percent Large
Company Value Fund and 9 percent Growth Opportunities Fund.
<PAGE>
PROVIDER BALANCED MODEL - Sought growth of capital and conservative total return
by investing in The One Group's fixed income and equity funds. The emphasis in
this model was on the fixed income funds. At December 31, 1997, the model was
comprised of the following mutual funds: 8 percent Disciplined Value Fund, 5
percent International Equity Index Fund, 12 percent Large Company Growth Fund,
13 percent Limited Volatility Bond Fund, 3 percent Prime Money Market Fund, 22
percent Government Bond Fund, 17 percent Income Bond Fund, 14 percent Large
Company Value Fund and 6 percent Growth Opportunities Fund.
PRESERVER CONSERVATIVE GROWTH MODEL - Sought conservative growth and
preservation of capital by investing primarily in The One Group's conservative
fixed income funds. At December 31, 1997, the model was comprised of the
following mutual funds: 4 percent Disciplined Value Fund, 3 percent
International Equity Index Fund, 6 percent Large Company Growth Fund, 17 percent
Limited Volatility Bond Fund, 4 percent Prime Money Market Fund, 31 percent
Government Bond Fund, 23 percent Income Bond Fund, 8 percent Large Company Value
Fund and 4 percent Growth Opportunities Fund.
PRESERVER FIXED INCOME MODEL - Sought preservation of capital and income
compounding by investing exclusively in The One Group's fixed income funds. At
December 31, 1997, the model was comprised of the following mutual funds: 38
percent Limited Volatility Bond Fund, 4 percent Prime Money Market Fund, 15
percent Government Bond Fund, 20 percent Income Bond Fund, 15 percent
Intermediate Bond Fund and 8 percent Ultra Short-Term Bond Fund. As of December
31, 1997, there were no participants invested in this portfolio.
On February 5, 1998, the assets held by Bank One were liquidated and invested in
the newly available funds held by Merrill Lynch, as directed by the Plan
Administrator. The Merrill Lynch investments have been abbreviated for purposes
of presentation in the financial statements. Refer to the investment option
descriptions below for complete fund names.
Bank One Investments Merrill Lynch Investments
- ------------------------------- -----------------------------------
Disciplined Value Fund Oppenheimer Main Street
Income Equity Fund Merrill Lynch Basic Value
International Equity Index Fund AIM International Equity
Large Company Growth Fund Merrill Lynch S & P 500
Limited Volatility Bond Fund Merrill Lynch Corp. Bond
Prime Money Market Fund Merrill Lynch Retirement
Government Bond Fund Merrill Lynch Corp. Bond
Income Bond Fund Merrill Lynch Corp. Bond
Large Company Value Fund Merrill Lynch Basic Value
Growth Opportunities Fund AIM Constellation
Subsequent to the initial transfer, participants can direct their contributions
into any one or more of the sixteen individual fund selections or participants
may select to invest in the Merrill Lynch Self-Directed Brokerage Account.
Participants can change their investment elections on a daily basis. A
description of each investment option is provided below:
SEITEL, INC. COMMON STOCK (Seitel, Inc. Stock Fund)- Invests in Seitel, Inc.
common stock.
MERRILL LYNCH RETIREMENT PRESERVATION TRUST (Merrill Lynch Retirement) - This
common/collective trust fund seeks to provide preservation of capital, liquidity
and current income at levels that are typically higher than those provided by
money market funds.
MFS EMERGING GROWTH FUND (MFS Emerging Growth) - This mutual fund seeks
long-term growth of capital. Dividend and interest income, if any, is
incidental.
OPPENHEIMER MAIN STREET INCOME AND GROWTH FUND (Oppenheimer Main Street) - This
mutual fund seeks growth through a wide variety of stocks from small, medium and
large companies while trying to dampen volatility through income-generating
securities, such as bonds and convertible securities.
VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND (Van Kampen Real Estate)
- - This mutual fund seeks long-term growth of capital, with current income as a
secondary objective.
<PAGE>
MERRILL LYNCH BASIC VALUE FUND, INC. (Merrill Lynch Basic Value) - This mutual
fund seeks capital appreciation, and secondarily, income, by investing primarily
in equities that appear to be undervalued.
