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HOUSTON, Dec. 14 — Input/Output, Inc. (NYSE: IO) today
announced net income of $3.8 million, or $0.08 per share, on revenue of
$73.9 million for the fiscal second quarter ended November 30, 1998, compared
with net income of $15.1 million, or $0.34 per share, on revenue of
$103.7 million for the same period a year ago. Weighted average diluted
common shares outstanding for the second quarter increased from
44,414,098 million at November 30, 1997, to 48,508,229 million at November 30,
1998, primarily due to the company's second quarter merger with DigiCOURSE,

For the six months ended November 30, 1998, Input/Output recorded net
income of $6.0 million, or $0.13 per share, on revenue of $141.0 million,
compared to net income of $26.4 million, or $0.60 per share, on revenue of
$186.7 million for the six months ended November 30, 1997.

“Second quarter results reflect a significantly weaker market for new
seismic data acquisition equipment sales due to a reduction in our customers'
capital expenditures, particularly among our land customers,'' said W.J. “Zeke''
Zeringue, chairman and CEO of Input/Output. “On a positive note, we were
encouraged by the market's response to the System 2000, selling five systems
during the second quarter. In addition, our marine business increased,
selling products for five new vessels mobilized during the quarter.''

Of the five System 2000 systems sold during the quarter, two were sold to
customers in Poland and one each to customers in China, the Ukraine and the
United States. During the quarter the company sold 5,928 channels of its land
seismic data acquisition recording equipment and 4,496 marine channels, as
compared to 33,720 channels of land equipment and 3,838 channels of marine
equipment in the second quarter of the previous year.

Market Outlook

“Without question, the next six months will be extremely challenging,''
Zeringue said. “Seismic crews are being stacked and contractors are leasing
equipment to each other. New vessels will not come to market at the rate
previously anticipated. Only six new hulls are expected to be placed into
service during the next six months. In addition, we anticipate that equipment
required for these vessels will be transferred from smaller, less capable
vessels which will probably be removed from service.''

To counter the difficult operating environment, the company intends to
aggressively market spare parts and other ancillary products, aggressively
market System 2000 and its telepresence capabilities as an efficient tool to
enhance crew productivity, and seek alternative financing arrangements that
will not tap into customers' limited capital expenditure budgets.

On the cost side, the company is adjusting manufacturing operations to the
anticipated product build level and implementing other operating and general
and administrative cost reductions. The company will continue to invest in
the development of high-impact technology-based products that will enable oil
and gas producers and service companies to be profitable in a low oil price

“In this market, we must focus our efforts on servicing seismic crews and
helping our customers become more operationally efficient,'' Zeringue said.
“We can anticipate a revenue shift toward service-related opportunities,
including spare parts, repairs and training. In addition, we will seek cost-
reduction efforts where we can. We will not, however, sacrifice our efforts
to develop high-impact technology. We are at an important juncture in the
next product development cycle, and will continue to focus on research and

Input/Output is a world leader in seismic acquisition imaging technology
for land, transition zone and marine exploration and production.

This press release contains forward-looking information, which are subject
the provisions of the Private Securities Litigation Reform Act of 1995,
including statements relating to marketing direction, effects of market
changes, product development efforts, and the company's performance for the
remainder of its current fiscal year. 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 report on Form 10-K for
the year ended May 31, 1998.

                       INPUT/OUTPUT, INC. AND SUBSIDIARIES

                 (In thousands, except share and per share data)

                        For the three months ended   For the six months ended
                                  November 30,             November 30,
                              1998          1997         1998          1997

    Net sales              $73,918      $103,683     $140,913      $186,653
    Cost of sales           45,936        61,892       90,968       111,548
     Gross profit           27,982        41,791       49,945        75,105
    Operating expenses:
     Research and
      development           10,052         8,228       19,113        15,616
     Marketing and sales     3,962         3,707        7,924         6,591
     General and
      administrative         8,100         8,442       14,435        14,510
     Amortization of
      intangibles            2,226         1,229        4,086         2,416
      Total operating
       expenses             24,340        21,606       45,558        39,133
    Earnings from operations 3,642        20,185        4,387        35,972
    Interest expense          (217)         (258)        (459)         (580)
    Other income             2,122         2,253        4,965         3,372
    Earnings before
     income taxes            5,547        22,180        8,893        38,764
    Income taxes             1,775         7,098        2,846        12,405

    Net earnings           $ 3,772       $15,082      $ 6,047       $26,359

    Basic earnings per
     common share            $0.08         $0.34        $0.13         $0.61

    Weighted average
     number of common
     shares outstanding 48,459,101    43,736,043   46,522,301    43,559,551

    Diluted earnings
     per common share        $0.08         $0.34        $0.13         $0.60

    Weighted average
     number of diluted
     common shares
     outstanding        48,508,229    44,414,098   46,605,248    44,103,991