10-Q

UNITED STATES

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, 2015 OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission file number 001-13601

GEOSPACE TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Texas	76-0447780
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

7007 Pinemont Drive

Houston, Texas  77040-6601

(Address of Principal Executive Offices) (Zip Code)

(713) 986-4444

(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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o   No  x

There were 13,147,916 shares of the Registrant’s Common Stock outstanding as of the close of business on April 30, 2015.

Table of Contents

	Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures about Market Risk	22
Item 4. Controls and Procedures	23
PART II. OTHER INFORMATION
Item 6. Exhibits	24

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

	March 31, 2015			September 30, 2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	23,513		$	33,357
Short-term investments		19,958			19,861
Trade accounts receivable, net		16,783			24,602
Current portion of notes receivable		4,404			3,786
Income tax receivable		8,857			2,570
Inventories, net		138,365			145,890
Deferred income tax assets		7,319			7,244
Prepaid expenses and other current assets		1,872			6,698
Total current assets		221,072			244,008
Rental equipment, net		45,262			53,873
Property, plant and equipment, net		50,989			49,205
Goodwill		1,843			1,843
Non-current deferred income tax assets		626			75
Non-current notes receivable		1,524			28
Prepaid income taxes		4,947			5,848
Other assets		106			106
Total assets	$	326,369		$	354,986
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable trade	$	2,865		$	4,964
Accrued expenses and other current liabilities		6,762			14,590
Deferred revenue		529			3,752
Deferred income tax liabilities		23			23
Income taxes payable		230			22
Total current liabilities		10,409			23,351
Non-current deferred income tax liabilities		664			2,377
Total liabilities		11,073			25,728
Commitments and contingencies
Stockholders’ equity:
Preferred stock		—			—
Common stock		131			131
Additional paid-in capital		71,966			70,704
Retained earnings		250,292			260,919
Accumulated other comprehensive loss		(7,093	)		(2,496	)
Total stockholders’ equity		315,296			329,258
Total liabilities and stockholders’ equity	$	326,369		$	354,986

The accompanying notes are an integral part of the consolidated financial statements.

3

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

	Three Months Ended						Six Months Ended
	March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
Revenues:
Products	$	24,833		$	58,909		$	43,296		$	156,729
Rental equipment		3,109			9,642			5,812			13,170
Total revenues		27,942			68,551			49,108			169,899
Cost of revenues:
Products		21,402			35,474			40,015			86,712
Rental equipment		5,124			5,174			7,698			8,192
Total cost of revenues		26,526			40,648			47,713			94,904
Gross profit		1,416			27,903			1,395			74,995
Operating expenses:
Selling, general and administrative		5,953			6,554			11,822			13,256
Research and development		3,691			5,097			6,992			9,472
Bad debt expense		321			296			1,018			644
Total operating expenses		9,965			11,947			19,832			23,372
Income (loss) from operations		(8,549	)		15,956			(18,437	)		51,623
Other income (expense):
Interest expense		(107	)		(103	)		(219	)		(235	)
Interest income		115			25			174			56
Foreign exchange gains, net		599			101			2,188			80
Other, net		(23	)		(12	)		(113	)		(38	)
Total other income (expense), net		584			11			2,030			(137	)
Income (loss) before income taxes		(7,965	)		15,967			(16,407	)		51,486
Income tax expense (benefit)		(2,783	)		5,151			(5,780	)		16,494
Net income (loss)	$	(5,182	)	$	10,816		$	(10,627	)	$	34,992
Basic earnings (loss) per share	$	(0.40	)	$	0.83		$	(0.82	)	$	2.68
Diluted earnings (loss) per share	$	(0.40	)	$	0.82		$	(0.82	)	$	2.66
Weighted average shares outstanding – Basic		13,002,616			12,950,416			12,990,129			12,948,788
Weighted average shares outstanding – Diluted		13,002,616			13,002,383			12,990,129			13,001,075

The accompanying notes are an integral part of the consolidated financial statements.

4

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended						Six Months Ended
	March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
Net income (loss)	$	(5,182	)	$	10,816		$	(10,627	)	$	34,992
Other comprehensive income (loss):
Change in unrealized gains on available-for-sale securities (net of tax)		23			—			21			—
Foreign currency translations adjustments		(1,966	)		(942	)		(4,618	)		(1,039	)
Other comprehensive income (loss)		(1,943	)		(942	)		(4,597	)		(1,039	)
Total comprehensive income (loss)	$	(7,125	)	$	9,874		$	(15,224	)	$	33,953

The accompanying notes are an integral part of the consolidated financial statements.

5

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months			Six Months
	Ended			Ended
	March 31, 2015			March 31, 2014
Cash flows from operating activities:
Net income (loss)	$	(10,627	)	$	34,992
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred income tax benefit		(2,338	)		(676	)
Depreciation		10,096			8,662
Accretion of discounts on short-term-investments		114			—
Stock-based compensation		2,327			1,935
Bad debt expense		1,018			644
Inventory obsolescence expense		1,662			1,717
Gross profit from the sale of used rental equipment		(1,349	)		(5,466	)
Gain on disposal of property, plant and equipment		(2	)		(58	)
Excess tax expense from stock-based compensation		(1,065	)		—
Effects of changes in operating assets and liabilities:
Trade accounts and notes receivable		3,559			337
Income tax receivable		(6,287	)		—
Inventories		3,303			(3,987	)
Costs and estimated earnings in excess of billings		—			12,400
Prepaid expenses and other current assets		4,645			306
Prepaid income taxes		900			(950	)
Accounts payable		(2,064	)		(2,496	)
Accrued expenses and other		(11,503	)		(1,346	)
Deferred revenue		(3,197	)		5,672
Income taxes payable		255			4,117
Net cash provided by (used in) operating activities		(10,553	)		55,803
Cash flows from investing activities:
Purchase of property, plant and equipment		(1,418	)		(4,379	)
Investment in rental equipment		(1,799	)		(18,309	)
Proceeds from sale of used rental equipment		3,570			8,551
Purchases of short-term investments		(1,875	)		—
Proceeds from the sale of short-term investments		1,715			—
Net cash provided by (used in) investing activities		193			(14,137	)
Cash flows from financing activities:
Principal payments on debt arrangements		—			(931	)
Excess tax benefit from stock-based compensation		—			661
Proceeds from exercise of stock options		—			212
Net cash used in financing activities		—			(58	)
Effect of exchange rate changes on cash		516			6
Increase (decrease) in cash and cash equivalents		(9,844	)		41,614
Cash and cash equivalents, beginning of period		33,357			2,726
Cash and cash equivalents, end of period	$	23,513		$	44,340

The accompanying notes are an integral part of the consolidated financial statements.

6

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2014 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at March 31, 2015 and the consolidated statements of operations and statements of comprehensive income (loss) for the three and six months ended March 31, 2015 and 2014, and the consolidated statements of cash flows for the six months ended March 31, 2015 and 2014 were 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 were made. The results of operations for the three and six months ended March 31, 2015 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 accounting principles generally accepted in the United States of America were omitted pursuant to the rules of the Securities and Exchange Commission. 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 Company’s fiscal year ended September 30, 2014.

Reclassifications

Certain amounts previously presented in the consolidated financial statements have been reclassified to conform to the current year presentation. During the six months ended March 31, 2015, the Company reclassified $4.2 million in deposits made for equipment purchases in the prior fiscal year from prepaid and other current assets to property, plant and equipment on its consolidated balance sheet. Such reclassification had no effect on net income (loss), stockholders’ equity or cash flows.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to bad debt reserves, inventory obsolescence reserves, percentage-of-completion revenue recognition, self-insurance reserves, product warranty reserves, long-lived assets, intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents.

Short-term Investments

The Company classifies its short-term investments consisting of corporate bonds, government bonds and other such similar investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding gains and losses reported each period as a component of accumulated other comprehensive income (loss) in stockholders’ equity. See note 2 for additional information.

Inventories

The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories.

7

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Impairment Review of Goodwill and Long-lived Assets

At March 31, 2015, the Company had $1.8 million of goodwill reflected in its consolidated balance sheet. In accordance with FASB ASC 350, “Intangibles – Goodwill and Other,” we perform goodwill impairment testing at least annually, unless indicators of impairment exist in interim periods. In recent months, business conditions in the oil and gas industry have significantly deteriorated and the market value of the Company’s stock has declined. In light of the foregoing, we concluded that it was appropriate for us to perform an interim goodwill impairment test as of December 31, 2014 and March 31, 2015. The impairment test for goodwill uses a two-step approach. Step one compares the estimated fair value of a reporting unit with goodwill to its carrying value. If the carrying value exceeds the estimated fair value, step two must be performed. Step two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit (including any unrecognized intangibles) as if the reporting unit was acquired in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of its goodwill, an impairment loss is recognized in an amount equal to the excess. Based on the results of our step one test as of December 31, 2014 and March 31, 2015, management concluded that goodwill was not impaired; however, given overall market conditions, management will continue to monitor this situation. In connection with our goodwill impairment test, management also reviewed the recoverability of the carrying value of the Company’s rental equipment and property, plant and equipment based on future undiscounted cash flows and determined that no such impairment of these assets was necessary at December 31, 2014 and March 31, 2015.

Revenue Recognition – Products and Services

The Company primarily derives revenue from the sale of its manufactured products, including revenues derived from the sale of its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its manufactured products. Except for revenues recognized using the percentage-of-completion method discussed below, the Company recognizes revenue from product sales, including the sale of used rental equipment, when (i) title passes to the customer, (ii) the customer assumes the risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales price is reasonably assured, and (v) product delivery occurs as directed by the customer. Except for certain of the Company’s reservoir characterization products, the Company’s products are generally sold without any customer acceptance provisions and the Company’s standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenues as earned over the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or longer. Revenues from engineering services are recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenues are recognized when services are rendered and are generally priced on a per day rate.

Revenue Recognition – Percentage of Completion

The Company utilizes the percentage-of-completion method (the “POC Method”) to recognize revenues and costs on contracts having the following characteristics:

· the order/contract requires significant custom designs for customer specific applications;

· the product design requires significant engineering efforts;

· the order/contract requires the customer to make progress payments during the contract term; and

· the order/contract requires at least 90 days of engineering and manufacturing effort.

The POC Method requires the Company’s senior management to make estimates, at least quarterly, of the (i) total expected costs of the contract, (ii) manufacturing progress against the contract and (iii) the estimated cost to complete the contract. These estimates impact the amount of revenue and gross profit the Company recognizes for each reporting period. Significant estimates that may affect the future cost to complete a contract include the cost and availability of raw materials and component parts, engineering services, manufacturing equipment, labor, manufacturing capacity, factory productivity, contract penalties and disputes, product warranties and other contingent factors. Change orders are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized. The Company defers recognition of the entire amount of revenue or portion thereof associated with unapproved change orders if there is substantial uncertainty as to amounts involved or ultimate realization. The cumulative impact of periodic revisions to the future cost to complete a contract will be reflected in the period in which these changes become known, including, to the extent required, the recognition of losses at the time such losses are known and estimable. Due to the various estimates inherent in the POC Method, actual final results at the conclusion of a contract could differ from management’s previous estimates.

8

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company analyzes a variety of indicators to determine manufacturing progress, including actual costs incurred to date compared to total estimated costs and actual quantities produced to date compared to total contract quantities.

Cost of sales includes direct contract costs, such as materials and labor, and indirect costs that are attributable to a contract’s production activity. The timing of when the Company invoices its customer is dependent upon the completion of certain production milestones as defined in the contract. Cumulative contract costs and estimated earnings to date in excess of cumulative billings are reported as a current asset on the consolidated balance sheet as “costs and estimated earnings in excess of billings.” Cumulative billings in excess of cumulative costs and estimated earnings are reported as a current liability on the consolidated balance sheet as “billings in excess of costs and estimated earnings.” Any uncollected billed revenue, including contract retentions, is included in “trade accounts receivable, net.”

The Company currently has no contracts accounted for under the POC Method.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs.

Product Warranties

Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance sheets. Changes in the warranty reserve are reflected in the following table (in thousands):

Balance at October 1, 2014	$	951
Accruals for warranties issued during the period		395
Settlements made (in cash or in kind) during the period		(702	)
Balance at March 31, 2015	$	644

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15 which provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and to provide related footnote disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customer (Topic 606).” The amendment applies a new five-step revenue recognition model to be used in recognizing revenues associated with customer contracts. The amendment requires disclosure sufficient to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill the contract. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

9

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

2. Short-term Investments

	As of March 31, 2015 (in thousands)
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Short-term investments:
Corporate	$	15,122	$	—	$	(5	)	$	15,117
Government		4,843		—		(2	)		4,841
Total	$	19,965	$	—	$	(7	)	$	19,958

	As of September 30, 2014 (in thousands)
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Short-term investments:
Corporate	$	14,262	$	—	$	(27	)	$	14,235
Government		5,638		—		(12	)		5,626
Total	$	19,900	$	—	$	(39	)	$	19,861

Accumulated other comprehensive loss on the consolidated balance sheets at March 31, 2015 and September 30, 2014 included unrealized losses (net of tax) of $5,000 and $26,000, respectively.

3. Derivative Financial Instruments

At March 31, 2015 and September 30, 2014, the Company’s Canadian subsidiary had $28.6 million and $29.8 million, respectively, of Canadian dollar denominated intercompany accounts payable owed to one of the Company’s U.S. subsidiaries.  In order to mitigate its exposure to movements in foreign currency rates between the U.S. dollar and Canadian dollar, the Company routinely enters into foreign currency forward contracts to hedge a portion of its exposure to changes in the value of the Canadian dollar.  At March 31, 2015, the Company was a party to a $28.0 million Canadian dollar forward contract.  This contract reduces the impact on cash flows from movements in the Canadian dollar/U.S. dollar currency exchange rate, but has not been designated as a hedge for accounting purposes.

At March 31, 2015, the Company had an accrued unrealized foreign exchange gain of $0.3 million under this contract.

The following table summarizes the gross fair value of all derivative instruments, which are not designated as hedging instruments and their location in the consolidated balance sheets (in thousands):

Derivative Instrument	Location	March 31, 2015		September 30, 2014
Foreign Currency Exchange Contracts	Prepaid Expenses and Other Current Assets	$	294	$	795

The following table summarizes the impact of the Company’s derivatives on the consolidated statements of operations for the three and six month periods ended March 31, 2015 and 2014 (in thousands):

		Three Months Ended					Six Months Ended
		March 31					March 31
Derivative Instrument	Location of Gain (Loss)	2015		2014			2015		2014
Foreign Currency Exchange Contracts	Other Income (Expense)	$	2,023	$	(58	)	$	2,948	$	155

Amounts in the above table include realized and unrealized derivative gains and losses.

10

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

4. Fair Value of Financial Instruments

At March 31, 2015, the Company’s financial instruments included cash and cash equivalents, short-term investments, foreign currency forward contract, trade and notes receivables and accounts payable.  Due to the short-term maturities of cash and cash equivalents, trade and other receivables and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates.

The Company measures its short-term investments and derivative instruments at fair value on a recurring basis.  The fair value measurement of the Company’s short-term investments and derivative instruments was determined using the following inputs (in thousands):

	As of March 31, 2015
			Quoted Prices in		Significant
			Active Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
	Total		(Level 1)		(Level 2)		(Level 3)
Short-term investments:
Corporate bonds	$	15,117	$	15,117	$	—	$	—
Government bonds		4,841		4,841		—		—
Foreign currency forward contract		294		—		294		—
Total	$	20,252	$	19,958	$	294	$	—

	As of September 30, 2014
			Quoted Prices in		Significant
			Active Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
	Total		(Level 1)		(Level 2)		(Level 3)
Short-term investments:
Corporate bonds	$	14,235	$	14,235	$	—	$	—
Government bonds		5,626		5,626		—		—
Foreign currency forward contract		795		—		795		—
Total	$	20,656	$	19,861	$	795	$	—

The Company applies fair value techniques on a non-recurring basis in evaluating potential impairment losses related to goodwill and long-lived assets.

5. Accounts and Notes Receivable

Current trade accounts are reflected in the following table (in thousands):

	March 31, 2015			September 30, 2014
Trade accounts receivable	$	18,637		$	25,727
Allowance for doubtful accounts		(1,854	)		(1,125	)
	$	16,783		$	24,602

The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses.  The Company determines the allowance based upon historical experience and a review of its balances.  Accounts receivable balances are charged off against the allowance whenever it is probable that the receivable will not be recoverable.  The Company does not have any off-balance-sheet credit exposure related to its customers.

11

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Notes receivable, net are reflected in the following table (in thousands):

	March 31, 2015		September 30, 2014
Notes receivable	$	5,928	$	3,814
Allowance for doubtful notes		—		—
		5,928		3,814
Less current portion		4,404		3,786
Non-current notes receivable	$	1,524	$	28

During the three months ended March 31, 2015, notes receivable were reduced $0.7 million in connection with the return of rental equipment from a customer in a non-cash transaction.

6. Inventories

Inventories consist of the following (in thousands):

	March 31, 2015			September 30, 2014
Finished goods	$	49,203		$	42,473
Work-in-process		20,856			28,582
Raw materials		77,150			82,599
Obsolescence reserve		(8,844	)		(7,764	)
	$	138,365		$	145,890

During the six months ended March 31, 2015 and 2014, the Company made non-cash inventory transfers of $0.1 million and $6.9 million, respectively, to its rental equipment fleet. Raw materials include semi-finished goods and component parts totaling $41.9 million and $43.6 million at March 31, 2015 and September 30, 2014, respectively.

7. Long-Term Debt

The Company had no long-term debt outstanding at March 31, 2015 and September 30, 2014.

