Seitel (NASDAQ:SEIEQ)
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Seitel Announces Third Quarter and Nine Month 2003 Results
HOUSTON, Nov. 14 /PRNewswire-FirstCall/ -- Seitel, Inc. (BULLETIN BOARD:
SEIEQ) ("Seitel" or the "Company") today reported revenues for the nine months
ended September 30, 2003 of $101.3 million compared with revenues of $120.2
million in the first nine months of 2002. For the third quarter ended September
30, 2003, revenue was $39.2 million compared to $50.6 million of revenue in last
year's third quarter. Reported revenue in the 2002 periods benefited from high
rates of data selections by clients. Partially offsetting the lower selections
in the 2003 periods were increased revenue from new data acquisition. Revenue
for the quarter and nine-month periods consisted of the following (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Acquisition revenue $7,747 $5,544 $24,428 $18,959
Licensing revenue
Cash licensing sales 19,246 21,357 57,560 46,361
Non-monetary exchanges 3,261 5,051 9,218 13,399
Deferral of revenue (9,805) (9,113) (35,685) (26,389)
Selections of data 17,403 26,974 42,433 66,327
Solutions and Other 1,347 791 3,342 1,562
Total $39,199 $50,604 $101,296 $120,219
For the nine months ended September 30, 2003, the Company reported a net loss of
$12.2 million, or $.48 per share, compared with a net loss of $94 million or
$3.72 per share in the first nine months of the prior year. Results for both
periods include certain adjustments, charges and costs. In the 2003 nine-month
period, the Company recorded an impairment charge of $13.4 million to reduce the
carrying value of its seismic data library. In addition, the 2003 nine month
period includes expenses totaling $5.9 million incurred for professional and
other fees related to the Company's restructuring efforts, including the
Company's Chapter 11 filing on July 21, 2003 and $1.9 million for costs related
to litigation. Partially offsetting a portion of these expenses in 2003 were
gains of $681,000 relating to the settlement of certain liabilities at less than
their carrying value, $3.4 million due to a strengthening of the Canadian dollar
and a reduction of $2.0 million in liabilities associated with certain
litigation that was settled in 2003 for amounts less than previously accrued.
The 2002 nine-month period included costs of $9.5 million for charges related to
compensation accrued or paid to and allowances for the collection of notes
receivable from certain former executives and $7.8 million for professional fees
related to the Company's restructuring efforts and costs related to litigation.
In addition, the 2002 nine month period includes impairment charges of $25.7
million relating to the carrying value of the Company's seismic data library, a
loss of $60.2 million relating to the discontinued oil and gas business of the
Company, and a charge of $17.2 million ($11.2 million, net of tax) relating to
the cumulative effect of a change in accounting policy for amortizing its
seismic data library.
For the quarter ended September 30, 2003, the Company reported a net loss of
$10.9 million, or $.43 per share, compared with net income of $3.2 million or
$.13 per share in the third quarter of 2002. Results for both periods include
certain adjustments, charges and costs. In the 2003 quarterly period, the
Company recorded an impairment charge of $13.4 million to reduce the carrying
value of the Company's seismic data library and incurred expenses totaling $1.7
million for professional and other fees related to the Company's restructuring
efforts and the Company's Chapter 11 filing on July 21, 2003. Partially
offsetting these charges and expenses in the 2003 third quarter was $300,000 due
to a strengthening of the Canadian dollar. The 2002 three-month period included
$4.6 million of costs for professional fees related to the Company's
restructuring efforts and costs related to litigation, $600,000 of losses
related to the weakening of the Canadian dollar, and a loss of $1.5 million
relating to the discontinued oil and gas business of the Company.
As noted above, during the period ended September 30, 2003, the Company recorded
a $13.4 million impairment charge to reduce the carrying value of its seismic
data library. Based on industry conditions and the recent level of cash sales
for certain of its library components, the Company revised its estimate of
future cash flows for these library components. As a result, the Company
determined that the revised estimate of future cash flows would not be
sufficient to recover the carrying value of these certain library components,
and accordingly, the Company estimated the fair value of such library components
by discounting their estimated future cash flows. The resulting difference
between the estimated fair value and the carrying value was recorded as an
impairment charge.
As previously reported, Seitel and 30 of its United States based subsidiaries
filed for Chapter 11 bankruptcy protection in the District of Delaware on July
21, 2003. As a result of these filings, Seitel and its 30 United States based
subsidiaries are debtors-in-possession under Chapter 11 of the Bankruptcy Code.
