Mitcham Industries Reports Fiscal 2018 Second Quarter Results

HUNTSVILLE, Texas, Sept. 7, 2017 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("the Company") today announced financial results for its fiscal 2018 second quarter ended July 31, 2017.

Total revenues for the second quarter of fiscal 2018 were $10.8 million compared to $8.7 million in the second quarter of fiscal 2017. Revenues from the Equipment Manufacturing and Sales segment increased to $9.6 million in the second quarter, compared to $5.8 million in the same period last year. Revenues from the Equipment Leasing segment were $1.3 million in the second quarter compared to $2.9 million in the same period last year. The Company reported a net loss attributable to common shareholders of $5.6 million, or $(0.46) per share, in the second quarter of fiscal 2018 compared to a net loss of $9.6 million, or $(0.80) per share, in the second quarter of fiscal 2017. Cash flow provided by operating activities was approximately $3.0 million in the second quarter of fiscal 2018 compared to $1.3 million in the second 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 second quarter of fiscal 2018 was a loss of approximately $261,000 compared to a loss of approximately $597,000 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, "We were pleased with our overall second quarter results, despite very challenging and ongoing conditions in our energy related business. Our manufacturing segment showed solid growth, both sequentially and year-over-year. We continue to make progress in re-positioning our Company to be a more significant player in the marine industry and in lessening our exposure to oil and gas exploration activities. At the same time, we are taking additional strategic steps to revise our business model in the leasing segment while maintaining a competitive presence and re-deploying capital into more attractive opportunities.

"Reviewing our financial results for the second fiscal quarter of 2018, the Equipment Manufacturing and Sales segment delivered much better performance year-over-year and sequentially, driven primarily by Seamap. We continue to anticipate a stronger fiscal year in this segment driven by improved visibility into oceanographic and hydrographic opportunities, especially in Asia. While our business at Klein has lagged expectations in recent periods, we have begun to see an increase in order bookings and inquiries, which we believe is indicative of a much improved second half of fiscal 2018 in that part of our business. We are seeing a greater number of opportunities as we continue to penetrate new markets and add new customers. In addition, we are seeing the scope of some of these projects become larger as well.

"Land and marine seismic exploration activity continues to be severely depressed from historical levels; however, we are experiencing an increased number of bids and inquiries. These projects have been slow to develop, but we are hopeful that by the fourth quarter we will begin to see this business recover.

"Our capital structure remains very strong with no debt on our balance sheet and ample liquidity, with cash and cash equivalents of over $7.0 million as of July 31, 2017. We generated positive operating cash flow in the first half of this fiscal year, including approximately $3.0 million in the second quarter of this year.

"As we move through the remainder of fiscal 2018, we see a number of opportunities for our manufacturing business and also expect continued slow improvement in our leasing business. Our strategic intent going forward is to continue to diversify our sales away from dependence on the oil and gas industry by expanding our equipment and manufacturing business, both organically and through acquisitions, in order to gain a greater foothold in the global marine industry. We also continue to evaluate and restructure our leasing business in order to make this a profitable part of our company in the future."

FISCAL 2018 SECOND QUARTER RESULTS

Total revenues for the second quarter increased 25% and were largely driven by a substantial increase in equipment manufacturing and sales compared to the same quarter a year ago. Equipment and manufacturing sales increased 67% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, decreased 40% from the second quarter of fiscal 2017. Total revenues for the second quarter of fiscal 2018 rose to $10.8 million compared to $8.7 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 92% in the second quarter of fiscal 2018 compared to approximately 79% in last year's second fiscal quarter.

Equipment manufacturing and sales increased to $9.6 million in the second quarter of fiscal 2018 compared to $5.8 million in last year's second quarter with improved performance by Seamap and SAP. The second quarter sales consisted of approximately $7.5 million of Seamap equipment, $1.0 million from Klein (including $0.5 million of intra-segment sales) and $1.6 million by SAP.

Equipment leasing revenues for the second quarter of fiscal 2018, excluding lease pool equipment sales, were $1.0 million compared to $1.6 million in the same period last year. The year-over-year decrease in second quarter equipment leasing revenues was driven by the ongoing softness in exploration activity.

Lease pool and other equipment sales were $0.3 million in the second quarter of fiscal 2018, compared to $1.3 million in the second quarter a year ago.

