Geospace Technologies Corporation Annual Report 2013

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FY2013 Annual Report · Geospace Technologies Corporation

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Corporate Headquarters

and Operating Facility

Geospace Technologies Corporation

7007 Pinemont Drive

Houston, Texas 77040

(713) 986-4444

GTC, Inc.

(713) 986-4444

Geospace Offshore

(713) 986-4444

EXILE Technologies Corporation

(713) 986-4444

Geospace Engineering Resources

International, Inc.

(713) 986-4444

Geospace Technologies Eurasia LLC

Kirovogradskaya, 36,

Ufa, Bashkortostan, Russia

450001

(7) 3472 25 3973

Geospace Technologies Canada, Inc.

2735-37 Avenue, N.E.

Calgary, Alberta, Canada T1Y 5R8

(403) 250-9600

geospacetech.ca

GTC Inc. Beijing Representative Office

Room 700, 7th Floor, Lido Office Tower

Lido Place

Jichang Road

Beijing 100004, P. R. China

86 10 64378768

www.geospace.com

EXILE Technologies Limited

F3 Bramingham Business Park

Enterprise Way, Luton,

Bedfordshire LU3 4BU,

England

44 (0) 1582 573 980

exiletech.co.uk

Geospace Technologies,

Sucursal Sudamericana

Carrera 127# 22G-28 INT 30

Bogota, Colombia

w w w . g e o s p a c e . c o m

2013 ANNU

AL REPOR

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Innovation driven.Sixteen years ago our company went

public. At that time we made a fervent

commitment to persistently innovate

new technologies that anticipate and

solve our customer’s greatest challenges.

That commitment has never wavered,

and today we are known for consistently

introducing game-changing products

that previously were unimaginable

in the industry. At our core we are

engineers with vision – a characteristic

that continues to produce positive results

for our customers and our shareholders.

OFFICERS

DIRE

CT ORS

Gary D. Owens

Chairman of the Board

Gary D. Owens

Chairman of the Board

President & Chief Executive Officer

Rick Wheeler

Executive Vice President &

Chief Operating Officer

Michael J. Sheen

Senior Vice President

Chief Technical Officer

Thomas T. McEntire

Vice President, Chief Financial

Officer & Secretary

Robbin Adams

Executive Vice President &

Chief Project Engineer

Thomas L. Davis, Ph.D.

Professor of Geophysics,

Colorado School of Mines

Tina M. Langtry

Retired Senior Manager

ConocoPhillips

William H. Moody

Retired Partner

KPMG

Michael J. Sheen

Senior Vice President

Chief Technical Officer

Charles H. Still

Retired Partner

Fulbright & Jaworski L.L.P.

Richard F. Miles

Retired Industry Executive

FORWARD-LOOKING STATEMENTS:

This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

All statements other than statements of historical fact included herein including statements regarding potential future products and markets, our potential future revenues, future

financial position, business strategy, future expectations and other plans and objectives for future operations, are forward-looking statements. We believe our forward-looking

statements are reasonable. However, they are based on certain assumptions about our industry and our business that may in the future prove to be inaccurate. Important factors that

could cause actual results to differ materially from our expectations include the level of seismic exploration worldwide, which is influenced primarily by prevailing prices for oil and gas,

the extent to which our new products are accepted in the market, the availability of competitive products that may be more technologically advanced or otherwise preferable to our

products, tensions in the Middle East and other factors disclosed under the heading “Risk Factors” and elsewhere in our Form 10-K which is on file with the Securities and Exchange

Commission. Further, all written and verbal forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors.

Left to right: Richard Miles, William Moody,

Charles Still, Gary Owens, Michael Sheen,

Tina Langtry and Thomas Davis.

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ADVANCING THE INDUSTRYDear Fellow Shareholders,Officers and DirectorsBOARD OF DIRECTORS

It’s with mixed emotions that I write
this final letter to you. I have to say
that I’m tremendously pleased with the
organization that Geospace Technologies
is today. When we went public in
November 1997 as OYO Geospace,
we were a small manufacturer of
components that were essential to
seismic data acquisition systems
manufactured by our competitors. But
we had big dreams and we had a wealth
of experience.

Gary D. Owens

Shortly after the IPO in 1997 I wrote that we would
“increase R&D spending.” We have created a new
electronics engineering group charged with the
development of new instrumentation for a new industry.
This long term project represents the commitment of
the company to expand its capability to meet the future
needs of our customers.

Making our Mark in Permanent
Reservoir Monitoring (PRM)

We did increase R&D spending and entered new
markets. We took what we had and made it so much
more. We built the first permanent seabed cabled
reservoir monitoring system for BP’s Valhall field,
which defined the industry standard for operational
excellence in the reservoir monitoring market. It
was the first of many, which today is reflected in the
huge system we have been building and delivering
to monitor two fields for Statoil. These large systems
represent engineering and manufacturing feats that
few companies could accomplish. The fact that we are
significantly ahead of schedule reflects the excellence
of our engineering team and the commitment of our
manufacturing group. Together, they are a formidable
competitive force in our industry.

REVENUE
(in millions)

$300.6

$173.0

$191.7

2011

2012 2013

NET INCOME
(in millions)

$69.6

$35.1

$29.7

2011

2012

2013

PRETAX RETURN ON
SHAREHOLDERS’ EQUITY
(percent)

47.0%

32.7%

29.3%

2011 2012

2013

Dear Fellow Shareholders,

Delivering New Downhole Solutions
for the Microseismic Market

Our PRM system was but a beginning. From there
we designed and delivered complex downhole tools
for the emerging microseismic market. Our tools
reached greater depths and functioned superbly
under challenging downhole conditions. Today, as
the microseismic market continues to grow due to
its success in the shale and unconventional reservoir
plays worldwide, we believe it will continue to be an
important source of revenues for the company.

Redefining the Market for
Wireless Land Seismic Data Acquisition

Perhaps one of our greatest accomplishments to date,
however, has been bringing a truly transformative
technology to land seismic data acquisition. With
the Geospace Seismic Recorder known as the GSX
(originally known as the GSR) we enabled our
customers to break free from their dependence on
cables as a transmission mode in data acquisition. This
saved them costly repair time and made deployment
and redeployment of modules a breeze compared
to the intricacies of laying and maintaining cables in
inhospitable environments (and I can’t really think of
a land seismic data environment that anyone on the
ground would ever call “hospitable”). Health, safety and
environmental issues declined in absolute and relative
terms, as fewer people were needed to carry much
lighter loads than were necessary in cable acquisition.

The GSR wireless system has functioned reliably
from day one and gathered vocal industry supporters
because of its outstanding field reliability, ability to

Microseismic fracture monitoring
is a borehole technique that
has become integral to the
successful exploitation of shale
and unconventional reservoir
plays worldwide.

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Field-proven technology like our
wireless land acquisition systems
(the GSX and GSR systems),
continue to transform how land
seismic data is being collected.

improve profitability and safety, and the decreased
costs and time associated with mobilization and
demobilization of crews.

Today, we have sold and rented more wireless
recording systems than all of our competitors
combined. We continue to improve the system, and
I look forward to a time in the not-so-distant-future
when the bulk of the land seismic data acquisition
market will depend upon cable-free, or wireless
acquisition systems.

Again, our land-based wireless products were designed
by an engineering team whose focus is unwavering.
Our engineers concentrate on envisioning products to
offer our customers game-changing advantages of
which they may have only dreamed. Our manufacturing
department has reinvented itself repeatedly to
accomplish the enormous changes contemplated. The
synergy of the two groups has demonstrated itself
repeatedly in products that are head and shoulders
above the competition.

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OBX Nodes: Changing the Marine Landscape

Wireless acquisition systems are changing the
economics and productivity of the seismic acquisition
industry as the introduction and subsequent success
of Geospace’s land-based wireless acquisition
systems have clearly demonstrated. Similarly, the
oil and gas industry is currently undergoing an
operational revolution in the technologies it uses
to collect marine seismic data. Traditional marine
seismic streamer technology is, in many acquisition
situations, being replaced by, or augmented with,
wireless marine nodal seafloor acquisition systems
– especially in environmentally sensitive areas or
shallow-water transition zones which were once
deemed “inaccessible” by the industry.

Recognizing both a customer need and this market
opportunity early on, Geospace engineers developed
and introduced our wireless nodal Ocean Bottom
Recorder (OBX) system to the industry. At a recent
industry tradeshow, the Society of Exploration
Geophysicists (SEG) meeting in Houston, Texas, our
OBX marine nodal acquisition system was the subject
of intense interest by visitors to our booth. Both
seismic contractors and oil companies alike could
readily see the benefits of this smaller, lighter and
more flexible wireless subsea nodal recording system
and what this could mean for their seismic acquisition
operations. They recognize that the wireless OBX
nodal system gives energy companies the flexibility
to design seismic surveys to better match their data
needs. They can collect and examine seismic data
from areas that they had never been able to survey
before. The OBX nodal system can be deployed in
deep or shallow water, including rivers, lakes and
swamps; around submarine obstructions such as
pipelines and offshore rigs; or strategically placed
in environmentally sensitive sites like coral reefs or
submarine habitat sanctuaries.

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Taking Our Vision to
the Marine Market

We are now offering
these same advantages
to customers who work in
shallow and deep water.
We believe our new ocean
bottom recorder (or OBX)
and our PRM systems will
change the economics of
marine seismic acquisition
and the management
of oil and gas reservoirs
around the world.

