Reclassification of prior year balancesRecent Accounting Pronouncements

        Certain prior year balances have been reclassified for consistent presentation.

Recent accounting pronouncements

In December 2003,October 2004, the emerging issues task force (the “EITF”) of the Financial Accounting Standards Board issued FIN 46R, a revisionEITF 04-8, “The Effect of Contingently Issuable Debt on Earnings per Share,” which is effective for periods ending after December 15, 2004.  This EITF statement requires us to FIN 46 (Consolidationinclude shares of Variable Interest Entities). FIN 46R replaces FIN 46 and provides additional clarification onour common stock issuable upon the applicationassumed conversion of ARB No. 51, Consolidated Financial Statements, to certain entitiesour Convertible Senior Notes in which equity investors do not have the characteristicscalculation of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.diluted weighted average shares.  We adopted FIN 46R on April 30, 2004. Adoptionthe EITF during the first quarter of fiscal 2005, but adoption did not have a materialsignificant effect on our financial position or results of operations, however, it required consolidation of our 80% owned joint venture accounted for under the equity method prior to adoption of FIN 46R. This entailed consolidating the 80% owned joint venture as of April 30, 2004 on a prospective basis.weighted average shares calculation.  The 80% owned joint venture provides processing and acquisition services and licensescontingently issuable shares related to our multi-client data. This change is reflected in an increaseConvertible Senior Notes had no impact on the calculation of multi-client data of $2.3 million, an increase in other assets and liabilities of $0.8 million and a decrease in investment in and advances to joint ventures of $3.1 million.

        In December 2003, the Financial Accounting Standards Board issued SFAS No. 132 (Revised 2003), Employer's Disclosures about Pension and Other Postretirement Benefits. This statement retains the disclosures required by SFAS No. 132 and adds additional disclosures. Those disclosures include information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. We adopted SFAS No. 132 (Revised 2003) inweighted average shares for the quarter ended April 30, 2004.October 31, 2004, as issuance of the shares would have been anti-dilutive.

2.              Multi-client library accounting change

        As ofEffective August 1, 2003, we changed our multi-clientminimum amortization policy with regard to includemulti-client data and recorded a minimum amortization fromcharge of $22.1 million in the datefirst quarter of survey completion, insteadfiscal 2004, included in cost of onlyservices in our Consolidated Statement of Operations.  Under the prior method, capitalized costs of multi-client surveys were charged to cost of services in the period sales occurred, using the sales forecast method, over an estimated five-year useful life.  However, during the last 24 months of survey book life.    This change resulted in a catch-up adjustment of $22.1 million recognized as additionalsurvey’s useful life, amortization expense duringwas the first quartergreater of the current fiscal year and is included inamount resulting from the sales forecast method or straight-line amortization of the remaining book value over the remaining portion of the original five-year estimated useful life.  Under the new method, capitalized costs of multi-client surveys are charged to cost of services onover an estimated five-year useful life based upon the "Consolidated Statementsgreater of Operations and Comprehensive Income (Loss)."the result (higher expense) under the sales forecast method or cumulative straight-line amortization from survey completion over an estimated five-year useful life.  Notwithstanding this change, the sales forecast method remains our primary method of calculating cost of services.  The total amortization period that concludes sixty months after survey completion represents the minimum period over which the surveys are expected to provide economic benefits.  We believe that commencing the minimum amortization upon survey completion, as opposed to our prior method of doing so only during the last twenty four months of the survey’s life, better reflects the potential diminution of survey value with the passage of time.

3.              Other expense (income), net

Other expense (income), net consists of the following:

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4.              Earnings per common share

Basic and diluted earnings per common share are computed as follows:

The Convertible Senior Notes were not convertible as of October 31, 2004 and the shares issuable from such conversion, while considered, are not included in this income per share calculation as they are anti-dilutive (See Note 5 for a description of our Senior Notes.)

The following options to purchase common shares have been excluded from the computation assuming dilution because the options' exercise prices exceedof the options exceeded the average market price of the underlying common shares or the options are anti-dilutive due to a net loss.

