##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    September 30, 2008o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    Fromto   Commission File
    No. 0-10144
  DAWSON GEOPHYSICAL
    COMPANY
  Texas

75-0970548(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification
    No.)   508 West Wall, Suite 800, Midland, Texas 79701
    (Principal Executive Office)
    Telephone Number:
    432-684-3000
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Title of Each Class
  1 3
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
  1 3
  1 3
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


6Item 1B.


Unresolved Staff Comments


11Item 2.


Properties


11Item 3.


Legal Proceedings


11Item 4.


Submission of Matters to a Vote of Security
    Holders


11PART IIItem 5.


Market for Our Common Equity and Related
    Stockholder Matters


13Item 6.


Selected Financial Data


15Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


15Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


20Item 8.


Financial Statements and Supplementary Data


21Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


21Item 9A.


Controls and Procedures


21Item 9B.


Other Information


22PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


22Item 11.


Executive Compensation


22Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


22Item 13.


Certain Relationships and Related Transactions
    and Director Independence


22Item 14.


Principal Accounting Fees and Services


22PART IVItem 15.


Exhibits and Financial Statement Schedules


23Signatures


24Index to Financial Statements


F-1Index to ExhibitsEX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  FORM 10-K
 For the
    Fiscal Year Ended September 30, 2008
  DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K, Form 10-K,
 Part I  Item 1.
    BUSINESS  General
  2-D, 3-D, 3-D
  3-D
   2




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3-D
  Business
    Strategy
    
    Attracting and retaining skilled and experienced personnel for
    our data acquisition and processing operations;
    Providing integrated in-house services necessary in each phase
    of seismic data acquisition and processing, including project
    design, land access permitting, surveying and related support
    functions as well as continuing the enhancement of our in-house
    health, safety, security and environmental programs;
    Maintaining the focus of our operations solely on the domestic
    onshore seismic market;
    Continuing to operate with conservative financial discipline;
    Updating our capabilities to incorporate advances in geophysical
    and supporting technologies; and
    Acquiring equipment to expand the recording channel capacity on
    our existing crews and equipping additional crews as market
    conditions permit.  Business
    Description
  Geophysical Services Overview.
  2-D 3-D 2-D 3-D 3-D 3-D
  3-D 3-D 3-D
 3




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##### Table of Contents



Data Acquisition. 3-D
            Data Processing.
      Integrated Services.
 4




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##### Table of Contents



Equipment
    Acquisition and Capital Expenditures
    Clients
        Contracts
  project-by-project
   5




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##### Table of Contents



Competition
    Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K, Form 10-K. 1-800-SEC-0330
 Item 1A.  RISK
    FACTORS  An investment in our common stock is subject to a number of
    risks discussed below. You should carefully consider these
    discussions of risk and the other information included in this
    Form 10-K.
    If any of the following risks were actually to occur, our
    business, financial condition or results of operations could be
    materially adversely affected.
  Recent
    decreases in the market price of oil and natural gas,
    disruptions in the global financial markets and the global
    economy generally may decrease demand for our seismic services
    and cause downward pressure on the prices we
    charge.
   6




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##### Table of Contents



If oil
    and natural gas prices or the level of capital expenditures by
    oil and gas companies were to decline, demand for our services
    would decline and our results of operations would be adversely
    affected.
      
    the level of supply and demand for oil and natural gas;
    level of prices, and expectations about future prices, for oil
    and natural gas;
    the ability of oil and gas producers to raise equity capital and
    debt financing;
    worldwide political, military and economic conditions, including
    the ability of the Organization of Petroleum Exporting Countries
    to set and maintain production levels and prices for oil;
    the cost of exploring for, developing and producing oil and
    natural gas;
    government policies regarding the exploration for, and
    production and development of oil and natural gas reserves;
    level of taxation relating to the energy industry, including
    taxation of consumption of energy sources; and
    weather conditions, including large-scale weather events such as
    hurricanes that affect oil and gas operations over a wide area
    or affect prices or locally inclement weather that can preclude
    or delay our seismic operations.    A
    limited number of customers account for a significant portion of
    our revenues, and the loss of one of these customers could harm
    our results of operations; we generally do not require our
    clients to pay in advance or to secure their obligations to us,
    so any failure to pay by these clients could harm our results of
    operations.
   7