Over the past 16 years,
Geospace has weathered the wave of cyclicality
that dominates our industry by adhering to three
philosophies: 1) focusing on lowering product and
operating costs for our customers, 2) designing
and bringing technologies to market that will
transform the industry and 3) striving to under-
promise and over-deliver. While we seek constant
improvement, we aren’t focused on incremental
change; we seek far-reaching transformative
change. And we’ve never been a company given
to hype. At times, this has caused our potential to
be overlooked or misunderstood, but that’s just
fine with us because we’d rather deliver game-
changing products and results that demonstrate
reality, rather than market hype.

Early on, Geospace Technologies’
Engineers developed the OBX
because they recognized an
emerging customer need for a
smaller, lighter and more flexible
wireless marine nodal seismic
acquisition product.

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As I write this letter, we’ve just ended our fiscal year
2013. Our revenues for this year were $300.6 million,
57% greater than $191.7 million in the previous year.
Net income was $69.6 million, or $5.38 per diluted
share, an increase of 98% over $35.1 million, or
$2.74 per diluted share, in the prior year.

We’ve come a long way in the past 16 years. Our
market capitalization was less than $100 million when
In closing, I would like to thank Mr. Takashi Kanemori, who left our
we got started. Now we’re over $1 billion in market
capitalization. We’ve grown and we have plans to
board after OYO Corporation sold their holdings in the company, and Mr.
expand our capacity further.
Richard White, who also left our board to take the CEO position of Global
I’ve worked with Rick Wheeler, our current Chief
Geophysical Corporation, for their past service to our company. And I
Operating Officer, for more than 30 years. He’s been a
would like to welcome Ms. Tina M. Langtry to our board of directors. I
part of Geospace’s engineering team since 1997 and
has overseen our operations for the last two years.
would also like to thank the management and employees of Geospace
While it’s bittersweet to retire, I can say that I am
Technologies throughout the world who have done so much to make our
delighted to be passing the baton to Rick. He’s the
growth possible. Most of all I want to thank our customers for allowing us
embodiment of Geospace’s culture and has been a
to serve their needs. For our long-term shareholders, I wish to thank you for
part of every one of our ground-breaking projects. With
Rick, I know that whatever our industry has in store, our
your patience and support. We are a strong company ready to take on the
company will continue to focus on what it does best –
opportunities for growth that continue to emerge.
development and delivery of innovative products. I also
know that he has great plans in store for Geospace, but
I’ll let him tell you about that.

Gary D. Owens

Gary D. Owens
Chairman of the Board

Chairman of the Board
President & Chief Executive Officer

President & Chief Executive Officer

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12/3/13 2:23 PM

It feels odd writing this letter with Gary sitting next
door, but he’s assured me and everyone else in the
company that he’s determined to be out the door
by the end of this calendar year, when the fish are
biting and his grandchildren are calling. He’s also
assured us he’ll be available for board meetings, but
he’s very ready to move on.

To that end, the Geospace team has been preparing
for his departure and to continue the vision we
shared back in 1997.

Rick Wheeler

We are Expanding Pinemont
Capabilities and Capacity

P I N E M O N T D R I V E

We recently purchased 9.6 acres of land
adjacent to our Pinemont headquarters and
are drawing up plans for a 3-story building
that will house a manufacturing plant on the
ground floor and offices above. In addition
to the plant and offices, we will have room
for training and conference rooms, as well as
additional engineering and test labs. Both the
additional plant and floors are sorely needed
as we’ve maxed out our existing space.

We also purchased another adjoining 7.7
acres which will be used for parking and
retention pond requirements associated
with the new building.

Existing
Property

Property
Expansion

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12/3/13 2:51 PM

Tested and inspected cable sections are readied

for shipping. Each reel contains 144 sensor pods

spaced every 50 meters creating a cable segment

of approximately 7.2 kilometers in length.

Dear Fellow Shareholders,RESULTS ENGINEERED

World-class energy companies have long wanted the capability to effectively manage hydrocarbon assets
in oil and gas reservoirs. Until recently, energy companies worldwide have only been able to produce
about 35 percent of the hydrocarbons in their reservoirs and they have known that increasing this recovery
rate would significantly increase their overall profits. But to effectively increase recovery rates companies
needed the ability to “see” the hydrocarbon assets inside their reservoirs, to constantly monitor them, and
to understand how and where they migrated over time.

In 2003, in the North Sea’s Valhall field, Geospace Technologies gave energy companies just that capability.
Geospace became the industry’s first technology company to successfully pioneer the development and
deployment of a seabed permanent reservoir monitoring system that gave energy companies the ability
to see inside their reservoirs and cost effectively manage the lifecycle of their reservoir assets. Using
sophisticated technical management practices, based largely on the seismic data collected by the PRM
system over time, recovery rates and profits increased.

Each PRM system must be customized to fit the company’s specific needs which vary from reservoir to
reservoir. PRM seabed systems are organizationally and technologically very complex projects, requiring
significant financial investments, time, and operational commitments from all of the parties involved.

Since the Valhall PRM installation in 2003, Geospace Technologies has successfully developed and deployed
a number of PRM seabed systems in areas as geographically diverse as the North Sea, the Caspian Sea,

offshore Brazil, and the Gulf of Mexico. Today, Geospace
Technologies is a recognized industry leader in successful
seabed PRM installations.

Now, Geospace Technologies is poised to once again pioneer
the expansion of the industry’s PRM technical vistas. We
have recently entered into a contract to develop and deploy
the industry’s first land-based PRM acquisition system. This
land-based PRM acquisition system will consist of 1,000
permanently emplaced sensor stations connected back to a
surface real-time data acquisition system. As in the seabed
PRM installations, this land-based system will undergo
periodic seismic surveys which, over time, will allow
reservoir engineers to track the movement of hydrocarbon assets within
the field and ultimately make better, more economically desirable decisions
regarding the management of the field’s hydrocarbon production.

Geospace Technologies’ marine success and its strength in land seismic data
acquisition systems has led to this important new contract and opened a
marketplace that has been relatively unexploited.

The ends of each
cable section must
be “terminated”
and connection
hardware installed.

Seismic sensors
are attached to
the cable and
permanently sealed
in protective cases
creating sensor
pods at specified
intervals along the
PRM cable sections.

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12/3/13 2:51 PM

Cable sections are
double armored and a
protective boot is installed
over each sensor pod.

Forging New Frontiers In Permanent Reservoir MonitoringIt feels odd writing this letter with Gary sitting next

door, but he’s assured me and everyone else in the

company that he’s determined to be out the door

by the end of this calendar year, when the fish are

biting and his grandchildren are calling. He’s also

assured us he’ll be available for board meetings, but

he’s very ready to move on.

To that end, the Geospace team has been preparing

for his departure and to continue the vision we

Rick Wheeler

shared back in 1997.

We are Expanding Pinemont

Capabilities and Capacity

P I N E M O N T D R I V E

We recently purchased 9.6 acres of land

adjacent to our Pinemont headquarters and

are drawing up plans for a 3-story building

that will house a manufacturing plant on the

ground floor and offices above. In addition

to the plant and offices, we will have room

for training and conference rooms, as well as

additional engineering and test labs. Both the

additional plant and floors are sorely needed

as we’ve maxed out our existing space.

We also purchased another adjoining 7.7

acres which will be used for parking and

retention pond requirements associated

with the new building.

Existing

Property

Expansion

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12/3/13 2:51 PM

Tested and inspected cable sections are readied
for shipping. Each reel contains 144 sensor pods
spaced every 50 meters creating a cable segment
of approximately 7.2 kilometers in length.

Dear Fellow Shareholders,RESULTS ENGINEERED

Statoil’s Permanent Reservoir
Monitoring System Ahead of
Schedule and Demand for Land
Wireless Acquisition Systems
Increases

As Gary mentioned, we are making
tremendous progress on our
shipments to Statoil. That has kept
the plant operating on several shifts
this year and has dominated much
of our operations, but we expect
that we will be shipping more of
our wireless land products in the
upcoming year. Demand for these
land systems is vibrant and we have
signed new agreements that will
enable us to serve the European
market more effectively with rentals
and repair.

Our GSX wireless system has also been in
use during the Canadian winters with very
positive results. One client has reported
that after fielding 10,000 channels of our
GSX system, they were up and running at
maximum capacity only three days later.
When contrasted to the time required for
the startup of a traditional cabled seismic
system, three days is a great result. For
our wireless clients, efficiencies gained
in the field equate to project profits. We
expect more sales and rentals of the GSX
and GCX in winter seasons to come.

All PRM cable sections undergo
final testing and inspection.

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OBX Will be a Game-Changing
System for Marine Operations

In addition, our new titanium model
of the marine wireless OBX system
has received significant interest from
contractors for both shallow and deep-
water use. Reaction from industry use
and testing thus far has been positive,
and we received an order for our
first deep water system of significant
size (over 2,300 stations) in October
2013. We expect our OBX system to
be another game-changing system
in that it opens up new possibilities
for contractors. Because there are
no cables it has significantly less
environmental impact and a much
smaller footprint. This means the
system can be used around coral reefs
without the risk of damage to the
fragile ecosystem posed by heavy
cables. It can be deployed where
marine seismic streamers cannot and
can be used to augment streamers
in areas that were previously
inaccessible. Because our OBX module
is significantly smaller and lighter than
competing marine modular products,
it is much easier to transport, store
and deploy/recover in the demanding
conditions that frequently exist in
marine environments.

