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Form 8-K MITCHAM INDUSTRIES INC For: Dec 06

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December 6, 2017 4:41 PM EST


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):
 
December 6, 2017
Mitcham Industries, Inc.
_________________________________________
(Exact name of registrant as specified in its charter)
 
 
 
Texas
001-13490
76-0210849
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
  
 
 
8141 SH 75 South, P.O. Box 1175, Huntsville, Texas
 
77342
________________________________
(Address of principal executive offices)
 
___________
(Zip Code)
 
 
 
Registrant’s telephone number, including area code:
 
936-291-2277
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [  ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]




Item 2.02 Results of Operation and Financial Condition.
On December 6, 2017 Mitcham Industries, Inc. issued a press release announcing earnings for the quarter ended October 31, 2017. The date and time for a conference call discussing the earnings are also included in the press release. The text of the press release is attached to this report as Exhibit 99.1.

The information in this item 2.02 (including the press release attached as Exhibit 99.1 and incorporated by reference into item 2.02) is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.



Item 9.01 Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are filed as a part of this report:
Exhibit No. Description











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 hereunto duly authorized.

 
 
 
 
 
 
 
 
 
 
 
 
Mitcham Industries, Inc.
  
 
 
 
 
December 6, 2017
 
By:
 
/s/ Robert P. Capps
 
 
 
 
 
 
 
 
 
Name: Robert P. Capps
 
 
 
 
Title: Co-Chief Executive Officer, Executive Vice President-Finance and Chief Financial Officer



Contacts:
 
Rob Capps, Co-CEO
Mitcham Industries, Inc.
936-291-2277
 
 
Jack Lascar / Mark Roberson
Dennard Lascar Associates
713-529-6600
MITCHAM INDUSTRIES REPORTS
FISCAL 2018 THIRD QUARTER RESULTS

HUNTSVILLE, TX - December 6, 2017 - Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or “the Company”) today announced financial results for its fiscal 2018 third quarter ended October 31, 2017.
Total revenues for the third quarter of fiscal 2018 increased to $8.6 million compared to $8.1 million in the third quarter of fiscal 2017. Revenues from the Equipment Manufacturing and Sales segment increased to $6.0 million in the third quarter, compared to $5.3 million in the same period last year mainly due to increased product shipments. Revenues from the Equipment Leasing segment were $2.7 million in the third quarter compared to $2.8 million in the same period last year. The Company reported a net loss attributable to common shareholders of $5.5 million, or $(0.46) per share, in the third quarter of fiscal 2018 compared to a net loss of $7.5 million, or $(0.62) per share, in the third quarter of fiscal 2017.
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation, non-cash costs of lease pool equipment sales and non-cash foreign exchange gains and losses) for the third quarter of fiscal 2018 was a loss of approximately $406,000 compared to a loss of approximately $513,000 in the same period last year. Adjusted EBITDA, which is not a measure determined in accordance with United States generally accepted accounting principles (“GAAP”), is defined and reconciled to reported net loss and cash provided by operating activities in the accompanying financial tables.

Rob Capps, Mitcham’s Co-Chief Executive Officer, stated, “As we approach the end of our fiscal year, it appears that we may have reached the bottom of this energy cycle sometime between the second and third quarter of this fiscal year. While the recovery may be slow and uneven, we are pleased to be emerging from this unprecedented downturn with a lower cost base and a stronger capital structure. Strategically, we continue to make progress in re-positioning our Company to be a more significant provider of technology to broader marine applications and are actively pursuing opportunities to expand our product offerings in this area. And in the process, we are lessening our exposure to the cyclical activity of oil and gas exploration.
“Our overall financial results for the third fiscal quarter of 2018 were very similar to our second fiscal quarter. The Equipment Manufacturing and Sales segment delivered incremental improvement over last year’s third quarter, and we currently anticipate a stronger fourth quarter in this segment driven by improving visibility into oceanographic and hydrographic opportunities, especially in Asia. We are experiencing an increase in inquiries and order bookings driven by multi-year program opportunities within the defense and maritime security industries.
“Land and marine seismic exploration activity continued to be depressed during the third quarter. However, we are starting to see an increase in the number of inquiries and bid opportunities. We are anticipating that this


segment should deliver a stronger fourth quarter led by seasonal winter activity in certain markets as well as some renewed land and marine seismic activity in North and South America.
“Our capital structure remains very strong with no debt on our balance sheet and ample liquidity, with cash and cash equivalents of $6.5 million as of October 31, 2017. Year-to-date, we generated over $2.2 million of operating cash flow.
“Strategically, we are undergoing a material change in our leasing business model. By implementing an asset-light strategy that enables us to monetize certain lease pool assets and make more effective use of our rental partnership agreements, we can lessen our exposure to the more cyclical oil and gas exploration industry. This new paradigm allows us to redeploy capital to expand our offerings in the equipment manufacturing side of our business, mainly marine technology, while opening new commercial opportunities within the leasing segment.”