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Our
    clients could delay, reduce or cancel their service contracts
    with us on short notice, which may lead to lower than expected
    demand and revenues.
    The
    high fixed costs of our operations could adversely affect our
    results of operations.
    Our
    revenues are subject to fluctuations that are beyond our control
    which could adversely affect our results of operations in any
    financial period.
    Our
    operations are subject to weather conditions which could
    adversely affect our results of operations.
    Our
    operations are subject to delays related to obtaining land
    access rights of way from third parties which could affect our
    results of operations.
  and/or
  We
    face intense competition in our business that could result in
    downward pricing pressure and the loss of market
    share.
   8




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If we
    do not manage our continued growth effectively, our results of
    operations could be affected.
    We may
    be unable to attract and retain skilled and technically
    knowledgeable employees which could adversely affect our
    business and our growth.
    Capital
    requirements for our operations are large. If we are unable to
    finance these requirements, our ability to continue our
    expansion and maintain our profitability could be
    affected.
    Our
    results of operations could be adversely affected by asset
    impairments.
    Technological
    change in our business creates risks of technological
    obsolescence and requirements for future capital expenditures.
    If we are unable to keep up with these technological advances,
    we may not be able to compete effectively.
   9




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We
    operate under hazardous conditions that subject us to risk of
    damage to property or personal injuries and may interrupt our
    business.
    We may
    be subject to liability claims that are not covered by our
    master service agreements or by insurance.
      Our
    industry is subject to governmental regulation which may
    adversely affect our future operations.
    Certain
    provisions of our charter and bylaws and our shareholder rights
    plan may make it difficult for a third party to acquire us, even
    in situations that may be viewed as desirable by
    shareholders.
    Failure
    to maintain effective internal controls in accordance with
    Section 404 of the Sarbanes-Oxley Act could have a material
    adverse effect on our stock price.
   10




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##### Table of Contents



Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES    Owned or



Building AreaLocation

Leased

Purpose

Square FeetMidland, TX

Leased

Executive offices and data processing


29,960Midland, TX

Owned

Field office


61,402Equipment fabrication facilityMaintenance and repairs shop       Item 3.
    LEGAL
    PROCEEDINGS      Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   11




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##### Table of Contents



Executive
    Officers of the Registrant
    Name

Age

PositionL. Decker Dawson


88


Chairman of the Board of DirectorsStephen C. Jumper


47


President, Chief Executive Officer and DirectorC. Ray Tobias


51


Executive Vice President, Chief Operating OfficerChristina W. Hagan


53


Executive Vice President, Secretary and Chief Financial OfficerHowell W. Pardue


72


Executive Vice PresidentK.S. Forsdick


57


Vice President       L. Decker Dawson. (1989-1990),
  Stephen C. Jumper. 3-D
  C. Ray Tobias.
  Christina W. Hagan.
  Howell W. Pardue.
  K.S. Forsdick.
 12




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##### Table of Contents



Part II  Item 5.
    MARKET
    FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS  ®
  Quarter Ended

High


LowDecember 31, 2006

$
40.26


$
26.56March 31, 2007

$
53.82


$
30.50June 30, 2007

$
63.89


$
48.03September 30, 2007

$
85.67


$
51.52December 31, 2007

$
83.86


$
64.67March 31, 2008

$
78.00


$
48.75June 30, 2008

$
79.95


$
56.41September 30, 2008

$
65.93


$
40.27         Equity
    Compensation Plan Information
  Number ofSecurities RemainingAvailable forNumber of





Future IssuanceSecurities to





Under Equitybe Issued





Compensation PlansUpon Exercise


Weighted-Average Exercise


(Excluding Securitiesof Outstanding


Price of


Reflected inPlan Category

Options


Outstanding Options


Column (a))(a)


(b)


(c)Equity compensation plans approved by security holders


23,250


$
17.91



943,550
(1)Equity compensation plans not approved by security holders










Total


23,250


$
17.91



943,550
(1)     (1)
    
    Although 238,550 shares are available to be issued under
    the 2000 Incentive Stock Plan and the 2004 Incentive Stock Plan,
    the Company does not intend to grant additional shares from
    either Plan. There are 705,000 shares available to be
    issued under the 2006 Stock and Performance Incentive Plan. 13




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Performance
    Graph
    Comparison
    of 5-Year
    Cumulative Total Return* Among
    Dawson Geophysical Company, the S & P 500 Index
    and the Value-Line Oilfield Services Industry Index
  
