-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D7gKm6WqJ+yNG7DZHtUJ8DfSi4smfpRS6g1mzmgokPzmHBN7VDn0guTaCRbLeF4s qEqcd8et9qO5SPTNHXXr0A== 0000899243-00-001231.txt : 20000511 0000899243-00-001231.hdr.sgml : 20000511 ACCESSION NUMBER: 0000899243-00-001231 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OYO GEOSPACE CORP CENTRAL INDEX KEY: 0001001115 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 760447780 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-36727 FILM NUMBER: 624168 BUSINESS ADDRESS: STREET 1: 7334 N GESSNER RD CITY: HOUSTON STATE: TX ZIP: 77040 BUSINESS PHONE: 7139399700 MAIL ADDRESS: STREET 1: 9777 W GULF BANK ROAD SUITE 5 CITY: HOUSTON STATE: TX ZIP: 77040 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 2000 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2000 [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 001-13601 OYO GEOSPACE CORPORATION (Exact Name of Registrant as Specified in Its Charter) DELAWARE 76-0447780 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 12750 SOUTH KIRKWOOD, SUITE 200 STAFFORD, TEXAS 77477 (Address of Principal Executive Offices) (281) 494-8282 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] There were 5,506,013 shares of the Registrant's Common Stock outstanding as of the close of business on May 9, 2000. ================================================================================ TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Number - ------------------------------ ------ Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION - --------------------------- Item 4. Submission of Matters to a Vote of Security Holders 13 Item 6. Exhibits and Reports on Form 8-K 13 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REPORT OF INDEPENDENT ACCOUNTANTS Board of Directors OYO Geospace Corporation and Subsidiaries We have reviewed the accompanying consolidated balance sheet of OYO Geospace Corporation and Subsidiaries as of March 31, 2000, and the related consolidated statements of operations for the three months and six months ended March 31, 2000 and 1999, and the consolidated statements of cash flows for the six months ended March 31, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the aforementioned financial statements for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of September 30, 1999, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the year then ended (not presented herein) and, in our report dated November 5, 1999, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of September 30, 1999, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ PricewaterhouseCoopers LLP Houston, Texas May 9, 2000 3 OYO GEOSPACE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)
ASSETS MARCH 31, 2000 SEPTEMBER 30, 1999 -------------- ------------------ (unaudited) Current assets: Cash and cash equivalents..................................... $ 3,873 $ 5,280 Trade accounts and current portion of notes receivable, net... 9,598 7,770 Inventories................................................... 21,857 21,941 Deferred income tax........................................... 1,722 1,864 Prepaid expenses and other.................................... 798 1,394 ------- ------- Total current assets....................................... 37,848 38,249 Rental equipment, net........................................... 2,074 1,654 Property, plant and equipment, net.............................. 18,395 17,060 Goodwill and other intangible assets, net....................... 5,427 5,598 Deferred income tax............................................. 746 729 Other assets.................................................... 171 129 ------- ------- Total assets............................................... $64,661 $63,419 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of long-term debt........ $ 191 $ 169 Accounts payable.............................................. 4,084 2,792 Accrued expenses and other.................................... 1,971 2,630 Income tax payable............................................ 126 319 ------- ------- Total current liabilities.................................. 6,372 5,910 Long-term debt.................................................. 4,069 4,182 Deferred income tax............................................. 1,665 1,929 ------- ------- Total liabilities.......................................... 12,106 12,021 ------- ------- Stockholders' equity: Preferred stock............................................... - - Common stock.................................................. 55 55 Additional paid-in capital.................................... 29,980 29,914 Retained earnings............................................. 23,894 23,066 Accumulated other comprehensive loss.......................... (455) (456) Unearned compensation-restricted stock awards................. (919) (1,181) ------- ------- Total stockholders' equity................................. 52,555 51,398 ------- ------- Total liabilities and stockholders' equity................. $64,661 $63,419 ======= ======= The accompanying notes are an integral part of the consolidated financial statements.