Geospace Technologies’ OBX
nodes have the advantage of
being smaller and lighter
weight than the competition,
and they’re easier to deploy
because they don’t have heavy
cables that have to be strung
around subsea obstacles.

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A smaller and lighter wireless marine
nodal seismic acquisition system like
the OBX requires less shipboard space
for storage, deployment and retrieval
operations – a major plus since ship
size is a significant cost element of
any marine survey.

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Since the OBX is relatively new in the market, it is
too early to assess its full impact on our bottom
line. However, interest continues to build and the
system holds all the promise of the land systems
to change the way contractors design and execute
their marine surveys.

On behalf of the entire Geospace Technologies team,
I want to thank Gary for his amazingly focused and
dedicated leadership these past 16 years. Without
question Gary is one of the finest leaders in this
industry and, undoubtedly, he is unique. He has built
an amazing team and organization, of which we all
are tremendously proud.

I am grateful for his guidance and friendship over
the past 30 years and look forward to continuing
on the path we all laid out many years ago. We’ve
ridden the wave that is the cyclical seismic industry
for quite some time and are preparing as best we
can for a future of growth and continued prosperity
for all of our stakeholders.

Rick Wheeler

Executive Vice President & Chief Operating Officer

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year

Ended September 30, 2013 OR

 Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-13601

GEOSPACE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

76-0447780
(I.R.S. Employer
Identification No.)

7007 Pinemont Drive
Houston, Texas 77040-6601
(Address of Principal Executive Offices)
(713) 986-4444
(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock

Name of Each Exchange on Which Registered
The NASDAQ Global Market

Securities Registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File

required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the Registrant was required to submit and post such files). Yes  No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and

will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

There were 12,948,916 shares of the Registrant’s Common Stock outstanding as of the close of business on November 18, 2013. As of March 31, 2013,
the aggregate market value of the Registrant’s Common Stock held by non-affiliates was approximately $1.4 billion (based upon the closing price of $107.92
on March 31, 2013, as reported by The NASDAQ Global Market).

Portions of the definitive proxy statement for the Registrant’s 2014 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.

DOCUMENTS INCORPORATED BY REFERENCE

Item 1. Business

Business Overview

PART I

Geospace Technologies Corporation is a Delaware corporation incorporated on September 27, 1994. Unless otherwise specified,

the discussion in this Annual Report on Form 10-K refers to Geospace Technologies Corporation and its subsidiaries. We design and
manufacture instruments and equipment used in the acquisition and processing of seismic data as well as in the characterization and
monitoring of producing oil and gas reservoirs. Demand for our products has been, and will likely continue to be, vulnerable to
downturns in the economy and the oil and gas industry in general. For more information, please refer to the risks discussed under the
heading “Risk Factors”.

We have engaged in the seismic instrument and equipment business since 1980 and market our products primarily to the oil and
gas industry. We also design, manufacture and distribute non-seismic equipment including thermal imaging equipment and industrial
products. We report and categorize our customers and products into two different segments: Seismic and Non-Seismic.

Products and Product Development

Seismic Products

Our seismic business segment accounts for the majority of our sales. Geoscientists use seismic data primarily in connection with
the exploration, development and production of oil and gas reserves to map potential and known hydrocarbon bearing formations and
the geologic structures that surround them. Our seismic product lines currently consist of land and marine nodal data acquisition
systems, seabed reservoir characterization products and services, geophones and hydrophones, leader wire, geophone string and
acquisition system connectors, telemetry cables, marine streamer retrieval and steering devices and various other products. Our
seismic products are compatible with most major competitive seismic data acquisition systems currently in use. We believe that our
seismic products are among the most technologically advanced instruments and equipment available for seismic data acquisition.

Traditional Products

An energy source and a data recording system are combined to acquire seismic data. We provide many of the components of

seismic data recording systems, including geophones, hydrophones, multi-component sensors, seismic leader wire, geophone strings,
connectors, seismic telemetry cables and other seismic related products. On land, our customers use geophones, leader wire, cables
and connectors to receive and measure seismic reflections resulting from an energy source into data recording units, which store the
seismic information for subsequent processing and analysis. In the marine environment, large ocean-going vessels tow long seismic
cables known as “streamers” containing hydrophones which are used to detect pressure changes. Hydrophones transmit electrical
impulses back to the vessel’s data recording unit where the seismic data is stored for subsequent processing and analysis. Our marine
seismic products help steer streamers while being towed and help recover streamers if they become disconnected from the vessel.

Our seismic sensor, cable and connector products are compatible with most major competitive seismic data acquisition systems

currently in use. Sales result primarily from seismic contractors purchasing our products as components of new seismic data
acquisition systems or to repair and replace components of seismic data acquisition systems already in use.

Our products used in marine seismic data acquisition include our marine seismic streamer retrieval devices (“SRDs”).

Occasionally, streamer cables are severed and become disconnected from the vessel as a result of obstacles, inclement weather, vessel
traffic or human error. Our SRDs, which are attached to the streamer cables, contain air bags which are designed to inflate
automatically at a given water depth, bringing the severed streamer cables to the surface. These SRDs save the seismic contractors
significant time and money compared to the alternative of losing the streamer cable. We also produce seismic streamer steering
devices, or “birds,” which are finlike devices that attach to the streamer cable. These birds help maintain the streamer cable at a certain
desired depth as it is being towed through the water.

Our wholly-owned subsidiary in the Russian Federation manufactures international standard geophones, sensors, seismic leader

wire, seismic telemetry cables and related seismic products for customers in the Russian Federation and other international seismic
marketplaces. We have a branch office in Colombia that primarily rents seismic equipment to our customers in the South American
market. Operating in foreign locations involves certain risks as discussed under the heading “Risk Factors – Our Foreign Subsidiaries
and Foreign Marketing Efforts Face Additional Risks and Difficulties” in this Annual Report on Form 10-K.

Wireless Products

We have developed a land-based wireless (or nodal) seismic data acquisition system. Each wireless station operates
independently and therefore can be deployed in virtually unlimited channel configurations. Rather than utilizing interconnecting
cables as required by most traditional land data acquisition systems, each wireless station operates as an independent data collection
system. As a result, our wireless system requires less maintenance, which we believe allows our customers to operate more effectively
and efficiently because of its reduced environmental impact, lower weight and ease of operation. Our wireless system is designed into
configurations ranging from one to four channels per station. Since its introduction in 2008 and through September 30, 2013, we have
sold approximately 239,000 wireless channels and have approximately 77,000 wireless channels in our rental fleet. With the recent
opening of a branch office in Bogotá, Colombia and the prospect for increasing demand for wireless rental equipment elsewhere in the
world, we expect further increases in the size of our wireless product rental fleet during the remainder of fiscal year 2014.

We have also developed a marine-based wireless seismic data acquisition system. Similar to our land wireless system, the

marine wireless system can be deployed in virtually unlimited channel configurations and does not require interconnecting cables
between each station. Our deep water versions of this marine wireless system can be deployed in depths of up to 3,000 meters.

Reservoir Products

Seismic surveys repeated over selected time intervals show dynamic changes within the reservoir and can be used to monitor the

effects of oil and gas production. In this regard, we have developed permanently installed high-definition reservoir characterization
products for ocean-bottom applications in producing oil and gas fields. We also produce a retrievable version of this ocean-bottom
system for use on fields where permanently installed systems are not appropriate or economical. Utilizing these tools, producers can
enhance the recovery of oil and gas deposits over the life of a reservoir.

Our high-definition reservoir characterization products include the HDSeis™ product line and a suite of borehole and reservoir

characterization products and services. Our HDSeis™ system is a high-definition seismic data acquisition system with flexible
architecture that allows it to be configured as a borehole seismic system or as a subsurface system for both land and marine reservoir-
monitoring projects. The scalable architecture of the HDSeis™ system enables custom designed system configuration for applications
ranging from low-channel engineering and environmental-scale surveys requiring a minimum number of recording channels to high-
channel surveys required to efficiently conduct permanent reservoir imaging and monitoring. Modular architecture allows virtually
unlimited channel expansion. In addition, multi-system synchronization features make the HDSeis™ system well suited for multi-well
or multi-site acquisition, simultaneous surface and downhole acquisition and continuous reservoir monitoring projects.

Reservoir characterization requires special purpose or custom designed systems in which portability becomes less critical and
functional reliability assumes greater importance. This reliability factor helps assure successful operations in inaccessible locations
over a considerable period of time. Additionally, reservoirs located in deep water or harsh environments require special
instrumentation and new techniques to maximize recovery. Reservoir characterization also requires high-bandwidth, high-resolution
seismic data for engineering project planning and reservoir management. We believe our HDSeis™ System and tools, designed for
cost-effective deployment and lifetime performance, will make borehole and seabed seismic acquisition a cost-effective and reliable
process for the challenges of reservoir characterization and monitoring. Our multi-component seismic product developments include
an omni-directional geophone for use in reservoir monitoring, a compact marine three-component or four-component gimbaled sensor
and special-purpose connectors, connector arrays and cases.