  9/03

9/04

9/05

9/06

9/07

9/08DAWSON GEOPHYSICAL COMPANY


100.00



303.63



439.04



431.06



1124.96



677.65S & P 500


100.00



113.87



127.82



141.62



164.90



128.66VALUE-LINE OILFIELD SERVICES


100.00



143.93



218.50



237.51



360.99



282.31   *
    $100 invested on
    9/30/03 in
    stock & index-including reinvestment of dividends. Fiscal
    year ending September 30.  ©
 14




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##### Table of Contents



Item 6.
    SELECTED
    FINANCIAL DATA    Years Ended September 30

2008


2007


2006


2005


2004(In thousands, except per share amounts)Operating revenues

$
324,926


$
257,763


$
168,550


$
116,663


$
69,346Net income

$
35,007


$
27,158


$
15,855


$
10,016


$
8,618Net income per common share

$
4.57


$
3.57


$
2.11


$
1.50


$
1.55Weighted average equivalent common shares outstanding


7,669



7,602



7,518



6,706



5,559Total assets

$
233,621


$
195,862


$
149,418


$
114,127


$
56,759Revolving line of credit

$



$
5,000


$



$



$
Long-term debt-less current maturities

$



$



$



$



$
Stockholders equity

$
185,960


$
149,155


$
119,208


$
101,904


$
50,282     Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K. Form 10-K.
  Overview
     15




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##### Table of Contents



Fiscal
    2008 Highlights
    
    Repaid all $20,000,000 outstanding under the Companys
    revolving line of credit in the fourth quarter;
    Replaced an I/O System II MRX recording system on an
    existing crew with a 7,500 channel ARAM ARIES recording system;
    Replaced an I/O System II MRX recording system on an
    existing crew with an 8,000 channel ARAM ARIES recording system;
    Took delivery of thirty ION vibrator energy source units;
    Added four IVI Enviro mini-vibrator energy source units used to
    operate in urban and sensitive environments. The Company now
    operates eight such units;
    Increased channel count from 102,000 to in excess of 117,000;
    Redeployed an existing I/O System II MRX recording system
    on an additional crew bringing the total of the Companys
    operating data acquisition crews to sixteen; and
    Operated in West Texas, South Texas, Fort Worth Basin of
    Texas, New Mexico, Oklahoma, Arkansas, Colorado, Utah, Montana,
    West Virginia, Pennsylvania, California, Louisiana, Nevada and
    New York.  Fiscal
    Year Ended September 30, 2008 Versus Fiscal Year Ended
    September 30, 2007
  Operating Revenues.
  Operating Costs.
 16




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##### Table of Contents



Taxes.
  Fiscal
    Year Ended September 30, 2007 Versus Fiscal Year Ended
    September 30, 2006
  Operating Revenues.
  Operating Costs. start-up
        Taxes.
  Liquidity
    and Capital Resources
  Introduction.
 17




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##### Table of Contents



Cash Flows.
      Capital Expenditures.
  3-D
  Capital Resources.
  30-day
 18




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##### Table of Contents



Payments Due by Period (in 000s)Less than


1-3


3-5


More thanTotal


1 Year


Years


Years


5 YearsOperating lease obligations

$
1,778


$
569


$
1,042


$
167


$
     Off-Balance
    Sheet Arrangements
    Effect of
    Inflation
    Critical
    Accounting Policies
    Revenue Recognition.
    Allowance for Doubtful Accounts.
  Impairment of Long-Lived Assets.
 19




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##### Table of Contents



Depreciable Lives of Property, Plant and
    Equipment.
  Tax Accounting.
  Stock-Based Compensation.
  Recently
    Issued Accounting Pronouncements
  157-2 (FSP 157-2),
      Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   20




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30-day
    Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Managements
    Evaluation of Disclosure Controls and Procedures
  Rule 13a-15
  Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f) Internal Control  Integrated
    Framework page F-3.
 21




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##### Table of Contents



Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f)
  Item 9B.
    OTHER
    INFORMATION   Part III  Item 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Regulation S-K) http://www.dawson3d.com
  Item 11.
    EXECUTIVE
    COMPENSATION    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K.
  Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    Item 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   22




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##### Table of Contents



Part IV  Item 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Financial Statements.
           Financial Statement Schedules.
  page F-20
      Exhibits.
  Form 10-K
 23