FISCAL 2018 THIRD QUARTER RESULTS
Total revenues for the third quarter of fiscal 2018 increased 7%, driven mainly by an increase in equipment manufacturing and sales compared to last year’s third quarter. Equipment and manufacturing sales increased 13% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, decreased 20% from the third quarter of fiscal 2017. Total revenues for the third quarter of fiscal 2018 rose to $8.6 million compared to $8.1 million in the same period last year. A significant portion of our revenues is typically generated from geographic areas outside the United States. The percentage of revenues from international customers was approximately 83% in the third quarter of fiscal 2018 compared to approximately 87% in last year’s third fiscal quarter.
Equipment manufacturing and sales increased to $6.0 million in the third quarter of fiscal 2018 compared to $5.3 million in last year’s third quarter. The third quarter sales consisted of approximately $3.7 million of Seamap equipment, $1.5 million from Klein (including $0.3 million of intra-segment sales) and $1.1 million by SAP.
Equipment leasing revenues for the third quarter of fiscal 2018, excluding lease pool equipment sales, were $2.1 million compared to $2.6 million in the same period last year. The year-over-year decrease in third quarter equipment leasing revenues was primarily driven by a reduction in exploration activity and an excess supply of existing used equipment.
Lease pool and other equipment sales were $0.6 million in the third quarter of fiscal 2018, compared to $0.2 million in the third quarter a year ago.
Lease pool depreciation expense in the third quarter of fiscal 2018 decreased to $3.6 million from $6.4 million in the same period a year ago, due to the reduction in lease pool purchases over the past three years as a well as an increase in lease pool sales.
General and administrative expenses increased slightly to $5.2 million in the third quarter of fiscal 2018 versus $5.0 million in the third quarter of fiscal 2017, due to an increase in business development activities.



CONFERENCE CALL
We have scheduled a conference call for Thursday, December 7 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2018 third quarter results. To access the call, please dial (412) 902-0030 and ask for the Mitcham Industries call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the Mitcham Industries corporate website, http://www.mitchamindustries.com, by logging onto the site and clicking “Investor Relations.” A telephonic replay of the conference call will be available through December 21, 2017 and may be accessed by calling (201) 612-7415 and using passcode 13673442#. A webcast archive will also be available at http://www.mitchamindustries.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at Dennard ▪ Lascar Associates (713) 529‑6600 or email [email protected].



About Mitcham Industries

Mitcham Industries, Inc. provides technology to the oceanographic, hydrographic, defense, seismic and security industries. Headquartered in Huntsville, Texas, Mitcham has a global presence with operating locations in the United States, Canada, Australia, Singapore, Russia, Hungary, Colombia and the United Kingdom. Mitcham’s worldwide Equipment Manufacturing and Sales Segment, which includes its Seamap and Klein Marine Systems units, designs, manufactures and sells specialized, high performance, marine sonar and seismic equipment. Through its Leasing Segment, Mitcham believes it is the largest independent provider of exploration equipment to the seismic industry.

Certain statements and information in this press release concerning results for the quarter ended October 31, 2016 may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts of our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Tables to Follow









MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)


 
October 31, 2017
 
January 31, 2017
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
6,541

 
$
2,902

Restricted cash
229

 
609

Accounts and contracts receivable, net of allowance for doubtful accounts of $2,965 and $3,716 at October 31, 2017 and January 31, 2017, respectively
12,165

 
15,830

 
 
 
 
Inventories, net
11,940

 
11,960

Prepaid income taxes
—

 
1,565

Prepaid expenses and other current assets
2,135

 
2,193

Total current assets
33,010

 
35,059

Seismic equipment lease pool and property and equipment, net
26,372

 
43,838

Intangible assets, net
8,151

 
9,012

Goodwill
3,997

 
3,997

Non-current prepaid income taxes
1,167

 
—

Long-term receivables net of allowance for doubtful accounts of $2,188 at October 31, 2017 and January 31, 2017
4,071

 
2,780

Other assets
29

 
28

Total assets
$
76,797

 
$
94,714

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
 
 
 
