Supplemental Guarantors Consolidating Condensed Financial Information

9 Months Ended

Sep. 30, 2011

Supplemental Guarantors Consolidating Condensed Financial Information [Abstract]

Supplemental Guarantors Consolidating Condensed Financial Information

NOTE L-SUPPLEMENTAL GUARANTORS CONSOLIDATING CONDENSED FINANCIAL INFORMATION

On February 14, 2007, the Company completed a private placement of 9.75% Senior Notes in the aggregate principal amount of $400.0 million. As of September 30, 2011, $275.0 million aggregate principal amount remains outstanding. The Company's payment obligations under the 9.75% Senior Notes are jointly and severally guaranteed by certain of its 100% owned U.S. subsidiaries ("Guarantor Subsidiaries"). All subsidiaries of the Company that do not guaranty the 9.75% Senior Notes are referred to as Non-Guarantor Subsidiaries.

The consolidating condensed financial statements are presented below and should be read in connection with the Condensed Consolidated Financial Statements of the Company. Separate financial statements of the Guarantor Subsidiaries are not presented because (i) the Guarantor Subsidiaries are wholly-owned and have fully and unconditionally guaranteed the 9.75% Senior Notes on a joint and several basis, and (ii) the Company's management has determined such separate financial statements are not material to investors.

The following consolidating condensed financial information presents the consolidating condensed balance sheets as of September 30, 2011 and December 31, 2010, and the consolidating condensed statements of operations and statements of cash flows for the nine months ended September 30, 2011 and September 30, 2010 of (a) the Company; (b) the Guarantor Subsidiaries; (c) the Non-Guarantor Subsidiaries; (d) elimination entries; and (e) the Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries on a consolidated basis.

Investments in subsidiaries are accounted for on the equity method. The principal elimination entries eliminate investments in subsidiaries, intercompany balances, intercompany transactions and intercompany sales.

CONSOLIDATING CONDENSED BALANCE SHEET

As of September 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Eliminations			Consolidated Total
ASSETS
Cash and cash equivalents	$	—		$	31,907		$	6,700		$	—		$	38,607
Receivables
Trade, net		—			35,955			12,397			—			48,352
Notes and other		520			47			2,162			—			2,729
Due from Seitel Holdings, Inc.		—			858			—			—			858
Intercompany receivables (payables)		91,032			(75,070	)		(15,962	)		—			—
Investment in subsidiaries		258,126			415,008			1,262			(674,396	)		—
Net seismic data library		—			73,462			41,262			—			114,724
Net property and equipment		—			1,551			3,239			—			4,790
Investment in marketable securities		—			174			—			—			174
Prepaid expenses, deferred charges and other		4,916			6,673			596			—			12,185
Intangible assets, net		900			17,265			9,942			—			28,107
Goodwill		—			107,688			96,080			—			203,768
Deferred income taxes		—			326			—			—			326
TOTAL ASSETS	$	355,494		$	615,844		$	157,678		$	(674,396	)	$	454,620
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable and accrued liabilities	$	3,347		$	18,050		$	9,312		$	—		$	30,709
Income taxes payable		110			—			498			—			608
Senior Notes		275,000			—			—			—			275,000
Notes payable		110			—			—			—			110
Obligations under capital leases		—			—			3,134			—			3,134
Deferred revenue		—			40,310			8,293			—			48,603
Deferred income taxes		—			—			1,635			—			1,635
TOTAL LIABILITIES		278,567			58,360			22,872			—			359,799
STOCKHOLDER'S EQUITY
Common stock		—			—			—			—			—
Additional paid-in capital		397,954			—			—			—			397,954
Parent investment		—			764,752			156,914			(921,666	)		—
Retained deficit		(321,027	)		(207,442	)		(39,828	)		247,270			(321,027	)
Accumulated other comprehensive income		—			174			17,720			—			17,894
TOTAL STOCKHOLDER'S EQUITY		76,927			557,484			134,806			(674,396	)		94,821
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	355,494		$	615,844		$	157,678		$	(674,396	)	$	454,620