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##### Table of Contents



SIGNATURES      By:
    /s/  Stephen
    C. Jumper        Signature

Title

Date/s/  L.
    Decker DawsonL.
    Decker Dawson

Chairman of the Board of Directors

12-9-08/s/  Stephen
    C. JumperStephen
    C. Jumper

President, Chief Executive Officer and Director (principal
    executive officer)

12-9-08/s/  Paul
    H. BrownPaul
    H. Brown

Director

12-9-08/s/  Gary
    M. HooverGary
    M. Hoover

Director

12-9-08/s/  Jack
    D. LaddJack
    D. Ladd

Director

12-9-08/s/  Ted
    R. NorthTed
    R. North

Director

12-9-08/s/  Tim
    C. ThompsonTim
    C. Thompson

Director

12-9-08/s/  Christina
    W. HaganChristina
    W. Hagan

Executive Vice President, Secretary and Chief Financial Officer
    (principal financial and accounting officer)

12-9-08  24




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##### 



INDEX TO
    FINANCIAL STATEMENTS   
 Financial Statements of Dawson Geophysical Company

PageReports of Independent Registered Public
    Accounting Firm, dated December 9, 2008


F-2Balance Sheets as of September 30, 2008 and
    2007


F-4Statements of Operations for the years ended
    September 30, 2008, 2007 and 2006


F-5Statements of Stockholders Equity and Other
    Comprehensive Income for the years ended September 30,
    2008, 2007 and 2006


F-6Statements of Cash Flows for the years ended
    September 30, 2008, 2007 and 2006


F-7Notes to Financial Statements


F-8Financial Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts for the years ended September 30, 2008,
    2007 and 2006


F-20   F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Share-Based Payment
  Internal Control 
    Integrated Framework
      F-2




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control 
    Integrated Framework
        Internal Control  Integrated
    Framework
        F-3




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  BALANCE
    SHEETS
  September 30,


September 30,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
8,311,000


$
14,875,000Accounts receivable, net of allowance for doubtful accounts of
    $55,000 in September 2008 and $176,000 in September 2007


76,221,000



56,707,000Prepaid expenses and other assets


877,000



815,000Current deferred tax asset


873,000



693,000Total current assets


86,282,000



73,090,000Property, plant and equipment


250,519,000



207,427,000Less accumulated depreciation


(103,180,000
)


(84,655,000
)Net property, plant and equipment


147,339,000



122,772,000$
233,621,000


$
195,862,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
15,308,000


$
12,816,000Revolving line of credit






5,000,000Accrued liabilities:Payroll costs and other taxes


3,363,000



2,325,000Other


14,869,000



14,263,000Deferred revenue


993,000



2,922,000Total current liabilities


34,533,000



37,326,000Deferred tax liability


13,128,000



9,381,000Stockholders equity:Preferred stock-par value $1.00 per share; 5,000,000 shares
    authorized, none outstanding






Common stock-par value
    $.331/3
    per share; 50,000,000 shares authorized, 7,794,744 and
    7,658,494 shares issued and outstanding in each period


2,598,000



2,553,000Additional paid-in capital


87,051,000



85,090,000Retained earnings


96,311,000



61,512,000Total stockholders equity


185,960,000



149,155,000$
233,621,000


$
195,862,000    F-4




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  STATEMENTS
    OF OPERATIONS
  Years Ended September 30,2008


2007


2006Operating revenues

$
324,926,000


$
257,763,000


$
168,550,000Operating costs:Operating expenses


237,484,000



190,117,000



125,848,000General and administrative


6,762,000



6,195,000



4,808,000Depreciation


24,253,000



18,103,000



13,338,000268,499,000



214,415,000



143,994,000Income from operations


56,427,000



43,348,000



24,556,000Other income (expense):Interest income


497,000



749,000



582,000Interest expense


(482,000
)


(145,000
)


Other (expense) income


(35,000
)


506,000



75,000Income before income tax


56,407,000



44,458,000



25,213,000Income tax expense:Current


(17,834,000
)


(13,906,000
)


(4,886,000
)Deferred


(3,566,000
)


(3,394,000
)


(4,472,000
)(21,400,000
)


(17,300,000
)


