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Technology Stocks : SEITEL (SEI)
SEI 53.11+2.1%Oct 30 3:59 PM EDT
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To: Don Earl who wrote (410)3/18/2002 9:46:03 PM
From: Don Earl  Read Replies (1) of 427
 
BREAKING DOWN THE DEPRECIATION NUMBERS

1996 1997 1998 1999 2000
SEISMIC REVENUE $67M $85M $126M $110M $139M
DATA BANK ADDITIONS $52M $89M $139M $116M $77M
SEISMIC REVENUE
LESS DATA PURCHASED $15M -$4M -$13M -$6M $62M


GROSS DATA BANK $285M $374M $513M $629M $706M
ACCUMULATED
DEPRECIATION $158M $193M $250M $299M $361M
NET DATA BANK $127M $181M $263M $330M $345M

DATA BANK DEPRECIATION $31M $35M $57M $49M $62M

PERCENT DEPRECIATION
OF GROSS DATA BANK 11% 9% 11% 8% 9%

TOTAL SEISMIC REVENUE 5 YEARS $528M
TOTAL SEISMIC ADDITIONS 5 YEARS $474M
TOTAL SEISMIC DEPRECIATION 5 YEARS $234M

With the exception of 2000, there has historically been a
close relationship between data additions and revenue. While
there is no disclosure as to the amounts involved, this note
is included for the first time in the 2000 report:

<<<Additionally, library sales include revenue resulting
from the merger and acquisition of some of the Company's oil
and gas company customers. In these instances, the data was
relicensed due to the nontransferability of the original license.>>>

While Seitel did not see fit to disclose to investors the
amount of what appears to be windfall profits in the second
half of 2000 and the first half of 2001, the sharp drop in
Q3 cash sales suggests this source of revenue has been
exhausted.

It is worth mentioning that many investors have made the
mistake of calculating the depreciation rate as a
percentage of net library data instead of the gross amount.
THE GROSS AMOUNT IS THE AMOUNT BEING DEPRECIATED!!! The net
amount is what is left after depreciation has taken place.

On a 5 year straight line basis, amortization would be 20%
of data additions per year and look like this:

1996 @ 100% of $127M = $127M
1997 @ 80% of $89M = $71M
1998 @ 60% of $139M = $83M
1999 @ 40% of $116M = $46M
2000 @ 20% of $77M = $15M

Total $342M

This is in sharp contrast to the $234 million actually
reported and makes a difference of $108 million in reported
earnings, or over $4 per share in unrealized losses.
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