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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) April 26, 1999
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MITCHAM INDUSTRIES, INC.
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(Exact name of registrant as specified in its Charter)
Texas 001-13490 76-0210849
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(State or other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification Number)
44000 Highway 75 South, Huntsville, Texas 77342
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (409) 291-2277
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
(a) On April 26, 1999, due to a sharp decline in seismic activity
and overall demand for the Company's services, the Company
entered into a Termination Agreement with Input/Output, Inc.
("I/O") under which the parties terminated the Preferred
Supplier Agreement they entered into effective June 30, 1998.
Under the Preferred Supplier Agreement, the Company had agreed,
among other things, to purchase an estimated $90 to $100 million
(after discounts) of I/O equipment over a five-year term ending
May 31, 2003. I/O had agreed, among other things, to refer to
the Company all rental inquiries from its customers, and not to
lease equipment covered by the I/O Agreement except in limited
circumstances. As a result of the Termination Agreement, I/O is
no longer restricted from competing with the Company in the
short-term equipment leasing business, and may seek to more
aggressively pursue lease and lease/purchase arrangements that
would likely have been prohibited by the Preferred Supplier
Agreement.
(b) On April 28, 1999, the Company issued a press release with
respect to the Termination Agreement. The press release is
attached hereto as Exhibit 99.
ITEM 7.
FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements. Not Applicable.
(b) Pro Forma Financial Information. Not Applicable.
(c) Exhibits.
Exhibit Number Description
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10 Termination Agreement, dated April 26, 1999,
between the Company and I/O
99 Press Release dated April 28, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MITCHAM INDUSTRIES, INC.
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(Registrant)
DATED: May 5, 1999
By: /s/ Billy F. Mitcham, Jr.
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Billy F. Mitcham, Jr.
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit Number Description
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10 Termination Agreement, dated April 26, 1999, between
the Company and I/O
99 Press Release dated April 28, 1999
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EXHIBIT 10
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EXHIBIT 10
TERMINATION AGREEMENT AND RELEASE
THIS TERMINATION AGREEMENT AND RELEASE (the "Agreement") is entered
into effective April 26, 1999, by and between Mitcham Industries, Inc.
("Mitcham"), having its principal place of business at 44000 Highway 75 South,
Huntsville, Texas, and Input/Output, Inc. ("I/O"), having its principal place of
business at 11104 W. Airport Blvd., Stafford, Texas, under the following
circumstances:
Mitcham and I/O are parties to that certain Preferred Supplier
Agreement (the "Supplier Agreement") dated June 30, 1998, under which Mitcham
agreed to purchase from I/O stated minimum amounts of I/O equipment over the
term of that agreement, on the terms and subject to the conditions specified
therein. Since the parties entered into the Supplier Agreement, the energy
services and seismic industries have experienced a dramatic unforeseen reduction
in demand due to continued depressed oil prices. As a result, the parties now
desire to terminate the Supplier Agreement and their obligations thereunder.
NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. TERMINATION. The Supplier Agreement is hereby terminated and, as of
the date of this Agreement, has no further force and effect except as
specifically stated in this Agreement. Each party acknowledges that, as of and
through the date of this Agreement, the other party is, and has at all times
since the effective date of the Supplier Agreement been, in full compliance with
its terms and conditions, and there has been no default by either party in the
performance of its obligations thereunder. Mitcham further acknowledges that, as
of the date of this Agreement, it has no exclusive leasing rights for I/O
equipment.
2. CONTINUING OBLIGATIONS. With respect to seismic equipment
manufactured by I/O that Mitcham purchased under the Supplier Agreement before
the date of this Agreement (collectively, "Products"):
(a) I/O will continue to provide maintenance and repairs to such
Products, at I/O's published rates in effect from time to time and
(b) Any and all warranties made by I/O with respect to such Products
shall remain in full force and effect as originally made.
