##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the quarterly period ended July 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 Commission File Number: 000-25142
 MITCHAM INDUSTRIES, INC.
  Texas
    
    76-0210849(State or other jurisdiction of
    
    (I.R.S. Employer Identificationincorporation or organization)
    
    No.)
 8141 SH 75 South
P.O. Box 1175
Huntsville, Texas 77342
 (936) 291-2277
 þ o
  o þ o
 o þ




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##### 



MITCHAM INDUSTRIES, INC.
Table of Contents
 PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets as of July 31, 2007 and January 31, 2007
    
    
    1Condensed Consolidated Statements of Operations for the Three and
Six Months Ended July 31, 2007 and 2006
    
    
    2Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2007
and 2006
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4.
    
    Controls and Procedures
    
    
    18PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    18Item 1A.
    
    Risk Factors
    
    
    18Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3.
    
    Defaults Upon Senior Securities
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    18Item 5.
    
    Other Information
    
    
    18Item 6.
    
    Exhibits
    
    
    18Signatures
    
    
    20Certification of Billy F. Mitcham, Jr., CEOCertification of Robert P. Capps, CFOCertification of Billy F. Mitcham, Jr., CEO and Robert P. Capps, CFO




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 MITCHAM INDUSTRIES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 July 31,
    
    
    January 31,2007
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,712
    
    
    $
    12,582Accounts receivable, net
    
    
    11,278
    
    
    
    11,823Current portion of notes receivable, net
    
    
    1,857
    
    
    
    1,787Inventories
    
    
    6,630
    
    
    
    7,308Deferred tax asset
    
    
    665
    
    
    
    483Prepaid expenses and other current assets
    
    
    2,019
    
    
    
    2,003Total current assets
    
    
    36,161
    
    
    
    35,986Seismic equipment lease pool and property and equipment, net
    
    
    36,578
    
    
    
    35,432Intangible assets, net
    
    
    1,899
    
    
    
    2,127Goodwill
    
    
    4,358
    
    
    
    3,358Deferred tax asset
    
    
    
    
    
    
    5,094Long-term portion of notes receivable and other assets
    
    
    117
    
    
    
    1,305Total assets
    
    $
    79,113
    
    
    $
    83,302LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,915
    
    
    $
    16,343Current maturities  long-term debt
    
    
    1,500
    
    
    
    1,500Income taxes payable
    
    
    163
    
    
    
    328Deferred revenue
    
    
    2,456
    
    
    
    948Accrued expenses and other current liabilities
    
    
    4,045
    
    
    
    3,177Total current liabilities
    
    
    12,079
    
    
    
    22,296Non-current deferred tax liability
    
    
    326
    
    
    
    Non-current income taxes payable
    
    
    833
    
    
    
    Long-term debt
    
    
    
    
    
    
    1,500Total liabilities
    
    
    13,238
    
    
    
    23,796Shareholders equity:Preferred stock, $1.00 par value; 1,000 shares authorized; none
issued and outstanding
    
    
    
    
    
    
    Common stock $.01 par value; 20,000 shares authorized; 10,687
and 10,601 shares issued at July 31 and January 31, 2007,
respectively
    
    
    107
    
    
    
    106Additional paid-in capital
    
    
    69,173
    
    
    
    67,385Treasury stock, at cost (919 shares at July 31 and January 31, 2007)
    
    
    (4,781
    )
    
    
    (4,781
    )Accumulated deficit
    
    
    (5,116
    )
    
    
    (6,142
    )Accumulated other comprehensive income
    
    
    6,492
    
    
    
    2,938Total shareholders equity
    
    
    65,875
    
    
    
    59,506Total liabilities and shareholders equity
    
    $
    79,113
    
    
    $
    83,302
 The accompanying notes are an integral part of these condensed consolidated financial
statements.
 1




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##### Table of Contents



MITCHAM INDUSTRIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedJuly 31,
    
    
    July 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Equipment leasing
    
    $
    6,249
    
    
    $
    4,970
    
    
    $
    16,330
    
    
    $
    11,980Lease pool equipment sales
    
    
    775
    
    
    
    442
    
    
    
    1,492
    
    
    
    3,149Seamap equipment sales
    
    
    5,605
    
    
    
    2,774
    
    
    
    15,663
    
    
    
    6,075Other equipment sales
    
    
    2,770
    
    
    
    2,773
    
    
    
    4,928
    
    
    
    3,870Total revenues
    
    
    15,399
    
    
    
    10,959
    
    
    