(9,358,000
)Net income

$
35,007,000


$
27,158,000


$
15,855,000Net income per common share

$
4.57


$
3.57


$
2.11Net income per common share-assuming dilution

$
4.53


$
3.54


$
2.09Weighted average equivalent common shares outstanding


7,669,124



7,601,889



7,518,372Weighted average equivalent common shares outstanding-assuming
    dilution


7,728,651



7,669,462



7,599,555    F-5




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DAWSON
    GEOPHYSICAL COMPANY
  STATEMENTS
    OF STOCKHOLDERS EQUITY AND OTHER COMPREHENSIVE
    INCOME
  AccumulatedCommon Stock


Additional


OtherNumber





Paid-in


Comprehensive


Retainedof Shares


Amount


Capital


Income (Expense)


Earnings


TotalBalance September 30, 2005


7,484,044


$
2,495,000


$
80,987,000


$
(77,000
)

$
18,499,000


$
101,904,000Net income


















15,855,000



15,855,000Other comprehensive income net of tax:Unrealized loss on securities:Unrealized holding gain arising during period














35,000Less: Reclassification adjustment for gain included in net income














31,000Income tax benefit














(22,000
)Other comprehensive income














44,000







44,000Comprehensive income for the period






















15,899,000Excess tax benefit of employee stock plan










180,000











180,000Stock-based compensation expense










289,000











289,000Issuance of common stock as compensation


18,450



6,000



560,000











566,000Exercise of stock options


46,750



16,000



354,000











370,000Balance September 30, 2006


7,549,244



2,517,000



82,370,000



(33,000
)


34,354,000



119,208,000Net income


















27,158,000



27,158,000Other comprehensive income net of tax:Realization of gains on investments














51,000Income tax benefit














(18,000
)Other comprehensive income














33,000







33,000Comprehensive income for the period






















27,191,000Excess tax benefit of employee stock plan










1,312,000











1,312,000Stock-based compensation expense










588,000











588,000Issuance of common stock as compensation


3,000



1,000



119,000











120,000Exercise of stock options


106,250



35,000



701,000











736,000Balance September 30, 2007


7,658,494



2,553,000



85,090,000







61,512,000



149,155,000Adoption of FIN 48


















(208,000
)


(208,000
)Net income


















35,007,000



35,007,000Excess tax benefit of employee stock plan










440,000











440,000Stock-based compensation expense










836,000











836,000Issuance of common stock as compensation


6,500



2,000



423,000











425,000Issuance of restricted stock awards and unearned compensation


94,500



31,000



(32,000
)










(1,000
)Exercise of stock options


35,250



12,000



294,000











306,000Balance September 30, 2008


7,794,744


$
2,598,000


$
87,051,000


$



$
96,311,000


$
185,960,000    F-6




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  STATEMENTS
    OF CASH FLOWS
  Years Ended September 30,2008


2007


2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
35,007,000


$
27,158,000


$
15,855,000Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation


24,253,000



18,103,000



13,338,000Noncash compensation


1,259,000



707,000



855,000Deferred income tax expense


3,566,000



3,394,000



4,472,000Excess tax benefit from share-based payment arrangement


(440,000
)


(1,312,000
)


(180,000
)Other


443,000



995,000



119,000Change in current assets and liabilities:Increase in accounts receivable


(15,711,000
)


(10,633,000
)


(17,378,000
)(Increase) decrease in prepaid expenses


(62,000
)


(125,000
)


437,000Increase in accounts payable


2,900,000



646,000



4,779,000Increase in accrued liabilities


1,644,000



10,435,000



2,773,000(Decrease) increase in deferred revenue


(1,929,000
)


2,059,000



673,000Net cash provided by operating activities


50,930,000



51,427,000



25,743,000CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from disposal of assets


29,000



537,000



453,000Capital expenditures, net of noncash capital expenditures
    summarized below in noncash investing activities


(53,269,000
)


(58,701,000
)


(35,477,000
)Proceeds from sale of short-term investments










8,993,000Proceeds from maturity of short-term investments






6,500,000



5,000,000Net cash used in investing activities


(53,240,000
)


(51,664,000
)


(21,031,000
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options


306,000



736,000



369,000Proceeds from revolving line of credit


15,000,000



5,000,000



Repayment on revolving line of credit


(20,000,000
)






Excess tax benefit from share-based payment arrangement


440,000



1,312,000



180,000Net cash (used) provided by financing activities


(4,254,000
)