4 OYO GEOSPACE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED -------------------------------- -------------------------------- March 31, 2000 March 31, 1999 March 31, 2000 March 31, 1999 -------------- -------------- -------------- -------------- Sales........................................... $ 14,963 $ 12,133 $ 27,758 $ 23,209 Cost of sales................................... 10,575 6,792 18,988 13,544 ---------- ---------- ---------- ---------- Gross profit.................................... 4,388 5,341 8,770 9,665 Operating expenses: Selling, general and administrative........... 2,324 3,001 4,754 5,516 Research and development...................... 1,605 1,569 2,942 3,227 ---------- ---------- ---------- ---------- Total operating expenses................... 3,929 4,570 7,696 8,743 ---------- ---------- ---------- ---------- Income from operations.......................... 459 771 1,074 922 Other income (expense): Interest expense.............................. (77) (110) (154) (161) Interest income............................... 100 69 180 99 Other, net.................................... 30 (81) 56 (34) ---------- ---------- ---------- ---------- Total other income (expense), net.......... 53 (122) 82 (96) ---------- ---------- ---------- ---------- Income before income taxes...................... 512 649 1,156 826 Income tax expense.............................. 103 227 328 289 ---------- ---------- ---------- ---------- Net income...................................... $ 409 $ 422 $ 828 $ 537 ========== ========== ========== ========== Basic earnings per share........................ $ 0.08 $ 0.08 $ 0.15 $ 0.10 ========== ========== ========== ========== Diluted earnings per share...................... $ 0.07 $ 0.08 $ 0.15 $ 0.10 ========== ========== ========== ========== Weighted average shares outstanding - Basic 5,432,058 5,394,859 5,421,330 5,365,572 Weighted average shares outstanding - Diluted 5,511,583 5,458,050 5,482,912 5,428,620 The accompanying notes are an integral part of the consolidated financial statements.
5 OYO GEOSPACE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
SIX MONTHS SIX MONTHS Ended Ended MARCH 31, 2000 MARCH 31, 1999 -------------- -------------- Cash flows from operating expenses: Net income.................................................. $ 828 $ 537 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Deferred income tax....................................... (140) (260) Depreciation and amortization............................. 1,791 2,081 Amortization of restricted stock awards................... 254 277 Bad debt expense.......................................... 78 736 Effects of changes in operating assets and liabilities: Trade accounts and notes receivable....................... (1,906) 3,249 Inventories............................................... 84 (2,748) Prepaid expenses and other assets......................... 769 65 Accounts payable.......................................... 1,290 (2,753) Accrued expenses and other................................ (410) (2,652) Income tax payable........................................ (366) (192) ------- ------- Net cash provided by (used in) operating activities..... 2,272 (1,660) ------- ------- Cash flows from investing activities: Capital expenditures........................................ (3,608) (2,848) Purchase of business, net of cash acquired.................. - (1,259) Proceeds from sale of equipment............................. 20 686 ------- ------- Net cash used in investing activities................... (3,588) (3,421) ------- ------- Cash flows from financing activities: Increase in notes payable................................... - 9,500 Principal payments on notes payable......................... (91) (6,934) ------- ------- Net cash provided by (used in) financing activities..... (91) 2,566 ------- ------- Effect of exchange rate changes on cash...................... - (17) ------- ------- Decrease in cash and cash equivalents........................ (1,407) (2,532) Cash and cash equivalents, beginning of period............... 5,280 3,970 ------- ------- Cash and cash equivalents, end of period..................... $ 3,873 $ 1,438 ======= ======= The accompanying notes are an integral part of the consolidated financial statements.
