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Seitel, Inc. (SEI) Message Board

  • komatinskys komatinskys Jun 9, 2002 10:46 AM Flag

    Framesbane - Accounting

    Framesbane,
    You're inability to calculate the EBIDTA (Note the note agreements specify EBIDTA, not cash EBIDTA) based on the SEC filings has me stumped. The calculation is quite simple. Start with the revenues and subtract cost of sales and SGA and expense. The oil and gas impairment is a yearly accounting test and amounts to accelerated depreciation.

    Regarding the other accounting changes, the change on new multiclient data shoots means that they recognize no revenue as far as earnings statements from these new shoots. The cash received goes to offset the cost of the shoot and results in a lower net data bank and lower depreciation going forward. Regarding contracts with deferred data selection, you're correct they may not receive all the cash up front. Payment terms would be specified in the contract. I'm not privy to the typical terms used so I can't comment on how the cash is collected.

    Chris

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Komatinskys, poor Framesbane is getting desperate to save face because he is citing links and quotes, that if read completely, support what you have been saying and not his stubborness.

      You are whipping poor Framesbane's ass on this issue. Accounting has always been an area where framesbane usually loses. The intelligent on this board can see through his desperate smoke and mirrors act to save face.

      It doesn't matter that Framesbane is wrong on the calculations. The big issue is that SEI remains in default.

      • 1 Reply to bear_stearns_bull
      • You are correct, they are still in technical default (the lessor of the two types of default)

        My point is that it does matter the extent to which they have violated the covenants. A violation of 2 to 1 is a much more serious matter than a violation of 4.6 to 1. The factors that caused the violation and whether or not the violation is viewed as a temporary condition with improvement likely or a more permanent condition also play onto what the final outcome might be. The two factors that combined to cause the violation where the poor energy price environment in late Q 01 and early Q1 02 which affected sales and the accounting adjustments (deferred revenue and removed revenue from new data shoots). The prospects for energy service companies are looking up as energy prices (especially natural gas - up 50% from the lows) have risen.

        Chris

    • http://www.sec.gov/Archives/edgar/data/750813/0000750813-99-000008.txt

      SCHEDULE B DEFINED TERMS


      <<<CONSOLIDATED INTEREST EXPENSE -- means, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Company and the Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of
      consolidated financial statements of the Company and the Restricted Subsidiaries
      in accordance with GAAP):

      (a) all interest in respect of Debt of the Company and the Restricted Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and

      (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period.>>>

      <<<CONSOLIDATED NET INCOME -- means, with reference to any period, the net income (or loss) of the Company and the Restricted Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between the Company and the
      Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and the Restricted Subsidiaries in accordance with GAAP, PROVIDED that there shall be excluded:...

      (e) any portion of such net income that cannot be freely converted into United States Dollars,...

      (i) any net income or gain (but not any net loss) during such period from (i) any extraordinary items >>>

      You can argue all you want, but non cash sales don't count and interest is the total amount due on the notes and credit lines before inter company adjustments. That still makes the EBITDA to interest 3 to 1, and that still isn't close to the 5 to 1 minimum requirement.

      I'm sorry you're getting clobbered, but continuing this discussion is likely to be as fruitful as trying to tell a friend they have fallen in love with a worthless person.

 

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