Share this page with someone.

Facebook Twitter LinkedIn Print Email

HOUSTON, May 10, 2006 /PRNewswire-FirstCall via COMTEX News Network/ — Input/Output, Inc. (NYSE: IO)
today announced a first quarter 2006 net loss of $3.3 million, or $0.04 loss
per share, on revenues of $86.3 million compared to a restated net loss of
$8.1 million, or $0.10 loss per share, on revenues of $62.0 million for the
same period a year ago.

Marine Imaging revenues more than doubled to $26.6 million from $10.9
million a year ago due to continued improvement in the worldwide marine market
and a strong contribution from the company’s towed streamer product line and
VectorSeis(R) Ocean (VSO) sales. These strong marine results were
accomplished despite a delay on the fulfillment of approximately $10 million
in VSO sales that were originally planned for the first quarter, but slipped
into the second quarter due to third party manufacturing delays.

GXT revenues increased 16 percent to $20.3 million during the quarter
compared to $17.5 million a year ago, primarily attributable to continued
strong processing revenues. This increase was achieved despite the delay in
completing a portion of a large multi-client project due to a super tanker
accidentally running over the survey boat streamers. That multi-client Span
project is now fully operational and is expected to be completed in the second
quarter.

Land Imaging revenues increased 14 percent to $34.9 million from $30.6
million a year ago, driven by continued strong performance from vibroseis
trucks and Sensor geophone sales. Land System Four sales were weak in the
first quarter, as expected, due to the upcoming new release of System Four,
which anticipates shipments beginning late in the second quarter.

Gross margin for the first quarter was 28 percent compared to 18 percent
for the same period a year ago. The year-over-year gross margin increase
includes improvements within Marine and GXT due to stronger demand and a
higher margin product mix, offset somewhat by continued pricing pressures in
land systems related to new product offerings and market penetration.
Operating expenses for the first quarter declined slightly to 29 percent of
revenues compared to 30 percent for the first quarter of last year. However,
this reduction was somewhat offset by an increase in R&D expense of $2.5
million, mainly due to a ramp-up to support FireFly(TM). Also, general and
administrative expenses were $3.3 million higher than the comparable quarter
last year, primarily due to higher than expected legal fees and increased
professional and accounting fees associated with the 2005 audit and Sarbanes-
Oxley compliance and $0.7 million related to expensing of stock options. Of
this amount, approximately $1.5 million represented non-recurring, one-time
charges.

Loss from operations in the first quarter was $1.1 million compared to a
loss from operations of $7.5 million in the first quarter of 2005. EBITDA
(earnings before net interest expense, taxes, depreciation and amortization)
for the first quarter improved to $5.2 million compared to $1.0 million in the
first quarter of last year. A reconciliation of EBITDA to reported earnings
can be found at the end of this press release.

Bob Peebler, I/O’s President and Chief Executive Officer, said, “As we
stated in our fourth quarter press release and conference call, we expected to
start the year slowly and improve throughout 2006, with a larger portion of
the revenues occurring in the last half of the year. Despite the slippage of
revenues from the first quarter, we still achieved these improved results and,
based on our current backlog and activity levels, we expect the remainder of
the year to show solid improvement.

“The Marine Imaging Systems Division had another very good quarter, led by
a strong seismic marine market, despite the inability to deliver some VSO
shipments originally planned for the first quarter. Approximately $4 million
in gross margin slipped into the second quarter due to delays in shipment of
the next VSO system, and the GXT multi-client project delay. Although still
incurring a $1.0 million operating loss in the quarter, GXT recorded improved
results. GXT’s backlog for processing work continued to increase during the
first quarter and the multi-client business looks strong going forward. In
addition, GXT booked $4.5 million in data library sales in the first quarter
that will be recognized throughout the remainder of 2006. Also, our customer,
RXT, is finalizing an order for its third VSO system, which is scheduled to be
delivered in the fourth quarter, in line with our expectations related to our
exclusive agreement with RXT.

