-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RTeX1lon8qSDpDijnv/MBLJWIk6nBDe0XnEYHkXtFbnwDYzUJjJjixYYDIjsRkOA dT0PZA88sqf2dOutAJnOhQ== 0000950129-04-000338.txt : 20040129 0000950129-04-000338.hdr.sgml : 20040129 20040129161802 ACCESSION NUMBER: 0000950129-04-000338 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040129 ITEM INFORMATION: FILED AS OF DATE: 20040129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INPUT OUTPUT INC CENTRAL INDEX KEY: 0000866609 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 222286646 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12691 FILM NUMBER: 04552729 BUSINESS ADDRESS: STREET 1: 11104 W AIRPORT BLVD STREET 2: SUITE 200 CITY: STAFFORD STATE: TX ZIP: 77477 BUSINESS PHONE: 2819333339 MAIL ADDRESS: STREET 1: 11104 W AIRPORT BLVD STREET 2: SUITE 200 CITY: STAFFORD STATE: TX ZIP: 77477 8-K 1 h12256e8vk.txt INPUT/OUTPUT, INC.- JANUARY 29, 2004 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): JANUARY 29, 2004 INPUT/OUTPUT, INC. (Exact name of registrant as specified in its charter) DELAWARE 1-12961 22-2286646 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 12300 PARC CREST DR. STAFFORD, TX 77477 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (281) 933-3339 =============================================================================== ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On January 29, 2004, Input/Output, Inc. (the "Company") issued a press release regarding its results of operations for the fourth quarter of 2003, a copy of which is furnished as Exhibit 99.1 hereto, which is incorporated herein by reference. Such exhibit (i) is furnished pursuant to Item 12 of Form 8-K, (ii) is not to be considered "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (iii) shall not be incorporated by reference into any previous or future filings made by or to be made by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or the Exchange Act. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 29, 2004 Input/Output, Inc. (Registrant) By: /s/ Robert P. Peebler ----------------------------------- Name: Robert P. Peebler ----------------------------------- Title: President & Chief Executive Officer ----------------------------------- -3- INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated January 29, 2004, issued by Input/Output, Inc. -4- EX-99.1 3 h12256exv99w1.txt PRESS RELEASE DATED JANUARY 29, 2004 EXHIBIT 99.1 [INPUT/OUTPUT LOGO APPEARS HERE] CONTACTS: J. Michael Kirksey Chief Financial Officer (281) 879-3658Input/O Input/Output (281) 879-3672 Jack Lascar, Partner Karen Roan, Vice President DRG&E (713) 529-6600 INPUT/OUTPUT REPORTS FOURTH QUARTER AND YEAR-END RESULTS o FOURTH QUARTER 2003 REVENUES OF $44 MILLION AND EARNINGS PER SHARE OF $0.01, IN LINE WITH PRIOR GUIDANCE o 2003 REVENUES INCREASED 27 PERCENT o 2003 VECTORSEIS SALES REACHED OVER $20 MILLION HOUSTON - JANUARY 29, 2004 - Input/Output, Inc. (NYSE: IO) today announced fourth quarter 2003 net earnings applicable to common shares of $633 thousand or $0.01 per share, on revenues of $44.0 million compared to a net loss applicable to common shares of $6.5 million, or $(0.13) per share, on revenues of $37.0 million for the same period a year ago. For the year ended December 31, 2003, Input/Output recorded a net loss applicable to common shareholders of $23.2 million, or $(0.45) per share, on revenues of $150.0 million compared to a net loss applicable to common shares of $120.8 million, or $(2.37) per share, on revenues of $118.6 million for the year ended December 31, 2002. Bob Peebler, I/O's President and Chief Executive Officer, said, "We are pleased with our return to profitability in the fourth quarter and with our improvements in our gross margin, cost structure and financial flexibility. We are excited about the market acceptance of our VectorSeis product line during its first year of commercialization." "Also, the strategic technology alliance with Apache, which was announced last quarter, should enable I/O to accelerate the adoption of advanced seismic imaging technologies. We expect these new technologies, when combined with the new processing capabilities that were acquired from Axis Geophysics, to provide I/O with a new competitive advantage in the market place," added Mr. Peebler. FOURTH QUARTER 2003 Fourth quarter revenues increased 19 percent over the fourth quarter a year ago primarily due to continued strength in land seismic activity among non-Western contractors. Land revenues rose significantly to $35.4 million versus $20.4 million in the fourth quarter a year ago. Marine revenues declined to $8.6 million from $16.6 million in the fourth quarter a year ago driven by continued overcapacity and consolidation in the industry. Gross margin percentage for the fourth quarter improved to 26 percent from 15 percent for the same period a year ago primarily due to volume improvements in the land division, higher margin sales of VectorSeis System Four land acquisition platforms, as well as improved revenue mix in the marine division. Adjusted EBITDA (adjusted earnings before net interest expense, taxes, depreciation and amortization) for