Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2017 | Jan. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2017 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | GEOS | |
Entity Registrant Name | GEOSPACE TECHNOLOGIES CORP | |
Entity Central Index Key | 1,001,115 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 13,563,491 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 13,923 | $ 15,092 |
Short-term investments | 32,085 | 36,137 |
Trade accounts receivable, net | 7,011 | 9,435 |
Financing receivables | 5,793 | 3,055 |
Income tax receivable | 263 | 273 |
Inventories | 19,994 | 20,752 |
Prepaid expenses and other current assets | 1,939 | 1,623 |
Total current assets | 81,008 | 86,367 |
Rental equipment, net | 15,542 | 16,462 |
Property, plant and equipment, net | 36,475 | 37,399 |
Non-current inventories | 56,184 | 55,935 |
Deferred income tax assets, net | 305 | 259 |
Non-current financing receivables, net | 7,032 | 8,195 |
Prepaid income taxes | 56 | 450 |
Other assets | 619 | 629 |
Total assets | 197,221 | 205,696 |
Current liabilities: | ||
Accounts payable trade | 3,322 | 2,599 |
Accrued expenses and other current liabilities | 6,516 | 6,338 |
Deferred revenue | 1,461 | 1,568 |
Total current liabilities | 11,299 | 10,505 |
Deferred income tax liabilities | 29 | 37 |
Total liabilities | 11,328 | 10,542 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity: | ||
Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $.01 par value, 20,000,000 shares authorized, 13,560,291 and 13,438,316 shares issued and outstanding | 136 | 134 |
Additional paid-in capital | 84,557 | 83,733 |
Retained earnings | 115,686 | 125,517 |
Accumulated other comprehensive loss | (14,486) | (14,230) |
Total stockholders’ equity | 185,893 | 195,154 |
Total liabilities and stockholders’ equity | $ 197,221 | $ 205,696 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 13,560,291 | 13,438,316 |
Common stock, shares outstanding | 13,560,291 | 13,438,316 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue: | ||
Total revenue | $ 14,644 | $ 15,285 |
Cost of revenue: | ||
Total cost of revenue | 15,612 | 18,612 |
Gross profit (loss) | (968) | (3,327) |
Operating expenses: | ||
Selling, general and administrative | 5,129 | 5,094 |
Research and development | 3,158 | 3,372 |
Bad debt expense (recovery) | 350 | (482) |
Total operating expenses | 8,637 | 7,984 |
Loss from operations | (9,605) | (11,311) |
Other income (expense): | ||
Interest expense | (64) | (8) |
Interest income | 263 | 130 |
Foreign exchange losses, net | (43) | (65) |
Other, net | (25) | (17) |
Total other income, net | 131 | 40 |
Loss before income taxes | (9,474) | (11,271) |
Income tax expense | 6 | 434 |
Net loss | $ (9,480) | $ (11,705) |
Loss per common share: | ||
Basic | $ (0.72) | $ (0.89) |
Diluted | $ (0.72) | $ (0.89) |
Weighted average common shares outstanding: | ||
Basic | 13,202,384 | 13,094,809 |
Diluted | 13,202,384 | 13,094,809 |
Products | ||
Revenue: | ||
Total revenue | $ 13,425 | $ 10,297 |
Cost of revenue: | ||
Total cost of revenue | 13,243 | 14,836 |
Rental equipment | ||
Revenue: | ||
Total revenue | 1,219 | 4,988 |
Cost of revenue: | ||
Total cost of revenue | $ 2,369 | $ 3,776 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net loss | $ (9,480) | $ (11,705) |
Other comprehensive loss, net of tax | ||
Change in unrealized losses on available-for-sale securities | (51) | (62) |
Foreign currency translation adjustments | (205) | (306) |
Total other comprehensive loss, net of tax | (256) | (368) |
Total comprehensive loss | $ (9,736) | $ (12,073) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (9,480) | $ (11,705) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Deferred income tax expense (benefit) | (55) | 34 |
Rental equipment depreciation | 2,247 | 3,308 |
Property, plant and equipment depreciation | 1,095 | 1,313 |
Accretion of discounts on short-term investments | 13 | 16 |
Stock-based compensation expense | 826 | 1,375 |
Bad debt expense (recovery) | 350 | (482) |
Inventory obsolescence expense | 1,434 | 4,147 |
Gross profit from sale of used rental equipment | (2,566) | (1,201) |
Realized loss on short-term investments | 1 | |
Effects of changes in operating assets and liabilities: | ||
Trade accounts receivable | 2,562 | 2,312 |
Income tax receivable | 10 | |
Inventories | (2,865) | (1,507) |
Prepaid expenses and other current assets | (329) | (39) |
Prepaid income taxes | 41 | 393 |
Accounts payable trade | 723 | (348) |
Accrued expenses and other | 267 | (257) |
Deferred revenue | (65) | 771 |
Income tax payable | (31) | |
Net cash used in operating activities | (5,792) | (1,900) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (218) | (106) |
Proceeds from the sale of used rental equipment | 997 | 1,915 |
Purchases of short-term investments | (1,905) | |
Proceeds from the sale of short-term investments | 5,898 | 2,674 |
Net cash provided by investing activities | 4,772 | 4,483 |
Cash flows from financing activities: | ||
Proceeds from the exercise of stock options | 50 | |
Net cash provided by financing activities | 50 | |
Effect of exchange rate changes on cash | (149) | (101) |
Increase (decrease) in cash and cash equivalents | (1,169) | 2,532 |
Cash and cash equivalents, beginning of fiscal year | 15,092 | 10,262 |
Cash and cash equivalents, end of fiscal period | $ 13,923 | $ 12,794 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2017 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at December 31, 2017 and the consolidated statements of operations, comprehensive loss and the consolidated statements of cash flows for the three months ended December 31, 2017 and 2016 were prepared by the Company without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made. The results of operations for the three months ended December 31, 2017 are not necessarily indicative of the operating results for a full year or of future operations. Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2017. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. The Company continually evaluates its estimates, including those related to bad debt reserves, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, impairment of long-lived assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents. Short-term Investments The Company classifies its short-term investments consisting of corporate bonds, government bonds and other such similar investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding gains and losses reported each period as a component of accumulated other comprehensive loss in stockholders’ equity. See note 2 for additional information. Inventories The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories. The Company periodically reviews the composition of its inventories to determine if market demand, product modifications, technology changes, excessive quantities on-hand and other factors hinder its ability to recover its investment in such inventories. The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates. Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s inventory investment will not be realized in its operating activities. The Company reviews its inventories for classification purposes. The value of inventories not expected to be realized in cash, sold or consumed during its next operating cycle are classified as noncurrent assets. Impairment of Long-lived Assets The Company’s long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. Revenue Recognition – Products and Services The Company primarily derives revenue from the sale of its manufactured products, including revenue derived from the sale of its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its manufactured products. The Company recognizes revenue from product sales, including the sale of used rental equipment, when all of the following have occurred: (i) title passes to the customer, (ii) the customer assumes the risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales price is reasonably assured, and (v) product delivery occurs as directed by the customer. Although infrequent, in cases where collectability is not reasonably assured, the installment or cost recovery method is used. Except for certain of the Company’s reservoir characterization products, the Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenue as earned over the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or longer. Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate. Research and Development Costs The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs. Product Warranties Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance sheets. Changes in the warranty reserve are reflected in the following table (in thousands): Balance at October 1, 2017 $ 508 Accruals for warranties issued during the period 197 Settlements made (in cash or in kind) during the period (150 ) Balance at December 31, 2017 $ 555 Recently Adopted Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued guidance which eliminates the exception of recognizing, at the time of transfer, current and deferred income taxes for intercompany profits on intra-entity asset transfers other than inventory. The Company adopted this guidance in its first quarter of its fiscal year ending September 30, 2018 using the modified retrospective approach. T he adoption resulted in a cumulative-effect adjustment to opening retained earnings of $0.4 million. Under prior guidance, the Company maintained a non-current prepaid income tax asset on its consolidated balance sheets representing income taxes paid in the U.S. on profits realized from the sale of rental equipment to its foreign subsidiaries. As this rental equipment was depreciated, the prepaid tax was recognized as a current income tax expense in the Company’s consolidated statement of operations. Under the new guidance, the Company is required to recognize a deferred tax asset related to the intercompany profits realized on the sale of non-inventory assets to its subsidiaries; however, profits realized from the intercompany sale of inventories will continue to be accounted for as a prepaid income tax asset in accordance with the prior guidance. Under the new guidance, the deferred tax asset resulting from the sale of non-inventory assets is recognized at the jurisdictional tax rate of the subsidiary which purchased the asset. Any differences between the subsidiary’s jurisdictional tax rate and the seller’s tax rate pertaining to the intercompany profit are charged to seller’s current income tax expense at the time of the sale. With the recent reduction in the U.S. income tax rate to 21%, and assuming that a majority of the Company’s equipment sales will continue to be made to its Canadian subsidiary having a higher statutory tax rate, the new guidance is expected to have a favorable impact on the Company’s provision for income taxes in future periods. Due to the fact the Company has a valuation allowance against its net deferred tax assets, the adoption of this guidance had no impact upon the Company’s income tax expense for the three months ended December 31, 2017. In March 2016, the FASB issued guidance to simplify key components of employee share-based payment accounting. The new guidance simplifies several aspects of the accounting for share-based payment transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification of excess tax benefits from share-based payments on the statement of cash flows. The Company adopted this guidance in the first quarter of its fiscal year ending September 30, 2018. No cumulative effect adjustment to retained earnings was needed upon adoption as the Company has no unrecorded excess tax benefits residing in additional paid-in-capital account. Under the prior standard, the Company was required to track and record as a component of additional paid-in capital the tax impact of cumulative windfalls, net of any shortfalls, which resulted from excess tax benefits from share-based payments. As a result, the impact of net windfalls has not historically affected the Company’s provision for income taxes or its effective income tax rate. Under the new guidance, the Company will no longer track windfalls or shortfalls resulting from share-based payments since all future windfalls and shortfalls will be recorded as a component of the Company’s current provision for income taxes. Depending on the magnitude of future windfalls or shortfalls, this change could significantly affect the Company’s provision for income taxes in a positive or negative direction. Due to the fact the Company has a valuation allowance against its net deferred tax assets, the adoption of this guidance had no impact upon the Company’s income tax expense for the three months ended December 31, 2017. In July 2015, the FASB issued guidance requiring management to measure inventory at the lower of cost or net realizable value. Under the new guidance, net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Since the Company is a manufacturer and the nature of its inventory is generally unique to its designs and applications thus preventing the gathering of relevant external market data, its existing practice for calculating net realizable value under the current standard is consistent with the practice prescribed by the new guidance. The Company adopted this standard in its first quarter of its fiscal year ending September 30, 2018. The adoption did not have a material effect upon the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements In November 2016, the FASB issued guidance which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance must be adopted by the Company no later than its first quarter of fiscal year 2019 and should be applied on a retrospective transition basis. The Company has historically not held restricted cash balances and, therefore, does not expect the adoption of this guidance to have a material effect on its consolidated financial statements. However, upon adoption of this guidance, the Company will make any necessary changes to present restricted cash balances in accordance with the guidance. In June 2016, the FASB issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in current U.S. generally accepted accounting principles (“GAAP”). The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The standard is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption for a fiscal year beginning after December 15, 2018 is permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company expects to adopt this standard during the first quarter of its fiscal year ending September 30, 2021 and is currently evaluating the impact of this new guidance on its consolidated financial statements. In February 2016, the FASB issued guidance requiring a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement and presentation of expense and cash flows arising from a lease by a lessee primarily will depend on its classification of the lease as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will also require operating leases of the lessee to be recognized on the balance sheet if the operating lease term is more than 12 months. The guidance also requires disclosures to help investors and other financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2018 and is to be applied using the modified retrospective approach. The Company expects to adopt this standard in its first quarter of its fiscal year ending September 30, 2020. The Company currently is not a lessee under any lease agreements with a term longer than one year. The Company is routinely a lessor in its rental contracts with customers; however, these rental agreements are generally short-term in nature, and the Company believes would be treated as operating leases under the new guidance; however, the Company has not completed a detailed review of its lease arrangements, and these conclusions are subject to change. In May 2014, the FASB issued guidance requiring entities to recognize revenue from contracts with customers