Accounts payable
$
2,118

 
$
1,929

Current maturities – long-term debt
—

 
6,371

Deferred revenue
236

 
651

Income taxes payable
329

 
—

Accrued expenses and other current liabilities
3,669

 
4,514

Total current liabilities
6,352

 
13,465

Deferred tax liability
296

 
317

Total liabilities
6,648

 
13,782

Shareholders’ equity:
 
 
 
Preferred stock, $1.00 par value; 1,000 shares authorized; 425 and 343 shares issued and outstanding at October 31, 2017 and January 31, 2017, respectively
9,144

 
7,294

Common stock, $0.01 par value; 20,000 shares authorized; 14,019 shares issued at October 31, 2017 and January 31, 2017
140

 
140

Additional paid-in capital
122,087

 
121,401

Treasury stock, at cost (1,929 shares at October 31, 2017 and January 31, 2017)
(16,858
)
 
(16,858
)
Accumulated deficit
(34,391
)
 
(20,451
)
Accumulated other comprehensive loss
(9,973
)
 
(10,594
)
Total shareholders’ equity
70,149

 
80,932

Total liabilities and shareholders’ equity
$
76,797

 
$
94,714





















MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

 
 
For the Three Months Ended October 31,
 
For the Nine Months Ended October 31,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Equipment manufacturing and sales
 
$
5,955

 
$
5,251

 
$
22,429

 
$
18,193

Equipment leasing
 
2,071

 
2,577

 
5,765

 
7,819

Lease pool and other equipment sales
 
618

 
229

 
9,719

 
2,439

Total revenues
 
8,644

 
8,057

 
37,913

 
28,451

Cost of sales:
 
 
 
 
 
 
 
 
Cost of equipment manufacturing and sales
 
3,132

 
2,944

 
12,975

 
10,062

Direct costs—equipment leasing
 
822

 
739

 
2,306

 
2,276

Direct costs—lease pool depreciation
 
3,578

 
6,428

 
11,509

 
19,976

Cost of lease pool and other equipment sales
 
211

 
83

 
6,410

 
882

Total cost of sales
 
7,743

 
10,194

 
33,200

 
33,196

Gross profit (loss)
 
901

 
(2,137
)
 
4,713

 
(4,745
)
Operating expenses:
 
 
 
 
 
 
 
 
General and administrative
 
5,178

 
5,039

 
15,145

 
15,778

Depreciation and amortization
 
516

 
558

 
1,622

 
1,857

Total operating expenses
 
5,694

 
5,597

 
16,767

 
17,635

Operating loss
 
(4,793
)
 
(7,734
)
 
(12,054
)
 
(22,380
)
Other income (expense):
 
 
 
 
 
 
 
 
Interest, net
 
52

 
(111
)
 
23

 
(539
)
Other, net
 
46

 
287

 
(107
)
 
126

Total other income (expense)
 
98

 
176

 
(84
)
 
(413
)
Loss before income taxes
 
(4,695
)
 
(7,558
)
 
(12,138
)
 
(22,793
)
(Provision) benefit for income taxes
 
(586
)
 
228

 
(1,172
)
 
(506
)
Net loss
 
$
(5,281
)
 
$
(7,330
)
 
$
(13,310
)
 
$
(23,299
)
Preferred stock dividends
 
(229
)
 
(180
)
 
(630
)
 
(294
)
Net loss available to common shareholders
 
$
(5,510
)
 
$
(7,510
)
 
$
(13,940
)
 
$
(23,593
)
Net loss per common share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.46
)
 
$
(0.62
)
 
$
(1.15
)
 
$
(1.96
)
Diluted
 
$
(0.46
)
 
$
(0.62
)
 
$
(1.15
)
 
$
(1.96
)
Shares used in computing net loss per common share:
 
 
 
 
 
 
Basic
 
12,087

 
12,075

 
12,082

 
12,068

Diluted
 
12,087

 
12,075

 
12,082

 
12,068




MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 
 
For the Nine Months Ended October 31,
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(13,310
)
 
$
(23,299
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
13,219

 
21,927

Stock-based compensation
 
685

 
587

Provision for inventory obsolescence
 
58

 
65

Gross profit from sale of lease pool equipment
 
(3,080
)
 
(1,420
)
Deferred tax benefit
 
(31
)
 
(582
)
Changes in working capital items:
 
 
 
 
Trade accounts and contracts receivable
 
5,129

 
10,308

Inventories
 
79

 
471

Prepaid expenses and other current assets
 
207

 
(893
)
Income taxes payable
 
714

 
384

Accounts payable, accrued expenses, other current liabilities and deferred revenue
 
(1,244
)
 