the fourth quarter was $3.0 million compared to a negative $5.8 million for the fourth quarter of last year. You can find a reconciliation of Adjusted EBITDA to reported earnings at the end of this press release. Operating expense levels in the fourth quarter of 2003 decreased 31 percent compared to last year's fourth quarter. As a percentage of revenues, SG&A expenses decreased to approximately 15 percent compared to 21 percent in the fourth quarter of 2002. Earnings from operations in the quarter were $744 thousand compared to a loss from operations of $9.7 million in the fourth quarter of 2002. FULL YEAR 2003 Revenues for the full year increased 27 percent over 2002 primarily due to strength in the land division. Land revenues rose 75 percent versus last year due to higher volumes. Marine revenues declined 33 percent from the same period a year ago due to continued overcapacity and reduction in capital spending in the marine contractor market. Gross margin percentage for 2003 rose to 19 percent compared to 15 percent in 2002, reflecting significant improvement in the gross margin for the land division from a negative 3 percent to 15 percent. Adjusted EBITDA (adjusted earnings before net interest expense, taxes, depreciation and amortization) for 2003 was a negative $8.9 million for 2003 compared to a negative $51.1 million in 2002. Operating expenses decreased approximately 39 percent compared to 2002. Approximately half of this improvement was driven primarily by lower research and development expenses and general and administrative expenses. Included in 2003 and 2002 operating expenses were charges related to the impairment of certain long-lived assets and goodwill of $1.1 million and $22.0 million, respectively. As a percentage of revenues, SG&A expenses decreased to approximately 20 percent in 2003 compared to 26 percent in 2002. Loss from operations for the full year was $21.3 million compared to a $63.6 million loss from operations in 2002. 2003 HIGHLIGHTS During 2003 the Company strengthened its financial condition by issuing $60 million of convertible securities in early December. Approximately $16 million of the net proceeds were used to repay existing short-term, high interest debt, and the balance will be used for general corporate purposes and potential acquisitions that support the Company's growth strategy. In addition, the previously existing warrants for 2,673,517 shares were exchanged for 125,000 common shares. As part of the Company's continuing effort to reduce its operating cost structure and increase its manufacturing flexibility, I/O entered into several outsourcing agreements for the manufacture of its seismic equipment. These agreements are part of a plan to reduce fixed costs and accelerate product delivery to the Company's global customer base and will provide significant operational and logistical benefits to I/O's existing and future customer base. From a business development standpoint, I/O successfully commercialized its VectorSeis System Four land acquisition system, which resulted in over $20 million of land system sales during 2003. This new technology introduction allowed the Company to penetrate key new markets in North America, Russia, Eastern Europe and China. OUTLOOK The following statements are based on our current expectations. These statements are forward looking and actual results may differ materially. Factors affecting these forward-looking statements are detailed below. Bob Peebler stated, "Looking at 2004, we expect an exciting year in terms of product transition and product introductions. In our land imaging division, we expect to introduce our new System Four Analog/Cable, which gives seismic contractors the flexibility to use either traditional analog geophone sensors or digital full-wave VectorSeis sensors, even on the same survey. System Four A/C will be the first land imaging platform in the market with this hybrid analog-digital capability and will provide contractors with the ability to benefit from the advantages of System Four in an analog environment and at the same time provide them with the ability to migrate to full digital VectorSeis as the market develops. "On the marine side, we plan to introduce two new products. In our towed streamer business, we have a product developed from our next generation DigiCourse positioning technology. This new product will improve the accuracy of both 3D and 4D surveys by delivering better understanding of the positioning of the numerous recording hydrophones placed up and down a streamer on a marine survey. In seabed imaging, which we believe will become an increasingly important part of the total marine seismic imaging business, we have had early successes with a prototype retrievable seabed system and plan to extend and commercialize these technologies and introduce our VectorSeis Ocean retrievable system later this year." Mike Kirksey, Chief Financial Officer, stated, "Based on our current backlog of business, our improved cost structure and the expected impact of our new product introductions, we expect 2004 revenues to range between $175 to $195 million. We expect a slight