On March 2, 2011, the Company entered into a credit agreement with Frost Bank.  On September 27, 2013, the Company amended the credit agreement and increased its borrowing availability to $50.0 million (as amended, the “Credit Agreement”).  The Company’s borrowings under the Credit Agreement were principally secured by its accounts receivable, inventories and equipment.  In addition, certain domestic subsidiaries of the Company guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries secured the obligations by the pledge of certain of the assets of such subsidiaries.  The Company was required to make quarterly interest payments on borrowed funds.  The Credit Agreement limited the incurrence of additional indebtedness, required the maintenance of certain financial ratios, restricted the Company and its subsidiaries’ ability to pay cash dividends and contained other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement was a LIBOR based rate with a margin spread of 250 to 325 basis points depending upon the maintenance of certain ratios.  At March 31, 2015, the Company was in compliance with all covenants under the Credit Agreement; however, a covenant requiring the Company to maintain a minimum ratio of Funded Debt to EBITDA restricted the Company’s potentially available borrowings under the Credit Agreement to $19.7 million at March 31, 2015.  At March 31, 2015 and September 30, 2014, the Company had standby letters of credit outstanding in the amount of $59,000 and $51,000, respectively.

On May 4, 2015, the Company again amended the Credit Agreement which reduced its borrowing availability to $30.0 million with amounts available for borrowing determined by a borrowing base.  Under the amendments to the Credit Agreement, the borrowing base is determined based upon certain of the Company’s and its U.S. subsidiaries’ assets which include (i) 80% of certain accounts receivable plus (ii) 50% of certain notes receivable (such result not to exceed $10 million) plus (iii) 25% of certain inventories (excluding work-in-process inventories).  On a pro forma basis as of March 31, 2015, the Company’s borrowing base was $37.9 million resulting in borrowing availability of $30.0 million less any outstanding letters of credit.  Borrowings under the Credit Agreement as amended are secured by substantially all of the Company’s assets.  In addition, the Company’s domestic subsidiaries have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured the obligations by the pledge of substantially all of the assets of such subsidiaries.  The Credit Agreement as amended expires on May 4, 2018 and all borrowed funds are due and payable at that time.  The Company is required to make monthly interest payments on borrowed funds.  

12

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Credit Agreement as amended limits the incurrence of additional indebtedness, requires the maintenance of a single financial ratio that compares certain of the Company’s assets to certain of its liabilities, restricts the Company and its subsidiaries’ ability to pay cash dividends and contains other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement as amended is based on the Wall Street Journal prime rate, which was 3.25% at March 31, 2015.

8. Accumulated Other Comprehensive Loss:

Accumulated other comprehensive loss consisted of the following (in thousands):

	Unrealized			Foreign
	Losses on			Currency
	Available-for-			Translation
	Sale Securities			Adjustments			Total
Balance at September 30, 2014	$	(26	)	$	(2,470	)	$	(2,496	)
Change in unrealized losses on available-for-sale securities (net of tax)		21			—			21
Foreign currency translation adjustments		—			(4,618	)		(4,618	)
Balance at March 31, 2015	$	(5	)	$	(7,088	)	$	(7,093	)

9. Stock-Based Compensation:

On November 21, 2013, the Company issued 184,000 shares of restricted stock under the 1997 Key Employee Stock Option Plan, as amended.  The fair value of the Company’s common stock on the date of grant was $98.68 per share, and the unrecognized compensation cost on the date of grant related to these awards, net of estimated forfeitures, was $17.3 million and will be charged to expense over four years as the restrictions lapse.  During fiscal year 2014, the Company issued a total of 13,000 shares of restricted stock under the 2014 Long Term Incentive Plan, as amended (“the Plan”) at a weighted average grant date fair value of $45.68 per share.  During the first six months of fiscal year 2015, the Company issued a total of 3,000 shares of restricted stock under the Plan at a weighted average grant date fair value of $19.13 per share. Recipients of restricted stock awards are entitled to vote such shares and are entitled to dividends if paid.

Compensation expense for restricted stock awards is determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of shares that are anticipated to fully vest.  As of March 31, 2015, we had unrecognized compensation expense of approximately $11.5 million, all of which was related to restricted stock awards.  The weighted average period over which this expense is expected to be recognized is 2.7 years.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

10. Earnings (Loss) Per Common Share

The Company applies the two-class method in calculating per share data.  The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):

	Three Months Ended					Six Months Ended
	March 31, 2015			March 31, 2014		March 31, 2015			March 31, 2014
Net income (loss)	$	(5,182	)	$	10,816	$	(10,627	)	$	34,992
Less: Income allocable to unvested restricted stock		—			109		—			353
Income (loss) available to common shareholders		(5,182	)		10,707		(10,627	)		34,639
Reallocation of participating earnings		—			—		—			1
Income (loss) attributable to common shareholders for diluted earnings per share	$	(5,182	)	$	10,707	$	(10,627	)	$	34,640
Weighted average number of common share equivalents:
Common shares used in basic earnings (loss) per share		13,002,616			12,950,416		12,990,129			12,948,788
Common share equivalents outstanding  related to stock options		—			51,967		—			52,287
Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share		13,002,616			13,002,383		12,990,129			13,001,075
Earnings (loss) per share:
Basic	$	(0.40	)	$	0.83	$	(0.82	)	$	2.68
Diluted	$	(0.40	)	$	0.82	$	(0.82	)	$	2.66

11. Commitments and Contingencies

The Company is involved in various pending or potential legal actions in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

12. Segment Information

The Company’s Seismic product lines include land and marine wireless data acquisition systems, seabed reservoir characterization products and services, geophones and geophone strings, hydrophones, leader wire, connectors, telemetry cables, marine streamer retrieval and steering devices and various other products.  The Non-Seismic product lines include thermal imaging products and industrial products.  The Company typically has a minor amount of Seismic product sales to its Non-Seismic customers.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the Company’s segment information (in thousands):

	Three Months Ended				Six Months Ended
	March 31, 2015		March 31, 2014		March 31, 2015		March 31, 2014
Net revenues:
Seismic	$	22,781	$	63,703	$	38,374	$	158,930
Non-Seismic		5,019		4,795		10,450		10,707
Corporate		142		53		284		262
Total	$	27,942	$	68,551	$	49,108	$	169,899
Income (loss) from operations:
Seismic	$	(5,744)	$	19,473	$	(13,129)	$	58,016
Non-Seismic		502		263		1,360		1,037
Corporate		(3,307)		(3,780)		(6,668)		(7,430)
Total	$	(8,549)	$	15,956	$	(18,437)	$	51,623

13. Income Taxes

The United States statutory tax rate for the three and six months ended March 31, 2015 and 2014 was 35%. The Company’s effective tax rates for the three months ended March 31, 2015 and 2014 were 34.9% and 32.3%, respectively. The Company’s effective tax rates for the six months ended March 31, 2015 and 2014 were 35.2% and 32.0%, respectively. The lower effective tax rates for the periods ended March 31, 2014 primarily resulted from a manufacturers’/producers’ deduction available to U.S. manufacturers.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of the major elements of our consolidated financial statements.  You should read this discussion and analysis together with our consolidated financial statements, including the accompanying notes, and other detailed information appearing elsewhere in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein, if any, contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words.  Statements that contain these words should be read carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information.  Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the adoption and sale of our products in various geographic regions, anticipated levels of capital expenditures and the sources of funding therefore, and our strategy for growth, product development, market position, financial results and reserves.  These forward-looking statements reflect our best judgment about future events and trends based on the information currently available to us.  However, there will likely be events in the future that we are not able to predict or control.  The factors listed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014, as well as other cautionary language in such Annual Report and this Quarterly Report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.  The occurrence of the events described in these risk factors and elsewhere in this Quarterly Report on Form 10-Q could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations.  We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.

Business Overview

Geospace Technologies Corporation is a Texas corporation originally incorporated in Delaware on September 27, 1994.  At the Company’s 2014 Annual Meeting of Stockholders, the Company’s stockholders approved the reincorporation of the Company from the State of Delaware to the State of Texas pursuant to a merger of the Company with and into a newly formed Texas corporation wholly owned by the Company. The reincorporation has been completed, and the Company is now a Texas corporation. Unless otherwise specified, the discussion in this Quarterly Report on Form 10-Q refers to Geospace Technologies Corporation and its subsidiaries.

We design and manufacture instruments and equipment used in the acquisition and processing of seismic data as well as in the characterization and monitoring of producing oil and gas reservoirs.  Demand for our products has been, and will likely continue to be, vulnerable to downturns in the economy and the oil and gas industry in general.  For more information, please refer to the risks discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

We have engaged in the seismic instrument and equipment business since 1980 and market our products primarily to the oil and gas industry.  We also design, manufacture and distribute non-seismic equipment including thermal imaging equipment and industrial products.  We report and categorize our customers and products into two different segments: Seismic and Non-Seismic.

Available Information

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).  Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.  You may also read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on their public reference room.  Our SEC filings are also available to the public on our website at http://www.geospace.com.  From time to time, we may post investor presentations on our website under the “Investor Relations” tab.  Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Quarterly Report on Form 10-Q or the documents incorporated by reference in this Quarterly Report on Form 10-Q.

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Products and Product Development

Seismic Products

Our seismic business segment accounts for the majority of our revenues. Geoscientists use seismic data primarily in connection with the exploration, development and production of oil and gas reserves to map potential and known hydrocarbon bearing formations and the geologic structures that surround them. Our seismic product lines currently consist of land and marine nodal data acquisition systems, permanent land and seabed reservoir monitoring products and services, geophones and geophone strings, hydrophones, leader wire, connectors, telemetry cables, marine streamer retrieval and steering devices and various other products. Our seismic products are compatible with most major competitive seismic data acquisition systems currently in use. We believe that our seismic products are among the most technologically advanced instruments and equipment available for seismic data acquisition.

Traditional Products

An energy source and a data recording system are combined to acquire seismic data. We provide many of the components of seismic data recording systems, including geophones, hydrophones, multi-component sensors, leader wire, geophone strings, connectors, seismic telemetry cables and other seismic related products. On land, our customers use geophones, leader wire, cables and connectors to receive and measure seismic reflections resulting from an energy source into data recording units, which store the seismic information for subsequent processing and analysis. In the marine environment, large ocean-going vessels tow long seismic cables known as “streamers” containing hydrophones which are used to detect pressure changes. Hydrophones transmit electrical impulses back to the vessel’s data recording unit where the seismic data is stored for subsequent processing and analysis. Our marine seismic products help steer streamers while being towed and help recover streamers if they become disconnected from the vessel.

Our seismic sensor, cable and connector products are compatible with most major competitive seismic data acquisition systems currently in use. Sales result primarily from seismic contractors purchasing our products as components of new seismic data acquisition systems or to repair and replace components of seismic data acquisition systems already in use.

Our products used in marine seismic data acquisition include our marine seismic streamer retrieval devices (“SRDs”). Occasionally, streamer cables are severed and become disconnected from the vessel as a result of obstacles, inclement weather, vessel traffic or human error. Our SRDs, which are attached to the streamer cables, contain air bags which are designed to inflate automatically at a given water depth, bringing the severed streamer cables to the surface. These SRDs save the seismic contractors significant time and money compared to the alternative of losing the streamer cable. We also produce seismic streamer steering devices, or “birds,” which are fin-like devices that attach to the streamer cable. These birds help maintain the streamer cable at a certain desired depth as it is being towed through the water.

Our wholly-owned subsidiary in the Russian Federation manufactures international standard geophones, sensors, seismic leader wire, seismic telemetry cables and related seismic products for customers in the Russian Federation and other international seismic marketplaces. We have a branch office in Colombia that primarily rents seismic equipment to our customers in the South American market.

Wireless Products

We have developed a land-based wireless (or nodal) seismic data acquisition system called the GSX.  Each GSX station operates independently and therefore can be deployed in virtually unlimited channel configurations.  Rather than utilizing interconnecting cables as required by most traditional land data acquisition systems, each GSX station operates as an independent data collection system.  As a result, our GSX system requires less maintenance, which we believe allows our customers to operate more effectively and efficiently because of its reduced environmental impact, lower weight and ease of operation.  Our GSX system is designed into configurations ranging from one to four channels per station.  Since its introduction in 2008 and through March 31, 2015, we have sold 330,000 GSX channels and we have 129,000 GSX channels in our rental fleet.  We do not expect to expand our GSX rental fleet significantly in fiscal year 2015.

We have also developed a marine-based wireless seismic data acquisition system called the OBX.  Similar to our GSX land-based wireless system, the marine OBX system can be deployed in virtually unlimited channel configurations and does not require interconnecting cables between each station.  Our deep water versions of the OBX system can be deployed in depths of up to 3,450 meters.  Through March 31, 2015, we have sold over 400 OBX stations and we have 4,300 OBX stations in our rental fleet.  We expect to make additional investments in our OBX rental fleet in fiscal year 2015.

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Reservoir Products

Seismic surveys repeated over selected time intervals show dynamic changes within the reservoir and can be used to monitor the effects of oil and gas production. In this regard, we have developed permanently installed high-definition reservoir monitoring systems for land and ocean-bottom applications in producing oil and gas fields. We also produce a retrievable version of our ocean-bottom system for use on fields where permanently installed systems are not appropriate or economical. Utilizing these tools, producers can enhance the recovery of oil and gas deposits over the life of a reservoir.

Our high-definition reservoir monitoring products include the HDSeis™ product line and a suite of borehole and reservoir monitoring products and services. Our HDSeis™ system is a high-definition seismic data acquisition system with flexible architecture that allows it to be configured as a borehole seismic system or as a subsurface system for both land and marine reservoir-monitoring projects. The scalable architecture of the HDSeis™ system enables custom designed system configuration for applications ranging from low-channel engineering and environmental-scale surveys requiring a minimum number of recording channels to high-channel surveys required to efficiently conduct permanent reservoir imaging and monitoring. Modular architecture allows virtually unlimited channel expansion. In addition, multi-system synchronization features make the HDSeis™ system well suited for multi-well or multi-site acquisition, simultaneous surface and downhole acquisition and continuous reservoir monitoring projects.

Reservoir monitoring requires special purpose or custom designed systems in which portability becomes less critical and functional reliability assumes greater importance. This reliability factor helps assure successful operations in inaccessible locations over a considerable period of time. Additionally, reservoirs located in deep water or harsh environments require special instrumentation and new techniques to maximize recovery. Reservoir monitoring also requires high-bandwidth, high-resolution seismic data for engineering project planning and reservoir management. We believe our HDSeis™ System and tools, designed for cost-effective deployment and lifetime performance, will make borehole and seabed seismic acquisition a cost-effective and reliable process for the challenges of reservoir monitoring. Our multi-component seismic product developments include an omni-directional geophone for use in reservoir monitoring, a compact marine three-component or four-component gimbaled sensor and special-purpose connectors, connector arrays and cases.

In November 2012, we received an order from Statoil (the “Statoil Order”) for $171.7 million, including amendments, to instrument two reservoirs in the North Sea.  During the fiscal years ended September 30, 2013 and 2014, we recognized revenues of $109.6 million and $62.1 million, respectively, from the Statoil Order using the percentage of completion revenue recognition method.  Also during the fiscal year ended September 30, 2014, we delivered a $5.0 million permanent land reservoir monitoring system for use in Saudi Arabia and a $4.4 million system to enlarge BP’s existing Valhall field system.  We have not delivered nor have we received orders for any permanent reservoir monitoring systems during the first six months of fiscal year 2015.

In addition, we produce seismic borehole acquisition systems which employ a fiber optic augmented wireline capable of very high data transmission rates. These systems are used for several reservoir monitoring applications, including an application pioneered by us allowing operators and service companies to monitor and measure the results of fracturing operations.

Non-Seismic Products

Our non-seismic businesses leverage upon our existing manufacturing facilities and engineering capabilities. We have found that many of our seismic products, with little or no modification, have direct application to industries beyond those involved in oil and gas exploration and development. For example, our customers utilize our borehole tools to monitor subsurface carbon dioxide injections and for mine safety applications.

Our non-seismic products include thermal imaging products targeted at the commercial graphics industry as well as various industrial products. Our industrial products include (i) sensors and tools for vibration monitoring, mine safety application and earthquake detection, (ii) cables for power and communication for the offshore oil and gas and offshore construction industries, and (iii) water meter cables and other specialty cable and connector products.

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Consolidated Results of Operations

We report and evaluate financial information for two segments: Seismic and Non-Seismic.  Summary financial data by business segment follows (in thousands):

	Three Months Ended						Six Months Ended
	March 31, 2015			March 31, 2014			March 31, 2015			March 31, 2014
Seismic
Traditional exploration product revenues	$	9,569		$	13,060		$	17,290		$	33,522
Wireless exploration product revenues		12,085			12,463			17,779			57,971
Reservoir product revenues		1,127			38,180			3,305			67,437
Total seismic revenues		22,781			63,703			38,374			158,930
Operating income (loss)		(5,744	)		19,473			(13,129	)		58,016
Non-Seismic
Net revenues		5,019			4,795			10,450			10,707
Operating income		502			263			1,360			1,037
Corporate
Net revenues		142			53			284			262
Operating loss		(3,307	)		(3,780	)		(6,668	)		(7,430	)
Consolidated Totals
Net revenues		27,942			68,551			49,108			169,899
Operating income (loss)		(8,549	)		15,956			(18,437	)		51,623

Overview

For the six months ended March 31, 2014, we experienced very strong market demand in both North American and international markets for our wireless GSX channels and geophone sensors which contributed to record seismic exploration product revenues of $91.5 million.  Also during that period, although the Statoil Order was entering its final phases, we reported revenues of $67.4 million from our seismic reservoir products, including $55.0 million from the Statoil Order.  Although we reported record seismic segment revenues and operating income of $158.9 million and $58.0 million, respectively, during the six months ended March 31, 2014, we began to experience a softening in the demand for our seismic exploration products, particularly in North America, as capital budgets for oil and gas producers were trending away from exploration-focused activities toward production and exploitation activities.  During this period oil production in North America’s unconventional shale reservoirs increased, as did oil production from non-OPEC countries, resulting in an oversupply of crude oil in the world market.  From July 2014 through March 2015, market prices for a barrel of crude oil declined from over $100 to $45 and have recently recovered to roughly $57.  With the decline in oil prices and the resulting reduction in cash flows for crude oil producers, capital spending budgets for crude oil exploration activities, including seismic activities, has been sharply reduced.  Resulting demand for our customer’s seismic exploration services has declined significantly and, therefore, demand for our seismic exploration equipment has decreased significantly over the last year.  In addition, the Statoil Order was completed in April 2014 and we have not received any new orders for permanent reservoir monitoring systems since that time.  As a result of these factors, our revenues for our seismic business segment for the six months ended March 31, 2015 declined 75.9%, from the corresponding period of the prior fiscal year, to $38.4 million resulting in an operating loss of $13.1 million.  We expect these challenging industry conditions to continue to negatively impact the demand for our seismic products throughout fiscal year 2015 and beyond.

