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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
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X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1999
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period to .
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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
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<PAGE>
SEITEL, INC. 401(k) PLAN
INDEX
Report of Independent Public Accountants................................... 3
Statements of Net Assets Available for Plan Benefits as of
December 31, 1999 and 1998............................................ 4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1999.................................. 5
Notes to Financial Statements as of December 31, 1999 and 1998............. 6
Schedule of Assets Held for Investment Purposes
as of December 31, 1999............................................... 10
<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, 1999 and
1998, and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 1999. These financial statements and
supplemental schedule referred to below are the responsibility of the Plan
administrator. Our responsibility is to express an opinion on these financial
statements and supplemental schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in net assets available for plan
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 1999, is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is 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 supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
June 26, 2000
<PAGE>
<TABLE>
<CAPTION>
SEITEL, INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
1999 1998
---------- ----------
<S> <C> <C>
ASSETS:
Investments, at fair market value:
Common stock $1,380,380 $1,390,759
Mutual funds 2,206,028 1,776,803
Common/collective trust 473,306 399,533
Cash and cash equivalents 36,021 --
Loans receivable 96,165 175,480
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Total investments 4,191,900 3,742,575
Employee contributions
receivable 11,689 12,472
Employer contributions
receivable 2,922 108,780
Interest receivable 3,139 2,843
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $4,209,650 $3,866,670
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
SEITEL, INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
<S> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Interest and dividends $ 182,351
Net depreciation in fair market
value of investments (356,147)
Employee contributions 479,877
Employer contributions 119,971
Rollover contributions 62,435
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Total additions 488,487
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants and beneficiaries (144,902)
Administration fees (605)
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Total deductions (145,507
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NET INCREASE 342,980
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 3,866,670
-----------
End of year $ 4,209,650
===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
SEITEL, INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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 Investment Committee) for
the Plan. The Investment Committee, which consists of four Seitel, Inc.
employees, is responsible for the general administration of the Plan.
The Company has adopted the Merrill Lynch Special Prototype Defined Contribution
Plan (the Prototype Plan). Merrill Lynch Trust Company of Texas (Merrill Lynch
or Trustee) is the trustee of the Plan.
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 1999. The Company makes matching
contributions 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 1999,
the Company elected to make a matching contribution equal to 25 percent of the
participant's contribution. In addition, the Company may elect to make
profit-sharing contributions in such an amount, if any, as determined by the
Company. For the year ended December 31, 1999, the Company made no additional
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.
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:
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BASIS OF ACCOUNTING
The financial statements are prepared on the accrual basis of accounting.
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 OPTIONS
Participants can direct their contributions into one or more of fourteen mutual
funds, Company common stock, a common/collection trust, or in the Merrill Lynch
Self-Directed Brokerage Account. Participants can change their
investment-election on a daily basis.
INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets:
<TABLE>
<CAPTION>
December 31,
1999 1998
----------- -----------
<S> <C> <C>
Seitel, Inc. Common Stock $ 1,380,380 $ 1,390,759
Merrill Lynch Retirement Preservation Trust 473,306 399,533
Oppenheimer Main Street Growth and Income Fund 369,925 319,221
Merrill Lynch Basic Value Fund, Inc. (Class D) 407,130 418,759
Merrill Lynch Corporate Bond Fund, Inc. -
Intermediate Term Portfolio (Class D) 160,942 230,622
Merrill Lynch S&P 500 Index Fund 652,892 469,245
</TABLE>
During 1999, the Plan's investments appreciated (depreciated) in value as
follows:
Common stock $ (580,986)
Mutual funds 224,839
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$ (356,147)
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INVESTMENT VALUATION AND INCOME RECOGNITION
Investments are reported at fair market value. The mutual funds and the
Company's common stock are valued based upon quoted market prices. The
common/collective trust fund, which invests primarily in guaranteed investment
contracts (GICs), synthetic GICs and U.S. Government securities, is fully
benefit responsive and is 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 for the fund is 6.43
percent for the year ended December 31, 1999. Participant loans are valued at
cost, which approximates fair market value.
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 market value of
investments in the statement of changes in net assets available for plan
benefits. Dividends are recorded on the ex-dividend date.
ADOPTION OF SOP 99-3
During 1999, the Plan adopted AICPA Statement of Position (SOP) 99-3,
"Accounting for and Reporting of Certain Defined Contribution Plan Investments
<PAGE>
and Other Disclosure Matters", which eliminates the requirement for a defined
contribution plan to disclose participant-directed investment programs. As such,
certain prior year disclosures concerning participant-directed investment
programs have been omitted from these financial statements.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
3. RISKS AND UNCERTAINTIES
-----------------------
The Plan provides for various investment in Company common stock, mutual funds,
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.
4. EXPENSES OF THE PLAN:
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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, 1999. Participants
requesting loans are assessed a loan fee which is deducted from their
participant account balance.
5. INCOME TAX STATUS:
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On June 29, 1993, the Prototype Plan obtained its latest determination letter in
which the Internal Revenue Service (IRS) stated that the Prototype Plan, as then
designed, was in compliance with the applicable requirements of the Internal
Revenue Code of 1986, as amended (IRC). 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.
6. PLAN TERMINATION:
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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.
7. RELATED-PARTY TRANSACTIONS:
--------------------------
Certain Plan investments are shares of mutual funds and a common/collective
trust fund managed by Merrill Lynch. Merrill Lynch is the trustee as defined by
the Plan and, therefore, these transactions qualify as party-in-interest
transactions.
<PAGE>
SCHEDULE
<TABLE>
<CAPTION>
SEITEL, INC. 401(k) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
Identity of Issue/Description Cost Current Value
------------------------------------------------------------------- -------- -------------
<S> <C> <C>
Seitel, Inc. Common Stock*<F1> (a)<F2> $1,380,380
Merrill Lynch Retirement Preservation Trust*<F1> (a)<F2> 473,306
MFS Emerging Growth Fund (Class A) (a)<F2> 61,511
Oppenheimer Main Street Growth and Income Fund (a)<F2> 369,925
Van Kampen Real Estate Securities Fund (a)<F2> 7,612
Merrill Lynch Basic Value Fund, Inc. (Class D)*<F1> (a)<F2> 407,130
Merrill Lynch Capital Fund, Inc. (Class D)*<F1> (a)<F2> 46,862
Merrill Lynch Global Allocation Fund, Inc. (Class D)*<F1> (a)<F2> 26,661
Merrill Lynch Corporate Bond Fund, Inc. - Intermediate
Term Portfolio (Class D)*<F1> (a)<F2> 160,942
Merrill Lynch S & P 500 Index Fund*<F1> (a)<F2> 652,892
Aim International Equity Fund (a)<F2> 136,008
Aim Constellation Fund (a)<F2> 101,891
Aim Balanced Fund (a)<F2> 31,993
Oppenheimer Quest Global Value Fund, Inc. (a)<F2> 15,249
Davis New York Venture Fund (a)<F2> 168,237
Oppenheimer Capital Appreciation Fund (a)<F2> 19,115
CMA Money Fund (a)<F2> 36,021
Participant Loans Receivable*<F1> (range of interest from 7.0% to 9.5%) (a)<F2> 96,165
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Total assets held for investment purposes $4,191,900
==========
<FN>
*<F1> Indicates a party in interest.
(a)<F2> Cost omitted for participant directed investments.
</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 28, 2000
<PAGE>
INDEX TO EXHIBIT
Exhibit
Number Page
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23 Consent of Independent Public Accountants 13