MERRILL LYNCH CAPITAL FUND, INC. (Merrill Lynch Capital) - This mutual fund
seeks the highest total investment return consistent with prudent risk primarily
through a fully managed investment policy that may include investments in
equity, debt and convertible securities.
MERRILL LYNCH GLOBAL ALLOCATION FUND, INC. (Merrill Lynch Global Allocation) -
This mutual fund seeks high total investment return consistent with prudent
risk.
MERRILL LYNCH CORPORATE BOND FUND, INC.-INTERMEDIATE TERM PORTFOLIO (Merrill
Lynch Corp. Bond) - This mutual fund seeks a high level of current income. As a
secondary objective the Fund seeks capital appreciation when consistent with its
primary objective.
MERRILL LYNCH S&P 500 INDEX FUND (Merrill Lynch S&P 500) - This mutual fund
seeks to provide investment results that, before expenses, replicate the total
return of the Standard & Poor's 500 Composite Stock Price Index. Management will
generally allocate investments among common stocks in approximately the same
weighting as the index.
AIM INTERNATIONAL EQUITY FUND (AIM International Equity) - This mutual fund
seeks long-term growth of capital by translating AIM's earnings-driven approach
for domestic stock selection to foreign markets.
AIM CONSTELLATION FUND (AIM Constellation) - This mutual fund seeks aggressive
capital growth primarily through shares of small and medium size companies that
have demonstrated superior earnings growth.
AIM BALANCED FUND (AIM Balanced) - This mutual fund seeks a high total return
consistent with preservation of capital by investing in a broadly diversified
portfolio of stocks and bonds.
<PAGE>
OPPENHEIMER QUEST GLOBAL FUND, INC. (Oppenheimer Quest Global) - This mutual
fund seeks capital appreciation from growth companies worldwide. Utilizes broad
diversification to lower risks associated with foreign investing.
DAVIS NEW YORK VENTURE FUND, INC. (Davis New York Venture) - This mutual fund
seeks long-term growth by purchasing growing companies at value prices, thus
providing consistent growth over time.
OPPENHEIMER CAPITAL APPRECIATION FUND (Oppenheimer Capital) - This mutual fund
seeks long-term growth by investing in a diverse portfolio of stocks. Reduces
risk by carefully researching each security and diversifying investments among
different industries.
THE MERRILL LYNCH SELF-DIRECT BROKERAGE ACCOUNT - This option allows the
participant to purchase and hold investments that are not offered as part of the
Plan's core investment menu. As of December 31, 1998, there were no participants
invested in this option.
PLAN LOANS
A loan can be requested in an amount not to exceed the lesser of $50,000 minus
the excess, if any, of the participant's highest plan loan balance within the
immediately preceding 12 months, over the outstanding balance of loans from the
Plan to the participant on the date the loan is made, or 50 percent of the
participant's vested interest in his or her account balance. The minimum loan
request amount is $1,000.
The interest rate for Plan loans is equal to a reasonable rate as deemed
appropriate by the Plan administrator and remains in effect over the term of the
loan. Loan principal and interest repayments are made through payroll
deductions. A loan fee is assessed at the time the loan is processed and is paid
by the participant.
2. SUMMARY OF ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The financial statements are prepared on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan's management to use estimates and
assumptions that affect the accompanying financial statements and disclosures.
Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments are carried at fair market value except for the Merrill Lynch
Retirement Preservation Trust Fund. The Merrill Lynch Retirement Preservation
Trust Fund is a common/collective trust fund investing primarily in guaranteed
investment contracts and U.S. Government securities. The guaranteed investment
contracts are fully benefit responsive and are recorded at contract value, which
approximates fair value. Contract value is determined based on contributions
made under the contract plus interest earned at the contract's rate less funds
used to pay investment fees and withdrawals. The effective yield of the
guaranteed investment contracts is 6.55 percent for the year ended December 31,
1998.
<PAGE>
Purchases and sales of securities are reflected on a trade-date basis. Net
realized gains (losses) and unrealized appreciation (depreciation) are
recognized as net appreciation (depreciation) in fair value of investments in
the statement of changes in net assets available for plan benefits. Dividends
are recorded on the ex-dividend date.