Three and six months ended March 31, 2015 compared to three and six months ended March 31, 2014

Consolidated revenues for the three months ended March 31, 2015 decreased by $40.6 million, or 59.2%, from the corresponding period of the prior fiscal year.  Consolidated revenues for the six months ended March 31, 2015 decreased by $120.8 million, or 71.1%, from the corresponding period of the prior fiscal year.  The decrease in revenues for the three and six months ended March 31, 2015 was attributable to substantially lower product demand in our seismic business segment.

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Consolidated gross profit for the three months ended March 31, 2015 decreased $26.5 million, or 94.9%, from the corresponding period of the prior fiscal year.  Consolidated gross profit for the six months ended March 31, 2015 decreased $73.6 million, or 98.1%, from the corresponding period of the prior fiscal year.  The decrease in gross profit for the three and six months ended March 31, 2015 was caused by (i) lower revenues from our seismic products, (ii) our inability to absorb certain fixed manufacturing costs due to low factory utilization and (iii) a sales mix containing a concentration of lower-margin products.  We expect our seismic product gross margins to be under significant stress throughout fiscal year 2015 due to expected lower manufacturing activity.

Consolidated operating expenses for the three and six months ended March 31, 2015 decreased $2.0 million or 16.6%, and $3.5 million or 15.1%, respectively, from the corresponding periods of the prior fiscal year.  The decrease for each period ended March 31, 2015 was primarily due to the elimination of incentive compensation expenses and was partially offset by increased bad debt expense.

Other income for the three and six months ended March 31, 2015 increased $0.6 million and $2.2 million, respectively, from the corresponding period of the prior fiscal year.  The increase in other income (expense) for each of the periods ended March 31, 2015 was primarily due to foreign exchange gains due to U.S. dollar deposits held by our Russian subsidiary.

The United States statutory tax rate for the three and six months ended March 31, 2015 and 2014 was 35%.  Our effective tax rates for the three months ended March 31, 2015 and 2014 were 34.9% and 32.3%, respectively.  Our effective tax rates for the six months ended March 31, 2015 and 2014 were 35.2% and 32.0%, respectively.  The lower effective tax rates for the period ended March 31, 2014 primarily resulted from a manufacturers’/producers’ deduction available to U.S. manufacturers.

Seismic Products

Revenues

Revenues of our seismic products for the three months ended March 31, 2015 decreased by $40.9 million, or 64.2%, from the corresponding period of the prior fiscal year.  Revenues of our seismic products for the six months ended March 31, 2015 decreased by $120.6 million, or 75.9%, from the corresponding period of the prior fiscal year.  The components of this decrease include the following:

· Traditional Product Revenues and Rentals – For the three months ended March 31, 2015, revenues from our traditional products decreased $3.5 million, or 26.7%, from the corresponding period of the prior fiscal year.  For the six months ended March 31, 2015, revenues from our traditional products decreased $16.2 million, or 48.4%, from the corresponding period of the prior fiscal year.  The decrease for the three and six months ended March 31, 2015 reflects lower demand for geophone and marine products due to the soft industry conditions described above.  In addition, the prior year period included large orders for geophones which accompanied the sale of GSX wireless systems.

· Wireless Product Revenues and Rentals –Our wireless product revenues for the three months ended March 31, 2015 include a $3.0 million non-refundable deposit received from a customer in fiscal year 2014 as a down payment for the purchase of OBX equipment.  Since the customer’s intentions to purchase the OBX equipment never materialized, the deposit was recorded as revenues during the three months ended March 31, 2015.  Excluding the impact of the $3.0 million deposit, for the three months ended March 31, 2015, revenues from our GSX and OBX wireless products decreased by $3.4 million, or 27.0%, from the corresponding period of the prior fiscal year.  This decline in revenues was due to a $5.5 million decline in wireless product rental revenues and was partially offset by a $2.1 million increase in product purchases which includes the sale of 5,300 GSX channels from our rental fleet during the current quarter.  Excluding the impact of the $3.0 million non-refundable deposit, for the six months ended March 31, 2015, revenues from our GSX and OBX wireless products decreased by $43.2 million, or 74.5%, from the corresponding period of the prior fiscal year.  Revenues from product sales declined by $37.3 million resulting from the sale of only 5,400 GSX channels in the current year period compared to 77,000 GSX channels in the prior year period.  In addition, rental revenues from our GSX and OBX wireless products declined by $5.9 million during the six months ended March 31, 2015.  While sales of our wireless systems are expected to be challenged until crude oil prices stabilize and industry conditions improve, we believe that future demand for our GSX and OBX will increase as seismic contractors transition to wireless systems to improve efficiencies and lower cost in lieu of less efficient cabled land and marine systems, although we expect this order flow to continue to be erratic from quarter to quarter.

· Reservoir Product Revenues, Rentals and Services – For the three months ended March 31, 2015, revenues from our reservoir products decreased $37.1 million, or 97.0%, from the corresponding period of the prior year.  For the six months ended March 31, 2015, revenues from our reservoir products decreased $64.1 million, or 95.1%, from the corresponding period of the prior year. The decrease in revenues for the three and six months ended March 2015 was primarily due to Statoil Order deliveries in each of the prior year periods as well as the delivery of two smaller permanent reservoir monitoring systems during the second quarter of the prior year.  Permanent reservoir monitoring system deliveries were

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$36.4 million and $64.4 million in the three and six month periods ended March 31, 2014, including $27.0 million and $55.0 million, respectively, from the Statoil Order.  There were no permanent reservoir monitoring systems delivered in fiscal year 2015.  While we continue to actively market these products to our customers, currently we do not expect to receive any substantial permanent reservoir monitoring contracts during fiscal year 2015.

Customer orders for our seismic products, especially large orders for our GSX and OBX wireless systems and our subsea permanent reservoir monitoring systems, generally occur irregularly making it difficult for us to predict our sales and production levels each quarter.  Furthermore, product shipping dates are generally determined by our customers and are not at our discretion.  As a result, these factors have caused past revenues of our seismic products to be unpredictable, or “lumpy,” and we expect this trend to continue into the future.

Operating Income (Loss)

Our operating income (loss) associated with revenues from our seismic products for the three months ended March 31, 2015 decreased by $25.2 million, or 129.5%, from the corresponding period of the prior fiscal year.  Our operating income associated with revenues from our seismic products for the six months ended March 31, 2015 decreased by $71.1 million, or 122.6%, from the corresponding period of the prior fiscal year. The decrease in operating income for the three and six months ended March 31, 2015 was due to the substantial decline in our product revenues which, in turn, resulted in substantially lower gross profits.

Non-Seismic Products

Revenues

Revenues from our non-seismic products for the three months ended March 31, 2015 increased by $0.2 million, or 4.7%, from the corresponding period of the prior fiscal year.  The increase in revenues resulted from increased demand for our industrial products.  Revenues from our non-seismic products for the six months ended March 31, 2015 decreased by $0.3 million, or 2.4%, from the corresponding period of the prior fiscal year.  The decrease resulted from lower sales of our thermal imaging products.

Operating Income

Our operating income associated with revenues from our non-seismic products for the three months ended March 31, 2015 increased $0.2 million, or 90.9%, from the corresponding period of the prior fiscal year. Our operating income associated with revenues from our non-seismic products for the six months ended March 31, 2015 increased $0.3 million, or 31.3%, from the corresponding period of the prior fiscal year.  The increase in operating income for the three and six months ended March 31, 2015 was primarily the result of margin improvements from our offshore cable products.

Liquidity and Capital Resources

At March 31, 2015, we had approximately $23.5 million in cash and cash equivalents and $19.9 million in short-term investments.  For the six months ended March 31, 2015, we used $10.6 million of cash from operating activities.  These uses of cash included (i) our net loss of $10.6 million, (ii) a $11.5 million decrease in accrued expenses and other current liabilities primarily due to the payment of fiscal year 2014 incentive compensation and calendar year 2014 property taxes, (iii) a $2.1 million decrease in accounts payable due declining inventory purchases resulting from reduced product demand, and (iv) a $3.2 million decrease in deferred revenue due to the revenue recognition of a $3.0 million non-refundable customer deposit.  These uses of cash were partially offset by (i) net non-cash charges of $12.9 million from deferred income taxes, depreciation, accretion, stock-based compensation, inventory obsolescence and bad debts, (ii) a $3.6 million decrease in trade accounts and notes receivable due to collections and a decline in revenues, and (iii) a $3.3 million decrease in inventories caused by reduced product demand and production.

For the six months ended March 31, 2015, we generated $0.2 million of cash from investing activities.  The sources of cash were attributable to proceeds of $3.6 million from the sale of used rental equipment.   This source of cash was partially offset by (i) capital expenditures of $1.8 million to expand our rental equipment fleet, (ii) $1.4 million for additions to our property and equipment and (iii) net purchases of $0.2 million of short-term investments.  We expect customer demand for rentals of our OBX nodal products to increase during the remainder of fiscal year 2015, resulting in estimated cash investments into our rental fleet of approximately $4 million and  non-cash transfers from our inventory account of $6 million or more.  We estimate that cash investments in property, plant and equipment will be approximately $4 million in fiscal year 2015, including $0.5 million related to the expansion of our Houston manufacturing and engineering facilities. If industry conditions were to improve substantially or if we receive significant PRM system orders, we may accelerate our facility expansion plans. We expect these capital expenditures will be financed from our cash on hand, internal cash flow, rental equipment sales proceeds and/or from borrowings under our credit agreement.  

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For the six months ended March 31, 2015, we had no cash flows from financing activities.

On March 2, 2011, we entered into a credit agreement with Frost Bank.  On September 27, 2013, we amended the credit agreement and increased the borrowing availability to $50.0 million (as amended, the “Credit Agreement”).  Our borrowings under the Credit Agreement were principally secured by our accounts receivable, inventories and equipment.  In addition, certain of our domestic subsidiaries guaranteed our obligations under the Credit Agreement and such subsidiaries secured the obligations by the pledge of certain of the assets of such subsidiaries.  We were required to make quarterly interest payments on borrowed funds.  The Credit Agreement limited the incurrence of additional indebtedness, required the maintenance of certain financial ratios, restricted us and our subsidiaries’ ability to pay cash dividends and contained other covenants customary in agreements of this type.  We believe that the cash flow coverage ratio and the funded debt to EBITDA ratio covenants were the most restrictive.  The interest rate for borrowings under the Credit Agreement was a LIBOR based rate with a margin spread of 250 to 325 basis points depending upon the maintenance of certain ratios.  At March 31, 2015, we were in compliance with all covenants under the Credit Agreement; however, a covenant requiring us to maintain a minimum ratio of Funded Debt to EBITDA restricted our potentially available borrowings under the Credit Agreement to $19.7 million at March 31, 2015.  There were standby letters of credit outstanding in the amount of $59,000 and additional borrowings available were approximately $19.7 million.  Please see “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014 for more information about the restrictive covenants imposed on us by the Credit Agreement.

On May 4, 2015, we again amended the Credit Agreement which reduced our borrowing availability to $30.0 million with amounts available for borrowing determined by a borrowing base.  Under the amendments to the Credit Agreement, the borrowing base is determined based upon certain or our and our U.S. subsidiaries’ assets which include (i) 80% of certain accounts receivable plus (ii) 50% of certain notes receivable (such result not to exceed $10 million) plus (iii) 25% of certain inventories (excluding work-in-process inventories).  On a pro forma basis as of March 31, 2015, our borrowing base was $37.9 million resulting in borrowing availability of $30.0 million less any outstanding letters of credit.  Borrowings under the Credit Agreement as amended are secured by substantially all our assets.  In addition, each of our domestic subsidiaries have guaranteed our obligations under the Credit Agreement as amended and such subsidiaries have secured the obligations by the pledge of substantially all of the assets of such subsidiaries.  The Credit Agreement as amended expires on May 4, 2018 and all borrowed funds are due and payable at that time.  We are required to make monthly interest payments on any borrowed funds.  The Credit Agreement as amended limits the incurrence of additional indebtedness, requires the maintenance of a single financial ratio that compares certain of our assets to certain of our liabilities,  restricts the Company and its subsidiaries’ ability to pay cash dividends and contains other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement as amended is based on the Wall Street Journal prime rate, which was 3.25% at March 31, 2015.

We believe that the combination of existing cash reserves, cash flows from operations and borrowing available under the Credit Agreement should provide us sufficient capital resources and liquidity to fund our planned operations through fiscal year 2015 and beyond.  However, there can be no assurance that such 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.  There can be no assurance we would be able to issue additional equity or debt securities in the future on terms that are acceptable to us or at all.

Critical Accounting Policies

There has been no material change to our critical accounting policies discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have market risk relative to sensitive instruments entered into for trading purposes and have only very limited risk as to arrangements entered into other than for trading purposes. We do not engage in commodity or commodity derivative instrument purchase or sales transactions. Because of the inherent unpredictability of foreign currency rates and interest rates, as well as other factors, actual results could differ materially from those projected in this Item.

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Foreign Currency and Operations Risk

One of our wholly-owned subsidiaries, Geospace Technologies Eurasia, is located in the Russian Federation. In addition, we operate a branch office, Geospace Technologies Sucursal Sudamericana, in Colombia. Our financial results for these entities may be affected by factors such as changes in foreign currency exchange rates, weak economic conditions or changes in the political climate. Our consolidated balance sheet at March 31, 2015 reflected approximately $8.7 million and $0.5 million of net working capital related to our Russian and Colombian operations, respectively. Both of these entities receive a portion of their revenues and pay a majority of their expenses primarily in their local currency. To the extent that transactions of these entities are settled in their local currency, a devaluation of these currencies versus the U.S. dollar could reduce any contribution from these entities to our consolidated results of operations and total comprehensive income as reported in U.S. dollars. We do not hedge the market risk with respect to our operations in these countries; therefore, such risk is a general and unpredictable risk of future disruptions in the valuation of such currencies versus U.S. dollars to the extent such disruptions result in any reduced valuation of these foreign entities’ net working capital or future contributions to our consolidated results of operations. At March 31, 2015, the foreign exchange rate for $1.00 (one U.S. dollar) was equal to 57.9 Russian Rubles and 2,596 Colombian Pesos, respectively. If the value of the U.S. dollar were to increase by ten percent against these foreign currencies, our working capital in the Russian Federation and Colombia could decline by $0.9 million and $0.1 million, respectively.

Foreign Currency Intercompany Accounts and Notes Receivable

From time to time, we provide access to capital to our foreign subsidiaries through U.S. dollar denominated interest bearing promissory notes. Such funds are generally used by our foreign subsidiaries to purchase capital assets and for general working capital needs. In addition, we sell products to our foreign subsidiaries on trade credit terms in both U.S. dollars and in the subsidiary’s local currency. Because we have intercompany debts denominated in foreign currencies, any appreciation or devaluation of such foreign currencies against the U.S. dollar will result in a gain or loss, respectively, to our consolidated statement of operations. In February 2015, we entered into a $28.0 million Canadian dollar 90-day hedge agreement with a United States bank to hedge our Canadian dollar foreign exchange rate exposure.  At March 31, 2015, we had outstanding Canadian-dollar denominated intercompany accounts receivable of $28.6 million Canadian dollars resulting in an under-hedged position of $0.6 million Canadian dollars.  To the extent our under-hedged position of $0.6 million Canadian dollars remains, if the U.S. dollar exchange rate were to strengthen by ten percent against the Canadian dollar, we would recognize a foreign exchange loss of $49,000 U.S. dollars in our consolidated financial statements.

Floating Interest Rate Risk

The Credit Agreement contains a floating interest rate which subjects us to the risk of increased interest costs associated with any upward movements in bank market interest rates. Our borrowing interest rate under the Credit Agreement was a LIBOR based rate plus 250 to 325 basis points resulting in an adjusted interest rate at March 31, 2015 of 2.7%.  Under the Credit Agreement, as amended, our borrowing interest rate is the Wall Street Journal prime rate, which was 3.25% at March 31, 2015.  As of March 31, 2015 and September 30, 2014, there were no borrowings outstanding under the Credit Agreement.

Item 4. Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company’s reports.

In connection with the preparation of this Quarterly Report on Form 10-Q, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the CEO and CFO, as of March 31, 2015 of the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.  Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2015.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 6. Exhibits

The following exhibits are filed with this Report on Form 10-Q.

3.1	Amended and Restated Certificate of Formation of Geospace Technologies Corporation.
3.2	Bylaws of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed April 17, 2015).
10.1	Second-Amendment to Credit Agreement effective May 4,2015 by and between Geospace Technologies Corporation borrower certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender
10.2	Revolving Promissory Note Agreement effective May 4, 2015 by and between Geospace Technologies Corporation borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender.
10.3	Waiver and Consent Letter to Loan Agreement effective April 6, 2015 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 7, 2015).
31.1	Certification of the Company's Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Company's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Company's Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Company's Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data file.

