Ion Geophysical (IOGPQ) 8-K I/o Reports Third Quarter 2006 Results

Exhibit 99.1

	CONTACTS:	R. Brian Hanson
		Chief Financial Officer
		Input/Output (281) 879-3672
FOR IMMEDIATE RELEASE
		Jack Lascar, Partner
		Karen Roan, SVP
		DRG&E (713) 529-6600

I/O REPORTS THIRD QUARTER 2006 RESULTS

•Strong revenue performance in all divisions
•Company increases guidance for 2006

HOUSTON — NOVEMBER 8, 2006 — Input/Output, Inc. (NYSE: IO) today announced third quarter 2006 net income of $2.9 million, or $0.04 per diluted share, on revenues of $110.0 million compared to previously restated net income of $2.7 million, or $0.03 per diluted share, on previously restated revenues of $79.5 million for the same period a year ago.

     Bob Peebler, I/O’s President and Chief Executive Officer, stated, “We continued to see a strong market for our products and services in the third quarter with a 38 percent revenue increase over the same period last year. One important highlight for the quarter was strong land system sales, reflecting the growing recognition of our improved analog systems, including the recently announced Scorpion^® land system, and continued strong sales of our vibrator trucks.

     “The only shortfall for the quarter was not obtaining the expected earnings on higher year over year land revenues. We are making a significant effort through cost reduction programs to improve our land margins and better align them with the performance of our other divisions. We are already seeing the positive impact of those programs and will enter 2007 in a much improved situation, which will benefit the acceleration of future earnings growth.

     “Our marine business continued to show strength across its entire product line, reflecting a buoyant marine seismic market and growth of the seismic fleet. We generated strong sales in our positioning products and in our towed streamer product line, and we are heading into a strong fourth quarter, led by the expected partial delivery of our third VectorSeis^® Ocean (VSO) system to our launch partner.

     “Our Sensor unit had another strong quarter, with the majority of our business originating from Africa and the Middle East. GXT had another solid quarter in multi-client and processing sales and continues to experience strong processing backlog. We are most excited about the upcoming field trial of FireFly™. FireFly is on track to begin the BP WarmSutter project in late-November, and we expect the 10,000 station shoot to be completed by the end of December. FireFly is a cableless land imaging system that we believe will change the way land seismic imaging is done, including enabling a much broader use of VectorSeis full-wave.”

THIRD QUARTER 2006

     Land Imaging Systems revenues increased 19 percent to $46.1 million compared to $38.8 million a year ago, driven by strong land systems sales and continued strong performance from Sensor geophone sales.

     Marine Imaging Systems revenues increased 52 percent to $24.9 million from $16.3 million a year ago, led by robust sales of the company’s positioning products and a solid contribution from the towed streamer product line.

     Seismic Imaging Solutions revenues increased 65 percent to $32.4 million during the quarter compared to $19.6 million a year ago. This strong performance was the result of strong processing and multi-client acquisition revenues.

     Gross margin for the third quarter was 30 percent, the same as in the third quarter a year ago, compared to 33 percent in the second quarter of 2006. Operating expenses for the third quarter were 24 percent of revenues, flat with the third quarter of last year and up from 21 percent of revenues during the second quarter of 2006 because of higher revenues in the second quarter of 2006. The third quarter included $7.8 million in research and development expenses, an increase of $2.9 million over the third quarter last year. In addition, the quarter included an increase of $2.2 million in sales and marketing expenses associated with our international expansion, and $1.4 million in Sarbanes-Oxley and audit expenses as compared to the same quarter in 2005. In total, the company had an increase in the third quarter of $0.6 million in stock-based compensation expense as compared to 2005.

     Income from operations in the third quarter was $6.5 million compared to $5.0 million in the third quarter of 2005. EBITDA (earnings before net interest expense, taxes, depreciation and amortization) for the third quarter improved to $18.0 million compared to a restated $10.8 million for the third quarter of last year. A reconciliation of EBITDA to reported earnings can be found at the end of this press release.