by applying a five-step model in accordance with the core principle to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this guidance specifies the accounting for some costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. In August 2015, the FASB issued guidance deferring the effective date of this guidance to annual periods beginning after December 15, 2017, including interim reporting periods therein. Entities have the option to adopt this guidance either retrospectively or through a modified retrospective transition method. This new standard will supersede existing revenue guidance and affect the Company's revenue recognition process and the presentations or disclosures of the Company's consolidated financial statements and footnotes. The Company recognizes revenue through three primary transactions types: (i) the immediate recognition of revenue through the routine delivery of products to its customers, (ii) the rental of equipment to its customers through short-term operating leases, and (iii) the recognition of revenue utilizing the percentage of completion method for the delivery of complex products requiring long manufacturing times and substantial engineering resources. The Company expects to adopt this standard in the first quarter of its fiscal year ending September 30, 2019 and is in the early stages of evaluating the standard, including the method of adoption to determine the impact on its consolidated financial statements. Further disclosures around policy changes or quantitative effects will be made as the Company moves closer to the adoption of this standard. |
Short-term Investments
Short-term Investments | 3 Months Ended |
Dec. 31, 2017 | |
Investments Debt And Equity Securities [Abstract] | |
Short-term Investments | 2. Short-term Investments As of December 31, 2017 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Short-term investments Corporate bonds $ 21,739 $ — $ (67 ) $ 21,672 Government bonds 10,452 — (39 ) 10,413 Total $ 32,191 $ — $ (106 ) $ 32,085 As of September 30, 2017 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Short-term investments Corporate bonds $ 22,829 $ — $ (31 ) $ 22,798 Government bonds 13,363 — (24 ) 13,339 Total $ 36,192 $ — $ (55 ) $ 36,137 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 3. Derivative Financial Instruments At December 31, 2017 and September 30, 2017, the Company’s Canadian subsidiary had CAN$32.7 million and CAD$26.1 million, respectively, of Canadian dollar denominated intercompany accounts payable owed to one of the Company’s U.S subsidiaries. In order to mitigate its exposure to movements in foreign currency rates between the U.S. dollar and Canadian dollar, the Company routinely enters into foreign currency forward contracts to hedge a portion of its exposure to changes in the value of the Canadian dollar. On December 29, 2017, the Company entered into a CAN$32.0 million 90-day hedge contract effective January 2, 2018 with a United States bank to reduce the impact on cash flows from movements in the Canadian dollar/U.S. dollar currency exchange rate, but has not been designated as a hedge for accounting purposes. The Company’s derivative instruments had no fair value as of December 31, 2017 and September 30, 2017. The following table summarizes the Company’s gains on derivative instruments in the consolidated statements of operations for the three months ended December 31, 2017 and 2016 (in thousands): Three Months Ended Derivative Instrument Location December 31, 2017 December 31, 2016 Foreign Currency Forward Contracts Other Income (Expense) $ 158 $ 72 Amounts in the above table include realized and unrealized derivative gains and losses. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 4. Fair Value of Financial Instruments At December 31, 2017, the Company’s financial instruments included cash and cash equivalents, short-term investments, derivative instruments, trade accounts and financing receivables and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade and other receivables and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates. The Company measures its short-term investments and derivative instruments at fair value on a recurring basis. The fair value measurement of the Company’s short-term investments and derivative instruments was determined using the following inputs (in thousands): As of December 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable (Level 2) Significant Unobservable (Level 3) Totals Short-term investments Corporate bonds $ 23,711 $ — $ — $ 23,711 Government bonds 12,750 — — 12,750 Total $ 36,461 $ — $ — $ 36,461 As of September 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable (Level 2) Significant Unobservable (Level 3) Totals Short-term investments Corporate bonds $ 22,798 $ — $ — $ 22,798 Government bonds 13,339 — — $ 13,339 Total $ 36,137 $ — $ — $ 36,137 |
Trade Accounts and Financing Re
Trade Accounts and Financing Receivables | 3 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Trade Accounts and Financing Receivables | 5. Trade Accounts and Financing Receivables Trade accounts receivable are reflected in the following table (in thousands): December 31, 2017 September 30, 2017 Trade accounts receivable $ 8,265 $ 10,830 Allowance for doubtful accounts (1,254 ) (1,395 ) $ 7,011 $ 9,435 The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses. The Company determines the allowance based upon historical experience and a current review of its balances. Accounts receivable balances are charged off against the allowance whenever it is probable that the receivable will not be recoverable. Financing receivables are reflected in the following table (in thousands): December 31, 2017 September 30, 2017 Promissory notes $ 7,062 $ 4,306 Sales-type lease 7,807 8,581 Total financing receivables 14,869 12,887 Unearned income: Promissory notes (95 ) (90 ) Sales-type lease (444 ) (527 ) Total unearned income (539 ) (617 ) Total financing receivables, net of unearned income 14,330 12,270 Allowance for doubtful promissory notes (1,505 ) (1,020 ) Less current portion (5,793 ) (3,055 ) Non-current financing receivables $ 7,032 $ 8,195 During the three months ended December 31, 2017, the Company issued a $2.8 million promissory note receivable to a customer in connection with the sale of rental equipment. Cash flows from financing receivables related to the sale of rental equipment for the three months ended December 31, 2017 of $0.9 million are presented in proceeds from the sale of used rental equipment in the consolidated statements of cash flows. |
Inventories
Inventories | 3 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 6. Inventories Inventories consist of the following (in thousands): December 31, 2017 September 30, 2017 Finished goods $ 32,768 $ 33,690 Work in process 5,837 2,512 Raw material 68,078 70,099 Obsolescence reserve (30,505 ) (29,614 ) 76,178 76,687 Less current portion (19,994 ) (20,752 ) Non-current portion $ 56,184 $ 55,935 During the three months ended December 31, 2017 and 2016, the Company made non-cash inventory transfers of $2.0 million and $0.3 million, respectively, to rental equipment. Raw materials include semi-finished goods and component parts which totaled approximately $44.1 million and $43.2 million at December 31, 2017 and September 30, 2017, respectively. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 7. Long-Term Debt The Company had no long-term debt outstanding at December 31, 2017 and September 30, 2017. On March 2, 2011, the Company entered into a credit agreement with Frost Bank with borrowing availability of $50.0 million (the “Credit Agreement”). On May 4, 2015, the Company amended the Credit Agreement which reduced its borrowing availability to $30.0 million with amounts available for borrowing determined by a borrowing base. On October 25, 2017, the Company entered into another amendment to the Credit Agreement which extended its maturity to April 30, 2019. The 2017 amendment also modified the borrowing base to be determined based upon certain of the Company’s assets which include (i) 80% of certain accounts receivable plus (ii) 50% of certain notes receivable (such result not to exceed $10 million) plus (iii) 25% of certain inventories (such result not to exceed $20 million) and requires the Company to maintain unencumbered liquid assets of $10 million. The 2017 amendment also removed a requirement that the Company maintain a financial ratio that compares certain of the Company’s assets to certain of its liabilities and imposed a new financial covenant that the Company maintain a minimum amount of certain liquid assets. As of December 31, 2017, the Company’s borrowing base was $26.6 million. As of December 31, 2017, the amount available for borrowing was $26.3 million after consideration of $0.3 million of outstanding letters of credit. The Company’s domestic subsidiaries have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured their obligations under such guarantees by the pledge of substantially all of the assets of such subsidiaries, except real property assets. The Company is required to make monthly interest payments on borrowed funds. The Credit Agreement limits the incurrence of additional indebtedness, restricts the Company and its subsidiaries’ ability to pay cash dividends and contains other covenants customary in agreements of this type. The interest rate for borrowings under the Credit Agreement is based on the Wall Street Journal prime rate, which was 4.50% at December 31, 2017. At December 31, 2017, the Company was in compliance with all covenants under the Credit Agreement. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Dec. 31, 2017 | |
Stockholders Equity Note [Abstract] | |
Accumulated Other Comprehensive Loss | 8. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consisted of the following (in thousands): Unrealized Losses on Available-for-Sale Securities Foreign Currency Translation Adjustments Totals Balance at October 1, 2017 $ (58 ) $ (14,172 ) $ (14,230 ) Changes in unrealized losses on available-for-sale securities (51 ) — (51 ) Foreign currency translation adjustments — (205 ) (205 ) Balance at December 31, 2017 $ (109 ) $ (14,377 ) $ (14,486 ) |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 9. Stock-Based Compensation During the three months ended December 31, 2017, the Company issued 138,650 shares of restricted stock under its 2014 Long Term Incentive Plan, as amended. The weighted average grant date fair value of the restricted stock was $15.54 per share. The grant date fair value of these awards was $2.2 million, which will be charged to expense over the next four years as the restrictions lapse. Compensation expense for restricted stock awards was determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of shares that are anticipated to fully vest. Recipients of restricted stock awards are entitled to vote such shares and are entitled to dividends, if paid. As of December 31, 2017, the Company had unrecognized compensation expense of $4.8 million relating to restricted stock awards. This unrecognized compensation expense is expected to be recognized over a weighted average period of 3.1 years. In addition, the Company had $0.3 million of unrecognized compensation expense related to nonqualified stock option awards which is expected to be recognized over a weighted average period of 1.2 years. As of December 31, 2017, a total of 300,675 shares of restricted stock and 201,800 nonqualified stock options shares were outstanding. |
Loss Per Common Share
Loss Per Common Share | 3 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Loss Per Common Share | 10. Loss Per Common Share The Company applies the two -class method in calculating per share data. The following table summarizes the calculation of net loss and weighted average common shares and common equivalent shares outstanding for purposes of the computation of loss per share (in thousands, except share and per share data): Three Months Ended December 31, 2017 December 31, 2016 Net loss $ (9,480 ) $ (11,705 ) Less: Income allocable to unvested restricted stock — — Loss available to common shareholders (9,480 ) (11,705 ) Reallocation of participating earnings — — Loss attributable to common shareholders for diluted earnings per share $ (9,480 ) $ (11,705 ) Weighted average number of common share equivalents: Common shares used in basic loss per share 13,202,384 13,094,809 Common share equivalents outstanding related to stock options — — Total weighted average common shares and common share equivalents used in diluted loss per share 13,202,384 13,094,809 Loss per share: Basic $ (0.72 ) $ (0.89 ) Diluted $ (0.72 ) $ (0.89 ) For the calculation of diluted loss per share for the three months ended December 31, 2017 and 2016, 201,800 and 206,300 stock options, respectively, were excluded in the calculation of weighted average shares outstanding as a result of their impact being antidilutive. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies The Company is involved in various pending or potential legal actions in the ordinary course of its business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. Management is not aware of any material pending or known to be contemplated legal or government proceedings against the Company. |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 12. Segment Information The Company reports and evaluates financial information for two segments: Seismic and Non-Seismic. Seismic product lines include: land and marine wireless data acquisition systems, permanent land and seabed reservoir monitoring products and services, geophones and geophone strings, hydrophones, leader wire, connectors, telemetry cables, marine streamer retrieval and steering devices and various other products. The Non-Seismic product lines include imaging products and industrial products. The following table summarizes the Company’s segment information (in thousands): Three Months Ended December 31, 2017 December 31, 2016 Revenue: Seismic $ 8,039 $ 9,406 Non-Seismic 6,454 5,736 Corporate 151 143 Total $ 14,644 $ 15,285 Income (loss) from operations: Seismic $ (7,673 ) $ (9,453 ) Non-Seismic 1,029 1,052 Corporate (2,961 ) (2,910 ) Total $ (9,605 ) $ (11,311 ) |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 13. Income Taxes The Company’s effective tax rate for the three months ended December 31, 2017 was impacted by the Tax Cuts and Jobs Act (“the Act”), which was enacted into law on December 22, 2017. Income tax effects resulting from changes in tax laws are accounted for by the Company in accordance with the authoritative guidance, which requires that these tax effects be recognized in the period in which the law is enacted and the effects are recorded as a component of provision for income taxes from continuing operations. As a result, the Company made changes to its provision for income tax resulting from the enactment of the Act for the three months ended December 31, 2017. The Act includes significant changes to the U.S. corporate income tax system which reduces the U.S. federal corporate tax rate from 35.0% to 21.0% as of January 1, 2018; shifts to a modified territorial tax regime which requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred; and creates new taxes on certain foreign-sourced earnings. The decrease in the U.S. federal corporate tax rate from 35.0% to 21.0% results in a blended statutory tax rate of 24.5% for the Company’s fiscal year ending September 30, 2018. The new taxes for certain foreign-sourced earnings under the Act are effective for the Company after the fiscal year ending September 30, 2018. The Company is currently in the early stages of evaluating the impact of the Act on its consolidated financial statements. Based on the Company’s initial assessments to date, it expects the one-time transition tax on certain foreign earnings and profits to have a minimal cash impact since it anticipates that it will be able to utilize existing