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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.

		GEOSPACE TECHNOLOGIES CORPORATION
Date:	May 8, 2015	By:	/s/ Walter R. Wheeler
			Walter R. Wheeler, President
			and Chief Executive Officer
			(duly authorized officer)
Date:	May 8, 2015	By:	/s/ Thomas T. McEntire
			Thomas T. McEntire, Vice President,
			Chief Financial Officer and Secretary
			(principal financial officer)

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EX-3.1

Exhibit 3.1

Amended and Restated

Certificate of Formation

of

Geospace Technologies Corporation

ARTICLE I

NAME

1.1 The name of the corporation is Geospace Technologies Corporation (the “Corporation”).

ARTICLE II

Duration

2.1 The Corporation shall have a perpetual existence. This document shall become effective when filed with the Secretary of State of Texas.

ARTICLE III

PURPOSE

3.1 The purpose for which the Corporation is organized is to transact any or all lawful business for which corporations may be organized under the Texas Business Organizations Code.

ARTICLE IV

Shares and shareholders

The total number of shares of stock of all classes which the Corporation has authority to issue is twenty-one million (21,000,000) shares, of which twenty million, (20,000,000) shares shall be common stock, with a par value of $.01 per share (“Common Stock”), and one million (1,000,000) shares shall be preferred stock, with a par value of $.01 per share (“Preferred Stock”). The designations and the powers, preferences and rights, and the qualifications, limitations or restrictions of the shares of each class of stock are as follows:

4.1 Preferred Stock may be issued from time to time by the Board of Directors as shares of one or more series.  Subject to the provisions hereof and the limitations prescribed by law, the Board of Directors is hereby vested with the authority and is expressly authorized, prior to issuance, by adopting resolutions providing for the issuance of, or providing for a change in the number of, shares of any particular series and, if and to the extent from time to time required by law, by filing a certificate pursuant to the Texas Business Organizations Code (or other law hereafter in effect relating to the same or substantially similar subject matter), to establish or change the number of shares to be included in each such series and to determine the designations, preferences, limitations, and relative rights, including voting rights, of each such series, all to the maximum extent permitted by the Texas Business Organizations Code as in effect on the date hereof or as hereafter amended.  

4.2 Except where otherwise set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of any series of Preferred Stock, the number of shares comprising such series may be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board of Directors, and fractional shares may be issued.  The shares of Preferred Stock of any one series shall be identical with the other shares in such series in all respects except as to the dates from and after which dividends thereon shall cumulate, if cumulative. Shares of any series of Preferred Stock that have been redeemed (whether through the operation of a sinking fund or otherwise) or purchased by the Corporation, or which, if convertible or exchangeable, have been converted into, or exchanged for, shares of stock of any other class or classes or any evidences of indebtedness shall have the status of authorized and unissued shares of Preferred Stock and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of any series of Preferred Stock and to any filing required by law. The number of authorized shares of Preferred Stock may be increased or decreased by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote without the separate vote of holders of Preferred Stock as a class.

4.3 Subject to all of the rights of the Preferred Stock, and except as may be expressly provided with respect to the Preferred Stock herein, by law or by the Board of Directors pursuant to this Article IV:

(a) dividends may be declared and paid or set apart for payment upon Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends and may be payable in cash, stock or otherwise;

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(b) the holders of Common Stock shall have the exclusive right to vote for the election of directors and on all other matters requiring stockholder action, each share being entitled to one vote; and

(c) upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of Common Stock in accordance with their respective rights and interests.

4.4 No holder of any stock of the Corporation shall be entitled as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class whatsoever of the Corporation, or of securities convertible into stock of any class whatsoever, whether now or hereafter authorized, or whether issued for cash or other consideration or by way of dividend. No holder of any stock of the Corporation shall have the right of cumulative voting at any election of directors or upon any other matter.

4.5 Special meetings of the shareholders may be called by the president, the Board of Directors, any other person authorized to call special meetings by the Bylaws of the Corporation, or by the holders of at least fifty percent of the outstanding shares entitled to vote at such a meeting.

4.6 The holders of a majority of the outstanding shares of stock of the Corporation having voting power with respect to a subject matter (excluding shares held by the Corporation for its own account) present or represented by proxy shall constitute a quorum at the meeting of shareholders for the transaction of business with respect to such subject matter; provided, that in the case of a special meeting called by shareholders, the holders of two-thirds of the outstanding shares of the Corporation entitled to vote on a subject, represented in person or by proxy, shall be required for a quorum.

4.7 The shareholder vote required for approval of a merger, interest exchange, conversion, or sale of all or substantially all of the Corporation’s assets or any other fundamental business transaction is the affirmative vote of holders of a majority of the outstanding shares entitled to vote thereon.

4.8 Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of such shareholders and may not be effected by any consent in writing by such shareholders unless such consent is unanimous.

ARTICLE V

Liability of Governing Persons

5.1 No director or officer of the Corporation shall be liable to the Corporation or any of its shareholders for monetary damages for an act or omission in such person’s capacity as a director or officer except that this Article V shall not authorize the elimination or limitation of liability of a director or officer of the Corporation to the extent he or she is found liable for:

(a) A breach of duty of loyalty, if any, to the Corporation or its shareholders;

(b) An act or omission not in good faith that constitutes a breach of duty of such director or officer to the Corporation or an act or omission that involves intentional misconduct or a knowing violation of the law;

(c) A transaction from which such director or officer received an improper benefit, regardless of whether the benefit resulted from an action taken within the scope of the director’s or officer’s office; or

(d) An act or omission for which the liability of a director or officer is expressly provided by an applicable statute.

5.2 If the Texas Business Organizations Code or any other applicable Texas statute hereafter is amended to authorize the further elimination or limitation of the liability of directors or officers of the Corporation, then the liability of a director or officer of the Corporation shall be limited to the fullest extent permitted by the Texas Business Organizations Code and such other applicable Texas statute, as so amended, and such limitation of liability shall be in addition to, and not in lieu of, the limitation on the liability of a director or officer of the Corporation provided by the foregoing provisions of this Article V.

5.3 Any repeal of or amendment to this Article V shall be prospective only and shall not adversely affect any limitation on the liability of a director of the Corporation existing at the time of such repeal or amendment.

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ARTICLE VI

INDEMNIFICATION

6.1 Each director or officer of the Corporation or a subsidiary of the Corporation who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or a subsidiary of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Texas Business Organizations Code as in effect on the date hereof or as hereafter amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expenses, (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. The right to indemnification conferred in this Section shall be a contract right in consideration of a director’s service to the Corporation and may be relied upon by a director as consideration for such director’s service, and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Texas Business Organizations Code requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under the applicable provisions of the Texas Business Organizations Code. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation or a subsidiary of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

6.2 The indemnification and advancement of expenses provided in this Article VI, shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any agreement, vote of shareholders, vote of disinterested directors, insurance arrangement or otherwise, both as to action in such person’s official capacity and as to action in another capacity.

6.3 The Corporation shall be obligated at all times to maintain the effectiveness of Bylaw provisions providing for the mandatory indemnification of the directors of the Corporation to the maximum extent permitted by the Texas Business Organizations Code.

6.4 Any repeal of or amendment to this Article VI shall be prospective only and shall not adversely affect any indemnification of a director or officer of the Corporation existing at the time of such repeal or amendment.

ARTICLE VII

Registered Office and Registered Agent

7.1 The address of the Corporation’s registered office is 1999 Bryan Street, Suite 900, Dallas, TX 75201, and the name of its registered agent at such address is CT Corporation System.

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ARTICLE VIII

DIRECTORS

8.1 The number of directors constituting the current board of directors is seven (7). The Board of Directors shall be divided into three classes that have staggered terms of office, and each class shall include the same or a similar number of directors as each other class, with each class serving a term of three years. The names and addresses of the persons who are to serve as the initial directors (and if the bylaws provide for classes of directors, the year in which such directors’ terms shall expire) until the next annual meeting at which their term expires or until their successors are elected and qualified are:

Name	Address	Year of Expiration of Term
Gary D. Owens	7007 Pinemont Drive Houston, Texas 77040	2016
William H. Moody	7007 Pinemont Drive Houston, Texas 77040	2016
Thomas L. Davis	7007 Pinemont Drive Houston, Texas 77040	2017
Richard F. Miles	7007 Pinemont Drive Houston, Texas 77040	2017
Michael J. Sheen	7007 Pinemont Drive Houston, Texas 77040	2018
Charles H. Still	7007 Pinemont Drive Houston, Texas 77040	2018
Tina M. Langtry	7007 Pinemont Drive Houston, Texas 77040	2018

ARTICLE IX

BYLAW AMENDMENTS

9.1 The Board of Directors shall have the power to make, alter, amend and repeal the Bylaws (except so far as the Bylaws adopted by the shareholders shall otherwise provide). Any Bylaws made by the Board of Directors under the powers conferred hereby may be altered, amended or repealed by the directors or by the shareholders; provided, however, that the Bylaws shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted (i) by shareholders action without the affirmative vote of the holders of at least two-thirds of the voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class or (ii) by director action without the affirmative vote of at least two-thirds (rounded up to the nearest whole number) of the directors then in office.

IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Formation effective as of this 16th day of April, 2015.

By:	/s/Thomas T. McEntire
Name:	Thomas T. McEntire
Title:	Chief Financial Officer

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EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO LOAN AGREEMENT

This SECOND AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is entered into on the 4th day of May, 2015 (the “Effective Date”), by and betweenGEOSPACE TECHNOLOGIES CORPORATION, a Texas corporation, successor-by-merger to GEOSPACE TECHNOLOGIES CORPORATION, a Delaware corporation (the “Borrower”), EACH OF THE DOMESTIC SUBSIDIARIES OF THE BORROWER identified on Schedule I attached hereto (collectively, the “Guarantor”), and FROST BANK, a Texas state bank (the “Bank”).

R E C I T A L S

WHEREAS, Borrower, Guarantor and Bank entered into that certain Loan Agreement dated September 27, 2013, as amended by that certain First Amendment to Loan Agreement executed by the parties thereto on December 16, 2013 and effective as of September 27, 2013 (as hereby and from time to time further amended, restated, supplemented, modified or replaced, the “Agreement”; a capitalized term used herein but not otherwise defined herein shall have the meaning assigned to such term in the Agreement);

WHEREAS, Borrower, Guarantor and Bank have agreed that certain terms or provisions of the Agreement be amended in the manner set forth herein to be effective as of the Effective Date; and

WHEREAS, Borrower, Guarantor and Bank hereby acknowledge that the terms and provisions of this Amendment constitute an amendment and modification of, and not a novation of, the Agreement or any other Loan Document.

NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

A G R E E M E N T S

1. Definitions.  The term “Loan Agreement” as used herein, in the Agreement and in the other Loan Documents, shall mean the Agreement as hereby amended and modified, and as further amended, restated, supplemented, modified or replaced from time to time as permitted thereby.  

2. Amendment of the Agreement.  Subject to Section 6 below, the Agreement is hereby amended, effective as of the Effective Date, as follows:

a. Certain Definitions.  The following definitions in Article I of the Agreement are hereby amended and restated in their entirety, as follows, and references to such definitions in the Loan Documents shall be references to the definitions as set forth herein:

“Revolving Credit Note” means a promissory note executed by Borrower and payable to the order of Lender, dated as of May 4, 2015, evidencing the Revolving Credit Loans made by Lender to Borrower hereunder, as the same may be amended, restated, supplemented, modified, extended or increased from time to time; further, such promissory note shall supersede and replace the form of Revolving Credit Note attached hereto as Exhibit C.

“Termination Date” means April 30, 2018.

b. Certain Definitions.  The following definitions are added to Article I of the Agreement in the appropriate alphabetical order, and references to such definitions in the Loan Documents shall be references to the definitions as set forth herein:

“Borrowing Base” is defined in Section 2.08.

“Eligible Accounts” means those Accounts Receivable (as defined in the Security Agreement) owing by any Account Debtor (other than Borrower or a Guarantor or any employee or Affiliate of Borrower or a Guarantor) to Borrower or a Guarantor which are not past due for a period of more than ninety (90) days from their contractual or customary due dates; provided, however, that those Accounts Receivable which Lender reasonably and in good faith, in accordance with its generally applicable credit practices, has determined may not be paid by reason of the Account Debtor’s financial condition or inability to pay shall be excluded from the Eligible Accounts.

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“Eligible Inventory” means that Inventory which is located at facilities owned or leased by Borrower or any Guarantor within the contiguous United States.

“Eligible Notes Receivable” means those Notes Receivable that do not have any payments due thereunder which are past due for a period of more than sixty (60) days; provided, however, that (a) those Notes Receivable which result from the conversion of any past due Accounts Receivable shall be excluded from the Eligible Notes Receivable for a period of ninety (90) days following such conversion, and (b) those Notes Receivable due from a Third-Party Domestic Debtor which Lender reasonably and in good faith, in accordance with its generally applicable credit practices, has determined may not be paid by reason of such Third-Party Domestic Debtor’s financial condition or inability to pay shall be excluded from the Eligible Notes Receivable.

“Inventory” means all finished goods and raw materials (excluding work in progress) then owned by Borrower or any Guarantor and held for sale, lease or other disposition in the ordinary course of its business.

“Notes Receivable” means those notes receivable held by Borrower or any Guarantor evidencing an obligation to be paid to such Borrower or Guarantor by any Third-Party Domestic Debtor.

“Third-Party Domestic Debtor” means any Person (other than Borrower or a Guarantor) incorporated, formed or otherwise organized or resident under the laws of the United States of America, any State thereof or the District of Columbia.

c. Certain Definitions.  The following definitions in Article I of the Agreement are deleted in their entirety:  “EBITDA”, “Funded Debt”, “Interest Expense”, “Income Tax Expense”, “Net Income” and “Subordinated Liabilities”.

d. Loans.  Section 2.01 of the Agreement is hereby amended and restated in its entirety, as follows:

Section 2.01.  Loans.  Lender agrees to lend to Borrower, on a revolving basis from time to time during the period commencing on the Closing Date and continuing through the Termination Date, such amounts as Borrower may request hereunder subject to the Borrowing Base set forth in Section 2.08 below (the “Revolving Credit Loans”); provided, however, that the total principal amount outstanding at any time shall not exceed THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) (the “Revolving Credit Commitment”) minus the Letter of Credit Liabilities.  If at any time the outstanding Revolving Credit Loans exceed an amount equal to the Revolving Credit Commitment, minus the Letter of Credit Liabilities, Borrower shall immediately repay the Loans to Lender equal to such excess amount, plus all accrued but unpaid interest thereon.  Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow hereunder.  All Revolving Credit Loans will be collectively called the “Loans”.

e.Borrowing Base.  Article II of the Agreement is hereby amended by adding the following new Section 2.08 at the end thereof:

Section 2.08.  Borrowing Base.  Each requested Advance under the Revolving Credit Commitment shall be subject to, and the aggregate of all Advances at any time outstanding may not exceed, the sum of:  (a) 80% of Eligible Accounts; plus (b) 25% of Eligible Inventory; plus (c) the lesser of (i) 50% of Notes Receivable and (ii) $10,000,000 (the “Borrowing Base”).  

f. Financial Statements.  Section 6.01(b) of the Agreement is hereby amended and restated in its entirety, as follows:

(b)Interim Financial Statements.  As soon as available, and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower, a copy of its Quarterly Report on Form 10-Q, or equivalent, of Borrower for such fiscal quarter that includes a consolidated balance sheet and income statement of Borrower and its Consolidated Subsidiaries as of the end of such fiscal quarter, all in form and substance and in reasonable detail reasonably satisfactory to Lender and duly certified (subject to year-end review adjustments) by a Managerial Official of Borrower as fairly presenting in all material respects, to the best of his or her knowledge, the financial condition of Borrower and its Consolidated Subsidiaries in accordance with GAAP, subject to normal year-end adjustments and the absence of footnotes (provided that the requirement for such certification contained in this paragraph (b) shall be deemed satisfied by a certification of a Managerial Official made in conjunction with a Form 10-Q as required by the Sarbanes-Oxley Act of 2002 as in effect on the Closing Date).

Page 2

g. Financial Statements.  Section 6.01 of the Agreement is hereby amended by inserting the following subsections (e) and (f) immediately preceding the last unnumbered paragraph of such section:

(e) Quarterly Borrowing Base Certificate.  As soon as available, and in any event within 45 days after the end of each fiscal quarter of each fiscal year of Borrower, a Borrowing Base Certificate, in substantially the form of Exhibit G attached hereto or other form mutually acceptable to Borrower and Lender, as of the end of such fiscal quarter.

(f) Monthly Borrowing Base Certificate.  As soon as available, and in any event within 45 days after the end of any month in which (a) any Advances were outstanding or (b) the Letter of Credit Liabilities exceeded $500,000.00, a Borrowing Base Certificate, in substantially the form of Exhibit G attached hereto or other form mutually acceptable to Borrower and Lender, as of the end of such month.

h. Financial Covenants.  Article VIII of the Agreement is hereby amended by deleting Sections 8.01, 8.02 and 8.03 therein and substituting the following, single section in lieu thereof:

Section 8.01.  Quick Ratio.  Maintain while any Obligations are outstanding a ratio of (a) “Cash and cash equivalents” plus “Short-term investments” plus “Trade accounts receivable” (net of any “Allowance for doubtful accounts”) plus “Current portion of notes receivable” (net of any “Allowance for doubtful notes”), to (b) “Current liabilities” (including the outstanding balance of the Loan) less “Deferred revenue” less “Billings in excess of costs and estimated earnings” (for percentage of completion contracts), in all respects as such terms are depicted and in such amounts as are reflected in the respective line items contained in Borrower’s financial statements and the notes thereto most recently delivered to Lender in accordance with Section 6.01(a) or Section 6.01(b), as applicable, of Borrower and its Subsidiaries on a consolidated basis of not less than 1.0 to 1.0.  This ratio shall be tested on a quarterly basis, commencing with the quarter ending June 30, 2015.

i. Compliance Certificate.  The form of Compliance Certificate attached as Exhibit E to the Agreement is hereby deleted in its entirety, and the form of Compliance Certificate attached hereto as Exhibit E is hereby substituted in lieu thereof.

j. Borrowing Base Certificate.The form of Borrowing Base Certificate attached hereto as Exhibit G is hereby inserted as a new Exhibit G to the Agreement immediately following the existing Exhibit F to the Agreement.

