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Exhibit 99.1
INDEX TO FINANCIAL STATEMENTS
Page
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Input / Output, Inc. Employee Stock Purchase Plan
Independent Auditors' Report ................................... F-2
Statements of Net Assets Available for Plan Benefits
as of June 30, 2000 and 1999 ................................... F-3
Statements of Changes in Net Assets Available for
Plan Benefits for the years ended June 30, 2000, 1999
and 1998 ....................................................... F-3
Notes to Financial Statements .................................. F-4
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INDEPENDENT AUDITORS' REPORT
Compensation Committee of the Board of Directors
Input / Output, Inc.
We have audited the accompanying statements of net assets available for plan
benefits of the Input / Output, Inc. Employee Stock Purchase Plan as of June 30,
2000 and 1999 and the related statements of changes in net assets available for
plan benefits for the years ended June 30, 2000, 1999 and 1998. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Input /
Output, Inc. Employee Stock Purchase Plan as of June 30, 2000 and 1999 and the
changes in net assets available for plan benefits for the years ended June 30,
2000, 1999 and 1998 in conformity with accounting principles generally accepted
in the United States of America.
/s/ KPMG LLP
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Houston, Texas
September 22, 2000
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INPUT/OUTPUT, INC. EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF
June 30,
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2000 1999
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Assets
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Cash ............................................... $ -- $ 347,810
Investments in shares of Input / Output, Inc.
Common Stock at fair value ....................... $2,987,605 $1,211,807
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Net Assets available for plan benefits ............. $2,987,605 $1,559,617
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INPUT/OUTPUT, INC. EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED
June 30,
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2000 1999 1998
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Additions to assets:
Employee contributions .......................... $ 1,051,382 $ 1,152,387 $ 995,544
Net appreciation (depreciation) in fair
value of Input / Output, Inc. Common Stock .... 753,915 (140,610) 109,473
Net realized gain (loss) on sales and
distributions of Input / Output, Inc. Common
Stock ......................................... (4,172) (12,906) 209,471
Total additions .................................... 1,801,125 998,871 1,314,488
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Deductions:
Distributions to participants ................... 373,137 461,732 542,702
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Change in net assets available for plan benefits
during the year .................................. $ 1,427,988 $ 537,139 $ 771,786
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Net Assets available for plan benefits:
At beginning of period .......................... $ 1,559,617 $ 1,022,478 $ 250,692
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At end of period ................................ $ 2,987,605 $ 1,559,617 $1,022,478
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See accompanying notes to financial statements.
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INPUT/OUTPUT, INC. EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF PLAN:
The following brief description of the Input / Output, Inc. Employee
Stock Purchase Plan ("the Purchase Plan") is provided for general information
purposes only. Participants should refer to the Purchase Plan for complete
information regarding the Purchase Plan's definitions, benefits, eligibility
and other matters.
(a) General
The Purchase Plan was approved by the Input/Output, Inc. (the Company)
Board of Directors in March, 1997 and commenced on April 1, 1997. The
stockholders of the Company approved the Purchase Plan on September 29, 1997.
There are 1.5 million shares of Common Stock of the Company reserved for
issuance under the Purchase Plan.
The Purchase Plan is intended to advance the long-term interests of the
Company by encouraging the acquisition and ownership of common stock of the
Company by employees of the Company. The Purchase Plan is intended to qualify
as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code (the Code) of 1986, as amended.
Effective April 1, 1999, the Purchase Plan was amended to reduce the
period of continuous employment required for participation in the plan.
Effective October 1, 1999, the Purchase Plan was amended for the
following reasons: (1) to shift the offering periods to coincide to the
calendar year, (2) to allow for the purchase of fractional shares utilizing
all of the funds in a participant's account and (3) to clarify that all
Input / Output, Inc. subsidiary employees are eligible to participate in the
plan.
(b) Eligibility
An "eligible employee" under the Purchase Plan is a person who (i) is
actively employed (ii) is actively employed on the first day of the offering
period and (iii) is not excluded pursuant to the following sentence. The
following person shall not be eligible: (1) employees whose customary
employment is twenty (20) hours or less per week, and (2) an employee who
owns 5% or more of the Company's Common Stock.