strengthening of business from our traditional customers and continued growth from our international markets. Much of our projected top line growth is expected to come from our new product offerings, including an expected doubling of VectorSeis sales from the $20 million level we generated in 2003. We expect full year 2004 gross margin percentage to be in the high 20's to the low 30's, EBITDA (earnings before net interest expense, taxes, depreciation and amortization) to range between $20 and $25 million and earnings of $0.05 to $0.15 per share. The first quarter of 2004 will be impacted by the product transition from our existing analog Image System to the new System Four analog technology, which will occur around mid-year, and by manufacturing lead times for vibrator trucks that are pushing deliveries into the next two quarters. As a result, for the first quarter of 2004, we expect revenue to range between $32 and $40 million and earnings per share to range between a loss of $0.02 and a loss of $0.08." CONFERENCE CALL Input/Output has scheduled a conference call for Thursday, January 29, 2004 at 5:00 p.m. eastern time. To participate in the conference call, dial (303) 262-2190 at least 10 minutes before the call begins and ask for the Input/Output conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until February 5, 2004. To access the replay, dial (303) 590-3000 and use pass code 567421. Investors, analysts and the general public will also have the opportunity to listen to the conference call live over the Internet by visiting www.i-o.com. Also, an archive of the web cast will be available shortly after the call on the company's website for approximately 90 days. Input/Output, Inc. is the major independent provider of seismic equipment and acquisition imaging technology for land, marine, and seabed applications. In addition, through its GMG/AXIS group, I/O offers specialty seismic processing services, including anisotropic imaging, that allow oil companies to more accurately image subsurface features in petroleum reservoirs. The company's technologies are applied in traditional 2D and 3D surveys along with rapidly growing areas like time-lapse 4D reservoir monitoring and full-wave, multicomponent data acquisition. I/O has offices in the United States, Canada, Europe, China, Russia and the Middle East. Additional information about Input/Output, Inc. is available at www.i-o.com. The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements concerning capital outlays by E&P companies and seismic contractors, future VectorSeis revenues, and fourth quarter revenues, gross margin, and net income per share. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include the timing and development of the Company's products and services and market acceptance of the Company's new and revised product offerings; risks associated with the Company's restructuring program; risks associated with competitor's product offerings and pricing pressures resulting there from; the Company's inability to produce products to preserve and increase market share; and technological and marketplace changes affecting the Company's product line. Additional risk factors, which could affect actual results are disclosed by the Company from time to time in its filings with the Securities and Exchange Commission. Tables to follow INPUT/OUTPUT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------------------- ------------------------------ 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Net sales...................................... $ 43,987 $ 36,981 $ 150,033 $ 118,583 Cost of sales.................................. 32,538 31,240 121,133 99,624 Amortization of intangibles.................... 258 387 1,059 1,394 ------------ ------------ ------------ ------------ Gross profit.......................... 11,191 5,354 27,841 17,565 ------------ ------------ ------------ ------------ Operating expenses: Research and development.................... 3,765 6,318 18,696 28,756 Marketing and sales......................... 3,715 3,288 12,566 11,218 General and administrative.................. 2,967 4,458 16,753 19,160 Impairment of long-lived assets............. - 1,004 1,120 6,874 Goodwill impairment......................... - - - 15,122 ------------ ------------ ------------ ------------ Total operating expenses............. 10,447 15,068 49,135 81,130 ------------ ------------ ------------ ------------ Earnings (loss) from operations................ 744 (9,714) (21,294) (63,565) Interest expense............................... (945) (1,381) (4,087) (3,124) Interest income................................ 359 525 1,903 2,280 Fair value adjustment and exchange of warrant obligation.................................. 769 907 1,757 3,252 Impairment of investment....................... (23) - (2,059) - Other income (expense)......................... (81) 66 976 (798) ------------ ------------ ------------ ------------ Earnings (loss) before income taxes............ 823 (9,597) (22,804) (61,955) Income tax (benefit) expense................... 190 (3,078) 348 57,919 ------------ ------------ ------------ ------------ Net earnings (loss)............................ 