    38,413
    
    
    
    25,074Cost of sales:Direct costs  equipment leasing
    
    
    351
    
    
    
    521
    
    
    
    821
    
    
    
    1,376Direct costs  lease pool depreciation
    
    
    2,442
    
    
    
    1,811
    
    
    
    4,846
    
    
    
    3,551Cost of equipment sales
    
    
    6,033
    
    
    
    3,495
    
    
    
    16,069
    
    
    
    7,718Total cost of sales
    
    
    8,826
    
    
    
    5,827
    
    
    
    21,736
    
    
    
    12,645Gross profit
    
    
    6,573
    
    
    
    5,132
    
    
    
    16,677
    
    
    
    12,429Operating expenses:General and administrative
    
    
    3,620
    
    
    
    3,829
    
    
    
    7,640
    
    
    
    7,363Depreciation and amortization
    
    
    366
    
    
    
    309
    
    
    
    721
    
    
    
    607Total operating expenses
    
    
    3,986
    
    
    
    4,138
    
    
    
    8,361
    
    
    
    7,970Operating income
    
    
    2,587
    
    
    
    994
    
    
    
    8,316
    
    
    
    4,459Other income (expense)Interest, net
    
    
    64
    
    
    
    186
    
    
    
    142
    
    
    
    334Other, net
    
    
    
    
    
    
    24
    
    
    
    2
    
    
    
    34Total other income
    
    
    64
    
    
    
    210
    
    
    
    144
    
    
    
    368Income before income taxes
    
    
    2,651
    
    
    
    1,204
    
    
    
    8,460
    
    
    
    4,827(Provision for) benefit from income taxes
    
    
    (930
    )
    
    
    49
    
    
    
    (2,799
    )
    
    
    (135
    )Net income
    
    $
    1,721
    
    
    $
    1,253
    
    
    $
    5,661
    
    
    $
    4,692Net income per common share:Basic
    
    $
    0.18
    
    
    $
    0.13
    
    
    $
    0.59
    
    
    $
    0.49Diluted
    
    $
    0.17
    
    
    $
    0.12
    
    
    $
    0.55
    
    
    $
    0.46Shares used in computing net
income per common share:Basic
    
    
    9,672
    
    
    
    9,599
    
    
    
    9,657
    
    
    
    9,585Diluted
    
    
    10,271
    
    
    
    10,115
    
    
    
    10,219
    
    
    
    10,134
 The accompanying notes are an integral part of these condensed consolidated financial
statements.
 2




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##### Table of Contents



MITCHAM INDUSTRIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands)
(unaudited)
 For the Six Months EndedJuly 31,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    5,661
    
    
    $
    4,692Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    5,567
    
    
    
    4,158Stock-based compensation
    
    
    985
    
    
    
    794Recovery of doubtful accounts
    
    
    (134
    )
    
    
    Provision for inventory obsolescence
    
    
    288
    
    
    
    Gross profit from sale of lease pool equipment
    
    
    (818
    )
    
    
    (1,509
    )Excess tax benefit from exercise of non-qualified stock options
    
    
    (483
    )
    
    
    (272
    )Deferred tax provision (benefit)
    
    
    1,794
    
    
    
    (415
    )Changes in:Trade accounts receivable
    
    
    1,222
    
    
    
    (2,016
    )Notes receivable
    
    
    1,111
    
    
    
    Inventories
    
    
    653
    
    
    
    (2,231
    )Income taxes payable
    
    
    109
    
    
    
    490Accounts payable, accrued expenses, other current liabilities
and deferred revenue
    
    
    1,304
    
    
    
    (53
    )Prepaid expenses and other current assets
    
    
    245
    
    
    
    (256
    )Net cash provided by operating activities
    
    
    17,504
    
    
    
    3,382Cash flows from investing activities:Purchases of seismic equipment held for lease
    
    
    (17,240
    )
    
    
    (4,078
    )Sales and maturities of short-term investments
    
    
    
    
    
    
    550Purchases of property and equipment
    
    
    (355
    )
    
    
    (1,270
    )Additional payments related to subsidiary acquisition
    
    
    
    
    
    
    (1,000
    )Sale of used lease pool equipment
    
    
    1,492
    
    
    
    3,149Net cash used in investing activities
    
    
    (16,103
    )
    
    
    (2,649
    )Cash flows from financing activities:Proceeds from borrowings
    
    
    4,500
    
    
    
    Payments on borrowings
    
    
    (6,000
    )
    