net operating loss carryforwards to substantially offset any taxes payable on foreign earnings and profits. Additionally, the Company has adjusted its U.S. gross deferred tax assets and liabilities to the new 21% statutory tax rate; however, it also recorded a corresponding adjustment to a valuation allowance which resulted in no net impact to deferred tax assets or provision for income taxes. Except for the adjustments referred to above, the Company has not recorded any income tax effects of the Act in its consolidated financial statements (including any provisional amounts) because it does not yet have the necessary information available, prepared or analyzed in reasonable detail to complete the applicable accounting. The Company’s effective tax rates for the three months ended December 31, 2017 and 2016 were (0.1)% and (9.6)% , respectively. The United States statutory rate for the three months ended December 31, 2017 and 2016 was 24.5% (blended) and 35%, respectively. Compared to the United States statutory rate, the lower effective tax rates resulted primarily from the provision of a valuation allowance against the Company’s U.S. and Canadian deferred tax assets due to the uncertainty surrounding the Company’s ability to utilize such deferred tax assets in the future to offset taxable income. |
Exit and Disposal Activities
Exit and Disposal Activities | 3 Months Ended |
Dec. 31, 2017 | |
Restructuring And Related Activities [Abstract] | |
Exit and Disposal Activities | 14. Exit and Disposal Activities In December 2017, the Company initiated a program to reduce operating costs in light of expected and continuing low levels of seismic product demand. The program is expected to produce approximately $6 million of annualized cash savings. The majority of the cost reductions were realized through a reduction of over 60 employees from the Company’s Houston area workforce. In connection with the workforce reductions, the Company incurred $0.7 million of termination costs in its first quarter of fiscal year 2018. The termination costs were recorded to both cost of revenue and operating expenses in the consolidated statement of operations. No further termination costs are expected and there are no outstanding liabilities related to this program as of December 31, 2017. |
Significant Accounting Polici21
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2017 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at December 31, 2017 and the consolidated statements of operations, comprehensive loss and the consolidated statements of cash flows for the three months ended December 31, 2017 and 2016 were prepared by the Company without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made. The results of operations for the three months ended December 31, 2017 are not necessarily indicative of the operating results for a full year or of future operations. Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2017. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. The Company continually evaluates its estimates, including those related to bad debt reserves, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, impairment of long-lived assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents. |
Short-term Investments | Short-term Investments The Company classifies its short-term investments consisting of corporate bonds, government bonds and other such similar investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding gains and losses reported each period as a component of accumulated other comprehensive loss in stockholders’ equity. See note 2 for additional information. |
Inventories | Inventories The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories. The Company periodically reviews the composition of its inventories to determine if market demand, product modifications, technology changes, excessive quantities on-hand and other factors hinder its ability to recover its investment in such inventories. The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates. Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s inventory investment will not be realized in its operating activities. The Company reviews its inventories for classification purposes. The value of inventories not expected to be realized in cash, sold or consumed during its next operating cycle are classified as noncurrent assets. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company’s long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. |
Revenue Recognition - Products and Services | Revenue Recognition – Products and Services The Company primarily derives revenue from the sale of its manufactured products, including revenue derived from the sale of its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its manufactured products. The Company recognizes revenue from product sales, including the sale of used rental equipment, when all of the following have occurred: (i) title passes to the customer, (ii) the customer assumes the risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales price is reasonably assured, and (v) product delivery occurs as directed by the customer. Although infrequent, in cases where collectability is not reasonably assured, the installment or cost recovery method is used. Except for certain of the Company’s reservoir characterization products, the Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenue as earned over the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or longer. Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate. |
Research and Development Costs | Research and Development Costs The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs. |
Product Warranties | Product Warranties Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance sheets. Changes in the warranty reserve are reflected in the following table (in thousands): Balance at October 1, 2017 $ 508 Accruals for warranties issued during the period 197 Settlements made (in cash or in kind) during the period (150 ) Balance at December 31, 2017 $ 555 |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued guidance which eliminates the exception of recognizing, at the time of transfer, current and deferred income taxes for intercompany profits on intra-entity asset transfers other than inventory. The Company adopted this guidance in its first quarter of its fiscal year ending September 30, 2018 using the modified retrospective approach. T he adoption resulted in a cumulative-effect adjustment to opening retained earnings of $0.4 million. Under prior guidance, the Company maintained a non-current prepaid income tax asset on its consolidated balance sheets representing income taxes paid in the U.S. on profits realized from the sale of rental equipment to its foreign subsidiaries. As this rental equipment was depreciated, the prepaid tax was recognized as a current income tax expense in the Company’s consolidated statement of operations. Under the new guidance, the Company is required to recognize a deferred tax asset related to the intercompany profits realized on the sale of non-inventory assets to its subsidiaries; however, profits realized from the intercompany sale of inventories will continue to be accounted for as a prepaid income tax asset in accordance with the prior guidance. Under the new guidance, the deferred tax asset resulting from the sale of non-inventory assets is recognized at the jurisdictional tax rate of the subsidiary which purchased the asset. Any differences between the subsidiary’s jurisdictional tax rate and the seller’s tax rate pertaining to the intercompany profit are charged to seller’s current income tax expense at the time of the sale. With the recent reduction in the U.S. income tax rate to 21%, and assuming that a majority of the Company’s equipment sales will continue to be made to its Canadian subsidiary having a higher statutory tax rate, the new guidance is expected to have a favorable impact on the Company’s provision for income taxes in future periods. Due to