Participants invested in the Seitel, Inc. Stock Fund through February 5, 1998
were assigned units of participation. The unit value was determined based upon
the fair market value of the underlying net assets, which consisted of Seitel,
Inc. common stock and temporary investments. The total units of Seitel, Inc.
Stock Fund assigned to participants as of December 31, 1997 was 48,471. On
February 5, 1998, the units held by participants invested in the Seitel, Inc.
Stock Fund were converted to shares of Seitel, Inc. common stock.
RISKS AND UNCERTAINTIES
The Plan provides for various investment in mutual funds, Company common stock,
short-term investments and a common/collective trust fund. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit and overall market volatility risk. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statements of net
assets available for plan benefits and participant account balances.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
3. EXPENSES OF THE PLAN:
All reasonable expenses incurred in connection with the administration of the
Plan can be paid by the Company but, if not paid by the Company, will be paid by
the Plan. The Company elected to pay all administrative expenses of the Plan,
excluding loan fees, for the year ended December 31, 1998. Participants
requesting loans are assessed a loan fee which is deducted from their
participant account balance.
4. INCOME TAX STATUS:
On January 27, 1993, the Plan obtained its latest determination letter in which
the Internal Revenue Service (IRS) stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code of
1986, as amended (IRC). The Plan was amended and restated effective January 1,
1998. During 1998, the Company requested a new determination letter from the
IRS. Although a determination letter has not been received, the Plan
administrator believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC. Therefore, the Plan
administrator believes that the Plan was qualified and related trust was
tax-exempt as of the financial statement date.
5. PLAN TERMINATION:
The Plan has been established to continue indefinitely. However, the Company
reserves the right to amend or terminate the Plan, in whole or in part, at any
time subject to the provisions of ERISA. Upon termination of the Plan, all
participants will become fully vested in their accounts.
<PAGE>
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for plan benefits per
the financial statements to the Form 5500 as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
December 31,
1998 1997
----------- -----------
<S> <C> <C>
Net assets available for plan benefits per the financial statements $ 3,866,670 $ 3,657,071
Amounts allocated to withdrawing participants -- (51,541)
----------- -----------
Net assets available for plan benefits per the Form 5500 $ 3,866,670 $ 3,605,530
=========== ===========
</TABLE>
The following is a reconciliation of benefits paid to participants and their
beneficiaries per the financial statements to the Form 5500 for the year ended
December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Benefits paid to participants and their beneficiaries per the financial statements $280,490
Add- Amounts allocated to withdrawing participants at
December 31, 1998 --
Less- Amounts allocated to withdrawing participants at
December 31, 1997 51,541
--------
Benefits paid to participants and their beneficiaries per the Form 5500 $228,949
========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
7. NONEXEMPT TRANSACTIONS:
As reported on Schedule III, certain Plan contributions were not remitted to the
trust within the timeframe specified by the Department of Labor's Regulation 29
CFR 2510.3-102, thus constituting a non-exempt transaction between the Plan and
the Company.
<PAGE>
<TABLE>
SCHEDULE I
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
- ------------------------------------------------------------
AS OF DECEMBER 31, 1998
- -----------------------
<CAPTION>
Current
Identity of Issue/Description Cost Value
- ---------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Seitel, Inc. Common Stock*<F1> $1,942,114 $1,390,759
Merrill Lynch Retirement Preservation Trust*<F1> 399,533 399,533
MFS Emerging Growth Fund (Class A) 16,489 18,560
Oppenheimer Main Street Growth and Income Fund 276,575 319,221
Van Kampen Real Estate Securities Fund 3,891 3,652
Merrill Lynch Basic Value Fund, Inc. (Class D)*<F1> 421,641 418,759
Merrill Lynch Capital Fund, Inc. (Class D)*<F1> 19,814 18,909
Merrill Lynch Global Allocation Fund, Inc. (Class D)*<F1> 17,173 15,009
Merrill Lynch Corporate Bond Fund, Inc. - Intermediate
Term Portfolio (Class D)*<F1> 229,219 230,622
Merrill Lynch S & P 500 Index Fund*<F1> 426,704 469,245
Aim International Equity Fund 77,933 80,823
Aim Constellation Fund 97,207 109,137
Aim Balanced Fund 16,793 17,395
Oppenheimer Quest Global Value Fund, Inc. 4,673 4,432
Davis New York Venture Fund 66,792 68,694
Oppenheimer Capital Appreciation Fund 2,358 2,345
Participant Loans Receivable*<F1>(range of interest from 7% to 10%) 175,480 175,480
---------- ----------
Total assets held for investment purposes $4,194,389 $3,742,575
========== ==========
<FN>
*<F1> Indicates a party in interest.