    
    Proceeds from issuance of common stock upon exercise of warrants
and stock options, net of stock surrendered
    
    
    322
    
    
    
    611Excess tax benefit from exercise of non-qualified stock options
    
    
    483
    
    
    
    272Net cash (used in) provided by financing activities
    
    
    (695
    )
    
    
    883Effect of changes in foreign exchange rates on cash and cash equivalents
    
    
    424
    
    
    
    (154
    )Net increase in cash and cash equivalents
    
    
    1,130
    
    
    
    1,462Cash and cash equivalents, beginning of period
    
    
    12,582
    
    
    
    16,438Cash and cash equivalents, end of period
    
    $
    13,712
    
    
    $
    17,900Supplemental cash flow information:Interest paid
    
    $
    244
    
    
    $
    153Income taxes paid
    
    $
    588
    
    
    
    
 The accompanying notes are an integral part of these condensed consolidated financial
statements.
 3




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##### Table of Contents



MITCHAM INDUSTRIES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(unaudited)
 1. Basis of Presentation
   2. Organization
  3. New Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 Income Taxes
 Fair Value Measurements
 4




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The Fair Value Option for Financial Assets and
Financial Liabilities
 3. Balance Sheet
 July 31,
    
    
    January 31,2007
    
    
    2007Accounts receivable:Accounts receivable
    
    $
    12,300
    
    
    $
    13,035Allowance for doubtful accounts
    
    
    (1,022
    )
    
    
    (1,212
    )Total accounts receivable, net
    
    $
    11,278
    
    
    $
    11,823Notes receivable:Notes receivable
    
    $
    1,966
    
    
    $
    3,077Allowance for doubtful accounts
    
    
    
    
    
    
    1,966
    
    
    
    3,077Less current portion of notes receivable
    
    
    (1,857
    )
    
    
    (1,787
    )Long-term portion of notes receivable
    
    $
    109
    
    
    $
    1,290Inventories:Raw materials
    
    $
    3,119
    
    
    $
    3,996Finished goods
    
    
    1,644
    
    
    
    2,023Work in progress
    
    
    2,594
    
    
    
    1,6867,357
    
    
    
    7,705Less allowance for obsolescence
    
    
    (727
    )
    
    
    (397
    )Total inventories, net
    
    $
    6,630
    
    
    $
    7,308Seismic equipment lease pool and property and
equipment:Seismic equipment lease pool
    
    $
    95,322
    
    
    $
    88,301Land and buildings
    
    
    366
    
    
    
    366Furniture and fixtures
    
    
    4,651
    
    
    
    4,347Autos and trucks
    
    
    519
    
    
    
    382100,858
    
    
    
    93,396Accumulated depreciation and amortization
    
    
    (64,280
    )
    
    
    (57,964
    )Total seismic equipment lease pool and
property and equipment, net
    
    $
    36,578
    
    
    $
    35,432Accrued expenses and other current liabilities:Accrued expenses
    
    $
    3,045
    
    
    $
    3,177Accrued earn-out payment
    
    
    1,000
    
    
    
    Total accrued expenses and other current
liabilities
    
    $
    4,045
    
    
    $
    3,177
 5




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##### Table of Contents



4. Goodwill and Other Intangible Assets
 Weighted
    
    
    July 31, 2007
    
    
    January 31, 2007Average
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetLife at
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying7/31/07
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountGoodwill
    
    
    
    
    
    $
    4,358
    
    
    
    
    
    
    
    
    
    
    $
    3,358Proprietary rights
    
    
    12.9
    
    
    $
    1,850
    
    
    $
    (257
    )
    
    $
    1,593
    
    
    $
    1,850
    
    
    $
    (195
    )
    
    $
    1,655Covenants
not-to-compete
    
    
    1.0
    
    
    
    1,000
    
    
    
    (694
    )
    
    
    306
    
    
    
    1,000
    
    
    
    (528
    )
    
    
    472Amortizable
intangible assets
    
    
    
    
    
    $
    2,850
    
    
    $
    (951
    )
    
    $
    1,899
    
    
    $
    2,850
    
    
    $
    (723
    )
    
    $
    2,127
   For fiscal year ended January 31,:2008
    
    $
    2292009
    
    
    2622010
    
    
    1232011
    
    
    1232012 and thereafter
    
    
    1,162Total
    
    $
    1,899
 5. Long-Term Debt and Notes Payable
   6




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##### Table of Contents



6. Shareholders Equity
  7. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJuly 31,
    
    
    July 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    1,721
    
    
    $
    1,253
    
    
    $
    5,661
    
    
    $
    4,692Gain (loss) from
foreign currency
translation
adjustment
    
    
    1,248
    
    
    