 The Convertible Senior Notes, with potential dilution of 6.4 million shares, are also excluded from the diluted earnings per share computation, as the notes were not convertible under their terms during the quarter ended April 30, 2004.

5.              Long-term debt

        Long-term debt is as follows:

        On February 14, 2003, we entered into a Credit Agreement (the "Credit Agreement") with Deutsche Bank AG, New York Branch, as Administrative Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and certain other lending institutions. The Credit Agreement provides term financing of $195.0 million under term A, term B and term C tranches (the "Term Loans"), a revolving loan facility aggregating $55.0 million, including a facility for swing line loans of up to $10.0 million and the issuance of letters of credit in an aggregate amount of up to $40.0 million. As of April 30,October 31, 2004, there were $2.2 million in lettersour long-term debt outstanding consisted of credit outstanding, leaving $52.8 million available for borrowings. Among other restrictions, the Credit Agreement prohibits us from paying cash dividends. Proceeds from the Term Loans were used to satisfy the obligations under our previous credit agreement and our Senior Notes due October 2003.

        The term A loan was in the original principal amount of $30.0 million, matures in February 2006, and requires quarterly interest payments at a rate, at our election, of LIBOR plus a margin ranging from 3.5% to 4.0% or a base rate plus a margin ranging from 2.25% to 2.75%. These margins are based on certain of our financial ratios. The term B loan was in the original principal amount of $125.0 million, matures in February 2007, and requires quarterly interest payments at a rate, at our election, of LIBOR plus 5.0%, subject to a 2% LIBOR floor or a base rate plus 3.75%. The term C loan was in the original principal amount of $40.0 million, would have matured in February 2008, and required quarterly interest payments at a rate, at our election, of LIBOR plus 7.5%, subject to a 3% LIBOR floor or a base rate plus 6.25%.

        The term A and term B loans required quarterly combined principal payments of $387,500 representing 0.25% of the initial principal balances. Should there be an event of default or if an unmatured event of default exists, or the credit rating of any of the debt is below Moody's Ba2 or S&P's BB, or our leverage ratio as of the last day of the most recent excess cash flow calculation period rises above certain levels, the term A and B loans also require principal payments of 50% of the prior fiscal year's cash flow, calculated as per the loan agreement. This payment is due 100 days after the end of the fiscal year and results in a ratable reduction of the future required quarterly principal payments. As our lowest debt rating by Moody's was below the minimum level, we paid $12.4 million of principal in November 2003 related to the company's cash flow from January 1, 2003 through July 31, 2003. Future excess cash flow payments of this type, if any, will be based on cash flow for full fiscal years. We used $129.0 million of net proceeds from the Floating Rate Convertible Senior Notes described below to repay in full the term C loan and to prepay portions of the term A and B loans. In addition, we prepaid an additional $25.0 million of term debt using cash on hand. We recorded $6.4 million in charges relating to the retirement of the $154.0 million term debt which included expensing of debt issuance costs, cancellation of interest rate swaps and prepayment penalties. These charges are included in interest expense on the "Consolidated Statement of Operations and Comprehensive Income (Loss)." Based upon the payments in November 2003 and March 2004 for the terms A and B loans, our required quarterly combined principal payment was reduced to $110,916.

        Loans made under the revolving loan facility, including swing-line loans, bear interest at a variable rate determined on the date of borrowing that is related to various base rates and margins depending upon our leverage ratio and the location of the borrowing. The revolving loan facility expires in February 2006.

        Borrowings under the Credit Agreement are secured by assets, including equipment, vehicles, multi-client data library, intellectual property, and stock of certain material subsidiaries, owned by us and certain of our subsidiaries. At April 30, 2004, the carrying value of the secured assets, including intercompany receivables, was $1.1 billion. The Credit Agreement and related documents contain a number of covenants, including financial covenants relating to interest coverage, leverage and net worth. At April 30, 2004, we were in compliance with these covenants.

        On March 3, 2004, we sold $125.0 million aggregate principal amount of Floating Rate Convertible Senior Notes Due 2024 in a private placement. On March 11, 2004, we sold an additional $30.0$155.0 million of Convertible Senior Notes due 2024. In addition, we have a Credit Facility consisting primarily of a revolving loan facility permitting borrowings of up to $55.0 million and we have various unsecured lines of credit totaling $8.5 million usable exclusively for letters of credit and bank guarantees.

