##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller Reporting Company o(Do not check if a smaller reporting company)
  o þ




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##### 



MITCHAM INDUSTRIES, INC.
Table of Contents
 PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets as of October 31, 2008
and January 31, 2008
    
    
    1Condensed Consolidated Statements of Income for the Three and
Nine Months Ended October 31, 2008 and 2007
    
    
    2Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended October 31, 2008 and 2007
    
    
    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
    
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    19Signatures
    
    
    21EX-31.1EX-31.2EX-32.1




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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)
 October 31, 2008
    
    
    January 31, 2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,802
    
    
    $
    13,884Restricted cash
    
    
    990
    
    
    
    Accounts receivable, net
    
    
    14,613
    
    
    
    12,816Current portion of contracts receivable
    
    
    1,356
    
    
    
    2,964Inventories, net
    
    
    5,710
    
    
    
    6,352Deferred tax asset
    
    
    936
    
    
    
    1,230Prepaid expenses and other current assets
    
    
    2,356
    
    
    
    1,491Total current assets
    
    
    31,763
    
    
    
    38,737Seismic equipment lease pool and property and equipment, net
    
    
    56,356
    
    
    
    53,179Intangible assets, net
    
    
    2,970
    
    
    
    3,692Goodwill
    
    
    4,320
    
    
    
    4,358Net deferred tax asset
    
    
    2,072
    
    
    
    1,505Long-term portion of contracts receivable and other assets
    
    
    5,272
    
    
    
    2,430Total assets
    
    $
    102,753
    
    
    $
    103,901LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    7,492
    
    
    $
    16,729Current maturities  long-term debt
    
    
    
    
    
    
    1,500Income taxes payable
    
    
    1,470
    
    
    
    1,967Deferred revenue
    
    
    799
    
    
    
    872Accrued expenses and other current liabilities
    
    
    3,480
    
    
    
    3,674Total current liabilities
    
    
    13,241
    
    
    
    24,742Long-term debt
    
    
    8,400
    
    
    
    Non-current income taxes payable
    
    
    3,274
    
    
    
    3,391Total liabilities
    
    
    24,915
    
    
    
    28,133Shareholders equity:Preferred stock, $1.00 par value; 1,000 shares authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock $0.01 par value; 20,000 shares authorized; 10,725 and 10,708 shares issued at
October 31, 2008 and January 31, 2008, respectively
    
    
    107
    
    
    
    107Additional paid-in capital
    
    
    73,906
    
    
    
    71,929Treasury stock, at cost (922 and 921 shares at October 31, 2008 and January 31, 2008,
respectively)
    
    
    (4,826
    )
    
    
    (4,805
    )Retained earnings
    
    
    9,306
    
    
    
    662Accumulated other comprehensive (loss) income
    
    
    (655
    )
    
    
    7,875Total shareholders equity
    
    
    77,838
    
    
    
    75,768Total liabilities and shareholders equity
    
    $
    102,753
    
    
    $
    103,901
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 1




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MITCHAM INDUSTRIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (in thousands, except per share data)
 (unaudited)
 For the Three Months
    
    
    For the Nine MonthsEnded
    
    
    EndedOctober 31,
    
    
    October 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Equipment leasing
    
    $
    10,043
    
    
    $
    8,402
    
    
    $
    29,916
    
    
    $
    24,732Lease pool equipment sales
    
    
    333
    
    
    
    1,661
    
    
    
    2,738
    
    
    
    3,153Seamap equipment sales
    
    
    2,385
    
    
    
    5,144
    
    
    
    10,952
    
    
    
    20,807Other equipment sales
    
    
    1,787
    
    
    
    1,998
    
    
    
    6,971
    
    
    
    6,926Total revenues
    
    
    14,548
    
    
    
    17,205
    
    
    
    50,577
    
    
    
    55,618Cost of sales:Direct costs  equipment leasing
    
    
    810
    
    
    
    475
    
    
    
    1,595
    
    
    
    1,296Direct costs  lease pool depreciation
    
    
    3,781
    
    
    