7,048,000



549,000Net (decrease) increase in cash and cash equivalents


(6,564,000
)


6,811,000



5,261,000CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


14,875,000



8,064,000



2,803,000CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
8,311,000


$
14,875,000


$
8,064,000SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest expense

$
541,000


$
145,000


$
Cash paid during the period for income taxes

$
18,812,000


$
10,259,000


$
4,177,000NONCASH INVESTING ACTIVITIES:Accrued purchases of property and equipment

$
382,000


$
790,000


$
4,900,000Unrealized loss on investments

$



$



$
(10,000
)    F-7




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS
  1.
    Summary
    of Significant Accounting Policies  Organization
    and Nature of Operations
  2-D, 3-D
  Cash
    Equivalents
    Short-Term
    Investments
    Fair
    Value of Financial Instruments
    Concentrations
    of Credit Risk
   F-8




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Property,
    Plant and Equipment
      Impairment
    of Long-Lived Assets
    Revenue
    Recognition
        Allowance
    for Doubtful Accounts
    Tax
    Accounting
   F-9




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Use of
    Estimates in the Preparation of Financial
    Statements
    Stock-Based
    Compensation
            Incentive
    Stock Options:
   F-10




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      WeightedWeighted


AverageNumber of


Average


RemainingOptioned


Exercise


Contractual


Aggregate IntrinsicShares


Price


Term in Years


Value ($000)Balance as of September 30, 2005


224,500


$
8.87



2.65


$
4,803Granted





$
Exercised


(46,750
)

$
7.90Expired


(6,500
)

$
9.27Balance as of September 30, 2006


171,250


$
9.12



2.22


$
3,535Granted





$
Exercised


(106,250
)

$
6.93Forfeited


(6,500
)

$
15.82Balance as of September 30, 2007


58,500


$
12.35



1.60


$
3,875Granted





$
Exercised


(35,250
)

$
8.68Balance as of September 30, 2008


23,250


$
17.91



1.08


$
650Exercisable as of September 30, 2008


15,000


$
17.91



1.08


$
420       Number of


Weighted AverageNonvested


Grant DateShare Awards


Fair ValueNonvested Shares Outstanding September 30, 2007


24,000


$
14.52Granted






Vested


(15,750
)


12.74Forfeited






Nonvested Shares Outstanding September 30, 2008


8,250


$
17.91      F-11




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        Stock
    Awards:
    Number of


Weighted AverageRestricted


Grant DateShare Awards


Fair ValueNonvested Restricted Shares Outstanding September 30, 2007


56,000


$
27.05Granted


38,500


$
67.25Nonvested Restricted Shares Outstanding September 30, 2008


94,500


$
43.43        F-12




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  2.
    Property,
    Plant and Equipment    September 30,2008


2007


Useful LivesLand, building and other

$
5,350,000


$
4,435,000



3 to 40 yearsRecording equipment


160,516,000



141,648,000



5 to 10 yearsVibrator energy sources


58,750,000



39,900,000



10 to 15 yearsVehicles


25,713,000



21,059,000



2 to 10 yearsOther(a)


190,000



385,000



250,519,000



207,427,000Less accumulated depreciation


(103,180,000
)


(84,655,000
)Net property, plant and equipment

$
147,339,000


$
122,772,000   (a)
    
    Other represents accumulated costs associated with equipment
    fabrication and modification not yet completed.  3.
    Other
    Current Liabilities    September 30,2008


2007Accrued self insurance reserves

$
6,704,000


$
6,373,000Accrued bonus and profit sharing


3,855,000



3,078,000Income taxes payable


1,262,000



2,314,000Accrued payables associated with fire


794,000



Other accrued expenses and current liabilities


2,254,000



2,498,000Total other current liabilities

$
14,869,000


$
14,263,000   4.
    Debt  30-day
 F-13




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  5.
    Employee
    Benefit Plans    6.
    Advertising
    Costs    7.
    Income
    Taxes      Year Ended September 30,2008


2007


2006Current Federal

$
16,082,000


$
11,778,000


$
3,935,000Current State


1,752,000



2,128,000



951,000Deferred Federal


3,296,000



3,280,000



4,599,000Deferred State


270,000



114,000



(127,000
)Total

$
21,400,000


$
17,300,000


$
9,358,000     Year Ended September 30,2008


2007


2006Tax expense computed at statutory rates

$
19,743,000


$
15,560,000


$
8,573,000Change in valuation allowance


(18,000
)