YEAR-TO-DATE 2006

     Revenues for the nine months ended September 30, 2006 increased 46 percent to $337.3 million from a restated $231.7 million for the first nine months of 2005. Gross margin for the first nine months of 2006 increased to 31 percent compared to 27 percent in the comparable period of 2005.

     Operating expenses for the first nine months of 2006 were 24 percent of revenue, consistent with 2005. Investment in research and development totaled $23 million, or 7 percent of revenue, an increase of $8.9 million over 2005. SG&A expenses increased $16.2 million, which includes an investment in sales and marketing of $5.9 million. In addition Sarbanes-Oxley and audit expenses increased $3.3 million, legal expenses increased $1.0 million as result of the litigation with Paulsson Geophysical Services, and bonus expense increased $1.9 million, reflecting current year performance. In total, the company incurred an increase in stock based compensation expense of $2.5 million.

     EBITDA for the first nine months of 2006 increased to $52.8 million from $29.4 million in the same period a year ago. Income from operations for the first nine months of 2006 increased to $22.7 million from $6.6 million in the first nine months of 2005. For the nine months ended September 30, 2006, I/O reported net income of $13.9 million, or $0.17 per diluted share, compared to a restated net income of $1.6 million, or $0.02 per diluted share for the same period a year ago.

OUTLOOK

     The following statements are based on our current expectations. These statements are forward looking and actual results may differ materially. Factors affecting these forward-looking statements are detailed below.

     Brian Hanson, Executive Vice President and Chief Financial Officer, commented, “Based on the first nine months results and our current pipeline of business, we are updating the previous guidance we provided earlier this year. We now expect 2006 revenues to range between $450 and $490 million, with earnings ranging between $0.25 and $0.36 per diluted share. Overall, our business of seismic equipment and processing services is expected to remain strong as the industry continues to refocus on exploration, and this bodes well for the remainder of 2006 and for 2007.”

CONFERENCE CALL

     I/O has scheduled a conference call for Thursday, November 9, 2006, at 9:00 a.m. Eastern Time. To participate in the conference call, dial 303-262-2137 at least 10 minutes before the call begins and ask for the Input/Output conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until November 16, 2006. To access the replay, dial 303-590-3000 and use pass code 11074271.

     Investors, analysts and the general public will also have the opportunity to listen to the conference call live over the Internet by visitingwww.i-o.com. Also, an archive of the web cast will be available shortly after the call on the company’s website.

ABOUT I/O

     I/O is a leading, technology-focused seismic solutions provider. The company provides cutting-edge seismic acquisition equipment, software, and planning and seismic processing services to the global oil and gas industry. I/O’s technologies are applied in both land and marine environments, in traditional 2D and 3D surveys, and in rapidly growing areas like time-lapse (4D) reservoir monitoring and full-wave imaging. Headquartered in Houston, Texas, I/O has regional offices in Canada, Latin America, Europe, China, Russia, Africa and the Middle East. Additional information is available atwww.i-o.com.

     The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements concerning estimated revenues,

earnings and earnings per share for fiscal 2006, and estimated gross margins, EBITDA and operating expenses as a percentage of revenue for fiscal 2006, future sales and market growth, and other statements that are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include the timing and development of the Company’s products and services and market acceptance of the Company’s new and revised product offerings; risks associated with competitor’s product offerings and pricing pressures resulting therefrom; the relatively small number of customers that the Company currently relies upon; the fact that a significant portion of the Company’s revenues is derived from foreign sales; the Company’s ability to successfully manage the integration of its acquisitions into the Company’s operations; the risks that sources of capital may not prove adequate; the Company’s inability to produce products to preserve and increase market share; collection of receivables; and technological and marketplace changes affecting the Company’s product line. Additional risk factors, which could affect actual results, are disclosed by the Company from time to time in its filings with the Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006.