    (223
    )
    
    
    3,554
    
    
    
    368Comprehensive income
    
    $
    2,969
    
    
    $
    1,030
    
    
    $
    9,215
    
    
    $
    5,060
 8. Income Taxes
      9. Earnings per Share
  7




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJuly 31,
    
    July 31,2007
    
    2006
    
    2007
    
    2006Basic common shares outstanding
    
    
    9,672
    
    
    
    9,599
    
    
    
    9,657
    
    
    
    9,585Stock options
    
    
    562
    
    
    
    487
    
    
    
    527
    
    
    
    525Restricted stock
    
    
    22
    
    
    
    13
    
    
    
    20
    
    
    
    8Warrants
    
    
    15
    
    
    
    16
    
    
    
    15
    
    
    
    16Total common share equivalents
    
    
    599
    
    
    
    516
    
    
    
    562
    
    
    
    549Diluted common shares outstanding
    
    
    10,271
    
    
    
    10,115
    
    
    
    10,219
    
    
    
    10,134
 10. Stock-Based Compensation
  11. Segment Reporting
 Disclosures about
Segments of an Enterprise and Related Information.
    As of July 31, 2007Fixed assets,
    
    
    Intangiblenet
    
    
    assets, net
    
    
    GoodwillEquipment Leasing
    
    $
    35,969
    
    
    $
    
    
    
    $
    Seamap
    
    
    1,217
    
    
    
    1,899
    
    
    
    4,358Eliminations
    
    
    (608
    )
    
    
    
    
    
    
    Consolidated
    
    $
    36,578
    
    
    $
    1,899
    
    
    $
    4,358
  8




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##### Table of Contents



Revenues
    
    
    Operating income (loss)
    
    
    Income (loss) before taxes2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Equipment Leasing
    
    $
    9,794
    
    
    $
    8,268
    
    
    $
    2,227
    
    
    $
    1,422
    
    
    $
    2,361
    
    
    $
    1,629Seamap
    
    
    5,754
    
    
    
    2,774
    
    
    
    363
    
    
    
    (373
    )
    
    
    293
    
    
    
    (370
    )Eliminations
    
    
    (149
    )
    
    
    (83
    )
    
    
    (3
    )
    
    
    (55
    )
    
    
    (3
    )
    
    
    (55
    )Consolidated
    
    $
    15,399
    
    
    $
    10,959
    
    
    $
    2,587
    
    
    $
    994
    
    
    $
    2,651
    
    
    $
    1,204
  Revenues
    
    
    Operating income (loss)
    
    
    Income (loss) before taxes2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Equipment Leasing
    
    $
    22,750
    
    
    $
    19,082
    
    
    $
    7,442
    
    
    $
    5,147
    
    
    $
    7,725
    
    
    $
    5,507Seamap
    
    
    16,118
    
    
    
    6,075
    
    
    
    1,013
    
    
    
    (633
    )
    
    
    874
    
    
    
    (625
    )Eliminations
    
    
    (455
    )
    
    
    (83
    )
    
    
    (139
    )
    
    
    (55
    )
    
    
    (139
    )
    
    
    (55
    )Consolidated
    
    $
    38,413
    
    
    $
    25,074
    
    
    $
    8,316
    
    
    $
    4,459
    
    
    $
    8,460
    
    
    $
    4,827
  9




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cautionary Statement about Forward-Looking Statements
  
    
    our future financial position and results of operations;
    
    planned capital expenditures;
    
    our business strategy and other plans for future operations;
    
    the future mix of revenues and business;
    
    future demand for our services; and
    
    general conditions in the energy industry and seismic service industry.
  Overview
    For the Three Months Ended
    
    
    For the Six Months EndedJuly 31,
    
    
    July 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)
    
    
    (in thousands)Revenues:Equipment Leasing
    
    $
    9,794
    
    
    $
    8,268
    
    
    $
    22,750
    
    
    $
    19,082Seamap
    
    
    5,754
    
    
    
    2,774
    
    
    
    16,118
    
    
    
    6,075Inter-segment sales
    
    
    (149
    )
    
    
    (83
    )
    
    
    (455
    )
    
    
    (83
    )Total revenues
    
    
    15,399
    
    
    
    10,959
    
    
    
    38,413
    
    
    