3. Full Force and Effect of Agreement.  Except as hereby specifically amended, modified or supplemented, Borrower hereby acknowledges and agrees that the Agreement and all of the other Loan Documents are hereby reaffirmed, confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms.  

4. Representations and Warranties of Borrower.  Borrower hereby certifies that:

a. The representations and warranties of Borrower contained in Article V of the Agreement and the other Loan Documents, or which are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 4.a., the representations and warranties contained in Section 5.06 of the Agreement will be deemed to refer to the most recent information and statements furnished pursuant to Section 6.01 of the Agreement.

b. The execution, delivery, and performance by Borrower of this Amendment have been duly authorized by all necessary corporate action by Borrower, and this Amendment constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforcement of remedies may be limited by Applicable Bankruptcy Law and general principles of equity.

c. As of the Effective Date, no Default or Event of Default exists under the Agreement or any other Loan Document.

5. Confirmation of Liens.  Borrower hereby confirms, extends, and renews to Bank the Liens granted by it in its Collateral as security for the prompt and complete payment when due of the Obligations.  Borrower confirms that this Amendment shall in no manner affect, waive or impair such Liens.  Bank shall have the right to exercise all rights and remedies of Bank in accordance with the terms and provisions of the Agreement (as modified hereby) and the other Loan Documents and in accordance with applicable law.  Nothing contained in this Amendment shall prejudice, act as, or be deemed to be a waiver of any right or remedy available to Bank by reason of the occurrence or existence of any fact, circumstance or event constituting a Default or Event of Default under the Agreement (as modified hereby) or any of the other Loan Documents.

6. Conditions to Effectiveness.  This Amendment shall not be effective until Bank shall have received the following, all of which, unless otherwise approved by Bank, must be satisfied on or before the Effective Date:

a. Two (2) original counterparts of this Amendment executed by Borrower and Guarantor;

Page 3

b. One (1) original of the Revolving Credit Note executed by Borrower;

c. Resolutions of the board of directors of each of Borrower and Guarantor, which resolutions authorize the execution, delivery, performance and ratification thereof by Borrower and Guarantor, as applicable, of the Agreement, this Amendment and the other Loan Documents to which it is a party; and

d. Payment or evidence of payment of any and all reasonable out-of-pocket fees and expenses incurred by Bank in connection with this Amendment including, but without limitation, the reasonable fees and expenses of Winstead PC, counsel to Bank.

Upon the satisfaction of the conditions set forth in this Section 6, this Amendment shall be effective as of the Effective Date.

7. Counterparts.  This Amendment may be separately executed in any number of counterparts, each of which will be an original, but all of which, taken together, will be deemed to constitute one and the same instrument. For purposes of negotiating and finalizing this Amendment, if this document or any document executed in connection with it is transmitted by facsimile machine, electronic mail or other electronic transmission, it will be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of facsimile machine or electronic mail will be considered for all purposes as an original signature. Any such transmitted document will be considered to have the same binding legal effect as an original document. At the request of any party, any faxed or electronically transmitted document will be re-executed by each signatory party in an original form.

8. Governing Law.  This Amendment has been executed and delivered in the State of Texas, is performable in Bexar County, Texas, and will be governed by and construed in accordance with the Governmental Requirements of the State of Texas and the Governmental Requirements of the United States of America applicable to transactions within the State of Texas.  Except to the extent that the Governmental Requirements of the United States may apply to the terms hereof, the substantive Governmental Requirements of the State of Texas (without regard to conflicts of laws principles) shall govern the validity, construction, enforcement and interpretation of this Amendment.

9. Invalid Provisions.  If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future Governmental Requirements, such provision will be fully severable, and the remaining provisions of this Amendment will remain in full force and effect and will not be affected by such illegal, invalid or unenforceable provision or by its severance. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10. No Novation.  This Amendment is given as an amendment and modification of, and not as a payment or satisfaction of, all of the Obligations and is not intended to constitute a novation of any of the Obligations.  All of the Obligations shall continue in full force and effect.

11. Successors and Assigns.  This Amendment will be binding upon and inure to the benefit of Bank and Borrower, and their respective successors and permitted assigns; provided, however, that Borrower may not, without the prior written consent of Bank, assign or encumber any interests, rights, remedies, powers, duties or obligations under this Amendment, and Lender may not assign or otherwise transfer any of its rights or obligations hereunder except (a) by way of participation in accordance with and subject to the provisions of Section 10.15 of the Agreement, (b) by way of pledge or assignment of a security interest to secure obligations to a Federal Reserve Bank (provided that any such pledge shall not release Bank from any of its obligations hereunder or substitute any such pledgee or assignee for Bank as a party hereto), or (c) following the occurrence and during the continuance of an Event of Default.  Any attempted assignment or transfer by any party in violation of this section shall be null and void.

12. Expenses.  Borrower agrees to pay all reasonable out of pocket costs and expenses (including without limitation reasonable fees and expenses of any counsel, financial advisor and agent for Bank) incurred before or after the date hereof by Bank or its affiliates in connection with the preparation, negotiation, execution, delivery and administration of the Agreement (as modified hereby) and the other Loan Documents, in each case to the extent provided in accordance with the terms and provisions of the Agreement and the other Loan Documents.

13. Waiver of Right to Trial by Jury.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE GOVERNMENTAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE AGREEMENT (AS MODIFIED HEREBY) OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

Page 4

14. Entire Agreement.  THIS AMENDMENT, THE AGREEMENT (AS MODIFIED HEREBY), AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER, GUARANTOR AND BANK RELATED TO THE SUBJECT MATTER HEREIN CONTAINED AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Page 5

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the day and year first above written.

BORROWER:
GEOSPACE TECHNOLOGIES CORPORATION,
a Texas corporation
By:	/s/ Thomas T. McEntire
Name:	Thomas T. McEntire
Title:	Vice President, Chief Financial Officer
	and Secretary
GUARANTOR:
GTC, INC.
EXILE TECHNOLOGIES CORPORATION
GEOSPACE ENGINEERING RESOURCES
	INTERNATIONAL, INC.
GEOSPACE FINANCE CORP.
GEOSPACE J.V., INC.
GEOSPACE TECHNOLOGIES,
	SUCURSAL SUDAMERICANA LLC
By:	/s/ Thomas T. McEntire
Name:	Thomas T. McEntire
Title:	Vice President, Chief Financial Officer
	and Secretary

Page 6

BANK:
FROST BANK,
a Texas state bank
By:	/s/ Larry Hammonds
Name:	Larry Hammonds
Title:	Market President

Page 7

Schedule I

(1) GTC, Inc., a Texas corporation

(2) Exile Technologies Corporation, a Texas corporation

(3) Geospace Engineering Resources International, Inc., a Texas corporation

(4) Geospace Finance Corp., a Texas corporation

(5) Geospace J.V., Inc., a Texas corporation

(6) Geospace Technologies, Sucursal Sudamericana LLC, a Texas limited liability company

Page 8

Exhibit E

Form of Compliance Certificate

COMPLIANCE CERTIFICATE

This COMPLIANCE CERTIFICATE (this “Certificate”) is delivered pursuant to the Loan Agreement dated September 27, 2013 (together with all amendments and modifications, if any, from time to time made thereto, the “Loan Agreement”), among Geospace Technologies Corporation, a Texas corporation (“Borrower”), certain Guarantors named therein, and Frost Bank, a Texas state bank.  Unless otherwise defined, terms used herein (including the exhibit attached hereto) have the respective meanings provided in the Loan Agreement.

The undersigned, being the duly elected, qualified and acting ____________ of Borrower, on behalf of Borrower and solely in his or her capacity as an officer of Borrower, hereby certifies and warrants that:

As of _______________, 20___:

(1) No Default.  No Default or Event of Default exists under the Loan Agreement or any other Loan Document as of the date hereof.

(2) Quick Ratio.  The Quick Ratio of Borrower and its Subsidiaries on a consolidated basis was __________ to 1.00 as computed in accordance with Section 8.01 of the Loan Agreement, as further detailed on the Quick Ratio Exhibit attached hereto.

IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate, this _____ day of ____________, 20___.

By:

Title:

On behalf of Geospace Technologies Corporation

Page 9

QUICK RATIO EXHIBIT

Period ending __________, 20___

Quick Ratio

1. (A) “Cash and cash equivalents”	$
(B) “Short-term investments”	$
(C) “Trade accounts receivable”
(net of any “Allowance for doubtful accounts”)	$
(D) “Current portion of notes receivable”
(net of any “Allowance for doubtful notes”)	$
2. (A) “Current liabilities”
(including the outstanding balance of the Loan)	$
(B) “Deferred revenue”	$
(C) “Billings in excess of costs and estimated earnings”
(for percentage of completion contracts)	$

With respect to each of the foregoing, in all respects as such terms are depicted and in such amounts as are reflected in the respective line items contained in Borrower’s financial statements and the notes thereto most recently delivered to Lender in accordance with Section 6.01(a) or Section 6.01(b) of the Loan Agreement, as applicable.

Quick Ratio =	[1(A) + 1(B) + 1(C) + 1(D)] ÷
	[2(A) – 2(B) – 2(C)] to 1.0	________ to 1.0
Required Quick Ratio is:		1.0 to 1.0

Page 10

Exhibit G

Form of Borrowing Base Certificate

BORROWING BASE CERTIFICATE

This BORROWING BASE CERTIFICATE (this “Certificate”) is delivered pursuant to the Loan Agreement dated September 27, 2013 (together with all amendments and modifications, if any, from time to time made thereto, the “Loan Agreement”), among Geospace Technologies Corporation, a Texas corporation (“Borrower”), certain Guarantors named therein, and Frost Bank, a Texas state bank.  Unless otherwise defined, terms used herein have the respective meanings provided in the Loan Agreement.

The undersigned, being the duly elected, qualified and acting ____________ of Borrower, on behalf of Borrower and solely in his or her capacity as an officer of Borrower, hereby certifies and warrants that, to the best of his or her knowledge, as of the [fiscal quarter] [month] ended _______________, 20___ (the “Period End”), the following fairly presents in all material respects, the Borrowing Base as of such Period End:

Borrowing Base Component	Amount	Advance Rate	Adjusted Amount
Eligible Accounts	$___________.__	80%	$_________.__   1(A)
Eligible Inventory	$___________.__	25%	$_________.__   1(B)
Eligible Notes Receivable	$___________.__	50%	$_________.__   1(C)

Borrowing Base = 1(A) + 1(B) + [LESSER OF 1(C) AND $10,000,000] $_________.__

In addition, the undersigned, on behalf of Borrower and solely in his or her capacity as an officer of Borrower, also certifies and warrants that, to the best of his or her knowledge, as of the Period End the Quick Ratio of Borrower and its Subsidiaries on a consolidated basis was __________ to 1.00 as computed in accordance with Section 8.01 of the Loan Agreement, as further detailed on the Quick Ratio Exhibit attached hereto.

IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate, this _____ day of ______________, 20___.

By:

Title:

On behalf of Geospace Technologies Corporation

Page 11

QUICK RATIO EXHIBIT

Period ending ________________, 20___

Quick Ratio

1. (A) “Cash and cash equivalents”	$
(B) “Short-term investments”	$
(C) “Trade accounts receivable”
(net of any “Allowance for doubtful accounts”)	$
(D) “Current portion of notes receivable”
(net of any “Allowance for doubtful notes”)	$
2. (A) “Current liabilities”
(including the outstanding balance of the Loan)	$
(B) “Deferred revenue”	$
(C) “Billings in excess of costs and estimated earnings”
(for percentage of completion contracts)	$

With respect to each of the foregoing, in all respects as such terms are depicted and in such amounts as are reflected in the respective line items contained in Borrower’s financial statements and the notes thereto most recently delivered to Lender in accordance with Section 6.01(a) or Section 6.01(b) of the Loan Agreement, as applicable.

Quick Ratio =	[1(A) + 1(B) + 1(C) + 1(D)] ÷
	[2(A) – 2(B) – 2(C)] to 1.0	________ to 1.0
Required Quick Ratio is:		1.0 to 1.0

Page 12

Page 13

EX-10.2

Exhibit 10.2

REVOLVING PROMISSORY NOTE

$30,000,000.00 May 4, 2015

For value received, GEOSPACE TECHNOLOGIES CORPORATION, a Texas corporation (“Borrower”), does hereby promise to pay to the order of FROST BANK, a Texas state bank (“Lender”), at P.O.  Box 34746, San Antonio, Texas 78265, or at such other address as Lender shall from time to time specify in writing, in lawful money of the United States of America, the sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00), or so much thereof as from time to time may be disbursed by Lender to Borrower under the terms of that certain Loan Agreement dated September 27, 2013, between Borrower, Guarantor (as defined therein) and Lender (as amended by that certain First Amendment to Loan Agreement executed by the parties thereto on December 16, 2013, and effective as of September 27, 2013, and that certain Second Amendment to Loan Agreement executed by the parties thereto dated May 4, 2015, and as from time to time further amended, restated, supplemented, modified or replaced, the “Loan Agreement”), and be outstanding, together with interest from the date hereof on the principal balance outstanding from time to time as hereinafter provided.  Interest shall be computed on a per annum basis of a year of 360 days and for the actual number of days elapsed, unless such calculation would result in a rate greater than the highest rate permitted by applicable law, in which case interest shall be computed on a per annum basis of a year of 365 days or 366 days in a leap year, as the case may be.  Any capitalized terms used in this Note and not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement.

1. Payment Terms.  Interest only on amounts outstanding hereunder shall be due and payable monthly as it accrues, on the 1st day of each and every calendar month, beginning May 1, 2015, and continuing regularly and monthly thereafter until the Termination Date, when the entire amount hereof, principal and accrued interest then remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal each day principal is outstanding and all payments made credited to any collection costs and late charges, to the discharge of the interest accrued and to the reduction of the principal, in such order as Lender shall determine.

2. Interest Rate. Interest on the outstanding and unpaid principal balance hereof shall be computed at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate, plus zero percent (0.0%) per annum, or (b) the Maximum Rate.  The term “Prime Rate,” as used herein, shall mean the maximum “Latest” “U.S.” prime rate of interest per annum published from time to time in the Money Rates section of The Wall Street Journal (U.S. Edition) or in any successor publication to The Wall Street Journal.  Borrower understands that the Prime Rate may not be the best, lowest, or most favored rate of Lender or The Wall Street Journal, and any representation or warranty in that regard is expressly disclaimed by Lender.  Borrower acknowledges that (i) if more than one U.S. prime rate is published at any time by The Wall Street Journal, the highest of such prime rates shall constitute the Prime Rate hereunder, and (ii) if at any time The Wall Street Journal ceases to publish a U.S. prime rate, Lender shall have the right to select a substitute rate that Lender determines, in the exercise of its reasonable commercial discretion, to be comparable to such prime rate, and the substituted rate as so selected, upon the sending of written notice thereof to Borrower, shall constitute the Prime Rate hereunder.  Upon each increase or decrease hereafter in the Prime Rate, the rate of interest upon the unpaid principal balance hereof shall be increased or decreased by the same amount as the increase or decrease in the Prime Rate, such increase or decrease to become effective as of the day of each such change in the Prime Rate and without notice to Borrower or any other person.

3. Late Charge.  If a payment is made more than 10 days after it is due, Borrower will be charged, in addition to interest, a delinquency charge of (a) 5% of the unpaid portion of the regularly scheduled payment, or (b) $250.00, whichever is less.  Additionally, upon maturity of this Note, if the outstanding principal balance (plus all accrued but unpaid interest) is not paid within 10 days of the maturity date, Borrower will be charged a delinquency charge of (i) 5% of the sum of the outstanding principal balance (plus all accrued but unpaid interest), or (ii) $250.00, whichever is less.  Borrower agrees with Lender that the charges set forth herein are reasonable compensation to Lender for the handling of such late payments.

4. Default Rate.  For so long as any Event of Default exists, regardless of whether or not there has been an acceleration of the indebtedness evidenced by this Note, and at all times after the maturity of the indebtedness evidenced by this Note (whether by acceleration or otherwise), and in addition to all other rights and remedies of Lender hereunder, interest shall accrue at the applicable rate stated in Section 2 above plus two percent (2%) per annum, but in no event in excess of the Maximum Rate, and such accrued interest shall be immediately due and payable.  Borrower acknowledges that it would be extremely difficult or impracticable to determine Lender’s actual damages resulting from any Event of Default, and such accrued interest is a reasonable estimate of those damages and does not constitute a penalty.

5. Revolving Line of Credit.  Under the Loan Agreement, Borrower may request advances and make payments hereunder from time to time, provided that it is understood and agreed that the aggregate principal amount outstanding from time to time hereunder shall not at any time exceed the amount permitted under the terms of the Loan Agreement.  The unpaid balance of this Note shall increase and decrease with each new advance or payment hereunder, as the case may be.  This Note shall not be deemed terminated or canceled prior to the date of its maturity other than in accordance with the terms of the Loan Agreement, although the entire principal balance hereof may from time to time be paid in full.  Borrower may borrow, repay and re-borrow hereunder.  All payments and prepayments of principal or interest on this Note shall be made in lawful money of the United States of America in immediately available funds, at the address of Lender indicated above, or such other place as the holder of this Note shall designate in writing to Borrower.  If any payment of principal or interest on this Note shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and any such extension of time shall be included in computing interest in connection with such payment.  The books and records of Lender shall be prima facie evidence of all outstanding principal of and accrued and unpaid interest on this Note.