In regards to customer orders for our permanent reservoir monitoring systems, in February 2012 we received an $18.0 million
order from Shell Brasil Petróleo Ltda to instrument a reservoir off the coast of Brazil, and in November 2012 we received a $166.9
million order from Statoil to instrument two reservoirs in the North Sea. During the fiscal year ended September 30, 2013, we
recognized revenue of $18.0 million from delivery of the Shell order, and we recognized revenues of $109.6 million from the Statoil

order using the percentage of completion revenue recognition method. We expect to recognize the remaining $57.3 million of revenue
from the Statoil order during fiscal year 2014.

In addition, we produce seismic borehole acquisition systems which employ a fiber optic augmented wireline capable of very

high data transmission rates. These systems are used for several reservoir characterization applications, including an application
pioneered by us allowing operators and service companies to monitor and measure the results of fracturing operations.

Non-Seismic Products

Our non-seismic businesses leverage upon our existing manufacturing facilities and engineering capabilities. We have found
that many of our seismic products, with little or no modification, have direct application to industries beyond those involved in oil and
gas exploration and development. For example, our customers utilize our borehole tools to monitor subsurface carbon dioxide
injections and for mine safety applications.

Our non-seismic products include thermal imaging products targeted at the commercial graphics industry as well as various

industrial products. Our industrial products include (i) sensors and tools for vibration monitoring, mine safety application and
earthquake detection, (ii) cables for power and communication for the offshore oil and gas and offshore construction industries, and
(iii) water meter cables and other specialty cable and connector products.

Segment and Geographic Information

Effective October 1, 2012, the Company reports and categorizes its sales and products into two business segments: Seismic and
Non-Seismic. Segment data from prior periods has been reclassified to conform to these new categories. Prior to October 1, 2012, the
Company reported its business segments as Seismic and Thermal Solutions. Our Seismic product lines currently include land and
marine wireless data acquisition systems, seabed reservoir characterization products and services, geophones and hydrophones, leader
wire, geophone string and acquisition system connectors, telemetry cables, marine streamer retrieval and steering devices and various
other products. Our Non-Seismic product lines include thermal imaging and industrial products. The Company frequently has a minor
amount of Seismic product sales to its Non-Seismic customers. For a discussion of financial information by segment and geographic
area, see Note 19 to the consolidated financial statements contained in this Annual Report on Form 10-K.

Competition

Seismic Products

We believe that we are one of the world’s largest manufacturers and distributors of seismic related products. The principal
competitors in our seismic business segment for data acquisition systems, geophones, hydrophones, geophone string connectors,
leader wire and telemetry cables are SERCEL (a division of CGGVeritas), ION Geophysical (“ION”), INOVA (a joint venture formed
in 2009 between ION and Bureau of Geophysical Prospecting, a subsidiary of China National Petroleum Company) and Steward
Cable (a division of Amphenol Corporation). Furthermore, entities in China affiliated with SERCEL as well as other Chinese
manufacturers produce low-cost geophones meeting current industry standards.

We believe that the principal keys for success in the seismic instruments and equipment market are technological superiority,

product durability, reliability, and customer support. We also believe that price and product delivery are always important
considerations for our customers. In general, most customers prefer to standardize data acquisition systems, geophones and
hydrophones, particularly if they are used by seismic companies that have multiple crews which are able to support each other. This
standardization makes it difficult for competitive manufacturers to gain market share from other manufacturers with existing customer
relationships.

As mentioned above, a key factor for seismic instruments and equipment manufacturers is durability under harsh field

conditions. Instruments and equipment must meet not only rigorous technical specifications regarding signal integrity and sensitivity,
but must also be extremely rugged and durable to withstand the rigors of field use, often in harsh environments.

We believe our primary competitors for our “wireless” nodal seismic data acquisition systems are SERCEL, Fairfield Industries,

Wireless Seismic, and INOVA.

With respect to our marine seismic products, we are not aware of any competing companies that manufacture a product
functionally similar to our patented seismic streamer retrieval device. We believe our primary competitors in the manufacture of our
streamer depth positioning device, or “birds,” are ION and SERCEL.

We believe our primary competitors for our deep water cabled reservoir characterization and monitoring systems are SERCEL,

ION and Petroleum Geo-Services ASA.

We believe our primary competitors for high-definition borehole seismic data acquisition systems are Avalon and SERCEL.

We believe our primary competitors for rental of seismic equipment are Mitcham Industries, Inc. and Seismic Equipment

Solutions.

Non-Seismic Products

We believe that there are numerous competitors and competitive technologies for our thermal imaging products including other
thermal device manufacturers, and manufacturers of direct-to-screen and inkjet solutions similar to those offered by Hewlett Packard.
Our non-seismic industrial products face competition from numerous domestic and international specialty product manufacturers.

Suppliers

We purchase raw materials from a variety of suppliers located in various countries. We typically have multiple suppliers for our

critical materials.

We produce our own brand of dry thermal film internally. We also purchase a substantial quantity of dry thermal film
manufactured by Agfa-Gevaert N.V. (“AGFA”). For a discussion of the risks related to our reliance on AGFA, see “Risk Factors –
We Rely on a Key Supplier for a Significant Portion of Our Dry Thermal Film.”

We do not currently experience any significant difficulties in obtaining raw materials from our suppliers for the production of

our seismic or non-seismic products.

Product Manufacturing and Assembly

Our manufacturing and product assembly operations consist of machining or molding the necessary component parts,

configuring these parts along with components received from various vendors and assembling a final product. We manufacture
seismic equipment to the specifications of our customers. For example, we can armor cables for applications such as deep water uses.
We assemble geophone strings and seismic telemetry cables based on a number of customer choices such as length, gauge, tolerance
and color of molded parts. With regard to dry thermal film, we mix and react various chemicals to formulate a reactive layer that is
then coated onto a clear polyester film. Upon completion of our manufacturing and assembly operations, we test our final products to
the functional and, in the case of seismic equipment, environmental extremes of product specifications and inspect the products for
quality assurance. We normally manufacture and ship our products based on customer orders and, therefore, typically do not maintain
significant inventories of finished goods held for sale, although we do stock significant amounts of finished good sub-assemblies in
anticipation of future customer orders.

Markets and Customers

Our principal customers for our traditional and wireless seismic products are seismic contractors and major independent and
government-owned oil and gas companies that either operate their own seismic crews or specify seismic instrument and equipment
preferences to contractors. For our deep water reservoir characterization products, our customers are generally large international oil
and gas companies that operate long-term offshore oil and gas producing properties. Our thermal imaging customers primarily consist
of direct users of our equipment as well as specialized resellers that focus on the newsprint, silkscreen and corrugated box printing
industries. Our industrial product customers consist of specialty manufacturers, research institutions and industrial product
distributors. Revenue recognition for the Statoil order comprised 36. 5% of our revenues during fiscal year 2013. Two customers

comprised 16.9% and 11.0% of our revenues during fiscal year 2012. Two customers comprised 20.2% and 11.1% of our revenues
during fiscal year 2011. The following table describes our sales by customer type (in thousands):

Traditional seismic exploration product revenues ...........................................
Wireless seismic exploration product revenues ...............................................
Seismic reservoir product revenues .................................................................
Non-Seismic product revenues ........................................................................
Other ................................................................................................................

2011

2013

YEAR ENDED SEPTEMBER 30,
2012
$ 49,782 $ 66,849 $ 67,862
63,753
15,998
24,559
798
$ 300,607 $ 191,664 $ 172,970

87,316 82,646
138,103 15,426
24,578 25,942
801

828

Intellectual Property

We seek to protect our intellectual property by means of patents, trademarks, trade secrets and other measures. Although we do
not consider any single patent essential to our success, we consider our patents regarding our marine seismic cable retrieval devices to
be of particular value to us. These patents are scheduled to expire in 2022. At this time we are not able to predict the effect of the
patent expiration.

Research and Development

We expect to incur significant future research and development expenditures aimed at the development of additional seismic

data acquisition products and thermal imaging technologies. We have incurred company-sponsored research and development
expenses of $14.7 million, $12.2 million and $11.5 million during the fiscal years ended September 30, 2013, 2012 and 2011
respectively.

Employees

As of September 30, 2013, we employed approximately 1,333 people predominantly on a full-time basis, of which 960 were
employed in the United States, 329 in the Russian Federation and the remainder in the Canada, United Kingdom, China and Colombia.
Our employees in the Russian Federation belong to a national union for machine manufacturers. Our remaining employees are not
unionized. We have never experienced a work stoppage and consider our relationship with our employees to be satisfactory.

Financial Information by Segment and Geographic Area

For a discussion of financial information by segment and geographic area, see Note 19 to the consolidated financial statements

contained in this Annual Report on Form 10-K. For a description of risks attendant to our foreign operations, please see the risk factor
below entitled “Our Foreign Subsidiaries and Foreign Marketing Efforts Face Additional Risks and Difficulties.”

Available Information

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange
Commission (“SEC”). Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. You
may also read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please
call the SEC at 1-800-SEC-0330 for further information on their public reference room. Our SEC filings are also available to the
public on our website at http://www.geospace.com. Please note that information contained on our website, whether currently posted or
posted in the future, is not a part of this Annual Report on Form 10-K or the documents incorporated by reference in this Annual
Report on Form 10-K.