CONSOLIDATING CONDENSED BALANCE SHEET

As of December 31, 2010

(In thousands)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Eliminations			Consolidated Total
ASSETS
Cash and cash equivalents	$	—		$	75,068		$	14,903		$	—		$	89,971
Receivables
Trade, net		—			23,269			11,135			—			34,404
Notes and other		—			70			14			—			84
Due from Seitel Holdings, Inc.		—			156			—			—			156
Intercompany receivables (payables)		128,299			(124,507	)		(3,792	)		—			—
Investment in subsidiaries		246,883			414,476			1,262			(662,621	)		—
Net seismic data library		—			74,719			31,385			—			106,104
Net property and equipment		—			1,402			4,044			—			5,446
Investment in marketable securities		—			3,102			—			—			3,102
Prepaid expenses, deferred charges and other		6,948			2,912			389			—			10,249
Intangible assets, net		900			19,674			12,543			—			33,117
Goodwill		—			107,688			100,362			—			208,050
Deferred income taxes		—			326			—			—			326
TOTAL ASSETS	$	383,030		$	598,355		$	172,245		$	(662,621	)	$	491,009
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Accounts payable and accrued liabilities	$	14,731		$	18,410		$	20,029		$	—		$	53,170
Income taxes payable		2			—			6			—			8
Senior Notes		402,056			—			—			—			402,056
Notes payable		154			—			—			—			154
Obligations under capital leases		—			—			3,394			—			3,394
Deferred revenue		—			31,140			5,981			—			37,121
Deferred income taxes		—			—			2,128			—			2,128
TOTAL LIABILITIES		416,943			49,550			31,538			—			498,031
STOCKHOLDER'S EQUITY (DEFICIT)
Common stock		—			—			—			—			—
Additional paid-in capital		277,488			—			—			—			277,488
Parent investment		—			764,752			156,908			(921,660	)		—
Retained deficit		(311,401	)		(219,050	)		(39,989	)		259,039			(311,401	)
Accumulated other comprehensive income		—			3,103			23,788			—			26,891
TOTAL STOCKHOLDER'S EQUITY (DEFICIT)		(33,913	)		548,805			140,707			(662,621	)		(7,022	)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)	$	383,030		$	598,355		$	172,245		$	(662,621	)	$	491,009

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2011

(In thousands)

							Non-
				Guarantor			Guarantor			Consolidating			Consolidated
	Parent			Subsidiaries			Subsidiaries			Eliminations			Total
REVENUE	$	—		$	102,973		$	45,245		$	(969	)	$	147,249
EXPENSES:
Depreciation and amortization		—			64,744			34,968			—			99,712
Cost of sales		—			61			7			—			68
Selling, general and administrative		1,278			14,498			8,320			(969	)		23,127
		1,278			79,303			43,295			(969	)		122,907
INCOME (LOSS) FROM OPERATIONS		(1,278	)		23,670			1,950			—			24,342
Interest expense, net		(12,047	)		(14,972	)		(603	)		—			(27,622	)
Foreign currency exchange gains (losses)		—			4			(1,178	)		—			(1,174	)
Loss on early extinguishment of debt		(7,912	)		—			—			—			(7,912	)
Gain on sale of marketable securities		—			2,467			—			—			2,467
Other income		3			27			178			—			208
Income (loss) before income taxes and equity in income of subsidiaries		(21,234	)		11,196			347			—			(9,691	)
Provision (benefit) for income taxes		—			(251	)		186			—			(65	)
Equity in income of subsidiaries		11,608			161			—			(11,769	)		—
NET INCOME (LOSS)	$	(9,626	)	$	11,608		$	161		$	(11,769	)	$	(9,626	)

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2010

(In thousands)

							Non-
				Guarantor			Guarantor			Consolidating			Consolidated
	Parent			Subsidiaries			Subsidiaries			Eliminations			Total
REVENUE	$	—		$	83,954		$	29,837		$	(2,313	)	$	111,478
EXPENSES:
Depreciation and amortization		—			87,173			34,615			—			121,788
Cost of sales		—			66			7			—			73
Selling, general and administrative		2,668			14,196			8,863			(2,313	)		23,414
		2,668			101,435			43,485			(2,313	)		145,275
LOSS FROM OPERATIONS		(2,668	)		(17,481	)		(13,648	)		—			(33,797	)
Interest expense, net		(14,901	)		(15,431	)		(188	)		—			(30,520	)
Foreign currency exchange gains		—			2			118			—			120
Gain on sale of marketable securities		—			52			—			—			52
Other income		1			146			42			—			189
Loss before income taxes and equity in loss of subsidiaries		(17,568	)		(32,712	)		(13,676	)		—			(63,956	)
Provision (benefit) for income taxes		—			293			(3,504	)		—			(3,211	)
Equity in loss of subsidiaries		(43,177	)		(10,172	)		—			53,349			—
NET LOSS	$	(60,745	)	$	(43,177	)	$	(10,172	)	$	53,349		$	(60,745	)