the fact the Company has a valuation allowance against its net deferred tax assets, the adoption of this guidance had no impact upon the Company’s income tax expense for the three months ended December 31, 2017. In March 2016, the FASB issued guidance to simplify key components of employee share-based payment accounting. The new guidance simplifies several aspects of the accounting for share-based payment transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification of excess tax benefits from share-based payments on the statement of cash flows. The Company adopted this guidance in the first quarter of its fiscal year ending September 30, 2018. No cumulative effect adjustment to retained earnings was needed upon adoption as the Company has no unrecorded excess tax benefits residing in additional paid-in-capital account. Under the prior standard, the Company was required to track and record as a component of additional paid-in capital the tax impact of cumulative windfalls, net of any shortfalls, which resulted from excess tax benefits from share-based payments. As a result, the impact of net windfalls has not historically affected the Company’s provision for income taxes or its effective income tax rate. Under the new guidance, the Company will no longer track windfalls or shortfalls resulting from share-based payments since all future windfalls and shortfalls will be recorded as a component of the Company’s current provision for income taxes. Depending on the magnitude of future windfalls or shortfalls, this change could significantly affect the Company’s provision for income taxes in a positive or negative direction. Due to the fact the Company has a valuation allowance against its net deferred tax assets, the adoption of this guidance had no impact upon the Company’s income tax expense for the three months ended December 31, 2017. In July 2015, the FASB issued guidance requiring management to measure inventory at the lower of cost or net realizable value. Under the new guidance, net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Since the Company is a manufacturer and the nature of its inventory is generally unique to its designs and applications thus preventing the gathering of relevant external market data, its existing practice for calculating net realizable value under the current standard is consistent with the practice prescribed by the new guidance. The Company adopted this standard in its first quarter of its fiscal year ending September 30, 2018. The adoption did not have a material effect upon the Company’s consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In November 2016, the FASB issued guidance which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance must be adopted by the Company no later than its first quarter of fiscal year 2019 and should be applied on a retrospective transition basis. The Company has historically not held restricted cash balances and, therefore, does not expect the adoption of this guidance to have a material effect on its consolidated financial statements. However, upon adoption of this guidance, the Company will make any necessary changes to present restricted cash balances in accordance with the guidance. In June 2016, the FASB issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in current U.S. generally accepted accounting principles (“GAAP”). The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The standard is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption for a fiscal year beginning after December 15, 2018 is permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company expects to adopt this standard during the first quarter of its fiscal year ending September 30, 2021 and is currently evaluating the impact of this new guidance on its consolidated financial statements. In February 2016, the FASB issued guidance requiring a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement and presentation of expense and cash flows arising from a lease by a lessee primarily will depend on its classification of the lease as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will also require operating leases of the lessee to be recognized on the balance sheet if the operating lease term is more than 12 months. The guidance also requires disclosures to help investors and other financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2018 and is to be applied using the modified retrospective approach. The Company expects to adopt this standard in its first quarter of its fiscal year ending September 30, 2020. The Company currently is not a lessee under any lease agreements with a term longer than one year. The Company is routinely a lessor in its rental contracts with customers; however, these rental agreements are generally short-term in nature, and the Company believes would be treated as operating leases under the new guidance; however, the Company has not completed a detailed review of its lease arrangements, and these conclusions are subject to change. In May 2014, the FASB issued guidance requiring entities to recognize revenue from contracts with customers by applying a five-step model in accordance with the core principle to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this guidance specifies the accounting for some costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. In August 2015, the FASB issued guidance deferring the effective date of this guidance to annual periods beginning after December 15, 2017, including interim reporting periods therein. Entities have the option to adopt this guidance either retrospectively or through a modified retrospective transition method. This new standard will supersede existing revenue guidance and affect the Company's revenue recognition process and the presentations or disclosures of the Company's consolidated financial statements and footnotes. The Company recognizes revenue through three primary transactions types: (i) the immediate recognition of revenue through the routine delivery of products to its customers, (ii) the rental of equipment to its customers through short-term operating leases, and (iii) the recognition of revenue utilizing the percentage of completion method for the delivery of complex products requiring long manufacturing times and substantial engineering resources. The Company expects to adopt this standard in the first quarter of its fiscal year ending September 30, 2019 and is in the early stages of evaluating the standard, including the method of adoption to determine the impact on its consolidated financial statements. Further disclosures around policy changes or quantitative effects will be made as the Company moves closer to the adoption of this standard. |
Significant Accounting Polici22
Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Changes in Warranty Reserve | Changes in the warranty reserve are reflected in the following table (in thousands): Balance at October 1, 2017 $ 508 Accruals for warranties issued during the period 197 Settlements made (in cash or in kind) during the period (150 ) Balance at December 31, 2017 $ 555 |
Short-term Investments (Tables)
Short-term Investments (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Investments Debt And Equity Securities [Abstract] | |
Short-term Investments | As of December 31, 2017 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Short-term investments Corporate bonds $ 21,739 $ — $ (67 ) $ 21,672 Government bonds 10,452 — (39 ) 10,413 Total $ 32,191 $ — $ (106 ) $ 32,085 As of September 30, 2017 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Short-term investments Corporate bonds $ 22,829 $ — $ (31 ) $ 22,798 Government bonds 13,363 — (24 ) 13,339 Total $ 36,192 $ — $ (55 ) $ 36,137 |
Derivative Financial Instrume24