As debtors-in-possession, the Company and these subsidiaries have continued to
operate their business in the ordinary and normal course. Also, as previously
disclosed, the Company's Canadian subsidiaries are not debtors in the bankruptcy
cases, and the bankruptcy filing does not impact any operations or creditors of
Seitel's Canadian subsidiaries.
The voting period on the Company's previously filed plan of reorganization ended
on November 13, 2003. Based on preliminary and unaudited information, all
classes of creditors have voted to accept the plan, however securities action
plaintiffs have voted to reject, and holders of equity interests are predicted
based upon current tallies to have voted to reject, the plan. A confirmation
hearing on the Company's plan of reorganization is scheduled to begin on
November 17, 2003 and is expected to be continued on December 3, 2003. Until
such time as the Bankruptcy Court makes a determination regarding confirmation
of the plan, it is not possible to predict whether or not the plan will be
confirmed or to predict the ultimate treatment that will be accorded to the
Company's existing shareholders or to holders of claims or to the securities
class action plaintiffs. All documents in the Company's Chapter 11 cases,
including plans of reorganization proposed in the Chapter 11 cases, are publicly
filed with the Bankruptcy Court for the District of Delaware.
Seitel markets its proprietary seismic information/technology to more than 400
petroleum companies, licensing data from its library and creating new seismic
surveys under multi-client projects.
Information Regarding Forward Looking Statements
This release includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Statements contained in this release about Seitel's future outlook,
prospects and plans, including those that express belief, expectation, estimates
or intentions, as well as those that are not statements of historical fact, are
forward looking. The words "proposed", "anticipates", "anticipated", "will",
"would", "should", "estimates" and similar expressions are intended to identify
forward-looking statements. Forward looking statements represent Seitel's
reasonable belief and are based on Seitel's current expectations and assumptions
with respect to future events. While Seitel believes its expectations and
assumptions are reasonable, they involve risks and uncertainties beyond Seitel's
control that could cause the actual results or outcome to differ materially from
the expected results or outcome. Such factors include the ability of the Company
to continue as a going concern; the Company's ability to obtain court approval
with respect to motions in the Chapter 11 proceeding prosecuted by it from time
to time; the impact of litigation on the Company and in any distribution to
creditors or equity holders of the Company; the delay or inability of the
Company to complete and/or consummate its proposed plan of reorganization; risks
associated with third parties seeking and obtaining court approval to propose
and confirm one or more plans of reorganization, for the appointment of a
Chapter 11 trustee or to convert the Company's Chapter 11 case to a Chapter 7
case; the ability of the Company to obtain and maintain normal terms with
vendors and service providers; the Company's ability to maintain contracts that
are critical to its operations; the potential adverse impact of the Chapter 11
cases on the Company's liquidity or results of operations and other risks
associated with operating a business in Chapter 11; any significant change in
the oil and gas industry or the economy generally; changes in the exploration
budgets of the Company's seismic data and related services customers; actual
customer demand for the Company's seismic data and related services; the timing
and extent of changes in commodity prices for natural gas; crude oil and
condensate and natural gas liquids and conditions in the capital markets and
equity markets during the periods covered by the forward looking statements; the
effect on our reported operating results and stock price as a result of the
Company's restatement of financial statements; the results or settlement of
litigation regarding the Company or its assets; the Company's non-compliance
with its debt covenants; adverse actions which may be taken by the Company's
creditors; the level of the Company's cash generated from operations; the
Company's ability to obtain alternative debt or equity financing on satisfactory
terms if internally generated funds are insufficient to fund its capital needs
and the lack of any strategic disposition, acquisition or joint venture
involving the Company's businesses and assets; and other risks and uncertainties
identified from time to time in the Company's reports filed with the Securities
and Exchange Commission, including its most recent Annual Report on Form 10-K,
copies of which may be obtained form the Company without charge. These
forward-looking statements speak only as of the date hereof and Seitel disclaims
any duty to update these statements other than as required by law. Similarly,
these and other factors, including the terms of any reorganization plan
ultimately confirmed, can affect the value of the Company's various pre-petition
liabilities, common stock and/or other equity securities. As a result, no
assurance can be given as to what values, if any, ultimately will be ascribed in
the bankruptcy proceedings to each of these constituencies. Accordingly, the
Company urges that the appropriate caution be exercised with respect to existing
and future investments in any of these liabilities and/or securities.