(2,000
)


90,000State income tax


1,270,000



1,505,000



569,000Other


405,000



237,000



126,000Income tax expense

$
21,400,000


$
17,300,000


$
9,358,000  F-14




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    September 30,2008


2007Deferred tax assets:Net operating loss carryforwards

$



$
19,000Receivables


20,000



64,000Restricted stock


464,000



183,000Workers compensation


493,000



355,000Other


430,000



343,000Total gross deferred tax assets


1,407,000



964,000Less valuation allowance


(70,000
)


(88,000
)Total deferred tax assets


1,337,000



876,000Deferred tax liabilities:Property and equipment


(13,592,000
)


(9,564,000
)Total gross deferred tax liabilities


(13,592,000
)


(9,564,000
)Net deferred tax liability

$
(12,255,000
)

$
(8,688,000
)Current portion of net deferred tax asset/liability

$
873,000


$
693,000Noncurrent portion of net deferred tax asset/liability


(13,128,000
)


(9,381,000
)Total net deferred tax liability

$
(12,255,000
)

$
(8,688,000
)         UnrecognizedBenefitsBalance as of October 1, 2007

$
137,000Increase (decrease) in prior year tax positions


Increase (decrease) in current year tax positions


Settlement with taxing authorities


Expiration of statutes of limitations


(2,000
)Balance as of September 30, 2008

$
135,000  F-15




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      8.
    Net
    Income per Common Share      2008


2007


2006Numerator:Net income and numerator for basic and diluted net income per
    common share: income available to common shareholders

$
35,007,000


$
27,158,000


$
15,855,000Denominator:Denominator for basic net income per common share-weighted
    average common shares


7,669,124



7,601,889



7,518,372Effect of dilutive securities-employee stock options and
    restricted stock grants


59,527



67,573



81,183Denominator for diluted net income per common share-adjusted
    weighted average common shares and assumed conversions


7,728,651



7,669,462



7,599,555Net income per common share

$
4.57


$
3.57


$
2.11Net income per common share-assuming dilution

$
4.53


$
3.54


$
2.09   9.
    Major
    Customers    2008


2007


2006A


36
%


49
%


24
%B


20
%






C










11
%    F-16




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    10.
    Commitments
    and Contingencies              Payments Due by Period (in 000s)Less than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 YearsOperating lease obligations

$
1,778


$
569


$
1,042


$
167


$
       11.
    Rights
    Agreement   F-17




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          12.
    Recently
    Issued Accounting Pronouncements  157-2 (FSP 157-2),
      13.
    Subsequent
    Events   F-18




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  14.
    Quarterly
    Financial Data (Unaudited)  Quarter EndedDecember 31


March 31


June 30


September 30Fiscal 2007:Operating revenues

$
53,654,000


$
59,935,000


$
68,637,000


$
75,537,000Income from operations

$
8,468,000


$
8,568,000


$
12,595,000


$
13,717,000Net income

$
5,435,000


$
5,368,000


$
7,561,000


$
8,794,000Net income per common share

$
.72


$
.71


$
.99


$
1.15Net income per common share assuming dilution

$
.71


$
.70


$
.98


$
1.14Fiscal 2008:Operating revenues

$
77,599,000


$
78,363,000


$
84,568,000


$
84,396,000Income from operations

$
12,217,000


$
13,143,000


$
16,145,000


$
14,922,000Net income

$
7,704,000


$
8,292,000


$
9,707,000


$
9,304,000Net income per common share

$
1.01


$
1.08


$
1.27


$
1.21Net income per common share assuming dilution

$
1.00


$
1.07


$
1.26


$
1.20  F-19




---



##### Table of Contents



Schedule II  Dawson
    Geophysical Company
  Valuation
    and Qualifying Accounts
  Balance at


Charged to





Balance atBeginning


Costs and





End ofof Period


Expenses


Deductions


PeriodAllowance for doubtful accounts*:Fiscal Year:2008

$
176,000


$
32,000


$
153,000


$
55,0002007


148,000



51,000



23,000



176,0002006


331,000



20,000



203,000



148,000Valuation allowance for deferred tax assets:Fiscal Year:2008

$
88,000


$
(18,000
)