Lease pool depreciation expense in the second quarter of fiscal 2018 decreased to $3.8 million from $6.7 million in the same period a year ago, due to the reduction in lease pool purchases and sales of lease pool equipment in the second half of fiscal 2017 and the current fiscal year.

General and administrative expenses decreased to $5.1 million in the second quarter of fiscal 2018 versus $5.4 million in the second quarter of fiscal 2017, due to the impact of continuing cost reduction efforts.

CONFERENCE CALL

We have scheduled a conference call for Friday, September 8, 2017 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2018 second 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 September 22, 2017 and may be accessed by calling (201) 612-7415 and using passcode 13668655#. 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 dwashburn@dennardlascar.com.

About Mitcham Industries

Mitcham Industries, Inc. provides equipment to the geophysical, oceanographic and hydrographic 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 July 31, 2017 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, EBITDA, cash flow 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.

    Contacts:                       Rob Capps, Co-CEO

                                    Mitcham Industries, Inc.

                                    936-291-2277


                                    Jack Lascar

                                    Dennard ? Lascar Associates

                                    713-529-6600

Tables to Follow

                                  MITCHAM INDUSTRIES, INC.

                           CONDENSED CONSOLIDATED BALANCE SHEETS

                           (in thousands, except per share data)

                                        (unaudited)


                                         July 31,                January 31,
                                                     2017                         2017
                                                     ----                         ----

                                         ASSETS

    Current assets:

    Cash and
     cash
     equivalents                                   $6,916                       $2,902

    Restricted
     cash                                             236                          609

    Accounts
     and                         at July
     contracts                   31, 2017
     receivable,                 and
     net of                      January
     allowance                   31, 2017,
     for                         respectively
     doubtful
     accounts
     of $3,419
     and $3,716                                    12,439                       15,830

     Inventories,
     net                                           12,465                       11,960

    Prepaid
     income
     taxes                                              -                       1,565

    Prepaid
     expenses
     and other
     current
     assets                                         1,934                        2,193
                                                    -----                        -----

    Total
     current
     assets                                        33,990                       35,059

    Seismic
     equipment
     lease pool
     and
     property
     and
     equipment,
     net                                           29,842                       43,838

    Intangible
     assets,
     net                                            8,536                        9,012

    Goodwill                                        3,997                        3,997

    Non-
     current
     prepaid
     income
     taxes                                          1,173                            -

    Long-term
     receivables                 January
     net of                      31, 2017
     allowance
     for
     doubtful
     accounts
     of $2,188
     at July
     31, 2017
     and                                            4,027                        2,780

    Other
     assets                                            29                           28
                                                      ---                          ---

    Total
     assets                                       $81,594                      $94,714
                                                  =======                      =======


                          LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

    Accounts
     payable                                       $1,770                       $1,929

    Current
     maturities
     - long-
     term debt                                          -                       6,371

    Deferred
     revenue                                          455                          651

    Income
     taxes
     payable                                           52                            -

    Accrued
     expenses
     and other
     current
     liabilities                                    4,366                        4,514
                                                    -----                        -----

    Total
     current
     liabilities                                    6,643                       13,465

    Deferred
     tax
     liability                                        275                          317
                                                      ---                          ---

    Total
     liabilities                                    6,918                       13,782

    Shareholders' equity:

    Preferred
     stock,                      at July
     $1.00 par                   31, 2017
     value;                      and
     1,000                       January
     shares                      31, 2017,
     authorized;                 respectively
     380 and
     343 shares
     issued and
     outstanding                                    8,133                        7,294

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

    Additional
     paid-in
     capital                                      121,861                      121,401

    Treasury
     stock, at
     cost
     (1,929
     shares at
     July 31,
     2017 and
     January
     31, 2017)                                   (16,858)                    (16,858)

    Accumulated
     deficit                                     (28,881)                    (20,451)

    Accumulated
     other
     comprehensive
     loss                                         (9,719)                    (10,594)
                                                   ------                      -------

    Total
     shareholders'
     equity                                        74,676                       80,932
                                                   ------                       ------

    Total
     liabilities
     and
     shareholders'
     equity                                       $81,594                      $94,714
                                                  =======                      =======

                                                          MITCHAM INDUSTRIES, INC.