The Convertible Senior Notes bear interest at a per annum rate which equals the initial purchaser.three-month LIBOR rate, adjusted quarterly, minus a spread of 0.75%.  The notescurrent interest rate on the Convertible Senior Notes, from March 15, 2005 through June 14, 2005, is 2.26%.  The Convertible Senior Notes are our senior unsecured obligations and are convertible under certain circumstances into a combination of cash and our common stock at a fixed conversion price of $24.03 (subject to adjustment in certain circumstances), which is equivalent to an initial conversion ratio of approximately 41.6 shares of our common stock per $1,000 principal amount of Convertible Senior Notes, or a maximum of approximately 6.4 million shares for the $155.0 million aggregate principal amount.stock.  In general, upon conversion of a note, the holder of such note will receive cash equal to the principal amount of the note and shares of our common stock for the note'snote’s conversion value in excess of such principal amount.  We used $129.0 millionentered into a registration rights agreement in which we agreed to file a registration statement with the Securities and Exchange Commission within 90 days of net proceeds from the sale of Convertible Senior NotesMarch 3, 2004 to repay in full the term C loan and to prepay portions of the term A and B loans. The remaining $20.0 million of net proceeds from the Convertible Senior Notes was used to repurchase, in negotiated transactions, 1,222,494 shares of our common stock sold by certain purchasersregister resales of the Convertible Senior Notes and associated shares of common stock.  We filed a registration statement on May 28, 2004 in connectioncompliance with the offering.

        The Convertible Senior Notes bear interest at a per annum rate which will equalregistration rights agreement; however, the three-month LIBOR rate, adjusted quarterly, minus a spread of 0.75%. The initial interest rate of the notes (through June 14, 2004) will be 0.37%. The notes will mature on March 15, 2024 and mayregistration statement is not be redeemed by us prioryet effective.  Because we are required to March 20, 2009. Holders of the notes may require us to repurchase some, or all, of the notes on March 15, 2009, 2014 and 2019. They could also require repurchase upon a change of control (as definedpay liquidated damages in the indentureevent the registration statement did not become effective on or before August 31,

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2004, or under whichcertain other circumstances, we have been incurring such damages in the Convertible Senior Notes were issued).amount of $2,153 per day since August 31, 2004.

Under certain circumstances and at the option of the holder, the Convertible Senior Notes are convertible prior to the maturity date into cash and shares of our common stock.  Certain of these circumstances may result in classification of the Convertible Senior Notes as current on our balance sheet.  These circumstances include:

(1)

1.the closing sale price of our common stock is over 120% of the conversion price, which is currently $24.03 (with 120% being $28.84) for a specified number of20 trading days



(2)

in the period of 30 consecutive trading days ending on the last trading day of the fiscal quarter preceding the quarter in which the conversion occurs;

2.if we called the notes for redemption and the redemption has not occurred



(3)

occurred;

3.the occurrence of a five consecutive trading day period in which the trading price of the notes was less than 95% of the closing sale price of our common stock on such day multiplied by the number of shares of our common stock issuable upon conversion of the notes



(4)

notes; or

4.the occurrence of specified corporate transactions

 The

Should any of these circumstances occur, the Convertible Senior Notes were soldwould be convertible at the then current stock price times the conversion ratio of 41.6146. This amount would be payable in cash equal to Deutsche Bank Securities Inc., the initial purchaser, under an exemption provided by section 4 (2) of the Securities Act. The initial purchaser concurrently sold the notes only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended. The notes and the underlying common stock issuable upon conversion have not been registered under the Securities Act or any applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. We entered into a registration rights agreement in which we agreed to file within 90 days of March 3, 2004 a registration statement with the Securities and Exchange Commission to register resalesprincipal amount of the notes, the par value adjusted for dividends or other equity transactions, and associatedthe additional amount payable in shares of our common stock.  Currently, the maximum amount payable by us on conversion is $155 million in cash plus approximately 6.5 million shares. For clarity, conversion at a $40 stock price would result in our payment of $155 million in cash and 2.575 million shares of common stock.  This settlement method is prescribed in the indenture and is not at the discretion of any party.  The shares issuable from such conversion are considered in the calculation of diluted earnings per share.