FINANCIAL TABLES ON FOLLOWING PAGES
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
September 30, December 31,
2003 2002
ASSETS
Cash and equivalents $45,739 $21,517
Restricted cash 350 4,469
Receivables
Trade, net of allowance 32,976 34,536
Notes and other 460 14,372
Net seismic data library 259,461 284,396
Net other property and equipment 16,749 19,789
Oil and gas operations held for sale 291 656
Investment in marketable securities 74 5
Deferred income taxes 8,123 11,322
Prepaid expenses, deferred charges
and other assets 7,122 7,074
TOTAL ASSETS $371,345 $398,136
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities not subject to compromise:
Accounts payable and accrued
liabilities $11,666 $31,391
Income taxes payable 416 916
Oil and gas operations held for sale 35 94
Debt
Unsecured Notes --- 255,000
Term loans 5,910 8,622
Obligations under capital leases 6,846 8,439
Financial guaranty --- 554
Deferred revenue 50,540 56,084
Liabilities subject to compromise 267,598 ---
TOTAL LIABILITIES 343,011 361,100
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, par value
$.01 per share; authorized
5,000,000 shares; none issued --- ---
Common stock, par value $.01 per share;
authorized 50,000,000 shares; issued
and outstanding 25,811,601
at September 30, 2003 and
December 31, 2002 258 258
Additional paid-in capital 166,630 166,630
Retained deficit (133,946) (121,793)
Treasury stock, 435,918 shares at
cost at September 30, 2003 and
December 31, 2002 (5,373) (5,373)
Notes receivable from officers
and employees (169) (1,178)
Accumulated other comprehensive
income (loss) 934 (1,508)
TOTAL STOCKHOLDERS' EQUITY 28,334 37,036
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $371,345 $398,136
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30,
2003 2002
REVENUE $39,199 $50,604
EXPENSES:
Depreciation and amortization 23,470 23,344
Cost of sales 180 444
Selling, general and administrative
expenses 6,694 14,912
Impairment of seismic data library 13,354 ---
43,698 38,700
INCOME (LOSS) FROM OPERATIONS (4,499) 11,904
Interest expense, net (4,945) (4,855)
Loss on sale of security --- (250)
Reorganization items (1,675) ---
Income (loss) from continuing operations
before income taxes (11,119) 6,799
Provision (benefit) for income taxes (192) 2,130
Income (loss) from continuing operations (10,927) 4,669
Income (loss) from discontinued operations
(including loss from disposal of
$1,225 in 2002) 19 (1,490)
NET INCOME (LOSS) $(10,908) $3,179
Basic and diluted income (loss)
per share:
Income (loss) from continuing
operations $(.43) $.19
Loss from discontinued operations --- (.06)
Net income (loss) $(.43) $.13
Weighted average number of common and
common equivalent shares - basic
and diluted 25,376 25,376
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Nine Months Ended September 30,
2003 2002
REVENUE $101,296 $120,219
EXPENSES:
Depreciation and amortization 61,718 61,505
Cost of sales 510 674
Selling, general and administrative
expenses 21,213 49,645
Impairment of seismic data library 13,354 25,696
96,795 137,520
INCOME (LOSS) FROM OPERATIONS 4,501 (17,301)
Interest expense, net (14,860) (15,039)
Gain on extinguishment of liabilities 681 ---
Loss on sale of security --- (332)
Reorganization items (1,675) ---
Loss from continuing operations before
income taxes and cumulative effect of
change in accounting principle (11,353) (32,672)
Provision (benefit) for income taxes 621 (10,025)
Loss from continuing operations before
cumulative effect of change in
accounting principle (11,974) (22,647)
Loss from discontinued operations
(including loss from disposal of
$57,989 in 2002) (179) (60,201)
Cumulative effect of change in
accounting principle, net of tax --- (11,162)
NET LOSS $(12,153) $(94,010)
Basic and diluted loss per share:
Loss from continuing operations $(.47) $(.90)
Loss from discontinued operations (.01) (2.38)
Cumulative effect of accounting change --- (.44)
Net loss $(.48) $(3.72)
Weighted average number of common and
common equivalent shares - basic
and diluted 25,376 25,275
DATASOURCE: Seitel, Inc.
CONTACT: Larry Lenig or Len Goldstein, both of Seitel, Inc.,
+1-713-881-8900
Web site: http://www.seitel-inc.com/