(4,242
)
Foreign exchange gains net of losses
 
(252
)
 
381

Net cash provided by operating activities
 
2,174

 
3,687

Cash flows from investing activities:
 
 
 
 
Purchases of seismic equipment held for lease
 
(321
)
 
(604
)
Purchases of property and equipment
 
(276
)
 
(117
)
Sale of used lease pool equipment
 
6,690

 
2,256

Net cash provided by investing activities
 
6,093

 
1,535

Cash flows from financing activities:
 
 
 
 
Net payments on revolving line of credit
 
(3,500
)
 
(9,400
)
Payments on term loan and other borrowings
 
(2,807
)
 
(2,414
)
Net proceeds from preferred stock offering
 
1,847

 
6,975

Preferred stock dividends
 
(630
)
 
(294
)
Purchase of treasury stock
 
—

 
(2
)
Net cash used in financing activities
 
(5,090
)
 
(5,135
)
Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash
 
82

 
(624
)
Net change in cash, cash equivalents and restricted cash
 
3,259

 
(537
)
Cash, cash equivalents and restricted cash beginning of period
 
3,511

 
3,769

Cash, cash equivalents and restricted cash, end of period
 
$
6,770

 
$
3,232

Supplemental cash flow information:
 
 
 
 
Interest paid
 
$
84

 
$
610

Income taxes paid
 
$
436

 
$
705

Purchases of seismic equipment held for lease in accounts payable at end of period
 
$
65

 
$
160




MITCHAM INDUSTRIES, INC.
Reconciliation of Net Loss and Net Cash Provided by Operating Activities to EBITDA and
Adjusted EBITDA


 
 
For the Three Months Ended October 31,
 
For the Nine Months Ended October 31,
 
 
2017
 
2016
 
2017
 
2016
 
 
(in thousands)
 
(in thousands)
Reconciliation of Net loss to EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
Net loss
 
$
(5,281
)
 
$
(7,330
)
 
$
(13,310
)
 
$
(23,299
)
Interest (income) expense, net
 
(52
)
 
111

 
(23
)
 
539

Depreciation and amortization
 
4,124

 
7,017

 
13,219

 
21,927

Provision (benefit) for income taxes
 
586

 
(228
)
 
1,172

 
506

EBITDA (1)
 
(623
)
 
(430
)
 
1,058

 
(327
)
Non-cash foreign exchange (gains) losses
 
(41
)
 
(288
)
 
320

 
31

Stock-based compensation
 
224

 
154

 
685

 
587

Cost of lease pool sales
 
34

 
51

 
6,228

 
764

Adjusted EBITDA (1)
 
$
(406
)
 
$
(513
)
 
$
8,291

 
$
1,055

Reconciliation of Net cash provided by operating activities to EBITDA
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
 
$
(1,912
)
 
$
602

 
$
2,174

 
$
3,687

Stock-based compensation
 
(224
)
 
(154
)
 
(685
)
 
(587
)
Provision for inventory obsolescence
 
9

 
(22
)
 
(58
)
 
(65
)
Changes in trade accounts, contracts and notes receivable
 
748

 
(1,539
)
 
(5,129
)
 
(10,308
)
Interest (received) paid
 
(36
)
 
106

 
84

 
610

Taxes paid, net of refunds
 
277

 
176

 
436

 
705

Gross profit (loss) from sale of lease pool equipment
 
228

 
(36
)
 
3,080

 
1,420

Changes in inventory
 
(186
)
 
(290
)
 
(79
)
 
(471
)
Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue
 
315

 
228

 
1,244

 
4,242

Changes in prepaid expenses and other current assets
 
(6
)
 
220

 
(207
)
 
893

Foreign exchange gains net of losses
 
181

 
196

 
252

 
(381
)
Other
 
(17
)
 
83

 
(54
)
 
(72
)
EBITDA (1)
 
$
(623
)
 
$
(430
)
 
$
1,058

 
$
(327
)