As of October 31, 2004, there were no borrowings and $1.8 million in letters of credit outstanding under the Credit Facility.  Borrowings under the Credit Facility, including swing-line loans, bear interest at a variable rate determined on the date of borrowing that is related to various base rates and margins depending upon our leverage ratio and the location of the borrowing.  The Credit Facility expires in February 2006.  Borrowings under the Credit Facility are secured by substantially all assets of the company.

During March 2005, we obtained waivers from our lenders under the Credit Facility related to the late filing of our financial statements.  On May 12, 2005 we obtained an extension to these waivers. The extended waivers allow us to deliver our required reports for fiscal 2004 and for the first and second quarters of fiscal 2005 to the lenders by no later than June 15, 2005.  If we are unable to meet this deadline or are unable to extend it further, our ability to borrow under the Credit Facility will be restricted.

We filedhave various unsecured lines of credit, with lending institutions that operate in geographic areas not covered by the lending institutions in our revolving loan facility, totaling $8.5 million that may be used exclusively for the issuance of letters of credit and bank guarantees.  As of October 31, 2004, $4.2 million in letters of credit were outstanding under these lines.

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6.              Pension plan

We maintain a registration statement on May 28,contributory defined benefit pension plan (the “Plan”) for eligible participating employees in the United Kingdom.  The following is the net periodic benefit cost by component:

We expect Service Costs to be $0.6 million for this pension plan in fiscal 2005.  As of October 31, 2004, our contributions to the plan have been made in complianceaccordance with the registration rights agreement. We are requiredSchedule of Contributions upon which this estimated Service Cost was based.

7.              Hedge transactions

From time to pay liquidated damages in the form of additional interest in the event the registration statementtime we enter into contracts with customers whereby payment is not effective on or beforein U.S. dollars, our functional currency.  During the 180th day after March 3,quarter ended October 31, 2004, or under certain other circumstances.

6.     Hedge transactions

        In March 2001, we entered into a contract requiringsuch contracts with customers whereby payments, to be received in November 2004, were to be made in the British Pound Sterling and the Norwegian kroner to charter the seismic vessel M/V Seisquest. The contract required 36 monthly payments commencing on June 1, 2001.Kroner.  To protect us against exposure to exchange rate risk, we entered into multiple forwardcurrency exchange contracts as cash flow hedges effectively fixing ourwith financial institutions.  As of October 31, 2004, the fair value of these contracts was a loss of $135,000 recorded in foreign currency exchange rate for Norwegian kroner to the U.S. dollar. This contract expired on April 30, 2004.

        On February 25, 2003, we entered into interest rate swaps in order to reduce our exposure to the variable interest rates under our Credit Agreement described above. These swaps, with notional amounts totaling $80.0 million, effectively hedged 41% of our exposure to interest rate changes for the two-year term of the swaps and had no value at inception. On March 29, 2004, upon prepayment of amounts outstanding under our current bank credit facility, the swap agreement was amended to an amount totaling $10.9 million. This amendment resulted in an expense of $416,000 and isloss included in interest expense for“Other income, net” in the current quarter on the "Consolidated Statements on“Consolidated Statement of Operations and Comprehensive Income (Loss)."”

 Details of the interest rate swaps as of April 30, 2004 are summarized in the following table:

        The values of the interest rate swaps are as follows:

        In March 2004, we entered into a contract in which we receive payments in pounds sterling. In order to minimize our exposure to currency risk, we purchased a put option in the notional amount of 658,000 pounds sterling and a call option in the amount of 366,000 pounds sterling. As of April 30, 2004, we realized a gain of $31,000 from this hedge.