6 OYO GEOSPACE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated balance sheet of OYO Geospace Corporation and its subsidiaries (the "Company") at September 30, 1999, has been derived from the Company's audited consolidated financial statements at that date. The consolidated balance sheet at March 31, 2000, and the consolidated statements of operations for the three months and six months ended March 31, 2000 and 1999, and the consolidated statements of cash flows for the six months ended March 31, 2000 and 1999, have been prepared by the Company, without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows have been made. The results of operations for the three months and six months ended March 31, 2000, are not necessarily indicative of the operating results for a full year or of future operations. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been omitted. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended September 30, 1999. 2. EARNINGS PER COMMON SHARE The following table summarizes the calculation of net earnings and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings per share:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------- ------------------------------- MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 2000 MARCH 31, 1999 -------------- -------------- -------------- -------------- Net earnings available to common stockholders (in thousands) $ 409 $ 422 $ 828 $ 537 ========== ========== ========== ========== Weighted average common shares outstanding 5,432,058 5,394,859 5,421,330 5,365,572 Weighted average common share equivalents outstanding 79,525 63,191 61,582 63,048 ---------- ---------- ---------- ---------- Weighted average common shares and common share equivalents outstanding 5,511,583 5,458,050 5,482,912 5,428,620 ========== ========== ========== ========== Basic earnings per common share $ 0.08 $ 0.08 $ 0.15 $ 0.10 ========== ========== ========== ========== Diluted earnings per common share $ 0.07 $ 0.08 $ 0.15 $ 0.10 ========== ========== ========== ==========
3. COMPREHENSIVE INCOME Comprehensive income includes all changes in a company's equity, except those resulting from investments by and distributions to owners. The following table summarizes the components of comprehensive income (in thousands): 7 OYO GEOSPACE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------- ------------------------------- March 31, 2000 March 31, 1999 March 31, 2000 March 31, 1999 -------------- -------------- -------------- -------------- Net income $ 409 $ 422 $ 828 $ 537 Foreign currency translation adjustments 120 (24) 1 (56) ------ ------ ------ ------ Total comprehensive income $ 529 $ 398 $ 829 $ 481 ====== ====== ====== ======
4. INVENTORIES Inventories consisted of the following (in thousands): MARCH 31, 2000 SEPTEMBER 30, 1999 -------------- ------------------ Finished goods $ 2,442 $ 3,070 Work in process 5,228 2,639 Raw materials 14,187 16,232 ------- ------- $21,857 $21,941 ======= ======= 5. SEGMENT AND GEOGRAPHIC INFORMATION The Company manages its business and makes decisions with respect to the deployment of resources on a single consolidated product-line basis. The Company has one reportable segment comprised of operations in the United States, Canada and the United Kingdom. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following analysis of the financial condition and results of operations of OYO Geospace Corporation should be read in conjunction with the Consolidated Financial Statements and Notes related thereto included elsewhere in this Form 10-Q. INDUSTRY OVERVIEW We design and manufacture instruments and equipment used in the acquisition and processing of seismic data and the commercial graphics industry. We have been in the seismic instrument and equipment business since 1980, marketing our products primarily to the oil and gas industry worldwide. Geoscientists use seismic data to map potential or existing oil and gas bearing formations and the geologic structures that surround them. Seismic data is used primarily in connection with the exploration, development and production of oil and gas. Seismic data acquisition is conducted on land in several stages. First, an energy source imparts seismic waves into the earth, reflections of which are received and measured by geophones and hydrophones. Electrical signals generated by the geophones and hydrophones are then transmitted through leader wire, geophone and hydrophone string connectors and telemetric cable to data collection units, which store information for processing and analysis. Seismic thermal imaging products are output devices used in the field or office to create a graphic representation of the seismic data after it has been acquired. Marine seismic data acquisition is conducted primarily by large ocean-going vessels that tow long seismic cables known as "streamers". Usually, the energy source in marine seismic data acquisition is an airgun, and the reflected seismic waves are received and measured by hydrophones, which are attached to the streamers. The streamers then transmit the electrical impulses back to the vessel via telemetric cable included within the streamers, and the seismic data is then processed in much the same manner as it is on land. The seismic data acquisition industry suffered a substantial downturn in fiscal 1999, which adversely impacted our operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Demand for Our Products is Volatile; Industry Conditions Currently are Uncertain". RESULTS OF OPERATIONS The following table sets forth for the three and six months ended March 31, 2000 and 1999, the percentage of certain statement of operations items to total sales:
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31, ---------------------------- -------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 70.7% 56.0% 68.4% 58.4% Gross profit 29.3% 44.0% 31.6% 41.6% Selling, general and administrative 15.5% 24.7% 17.1% 23.7% Research and development 10.7% 12.9% 10.6% 13.9% Income from operations 3.1% 6.4% 3.9% 4.0% Other income (expense), net 0.3% (1.0)% 0.3% (0.4)% Income before provision for income taxes 3.4% 5.4% 4.2% 3.6% Provision for income taxes 0.7% 1.9% 1.2% 1.3% Net income 2.7% 3.5% 3.0% 2.3%
9 Fiscal Year 2000 Compared to Fiscal Year 1999. Sales for the three months and six months ended March 31, 2000 increased $2.8 million, or 23.3%, and $4.5 million, or 19.6%, respectively, from the corresponding periods of the prior fiscal year. The increase in sales was primarily due to an increase in demand for our land-based seismic products for the Canadian and Middle Eastern marketplaces as well as increased sales of our thermal imaging products targeted at the commercial graphics industry. These sales increases were partially offset by a decrease in sales of our marine-based seismic products. Cost of sales for the three months and six months ended March 31, 2000 increased $3.8 million, or 55.7%, and $5.4 million, or 40.2%, respectively, from the corresponding periods of the prior fiscal year. Cost of sales increased as a percentage of total sales to 70.7% and 68.4% in the three months and six months ended March 31, 2000, respectively, from 56.0% and 58.4% in the corresponding periods of the prior fiscal year. This percentage increase was generally attributable to the sales mix in the current periods containing a greater percentage of our land-based seismic products, which generally have lower gross profit margins than our marine-based seismic and thermal imaging products. In addition, we have experienced competitive pricing pressures on our land-based seismic products as a result of recent industry conditions. We expect these competitive pressures to continue throughout the remainder of this fiscal year. Selling, general and administrative expenses for the three months and six months ended March 31, 2000 decreased $0.7 million, or 22.6%, and $0.8 million, or 13.8%, respectively, from the corresponding period of the prior fiscal year. Selling, general and administrative expenses decreased as a percentage of total sales to 15.5% and 17.1% in the three months and six months ended March 31, 2000, respectively, from 24.7% and 23.7% in the corresponding periods of the prior fiscal year, primarily reflecting the impact of lower bad debt expense and our efforts to reduce costs in response to recent industry conditions. Research and development expenses for the three months ended March 31, 2000 increased $36,000, or 2.3%, and for the six months ended March 31, 2000 decreased $0.3 million, or 8.8%, from the corresponding periods of the prior fiscal year. Research and development expenses decreased as a percentage of total sales to 10.7% and 10.6% in the three months and six months ended March 31, 2000, respectively, from 12.9% and 13.9% in the corresponding periods of the prior fiscal year, reflecting higher sales volume. Our effective tax rate for the three months ended March 31, 2000 was 20.1% compared to 35.0% for the three months ended March 31, 1999. The effective tax rate for the six months ended March 31, 2000 was 28.4% compared to 35.0% for the corresponding period of the prior fiscal year. The tax rate of the current periods include the recognition of a $0.1 million tax benefit relating to the prior fiscal year. Excluding the prior year tax benefit, the company's effective rate would be 35.0% for the current periods. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2000, we had $3.9 million in cash and cash equivalents. For the six months ended March 31, 2000, we generated $2.3 million of cash from operating activities, principally resulting from our net income adjusted for noncash expenses and an increase in trade accounts payable. Such cash flow was partially offset by an increase in trade accounts and notes receivable. For the six months ended March 31, 2000, we used approximately $3.6 million of cash in investing activities, principally consisting of capital expenditures. We estimate that total capital expenditures in fiscal 2000 will be approximately $6.0 million. For the six months ended March 31, 2000, we used $0.1 million of cash in financing activities resulting from principal payments on long-term mortgage notes payable. We have a working capital line of credit, under which we are able to borrow up to $10.0 million secured by our accounts receivable and inventory. The credit facility expires in October 2001. Our credit facility prohibits us from paying cash dividends on our common stock, limits our capital expenditures, limits our additional indebtedness to 10 $7.5 million, requires us to maintain certain