6. Prepayment.  Borrower reserves the right from time to time to prepay, prior to maturity, all or any part of the principal of this Note without premium or penalty.  Any prepayments shall be applied first to accrued interest and then to principal.  Borrower will provide written notice to the holder of this Note of any such prepayment of all or any part of the principal at the time thereof.  All payments and prepayments of principal or interest on this Note shall be made in lawful money of the United States of America in immediately available funds, at the address of Lender indicated above, or such other place as the holder of this Note shall designate in writing to Borrower.

7. Default.  It is expressly provided that upon the occurrence and during the continuance of an Event of Default the holder of this Note may, at its option, exercise the remedies of Lender provided in Section 9.02 of the Loan Agreement; and in the event default is made in the prompt payment of this Note when due or declared due, and the same is placed in the hands of an attorney for collection, or suit is brought on same, or the same is collected through probate, bankruptcy or other judicial proceedings, then the Borrower agrees and promises to pay all out-of-pocket costs of collection, including reasonable attorney’s fees.

8. No Usury Intended; Usury Savings Clause.  In no event shall interest contracted for, charged or received hereunder, plus any other charges in connection herewith which constitute interest, exceed the Maximum Rate.  The amounts of such interest or other charges previously paid to the holder of the Note in excess of the amounts permitted by applicable law shall be applied by the holder of the Note to reduce the principal of the indebtedness evidenced by the Note, or, at the option of the holder of the Note, be refunded.  To the extent permitted by applicable law, determination of the Maximum Rate shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the loan and indebtedness, all interest at any time contracted for, charged or received from the Borrower hereof in connection with the loan and indebtedness evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof.

9. Security.  This Note has been executed and delivered pursuant to the Loan Agreement and is secured by a Security Agreement dated as of September 27, 2013, by and among Borrower, each of the domestic subsidiaries of Borrower identified on Schedule 1 attached hereto and Lender, covering certain collateral as more particularly described therein.  The holder of this Note is entitled to the benefits and security provided in the Loan Documents.

10. Joint and Several Liability; Waiver.  Each maker, signer, surety and endorser hereof, as well as all successors and assigns of said parties, shall be directly and primarily, jointly and severally, liable for the payment of all indebtedness hereunder.  Lender may release or modify the obligations of any of the foregoing persons or entities, or guarantors hereof, in connection with this Note without affecting the obligations of the others.  All such persons or entities expressly waive presentment and demand for payment, notice of default, notice of intent to accelerate maturity, notice of acceleration of maturity, protest, notice of protest, notice of dishonor, and all other notices and demands for which waiver is not prohibited by applicable law, and diligence in the collection hereof; and agree to all renewals, extensions, indulgences, partial payments, releases or exchanges of collateral, or taking of additional collateral, with or without notice, before or after maturity.  No delay or omission of Lender in exercising any right hereunder shall be a waiver of such right or any other right under this Note.

11. Texas Finance Code.  In no event shall Chapter 346 of the Texas Finance Code (which regulates certain revolving loan accounts and revolving tri-party accounts) apply to this Note.  To the extent that Chapter 303 of the Texas Finance Code is applicable to this Note, the “weekly ceiling” specified in such article is the applicable ceiling; provided that, if any applicable law permits greater interest, the law permitting the greatest interest shall apply.

Revolving Promissory Note 2

12. Governing Law; Venue.  This Note is being executed and delivered, and is intended to be performed in the State of Texas.  Except to the extent that the laws of the United States of America may apply to the terms hereof, the substantive laws of the State of Texas (without regard to conflicts of laws) shall govern the validity, construction, enforcement and interpretation of this Note.  In the event of a dispute involving this Note or any other instruments executed in connection herewith, the undersigned irrevocably agrees that venue for such dispute shall lie in any court of competent jurisdiction in Bexar County, Texas.

13. Purpose of Loan.  Borrower agrees that no advances under this Note shall be used for personal, family or household purposes, and that all advances hereunder shall be used solely for business, commercial, investment, or other similar purposes.

14. Captions.  The captions in this Note are inserted for convenience only and are not to be used to limit the terms herein.

15. Renewal.  This Note is given in renewal, extension and decrease, but not extinguishment, of all amounts left owing and unpaid on that certain Revolving Promissory Note dated September 27, 2013, executed and delivered by Borrower, formerly known as Geospace Technologies Corporation, a Delaware corporation, and payable to the order of Lender in the original face amount of $50,000,000.00.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGE FOLLOWS]

Revolving Promissory Note 3

BORROWER:
GEOSPACE TECHNOLOGIES CORPORATION, a Texas corporation
By:	/s/ Thomas T. McEntire
	Thomas T.  McEntire, Vice President,
	Chief Financial Officer and Secretary

Revolving Promissory Note Signature Page to Revolving Promissory Note

SCHEDULE 1

TO

REVOLVING PROMISSORY NOTE

(1) GTC, Inc., a Texas corporation

(2) Exile Technologies Corporation, a Texas corporation

(3) Geospace Engineering Resources International, Inc., a Texas corporation

(4) Geospace Finance Corp., a Texas corporation

(5) Geospace J.V., Inc., a Texas corporation

(6) Geospace Technologies, Sucursal Sudamericana LLC, a Texas limited liability company

Revolving Promissory Note Schedule 1 to Revolving Promissory Note

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Walter R. Wheeler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Geospace Technologies Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 8, 2015
	/s/ Walter R. Wheeler
	Name: Walter R. Wheeler
	Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Thomas T. McEntire, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Geospace Technologies Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 8, 2015
	/s/ Thomas T. McEntire
	Name: Thomas T. McEntire
	Title: Vice President, Chief Financial Officer and Secretary

EX-32.1

Exhibit 32.1

Informational Addendum to Report on Form 10-Q

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

The undersigned President and Chief Executive Officer of Geospace Technologies Corporation does hereby certify as follows:

Solely for the purpose of meeting the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and solely to the extent this certification may be applicable to this Report on Form 10-Q, the undersigned hereby certifies that this Report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in this Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Geospace Technologies Corporation.

/s/ Walter R. Wheeler

Name: Walter R. Wheeler

Title: President and Chief Executive Officer

May 8, 2015

EX-32.2

Exhibit 32.2

Informational Addendum to Report on Form 10-Q

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

The undersigned Vice President, Chief Financial Officer and Secretary of Geospace Technologies Corporation does hereby certify as follows:

Solely for the purpose of meeting the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and solely to the extent this certification may be applicable to this Report on Form 10-Q, the undersigned hereby certifies that this Report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in this Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Geospace Technologies Corporation.

/s/ Thomas T. McEntire

Name: Thomas T. McEntire

Title: Vice President, Chief Financial Officer and Secretary

May 8, 2015

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Accounts and Notes Receivables - Additional Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Accounts Receivable Net [Abstract]
Decrease in notes receivables	$ 0.7

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Income Taxes - Additional Information (Details)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
United States statutory tax rate	35.00%	35.00%	35.00%	35.00%
Company's effective tax rates	34.90%	32.30%	35.20%	32.00%

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Calculation of Weighted Average Common Shares and Common Equivalent Shares Outstanding (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Net income (loss)	$ (5,182)	$ 10,816	$ (10,627)	$ 34,992
Less: Income allocable to unvested restricted stock		109		353
Income (loss) available to common shareholders	(5,182)	10,707	(10,627)	34,639
Reallocation of participating earnings				1
Income (loss) attributable to common shareholders for diluted earnings per share	$ (5,182)	$ 10,707	$ (10,627)	$ 34,640
Weighted average number of common share equivalents:
Common shares used in basic earnings (loss) per share	13,002,616	12,950,416	12,990,129	12,948,788
Common share equivalents outstanding related to stock options		51,967		52,287
Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share	13,002,616	13,002,383	12,990,129	13,001,075
Basic	$ (0.40)	$ 0.83	$ (0.82)	$ 2.68
Diluted	$ (0.40)	$ 0.82	$ (0.82)	$ 2.66

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Derivative Financial Instruments - Additional Information (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Sep. 30, 2014
Canadian Dollar Forward Contract
Derivative Financial Instruments [Line Items]
Foreign currency forward contract to hedge	$ 28.0
Accrued unrealized foreign exchange gain	0.3
Canadian Subsidiary
Derivative Financial Instruments [Line Items]
Denominated intercompany accounts payable	$ 28.6	$ 29.8

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Inventories (Tables)

6 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following (in thousands):

	March 31, 2015			September 30, 2014
Finished goods	$	49,203		$	42,473
Work-in-process		20,856			28,582
Raw materials		77,150			82,599
Obsolescence reserve		(8,844	)		(7,764	)
	$	138,365		$	145,890

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Long-Term Debt - Additional Information (Details) (USD $)	6 Months Ended
	Mar. 31, 2015	Sep. 30, 2014	Sep. 27, 2013	May 04, 2015
Long-Term Debt [Abstract]
Total long-term debt outstanding	$ 0	$ 0
Line of credit borrowing capacity	37,900,000		50,000,000
Line of credit borrowing availability	19,700,000
Credit agreement borrowing availability	30,000,000
Credit agreement expiration date	May 04, 2018
Subsequent Event
Long-Term Debt [Abstract]
Credit agreement borrowing availability				30,000,000
Subsequent Event | Certain Accounts Receivable
Long-Term Debt [Abstract]
Borrowing base as percentage of assets				80.00%
Subsequent Event | Certain Notes Receivable
Long-Term Debt [Abstract]
Borrowing base as percentage of assets				50.00%
Maximum amount of borrowing base as percentage of assets				10,000,000
Subsequent Event | Certain Inventories
Long-Term Debt [Abstract]
Borrowing base as percentage of assets				25.00%
Prime Rate
Long-Term Debt [Abstract]
Marginal interest rate	3.25%
New Agreement
Long-Term Debt [Abstract]
Credit agreement date	Mar. 02, 2011
Line of Credit | Minimum | LIBOR
Long-Term Debt [Abstract]
Marginal interest rate	2.50%
Line of Credit | Maximum | LIBOR
Long-Term Debt [Abstract]
Marginal interest rate	3.25%
Standby Letters of Credit
Long-Term Debt [Abstract]
Standby letters of credit outstanding	$ 59,000	$ 51,000

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Current Trade Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Current trade accounts receivable
Trade accounts receivable	$ 18,637	$ 25,727
Allowance for doubtful accounts	(1,854)	(1,125)
Total current trade accounts receivable	$ 16,783	$ 24,602

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Summary of Company's Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Net Revenues	$ 27,942	$ 68,551	$ 49,108	$ 169,899
Income (loss) from operations	(8,549)	15,956	(18,437)	51,623
Seismic | Operating Segments
Segment Reporting Information [Line Items]
Net Revenues	22,781	63,703	38,374	158,930
Income (loss) from operations	(5,744)	19,473	(13,129)	58,016
Non-Seismic | Operating Segments
Segment Reporting Information [Line Items]
Net Revenues	5,019	4,795	10,450	10,707
Income (loss) from operations	502	263	1,360	1,037
Corporate | Corporate, Non-Segment
Segment Reporting Information [Line Items]
Net Revenues	142	53	284	262
Income (loss) from operations	$ (3,307)	$ (3,780)	$ (6,668)	$ (7,430)

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Fair Value of Financial Instruments

6 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

At March 31, 2015, the Company’s financial instruments included cash and cash equivalents, short-term investments, foreign currency forward contract, trade and notes receivables and accounts payable.  Due to the short-term maturities of cash and cash equivalents, trade and other receivables and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates.

The Company measures its short-term investments and derivative instruments at fair value on a recurring basis.  The fair value measurement of the Company’s short-term investments and derivative instruments was determined using the following inputs (in thousands):

	As of March 31, 2015
			Quoted Prices in		Significant
			Active Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
	Total		(Level 1)		(Level 2)		(Level 3)
Short-term investments:
Corporate bonds	$	15,117	$	15,117	$	—	$	—
Government bonds		4,841		4,841		—		—
Foreign currency forward contract		294		—		294		—
Total	$	20,252	$	19,958	$	294	$	—

	As of September 30, 2014
			Quoted Prices in		Significant
			Active Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
	Total		(Level 1)		(Level 2)		(Level 3)
Short-term investments:
Corporate bonds	$	14,235	$	14,235	$	—	$	—
Government bonds		5,626		5,626		—		—
Foreign currency forward contract		795		—		795		—
Total	$	20,656	$	19,861	$	795	$	—

           The Company applies fair value techniques on a non-recurring basis in evaluating potential impairment losses related to goodwill and long-lived assets.

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Accumulated Other Comprehensive Loss (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Accumulated other comprehensive income (loss)			$ (2,496)
Change in unrealized losses on available-for-sale securities (net of tax)	23		21
Foreign currency translation adjustments	(1,966)	(942)	(4,618)	(1,039)
Accumulated other comprehensive income (loss)	(7,093)		(7,093)
Unrealized Losses on Available-for-Sale Securities
Accumulated other comprehensive income (loss)			(26)
Change in unrealized losses on available-for-sale securities (net of tax)			21
Accumulated other comprehensive income (loss)	(5)		(5)
Foreign Currency Translation Adjustments
Accumulated other comprehensive income (loss)			(2,470)
Foreign currency translation adjustments			(4,618)
Accumulated other comprehensive income (loss)	$ (7,088)		$ (7,088)

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Significant Accounting Policies - Additional Information (Details) (USD $)	3 Months Ended	6 Months Ended
	Dec. 31, 2014	Mar. 31, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
Reclassification of prior year deposit made for equipment from prepaid and other current assets to property, plant and equipment		$ 4,200,000
Goodwill		1,843,000	1,843,000
Impairment of property plant and equipment	$ 0	$ 0

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Segment Information (Tables)

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summary of Company's Segment Information

The following table summarizes the Company’s segment information (in thousands):

	Three Months Ended				Six Months Ended
	March 31, 2015		March 31, 2014		March 31, 2015		March 31, 2014
Net revenues:
Seismic	$	22,781	$	63,703	$	38,374	$	158,930
Non-Seismic		5,019		4,795		10,450		10,707
Corporate		142		53		284		262
Total	$	27,942	$	68,551	$	49,108	$	169,899
Income (loss) from operations:
Seismic	$	(5,744)	$	19,473	$	(13,129)	$	58,016
Non-Seismic		502		263		1,360		1,037
Corporate		(3,307)		(3,780)		(6,668)		(7,430)
Total	$	(8,549)	$	15,956	$	(18,437)	$	51,623

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Stock-Based Compensation - Additional Information (Details) (Restricted Stock, USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended	0 Months Ended	12 Months Ended
	Mar. 31, 2015	Nov. 21, 2013	Sep. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation expense	$ 11.5
Expected period for recognition of unrecognized compensation expense	2 years 8 months 12 days
1997 Key Employee Stock Option Plan Member
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued		184,000
Fair value of the Company’s common stock on the date of grant		$ 98.68
Unrecognized compensation expense		$ 17.3
Expected period for recognition of unrecognized compensation expense		4 years
2014 Long Term Incentive Plan Member
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued	3,000		13,000
Fair value of the Company’s common stock on the date of grant	$ 19.13		$ 45.68

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Changes in Warranty Reserve (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2015
Changes in product warranty reserve
Balance at the beginning of the period	$ 951
Accruals for warranties issued during the period	395
Settlements made (in cash or in kind) during the period	(702)
Balance at the end of the period	$ 644

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Short-term Investments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Schedule Of Available For Sale Securities [Line Items]
Short-term Investments, Amortized Cost	$ 19,965	$ 19,900
Short-term Investments, Unrealized Losses	(7)	(39)
Short-term Investments, Estimated Fair Value	19,958	19,861
Corporate
Schedule Of Available For Sale Securities [Line Items]
Short-term Investments, Amortized Cost	15,122	14,262
Short-term Investments, Unrealized Losses	(5)	(27)
Short-term Investments, Estimated Fair Value	15,117	14,235
Government
Schedule Of Available For Sale Securities [Line Items]
Short-term Investments, Amortized Cost	4,843	5,638
Short-term Investments, Unrealized Losses	(2)	(12)
Short-term Investments, Estimated Fair Value	$ 4,841	$ 5,626

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Derivative Financial Instruments

6 Months Ended

Mar. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

3. Derivative Financial Instruments

At March 31, 2015 and September 30, 2014, the Company’s Canadian subsidiary had $28.6 million and $29.8 million, respectively, of Canadian dollar denominated intercompany accounts payable owed to one of the Company’s U.S. subsidiaries.  In order to mitigate its exposure to movements in foreign currency rates between the U.S. dollar and Canadian dollar, the Company routinely enters into foreign currency forward contracts to hedge a portion of its exposure to changes in the value of the Canadian dollar.  At March 31, 2015, the Company was a party to a $28.0 million Canadian dollar forward contract.  This contract reduces the impact on cash flows from movements in the Canadian dollar/U.S. dollar currency exchange rate, but has not been designated as a hedge for accounting purposes.

At March 31, 2015, the Company had an accrued unrealized foreign exchange gain of $0.3 million under this contract.