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3. RELEASE. Each party hereby releases, acquits and forever discharges
the other party, its directors, officers, shareholders, employees, agents,
representatives, and successors-in-interest, and any other person claiming by,
through, or under it, from any and all claims, causes of action, demands,
charges liabilities, damages, costs and expenses arising out of the Supplier
Agreement.
4. MISCELLANEOUS.
4.1 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement between the parties with respect to the subject matter hereof, and
fully supersedes any and all prior agreements or understandings between the
parties with respect to such subject matter.
4.2 GOVERNING LAW. This Agreement shall be governed by,
construed under and enforced and interpreted in accordance with the internal
substantive laws of the State of Texas that applies to agreements to be made and
performed solely in Texas, without giving effect to any conflicts or choice of
laws principles that might otherwise apply.
4.3 MULTIPLE COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be considered an original, but all of
which shall be deemed the same instrument.
EXECUTED THIS 26th day of April, 1999.
INPUT/OUTPUT, INC. MITCHAM INDUSTRIES, INC.
By: /s/ Rex Reavis By: /s/ Billy F. Mitcham, Jr.
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Name: Rex Reavis Name: Billy F. Mitcham, Jr.
Title: Vice President Title: President and Chief Executive Officer
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EXHIBIT 99
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EXHIBIT 99
PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: P. BLAKE DUPUIS
409-291-2277
MITCHAM INDUSTRIES ANNOUNCES TERMINATION OF
PREFERRED SUPPLIER AGREEMENT WITH INPUT/OUTPUT, INC.
HUNTSVILLE, Texas (April 28, 1999) - Mitcham Industries, Inc. (NASDAQ: MIND)
announced today that Mitcham and Input/Output, Inc. (NYSE: IO) have terminated
their Preferred Supplier Agreement which called for, among other things, Mitcham
Industries to purchase equipment from I/O and I/O to refer rental inquiries to
Mitcham Industries. The Company said that substantial changes within its
marketplace necessitated its decision to terminate the agreement.
Foremost among those changes is the sharp decline in seismic activity and
overall equipment demand due to continued depressed oil and gas prices, reduced
exploration budgets and consolidations of companies in the oil and gas industry.
The Company said that recent increases in oil prices, while encouraging, have
not yet countered these trends.
"Our immediate goal is to preserve the strength of our company throughout this
downturn," said Billy F. Mitcham, Jr., Mitcham Industries' Chairman and CEO. "In
view of the dramatic changes in our operating environment this past year, we
believe it would be imprudent for our company to make substantial outlays for
equipment that might well be idle for a considerable period of time."
"We remain committed to providing our customers with the finest seismic
equipment available," Mitcham said. "And we have the most advanced seismic
systems and related equipment on the market ready to meet their needs."
Commenting on the company's future relationship with Input/Output, Mitcham said,
"We value our long-standing relationship with Input/Output and look forward to
remaining a good customer in the future."
Mitcham Industries Inc. is the leading independent company specializing in the
leasing of 3-D seismic equipment to the oil and gas industry. Mitcham also sells
new and "experienced" seismic equipment.
M O R E
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This press release contains 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. All statements other than statements of historical facts
included herein, including statements regarding potential future demand for the
company's products and services, the company's future financial position and
results of operations, business strategy and other plans and objectives for
future operations, are forward-looking statements.
Although the company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct and actual results may differ
materially from such forward-looking statements. Important factors that could
cause or contribute to such differences include: uncertainty of the oil and gas
industry and demand for services; dependence upon additional lease contracts;
customer concentration and credit risk; industry consolidation; the risk of
technological obsolescence of the company's lease fleet; vulnerability to
weather conditions and seasonality of results; dependence upon suppliers; risks
related to Year 2000 issues; and other factors which are disclosed in the
company's Securities and Exchange Commission filings, available from the company
without charge. Further, all written and verbal forward-looking statements
attributable to the company or persons acting on its behalf are expressly
qualified in their entirety by such factors.
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