$



$
70,0002007


90,000



(2,000
)






88,0002006






90,000







90,000     *
    
    Deductions related to allowance for doubtful accounts represent
    amounts that have been deemed uncollectible and written off by
    the Company. F-20




---



##### Table of Contents



INDEX TO
    EXHIBITS  Number

Exhibit3
.1

Second Restated Articles of Incorporation of the Company, as
    amended (filed on February 9, 2007 as Exhibit 3.1 to
    the Companys Quarterly Report on
    Form 10-Q
    for the first quarter ended December 31, 2006 (File
    No. 000-10144)
    and incorporated herein by reference and filed on
    November 28, 2007 as Exhibit 3.1 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).3
.2

Amended and Restated Bylaws of the Company (filed on
    August 7, 2007 as Exhibit 3.2 to the Companys
    Quarterly Report on
    Form 10-Q
    for the third quarter ended June 30, 2007 (File
    No. 000-10144)
    and incorporated herein by reference).4
.1

Rights Agreement by and between the Company and Mellon Investor
    Services, LLC (f/k/a Chasemellon Shareholder Services, L.L.C.),
    as Rights Agent, dated July 13, 1999 (filed on
    December 11, 2003 as Exhibit 4 to the
    Registrants Annual Report on
    Form 10-K
    for the fiscal year ended September 30, 2003 (File
    No. 000-10144)
    and incorporated herein by reference).10
.1

Dawson Geophysical Company 2006 Stock and Performance Incentive
    Plan (the 2006 Plan), dated November 28, 2006
    (filed on January 29, 2007 as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.2

Dawson Geophysical Company 2004 Incentive Stock Plan (filed on
    March 12, 2004 as Exhibit 10.1 to the Companys
    Registration Statement on
    Form S-8
    (File
    No. 333-113576)
    and incorporated herein by reference).10
.3

Dawson Geophysical Company 2000 Incentive Stock Plan (filed on
    August 3, 2001 as Exhibit 10.1 to the Companys
    Registration Statement on
    Form S-8
    (File
    No. 333-66666)
    and incorporated herein by reference).10
.4

Form of Restricted Stock Agreement for the 2006 Plan (filed on
    February 11, 2008 as Exhibit 10.3 to the
    Companys Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.5

Form of Stock Option Agreement for the 2006 Plan (filed on
    February 11, 2008 as Exhibit 10.4 to the
    Companys Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.6

Form of Restricted Stock Agreement for the 2006 Plan (filed on
    August 6, 2007 as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.7

Form of Stock Option Agreement for the 2006 Plan (filed on
    August 6, 2007 as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.8

Description of Profit Sharing Plan (filed on December 3,
    2007 as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.9

Description of Profit Sharing Plan (filed on September 29,
    2008 as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.10

Form of Master Geophysical Data Acquisition Agreement (filed on
    December 11, 2003 as Exhibit 10 to the
    Registrants Annual Report on
    Form 10-K
    for the fiscal year ended September 30, 2003 (File
    No. 000-10144)
    and incorporated herein by reference).10
.11

Revolving Line of Credit Loan Agreement, dated June 2,
    2008, between the Company and Western National Bank (filed on
    June 5, 2008 as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.12

Security Agreement, dated June 2, 2008, between the Company
    and Western National Bank (filed on June 5, 2008 as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    and incorporated herein by reference).23
.1*

Consent of Independent Registered Public Accounting Firm.31
.1*

Certification of Chief Executive Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended.




---



##### Table of Contents



Number

Exhibit31
.2*

Certification of Chief Financial Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended.32
.1*

Certification of Chief Executive Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(b)
    promulgated under the Securities Exchange Act of 1934, as
    amended, and Section 1350 of Chapter 63 of
    Title 18 of the United States Code. Pursuant to SEC Release
    34-47551,
    this Exhibit is furnished to the SEC and shall not be deemed to
    be filed.32
.2*

Certification of Chief Financial Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(b)
    promulgated under the Securities Exchange Act of 1934, as
    amended, and Section 1350 of Chapter 63 of
    Title 18 of the United States Code. Pursuant to SEC Release
    34-47551,
    this Exhibit is furnished to the SEC and shall not be deemed to
    be filed.     *
    
    Filed herewith.
    
    Identifies exhibit that consists of or includes a management
    contract or compensatory plan or arrangement.