Item 1A. Risk Factors

Risk Factors

Commodity Price Levels May Affect Demand for Our Products

Demand for many of our products and the profitability of our operations depend primarily on the level of worldwide oil and gas

exploration activity. Prevailing oil and gas prices, with an emphasis on crude oil prices, and market expectations regarding potential
changes in such prices significantly affect the level of worldwide oil and gas exploration activity. During periods of improved energy
commodity prices, the capital spending budgets of oil and natural gas operators tend to expand, which results in increased demand for
our products. Conversely, in periods when these energy commodity prices deteriorate, capital spending budgets of oil and natural gas
operators tend to contract and the demand for our products generally weakens. Historically, the markets for oil and gas have been
volatile and are subject to wide fluctuation in response to changes in the supply of and demand for oil and gas, market uncertainty and
a variety of additional factors that are beyond our control. These factors include the level of consumer demand, supplies of oil and
natural gas, regional and international economic conditions, weather conditions, domestic and foreign governmental regulations
(including those related to climate change), price and availability of alternative fuels, political conditions, instability and hostilities in
the Middle East and other significant oil-producing regions, increases and decreases in foreign supply of oil and gas, the effect of
worldwide energy conservation measures, and the ability of OPEC to set and maintain production levels and prices of foreign imports.

Slow economic recovery in the United States, uncertainty in the European markets and slowing economic growth in growing

economies like those in China and India could lead to a decline in demand for crude oil and natural gas. Further slowdowns in
economic activity would likely reduce worldwide demand for energy and result in an extended period of lower crude oil and natural
gas prices. Any unexpected material changes in oil and gas prices or other market trends that adversely impact seismic exploration
activity would likely affect the demand for our products and could materially and adversely affect our results of operations and
liquidity.

Our New Products May Not Achieve Market Acceptance

Our outlook and assumptions are based on various macro-economic factors and internal assessments, and actual market
conditions could vary materially from those assumed. In recent years, we have incurred significant expenditures to fund our research
and development efforts, and we intend to continue those expenditures in the future. However, research and development is by its
nature speculative, and we cannot assure you that these expenditures will result in the development of new products or services or that
any new products and services we have developed recently or may develop in the future will be commercially marketable or profitable
to us. In particular, we have incurred substantial expenditures to develop our wireless nodal seismic data acquisition systems, as well
as other seismic products for reservoir characterization applications. In addition, we try to use some of our capabilities, particularly
our cable manufacturing capabilities, to supply products to new markets. Further, we have incurred substantial expense and expended
significant effort to develop our thermal solutions products. We cannot assure you that we will realize our expectations regarding
acceptance of and revenues generated by our new products and services in existing or new markets.

We May Experience Fluctuations in Quarterly Results of Operations

Historically, the rate of new orders for our products has varied substantially from quarter to quarter. Moreover, we typically

operate, and expect to continue to operate, on the basis of orders in-hand for our products before we commence substantial
manufacturing “runs.” The short-term nature of our order backlog for most products generally does not allow us to predict with any
accuracy demand for our products more than approximately three months in advance. Thus, our ability to replenish orders and the
completion of orders, particularly large orders for deep water reservoir characterization projects, can significantly impact our
operating results and cash flow for any quarter, and results of operations for any one quarter may not be indicative of results of
operations for future quarters. These periodic fluctuations in our operating results could adversely affect our stock price.

Our Use of Percentage-of-Completion Method of Accounting Could Result in Volatility in our Results of Operations.

We recognize revenues and profits from certain long-term contracts using the percentage-of-completion method of accounting.

Our current estimates of the contract costs and the profitability of our long-term contract, although reasonably reliable when made,
could change as a result of uncertainties associated with this type of contract. Accordingly, we review the contract price and cost

estimates periodically as our manufacturing efforts progress, and the cumulative impact of any periodic revisions to the contract price
or cost estimates will be reflected in the period in which these changes become known, including, to the extent required, the
recognition of losses at the time such losses are known and estimable, and such losses could be material. In addition, change orders
can increase (and sometimes substantially) the future scope and cost of a job. Therefore, change order awards (although frequently
beneficial in the long-term) can have the short-term effect of reducing the contract’s percentage-of-completion and thus the revenues
and profits that otherwise would be recognized to date.

Our Credit Risk Could Increase if Our Customers Face Difficult Economic Circumstances

We believe that our allowances for bad debts are adequate in light of known circumstances. However, we cannot assure you that

additional amounts attributable to uncollectible receivables and bad debt write-offs will not have a material adverse effect on our
future results of operations. Many of our seismic customers are not well capitalized and as a result cannot always pay our invoices
when due. We have in the past incurred write-offs in our accounts receivable due to customer credit problems. We have found it
necessary from time to time to extend trade credit, including promissory notes, to long-term customers and others where some risks of
non-payment exist. With the recent global financial crisis and tight commercial credit availability, some of our customers relying on
credit markets as the source of funds for their capital spending may experience significant liquidity difficulties, which increase those
credit risks. An increase in the level of bad debts and any deterioration in our credit risk could adversely affect the price of our stock.
In addition, we rent equipment to our customers that can be utilized in various countries around the world. If our rental customers
experience financial difficulties, it could be difficult or impossible to retrieve our rental equipment from foreign countries.

Our Industry is Characterized by Rapid Technological Development and Product Obsolescence

Our instruments and equipment are constantly undergoing rapid technological improvement. Our future success depends on our

ability to continue to:

improve our existing product lines,
address the increasingly sophisticated needs of our customers,



 maintain a reputation for technological leadership,
 maintain market acceptance of our products,


 develop new markets for our products and capabilities.

anticipate changes in technology and industry standards,
respond to technological developments on a timely basis, and

Current competitors or new market entrants may develop new technologies, products or standards that could render our products

obsolete. We cannot assure you that we will be successful in developing and marketing, on a timely and cost effective basis, product
enhancements or new products that respond to technological developments, that are accepted in the marketplace or that comply with
new industry standards. Additionally, in anticipation of customer product orders, from time to time we acquire substantial quantities of
inventories, which if not sold or integrated into products within a reasonable period of time, could become obsolete. In such case, we
would be required to impair the value of such inventories on our balance sheet.

We Operate in Highly Competitive Markets

The markets for most of our products are highly competitive. Many of our existing and potential competitors have substantially
greater marketing, financial and technical resources than we do. Some competitors currently offer a broader range of instruments and
equipment for sale than we do and may offer financing arrangements to customers on terms that we may not be able to match. In
addition, new competitors may enter the market and competition could intensify. As to our non-seismic thermal solutions products, we
compete with other printing solutions, including inkjet and laser printing technologies, many of which are provided by large
companies with significant resources.

We cannot assure you that sales of our products will continue at current volumes or prices if current competitors or new market

entrants introduce new products with better features, performance, price or other characteristics than our products. Competitive
pressures or other factors may also result in significant price competition that could have a material adverse effect on our results of
operations.

We Have a Limited Market for Our Seismic Products

In our seismic business segment, we generally market our traditional and wireless products to seismic service contractors. We
estimate that, based on published industry sources, fewer than 50 seismic contracting companies are currently operating worldwide
(excluding those operating in the Russian Federation and the former Soviet Union, India, the People’s Republic of China and certain
Eastern European countries, where seismic data acquisition activity is difficult to verify). We estimate that fewer than 20 seismic
contractors are engaged in marine seismic exploration. Due to these market factors, a relatively small number of customers, some of
whom are experiencing financial difficulties, have accounted for most of our sales. From time to time these seismic contractors have
sought to vertically integrate and acquire our competitors, which has influenced their supplier decisions before and after such
transactions. In addition, consolidation among our customers may further concentrate our business to a limited number of customers
and expose us to increased risks related to dependence on a small number of customers. The loss of a small number of these customers
could materially and adversely impact sales of our seismic products. We market our seabed permanent reservoir monitoring systems
products to large oil and gas companies. Since this product’s introduction in 2002, we have received system orders from three
offshore oil and gas operators including BP, Shell and Statoil which has accounted for a significant portion of our revenue in this and
prior fiscal years. If we do not receive new large orders for our permanent reservoir monitoring systems, our future revenues and
profits from this product segment will decline significantly.

We Cannot Be Certain of the Effectiveness of Patent Protection

We hold and from time to time apply for certain patents relating to some of our seismic data acquisition and other products. We

also own several patents which relate to the development of dry thermal film. We cannot assure you that our patents will prove
enforceable or free of challenge, that any patents will be issued for which we have applied or that competitors will not develop
functionally similar technology outside the protection of any patents we have or may obtain.

Our Foreign Subsidiaries and Foreign Marketing Efforts Face Additional Risks and Difficulties

Based on customer billing data, sales to foreign customers outside the United States accounted for approximately 71% of our
sales during fiscal year 2013; however, we believe the percentage of sales outside the United States is much higher as many of our
products are first delivered to a domestic location and ultimately shipped to a foreign location. We again expect sales outside of the
United States to represent a substantial portion of our sales for fiscal year 2014 and subsequent years.

Foreign sales are subject to special risks inherent in doing business outside of the United States, including the risk of war,

terrorist activities, civil disturbances, embargo and government activities and foreign attitudes about conducting business activities
with the United States, restrictions of the movement and exchange of funds, inhibitions of our ability to collect accounts receivable,
international sanctions, expropriation and nationalization of our assets or those of our customers, currency fluctuations, devaluations
and conversion restrictions, confiscatory taxation or other adverse tax policies and governmental actions that may result in the
deprivation of our contractual rights, all of which may disrupt markets or our operations.