633 (6,519) (23,152) (119,874) Preferred dividend............................. - - - 947 ------------ ------------ ------------ ------------ Net earnings (loss) applicable to common shares $ 633 $ (6,519) $ (23,152) $ (120,821) ============ ============ ============ ============ Basic earnings (loss) per common share......... $ 0.01 $ (0.13) $ (0.45) $ (2.37) ============ ============ ============ ============ Weighted average number of common shares outstanding................... 51,288,975 51,101,765 51,236,771 51,014,505 ============ ============ ============ ============ Diluted earnings (loss) per common share....... $ 0.01 $ (0.13) $ (0.45) $ (2.37) ============ ============ ============ ============ Weighted average number of diluted common shares outstanding.................. 54,604,885 51,101,765 51,236,771 51,014,505 ============ ============ ============ ============
INPUT/OUTPUT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 31, DECEMBER 31, 2003 2002 ------------- ------------- ASSETS Current assets: Cash and cash equivalents...................................... $ 59,507 $ 76,218 Restricted cash................................................ 1,127 1,173 Accounts receivable, net....................................... 34,270 18,745 Current portion notes receivable, net.......................... 14,420 6,137 Inventories.................................................... 53,551 50,010 Prepaid expenses and other current assets...................... 3,703 3,136 ------------- ------------- Total current assets................................... 166,578 155,419 Notes receivable.................................................. 6,409 12,057 Net assets held for sale.......................................... 3,331 - Property, plant and equipment, net................................ 27,607 39,255 Goodwill, net..................................................... 35,025 33,758 Other assets, net................................................. 9,105 7,956 ------------- ------------- Total assets........................................... $ 248,055 $ 248,445 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of long-term debt......... $ 2,687 $ 2,142 Accounts payable............................................... 14,591 18,927 Accrued expenses............................................... 15,833 17,210 Warrant obligation............................................. - 2,200 ------------- ------------- Total current liabilities.............................. 33,111 40,479 Long-term debt, net of current maturities......................... 78,516 51,430 Other long-term liabilities....................................... 3,813 5,199 Stockholders' equity: Common stock................................................... 522 519 Additional paid-in capital..................................... 296,663 296,002 Accumulated deficit............................................ (159,685) (136,534) Accumulated other comprehensive loss........................... 1,292 (2,380) Treasury stock................................................. (5,826) (5,929) Unamortized restricted stock compensation....................... (351) (341) ------------- ------------- Total stockholders' equity............................. 132,615 151,337 ------------- ------------- Total liabilities and stockholders' equity............. $ 248,055 $ 248,445 ============= =============
CALCULATION OF EBIT AND ADJUSTED EBITDA (NON-GAAP MEASURES) (IN THOUSANDS) (UNAUDITED) Adjusted EBITDA is a non-GAAP measurement that is presented as an additional indicator of operating performance and is not a substitute for net earnings (loss) or earnings (loss) per share calculated under generally accepted accounting principles (GAAP). We believe that EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to service our debt. The calculation of adjusted EBITDA shown below is based upon amounts derived from the company's financial statements prepared in conformity with GAAP.
THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, DECEMBER 31, ---------------------------- ----------------------------- 2003 2002 2003 2002 ---------- ----------- ------------ ----------- Earnings (loss) before income taxes............ $ 823 $ (9,597) $ (22,804) $ (61,955) Interest expense............................... 945 1,381 4,087 3,124 Interest income................................ (359) (525) (1,903) (2,280) ---------- ----------- ------------ ----------- Earnings (loss) before net interest expense and taxes (EBIT)................... 1,409 (8,741) (20,620) (61,111) Fair value adjustment and exchange of warrant obligation.......................... (769) (907) (1,757) (3,252) Impairment of investment....................... 23 - 2,059 - Total depreciation and amortization expense.... 2,351 3,813 11,444 13,237 ---------- ----------- ------------ ----------- Adjusted earnings (loss) before net interest expense, taxes, depreciation and amortization (adjusted EBITDA).......... $ 3,014 $ (5,835) $ (8,874) $ (51,126) ========== =========== ============ ===========
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