</FN>
</TABLE>
<PAGE>
<TABLE>
SCHEDULE II
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Current
Value
of Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price (a)<F1> Price (b)<F2> Asset Date (Loss)
- ------------------------------ ------------------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS:
The One Group Disciplined Value Fund-
Purchases $ 982 $ -- $ 982 $ 982 $ --
Sales -- 269,694 244,212 269,694 25,482
The One Group Income Equity Fund-
Purchases 961 -- 961 961 --
Sales -- 315,606 267,306 315,606 48,300
The One Group Large Company Growth Fund-
Purchases 880 -- 880 880 --
Sales -- 311,676 261,381 311,676 50,295
The One Group Prime Money Market Fund-
Purchases 4,823 -- 4,823 4,823 --
Sales -- 370,119 370,119 370,119 --
<FN>
(a)<F1> Purchase price includes transaction expenses.
(b)<F2> Selling price is net of transaction expenses.
</FN>
</TABLE>
Note: This schedule includes both series and single transactions
involving the same investment activity which exceeds
5 percent of the value of Plan assets as of January 1, 1998.
<PAGE>
<TABLE>
SCHEDULE II
Continued
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Current
Value
of Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price (a)<F1> Price (b)<F2> Asset Date (Loss)
- ------------------------------ ------------------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS (Continued):
Seitel, Inc. Seitel, Inc. Common Stock-
Purchases $ 228,897 $ -- $ 228,897 $228,897 $ --
Sales -- 180,160 245,469 180,160 (65,309)
Merrill Lynch Trust Company Merrill Lynch Retirement
Preservation Trust-
Purchases 471,553 -- 471,553 471,553 --
Sales -- 72,020 72,020 72,020 --
Oppenheimer Funds
Distributor, Inc. Oppenheimer Main Street
Growth and Income Fund-
Purchases 326,914 -- 326,914 326,914 --
Sales -- 54,778 50,339 54,778 4,439
Merrill Lynch Funds
Distributor Merrill Lynch Basic Value
Fund, Inc. (Class D)-
Purchases 563,512 -- 563,512 563,512 --
Sales -- 151,447 141,871 151,447 9,576
<FN>
(a)<F1> Purchase price includes transaction expenses.
(b)<F2> Selling price is net of transaction expenses.
</FN>
</TABLE>
Note: This schedule includes both series and single transactions
involving the same investment activity which exceeds
5 percent of the value of Plan assets as of January 1, 1998.
<PAGE>
<TABLE>
SCHEDULE II
Continued
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Current
Value
of Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price (a)<F1> Price (b)<F2> Asset Date (Loss)
- ------------------------------ ------------------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS (Continued):
Merrill Lynch Funds
Distributor Merrill Lynch Corporate Bond
Fund, Inc. Intermediate
Term Portfolio (Class D)-
Purchases $ 248,532 $ -- $ 248,532 $248,532 $ --
Sales -- 19,321 19,313 19,321 8
Merrill Lynch Funds
Distributor Merrill Lynch S&P 500
Index Fund-
Purchases 501,703 -- 501,703 501,703 --
Sales -- 82,572 74,999 82,572 7,573
<FN>
(a)<F1> Purchase price includes transaction expenses.
(b)<F2> Selling price is net of transaction expenses.
</FN>
</TABLE>
Note: This schedule includes both series and single transactions
involving the same investment activity which exceeds
5 percent of the value of Plan assets as of January 1, 1998.