    25,074Cost of sales:Equipment Leasing
    
    
    5,107
    
    
    
    4,309
    
    
    
    9,953
    
    
    
    9,230Seamap
    
    
    3,864
    
    
    
    1,546
    
    
    
    12,099
    
    
    
    3,443Inter-segment costs
    
    
    (145
    )
    
    
    (28
    )
    
    
    (316
    )
    
    
    (28
    )Total cost of sales
    
    
    8,826
    
    
    
    5,827
    
    
    
    21,736
    
    
    
    12,645Gross profit
    
    
    6,573
    
    
    
    5,132
    
    
    
    16,677
    
    
    
    12,429Operating expenses:General and administrative
    
    
    3,620
    
    
    
    3,829
    
    
    
    7,640
    
    
    
    7,363Depreciation and amortization
    
    
    366
    
    
    
    309
    
    
    
    721
    
    
    
    607Total operating expenses
    
    
    3,986
    
    
    
    4,138
    
    
    
    8,361
    
    
    
    7,970Operating income
    
    $
    2,587
    
    
    $
    994
    
    
    $
    8,316
    
    
    $
    4,459
 10




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##### Table of Contents



For the Three Months Ended
    
    
    For the Six Months EndedJuly 31,
    
    
    July 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)
    
    
    (in thousands)EBITDA(1)
    
    $
    5,395
    
    
    $
    3,138
    
    
    $
    13,885
    
    
    $
    8,651Adjusted EBITDA(1)
    
    $
    5,824
    
    
    $
    3,719
    
    
    $
    14,870
    
    
    $
    9,445Reconciliation of Net Income
to EBITDA and Adjusted EBITDANet income
    
    $
    1,721
    
    
    $
    1,253
    
    
    $
    5,661
    
    
    $
    4,692Interest income, net
    
    
    (64
    )
    
    
    (186
    )
    
    
    (142
    )
    
    
    (334
    )Depreciation and amortization
    
    
    2,808
    
    
    
    2,120
    
    
    
    5,567
    
    
    
    4,158Provision for (benefit from)
income taxes
    
    
    930
    
    
    
    (49
    )
    
    
    2,799
    
    
    
    135EBITDA (1)
    
    
    5,395
    
    
    
    3,138
    
    
    
    13,885
    
    
    
    8,651Stock-based compensation
    
    
    429
    
    
    
    497
    
    
    
    985
    
    
    
    794Adjusted EBITDA (1)
    
    $
    5,824
    
    
    $
    3,635
    
    
    $
    14,870
    
    
    $
    9,445
 
 (1)
    
    EBITDA is defined as earnings (loss) before (a) interest income, net of
interest expense, (b) provision for (or benefit from) income taxes and (c) depreciation and
amortization. Adjusted EBITDA excludes stock-based compensation. We consider EBITDA and
Adjusted EBITDA to be important indicators for the performance of our business, but not
measures of performance calculated in accordance with accounting principles generally accepted
in the United States of America (GAAP). We have included these non-GAAP financial measures
because they provide management with important information for assessing our performance and
as indicators of our ability to make capital expenditures and finance working capital
requirements. EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP
and should not be considered in isolation or as alternatives to cash flow from operating
activities or as alternatives to net income as indicators of operating performance or any
other measures of performance derived in accordance with GAAP. Other companies in our
industry may calculate EBITDA or Adjusted EBITDA differently than we do and EBITDA and
Adjusted EBITDA may not be comparable with similarly titled measures reported by other
companies.     11




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##### Table of Contents



Results of Operations
  Revenues and Direct Costs
 Equipmen Leasing
  Three Months Ended
    
    
    Six Months EndedJuly 31,
    
    
    July 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)
    
    
    (in thousands)Equipment leasing
    
    $
    6,249
    
    
    $
    4,970
    
    
    $
    16,330
    
    
    $
    11,980Lease pool equipment sales
    
    
    775
    
    
    
    442
    
    
    
    1,492
    
    
    
    3,149New seismic equipment sales
    
    
    1,666
    
    
    
    2,092
    
    
    
    3,446
    
    
    
    1,678SAP equipment sales
    
    
    1,104
    
    
    
    764
    
    
    
    1,482
    
    
    
    2,276$
    9,794
    
    
    $
    8,268
    
    
    $
    22,750
    
    
    $
    19,083
   12




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##### Table of Contents



Seamap
   13




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##### Table of Contents



Operating Costs
  Interest and Other Income, net
  Provision for Income Taxes
  Liquidity and Capital Resources
    14