The following table summarizes the gross fair value of all derivative instruments, which are not designated as hedging instruments and their location in the consolidated balance sheets (in thousands):

Derivative Instrument	Location	March 31, 2015		September 30, 2014
Foreign Currency Exchange Contracts	Prepaid Expenses and Other Current Assets	$	294	$	795

The following table summarizes the impact of the Company’s derivatives on the consolidated statements of operations for the three and six month periods ended March 31, 2015 and 2014 (in thousands):

		Three Months Ended					Six Months Ended
		March 31					March 31
Derivative Instrument	Location of Gain (Loss)	2015		2014			2015		2014
Foreign Currency Exchange Contracts	Other Income (Expense)	$	2,023	$	(58	)	$	2,948	$	155

Amounts in the above table include realized and unrealized derivative gains and losses.

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Short-term Investments - Additional Information (Details) (USD $)	6 Months Ended	12 Months Ended
	Mar. 31, 2015	Sep. 30, 2014
Short Term Investments [Abstract]
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss), Net of Tax	$ 5,000	$ 26,000

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Inventory Disclosure [Abstract]
Finished goods	$ 49,203	$ 42,473
Work-in-process	20,856	28,582
Raw materials	77,150	82,599
Obsolescence reserve	(8,844)	(7,764)
Total	$ 138,365	$ 145,890

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$ 23,513	$ 33,357
Short-term investments	19,958	19,861
Trade accounts receivable, net	16,783	24,602
Current portion of notes receivable	4,404	3,786
Income tax receivable	8,857	2,570
Inventories, net	138,365	145,890
Deferred income tax assets	7,319	7,244
Prepaid expenses and other current assets	1,872	6,698
Total current assets	221,072	244,008
Rental equipment, net	45,262	53,873
Property, plant and equipment, net	50,989	49,205
Goodwill	1,843	1,843
Non-current deferred income tax assets	626	75
Non-current notes receivable	1,524	28
Prepaid income taxes	4,947	5,848
Other assets	106	106
Total assets	326,369	354,986
Current liabilities:
Accounts payable trade	2,865	4,964
Accrued expenses and other current liabilities	6,762	14,590
Deferred revenue	529	3,752
Deferred income tax liabilities	23	23
Income taxes payable	230	22
Total current liabilities	10,409	23,351
Non-current deferred income tax liabilities	664	2,377
Total liabilities	11,073	25,728
Commitments and contingencies
Stockholders’ equity:
Preferred stock
Common stock	131	131
Additional paid-in capital	71,966	70,704
Retained earnings	250,292	260,919
Accumulated other comprehensive loss	(7,093)	(2,496)
Total stockholders’ equity	315,296	329,258
Total liabilities and stockholders’ equity	$ 326,369	$ 354,986

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Earnings (Loss) Per Common Share - Additional Information (Details)	6 Months Ended
	Mar. 31, 2015
Earnings Per Share [Abstract]
Split of common stock ratio	2

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Significant Accounting Policies

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Significant Accounting Policies

1. Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2014 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at March 31, 2015 and the consolidated statements of operations and statements of comprehensive income (loss) for the three and six months ended March 31, 2015 and 2014, and the consolidated statements of cash flows for the six months ended March 31, 2015 and 2014 were 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 were made. The results of operations for the three and six months ended March 31, 2015 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 accounting principles generally accepted in the United States of America were omitted pursuant to the rules of the Securities and Exchange Commission. 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 Company’s fiscal year ended September 30, 2014.

Reclassifications

Certain amounts previously presented in the consolidated financial statements have been reclassified to conform to the current year presentation. During the six months ended March 31, 2015, the Company reclassified $4.2 million in deposits made for equipment purchases in the prior fiscal year from prepaid and other current assets to property, plant and equipment on its consolidated balance sheet. Such reclassification had no effect on net income (loss), stockholders’ equity or cash flows.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to bad debt reserves, inventory obsolescence reserves, percentage-of-completion revenue recognition, self-insurance reserves, product warranty reserves, long-lived assets, intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents.

Short-term Investments

The Company classifies its short-term investments consisting of corporate bonds, government bonds and other such similar investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding gains and losses reported each period as a component of accumulated other comprehensive income (loss) in stockholders’ equity. See note 2 for additional information.

Inventories

The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories.

Impairment Review of Goodwill and Long-lived Assets

At March 31, 2015, the Company had $1.8 million of goodwill reflected in its consolidated balance sheet. In accordance with FASB ASC 350, “Intangibles – Goodwill and Other,” we perform goodwill impairment testing at least annually, unless indicators of impairment exist in interim periods. In recent months, business conditions in the oil and gas industry have significantly deteriorated and the market value of the Company’s stock has declined. In light of the foregoing, we concluded that it was appropriate for us to perform an interim goodwill impairment test as of December 31, 2014 and March 31, 2015. The impairment test for goodwill uses a two-step approach. Step one compares the estimated fair value of a reporting unit with goodwill to its carrying value. If the carrying value exceeds the estimated fair value, step two must be performed. Step two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit (including any unrecognized intangibles) as if the reporting unit was acquired in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of its goodwill, an impairment loss is recognized in an amount equal to the excess. Based on the results of our step one test as of December 31, 2014 and March 31, 2015, management concluded that goodwill was not impaired; however, given overall market conditions, management will continue to monitor this situation. In connection with our goodwill impairment test, management also reviewed the recoverability of the carrying value of the Company’s rental equipment and property, plant and equipment based on future undiscounted cash flows and determined that no such impairment of these assets was necessary at December 31, 2014 and March 31, 2015.

Revenue Recognition – Products and Services

The Company primarily derives revenue from the sale of its manufactured products, including revenues derived from the sale of its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its manufactured products. Except for revenues recognized using the percentage-of-completion method discussed below, the Company recognizes revenue from product sales, including the sale of used rental equipment, when (i) title passes to the customer, (ii) the customer assumes the risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales price is reasonably assured, and (v) product delivery occurs as directed by the customer. Except for certain of the Company’s reservoir characterization products, the Company’s products are generally sold without any customer acceptance provisions and the Company’s standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenues as earned over the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or longer. Revenues from engineering services are recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenues are recognized when services are rendered and are generally priced on a per day rate.

Revenue Recognition – Percentage of Completion

The Company utilizes the percentage-of-completion method (the “POC Method”) to recognize revenues and costs on contracts having the following characteristics:

— the order/contract requires significant custom designs for customer specific applications;

— the product design requires significant engineering efforts;

— the order/contract requires the customer to make progress payments during the contract term; and

— the order/contract requires at least 90 days of engineering and manufacturing effort.

The POC Method requires the Company’s senior management to make estimates, at least quarterly, of the (i) total expected costs of the contract, (ii) manufacturing progress against the contract and (iii) the estimated cost to complete the contract. These estimates impact the amount of revenue and gross profit the Company recognizes for each reporting period. Significant estimates that may affect the future cost to complete a contract include the cost and availability of raw materials and component parts, engineering services, manufacturing equipment, labor, manufacturing capacity, factory productivity, contract penalties and disputes, product warranties and other contingent factors. Change orders are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized. The Company defers recognition of the entire amount of revenue or portion thereof associated with unapproved change orders if there is substantial uncertainty as to amounts involved or ultimate realization. The cumulative impact of periodic revisions to the future cost to complete a contract will be reflected in the period in which these changes become known, including, to the extent required, the recognition of losses at the time such losses are known and estimable. Due to the various estimates inherent in the POC Method, actual final results at the conclusion of a contract could differ from management’s previous estimates.

The Company analyzes a variety of indicators to determine manufacturing progress, including actual costs incurred to date compared to total estimated costs and actual quantities produced to date compared to total contract quantities.

Cost of sales includes direct contract costs, such as materials and labor, and indirect costs that are attributable to a contract’s production activity. The timing of when the Company invoices its customer is dependent upon the completion of certain production milestones as defined in the contract. Cumulative contract costs and estimated earnings to date in excess of cumulative billings are reported as a current asset on the consolidated balance sheet as “costs and estimated earnings in excess of billings.” Cumulative billings in excess of cumulative costs and estimated earnings are reported as a current liability on the consolidated balance sheet as “billings in excess of costs and estimated earnings.” Any uncollected billed revenue, including contract retentions, is included in “trade accounts receivable, net.”

The Company currently has no contracts accounted for under the POC Method.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs.

Product Warranties

Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance sheets. Changes in the warranty reserve are reflected in the following table (in thousands):

Balance at October 1, 2014	$	951
Accruals for warranties issued during the period		395
Settlements made (in cash or in kind) during the period		(702	)
Balance at March 31, 2015	$	644

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15 which provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and to provide related footnote disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customer (Topic 606).” The amendment applies a new five-step revenue recognition model to be used in recognizing revenues associated with customer contracts. The amendment requires disclosure sufficient to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill the contract. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

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Company's Derivatives on Consolidated Financial Statements of Operations (Details) (Foreign Currency Forward Contract, Other Income (Expense), USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Foreign Currency Forward Contract | Other Income (Expense)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Amount of (Loss) Gain Recognized in Income	$ 2,023	$ (58)	$ 2,948	$ 155

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Derivative Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Gross Fair Value of all Derivative Instruments

The following table summarizes the gross fair value of all derivative instruments, which are not designated as hedging instruments and their location in the consolidated balance sheets (in thousands):

Derivative Instrument	Location	March 31, 2015		September 30, 2014
Foreign Currency Exchange Contracts	Prepaid Expenses and Other Current Assets	$	294	$	795

Company's Derivatives on Consolidated Financial Statements of Operations

The following table summarizes the impact of the Company’s derivatives on the consolidated statements of operations for the three and six month periods ended March 31, 2015 and 2014 (in thousands):

		Three Months Ended					Six Months Ended
		March 31					March 31
Derivative Instrument	Location of Gain (Loss)	2015		2014			2015		2014
Foreign Currency Exchange Contracts	Other Income (Expense)	$	2,023	$	(58	)	$	2,948	$	155

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Fair Value Measurement of Company's Short-term Investments and Derivative Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term Investments, Estimated Fair Value	$ 19,958	$ 19,861
Fair Value, Measurements, Recurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	20,252	20,656
Fair Value, Measurements, Recurring | Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term Investments, Estimated Fair Value	15,117	14,235
Fair Value, Measurements, Recurring | Government bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term Investments, Estimated Fair Value	4,841	5,626
Fair Value, Measurements, Recurring | Canadian Dollar Forward Contract
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Net Derivatives	294	795
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	19,958	19,861
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term Investments, Estimated Fair Value	15,117	14,235
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Government bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term Investments, Estimated Fair Value	4,841	5,626
Fair Value, Measurements, Recurring | Significant Other Observable (Level 2)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	294	795
Fair Value, Measurements, Recurring | Significant Other Observable (Level 2) | Canadian Dollar Forward Contract
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Net Derivatives	$ 294	$ 795

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Accounts and Notes Receivable (Tables)

6 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Current Trade Accounts Receivable

Current trade accounts are reflected in the following table (in thousands):

	March 31, 2015			September 30, 2014
Trade accounts receivable	$	18,637		$	25,727
Allowance for doubtful accounts		(1,854	)		(1,125	)
	$	16,783		$	24,602

Notes Receivable

Notes receivable, net are reflected in the following table (in thousands):

	March 31, 2015		September 30, 2014
Notes receivable	$	5,928	$	3,814
Allowance for doubtful notes		—		—
		5,928		3,814
Less current portion		4,404		3,786
Non-current notes receivable	$	1,524	$	28

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Short-term Investments

6 Months Ended

Mar. 31, 2015

Investments Debt And Equity Securities [Abstract]

Short-term Investments

2. Short-term Investments

	As of March 31, 2015 (in thousands)
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Short-term investments:
Corporate	$	15,122	$	—	$	(5	)	$	15,117
Government		4,843		—		(2	)		4,841
Total	$	19,965	$	—	$	(7	)	$	19,958

	As of September 30, 2014 (in thousands)
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Short-term investments:
Corporate	$	14,262	$	—	$	(27	)	$	14,235
Government		5,638		—		(12	)		5,626
Total	$	19,900	$	—	$	(39	)	$	19,861

Accumulated other comprehensive loss on the consolidated balance sheets at March 31, 2015 and September 30, 2014 included unrealized losses (net of tax) of $5,000 and $26,000, respectively.

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Revenues:
Total revenues	$ 27,942	$ 68,551	$ 49,108	$ 169,899
Cost of revenues:
Total cost of revenues	26,526	40,648	47,713	94,904
Gross profit	1,416	27,903	1,395	74,995
Operating expenses:
Selling, general and administrative	5,953	6,554	11,822	13,256
Research and development	3,691	5,097	6,992	9,472
Bad debt expense	321	296	1,018	644
Total operating expenses	9,965	11,947	19,832	23,372
Income (loss) from operations	(8,549)	15,956	(18,437)	51,623
Other income (expense):
Interest expense	(107)	(103)	(219)	(235)
Interest income	115	25	174	56
Foreign exchange gains, net	599	101	2,188	80
Other, net	(23)	(12)	(113)	(38)
Total other income (expense), net	584	11	2,030	(137)
Income (loss) before income taxes	(7,965)	15,967	(16,407)	51,486
Income tax expense (benefit)	(2,783)	5,151	(5,780)	16,494
Net income (loss)	(5,182)	10,816	(10,627)	34,992
Basic earnings (loss) per share	$ (0.40)	$ 0.83	$ (0.82)	$ 2.68
Diluted earnings (loss) per share	$ (0.40)	$ 0.82	$ (0.82)	$ 2.66
Weighted average shares outstanding – Basic	13,002,616	12,950,416	12,990,129	12,948,788
Weighted average shares outstanding – Diluted	13,002,616	13,002,383	12,990,129	13,001,075
Products
Revenues:
Total revenues	24,833	58,909	43,296	156,729
Cost of revenues:
Total cost of revenues	21,402	35,474	40,015	86,712
Rental equipment
Revenues:
Total revenues	3,109	9,642	5,812	13,170
Cost of revenues:
Total cost of revenues	$ 5,124	$ 5,174	$ 7,698	$ 8,192

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Segment Information

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

12. Segment Information

The Company’s Seismic product lines include land and marine wireless data acquisition systems, seabed reservoir characterization products and services, geophones and geophone strings, hydrophones, leader wire, connectors, telemetry cables, marine streamer retrieval and steering devices and various other products.  The Non-Seismic product lines include thermal imaging products and industrial products.  The Company typically has a minor amount of Seismic product sales to its Non-Seismic customers.

The following table summarizes the Company’s segment information (in thousands):

	Three Months Ended				Six Months Ended
	March 31, 2015		March 31, 2014		March 31, 2015		March 31, 2014
Net revenues:
Seismic	$	22,781	$	63,703	$	38,374	$	158,930
Non-Seismic		5,019		4,795		10,450		10,707
Corporate		142		53		284		262
Total	$	27,942	$	68,551	$	49,108	$	169,899
Income (loss) from operations:
Seismic	$	(5,744)	$	19,473	$	(13,129)	$	58,016
Non-Seismic		502		263		1,360		1,037
Corporate		(3,307)		(3,780)		(6,668)		(7,430)
Total	$	(8,549)	$	15,956	$	(18,437)	$	51,623

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Document and Entity Information	6 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	GEOS
Entity Registrant Name	GEOSPACE TECHNOLOGIES CORP
Entity Central Index Key	0001001115
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		13,147,916

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Income Taxes

6 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The United States statutory tax rate for the three and six months ended March 31, 2015 and 2014 was 35%. The Company’s effective tax rates for the three months ended March 31, 2015 and 2014 were 34.9% and 32.3%, respectively. The Company’s effective tax rates for the six months ended March 31, 2015 and 2014 were 35.2% and 32.0%, respectively. The lower effective tax rates for the periods ended March 31, 2014 primarily resulted from a manufacturers’/producers’ deduction available to U.S. manufacturers.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ (5,182)	$ 10,816	$ (10,627)	$ 34,992
Other comprehensive income (loss):
Change in unrealized gains on available-for-sale securities (net of tax)	23		21
Foreign currency translations adjustments	(1,966)	(942)	(4,618)	(1,039)
Other comprehensive income (loss)	(1,943)	(942)	(4,597)	(1,039)
Total comprehensive income (loss)	$ (7,125)	$ 9,874	$ (15,224)	$ 33,953

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Long-Term Debt

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Long-Term Debt

7. Long-Term Debt

The Company had no long-term debt outstanding at March 31, 2015 and September 30, 2014.

On March 2, 2011, the Company entered into a credit agreement with Frost Bank.  On September 27, 2013, the Company amended the credit agreement and increased its borrowing availability to $50.0 million (as amended, the “Credit Agreement”).  The Company’s borrowings under the Credit Agreement were principally secured by its accounts receivable, inventories and equipment.  In addition, certain domestic subsidiaries of the Company guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries secured the obligations by the pledge of certain of the assets of such subsidiaries.  The Company was required to make quarterly interest payments on borrowed funds.  The Credit Agreement limited the incurrence of additional indebtedness, required the maintenance of certain financial ratios, restricted the Company and its subsidiaries’ ability to pay cash dividends and contained other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement was a LIBOR based rate with a margin spread of 250 to 325 basis points depending upon the maintenance of certain ratios.  At March 31, 2015, the Company was in compliance with all covenants under the Credit Agreement; however, a covenant requiring the Company to maintain a minimum ratio of Funded Debt to EBITDA restricted the Company’s potentially available borrowings under the Credit Agreement to $19.7 million at March 31, 2015.  At March 31, 2015 and September 30, 2014, the Company had standby letters of credit outstanding in the amount of $59,000 and $51,000, respectively.