A portion of our manufacturing is conducted through our subsidiary Geospace Technologies Eurasia, which is based in the
Russian Federation. Our business could be directly affected by political and economic conditions in the Russian Federation. Boycotts,
protests, governmental sanctions and other actions in the region could adversely affect our ability to operate profitably. The risk of
doing business in the Russian Federation and other economically or politically volatile areas could adversely affect our operations and
earnings. Foreign sales are also generally subject to the risk of compliance with additional laws, including tariff regulations and import
and export restrictions. Sales into certain foreign countries require prior U.S. government approval in the form of an export license.
We cannot assure you that we will not experience difficulties in connection with future foreign sales. Also due to foreign laws and
restrictions, should we experience substantial growth in certain foreign markets, for example in the Russian Federation, we may not be
able to transfer cash balances to the United States to assist with debt servicing or other obligations.

Unfavorable Currency Exchange Rate Fluctuations Could Adversely Affect Our Results of Operations

Substantially all of our third-party sales from the United States are made in U.S. dollars, though from time to time we may make

sales in foreign currencies including intercompany sales. As a result, we may be subject to foreign currency fluctuations on our sales.
The reporting currency for our financial statements is the U.S. dollar. However, the assets, liabilities, revenues and costs of our

Russian, Canadian, United Kingdom and Colombian subsidiaries are denominated in currencies other than U.S. dollars. To prepare
our consolidated financial statements, we must translate those assets, liabilities, revenues and expenses into U.S. dollars at then-
applicable exchange rates. Consequently, increases and decreases in the value of the U.S. dollar versus these other currencies will
affect the amount of these items in our consolidated financial statements, even if their value has not changed in their original currency.
These translations could result in significant changes to our results of operations from period to period. For the fiscal year ended
September 30, 2013, approximately 14.3% of our consolidated revenues related to the operations of our foreign subsidiaries.

We Have a Relatively Small Public Float, and Our Stock Price May be Volatile

In October 2012, we implemented a 2-for-1 split of our common stock effected in the legal form of a stock dividend. Other than

the disclosure of the authorized number of shares of our common stock, we have adjusted all share and per-share disclosures for all
periods presented in our consolidated financial statements to give effect to the stock split. Despite our recent 2-for-1 stock split, at
September 30, 2013, we have approximately 12.6 million shares outstanding held by non-affiliates. This small float results in a
relatively illiquid market for our common stock. Our daily trading volume for the year ended September 30, 2013 averaged
approximately 146,000 shares. Our small float and daily trading volumes have in the past caused, and may in the future result in,
significant volatility in our stock price.

We Rely on a Key Supplier for a Significant Portion of Our Dry Thermal Film

While we currently manufacture dry thermal film, we also purchase a large quantity of dry thermal film from a European

manufacturer through its distributor in the United Kingdom. Except for the film produced by us and sold to us by this
manufacturer/distributor, we know of no other source for dry thermal film that performs well in our thermal imaging equipment. If we
are unable to economically manufacture dry thermal film internally or the European manufacturer/distributor we rely on were to
discontinue producing dry thermal film, were to become unwilling to contract with us on competitive terms or were unable to supply
dry thermal film in sufficient quantities to meet our requirements, our ability to compete in the thermal imaging marketplace could be
impaired, which could adversely affect our financial performance.

Our Success Depends Upon a Limited Number of Key Personnel

Our success depends on attracting and retaining highly skilled professionals. A number of our employees are highly skilled
engineers and other professionals. In addition, our success depends to a significant extent upon the abilities and efforts of the members
of our senior management team. If we fail to continue to attract and retain such professionals, our ability to compete in the industry
could be adversely affected.

A General Downturn in the Economy in Future Periods May Adversely Affect Our Business

Slow economic recovery in the United States, uncertainty in the European markets and slowing growth in China and India and
any other economic slowdown in future periods, could adversely affect our business in ways that we cannot predict. During times of
economic slowdown, our customers may reduce their capital expenditures and defer or cancel pending projects and product orders.
Such developments occur even among customers that are not experiencing financial difficulties. Any economic downturn may
adversely affect the demand for oil and gas generally or cause volatility in oil and gas commodity prices and, therefore, adversely
affect the demand for delivery of our products to the oil and gas industry. It could also adversely affect the demand for consumer
products, which could in turn adversely affect our thermal solutions business. To the extent these factors adversely affect other seismic
companies in the industry, there could be an oversupply of products and services and downward pressure on pricing for seismic
products and services, which could adversely affect us. Additionally, bankruptcies or financial difficulties among our customers could
reduce our cash flows and adversely impact our liquidity and profitability. See “We Have a Limited Market for Our Seismic
Products,” above.

We Have a Minimal Disaster Recovery Program at our Houston Facilities

Due to its proximity to the Texas Gulf Coast, our facilities in Houston, Texas are annually subject to the threat of hurricanes,

and the aftermath that follows. Hurricanes may cause, among other types of damage, the loss of electrical power for extended periods
of time. If we lost electrical power at our Pinemont facility, or if a fire or other natural disaster occurred, we would be unable to
continue our manufacturing operations during the power outage because we do not own a generator or any other back-up power source
large enough to provide for our manufacturing power consumption needs. We have a back-up generator to provide power for our
information technology operations. Although we store our back-up data offsite, we do not maintain an alternative facility to run our
information technology operations. Additionally, we do not have an alternative manufacturing or operating location in the United
States. A significant disruption in our manufacturing and information technology operations could materially and adversely affect our
business operations during an extended period of a power outage, fire or other natural disaster.

The Credit Agreement Imposes Restrictions on Our Business

We and several of our subsidiaries are parties to a credit agreement with a bank. The credit agreement contains covenants and

requires maintenance of certain financial ratios and tests, which impose restrictions on our business and on the business of our
guarantor-subsidiaries. Our ability to comply with these restrictions may be affected by events beyond our control, including, but not
limited to, prevailing economic, financial, and industry conditions and continuing declines in our sales of products. The breach of any
of these covenants or restrictions, as well as any failure to make a payment of interest or principal when due, could result in a default
under the credit agreement. Such a default would permit our lender to declare amounts borrowed from it to be due and payable,
together with accrued and unpaid interest, and the ability to borrow under the credit agreement could be terminated. If we are unable
to repay debt to our lender, the lender could proceed against the collateral securing that debt. While we intend to seek alternative
sources of cash in such a situation, there is no guarantee that any alternative cash source would be available, or would be available on
terms favorable to us.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of September 30, 2013, our operations included the following locations:

Location
Houston, Texas ..........
Houston, Texas ..........
Houston, Texas ..........
Houston, Texas ..........
Houston, Texas ..........
Houston, Texas ..........
Ufa, Bashkortostan,

Approximate
Square Footage/Acreage

Owned/Leased
Owned
Owned
Owned
Owned
Owned
Leased

387,000
77,000
30,000
9.6 acres
7.7 acres
38,000

Russia ....................

Owned
Calgary, Alberta, Canada Owned
Luton, Bedfordshire,
England .................
Beijing, China ............
Bogota, Colombia ......

Owned
Leased
Owned

120,000
45,000

8,000
1,000
19,000

Use
See Note 1 below
See Note 2 below
See Note 3 below
See Note 4 below
See Note 5 below
See Note 6 below

Segment

Seismic and non-seismic
Corporate
Seismic
Seismic
Seismic
Seismic

Manufacturing, sales and service Seismic
Manufacturing, sales and service Seismic and non-seismic

Sales and service
Sales and service
Sales and service

Non-seismic
Seismic
Seismic

While we believe that our facilities are adequate for our immediate needs, we are currently evaluating plans for the expansion of

our Houston manufacturing and engineering facilities.

(1) This property is located at 7007 Pinemont Drive in Houston, Texas (the “Pinemont facility”). The Pinemont facility

contains substantially all manufacturing activities and all engineering, selling, marketing and administrative activities for
our company in the United States. The Pinemont facility also serves as our company headquarters.

(2) This property, located at 7334 N. Gessner in Houston, Texas, previously contained a manufacturing operation and certain
support functions. In February 2006, we entered into a lease agreement with a tenant. The lease agreement, as amended in
2009, requires the tenant to lease the entire building through July 31, 2020.

(3) This property is located at 6410 Langfield Road in Houston, Texas. This facility provides additional warehousing and

testing capacity for our manufacturing operations.

(4) This property is located adjacent to the Pinemont Facility. This tract of land is currently being used as additional parking
for the Pinemont Facility. We are evaluating expansion plans which are expected to more fully utilize this property.
(5) This property is located adjacent to the Pinemont Facility. This tract of land has a large concrete parking lot and two

buildings that will likely have little or no utility to the company. We are evaluating expansion plans which are expected to
more fully utilize this property.

(6) This property is located at 6855 Wynnwood, Houston, Texas. This property is used to assemble products and to

warehouse inventories for our seismic segment.

Item 3. Legal Proceedings

We are involved in various pending or potential legal actions in the ordinary course of our business. Management is unable to

predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. However, management believes that the
most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position,
results of operations or cash flows.

Item 4. Mine Safety Disclosures

None.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

The following graph compares the performance of the Company’s common stock with the performance of the Russell 2000

index and the Standard & Poor’s Oil & Gas Equipment and Services index as of each of the dates indicated.