    2,567
    
    
    
    11,094
    
    
    
    7,413Cost of equipment sales
    
    
    2,697
    
    
    
    4,887
    
    
    
    11,886
    
    
    
    20,956Total cost of sales
    
    
    7,288
    
    
    
    7,929
    
    
    
    24,575
    
    
    
    29,665Gross profit
    
    
    7,260
    
    
    
    9,276
    
    
    
    26,002
    
    
    
    25,953Operating expenses:General and administrative
    
    
    4,317
    
    
    
    5,045
    
    
    
    13,622
    
    
    
    12,685Depreciation and amortization
    
    
    287
    
    
    
    389
    
    
    
    1,046
    
    
    
    1,110Total operating expenses
    
    
    4,604
    
    
    
    5,434
    
    
    
    14,668
    
    
    
    13,795Operating income
    
    
    2,656
    
    
    
    3,842
    
    
    
    11,334
    
    
    
    12,158Other incomeInterest, net
    
    
    36
    
    
    
    178
    
    
    
    409
    
    
    
    319Other, net
    
    
    29
    
    
    
    (6
    )
    
    
    37
    
    
    
    (3
    )Total other income
    
    
    65
    
    
    
    172
    
    
    
    446
    
    
    
    316Income before income taxes
    
    
    2,721
    
    
    
    4,014
    
    
    
    11,780
    
    
    
    12,474(Provision) benefit for income taxes
    
    
    20
    
    
    
    (1,583
    )
    
    
    (3,136
    )
    
    
    (4,382
    )Net income
    
    $
    2,741
    
    
    $
    2,431
    
    
    $
    8,644
    
    
    $
    8,092Net income per common share:Basic
    
    $
    0.28
    
    
    $
    0.25
    
    
    $
    0.89
    
    
    $
    0.84Diluted
    
    $
    0.27
    
    
    $
    0.24
    
    
    $
    0.84
    
    
    $
    0.79Shares used in computing net income per common share:Basic
    
    
    9,776
    
    
    
    9,733
    
    
    
    9,764
    
    
    
    9,682Diluted
    
    
    10,188
    
    
    
    10,333
    
    
    
    10,303
    
    
    
    10,257
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 2




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MITCHAM INDUSTRIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (unaudited)
 For the Nine Months EndedOctober 31,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    8,644
    
    
    $
    8,092Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    12,258
    
    
    
    8,523Stock-based compensation
    
    
    1,691
    
    
    
    1,628Provision for doubtful accounts
    
    
    518
    
    
    
    165Provision for inventory obsolescence
    
    
    230
    
    
    
    316Gross profit from sale of lease pool equipment
    
    
    (1,363
    )
    
    
    (2,193
    )Excess tax benefit from exercise of non-qualified stock options
    
    
    (96
    )
    
    
    (1,219
    )Deferred tax (benefit) provision
    
    
    (190
    )
    
    
    1,981Non-current income taxes payable
    
    
    (598
    )
    
    
    Changes in:Accounts receivable
    
    
    (3,970
    )
    
    
    (1,429
    )Contracts receivable
    
    
    (88
    )
    
    
    1,535Inventories
    
    
    (601
    )
    
    
    1,317Prepaid expenses and other current assets
    
    
    (1,051
    )
    
    
    850Income taxes payable
    
    
    (390
    )
    
    
    1,252Accounts payable, accrued expenses, other current liabilities
and deferred revenue
    
    
    (4,885
    )
    
    
    (430
    )Net cash provided by operating activities
    
    
    10,109
    
    
    
    20,388Cash flows from investing activities:Purchases of seismic equipment held for lease
    
    
    (24,620
    )
    
    
    (19,199
    )Purchases of property and equipment
    
    
    (488
    )
    
    
    (434
    )Additional payments related to subsidiary acquisition
    
    
    
    
    
    
    (1,000
    )Sale of used lease pool equipment
    
    
    2,738
    
    
    
    3,153Net cash used in investing activities
    
    
    (22,370
    )
    