<PAGE>
<TABLE>
SCHEDULE II
Continued
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Current
Value
of Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price (a)<F1> Price (b)<F2> Asset Date (Loss)
- ------------------------------ ------------------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS:
The One Group Disciplined Value Fund-
Sale $ -- $ 254,480 $ 229,975 $254,480 $ 24,505
The One Group Income Equity Fund-
Sale -- 300,078 254,292 300,078 45,786
The One Group Large Company Growth Fund-
Sale -- 296,015 248,110 296,015 47,905
Merrill Lynch Trust Company Merrill Lynch Retirement
Preservation Trust-
Purchase 370,119 -- 370,119 370,119 --
<FN>
(a)<F1> Purchase price includes transaction expenses.
(b)<F2> Selling price is net of transaction expenses.
</FN>
</TABLE>
Note: This schedule includes both series and single transactions
involving the same investment activity which exceeds
5 percent of the value of Plan assets as of January 1, 1998.
<PAGE>
<TABLE>
SCHEDULE II
Continued
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Current
Value
of Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price (a)<F1> Price (b)<F2> Asset Date (Loss)
- ------------------------------ ------------------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS (Continued):
Merrill Lynch Funds
Distributor Merrill Lynch Basic
Value Fund, Inc.
(Class D)-
Purchase $ 468,554 $ -- $ 468,554 $468,554 $ --
Merrill Lynch Funds
Distributor Merrill Lynch S&P 500
Index Fund-
Purchase 296,015 -- 296,015 296,015 --
Merrill Lynch Funds
Distributor Merrill Lynch Corporate
Bond Fund, Inc. -
Intermediate Term
Portfolio (Class D)-
Purchase 191,589 -- 191,589 191,589 --
Oppenheimer Funds
Distributor, Inc. Oppenheimer Main Street
Growth and Income Fund-
Purchase 254,480 -- 254,480 254,480 --
<FN>
(a)<F1> Purchase price includes transaction expenses.
(b)<F2> Selling price is net of transaction expenses.
</FN>
</TABLE>
Note: This schedule includes both series and single transactions
involving the same investment activity which exceeds
5 percent of the value of Plan assets as of January 1, 1998.
<PAGE>
<TABLE>
SCHEDULE III
SEITEL, INC. 401(k) PLAN
- ------------------------
ITEM 27(e) - SCHEDULE OF NON-EXEMPT TRANSACTIONS
- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
<CAPTION>
Relationship to Plan, Description of Transactions, Interest
Identity of Employer or Other Including Maturity Date, Rate of Amount Incurred
Party Involved Party in Interest Interest and Maturity Loaned on Loan
- ------------------ -------------------------- ------------------------------------------ ---------- ----------
<S> <C> <C> <C> <C>
Seitel, Inc. Employer Lending of monies from the Plan to
the Employer (contributions not
timely remitted to the Plan) as
follows:
Deemed loan dated February
20, 1998, maturity of March
12, 1998 with interest
9% per annum $ 52,486 $ 259
Deemed loan dated April 21,
1998, maturity of May 14,
1998 with interest
8% per annum 34,330 173
Deemed loan dated April 21,
1998, maturity of May 22,
1998 with interest
8% per annum 4,325 29
Deemed loan dated May 21,
1998, maturity of May 22,
1998 with interest
8% per annum 3,880 1
----------
$ 462(a)<F1>
==========
<FN>
(a)<F1> Interest of $462 was remitted to the Plan by the Employer subsequent to Plan year-end.
</FN>
</TABLE>
<PAGE>
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Investment Committee of Seitel, Inc. has duly caused this annual report to
be signed on its behalf by the undersigned hereunto duly authorized.
Seitel, Inc. 401(k) Plan
By: /s/ Debra D. Valice
-----------------------------------
Debra D. Valice
Chairperson of Investment Committee
Date:June 29, 1999
<PAGE>
INDEX TO EXHIBIT
Exhibit
Number Page
- -------------- ---------------
23 Consent of Independent Public Accountants 24
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 23, 1999, included in this Annual Report on
Form 11-K for the year ended December 31, 1998, into the previously filed Form
S-8 Registration Statement. (File No. 33-89934.)
ARTHUR ANDERSEN LLP
Houston, Texas
June 29, 1999
