HOUSTON, March 17 /PRNewswire/ — Input/Output, Inc. (NYSE: IO) announced
today its results for the third quarter ended February 29, 2000. For the
quarter, I/O reported revenue of $33.4 million and a net loss applicable to
common stockholders of $(9.6) million, or $(0.19) per common share, compared
to revenue of $37.8 million and a net loss applicable to common stockholders
of $(61.2) million, or $(1.21) per common share, for the three months ended
February 28, 1999.
Revenues for the nine months ended February 29, 2000 were $87.8 million,
compared to $178.7 million for the same period last year. The net loss
applicable to common stockholders for the nine months ended February 29, 2000
was $(26.4) million, or $(0.52) per share, compared to a net loss of
$(55.2) million, or $(1.15) per share, for the same period last year.
“This quarter’s revenue increase over second quarter revenue of
$24.4 million can be attributed to a $10.6 million marine order for an MSX
recording system, exportable streamer sections, and positioning systems,” said
Tim Probert, the Company’s President and Chief Executive Officer. “Although
market indicators are signaling the beginning of a broader industry recovery,
we do not believe demand for new seismic instrumentation will increase in the
short term. However, we are seeing seismic activity levels increase in
certain international land markets, such as the Middle East and China, and we
continue to explore opportunities to sell equipment into those markets. We
believe demand for marine seismic instrumentation will lag the land recovery
as marine seismic contractors work to improve the utilization of their
vessels, and associated acquisition equipment.”
Land and marine division revenues during the third quarter of fiscal 2000
were $15.0 million and $18.4 million, respectively, compared to land division
revenue of $17.4 million and marine division revenue of $20.4 million for the
prior year third quarter.
Third Quarter Charges and Recoveries
Included in the third quarter charges and recoveries are the following:
(1) $8.7 million of inventory charges primarily related to the Company’s
recent decision to commercialize VectorSeis(TM) digital sensor products having higher technical standards than the products it had previously developed which had been capitalized. The Company had previously decided to commercialize these earlier VectorSeis(TM) products which have since proven, for reasons discussed below, to be not commercially feasible given current and expected market conditions. The inventory charge is included in cost of goods sold.
(2) $2.4 million charged to general and administrative expenses as a bad
debt expense relating to one of the Company’s marine customers.
(3) $1.3 million of charges related to a 45-employee reduction in the
Company's workforce worldwide. The charges are included in general and administrative expenses.
(4) $0.7 million of charges related to legal settlements. The charges are
included in cost of goods sold ($0.3 million) and general and administrative expenses ($0.4 million).
The aforementioned charges were offset by $12.8 million of recoveries
attributable to a customer’s bankruptcy settlement, consisting of a
$10.2 million reduction in the Company’s allowance for loan loss (recorded as
a reduction to general and administrative expenses), and a related
$2.6 million reversal of warranty reserves based on a bankruptcy settlement
(recorded as a reduction to cost of goods sold).
“Based on data gathered from previous VectorSeis(TM) digital sensor
surveys and the anticipated longer-term market recovery for new seismic
instrumentation, the Company has determined that market acceptance of
VectorSeis(TM) products may be enhanced by commercializing products having
higher technical standards,” Probert said. “However, the modules built during
the past year will be used in field tests, and are currently deployed in
Canada on another survey.”
Company Announces Stock Repurchase Plan
Separately, I/O announced that its board of directors has authorized the
repurchase of up to 200,000 shares of its common stock. The Company plans to
purchase its common shares in the open market and in privately negotiated
transactions, with repurchases to be made from time to time as determined by
the officers of the Company, subject to prevailing market conditions.
The shares repurchased will be held by the Company as treasury stock to be
awarded under its new restricted stock plan and under its other employee
equity benefit plans. Certain employees of the Company may purchase up to a
specified number of shares of common stock in the open market during a
three-week period beginning March 22, 2000. After this three-week period, the
Company plans to initiate repurchases of its common stock. Under the
restricted stock plan, the company plans to “match” the number of shares
acquired by the employees by granting to them the same number of shares of
restricted stock. It is contemplated that these grants under the restricted
stock plan would vest in equal amounts over a three-year period beginning in
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 market demand for seismic instrumentation,
the effects of industry market changes, the timing and success of the
Company’s product development efforts, the timing and commercial success of
the Company’s introduction of its VectorSeis(TM) digital sensor, the timing
and effects of its stock repurchase program, and the Company’s ability to fund
its research and development expenditures and operating expenses during the
industry downturn. 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, risks associated with competition and
competitive pricing pressures, defaults in financed purchase obligations and
changes in contract terms, 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, 1999 and the company’s Quarterly Report
on Form 10Q filed thereafter.
INPUT/OUTPUT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (unaudited)
Three months ended Nine months ended February 29, February 28, February 29, February 28, 2000 1999 2000 1999 Net sales $33,424 $37,755 $87,841 $178,668 Cost of sales (A) 33,813 83,420 76,972 173,666 Gross profit (loss) (389) (45,665) 10,869 5,002 Operating expenses: Research and development 7,489 12,624 21,560 32,152 Marketing and sales 2,752 3,284 7,631 11,324 General and administrative (B) (2,858) 30,024 8,339 44,650 Amortization of intangibles 2,042 3,771 5,883 7,857 Total operating expenses 9,425 49,703 43,413 95,983 Loss from operations (9,814) (95,368) (32,544) (90,981) Interest expense (197) (229) (611) (688) Other income 1,761 1,824 4,016 6,789 Loss before income taxes (8,250) (93,773) (29,139) (84,880) Income tax (benefit) expense (C) 168 (32,553) (6,098) (29,708) Net loss (8,418) (61,220) (23,041) (55,172) Preferred stock dividend 1,156 --- 3,380 --- Net loss applicable to common stockholders $(9,574) $(61,220) $(26,421) $(55,172) Basic and Diluted loss per common share $(0.19) $(1.21) $(0.52) $(1.15) Weighted average number of basic and diluted common shares outstanding 50,779,580 50,499,898 50,714,648 47,848,166
(A) Includes third quarter 2000 net charges of $6.4 million and fiscal
2000 year-to-date net charges of $7.8 million.
(B) Includes third quarter 2000 net recovery of $6.1 million and fiscal
2000 year-to-date net recovery of $2.7 million.
(C) Due to the revised forecast of the net loss for year ending
May 31, 2000, the Company has recorded its taxes for the nine months ending February 29, 2000 at an effective tax rate of 20.9%.
SOURCE Input/Output, Inc.
CONTACT: Greg Rosenstein, Manager of Investor Relations, 281-879-2036,
or C. Robert Bunch, Chief Administrative Officer, 281-933-3339, both of