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##### Table of Contents



Critical Accounting Policies
   Revenue Recognition
     15




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##### Table of Contents



Allowance for Doubtful Accounts
  Long-Lived Assets
    Accounting for the Impairment or Disposal of Long-Lived Assets
 Income Taxes
  Accounting for Income Taxes
 
    
    taxable income projections in future years;
    
    whether the carryforward period is so brief that it would limit realization of tax benefits;
    
    future sales and operating cost projections that will produce more than enough taxable
income to realize the deferred tax asset based on existing sales prices and cost
structures; and
    
    our earnings history exclusive of the loss that created the future deductible amount
coupled with evidence indicating that the loss is an aberration rather than a continuing
condition.
  16




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##### Table of Contents




    
    the current level of worldwide oil and gas exploration activities resulting from
historically high prices for oil and natural gas;
    
    increasing world demand for oil;
    
    our recent history of profitable operations in various jurisdictions;
    
    our anticipated positive income in various jurisdictions; and
    
    our existing customer relationships.
  
    
    the risk of the world oil supply increasing, thereby depressing the price of oil and natural gas;
    
    the risk of decreased global demand for oil; and
    
    the potential for increased competition in the seismic equipment leasing and sales business.
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
  Stock-Based Compensation
 Share-Based Payment
 New Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 17




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##### Table of Contents



Market Risk
  Foreign Currency Risk
   
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
 18




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits
  SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Number
    
    Reference3.1
    
    Amended and
Restated Articles
of Incorporation of
Mitcham Industries,
Inc.
    
    Incorporated by reference to
Mitcham Industries, Inc.s
Registration Statement on Form
S-8, filed with the SEC on
August 9, 2001.
    
    333-67208
    
    
    3.13.2
    
    Second Amended and
Restated Bylaws of
Mitcham Industries,
Inc.
    
    Incorporated by reference to
Mitcham Industries, Inc.s
Annual Report on Form 10-K for
the fiscal year ended January
31, 2004, filed with the SEC on
May 28, 2004.
    
    000-25142
    
    
    3.231.1
    
    Certification
of Billy F.
Mitcham, Jr., Chief
Executive Officer,
pursuant to Rule
13a-14(a) and Rule
15d-14(a) of the
Securities Exchange
Act, as amended31.2
    
    Certification
of Robert P. Capps,
Chief Financial
Officer, pursuant
to Rule 13a-14(a)
and Rule 15d-14(a)
of the Securities
Exchange Act, as
amended32.1
    
    Certification
of Billy F.
Mitcham, Jr., Chief
Executive Officer,
and Robert P.
Capps, Chief
Financial Officer,
under Section 906
of the Sarbanes
Oxley Act of 2002,
18 U.S.C. § 1350
 19




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##### Table of Contents



SIGNATURES
  MITCHAM INDUSTRIES, INC.Date: September 5, 2007
    /s/ Robert P. CappsRobert P. CappsExecutive Vice President-Finance and Chief Financial Officer

(Duly Authorized Officer and Chief Accounting Officer) 20




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##### Table of Contents



Index
to Exhibits
 SEC File orExhibit
    
    
    
    
    
    Registration
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Number
    
    Reference3.1
    
    Amended and
Restated Articles
of Incorporation of
Mitcham Industries,
Inc.
    
    Incorporated by reference to
Mitcham Industries, Inc.s
Registration Statement on Form
S-8, filed with the SEC on
August 9, 2001.
    
    333-67208
    
    
    3.13.2
    
    Second Amended and
Restated Bylaws of
Mitcham Industries,
Inc.
    
    Incorporated by reference to
Mitcham Industries, Inc.s
Annual Report on Form 10-K for
the fiscal year ended January
31, 2004, filed with the SEC on
May 28, 2004.
    
    000-25142
    
    
    3.231.1
    
    Certification
of Billy F.
Mitcham, Jr., Chief
Executive Officer,
pursuant to Rule
13a-14(a) and Rule
15d-14(a) of the
Securities Exchange
Act, as amended31.2
    
    Certification
of Robert P. Capps,
Chief Financial
Officer, pursuant
to Rule 13a-14(a)
and Rule 15d-14(a)
of the Securities
Exchange Act, as
amended32.1
    
    Certification
of Billy F.
Mitcham, Jr., Chief
Executive Officer,
and Robert P.
Capps, Chief
Financial Officer,
under Section 906
of the Sarbanes
Oxley Act of 2002,
18 U.S.C. § 1350