                                              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   (in thousands, except per share data)

                                                                (unaudited)




                                                           For the Three Months                  For the Six Months
                                                               Ended July 31,
                                                                                                  Ended July 31,


                                                                2017                        2016                       2017         2016
                                                                ----                                                              ----

    Revenues:

    Equipment manufacturing and
     sales                                                    $9,586                      $5,754                    $16,474      $12,942

    Equipment leasing                                            977                       1,634                      3,694        5,242

    Lease pool and other
     equipment sales                                             273                       1,275                      9,101        2,210

     Total revenues                                           10,836                       8,663                     29,269       20,394
                                                              ------                       -----                     ------       ------


    Cost of sales:

    Cost of equipment
     manufacturing and sales                                   5,868                       3,097                      9,843        7,118

    Direct costs -equipment
     leasing                                                     540                         785                      1,484        1,537

    Direct costs -lease pool
     depreciation                                              3,750                       6,675                      7,931       13,548

    Cost of lease pool and
     other equipment sales                                        60                         348                      6,199          799

    Total cost of sales                                       10,218                      10,905                     25,457       23,002
                                                              ------                      ------                     ------       ------

    Gross profit (loss)                                          618                     (2,242)                     3,812      (2,608)


    Operating expenses:

    General and administrative                                 5,065                       5,426                      9,967       10,739

    Depreciation and
     amortization                                                525                         647                      1,106        1,299
                                                                 ---                         ---                      -----        -----

    Total operating expenses                                   5,590                       6,073                     11,073       12,038
                                                               -----                       -----                     ------       ------


    Operating loss                                           (4,972)                    (8,315)                   (7,261)    (14,646)


    Other income (expense):

    Interest, net                                                 17                       (164)                      (29)       (428)

    Other, net                                                  (52)                      (612)                     (153)       (161)
                                                                 ---                        ----                       ----         ----

    Total other expense                                         (35)                      (776)                     (182)       (589)
                                                                 ---                        ----                       ----         ----


    Loss before income taxes                                 (5,007)                    (9,091)                   (7,443)    (15,235)


    Provision for income taxes                                 (357)                      (435)                     (586)       (734)
                                                                ----                        ----                       ----         ----


    Net loss                                                $(5,364)                   $(9,526)                  $(8,029)   $(15,969)

    Preferred stock dividends                                  (207)                      (114)                     (401)       (114)
                                                                ----                        ----                       ----         ----

    Net loss available to
     common shareholders                                    $(5,571)                   $(9,640)                  $(8,430)   $(16,083)
                                                             =======                     =======                    =======     ========


    Net loss per common share:

    Basic                                                    $(0.46)                    $(0.80)                   $(0.70)     $(1.33)
                                                              ======                      ======                     ======       ======

    Diluted                                                  $(0.46)                    $(0.80)                   $(0.70)     $(1.33)
                                                              ======                      ======                     ======       ======


    Shares used in computing net loss per common share:

    Basic                                                     12,082                      12,070                     12,080       12,065

    Diluted                                                   12,082                      12,070                     12,080       12,065

                                         MITCHAM INDUSTRIES, INC.

                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              (in thousands)

                                                (unaudited)


                                                                                 For the Six Months
                                                                                 Ended July 31,
                                                                                 --------------

                                                                                2017                      2016
                                                                                ----                      ----

    Cash flows from operating activities:

    Net loss                                                                $(8,029)                $(15,969)

    Adjustments to reconcile net loss to net cash
     provided by operating activities:

    Depreciation and amortization                                              9,095                    14,910

    Stock-based compensation                                                     461                       433

    Provision for inventory obsolescence                                          67                        43

    Gross profit from sale of lease pool equipment                           (2,852)                  (1,456)

    Deferred tax benefit                                                        (57)                    (375)

    Changes in working capital items:

    Trade accounts and contracts receivable                                    5,877                     8,769

    Inventories                                                                (107)                      181

    Prepaid expenses and other current assets                                    201                     (673)

    Income taxes payable                                                         430                       658

    Accounts payable, accrued expenses, other current
     liabilities and deferred revenue                                          (929)                  (4,014)

    Foreign exchange gains net of losses                                        (71)                      577
                                                                                 ---                       ---