The graph assumes $100 invested on September 30, 2008 (a) in the Company’s common stock, (b) in the stocks comprising the

Russell 2000 index on that day and (c) in the stocks comprising the Standard & Poor’s Oil & Gas Equipment and Services index on
that day. Reinvestment of all dividends on stocks comprising the two indices is assumed. The foregoing graphs are based on historical
data and are not necessarily indicative of future performance. These graphs shall not be deemed to be “soliciting material” or to be
“filed” with the Securities and Exchange Commission or subject to the Regulations of 14A or 14C under the Exchange Act or to the
liabilities of Section 18 of the Exchange Act.

Our common stock is traded on The NASDAQ Global Market under the symbol “GEOS”. On November 18, 2013, there were
approximately 12 holders of record of our common stock, and the closing price per share on such date was $103.55 as quoted by The
NASDAQ Global Market.

In October 2012, we implemented a 2-for-1 split of our common stock effected in the legal form of a stock dividend. Other than

The following table shows the high and low per share sales prices for our common stock reported on The NASDAQ Global

Market.

Year Ended September 30, 2013:

Fourth Quarter .........................................................................................................................
Third Quarter ...........................................................................................................................
Second Quarter ........................................................................................................................
First Quarter .............................................................................................................................

Year Ended September 30, 2012:

Low

High

66.87 $
65.31
82.28
57.00

84.82
108.86
113.73
89.13

41.87 $
40.31
37.96
25.87

61.75
58.92
58.00
45.88

Since our initial public offering in 1997, we have not paid dividends, and we do not intend to pay cash dividends on our
common stock in the foreseeable future. We presently intend to retain our earnings for use in our business, with any future decision to
pay cash dividends dependent upon our growth, profitability, financial condition and other factors our Board of Directors may deem
relevant. Our existing credit agreement also has covenants that materially limit our ability to pay dividends. For a discussion of our
credit agreement, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operation –
Liquidity and Capital Resources” contained in this Annual Report on Form 10-K.

The following equity plan information is provided as of September 30, 2013:

Equity Compensation Plan Information

Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (a)

Weighted-average
Exercise Price of
Outstanding Options,
Warrants and Rights (b)

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column (a)) (c)

106,050

18.61

184,350

Plan Category
Equity Compensation Plans Approved
by Security Holders .......................

Item 6. Selected Consolidated Financial Data

The following table sets forth certain selected historical financial data on a consolidated basis. We have derived the selected
consolidated financial information as of September 30, 2013 and 2012 and for fiscal years 2013, 2012 and 2011 from our audited
consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. We have derived the selected
consolidated financial information as of September 30, 2011, 2010 and 2009 and for fiscal years 2010 and 2009 from audited
consolidated formation not included herein. The selected consolidated financial data should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in item 7 and our consolidated financial
statements appearing elsewhere in this Annual Report on Form 10-K.

Year Ended September 30,

2013

2012

2011

2010

2009

(in thousands, except share and per share amounts)

Statement of Operations Data:
Sales ....................................................................
Cost of sales ........................................................
Gross profit .........................................................
Operating expenses:

Selling, general and administrative ...........
Research and development ........................
Bad debt expense (recovery) .....................
Total operating expenses .....................................
Income from operations ......................................
Other income (expense), net ...............................
Income before income taxes ...............................
Income tax expense .............................................
Net income ..........................................................
Net income per share:

Basic (1) ....................................................

Diluted (1) .................................................

Weighted average shares outstanding:

300,607 $
160,846
139,761

191,664 $
109,600
82,064

172,970 $
98,857
74,113

128,533 $
81,307
47,226

23,383
14,694
457
38,534
101,227
(134)
101,093
31,536
69,557 $

18,914
12,167
118
31,199
50,865
997
51,862
16,744
35,118 $

18,051
11,529
128
29,708
44,405
214
44,619
14,908
29,711 $

16,672
9,925
(479)
26,118
21,108
(206)
20,902
6,820
14,082 $

92,860
66,299
26,561

14,572
8,062
318
22,952
3,609
(298)
3,311
1,551
1,760

5.40 $

5.38 $

2.76 $

2.74 $

2.39 $

2.36 $

1.17 $

1.14 $

0.15

0.14

Basic (1) ....................................................
Diluted (1) .................................................

12,886,372 12,735,520 12,441,313 12,062,627 11,900,805
12,938,661 12,836,239 12,572,647 12,386,036 12,158,756

Other Financial Data:
Depreciation, amortization and stock-based

compensation expenses ..................................
Capital expenditures ............................................

12,773 $
41,659

10,349 $
35,729

7,783 $
20,144

5,629 $
6,117

5,472
1,709

2013

2012

2011

2010

2009

As of September 30,

(in thousands)

Balance Sheet Data:
Working capital ...................................................
Total assets ..........................................................
Short-term debt ...................................................
Long-term debt ....................................................
Stockholders’ equity ...........................................

198,464 $
327,225
—
931
289,058

146,036 $
259,022
—
—
214,987

124,900 $
196,801
—
—
177,013

91,577 $
163,496
440
7,260
136,586

82,842
141,482
728
8,820
118,658

(1)

We did not declare or pay any cash dividends during any of the periods noted in the above tables.
In October 2012, we implemented a 2-for-1 split of our common stock effected in the legal form of a stock dividend.
Other than the disclosure of the authorized number of shares of our common stock, we have adjusted all share and per-
share disclosures for all periods presented in our consolidated financial statements.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of the major elements of our consolidated financial statements. You

should read this discussion and analysis together with our consolidated financial statements, including the accompanying notes, and
other detailed information appearing elsewhere in this Annual Report on Form 10-K, including under the heading “Risk Factors”. The
discussion of our financial condition and results of operations includes various forward-looking statements about our markets, the
demand for our products and services and our future plans and results. These statements are based on assumptions that we consider to
be reasonable, but that could prove to be incorrect. For more information regarding our assumptions, you should refer to the section
entitled “Forward-Looking Statements and Assumptions” contained in this Item 7 in this Annual Report on Form 10-K.

Background

We design and manufacture instruments and equipment used by the oil and gas industry to acquire seismic data in order to

locate, characterize and monitor hydrocarbon producing reservoirs. The company also designs and manufactures non-seismic
products, including industrial products, offshore cables, thermal printing equipment and film. See the information under the heading
“Business” in this Annual Report on Form 10-K.

Consolidated Results of Operations

As we have reported in the past, our sales and operating profits have varied significantly from quarter-to-quarter, and even year-
to-year, and are expected to continue that trend in the future, especially when our quarterly or annual financial results are impacted by
the presence or absence of relatively large, but somewhat erratic, shipments of permanent seabed reservoir monitoring systems and/or
wireless data acquisition systems for land and marine applications.

We report and evaluate financial information for two segments: Seismic and Non-Seismic. Summary financial data by business

segment follows (in thousands):

Year Ended September 30,
2012

2013

2011

Seismic

Traditional exploration product revenues ..............................................................
Wireless exploration product revenues ..................................................................
Reservoir product revenues ...................................................................................
Total sales ..............................................................................................................
Operating income ..................................................................................................

49,781 $
87,316
138,103
275,200
110,118

66,849 $
82,646
15,426
164,921
55,990

67,862
63,753
15,998
147,613
49,486

Non-Seismic

Sales .......................................................................................................................
Operating income ..................................................................................................

24,578
3,344

25,942
4,479

24,559
3,954

Corporate

Sales .......................................................................................................................
Operating loss ........................................................................................................

829
(12,235 )

801
(9,604)

798
(9,035)

Consolidated Totals

300,607
101,227

191,664
50,865

172,970
44,405

Overview

Fiscal Year 2013 Compared to Fiscal Year 2012

Consolidated sales for fiscal year 2013 increased $108.9 million, or 56.8%, from fiscal year 2012. This increase in sales reflects

greater demand for our seismic permanent reservoir monitoring products.

Consolidated gross profit for fiscal year 2013 increased by $57.7 million, or 70.3%, from fiscal year 2012. The increase in gross

profit resulted from increased sales of our permanent reservoir monitoring products.

Consolidated operating expenses for fiscal year 2013 increased $7.3 million, or 23.5%, from fiscal year 2012. The increase in

operating expenses reflects higher personnel costs and other general expense increases associated with our sales growth and asset
expansion.

The U.S. statutory tax rate applicable to us for fiscal years 2013 and 2012 was 35.0%; however, our effective tax rate was 31.2%

and 32.3% for fiscal years 2013 and 2012, respectively. The lower effective tax rate for both fiscal years resulted from (i) the impact
of the manufacturers’/producers’ deduction available in the United States, and (ii) research and experimentation tax credits.

Fiscal Year 2012 Compared to Fiscal Year 2011

Consolidated sales for fiscal year 2012 increased $18.7 million, or 10.8%, from fiscal year 2011. The higher level of sales

resulted from increased customer demand for our seismic products and particularly robust demand for sales and rentals of our land-
based wireless (or nodal) data acquisition systems. The increased demand for our seismic products is being driven by strong oil and
gas exploration activities throughout the world.

Consolidated gross profit for fiscal year 2012 increased by $8.0 million, or 10.7%, from fiscal year 2011. The increase in gross

profits resulted from increased sales and rentals of our seismic products.

Consolidated operating expenses for fiscal year 2012 increased $1.5 million, or 5.0%, from fiscal year 2011. The increase in
operating expenses resulted from expanded activities associated with our sales growth, and from increased incentive compensation
expenses.