(1)
EBITDA is defined as net income before (a) interest income and interest expense, (b) provision for (or benefit from) income taxes and (c) depreciation and amortization. Adjusted EBITDA excludes non-cash foreign exchange gains and losses, non-cash costs of lease pool equipment sales and stock-based compensation. This definition of Adjusted EBITDA is consistent with the definition in the Credit Agreement. We consider EBITDA and Adjusted EBITDA to be important indicators for the performance of our business, but not measures of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We have included these non-GAAP financial measures because management utilizes this information for assessing our performance and liquidity, and as indicators of our ability to make capital expenditures, service debt and finance working capital requirements. The Credit Agreement contained financial covenants based on EBITDA or Adjusted EBITDA. Management believes that EBITDA and Adjusted EBITDA are measurements that are commonly used by analysts and some investors in evaluating the performance and liquidity of companies such as us. In particular, we believe that it is useful to our analysts and investors to understand this relationship because it excludes transactions not related to our core cash operating activities. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations. EBITDA and Adjusted EBITDA are not measures of financial performance or liquidity under GAAP and should not be considered in isolation or as alternatives to cash flow from operating activities or as alternatives to net income as indicators of operating performance or any other measures of performance derived in accordance with GAAP. In evaluating our performance as measured by EBITDA, management recognizes and considers the limitations of this measurement. EBITDA and Adjusted EBITDA do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA and Adjusted EBITDA are only two of the measurements that management utilizes.    Other companies in our industry may calculate EBITDA or Adjusted EBITDA differently than we do and EBITDA and Adjusted EBITDA may not be comparable with similarly titled measures reported by other companies.





Mitcham Industries, Inc.
Segment Operating Results
(in thousands)
(unaudited)

 
 
For the Three Months Ended October 31,
 
For the Nine Months Ended October 31,
 
 
2017
 
2016
 
2017
 
2016
 
 
(in thousands)
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
Equipment Manufacturing and Sales
 
$
5,992

 
$
5,251

 
$
22,565

 
$
18,229

Equipment Leasing
 
2,730

 
2,806

 
15,546

 
10,258

Inter-segment sales
 
(78
)
 
—

 
(198
)
 
(36
)
Total revenues
 
8,644

 
8,057

 
37,913

 
28,451

Cost of sales:
 
 
 
 
 
 
 
 
Equipment Manufacturing and Sales
 
3,174

 
2,887

 
13,116

 
10,062

Equipment Leasing
 
4,647

 
7,249

 
20,282

 
23,134

Inter-segment costs
 
(78
)
 
58

 
(198
)
 
—

Total cost of sales
 
7,743

 
10,194

 
33,200

 
33,196

Gross profit (loss)
 
901

 
(2,137
)
 
4,713

 
(4,745
)
Operating expenses:
 
 
 
 
 
 
 
 
General and administrative
 
5,178

 
5,039

 
15,145

 
15,778

Depreciation and amortization
 
516

 
558

 
1,622

 
1,857

Total operating expenses
 
5,694

 
5,597

 
16,767

 
17,635

Operating loss
 
$
(4,793
)
 
$
(7,734
)
 
$
(12,054
)
 
$
(22,380
)
Equipment Manufacturing and Sales Segment:
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Seamap
 
$
3,676

 
$
2,536

 
$
16,053

 
$
9,662

Klein
 
1,517

 
1,999

 
3,456

 
6,462

SAP
 
1,087

 
1,440

 
3,998

 
3,253

Intra-segment sales
 
(288
)
 
(724
)
 
(942
)
 
(1,148
)
 
 
5,992

 
5,251

 
22,565

 
18,229

Cost of sales:
 
 
 
 
 
 
 
 
Seamap
 
1,671

 
1,061

 
8,438

 
4,501

Klein
 
894

 
1,468

 
2,571

 
4,330

SAP
 
896

 
1,140

 
3,158

 
2,436

Intra-segment sales
 
(287
)
 
(782
)
 
(1,051
)
 
(1,205
)
 
 
3,174

 
2,887

 
13,116

 
10,062

Gross profit
 
$
2,818

 
$
2,364

 
$
9,449

 
$
8,167

Gross profit margin
 
47
%
 
45
%
 
42
%
 
45
%
Equipment Leasing Segment:
 
 
 
 
 
 
 
 
Revenue:
 
 
Equipment leasing
 
$
2,071

 
$
2,577

 
$
5,765

 
$
7,819

Lease pool equipment sales
 
247

 
87

 
9,309

 
2,256

Other equipment sales
 
412

 
142

 
472

 
183

 
 
2,730

 
2,806

 
15,546

 
10,258

Cost of sales:
 
 
Direct costs-equipment leasing
 
858

 
739

 
2,363

 
2,276

Lease pool depreciation
 
3,578

 
6,428

 
11,509

 
19,976

Cost of lease pool equipment sales
 
33

 
51

 
6,228

 
764

Cost of other equipment sales
 
178

 
31

 
182

 
118

 
 
4,647

 
7,249

 
20,282

 
23,134

Gross loss
 
$
(1,917
)
 
$
(4,443
)
 
$
(4,736
)
 
$
(12,876
)

####





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