financial ratios and contains other customary covenants. There were no outstanding lines of credit at March 31, 2000 and borrowing availability was $10.0 million. We believe that the combination of cash flow from operations and borrowing availability under our credit facility should provide us with sufficient capital resources and liquidity to fund our planned operations through fiscal 2000. However, there can be no assurance that these sources of capital will be sufficient to support our capital requirements in the long-term, and we may be required to issue additional debt or equity securities in the future to meet our capital requirements. FORWARD LOOKING STATEMENTS This Form 10-Q includes "forward-looking" statements which are subject to the "safe harbor" provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included herein, including statements about potential future products and markets, our future financial position, business strategy and other plans and objectives for future operations, are forward- looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct, and actual results may differ materially from such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations are disclosed below and in our Annual Report on Form 10-K for the year ended September 30, 1999 under the headings "Forward-Looking Statements" and "Risk Factors". Further, all written and verbal forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors. DEMAND FOR OUR PRODUCTS IS VOLATILE; INDUSTRY CONDITIONS CURRENTLY ARE UNCERTAIN Fiscal 1999 was a particularly challenging year for the seismic industry as low oil and gas prices delayed land exploration activities and caused seismic contractors to consolidate crews and stack equipment. We believe improvements in oil and gas prices should result in an increase in geophysical activity in the second half of fiscal 2000, but we expect that the industry will continue to be cautious until it becomes apparent that oil and gas prices have stabilized at levels adequate to sustain profitability. Demand for our products used in the acquisition and processing of seismic data is dependent primarily upon the level of worldwide oil and gas exploration activity. That activity, in turn, is dependent primarily upon the stability of prevailing oil and gas prices. After a volatile and generally depressed price environment in 1998, oil prices opened fiscal 1999 at moderate levels and dropped sharply in October and November to remain between $10 and $12 per barrel throughout the winter. This rapid decline in oil prices forced most major oil companies to significantly reduce their exploration budgets in 1999 which, in turn, caused most seismic contractors (our primary customers) to significantly reduce the number of operational crews performing seismic related activities. This crew reduction resulted in large amounts of under utilized or idle seismic equipment in the marketplace. Beginning in March 1999, oil prices rose steadily, in part as a result of production quotas imposed by OPEC nations, and have returned to more moderate levels. However, these commodity price increases have not yet resulted in a significant recovery of demand for our products in the seismic marketplace. Until the number of operational seismic crews increases significantly and until idle seismic equipment is again utilized, we believe our seismic equipment sales may remain at depressed levels. Further, if oil and gas prices return to lower levels, our sales may further decline. The recent industry environment has resulted in, and may continue to result in, competitive pricing pressures on our land-based seismic products. We intend to respond competitively to these market forces in order to maintain, or improve, our market share. In addition, the recent industry environment has resulted in, and may continue to result in, a greater percentage of our sales being attributable to certain consumable land-based seismic products that historically have provided lower gross profit margins. Further, if overall sales decrease, our manufacturing costs per unit increase as fixed costs are allocated over fewer units. The combination of these factors may result in lower gross profit margins in future periods. 11 OUR CUSTOMER FINANCING RESULTS IN CREDIT RISKS TO US We have found it necessary from time to time to extend long term trade credit to our customers through accounts and notes receivable. As a result, we are subject to the credit risks of nonpayment or late payment. Given current industry conditions, some of our customers may experience liquidity difficulties, which increases those credit risks. We cannot assure you that sufficient aggregate amounts of uncollectible receivables and bad debt charges will not have a material adverse effect on our future results of operations. At March 31, 2000, our bad debt allowance was $0.5 million. We systematically adjust this allowance each month to reflect the estimated credit risk associated with our trade accounts and notes receivable. We base this adjustment on the level of past due accounts and notes receivable, customer creditworthiness, past payment history, access to underlying collateral and other factors. Although we believe this allowance is a fair representation of the credit risk with respect to our outstanding receivables, we can not assure you that this allowance will be adequate to cover every potential bad debt exposure. 