On May 4, 2015, the Company again amended the Credit Agreement which reduced its borrowing availability to $30.0 million with amounts available for borrowing determined by a borrowing base.  Under the amendments to the Credit Agreement, the borrowing base is determined based upon certain of the Company’s and its U.S. subsidiaries’ assets which include (i) 80% of certain accounts receivable plus (ii) 50% of certain notes receivable (such result not to exceed $10 million) plus (iii) 25% of certain inventories (excluding work-in-process inventories).  On a pro forma basis as of March 31, 2015, the Company’s borrowing base was $37.9 million resulting in borrowing availability of $30.0 million less any outstanding letters of credit.  Borrowings under the Credit Agreement as amended are secured by substantially all of the Company’s assets.  In addition, the Company’s domestic subsidiaries have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured the obligations by the pledge of substantially all of the assets of such subsidiaries.  The Credit Agreement as amended expires on May 4, 2018 and all borrowed funds are due and payable at that time.  The Company is required to make monthly interest payments on borrowed funds.  The Credit Agreement as amended limits the incurrence of additional indebtedness, requires the maintenance of a single financial ratio that compares certain of the Company’s assets to certain of its liabilities, restricts the Company and its subsidiaries’ ability to pay cash dividends and contains other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement as amended is based on the Wall Street Journal prime rate, which was 3.25% at March 31, 2015.

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Inventories

6 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

6. Inventories

Inventories consist of the following (in thousands):

	March 31, 2015			September 30, 2014
Finished goods	$	49,203		$	42,473
Work-in-process		20,856			28,582
Raw materials		77,150			82,599
Obsolescence reserve		(8,844	)		(7,764	)
	$	138,365		$	145,890

During the six months ended March 31, 2015 and 2014, the Company made non-cash inventory transfers of $0.1 million and $6.9 million, respectively, to its rental equipment fleet. Raw materials include semi-finished goods and component parts totaling $41.9 million and $43.6 million at March 31, 2015 and September 30, 2014, respectively.

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement of Company's Short-term Investments and Derivative Instruments

The fair value measurement of the Company’s short-term investments and derivative instruments was determined using the following inputs (in thousands):

	As of March 31, 2015
			Quoted Prices in		Significant
			Active Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
	Total		(Level 1)		(Level 2)		(Level 3)
Short-term investments:
Corporate bonds	$	15,117	$	15,117	$	—	$	—
Government bonds		4,841		4,841		—		—
Foreign currency forward contract		294		—		294		—
Total	$	20,252	$	19,958	$	294	$	—

	As of September 30, 2014
			Quoted Prices in		Significant
			Active Markets for		Other		Significant
			Identical Assets		Observable		Unobservable
	Total		(Level 1)		(Level 2)		(Level 3)
Short-term investments:
Corporate bonds	$	14,235	$	14,235	$	—	$	—
Government bonds		5,626		5,626		—		—
Foreign currency forward contract		795		—		795		—
Total	$	20,656	$	19,861	$	795	$	—

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Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2014 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at March 31, 2015 and the consolidated statements of operations and statements of comprehensive income (loss) for the three and six months ended March 31, 2015 and 2014, and the consolidated statements of cash flows for the six months ended March 31, 2015 and 2014 were 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 were made. The results of operations for the three and six months ended March 31, 2015 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 accounting principles generally accepted in the United States of America were omitted pursuant to the rules of the Securities and Exchange Commission. 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 Company’s fiscal year ended September 30, 2014.

Reclassifications

Reclassifications

Certain amounts previously presented in the consolidated financial statements have been reclassified to conform to the current year presentation. During the six months ended March 31, 2015, the Company reclassified $4.2 million in deposits made for equipment purchases in the prior fiscal year from prepaid and other current assets to property, plant and equipment on its consolidated balance sheet. Such reclassification had no effect on net income (loss), stockholders’ equity or cash flows.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to bad debt reserves, inventory obsolescence reserves, percentage-of-completion revenue recognition, self-insurance reserves, product warranty reserves, long-lived assets, intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents.

Short-term Investments

Short-term Investments

The Company classifies its short-term investments consisting of corporate bonds, government bonds and other such similar investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding gains and losses reported each period as a component of accumulated other comprehensive income (loss) in stockholders’ equity. See note 2 for additional information.

Inventories

Inventories

The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories.

Impairment Review of Goodwill and Long-lived Assets

Impairment Review of Goodwill and Long-lived Assets

At March 31, 2015, the Company had $1.8 million of goodwill reflected in its consolidated balance sheet. In accordance with FASB ASC 350, “Intangibles – Goodwill and Other,” we perform goodwill impairment testing at least annually, unless indicators of impairment exist in interim periods. In recent months, business conditions in the oil and gas industry have significantly deteriorated and the market value of the Company’s stock has declined. In light of the foregoing, we concluded that it was appropriate for us to perform an interim goodwill impairment test as of December 31, 2014 and March 31, 2015. The impairment test for goodwill uses a two-step approach. Step one compares the estimated fair value of a reporting unit with goodwill to its carrying value. If the carrying value exceeds the estimated fair value, step two must be performed. Step two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit (including any unrecognized intangibles) as if the reporting unit was acquired in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of its goodwill, an impairment loss is recognized in an amount equal to the excess. Based on the results of our step one test as of December 31, 2014 and March 31, 2015, management concluded that goodwill was not impaired; however, given overall market conditions, management will continue to monitor this situation. In connection with our goodwill impairment test, management also reviewed the recoverability of the carrying value of the Company’s rental equipment and property, plant and equipment based on future undiscounted cash flows and determined that no such impairment of these assets was necessary at December 31, 2014 and March 31, 2015.

Revenue Recognition

Revenue Recognition – Products and Services

The Company primarily derives revenue from the sale of its manufactured products, including revenues derived from the sale of its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its manufactured products. Except for revenues recognized using the percentage-of-completion method discussed below, the Company recognizes revenue from product sales, including the sale of used rental equipment, when (i) title passes to the customer, (ii) the customer assumes the risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales price is reasonably assured, and (v) product delivery occurs as directed by the customer. Except for certain of the Company’s reservoir characterization products, the Company’s products are generally sold without any customer acceptance provisions and the Company’s standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenues as earned over the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or longer. Revenues from engineering services are recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenues are recognized when services are rendered and are generally priced on a per day rate.

Revenue Recognition – Percentage of Completion

The Company utilizes the percentage-of-completion method (the “POC Method”) to recognize revenues and costs on contracts having the following characteristics:

— the order/contract requires significant custom designs for customer specific applications;

— the product design requires significant engineering efforts;

— the order/contract requires the customer to make progress payments during the contract term; and

— the order/contract requires at least 90 days of engineering and manufacturing effort.

The POC Method requires the Company’s senior management to make estimates, at least quarterly, of the (i) total expected costs of the contract, (ii) manufacturing progress against the contract and (iii) the estimated cost to complete the contract. These estimates impact the amount of revenue and gross profit the Company recognizes for each reporting period. Significant estimates that may affect the future cost to complete a contract include the cost and availability of raw materials and component parts, engineering services, manufacturing equipment, labor, manufacturing capacity, factory productivity, contract penalties and disputes, product warranties and other contingent factors. Change orders are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized. The Company defers recognition of the entire amount of revenue or portion thereof associated with unapproved change orders if there is substantial uncertainty as to amounts involved or ultimate realization. The cumulative impact of periodic revisions to the future cost to complete a contract will be reflected in the period in which these changes become known, including, to the extent required, the recognition of losses at the time such losses are known and estimable. Due to the various estimates inherent in the POC Method, actual final results at the conclusion of a contract could differ from management’s previous estimates.

The Company analyzes a variety of indicators to determine manufacturing progress, including actual costs incurred to date compared to total estimated costs and actual quantities produced to date compared to total contract quantities.

Cost of sales includes direct contract costs, such as materials and labor, and indirect costs that are attributable to a contract’s production activity. The timing of when the Company invoices its customer is dependent upon the completion of certain production milestones as defined in the contract. Cumulative contract costs and estimated earnings to date in excess of cumulative billings are reported as a current asset on the consolidated balance sheet as “costs and estimated earnings in excess of billings.” Cumulative billings in excess of cumulative costs and estimated earnings are reported as a current liability on the consolidated balance sheet as “billings in excess of costs and estimated earnings.” Any uncollected billed revenue, including contract retentions, is included in “trade accounts receivable, net.”

The Company currently has no contracts accounted for under the POC Method.

Research and Development Costs

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs.

Product Warranties

Product Warranties

Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance sheets. Changes in the warranty reserve are reflected in the following table (in thousands):

Balance at October 1, 2014	$	951
Accruals for warranties issued during the period		395
Settlements made (in cash or in kind) during the period		(702	)
Balance at March 31, 2015	$	644

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15 which provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and to provide related footnote disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customer (Topic 606).” The amendment applies a new five-step revenue recognition model to be used in recognizing revenues associated with customer contracts. The amendment requires disclosure sufficient to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill the contract. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

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Earnings (Loss) Per Common Share

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings (Loss) Per Common Share

10. Earnings (Loss) Per Common Share

The Company applies the two-class method in calculating per share data.  The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):

	Three Months Ended					Six Months Ended
	March 31, 2015			March 31, 2014		March 31, 2015			March 31, 2014
Net income (loss)	$	(5,182	)	$	10,816	$	(10,627	)	$	34,992
Less: Income allocable to unvested restricted stock		—			109		—			353
Income (loss) available to common shareholders		(5,182	)		10,707		(10,627	)		34,639
Reallocation of participating earnings		—			—		—			1
Income (loss) attributable to common shareholders for diluted earnings per share	$	(5,182	)	$	10,707	$	(10,627	)	$	34,640
Weighted average number of common share equivalents:
Common shares used in basic earnings (loss) per share		13,002,616			12,950,416		12,990,129			12,948,788
Common share equivalents outstanding  related to stock options		—			51,967		—			52,287
Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share		13,002,616			13,002,383		12,990,129			13,001,075
Earnings (loss) per share:
Basic	$	(0.40	)	$	0.83	$	(0.82	)	$	2.68
Diluted	$	(0.40	)	$	0.82	$	(0.82	)	$	2.66

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Accumulated Other Comprehensive Loss

6 Months Ended

Mar. 31, 2015

Stockholders Equity Note [Abstract]

Accumulated Other Comprehensive Loss

8. Accumulated Other Comprehensive Loss:

Accumulated other comprehensive loss consisted of the following (in thousands):

	Unrealized			Foreign
	Losses on			Currency
	Available-for-			Translation
	Sale Securities			Adjustments			Total
Balance at September 30, 2014	$	(26	)	$	(2,470	)	$	(2,496	)
Change in unrealized losses on available-for-sale securities (net of tax)		21			—			21
Foreign currency translation adjustments		—			(4,618	)		(4,618	)
Balance at March 31, 2015	$	(5	)	$	(7,088	)	$	(7,093	)

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Stock-Based Compensation

6 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

9. Stock-Based Compensation:

On November 21, 2013, the Company issued 184,000 shares of restricted stock under the 1997 Key Employee Stock Option Plan, as amended.  The fair value of the Company’s common stock on the date of grant was $98.68 per share, and the unrecognized compensation cost on the date of grant related to these awards, net of estimated forfeitures, was $17.3 million and will be charged to expense over four years as the restrictions lapse.  During fiscal year 2014, the Company issued a total of 13,000 shares of restricted stock under the 2014 Long Term Incentive Plan, as amended (“the Plan”) at a weighted average grant date fair value of $45.68 per share.  During the first six months of fiscal year 2015, the Company issued a total of 3,000 shares of restricted stock under the Plan at a weighted average grant date fair value of $19.13 per share. Recipients of restricted stock awards are entitled to vote such shares and are entitled to dividends if paid.

Compensation expense for restricted stock awards is determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of shares that are anticipated to fully vest.  As of March 31, 2015, we had unrecognized compensation expense of approximately $11.5 million, all of which was related to restricted stock awards.  The weighted average period over which this expense is expected to be recognized is 2.7 years.

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

The Company is involved in various pending or potential legal actions in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

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Gross Fair Value of all Derivative Instruments (Details) (Foreign Currency Forward Contract, Prepaid Expenses and Other Current Assets, USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Foreign Currency Forward Contract | Prepaid Expenses and Other Current Assets
Derivatives Fair Value [Line Items]
Derivative Assets	$ 294	$ 795

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Short-term Investments (Tables)

6 Months Ended

Mar. 31, 2015

Investments Debt And Equity Securities [Abstract]

Short-term Investments

	As of March 31, 2015 (in thousands)
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Short-term investments:
Corporate	$	15,122	$	—	$	(5	)	$	15,117
Government		4,843		—		(2	)		4,841
Total	$	19,965	$	—	$	(7	)	$	19,958

	As of September 30, 2014 (in thousands)
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Short-term investments:
Corporate	$	14,262	$	—	$	(27	)	$	14,235
Government		5,638		—		(12	)		5,626
Total	$	19,900	$	—	$	(39	)	$	19,861

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Mar. 31, 2015

Stockholders Equity Note [Abstract]

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consisted of the following (in thousands):

	Unrealized			Foreign
	Losses on			Currency
	Available-for-			Translation
	Sale Securities			Adjustments			Total
Balance at September 30, 2014	$	(26	)	$	(2,470	)	$	(2,496	)
Change in unrealized losses on available-for-sale securities (net of tax)		21			—			21
Foreign currency translation adjustments		—			(4,618	)		(4,618	)
Balance at March 31, 2015	$	(5	)	$	(7,088	)	$	(7,093	)

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Inventories - Additional Information (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Inventory Disclosure [Abstract]
Inventories transferred to rental equipment	$ 0.1	$ 6.9
Raw materials include semi-finished goods and component parts	$ 41.9		$ 43.6

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income (loss)	$ (10,627)	$ 34,992
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred income tax benefit	(2,338)	(676)
Depreciation	10,096	8,662
Accretion of discounts on short-term-investments	114
Stock-based compensation	2,327	1,935
Bad debt expense	1,018	644
Inventory obsolescence expense	1,662	1,717
Gross profit from the sale of used rental equipment	(1,349)	(5,466)
Gain on disposal of property, plant and equipment	(2)	(58)
Excess tax expense from stock-based compensation	(1,065)
Effects of changes in operating assets and liabilities:
Trade accounts and notes receivable	3,559	337
Income tax receivable	(6,287)
Inventories	3,303	(3,987)
Costs and estimated earnings in excess of billings		12,400
Prepaid expenses and other current assets	4,645	306
Prepaid income taxes	900	(950)
Accounts payable	(2,064)	(2,496)
Accrued expenses and other	(11,503)	(1,346)
Deferred revenue	(3,197)	5,672
Income taxes payable	255	4,117
Net cash provided by (used in) operating activities	(10,553)	55,803
Cash flows from investing activities:
Purchase of property, plant and equipment	(1,418)	(4,379)
Investment in rental equipment	(1,799)	(18,309)
Proceeds from sale of used rental equipment	3,570	8,551
Purchases of short-term investments	(1,875)
Proceeds from the sale of short-term investments	1,715
Net cash provided by (used in) investing activities	193	(14,137)
Cash flows from financing activities:
Principal payments on debt arrangements		(931)
Excess tax benefit from stock-based compensation		661
Proceeds from exercise of stock options		212
Net cash used in financing activities		(58)
Effect of exchange rate changes on cash	516	6
Increase (decrease) in cash and cash equivalents	(9,844)	41,614
Cash and cash equivalents, beginning of period	33,357	2,726
Cash and cash equivalents, end of period	$ 23,513	$ 44,340

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Accounts and Notes Receivable

6 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Accounts and Notes Receivable

5. Accounts and Notes Receivable

Current trade accounts are reflected in the following table (in thousands):

	March 31, 2015			September 30, 2014
Trade accounts receivable	$	18,637		$	25,727
Allowance for doubtful accounts		(1,854	)		(1,125	)
	$	16,783		$	24,602

The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses.  The Company determines the allowance based upon historical experience and a review of its balances.  Accounts receivable balances are charged off against the allowance whenever it is probable that the receivable will not be recoverable.  The Company does not have any off-balance-sheet credit exposure related to its customers.

Notes receivable, net are reflected in the following table (in thousands):

	March 31, 2015		September 30, 2014
Notes receivable	$	5,928	$	3,814
Allowance for doubtful notes		—		—
		5,928		3,814
Less current portion		4,404		3,786
Non-current notes receivable	$	1,524	$	28

During the three months ended March 31, 2015, notes receivable were reduced $0.7 million in connection with the return of rental equipment from a customer in a non-cash transaction.

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Earnings (Loss) Per Common Share (Tables)

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for computation of earnings (loss) per share

The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):

	Three Months Ended					Six Months Ended
	March 31, 2015			March 31, 2014		March 31, 2015			March 31, 2014
Net income (loss)	$	(5,182	)	$	10,816	$	(10,627	)	$	34,992
Less: Income allocable to unvested restricted stock		—			109		—			353
Income (loss) available to common shareholders		(5,182	)		10,707		(10,627	)		34,639
Reallocation of participating earnings		—			—		—			1
Income (loss) attributable to common shareholders for diluted earnings per share	$	(5,182	)	$	10,707	$	(10,627	)	$	34,640
Weighted average number of common share equivalents:
Common shares used in basic earnings (loss) per share		13,002,616			12,950,416		12,990,129			12,948,788
Common share equivalents outstanding  related to stock options		—			51,967		—			52,287
Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share		13,002,616			13,002,383		12,990,129			13,001,075
Earnings (loss) per share:
Basic	$	(0.40	)	$	0.83	$	(0.82	)	$	2.68
Diluted	$	(0.40	)	$	0.82	$	(0.82	)	$	2.66

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Notes Receivable (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Accounts Receivable Net [Abstract]
Notes receivable	$ 5,928	$ 3,814
Total	5,928	3,814
Less current portion	4,404	3,786
Non-current notes receivable	$ 1,524	$ 28

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Significant Accounting Policies (Tables)

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Changes in Warranty Reserve

Changes in the warranty reserve are reflected in the following table (in thousands):

Balance at October 1, 2014	$	951
Accruals for warranties issued during the period		395
Settlements made (in cash or in kind) during the period		(702	)
Balance at March 31, 2015	$	644