    Net cash provided by operating activities                                  4,086                     3,084
                                                                               -----                     -----

    Cash flows from investing activities:

    Purchases of seismic equipment held for lease                              (234)                    (583)

    Purchases of property and equipment                                        (128)                     (77)

    Sale of used lease pool equipment                                          6,020                     2,169
                                                                               -----                     -----

    Net cash provided by investing activities                                  5,658                     1,509
                                                                               -----                     -----

    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)                  (1,612)

    Net proceeds from preferred stock offering                                   774                     7,117

    Preferred stock dividends                                                  (401)                    (114)

    Net cash used in financing activities                                    (5,934)                  (4,009)

    Effect of changes in foreign exchange rates on cash
     and cash equivalents                                                      (169)                    (857)
                                                                                ----                      ----

    Net change in cash and cash equivalents                                    3,641                     (273)

    Cash and cash equivalents, beginning of period                             3,511                     3,769
                                                                               -----                     -----

    Cash and cash equivalents, end of period                                  $7,152                    $3,496
                                                                              ======                    ======

    Supplemental cash flow information:

    Interest paid                                                               $120                      $504

    Income taxes  paid                                                          $159                      $529

    Purchases of seismic equipment held for lease in
     accounts payable at end of period                                           $42                      $148

                                                                                                               Mitcham Industries, Inc.

                                                                        Reconciliation of Net Loss and Net Cash Provided by Operating Activities to EBITDA and Adjusted EBITDA



                                                                                                                                                                                For the Three Months Ended
                                                                                                                                                                                         July 31,                 For the Six Months Ended

                                                                                                                                                                                                                                                                                 July 31,


                                                                                                                                                                                                      2017                               2016                    2017                2016
                                                                                                                                                                                                      ----                               ----                    ----                ----

                                                                                                                                                                               (in thousands)                                                        (in thousands)

    Reconciliation of Net loss to EBITDA and Adjusted EBITDA

    Net loss                                                                                                                                                                                      $(5,364)                          $(9,526)               $(8,029)          $(15,969)

    Interest expense, net                                                                                                                                                                             (17)                               164                      29                 428

    Depreciation and amortization                                                                                                                                                                    4,304                              7,353                   9,095              14,910

    Provision for income taxes                                                                                                                                                                         357                                435                     586                 734
                                                                                                                                                                                                       ---                                ---                     ---                 ---

    EBITDA (1)                                                                                                                                                                                       (720)                           (1,574)                  1,681                 103

    Non-cash foreign exchange losses                                                                                                                                                                   167                                493                     361                 319

    Stock-based compensation                                                                                                                                                                           237                                186                     461                 433

    Cost of lease pool sales                                                                                                                                                                            55                                298                   6,194                 713
                                                                                                                                                                                                       ---                                ---                   -----                 ---

    Adjusted EBITDA (1)                                                                                                                                                                             $(261)                            $(597)                 $8,697              $1,568
                                                                                                                                                                                                     =====                              =====                  ======              ======

    Reconciliation of Net cash provided by operating activities to EBITDA

    Net cash provided by operating activities                                                                                                                                                              $1,335                             $4,086                  $3,084

                                                                                                                                                                                                    $2,974

    Stock-based compensation                                                                                                                                                                         (237)                             (186)                  (461)              (433)

    Provision for inventory obsolescence                                                                                                                                                              (59)                                 -                   (67)               (43)

    Changes in trade accounts, contracts and notes receivable                                                                                                                                      (3,702)                           (5,960)                (5,877)            (8,769)

    Interest paid                                                                                                                                                                                       28                                166                     120                 504

    Taxes paid, net of refunds                                                                                                                                                                         146                                378                     159                 529

    Gross profit from sale of lease pool equipment                                                                                                                                                     163                                965                   2,852               1,456

    Changes in inventory                                                                                                                                                                           (1,296)                               116                     107               (181)

    Changes in accounts payable, accrued expenses and other current
     liabilities and deferred revenue                                                                                                                                                                  977                              1,970                     929               4,014

    Changes in prepaid expenses and other current assets                                                                                                                                               348                                423                   (201)                673

    Foreign exchange gains net of losses                                                                                                                                                                23                              (696)                     71               (577)