7.8.              Segment information

        We have twoBeginning in fiscal 2005, we organized the company into three geographic regions: North and South America (NASA); Europe, Africa, the Middle East and CIS (EAME); and Asia Pacific (APAC).  This reorganization is designed to move our operational decision-making closer to our customers.  Our geographic segments land and marine operations, bothoffer a common suite of which provide geophysical products and services to their customers, although each product or service may be adapted to meet the petroleum industry.needs of the local markets.  This segmentation of our company is representative of the manner in which it is viewed and managed by our senior managers and our Board of Directors. The two segments haveinformation related to the three months ended October 31, 2003 has been aggregated, as they are similar in their economic characteristics andrestated to reflect the nature of their products, production processes and customers.new segment structure. A reconciliation of the reportable segments'segments’ results to those of the total enterprise is given below:

8.     Pension Plan

        We maintain a contributory defined benefit pension plan (the "Pension Plan") for eligible participating employees in8

Corporate operating income (loss) includes certain general and administrative and research and development expenses not allocated to the United Kingdom. Monthly contributions by employees are equal to 4% of their salaries. We provide an additional contribution in an actuarially determined amount necessary to fund future benefits to be provided under the Pension Plan. Benefits provided are based upon¹/60 of the employee's final pensionable salary (as defined) for each complete year of service up to²/3 of the employee's final pensionable salary and increase annually in line with inflation subject to a maximum increase of 5% per annum. The Pension Plan also provides for 50% of such actual or expected benefits to be paid to a surviving spouse upon the death of a participant. Pension Plansegments.  Corporate assets consist mainlyprimarily of investments in marketable securities that are heldcash and managed by an independent trustee.cash equivalents.

 The components of net periodic pension costs are as follows:

        Contributions for fiscal 2004 are expected to be approximately $528,000.

9.              Stock based compensation

We account for stock basedstock-based employee compensation using the intrinsic method prescribed in Accounting Principles Board Opinion No. 25 and have adopted the disclosure only provisions of Statement of Financial Accounting Standards (SFAS) No. 148.  TheAs required by SFAS No. 148, we disclose the effect on net income and earnings per share of equity-based employee compensation, including stock options, that would have been recorded using the fair value based methodmethod.  We will adopt SFAS No. 123R beginning with our first quarter of fiscal 2006.  This will require us to record the cost of this equity-based compensation in our income statement based on the estimated fair value of the awards.

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10.       Restatement

The historical financial information in this document for stock options is as follows:

10.   Subsequent event

        On June 10, 2004, we repaid the remaining $27.0 millionperiod ended October 31, 2003 has been restated due to accounting errors.  These errors were discovered during two separate reviews, a comprehensive review of our bank debtbalance sheet and settleda review of specific types of our interest rate swaps.customer contracts.

Balance Sheet Review

During our fiscal 2004 year-end balance sheet review, we found various types of clerical and account reconciliation errors related primarily to the intercompany transfer of property and foreign currency items.  The fixed asset errors of approximately $1.9 million affected depreciation and amortization charges over the past seven years.  We incurred prepayment penaltiescorrected all matters identified in the balance sheet review in our restatement, although such items were not individually material.

Contract Review

We also reviewed our accounting for our customer contracts, including those that contain provisions for customer payment of $218,000mobilization fees, revenue sharing with customers and lossescertain date contingencies.  Because our contracts vary widely in terms and conditions, we reviewed the deliverables of each type of contract and, where required, applied the guidance of EITF 00-21.  We determined that our accounting treatment for certain of these customer contracts was not in accordance with generally accepted accounting principles and adjusted our accounts accordingly.  We had recognized mobilization fees as revenue during the period of mobilization rather than during the period of seismic data acquisition, as required by Staff Accounting Bulletin (the “SAB”) 104.  In contracts with revenue sharing clauses and date contingencies, we recognized revenue before the price to be ultimately paid by the related customer was fixed or determinable under SAB No. 104. In all cases, our errors related to customer contracts were related to the timing of revenue recognition.

The following is a summary of the effect of the restatement adjustments on our previously reported net income, earnings per share and total assets for the swapsthree months ended October 31, 2003:

The following are the restated financial statements for the first quarter of $25,000.fiscal 2004 compared to the previously reported amounts:

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RESTATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2003

(UNAUDITED)