    
    (17,480
    )Cash flows from financing activities:Net proceeds from line of credit
    
    
    8,400
    
    
    
    4,500Payments on borrowings
    
    
    (1,500
    )
    
    
    (6,000
    )Purchase of short-term investments
    
    
    (1,413
    )
    
    
    Proceeds from issuance of common stock upon exercise of warrants
and stock options, net of stock surrendered to pay taxes
    
    
    184
    
    
    
    341Excess tax benefit from exercise of non-qualified stock options
    
    
    96
    
    
    
    1,219Net cash provided by financing activities
    
    
    5,767
    
    
    
    60Effect of changes in foreign exchange rates on cash and cash equivalents
    
    
    (1,588
    )
    
    
    755Net (decrease) increase in cash and cash equivalents
    
    
    (8,082
    )
    
    
    3,723Cash and cash equivalents, beginning of period
    
    
    13,884
    
    
    
    12,582Cash and cash equivalents, end of period
    
    $
    5,802
    
    
    $
    16,305Supplemental cash flow information:Interest paid
    
    $
    201
    
    
    $
    248Income taxes paid
    
    $
    3,314
    
    
    $
    811Purchases of seismic equipment held for lease in accounts payable
at end of period
    
    $
    4,526
    
    
    $
    6,485
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 3




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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
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 4. Restricted Cash
  4




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5. Balance Sheet
 October 31,
    
    
    January 31,2008
    
    
    2008Accounts receivable:Accounts receivable
    
    $
    15,642
    
    
    $
    14,328Allowance for doubtful accounts
    
    
    (1,029
    )
    
    
    (1,512
    )Total accounts receivable, net
    
    $
    14,613
    
    
    $
    12,816
  Prepaid expenses and other current assets:Insurance settlement receivable
    
    $
    1,146
    
    
    $
    Prepaid expenses
    
    
    754
    
    
    
    1,134Other
    
    
    456
    
    
    
    357$
    2,356
    
    
    $
    1,491
  Contracts receivable:Contracts receivable
    
    $
    5,728
    
    
    $
    5,360Less current portion of contracts receivable
    
    
    (1,356
    )
    
    
    (2,964
    )Long-term portion of contracts receivable
    
    $
    4,372
    
    
    $
    2,396
  Inventories:Raw materials
    
    $
    3,044
    
    
    $
    3,565Finished goods
    
    
    1,177
    
    
    
    898Work in progress
    
    
    2,415
    
    
    
    2,6936,636
    
    
    
    7,156Less allowance for obsolescence
    
    
    (926
    )
    
    
    (804
    )Total inventories, net
    
    $
    5,710
    
    
    $
    6,352
  Seismic equipment lease pool and property and
equipment:Seismic equipment lease pool
    
    $
    118,988
    
    
    $
    116,676Land and buildings
    
    
    366
    
    
    
    366Furniture and fixtures
    
    
    5,248
    
    
    
    5,026Autos and trucks
    
    
    477
    
    
    
    605125,079
    
    
    
    122,673Accumulated depreciation and amortization
    
    
    (68,723
    )
    
    
    (69,494
    )Total seismic equipment lease pool and
property and equipment, net
    
    $
    56,356
    
    
    $
    53,179
 5




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6. Goodwill and Other Intangible Assets
 Weighted
    
    
    October 31, 2008
    
    
    January 31, 2008Average
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetLife at
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying10/31/08
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountGoodwill
    
    
    
    
    
    $
    4,320
    
    
    
    
    
    
    $
    4,320
    
    
    $
    4,358
    
    
    
    
    
    
    $
    4,358Proprietary rights
    
    
    11.7
    
    
    $
    3,490
    
    
    $
    (520
    )
    
    $
    2,970
    
    
    $
    3,886
    
    
    $
    (333
    )
    
    $
    3,553Covenants
not-to-compete
    
    
    
    
    
    
    1,000
    
    
    
    (1,000
    )
    
    
    
    
    
    
    1,000
    
    
    
    (861
    )
    
    
    139Amortizable intangible assets
    
    
    
    
    
