Input/Output Inc. (NYSE:IO) filed Quarterly Report for the period ended 2010-03-31.
Input/output Inc. has a market cap of $668.2 million; its shares were traded at around $5.63 with and P/S ratio of 1.6. IO is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations:In response to the global economic downturn, we took measures to reduce operating costs in our businesses during 2008 and 2009. In addition, we slowed our capital spending, including our investments in our multi-client data libraries in 2009 and into 2010. For the three months ended March 31, 2010, total capital expenditures were $6.5 million, compared to $19.9 million for the three months ended March 31, 2009. We are projecting capital expenditures for 2010 to be between $100 million to $110 million. Of that total, we expect to spend approximately $90 million to $100 million on investments in our multi-client data library, and we anticipate that a majority of this investment will be underwritten by our customers. To the extent that our customers commitments do not reach an acceptable level of pre-funding, the amount of our anticipated investment could decline. The remaining sums are expected to be funded from internally generated cash.
The 23,789,536 shares of our common stock issued by us to BGP consisted of (i) 10,204,082 shares acquired upon BGPs conversion of the approximately $28.6 million principal balance of indebtedness outstanding under a Convertible Promissory Note dated as of October 23, 2009 (the Domestic Convertible Note) issued by us to Bank of China, New York Branch (Bank of China) and (ii) 13,585,454 shares BGP purchased for $2.80 cash per share under the Stock Purchase Agreement, resulting in total gross cash proceeds to us from this sale of approximately $38.0 million. The conversion price per our share under the Domestic Convertible Note was $2.80 per share.
As part of the re-financing of our debt, we, contemporaneously with the formation of INOVA Geophysical, entered into a new Credit Facility, which provided us with approximately $106.3 million under a new five-year term loan and borrowing capacity of approximately $100.0 million under a new revolving line of credit. In connection with the approximately $38.0 million in cash received from BGP for BGPs purchase of 13,585,454 shares of our common stock under the Stock Purchase Agreement, we borrowed approximately $191.3 million in new borrowings under our new Credit Facility, consisting of approximately $106.3 million under a new five-year term loan and approximately $85.0 million under a new revolving line of credit. These funds, along with certain cash on hand, were applied to repay an aggregate of approximately $226.0 million in indebtedness, including (i) approximately $89.4 million in outstanding revolving indebtedness under our prior bank senior credit facility, (ii) approximately $101.6 million in outstanding indebtedness under a five-year term loan under our prior bank senior credit facility and (iii) approximately $35.0 million of outstanding indebtedness under an amended and restated subordinated promissory note dated December 30, 2008 that was payable to one of the selling shareholders in connection with our acquisition of ARAM Systems Ltd. in 2008.
2010 Developments. Our overall total net revenues of $88.7 million for the three months ended March 31, 2010 decreased $18.2 million, or 17.0%, compared to total net revenues for the three months ended March 31, 2009. Our overall gross profit percentage for the first three months of 2010 was 25.2% compared to 31.5% for the first three months of 2009. In the first three months of 2010, we recorded a loss from operations of $11.0 million, compared to $44.6 million loss from operations (which includes the effect of an impairment of intangible assets charge of $38.0 million) for the first three months of 2009.
compared to $34.2 million in the corresponding period of last year. This decrease related mainly to the lack of land equipment sales to BGP, due to the pending formation of INOVA Geophysical, in the first quarter of 2010 compared to $12.7 million of BGP sales in the first quarter of 2009. Marine Imaging Systems net revenues for the three months ended March 31, 2010 decreased by $4.8 million to $13.7 million compared to $18.5 million in the corresponding period of last year, principally due to the decrease in streamer positioning systems product sales compared to the same period of 2009. Revenues from our Data Management Solutions segment (our Concept Systems subsidiary) increased compared to the corresponding period of last year due to increased software sales of ORCA.
Interest Expense, net. Interest expense of $25.6 million for the three months ended March 31, 2010 increased $18.7 million compared to $6.9 million for the first quarter of 2009. The increase is due to the accretion of approximately $8.7 million of the non-cash debt discount (now fully amortized at March 31, 2010) associated with our Convertible Notes and the write-off of $10.1 million of deferred financing charges related to our prior financings during the first quarter of 2010. Because of the recent financing transactions and repayments of our former outstanding indebtedness, we expect that our interest expense will be significantly lower the remaining three quarters of 2010 than we experienced in the same period of 2009. See Liquidity and Capital Resources Sources of Capital below.
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