Derivative Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Company's Derivatives on Consolidated Financial Statements of Operations | The following table summarizes the Company’s gains on derivative instruments in the consolidated statements of operations for the three months ended December 31, 2017 and 2016 (in thousands): Three Months Ended Derivative Instrument Location December 31, 2017 December 31, 2016 Foreign Currency Forward Contracts Other Income (Expense) $ 158 $ 72 |
Fair Value of Financial Instr25
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement of Company's Short-term Investments and Derivative Instruments | The fair value measurement of the Company’s short-term investments and derivative instruments was determined using the following inputs (in thousands): As of December 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable (Level 2) Significant Unobservable (Level 3) Totals Short-term investments Corporate bonds $ 23,711 $ — $ — $ 23,711 Government bonds 12,750 — — 12,750 Total $ 36,461 $ — $ — $ 36,461 As of September 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable (Level 2) Significant Unobservable (Level 3) Totals Short-term investments Corporate bonds $ 22,798 $ — $ — $ 22,798 Government bonds 13,339 — — $ 13,339 Total $ 36,137 $ — $ — $ 36,137 |
Trade Accounts and Financing 26
Trade Accounts and Financing Receivables (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Trade Accounts Receivable | Trade accounts receivable are reflected in the following table (in thousands): December 31, 2017 September 30, 2017 Trade accounts receivable $ 8,265 $ 10,830 Allowance for doubtful accounts (1,254 ) (1,395 ) $ 7,011 $ 9,435 |
Financing Receivables | Financing receivables are reflected in the following table (in thousands): December 31, 2017 September 30, 2017 Promissory notes $ 7,062 $ 4,306 Sales-type lease 7,807 8,581 Total financing receivables 14,869 12,887 Unearned income: Promissory notes (95 ) (90 ) Sales-type lease (444 ) (527 ) Total unearned income (539 ) (617 ) Total financing receivables, net of unearned income 14,330 12,270 Allowance for doubtful promissory notes (1,505 ) (1,020 ) Less current portion (5,793 ) (3,055 ) Non-current financing receivables $ 7,032 $ 8,195 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following (in thousands): December 31, 2017 September 30, 2017 Finished goods $ 32,768 $ 33,690 Work in process 5,837 2,512 Raw material 68,078 70,099 Obsolescence reserve (30,505 ) (29,614 ) 76,178 76,687 Less current portion (19,994 ) (20,752 ) Non-current portion $ 56,184 $ 55,935 |
Accumulated Other Comprehensi28
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Stockholders Equity Note [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss consisted of the following (in thousands): Unrealized Losses on Available-for-Sale Securities Foreign Currency Translation Adjustments Totals Balance at October 1, 2017 $ (58 ) $ (14,172 ) $ (14,230 ) Changes in unrealized losses on available-for-sale securities (51 ) — (51 ) Foreign currency translation adjustments — (205 ) (205 ) Balance at December 31, 2017 $ (109 ) $ (14,377 ) $ (14,486 ) |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Calculation of Net Loss and Weighted Average Common Shares and Common Equivalent Shares Outstanding for Computation of Loss Per Share | The following table summarizes the calculation of net loss and weighted average common shares and common equivalent shares outstanding for purposes of the computation of loss per share (in thousands, except share and per share data): Three Months Ended December 31, 2017 December 31, 2016 Net loss $ (9,480 ) $ (11,705 ) Less: Income allocable to unvested restricted stock — — Loss available to common shareholders (9,480 ) (11,705 ) Reallocation of participating earnings — — Loss attributable to common shareholders for diluted earnings per share $ (9,480 ) $ (11,705 ) Weighted average number of common share equivalents: Common shares used in basic loss per share 13,202,384 13,094,809 Common share equivalents outstanding related to stock options — — Total weighted average common shares and common share equivalents used in diluted loss per share 13,202,384 13,094,809 Loss per share: Basic $ (0.72 ) $ (0.89 ) Diluted $ (0.72 ) $ (0.89 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of Company's Segment Information | The following table summarizes the Company’s segment information (in thousands): Three Months Ended December 31, 2017 December 31, 2016 Revenue: Seismic $ 8,039 $ 9,406 Non-Seismic 6,454 5,736 Corporate 151 143 Total $ 14,644 $ 15,285 Income (loss) from operations: Seismic $ (7,673 ) $ (9,453 ) Non-Seismic 1,029 1,052 Corporate (2,961 ) (2,910 ) Total $ (9,605 ) $ (11,311 ) |
Changes in Warranty Reserve (De
Changes in Warranty Reserve (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2017USD ($) | |
Changes in product warranty reserve | |
Balance at the beginning of the period | $ 508 |
Accruals for warranties issued during the period | 197 |
Settlements made (in cash or in kind) during the period | (150) |
Balance at the end of the period | $ 555 |
Significant Accounting Polici32
Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | |||||
Cumulative-effect adjustment to opening retained earnings | $ 400,000 | $ 400,000 | |||
U.S. income tax rate | 24.50% | 35.00% | 35.00% | ||
Valuation allowance against net deferred tax assets | $ 0 | ||||
Unrecorded excess tax benefits in additional paid-in-capital account | 0 | ||||
Restricted cash | $ 0 | $ 0 | |||
Scenario, Forecast | |||||
Significant Accounting Policies [Line Items] | |||||
U.S. income tax rate | 21.00% | 24.50% |
Short-term Investments (Details
Short-term Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Schedule Of Available For Sale Securities [Line Items] | ||
Short-term Investments, Amortized Cost | $ 32,191 | $ 36,192 |
Short-term Investments, Unrealized Losses | (106) | (55) |
Short-term Investments, Estimated Fair Value | 32,085 | 36,137 |
Corporate bonds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Short-term Investments, Amortized Cost | 21,739 | 22,829 |
Short-term Investments, Unrealized Losses | (67) | (31) |
Short-term Investments, Estimated Fair Value | 21,672 | 22,798 |
Government bonds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Short-term Investments, Amortized Cost | 10,452 | 13,363 |
Short-term Investments, Unrealized Losses | (39) | (24) |
Short-term Investments, Estimated Fair Value | $ 10,413 | $ 13,339 |
Short-term Investments - Additi
Short-term Investments - Additional Information (Details) | 3 Months Ended |
Dec. 31, 2017 | |
Short Term Investments [Abstract] | |
Short-term investments, contractual maturity period range start | 2018-01 |
Short-term investments, contractual maturity period range end | 2020-01 |
Derivative Financial Instrume35
Derivative Financial Instruments - Additional Information (Details) CAD in Millions | Dec. 29, 2017CAD | Dec. 31, 2017USD ($) | Dec. 31, 2017CAD | Sep. 30, 2017USD ($) | Sep. 30, 2017CAD |
Canadian Dollar Forward Contract | |||||
Derivative [Line Items] | |||||
Foreign currency forward contract to hedge | CAD 32 | ||||
Foreign currency forward contract term | 90 days | ||||
Fair value of derivative instruments | $ | $ 0 | $ 0 | |||
Canadian Subsidiary | |||||
Derivative [Line Items] | |||||
Denominated intercompany accounts payable | CAD 32.7 | CAD 26.1 |
Company's Derivatives on Consol
Company's Derivatives on Consolidated Financial Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Foreign Currency Forward Contracts | Other Income (Expense) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Amount of (Loss) Gain Recognized in Income | $ 158 | $ 72 |
Fair Value Measurement of Compa
Fair Value Measurement of Company's Short-term Investments and Derivative Instruments (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | $ 36,461 | $ 36,137 |
Corporate bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Short-term Investments, Estimated Fair Value | 23,711 | 22,798 |