    $
    4,490
    
    
    $
    (1,520
    )
    
    $
    2,970
    
    
    $
    4,886
    
    
    $
    (1,194
    )
    
    $
    3,692
   For fiscal years ending January 31:2009
    
    $
    632010
    
    
    2552011
    
    
    2552012
    
    
    2552013 and thereafter
    
    
    2,142Total
    
    $
    2,970
 7. Long-Term Debt and Notes Payable
   6




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8. Shareholders Equity
  9. Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedOctober 31,
    
    
    October 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    2,741
    
    
    $
    2,431
    
    
    $
    8,644
    
    
    $
    8,092Gain (loss) from foreign
currency translation
adjustment
    
    
    (8,532
    )
    
    
    2,752
    
    
    
    (8,530
    )
    
    
    6,306Comprehensive (loss) income
    
    $
    (5,791
    )
    
    $
    5,183
    
    
    $
    114
    
    
    $
    14,398
  10. Income Taxes
 Accounting for Income
Taxes Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109, Accounting for Income Taxes
   7




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11. Earnings per Share
  Three Months Ended
    
    Nine Months EndedOctober 31,
    
    October 31,2008
    
    2007
    
    2008
    
    2007Basic weighted average common shares outstanding
    
    
    9,776
    
    
    
    9,733
    
    
    
    9,764
    
    
    
    9,682Stock options
    
    
    387
    
    
    
    575
    
    
    
    517
    
    
    
    543Unvested restricted stock
    
    
    13
    
    
    
    25
    
    
    
    14
    
    
    
    22Phantom stock
    
    
    12
    
    
    
    
    
    
    
    8
    
    
    
    Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Total weighted average common share equivalents
    
    
    412
    
    
    
    600
    
    
    
    539
    
    
    
    575Diluted weighted average common shares
outstanding
    
    
    10,188
    
    
    
    10,333
    
    
    
    10,303
    
    
    
    10,257
 12. Stock-Based Compensation
  8




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13. Segment Reporting
 Disclosures about
Segments of an Enterprise and Related Information.
    As of October 31,
    
    
    As of January 31,2008
    
    
    2008Total assets
    
    
    Total assetsEquipment Leasing
    
    $
    86,776
    
    
    $
    86,057Seamap
    
    
    16,562
    
    
    
    18,434Eliminations
    
    
    (585
    )
    
    
    (590
    )Consolidated
    
    $
    102,753
    
    
    $
    103,901
  Revenues
    
    
    Operating income (loss)
    
    
    Income before taxes2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Equipment Leasing
    
    $
    12,163
    
    
    $
    12,061
    
    
    $
    2,894
    
    
    $
    3,590
    
    
    $
    2,567
    
    
    $
    3,816Seamap
    
    
    2,601
    
    
    
    5,313
    
    
    
    (178
    )
    
    
    471
    
    
    
    214
    
    
    
    426Eliminations
    
    
    (216
    )
    
    
    (169
    )
    
    
    (60
    )
    
    
    (219
    )
    
    
    (60
    )
    
    
    (228
    )Consolidated
    
    $
    14,548
    
    
    $
    17,205
    
    
    $
    2,656
    
    
    $
    3,842
    
    
    $
    2,721
    
    
    $
    4,014
  Revenues
    
    
    Operating income
    
    
    Income before taxes2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Equipment Leasing
    
    $
    39,625
    
    
    $
    34,811
    
    
    $
    10,707
    
    
    $
    10,726
    
    
    $
    10,817
    
    
    $
    11,234Seamap
    
    
    11,208
    
    
    
    21,431
    
    
    
    603
    
    
    
    1,484
    
    
    
    939
    
    
    
    1,301Eliminations
    
    
    (256
    )
    
    
    (624
    )
    
    
    24
    
    
    
    (52
    )
    
    
    24
    
    
    
    (61
    )Consolidated
    
    $
    50,577
    
    
    $
    55,618
    
    
    $
    11,334
    
    
    $
    12,158
    
    
    $
    11,780
    
    
    $
    12,474
  9




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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.
  