    Other                                                                                                                                                                                             (85)                              (85)                   (37)              (154)
                                                                                                                                                                                                       ---                                ---                     ---                ----

    EBITDA (1)                                                                                                                                                                                      $(720)                          $(1,574)                 $1,681                $103
                                                                                                                                                                                                     =====                            =======                  ======                ====

    (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            For the Six Months Ended

                                                                          July 31,                             July 31,
                                                                          --------                             --------

                                                                    2017                     2016          2017                    2016
                                                                    ----                     ----          ----                    ----

                                                                     (in thousands)                   (in thousands)

    Revenues:

    Equipment
     Manufacturing and
     Sales                                                        $9,662                   $5,758       $16,573                 $12,978

    Equipment Leasing                                              1,271                    2,909        12,816                   7,452

    Inter-segment sales                                             (97)                     (4)        (120)                   (36)
                                                                     ---                      ---          ----                     ---

         Total revenues                                           10,836                    8,663        29,269                  20,394
                                                                  ------                    -----        ------                  ------

    Cost of sales:

    Equipment
     Manufacturing and
     Sales                                                         5,943                    3,116         9,942                   7,174

    Equipment Leasing                                              4,373                    7,809        15,636                  15,885

    Inter-segment costs                                             (98)                    (20)        (121)                   (57)
                                                                     ---                      ---          ----                     ---

    Total cost of sales                                           10,218                   10,905        25,457                  23,002
                                                                  ------                   ------        ------                  ------

    Gross profit (loss)                                              618                  (2,242)        3,812                 (2,608)

    Operating expenses:

    General and
     administrative                                                5,065                    5,426         9,967                  10,739

    Depreciation and
     amortization                                                    525                      647         1,106                   1,299
                                                                     ---                      ---         -----                   -----

         Total operating
          expenses                                                 5,590                    6,073        11,073                  12,038
                                                                   -----                    -----        ------                  ------

    Operating loss                                              $(4,972)                $(8,315)     $(7,261)              $(14,646)
                                                                 =======                  =======       =======                ========

    Equipment Manufacturing and Sales Segment:

    Revenues:

      Seamap                                                      $7,490                   $2,208       $12,377                  $7,126

      Klein                                                        1,002                    2,326         1,939                   4,462

      SAP                                                          1,622                    1,332         2,911                   1,813

      Intra-segment sales                                          (452)                   (108)        (654)                  (423)
                                                                    ----                     ----          ----                    ----

                                                                   9,662                    5,758        16,573                  12,978

    Cost of sales:

      Seamap                                                       4,206                      900         6,767                   3,439

      Klein                                                          944                    1,390         1,677                   2,861

      SAP                                                          1,245                      934         2,262                   1,297

      Intra-segment sales                                          (452)                   (108)        (764)                  (423)
                                                                    ----                     ----          ----                    ----

                                                                   5,943                    3,116         9,942                   7,174
                                                                   -----                    -----         -----                   -----

    Gross profit                                                  $3,719                   $2,642        $6,631                  $5,804
                                                                  ======                   ======        ======                  ======

    Gross profit margin                                              38%                     46%          40%                    45%

    Equipment Leasing Segment:Equipment Leasing Segment:

    Revenues:

    Equipment leasing                                               $977                   $1,634        $3,694                  $5,242

    Lease pool equipment
     sales                                                           228                    1,263         9,062                   2,169

    Other equipment sales                                             66                       12            60                      41
                                                                     ---                      ---           ---                     ---

                                                                   1,271                    2,909        12,816                   7,452

    Cost of sales:

    Direct costs-
     equipment leasing                                               561                      785         1,505                   1,537

    Lease pool
     depreciation                                                  3,750                    6,675         7,931                  13,548

    Cost of lease pool
     equipment sales                                                  66                      298         6,195                     713

    Cost of other
     equipment sales                                                 (4)                      51             5                      87
                                                                     ---                      ---           ---                     ---

                                                                   4,373                    7,809        15,636                  15,885
                                                                   -----                    -----        ------                  ------

    Gross loss                                                  $(3,102)                $(4,900)     $(2,820)               $(8,433)
                                                                 =======                  =======       =======                 =======

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SOURCE Mitcham Industries, Inc.