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HOUSTON, Sept. 17 /PRNewswire/ — Input/Output, Inc. (NYSE: IO) announced today its results for the first quarter ended August 31, 1999. For the quarter, I/O recorded revenue of $30.0 million and a net loss applicable to common stockholders of $9.3 million, or ($0.18) per share — which includes pretax charges of $4.7 million and preferred dividends of $1.1 million. Excluding the pretax charges, the Company recorded a first quarter net loss applicable to common stockholders of $6.1 million, or ($0.12) per share.

First quarter revenues were stronger than anticipated due to a $9.0 million sale to a geophysical company in the Former Soviet Union. The sale included two I/O SYSTEM 2000™ systems, one RSR system, 12 vibrator trucks and other ancillary equipment.

The net loss included preferred dividends of $1.1 million. Although the Series B and C Convertible Preferred Stock issued to SCF Partners has a 1% cash dividend rate ($138,000 per quarter), the agreement allows for, in certain circumstances, conversion of the preferred stock into common stock based on the accumulated value of the preferred stock divided by the then-market price. As disclosed in the Company’s most recent 10-K, the Company is accruing the full 8% preferred dividend.

Included in the first quarter charges are the following:

(1) Charges of $3.3 million primarily related to employee severance and

the closing of the Company’s Ireland facility. These charges are

included in general and administrative expenses.

(2) Charges of $1.4 million related to product-related warranties. These

charges are included in cost of sales.

“While we continue to make good progress toward the successful repositioning of the Company, overall demand for new seismic instrumentation remains weak, and we don’t anticipate a meaningful recovery in our business to begin until some time in calendar year 2000,” said Sam Smith, Chief Executive Officer of I/O.

Input/Output is a world leader in seismic acquisition imaging technology for land, transition zone and marine exploration and production. The company specializes in driving to market technology that creates value for the energy industry in the areas of 2D, 3D, 4D and multi-component seismic data.

This press release contains forward-looking information, which is subject to the provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to the effects of repositioning the company and the company’s performance given current market conditions. Investors are cautioned that all forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including risks associated with the timing and development of, and market acceptance of, the Company’s products and services and the current downturn in the oil and gas exploration industry, risks associated with competition and competitive pricing pressures, defaults in financed purchase obligations and changes in contract terms, risks associated with acquisitions and the potential effects thereof and risks associated with sales to customers outside the United States. Additional factors which could affect actual results are described in the section entitled “Cautionary Statement for Purposes of Forward-Looking Statements” contained in the Company’s annual report on Form 10-K for the year ended May 31, 1999.

               (in thousands, except share and per share data)

                                                    For the three months ended
                                                              August 31,
                                                            1999       1998
    Net sales                                            $29,979     $66,995
    Cost of sales                                         23,994      44,716
              Gross profit (A)                             5,985      22,279

    Operating expenses:
       Research and development                            7,203       9,242
       Marketing and sales                                 2,881       4,013
       General and administrative (B)                      6,914       6,419
       Amortization of intangibles                         1,925       1,860
              Total operating expenses                    18,923      21,534

    Earnings (loss) from operations                      (12,938)        745
    Interest expense                                        (212)       (242)
    Other income                                           1,034       2,843
    Earnings (loss) before income taxes                  (12,116)      3,346
    Income tax (benefit) expense                          (3,877)      1,071

    Net (loss) earnings                                   (8,239)      2,275

    Preferred stock dividend                               1,081         ---

    Net (loss) earnings applicable to
     common  stockholders                                $(9,320)     $2,275

    Basic (loss) earnings applicable
     to common stock                                      $(0.18)      $0.05

    Weighted average number of
     common shares outstanding                        50,669,031  44,585,501

    Diluted (loss) earnings applicable
     to common  stock                                     $(0.18)      $0.05

    Weighted average number of diluted
     common shares outstanding                        50,669,031  44,702,268

    (A) Includes first quarter 2000 charges of $1.4 million related to
        product-related warranties.
    (B) Includes first quarter 2000 charges of $3.3 million primarily related
        to employee severance and the closing of the Company's Ireland
        facility.  Certain amounts previously reported have been reclassed to
        conform to the current year presentation.

SOURCE  Input/Output, Inc.