    
    decline in the demand for seismic data and our services;
    
    the effect on recent declines in oil and natural gas prices on exploration activities:
    
    the effect of uncertainty in financial markets on our customers and our ability to
obtain financing;
    
    loss of significant customers;
    
    defaults by customers on amounts due us;
    
    risks associated with our manufacturing operations and
    
    foreign currency exchange risk
   Overview
   10




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For the Three Months Ended
    
    
    For the Nine Months EndedOctober 31,
    
    
    October 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)
    
    
    (in thousands)Revenues:Equipment Leasing
    
    $
    12,163
    
    
    $
    12,061
    
    
    $
    39,625
    
    
    $
    34,811Seamap
    
    
    2,601
    
    
    
    5,313
    
    
    
    11,208
    
    
    
    21,431Inter-segment sales
    
    
    (216
    )
    
    
    (169
    )
    
    
    (256
    )
    
    
    (624
    )Total revenues
    
    
    14,548
    
    
    
    17,205
    
    
    
    50,577
    
    
    
    55,618Cost of sales:Equipment Leasing
    
    
    6,118
    
    
    
    4,655
    
    
    
    19,089
    
    
    
    14,914Seamap
    
    
    1,325
    
    
    
    3,215
    
    
    
    5,766
    
    
    
    15,314Inter-segment costs
    
    
    (155
    )
    
    
    59
    
    
    
    (280
    )
    
    
    (563
    )Total cost of sales
    
    
    7,288
    
    
    
    7,929
    
    
    
    24,575
    
    
    
    29,665Gross profit
    
    
    7,260
    
    
    
    9,276
    
    
    
    26,002
    
    
    
    25,953Operating expenses:General and administrative
    
    
    4,317
    
    
    
    5,045
    
    
    
    13,622
    
    
    
    12,685Depreciation and amortization
    
    
    287
    
    
    
    389
    
    
    
    1,046
    
    
    
    1,110Total operating expenses
    
    
    4,604
    
    
    
    5,434
    
    
    
    14,668
    
    
    
    13,795Operating income
    
    $
    2,656
    
    
    $
    3,842
    
    
    $
    11,334
    
    
    $
    12,158EBITDA(1)
    
    $
    6,790
    
    
    $
    6,792
    
    
    $
    23,629
    
    
    $
    20,678Adjusted EBITDA(1)
    
    $
    7,318
    
    
    $
    7,435
    
    
    $
    25,320
    
    
    $
    22,306Reconciliation of Net Income to
EBITDA and Adjusted EBITDANet income
    
    $
    2,741
    
    
    $
    2,431
    
    
    $
    8,644
    
    
    $
    8,092Interest income, net
    
    
    (36
    )
    
    
    (178
    )
    
    
    (409
    )
    
    
    (319
    )Depreciation and amortization
    
    
    4,105
    
    
    
    2,956
    
    
    
    12,258
    
    
    
    8,523(Benefit) provision for income taxes
    
    
    (20
    )
    
    
    1,583
    
    
    
    3,136
    
    
    
    4,382EBITDA (1)
    
    
    6,790
    
    
    
    6,792
    
    
    
    23,629
    
    
    
    20,678Stock-based compensation
    
    
    528
    
    
    
    643
    
    
    
    1,691
    
    
    
    1,628Adjusted EBITDA (1)
    
    $
    7,318
    
    
    $
    7,435
    
    
    $
    25,320
    
    
    $
    22,306
 
 (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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Business Outlook
       12




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Results of Operations
  Revenues and Cost of Sales
 Equipment Leasing
  Three Months Ended
    
    
    Nine Months EndedOctober 31,
    
    
    October 31,2008
    
    
    2007
    
    
    2008
    
    
    2007($ in thousands)
    
    
    ($ in thousands)Revenue:Equipment leasing
    
    $
    10,043
    
    
    $
    8,402
    
    
    $
    29,916
    
    
    $
    24,732Lease pool equipment sales
    
    
    333
    
    
    
    1,661
    
    
    
    2,738
    
    
    