Government bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Short-term Investments, Estimated Fair Value | 12,750 | 13,339 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | 36,461 | 36,137 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Short-term Investments, Estimated Fair Value | 23,711 | 22,798 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Short-term Investments, Estimated Fair Value | $ 12,750 | $ 13,339 |
Trade Accounts Receivable (Deta
Trade Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Current trade accounts receivable | ||
Trade accounts receivable | $ 8,265 | $ 10,830 |
Allowance for doubtful accounts | (1,254) | (1,395) |
Total current trade accounts receivable | $ 7,011 | $ 9,435 |
Financing Receivables (Details)
Financing Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Accounts Notes And Loans Receivable [Line Items] | ||
Total financing receivables | $ 14,869 | $ 12,887 |
Total unearned income | (539) | (617) |
Total financing receivables, net of unearned income | 14,330 | 12,270 |
Allowance for doubtful promissory notes | (1,505) | (1,020) |
Less current portion | (5,793) | (3,055) |
Non-current financing receivables | 7,032 | 8,195 |
Promissory Notes | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Total financing receivables | 7,062 | 4,306 |
Total unearned income | (95) | (90) |
Sales Type Lease | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Total financing receivables | 7,807 | 8,581 |
Total unearned income | $ (444) | $ (527) |
Trade Accounts and Financing 40
Trade Accounts and Financing Receivables - Additional Information (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2017USD ($) | |
Accounts Notes And Loans Receivable [Line Items] | |
Financing receivables related to sale of rental equipment | $ 0.9 |
Customer | Promissory Notes | |
Accounts Notes And Loans Receivable [Line Items] | |
Promissory note receivable issued | $ 2.8 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 32,768 | $ 33,690 |
Work in process | 5,837 | 2,512 |
Raw material | 68,078 | 70,099 |
Obsolescence reserve | (30,505) | (29,614) |
Total | 76,178 | 76,687 |
Less current portion | (19,994) | (20,752) |
Non-current portion | $ 56,184 | $ 55,935 |
Inventories - Additional Inform
Inventories - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |||
Inventories transferred to rental equipment | $ 2 | $ 0.3 | |
Raw materials include semi-finished goods and component parts | $ 44.1 | $ 43.2 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - Frost Bank Credit Agreement - USD ($) | Oct. 25, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | May 04, 2015 | Mar. 02, 2011 |
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | $ 0 | $ 0 | |||
Line of credit borrowing capacity | 26,600,000 | $ 50,000,000 | |||
Credit agreement borrowing availability | 26,300,000 | $ 30,000,000 | |||
Outstanding letters of credit | $ 300,000 | ||||
Prime Rate | |||||
Debt Instrument [Line Items] | |||||
Marginal interest rate | 4.50% | ||||
Second Amendment | |||||
Debt Instrument [Line Items] | |||||
Credit agreement expiration date | Apr. 30, 2019 | ||||
Unencumbered liquid asset value | $ 10,000,000 | ||||
Second Amendment | Certain Accounts Receivable | |||||
Debt Instrument [Line Items] | |||||
Borrowing base as percentage of assets | 80.00% | ||||
Second Amendment | Certain Notes Receivable | |||||
Debt Instrument [Line Items] | |||||
Borrowing base as percentage of assets | 50.00% | ||||
Maximum amount of borrowing based upon assets | $ 10,000,000 | ||||
Second Amendment | Certain Inventories | |||||
Debt Instrument [Line Items] | |||||
Borrowing base as percentage of assets | 25.00% | ||||
Maximum amount of borrowing based upon assets | $ 20,000,000 | ||||
New Agreement | |||||
Debt Instrument [Line Items] | |||||
Credit agreement date | Mar. 2, 2011 |
Accumulated Other Comprehensi44
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Beginning Balance | $ 195,154 | |
Changes in unrealized losses on available-for-sale securities | (51) | $ (62) |
Foreign currency translation adjustments | (205) | $ (306) |
Ending Balance | 185,893 | |
Unrealized Losses on Available-for-Sale Securities | ||
Beginning Balance | (58) | |
Changes in unrealized losses on available-for-sale securities | (51) | |
Ending Balance | (109) | |
Foreign Currency Translation Adjustments | ||
Beginning Balance | (14,172) | |
Foreign currency translation adjustments | (205) | |
Ending Balance | (14,377) | |
Accumulated Other Comprehensive Loss | ||
Beginning Balance | (14,230) | |
Ending Balance | $ (14,486) |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unrecognized compensation expense | $ | $ 0.3 |
Expected period for recognition of unrecognized compensation expense | 1 year 2 months 13 days |
Share outstanding, restricted stock | shares | 300,675 |
Nonqualified stock options outstanding | shares | 201,800 |
Restricted Stock | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unrecognized compensation expense | $ | $ 4.8 |
Expected period for recognition of unrecognized compensation expense | 3 years 1 month 7 days |
Restricted Stock | 2014 Long Term Incentive Plan | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares issued | shares | 138,650 |
Weighted average grant date fair value of the restricted stock | $ / shares | $ 15.54 |
Grant date fair value of restricted stock | $ | $ 2.2 |
Restricted stock restriction period | 4 years |
Loss Per Common Share - Additio
Loss Per Common Share - Additional Information (Details) | 3 Months Ended | |
Dec. 31, 2017shares | Dec. 31, 2016shares | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Split of common stock ratio | 2 | |
Stock Options | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Number of Stock options | 201,800 | 206,300 |
Calculation of Net Loss and Wei
Calculation of Net Loss and Weighted Average Common Shares and Common Equivalent Shares Outstanding for Computation of Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (9,480) | $ (11,705) |
Loss available to common shareholders | (9,480) | (11,705) |
Loss attributable to common shareholders for diluted earnings per share | $ (9,480) | $ (11,705) |
Weighted average number of common share equivalents: | ||
Common shares used in basic loss per share | 13,202,384 | 13,094,809 |
Total weighted average common shares and common share equivalents used in diluted loss per share | 13,202,384 | 13,094,809 |
Loss per share: | ||
Basic | $ (0.72) | $ (0.89) |
Diluted | $ (0.72) | $ (0.89) |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 3 Months Ended |
Dec. 31, 2017Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Summary of Company's Segment In
Summary of Company's Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 14,644 | $ 15,285 |
Income (loss) from operations | (9,605) | (11,311) |
Operating Segments | Seismic | ||
Segment Reporting Information [Line Items] | ||
Revenue | 8,039 | 9,406 |
Income (loss) from operations | (7,673) | (9,453) |
Operating Segments | Non-Seismic | ||
Segment Reporting Information [Line Items] | ||
Revenue | 6,454 | 5,736 |
Income (loss) from operations | 1,029 | 1,052 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Revenue | 151 | 143 |
Income (loss) from operations | $ (2,961) | $ (2,910) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Income Taxes [Line Items] | |||||
United States statutory tax rate | 24.50% | 35.00% | 35.00% | ||
Valuation allowance for deferred tax assets or provision for income taxes | $ 0 | $ 0 | |||
Company's effective tax rates | (0.10%) | (9.60%) | |||
Scenario, Forecast | |||||
Income Taxes [Line Items] | |||||
United States statutory tax rate | 21.00% | 24.50% |
Exit and Disposal Activities -
Exit and Disposal Activities - Additional Information (Details) | 1 Months Ended | 3 Months Ended |
Dec. 31, 2017USD ($)Employee | Dec. 31, 2017USD ($) | |
Restructuring Cost And Reserve [Line Items] | ||
Expected annualized cash savings | $ 6,000,000 | |
Termination costs | $ 700,000 | |
Expected further termination costs | 0 | 0 |
Outstanding liabilities | $ 0 | $ 0 |
Employee Reduction | Houston Area Workforce | ||
Restructuring Cost And Reserve [Line Items] | ||
Reduction in number of employees | Employee | 60 |