(c) Contributions
The Purchase Plan allows all eligible employees to authorize payroll
deductions at the rate of 1% up to 15% of base compensation to be applied
toward the purchase of Input / Output, Inc. Common Stock. The purchase price
of the Common Stock will be the lesser of 85% of the closing price on the
first day of the applicable offering period or most recently preceding
trading day or 85% of the closing price on the last day of the offering
period or most recently preceding trading day. Under the Purchase Plan,
separate six-month offering periods ("offering period") commence on January
1st and July 1st of each year.
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INPUT/OUTPUT, INC. EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(d) Participant Accounts
A Purchase Plan account in the name of each participant will be
maintained. Each pay day a participant's payroll deduction shall be withheld
and credited to such account. As of the last day of the Offering Period the
amount in the participant's account shall be applied to the purchase of the
Company's Common Stock. The purchase of stock will be made solely from
amounts credited to the participant's plan account. The total number of
employees participating in the purchase plan as of June 30, 2000, 1999 and
1998 was 519, 428 and 401, respectively.
(e) Distributions
Upon withdrawing from an offering, terminating employment or
terminating their participation in the Plan, the Plan Administrator will
transfer to the participant a stock certificate of the shares of Common Stock
in such participant's plan account or, alternatively, the participant may
request in writing the sale of all or part of the shares of Common Stock in
such participant's plan account. The shares will be sold within five business
days, and the Purchase Plan will deliver to the participant the proceeds of
the sale, less a handling charge, brokerage commissions, and other costs of
sale.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are presented on the accrual basis
of accounting in conformity with accounting principles generally accepted in
the United States of America.
Investments in Company Common Stock are reported at fair value
determined by reference to quoted market prices. Net realized gains and
losses on disposition of investments are reported on the revalued cost
method. Revalued cost is the fair value of the assets at the beginning of the
Plan year or historical cost if the investment was acquired since the
beginning of the year. Any unrealized appreciation or depreciation is
recognized as a gain or loss currently in the statement of changes in net
assets available for plan benefits.
(3) FEDERAL INCOME TAXES
The Purchase Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Section 423 of the
Code. Under those provisions, no income will be taxable to a participant at
the time of the grant of the option or purchase of shares for federal income
tax purposes. However, a participant may become liable for tax upon
dispositions of shares acquired, and the tax consequences will depend on how
long a participant has held the shares prior to disposition.
(4) ADMINISTRATION OF PLAN ASSETS
The Purchase Plan's investment in shares of Input / Output, Inc. Common
Stock are held in safekeeping as designated by Computershare Investor
Services, L.L.C. formerly Harris Trust, Inc. ("Registrar"). Cash
contributions to the Purchase Plan are held by the Company prior to the
investment in Input / Output, Inc. Common Stock. Certain administrative
functions are performed by officers or employees of the Company or Registrar.
No such officers or employees receive compensation from the Purchase Plan.
All administrative expenses of the Purchase Plan are borne by the Company.
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INPUT/OUTPUT, INC. EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(5) PLAN TERMINATION
The Purchase Plan will terminate (a) on the date all shares authorized
for sale under the Purchase Plan have been purchased or (b) at any time, at
the discretion of the Board of Directors of the Company; provided however,
that no termination shall affect outstanding offerings of shares.
Upon termination of the Purchase Plan and the exercise or lapse of all
offering rights thereunder all remaining amounts credited to the Purchase
Plan accounts of participants shall be returned to such participants in cash
without interest. At this time, there is no intention to terminate the
Purchase Plan.
(6) INVESTMENTS
The investments, at June 30, 2000 and 1999 are presented in the
following table:
June 30,
2000 1999
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Shares of Input / Output, Inc. Common Stock
Number of shares ....................... 353,432 160,239
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Average cost ........................... $2,233,690 $1,352,417
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Fair value ............................. $2,987,605 $1,211,807
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