    3,153New seismic equipment sales
    
    
    117
    
    
    
    760
    
    
    
    3,764
    
    
    
    4,207SAP equipment sales
    
    
    1,670
    
    
    
    1,238
    
    
    
    3,207
    
    
    
    2,71912,163
    
    
    $
    12,061
    
    
    
    39,625
    
    
    $
    34,811Cost of sales:Lease pool depreciation
    
    
    3,822
    
    
    
    2,500
    
    
    
    11,214
    
    
    
    7,413Direct costs-equipment leasing
    
    
    810
    
    
    
    475
    
    
    
    1,595
    
    
    
    1,296Cost of lease pool equipment
sales
    
    
    143
    
    
    
    175
    
    
    
    1,375
    
    
    
    960Cost of new seismic equipment
sales
    
    
    64
    
    
    
    623
    
    
    
    2,549
    
    
    
    3,443Cost of SAP equipment sales
    
    
    1,279
    
    
    
    882
    
    
    
    2,356
    
    
    
    1,8026,118
    
    
    
    4,655
    
    
    
    19,089
    
    
    
    14,914Gross profit
    
    $
    6,045
    
    
    $
    7,406
    
    
    $
    20,536
    
    
    $
    19,897Gross profit %
    
    
    50
    %
    
    
    61
    %
    
    
    52
    %
    
    
    57
    %
  13




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14




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##### Table of Contents



Seamap
  Three Months Ended October 31,
    
    
    Nine Months Ended October 31,2008
    
    
    2007
    
    
    2008
    
    
    2007($ in thousands)
    
    
    ($ in thousands)Equipment sales
    
    $
    2,601
    
    
    $
    5,313
    
    
    $
    11,208
    
    
    $
    21,431Cost of equipment sales
    
    
    1,325
    
    
    
    3,215
    
    
    
    5,766
    
    
    
    15,314Gross profit
    
    $
    1,276
    
    
    $
    2,098
    
    
    $
    5,442
    
    
    $
    6,117Gross profit %
    
    
    49
    %
    
    
    39
    %
    
    
    49
    %
    
    
    29
    %
   Operating Expenses
  15




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##### Table of Contents



Interest and Other Income, net
  Provision for Income Taxes
 Accounting for Uncertainty
in Income Taxes  an interpretation of FASB Statement No. 109, Accounting for Income Taxes
 Liquidity and Capital Resources
     16




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk
  Foreign Currency Risk
   17




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##### Table of Contents



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
  The recent worldwide financial and credit crisis could lead to an extended worldwide economic
recession and have a material adverse effect on our revenue and profitability.
  18




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##### Table of Contents



The global financial crisis may impact our business and financial condition in ways that we
currently cannot predict.
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    (a)
    
    (b)
    
    (c)
    
    (d)Total number of
    
    Maximumshares
    
    number ofpurchased as
    
    shares that mayTotal
    
    Average
    
    part of publicly
    
    yet benumber of
    
    price
    
    announced
    
    purchasedshares
    
    paid per
    
    plans or
    
    under the plansPeriod
    
    purchased
    
    share
    
    programs
    
    or programsAugust 1-31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    September 1-30, 2008
    
    
    1,058
    
    
    $
    12.24
    
    
    
    
    
    
    
    October 1-31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,058
    
    
    $
    12.24
    
    
    
    
    
    
    
    
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits
  19




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##### Table of Contents



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
    
    
    3.210.1
    
    
    Loan Agreement
Dated September 24,
2008 between
Mitcham Industries,
Inc. and First
Victoria National
Bank
    
    Incorporated by reference to
Mitcham Industries, Inc.
Current Report on Form 8-K
filed with the SEC on September
25, 2008
    
    000-25142
    
    
    10.131.1
    
    
    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
 20




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SIGNATURES
  MITCHAM INDUSTRIES, INC.Date:  December 9, 2008
    /s/ Robert P. CappsRobert P. CappsExecutive Vice President-Finance and Chief Financial Officer
(Duly Authorized Officer and Chief Accounting Officer) 21