12 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On January 28, 2000, we held our Annual Meeting of Stockholders (the "Meeting"). At the Meeting, our stockholders approved the election of Katsuhiko Kobayashi, Michael J. Sheen and Charles H. Still as directors, each holding office until the 2003 Annual Meeting of Shareholders or until his successor is duly elected and qualified. The directors were elected with the following votes: For Withheld --- -------- Katsuhiko Kobayashi 5,195,915 6,700 Michael J. Sheen 5,196,115 6,500 Charles H. Still 5,196,415 6,200 The total voted shares represented by proxy was 5,202,615. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following exhibits are filed with this Quarterly Report. 10.1 Second Amendment to Business Loan Agreement, dated January 28, 2000, made by and between the Company and Bank of America. 15.1 Awareness Letter of Independent Accountants 27.1 Financial Data Schedule (b) The Company did not file any reports on Form 8-K during the quarter for which this report is filed. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OYO GEOSPACE CORPORATION Date: May 9, 2000 By: /s/ Gary D. Owens ------------------------------------ Gary D. Owens, Chairman of the Board President and Chief Executive Officer (duly authorized officer) Date: May 9, 2000 By: /s/ Thomas T. McEntire ------------------------------------ Thomas T. McEntire Chief Financial Officer (principal financial officer) 14 EX-10.1 2 SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT EXHIBIT 10.1 [BANK OF AMERICA LOGO] AMENDMENT TO DOCUMENTS ================================================================================ SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT This Second Amendment to Business Loan Agreement is entered into as of January 28, 2000, among Bank of America, N.A. ("Bank") and OYO Geospace Corporation ("Borrower"). RECITALS -------- A. WHEREAS, Bank and Borrower have entered into that certain Business Loan Agreement dated June 26, 1998, and amended on March 18, 1999 (collectively the "Agreement"); and B. WHEREAS, Borrower and Bank desire to amend certain terms and provisions of said Agreement as more specifically hereinafter set forth. AGREED ------ NOW, THEREFORE, in consideration of the foregoing recitals and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower mutually agree to amend said agreement as follows: 1. In Paragraph 1.2 (AVAILABILITY) of the Agreement the Date "October 1, 2001" is substituted for the date "June 30, 2000". 2. Section 1.6 (OFFSHORE RATE) is amended by substituting the following table for the table that follows the first paragraph of that section, effective for interest rate elections made on or after July 1, 2000; FUNDED DEBT TO EBITDA PERCENTAGE AMOUNT Less than or equal to 1.00:1.00 1.25% Greater than 1.00:1.00 but less than 1.50:100 1.875% Greater than 1.50:100 2.50% 3. Section 5.5 (GUARANTIES) of the Business Loan Agreement is hereby amended by deleting Houston Geophysical Products, Inc. and substituting with Geospace Engineering Resources, Inc. This Amendment will become effective as of the date first written above, provided that each of the following conditions precedent have been satisfied in a manner satisfactory to Bank: The Bank has received from the Borrower a duly executed original of this Amendment, together with a duly executed Guarantor Acknowledgment and Consent in the form attached hereto (the "Consent"). Except as provided in this Amendment, all of the terms and provisions of the Agreement and the documents executed in connection therewith shall remain in full force and effect. All references in such other documents to the Agreement shall hereafter be deemed to be references to the Agreement as amended hereby. THIS WRITTEN AMENDMENT AND THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of the date first written above. BANK OF AMERICA, N.A. By: /s/ George M. Smith - ------------------------------------------- George M. Smith, Senior Vice President OYO GEOSPACE CORPORATION By: /s/ Thomas T. McEntire - ------------------------------------------- Thomas T. McEntire, Chief Financial Officer EX-15.1 3 AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS EXHIBIT 15.1 AWARENESS LETTERS OF INDEPENDENT ACCOUNTANTS -------------------------------------------- Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: OYO Geospace Corporation Registration on Form S-8 We are aware that our report dated April 20, 2000, on our review of interim financial information of OYO Geospace Corporation as of March 31, 2000 and for the three months and six months ended March 31, 2000 and 1999, and included in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000, is incorporated by reference in the Company's registration statements on Form S-8 (333-40893 and 333-80003). Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ PricewaterhouseCoopers LLP Houston, Texas May 9, 2000 EX-27.1 4 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS SEP-30-2000 MAR-31-2000 3,873 0 10,114 516 21,857 37,848 32,348 11,879 64,661 6,372 4,069 0 0 55 52,500 64,661 27,758 27,758 18,988 7,696 0 78 154 1,156 (328) 828 0 0 0 828 0.15 0.15
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