Tables to follow

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INPUT/OUTPUT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(In thousands, except per share amounts)
Product revenues	$	77,608		$	59,862		$	237,620		$	162,361
Service revenues		32,365			19,646			99,693			69,356
Total net revenues		109,973			79,508			337,313			231,717
Cost of products		56,113			42,681			170,236			116,086
Cost of services		20,847			13,002			63,344			52,967
Total cost of sales		76,960			55,683			233,580			169,053
Gross profit		33,013			23,825			103,733			62,664
Operating expenses (income):
Research and development		7,762			4,814			23,032			14,148
Marketing and sales		9,813			7,565			28,458			22,575
General and administrative		8,994			6,429			29,557			19,227
(Gain) loss on sale of assets		(9	)		(1	)		(33	)		75
Total operating expenses		26,560			18,807			81,014			56,025
Income from operations		6,453			5,018			22,719			6,639
Interest expense		(1,484	)		(1,367	)		(4,309	)		(4,726	)
Interest income		630			218			1,517			482
Other income (expense)		(687	)		(4	)		(1,309	)		61
Income before income taxes and change in accounting principle		4,912			3,865			18,618			2,456
Income tax expense (benefit)		1,419			650			3,332			(202	)
Net income before change in accounting principle		3,493			3,215			15,286			2,658
Cumulative effect of change in accounting principle		—			—			398			—
Net income		3,493			3,215			15,684			2,658
Preferred stock dividends and accretion		636			488			1,801			1,104
Net income applicable to common shares	$	2,857		$	2,727		$	13,883		$	1,554
Basic and diluted income per share:
Net income per basic and diluted share before change in accounting principle	$	0.04		$	0.03		$	0.17		$	0.02
Cumulative effect of change in accounting principle		—			—			—			—
Net income per basic and diluted share	$	0.04		$	0.03		$	0.17		$	0.02
Weighted average number of common shares outstanding:
Basic		79,575			79,313			79,344			78,903
Diluted		81,354			80,646			80,976			79,957

INPUT/OUTPUT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

	September 30,			December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	43,130		$	15,853
Restricted cash		1,559			1,532
Accounts receivable, net		114,508			120,880
Current portion of notes receivable, net		6,030			8,372
Unbilled receivables		23,668			15,070
Inventories		104,079			81,428
Prepaid expenses and other current assets		12,824			10,919
Total current assets		305,798			254,054
Notes receivable		5,617			6,508
Non-current deferred income tax asset		3,183			3,183
Property, plant and equipment, net		33,773			28,997
Multi-client data library, net		31,862			18,996
Investments at cost		4,254			4,000
Goodwill		155,016			154,794
Intangible and other assets, net		63,151			67,329
Total assets	$	602,654		$	537,861
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	7,150		$	4,405
Accounts payable		35,903			31,938
Accrued expenses		42,138			29,867
Accrued multi-client data library royalties		24,867			18,961
Deferred revenue		29,015			11,939
Deferred income tax liability		3,183			3,183
Total current liabilities		142,256			100,293
Long-term debt, net of current maturities		71,868			71,541
Non-current deferred income tax liability		4,138			4,304
Other long-term liabilities		4,405			4,340
Total liabilities		222,667			180,478
Cumulative convertible preferred stock		29,950			29,838
Stockholders’ equity:
Common stock		808			807
Additional paid-in capital		489,800			487,232
Accumulated deficit		(136,124	)		(150,007	)
Accumulated other comprehensive loss		2,057			(728	)
Treasury stock, at cost		(6,504	)		(5,968	)
Unamortized restricted stock compensation		—			(3,791	)
Total stockholders’ equity		350,037			327,545
Total liabilities and stockholders’ equity	$	602,654		$	537,861

Reconciliation of EBITDA to Net Income
(Non-GAAP Measures)
(In thousands)
(Unaudited)

     EBITDA is a Non-GAAP measurement that is presented as an additional indicator of operating performance and is not a substitute for net income or net income per share calculated under generally accepted accounting principles (GAAP). We believe that EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to service our debt. The calculation of EBITDA shown below is based upon amounts derived from the company’s financial statements prepared in conformity with GAAP.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
Net income applicable to common shares	$	2,857		$	2,727		$	13,883		$	1,554
Interest expense		1,484			1,367			4,309			4,726
Interest income		(630	)		(218	)		(1,517	)		(482	)
Income tax expense (benefit)		1,419			650			3,332			(202	)
Depreciation and amortization expense		12,898			6,244			32,816			23,813
EBITDA	$	18,028		$	10,770		$	52,823		$	29,409

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