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HOUSTON, Oct 29, 2002 /PRNewswire-FirstCall via COMTEX/ — Input/Output, Inc.
(NYSE: IO) today announced revenues for the third quarter ended September 30,
2002 of $28.5 million compared to revenues of $22.9 million last quarter and
$58.6 million for the same period a year ago. The sequential increase in
revenues was principally attributable to an increase in analog land seismic
equipment sales. Land and marine revenues during the third quarter were $16.4
million and $12.1 million, respectively, compared to land revenue of $10.8
million and marine revenue of $12.1 million last quarter. The Company reported a
loss from operations for the quarter of $32.3 million compared to an operating
loss of $14.0 million last quarter and earnings from operations of $2.3 million
for the third quarter last year. Included in this quarter’s loss from operations
are charges of $3.9 million related to the discontinuance of certain products,
$15.1 million for impairment of goodwill related to our analog land seismic
operations, and $5.9 million for the closure of the Company’s Alvin, Texas and
Louisville, Colorado facilities. After adjusting for these unusual charges, the
Company’s loss from operations for the third quarter ended September 30, 2002
was $7.4 million.

The net loss applicable to common shareholders for the quarter ended September
30, 2002 was $29.4 million or $(0.58) per share. This is compared to a net loss
applicable to common shareholders of $78.9 million, or $(1.55) per share, last
quarter and net earnings applicable to common shareholders of $2.7 million, or
$0.05 per share for the same period a year ago.

“Due to the continued weak seismic market fundamentals, we have taken decisive
steps to further reduce our overall cost structure to enable us to operate
profitably at lower levels of overall seismic activity,” said Tim Probert, the
Company’s President and Chief Executive Officer. “First, we have taken steps to
significantly reduce our corporate overhead burden by reducing the number of
corporate personnel from about 93 to 45 individuals. Second, we have taken steps
to further rationalize our facility infrastructure. Specifically, we will
combine our two Colorado-based operations into Axis Geophysics’ Denver offices
and close our Alvin, Texas manufacturing facility. In addition, we have
initiated the statutorily-mandated steps leading to the possible closure of our
Norwich, U.K.-based geophone stringing facility. Existing operations in these
facilities will either be relocated to other existing I/O facilities or
outsourced to contract manufacturers, in either case with a preference to lower
cost environments. Third, we have combined certain business units in order to
create critical mass and further reduce our administrative costs. Each business
unit has also reviewed its personnel requirements and is making the necessary
adjustments. Finally, we are carefully evaluating the portfolio of products we
currently support and will eliminate those products for which the market outlook
does not justify continuing investment. These actions are anticipated to reduce
our ongoing consolidated annual operating expenses by about $10.5 million and
will result in a reduction of about 150 people, or more than 20% of our current
fulltime workforce.”

Mr. Probert continued, “Despite the conditions necessitating these actions,
there are a number of causes for optimism regarding our business. Interest in
our VectorSeis System 4 digital land acquisition system is growing as we
continue to introduce this new technology to both oil companies and seismic
contractors. I am quite optimistic that we will announce meaningful sales of
this product before the end of the year. We just completed the acquisition of
test data in the North Sea with our first ocean bottom cable utilizing our
VectorSeis technology. The data is currently being processed, but early comments
from our oil company partners are extremely encouraging. Our goal is to have our
first commercial VectorSeis OBS product available by the second quarter next
year. Finally, quote activity for our marine towed- array products, including
our new DigiSource air gun controller and our solid streamer, for which we
expect final field-testing later this year, is quite positive. These encouraging
factors, together with our aggressive control of costs, should result in much
improved results in 2003.”

Input/Output, Inc. is an industry leader in seismic acquisition imaging
technology for land, marine, transition zone exploration, production and
reservoir monitoring. The Company specializes in technology that creates value
for the energy industry in the areas of 2D, 3D, 4D and multi-component seismic
data. Additional information on Input/Output, Inc. is available on the Internet
at www.i-o.com or contact us at ir@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 the Company’s revenue and earnings projections for 2002,
any statement concerning future business fundamentals for the seismic industry,
and future sales and acceptance of new product offerings. 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 a continuation in
trends for energy industry demand for seismic services and products; 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
competitors’ product offerings and pricing pressures resulting therefrom; the
Company’s inability to produce products to preserve and increase market share;
technological and marketplace changes affecting the Company’s product line;
risks associated with sales of products to customers outside the United States;
losses of significant customers; dependence on key technical and other
personnel; payment defaults under sales credit arrangements with the Company’s
customers; future performance from acquired businesses and units falling below
projected expectations; the success of future acquisitions and strategic
alliances by the Company; future energy exploration industry conditions and
future prices worldwide for oil and natural gas. 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.

                     INPUT/OUTPUT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001

Net sales $28,539 $58,647 $81,602 $160,924
Cost of sales 24,767 41,123 68,384 106,912
Gross profit 3,772 17,524 13,218 54,012

Operating expenses:
Research and
development 6,750 6,699 22,438 21,895
Marketing and sales 2,625 2,857 7,930 8,444
General and
administrative 5,366 4,491 14,702 14,101
Amortization of
intangibles 370 1,225 1,007 3,546
Impairment of assets 20,992 — 20,992 —
Total operating
expenses 36,103 15,272 67,069 47,986

Earnings (loss) from
operations (32,331) 2,252 (53,851) 6,026

Interest expense (1,247) (55) (1,743) (645)
Interest income 511 1,388 1,755 3,874
Other income 1,824 158 1,481 58
Income (loss) before
income taxes (31,243) 3,743 (52,358) 9,313
Income tax expense
(benefit) 157 (352) 60,997 2,044
Net earnings (loss) (31,400) 4,095 (113,355) 7,269
Preferred dividend (1,987) 1,416 947 4,201
Net earnings (loss)
applicable to
common shares $(29,413) $2,679 $(114,302) $3,068

Basic earnings (loss)
per common share $(0.58) $0.05 $(2.24) $0.06

Weighted average number
of common shares
outstanding 51,090,776 51,319,419 50,985,098 51,179,516

Diluted earnings (loss)
per common share $(0.58) $0.05 $(2.24) $0.06

Weighted average number
of diluted common
shares outstanding 51,090,776 52,413,427 50,985,098 52,444,450

SOURCE Input/Output, Inc.

CONTACT:
C. Robert Bunch, Chief Administrative Officer of Input-Output,
Inc., +1-281-933-3339

URL: http://www.i-o.com