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2011

(In thousands)

							Non-
				Guarantor			Guarantor			Consolidating		Consolidated
	Parent			Subsidiaries			Subsidiaries			Eliminations		Total
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	(38,639	)	$	78,628		$	24,395		$	—	$	64,384
Cash flows from investing activities:
Cash invested in seismic data		—			(57,493	)		(45,219	)		—		(102,712	)
Cash paid to acquire property, equipment and other		—			(1,055	)		(166	)		—		(1,221	)
Net proceeds from sale of marketable securities		—			2,467			—			—		2,467
Cash from sale of property, equipment and other		—			34			1			—		35
Advances to Seitel Holdings, Inc.		—			(752	)		—			—		(752	)
Repayment from Seitel Holdings, Inc.		—			50			—			—		50
Net cash used in investing activities		—			(56,749	)		(45,384	)		—		(102,133	)
Cash flows from financing activities:
Principal payments on notes payable		(44	)		—			—			—		(44	)
Repayment of 9.75% Senior Notes		(131,094	)		—			—			—		(131,094	)
Repayment of 11.75% Senior Notes		(2,000	)		—			—			—		(2,000	)
Principal payments on capital lease obligations		—			—			(122	)		—		(122	)
Borrowings on line of credit		—			—			737			—		737
Payments on line of credit		—			—			(737	)		—		(737	)
Contributed capital		125,000			—			—			—		125,000
Costs of debt and equity transactions		(6,263	)		—			(70	)		—		(6,333	)
Intercompany transfers		53,040			(65,040	)		12,000			—		—
Net cash provided by (used in) financing activities		38,639			(65,040	)		11,808			—		(14,593	)
Effect of exchange rate changes		—			—			978			—		978
Net decrease in cash and cash equivalents		—			(43,161	)		(8,203	)		—		(51,364	)
Cash and cash equivalents at beginning of period		—			75,068			14,903			—		89,971
Cash and cash equivalents at end of period	$	—		$	31,907		$	6,700		$	—	$	38,607

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2010

(In thousands)

							Non-
				Guarantor			Guarantor			Consolidating		Consolidated
	Parent			Subsidiaries			Subsidiaries			Eliminations		Total
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	(39,224	)	$	69,025		$	19,841		$	—	$	49,642
Cash flows from investing activities:
Cash invested in seismic data		—			(19,070	)		(10,972	)		—		(30,042	)
Cash paid to acquire property, equipment and other		—			(153	)		(45	)		—		(198	)
Net proceeds from sale of marketable securities		—			52			—			—		52
Return of capital from subsidiary		—			4,501			(4,501	)		—		—
Advances to Seitel Holdings, Inc.		—			(9	)		—			—		(9	)
Net cash used in investing activities		—			(14,679	)		(15,518	)		—		(30,197	)
Cash flows from financing activities:
Principal payments on notes payable		(40	)		—			—			—		(40	)
Principal payments on capital lease obligations		—			—			(108	)		—		(108	)
Borrowings on line of credit		—			—			10			—		10
Payments on line of credit		—			—			(10	)		—		(10	)
Costs of debt and equity transactions		(65	)		—			—			—		(65	)
Intercompany transfers		39,329			(39,329	)		—			—		—
Net cash provided by (used in) financing activities		39,224			(39,329	)		(108	)		—		(213	)
Effect of exchange rate changes		—			—			121			—		121
Net increase in cash and cash equivalents		—			15,017			4,336			—		19,353
Cash and cash equivalents at beginning of period		—			24,221			2,049			—		26,270
Cash and cash equivalents at end of period	$	—		$	39,238		$	6,385		$	—	$	45,623