“On the Land Imaging side, the fundamental drivers behind the seismic
market continue to improve, and our Sensor unit had another strong quarter.
Our land System Four sales were weak in the first quarter with customers
delaying orders in anticipation of the new release of System Four, which is
scheduled to be ready late in the second quarter. Last week’s announcement of
Apache’s participation in the multi-year 10,000 station FireFly program,
combined with the earlier announcement of our alliance with BP, is another
strong indicator of industry excitement about the potential of FireFly, both
from an image quality and productivity perspective. The FireFly engineering
program is on schedule with the goal of shooting the first program for BP in
the fourth quarter of 2006.”

OUTLOOK

The following statements are based on our current expectations. These
statements are forward looking and actual results may differ materially.
Factors affecting these forward-looking statements are detailed below.

Mr. Peebler stated, “Even with the slow start to 2006, we remain
optimistic about the year and reaffirm our annual revenue guidance of $410 to
$450 million, with earnings ranging between $0.20 and $0.35 per share. We
believe that the second half of the year will be stronger than the first half
due to the backlog of large Marine sales that are scheduled for the fourth
quarter, the normal shape of the data library business with its pattern of
strong year-end spending, and improving land System Four sales and margins
resulting from our new system releases. Overall, our business of seismic
equipment and processing services is strengthening as the industry refocuses
on exploration, and this bodes well for a good year.”

CONFERENCE CALL

I/O has scheduled a conference call for Thursday, May 11, 2006, at
9:00 a.m. Eastern Time. To participate in the conference call, dial
303-262-2075 at least 10 minutes before the call begins and ask for the
Input/Output conference call. A replay of the call will be available
approximately two hours after the live broadcast ends and will be accessible
until May 18, 2006. To access the replay, dial 303-590-3000 and use pass code
11059407.

Investors, analysts and the general public will also have the opportunity
to listen to the conference call live over the Internet by visiting
http://www.i-o.com . Also, an archive of the web cast will be available
shortly after the call on the company’s website.

I/O is a leading, technology-focused seismic solutions provider. The
company provides cutting-edge seismic acquisition equipment, software, and
planning and seismic processing services to the global oil and gas industry.
I/O’s technologies are applied in both land and marine environments, in
traditional 2D and 3D surveys, and in rapidly growing areas like time-lapse
(4D) reservoir monitoring and full-wave imaging. Headquartered in Houston,
Texas, I/O has regional offices in Canada, Latin America, Europe, China,
Russia, Africa and the Middle East. Additional information is available at
http://www.i-o.com .

The information included herein contains certain 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. These forward-looking
statements include statements concerning estimated revenues, earnings and
earnings per share for fiscal 2006, and estimated gross margins, EBITDA and
operating expenses as a percentage of revenue for fiscal 2006, future sales
and market growth, and other statements that are not of historical fact.
Actual results may vary materially from those described in these forward-
looking statements. All forward-looking statements reflect numerous
assumptions and involve a number of risks and uncertainties. These risks and
uncertainties include the timing and development of the Company’s products and
services and market acceptance of the Company’s new and revised product
offerings; risks associated with competitor’s product offerings and pricing
pressures resulting therefrom; the relatively small number of customers that
the Company currently relies upon; the fact that a significant portion of the
Company’s revenues is derived from foreign sales; the risks that sources of
capital may not prove adequate; the Company’s inability to produce products to
preserve and increase market share; collection of receivables; and
technological and marketplace changes affecting the Company’s product line.
Additional risk factors, which could affect actual results, are disclosed by
the Company from time to time in its filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended
December 31, 2005 and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2006.

Tables to follow



                     INPUT/OUTPUT, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                (In thousands)
                                  (Unaudited)
                                                       March 31,      Dec. 31,
                                                         2006           2005
                       ASSETS
    Current assets:
       Cash and cash equivalents                      $ 31,669       $ 15,853
       Restricted cash                                   1,136          1,532
       Accounts receivable, net                         93,259        120,880
       Current portion of notes receivable, net         10,692          8,372
       Unbilled receivables                              9,344         15,070
       Inventories                                      95,293         81,428
       Prepaid expenses and other current assets         9,963         10,919
             Total current assets                      251,356        254,054
    Notes receivable                                     7,099          6,508
    Non-current deferred income tax asset                3,183          3,183
    Property, plant and equipment, net                  28,558         28,997
    Multi-client data library, net                      26,512         18,996
    Investments at cost                                  4,000          4,000
    Goodwill                                           152,501        154,794
    Intangible and other assets, net                    65,203         67,329
             Total assets                             $538,412       $537,861

           LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
       Notes payable and current maturities
        of long-term debt                             $  3,961       $  4,405
       Accounts payable                                 25,260         31,938
       Accrued expenses                                 51,245         48,828
       Deferred revenue                                 20,742         11,939
       Deferred income tax liability                     3,183          3,183
             Total current liabilities                 104,391        100,293
    Long-term debt, net of current maturities           71,665         71,541
    Non-current deferred income tax liability            4,191          4,304
    Other long-term liabilities                          4,358          4,340
             Total liabilities                         184,605        180,478

    Cumulative convertible preferred stock              29,875         29,838

    Stockholders' equity:
      Common stock                                         801            807
      Additional paid-in capital                       485,300        487,232
      Accumulated deficit                             (153,341)      (150,007)
      Accumulated other comprehensive loss              (2,860)          (728)
      Treasury stock                                    (5,968)        (5,968)
      Unamortized restricted stock compensation            ---         (3,791)
      Total stockholders' equity                       323,932        327,545
      Total liabilities and stockholders' equity      $538,412       $537,861



                       INPUT/OUTPUT, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share amounts)
                                   (Unaudited)

                                                        Three Months Ended
                                                              March 31,
                                                         2006           2005
                                                                    (Restated)
    Net sales                                         $ 86,349       $ 62,042
    Cost of sales                                       62,587         51,167
       Gross profit                                     23,762         10,875
    Operating expenses (income):
    Research and development                             7,081          4,555
    Marketing and sales                                  8,175          7,487
    General and administrative                           9,633          6,305
    Gain on sale of assets                                 ---             (5)
       Total operating expenses                         24,889         18,342
    Income (loss) from operations                       (1,127)        (7,467)
    Interest expense                                    (1,399)        (1,744)
    Interest income                                        320             71
    Other income (expense)                                 (19)            41
       Loss before income taxes and change in
        accounting principle                            (2,225)        (9,099)
    Income tax expense (benefit)                           942         (1,215)
       Net loss before change in accounting principle   (3,167)        (7,884)
    Cumulative effect of change in accounting principle    398            ---
       Net loss                                         (2,769)        (7,884)
    Preferred stock dividends and accretion                565            194
       Net loss applicable to common shares           $ (3,334)      $ (8,078)

    Basic and diluted loss per share:
       Loss per share before change in
        accounting principle                          $  (0.05)      $  (0.10)
       Cumulative effect of change in
        accounting principle                              0.01            ---
       Loss per share                                 $  (0.04)      $  (0.10)
    Weighted average number of common shares
     outstanding:
       Basic                                            79,134         78,298
       Diluted                                          79,134         78,298



                     Reconciliation of EBITDA to Net Loss
                             (Non-GAAP Measures)
                                (In thousands)
                                 (Unaudited)

EBITDA is a Non-GAAP measurement that is presented as an additional
indicator of operating performance and is not a substitute for net income
(loss) or net income (loss) per share calculated under generally accepted
accounting principals (GAAP). We believe that EBITDA provides useful
information to investors because it is an indicator of the strength and
performance of our ongoing business operations, including our ability to
service our debt. The calculation of EBITDA shown below is based upon amounts
derived from the company’s financial statements prepared in conformity with
GAAP.

Three Months Ended
                                                              March 31,
                                                         2006           2005
                                                                    (Restated)
    Net loss applicable to common shares               $(3,334)      $ (8,078)
    Interest expense                                     1,399          1,744
    Interest income                                       (320)           (71)
    Income tax expense (benefit)                           942         (1,215)
    Depreciation and amortization expense                6,941          8,575
    Cumulative effect of change in accounting principle   (398)           ---
    EBITDA                                             $ 5,230       $    955

CONTACTS: Robert P. Peebler
Chief Executive Officer
Input/Output (281) 879-3615

Jack Lascar, Partner
Karen Roan, SVP
DRG&E (713) 529-6600

SOURCE Input/Output, Inc.