-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dl2ZBp9EuiG44tH0m2L1lRSe8DLX553uiCMkcCx0rn8Dx79GMzwlWXWWInTTapuQ voJiVpt9wYZ6lB6TYFkC9g== 0000750813-99-000022.txt : 19990630 0000750813-99-000022.hdr.sgml : 19990630 ACCESSION NUMBER: 0000750813-99-000022 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEITEL INC CENTRAL INDEX KEY: 0000750813 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 760025431 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-10165 FILM NUMBER: 99655302 BUSINESS ADDRESS: STREET 1: 50 BRIAR HOLLOW LN STREET 2: WEST BLDG 7TH FLR CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7138818900 MAIL ADDRESS: STREET 1: 50 BRIAR HOLLOW LANE WEST STREET 2: 7TH FLOOR CITY: HOUSTON STATE: TX ZIP: 77027 FORMER COMPANY: FORMER CONFORMED NAME: SEISMIC ENTERPRISES INC DATE OF NAME CHANGE: 19870814 11-K 1 ANNUAL REPORT SEITEL, INC.'S 401(K) PLAN - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 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 SEITEL, INC. 401(k) PLAN - ------------------------ STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION - -------------------------------------------------------------------------- AS OF DECEMBER 31, 1998 - -----------------------
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 ---------- --------- --------- --------- --------- --------- --------- --------- 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 ========= ==========
The accompanying notes are an integral part of this financial statement. SEITEL, INC. 401(k) PLAN - ------------------------ STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION - -------------------------------------------------------------------------- AS OF DECEMBER 31, 1997 - -----------------------
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 ---------- ---------- ---------- ---------- ---------- ---------- ---------- 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 ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of this financial statement. 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 - ------------------------------------
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 ---------- --------- --------- --------- --------- --------- --------- ---------- -------- 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 ========== ========= ========= ========= ========= ========= ========= ========== ======== 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 $ -- ======== ========= ========== ========= ========= ========== ========= ========= ========= 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 ==========
The accompanying notes are an integral part of this financial statement. 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. 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: 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. 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. 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. 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. 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. 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:
December 31, 1998 1997 ----------- ----------- 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 =========== ===========
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:
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 ========
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. SCHEDULE I SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - ------------------------------------------------------------ AS OF DECEMBER 31, 1998 - -----------------------
Current Identity of Issue/Description Cost Value - ---------------------------------------------------------------- ---------- ---------- Seitel, Inc. Common Stock* $1,942,114 $1,390,759 Merrill Lynch Retirement Preservation Trust* 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)* 421,641 418,759 Merrill Lynch Capital Fund, Inc. (Class D)* 19,814 18,909 Merrill Lynch Global Allocation Fund, Inc. (Class D)* 17,173 15,009 Merrill Lynch Corporate Bond Fund, Inc. - Intermediate Term Portfolio (Class D)* 229,219 230,622 Merrill Lynch S & P 500 Index Fund* 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*(range of interest from 7% to 10%) 175,480 175,480 ---------- ---------- Total assets held for investment purposes $4,194,389 $3,742,575 ========== ========== * Indicates a party in interest.
SCHEDULE II SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS - ------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain Identity of Party Involved Description of Asset Price (a) Price (b) Asset Date (Loss) - ------------------------------ ------------------------- --------- --------- --------- -------- -------- 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 -- (a) Purchase price includes transaction expenses. (b) Selling price is net of transaction expenses.
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. SCHEDULE II Continued SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS - ------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain Identity of Party Involved Description of Asset Price (a) Price (b) Asset Date (Loss) - ------------------------------ ------------------------- --------- --------- --------- -------- -------- 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 (a) Purchase price includes transaction expenses. (b) Selling price is net of transaction expenses.
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. SCHEDULE II Continued SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS - ------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain Identity of Party Involved Description of Asset Price (a) Price (b) Asset Date (Loss) - ------------------------------ ------------------------- --------- --------- --------- -------- -------- 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 (a) Purchase price includes transaction expenses. (b) Selling price is net of transaction expenses.
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. SCHEDULE II Continued SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS - ------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain Identity of Party Involved Description of Asset Price (a) Price (b) Asset Date (Loss) - ------------------------------ ------------------------- --------- --------- --------- -------- -------- 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 -- (a) Purchase price includes transaction expenses. (b) Selling price is net of transaction expenses.
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. SCHEDULE II Continued SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS - ------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------
Current Value of Asset on Purchase Selling Cost of Transaction Net Gain Identity of Party Involved Description of Asset Price (a) Price (b) Asset Date (Loss) - ------------------------------ ------------------------- --------- --------- --------- -------- -------- 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 -- (a) Purchase price includes transaction expenses. (b) Selling price is net of transaction expenses.
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. SCHEDULE III SEITEL, INC. 401(k) PLAN - ------------------------ ITEM 27(e) - SCHEDULE OF NON-EXEMPT TRANSACTIONS - ------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------
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 - ------------------ -------------------------- ------------------------------------------ ---------- ---------- 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) ========== (a) Interest of $462 was remitted to the Plan by the Employer subsequent to Plan year-end.
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 INDEX TO EXHIBIT Exhibit Number Page - -------------- --------------- 23 Consent of Independent Public Accountants 24 EX-23 2 CONSENT OF ARTHUR ANDERSEN LLP 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 -----END PRIVACY-ENHANCED MESSAGE-----