The U.S. statutory tax rate applicable to us for fiscal years 2012 and 2011 was 35.0%; however, our effective tax rate was 32.3%

and 33.4% for fiscal years 2012 and 2011, respectively. The lower effective tax rate for both fiscal years resulted from (i) the impact
of the manufacturers’/producers’ deduction available in the United States, (ii) lower tax rates applicable to income earned in foreign
tax jurisdictions and (iii) research and experimentation tax credits.

Segment Results of Operations

Seismic Products

Fiscal Year 2013 Compared to Fiscal Year 2012

Sales

Sales of our seismic products for the fiscal year ended September 30, 2013 increased by $110.3 million, or 66.9%, from the

prior fiscal year. The components of this increase include the following:

 Traditional Product Sales and Rentals – For the fiscal year ended September 30, 2013, revenues from our traditional

products decreased $17.1 million, or 25.5%, from the corresponding period of the prior fiscal year. The decline in revenues
resulted from lower demand for our geophone products, marine products and connector products. We believe this decline in
sales of our traditional products is partially due to a general decline in seismic exploration activities in North America
caused by producers focusing investment activities on oil and gas distribution infrastructure during 2013. With increasing
production and declining demand for crude oil in North America, we believe the market for many of our traditional seismic
products could remain challenged in future periods.

 Wireless Product Sales and Rentals – For the fiscal year ended September 30, 2013, sales and rental revenues from our land
and marine wireless products increased by $4.7 million, or 5.7%, from the prior fiscal year. During fiscal year 2013, we
sold approximately 81,000 channels of land wireless systems, including the sale of 33,000 channels of used wireless
equipment from our rental fleet which generated revenues of $22.9 million. We believe demand for land and marine
wireless channel sales and rentals, although erratic from quarter-to-quarter, will continue into the future and reflects the
seismic industry’s acceptance of our wireless systems in lieu of less efficient legacy cable-based systems. This product line
represents a significant part of our revenues and quarterly fluctuations can significantly impact our operating income.

 Reservoir Product Sales, Rentals and Services – For the fiscal year ended September 30, 2013, revenues from our reservoir
products increased $122.7 million, or 795.3%, from the prior fiscal year. During the year ended September 30, 2013, we
recorded revenues of approximately $18.0 million for delivery of a reservoir characterization system to Shell Brasil
Petróleo Ltda and we recognized revenues under the percentage of completion method of approximately $109.6 million
from production of the Statoil order. Revenues from our reservoir products, which in recent years primarily reflected sales
of our seismic borehole tools, have historically been erratic.

The rate of new customer orders for our seismic products, especially large orders for our wireless, marine, borehole and subsea

reservoir products, generally occur irregularly thereby making it difficult for us to predict our sales and production levels each quarter.
Furthermore, product shipping dates are generally determined by our customers and are not at our discretion. As a result, these factors
have caused past sales of our seismic products to be unpredictable and we expect this trend to continue into the future.

Operating Income.

Operating income for fiscal year 2013 increased $54.1 million, or 96.7%, from fiscal year 2012. The higher level of operating

income resulted primarily from the recognition of revenues from our permanent reservoir monitoring systems.

Fiscal Year 2012 Compared to Fiscal Year 2011

Sales

Sales of our seismic products for the fiscal year ended September 30, 2012 increased by $17.3 million, or 11.7%, from the prior

fiscal year. The components of this increase include the following:

 Traditional Product Sales and Rentals – For the fiscal year ended September 30, 2012, revenues from our traditional

products decreased $1.0 million, or 1.5%, from the corresponding period of the prior fiscal year. This decline in revenues
primarily resulted from reduced shipments of marine products and was partially offset by increased sales of geophones and
connectors.

 Wireless Product Sales and Rentals – For the fiscal year ended September 30, 2012, revenues from our wireless products

increased by $18.9 million, or 29.6%, from the prior fiscal year. During fiscal year 2012, we sold approximately 73,000
channels of land wireless systems, including the sale of 29,000 channels of used wireless equipment from our rental fleet
which generated revenues of $19.0 million. The increase in revenues resulted from the continued industry acceptance of our
wireless systems in lieu of less efficient legacy cable-based systems.

 Reservoir Product Sales, Rentals and Services – For the fiscal year ended September 30, 2012, revenues from our reservoir
products decreased $0.6 million, or 3.6%, from the prior fiscal year. Revenues from these products, which in recent years
primarily include our seismic borehole tools, have historically been erratic. Due to the recent receipt of large orders for our
permanent seabed reservoir monitoring systems, we expect revenues for our reservoir products to increase significantly in
future years.

Operating Income.

Operating income for fiscal year 2012 increased $6.5 million, or 13.1%, from fiscal year 2011. The higher level of operating

income resulted from increased wireless product sales and the recognition of revenues from our reservoir products.

Non-Seismic Products

Fiscal Year 2013 Compared to Fiscal Year 2012

Sales.

Sales of our non-seismic products for the year ended September 30, 2013 decreased by $1.4 million, or 5.3%, from fiscal year
2012. This decrease is primarily due to lower sales of our thermal solutions and industrial sensor products to our European customers
which appear to have been impacted by the region’s economic crisis. We expect the European market for sales of our non-seismic
products to remain challenging during fiscal year 2014.

Operating Income.

Our operating income associated with sales of our non-seismic products for the year ended September 30, 2013 decreased $1.1
million, or 25.3%, from the corresponding period of the prior fiscal year. The decrease in operating income resulted from lower sales
levels, and lower profit margins due to less favorable sales mix and higher operating expenses.

Fiscal Year 2012 Compared to Fiscal Year 2011

Sales.

Sales of our non-seismic products for fiscal year 2012 increased $1.4 million, or 5.6%, from fiscal year 2011. This increase

resulted from higher sales of our offshore cable products, and was partially offset by a decrease in sales of our thermal imaging
products.

Operating Income.

Our operating income from our non-seismic products for fiscal year 2012 increased $0.5 million, or 13.3%, from fiscal year

2011. The increase in operating income resulted from increased product sales.

Incentive Compensation Program

We adopted an incentive compensation program for fiscal year 2013 whereby most employees will be eligible to begin earning
incentive compensation if the Company reaches a five percent pretax return on stockholders’ equity, determined as of September 30,
2012. To be eligible to participate in this incentive compensation program, employees must participate in our Core Values Program.
Based on our experience in prior years, we expect one hundred percent of our eligible employees to participate in the Core Values
Program. The incentive compensation program does not apply to the employees of our subsidiary in the Russian Federation since such
employees participate in a locally administered bonus program. Certain non-executive employees are required to achieve specific
goals to earn a significant portion of their total incentive compensation award. Any bonus awards earned under this program in fiscal
year 2013 will be paid out to eligible employees after the end of the fiscal year.

Upon reaching the five percent threshold under this proposed program, an incentive compensation accrual will be established
equal to 16.7 percent of the amount of any consolidated pretax profits above the five percent pretax return threshold. The maximum
aggregate bonus available under the program for fiscal year 2013 was $6.5 million. For the fiscal years ended September 30, 2013 and
2012, we had accrued $6.5 million and $5.7 million, respectively, of incentive compensation expense.

Liquidity and Capital Resources

Fiscal Year 2013

At September 30, 2013, we had $2.7 million in cash and cash equivalents. For fiscal year 2013, we used approximately $57.2

million of cash from operating activities. Sources of cash generated in our operating activities included our net income of $69.6
million. Additional sources of cash included net non-cash charges of $13.1 million for deferred income taxes, depreciation,
amortization, accretion, stock-based compensation, inventory obsolescence and bad debts and a $3.3 million increase accrued
expenses and other. These sources of cash were offset by uses of cash which included (i) a $73.4 million increase in inventories due to
current and expected future production for the Statoil order and for production of marine and land wireless products in anticipation of
future orders, (ii) a $33.7 million increase in trade accounts and notes receivable primarily resulting from increased sales and the
timing of cash collections, (iii) a $13.6 million adjustment to transfer gross profits from rental equipment sales to investing activities
since such transactions involve the sale of long-lived assets, (iv) a $12.4 million increase in costs and estimated earnings in excess of
billings for the Statoil order, (v) a $7.5 million decrease in deferred revenue primarily due to the revenue recognition of advance
payments received from Shell Brasil Petróleo Ltda, (vi) a $1.1 million decrease in income tax payable resulting from the timing of our
income tax payments, (vii) a $0.7 million increase in prepaid income taxes related to intercompany product sales, (viii) a $0.5 million
increase in prepaid expenses and other current assets due to vendor prepayment requirements and tax deposits and (iv) a $0.4 million
decrease in accounts payable due to the timing of payments to our vendors.

For fiscal year 2013, we generated approximately $3.4 million of cash from investing activities. We generated $25.5 million of

cash proceeds from the sale of used rental equipment and we generated $19.6 million of cash proceeds from the sale of short-term
investments. These cash proceeds were offset by an investment of $22.3 million to expand our rental equipment fleet to meet
customer demand, and a $19.4 million investment in other property and equipment, including $8.5 million of real property
acquisitions in Houston and Bogotá. We estimate that our capital expenditures for rental equipment in fiscal year 2014 could be
approximately $30 million or more, excluding non-cash transfers from our inventory account. In addition, we estimate that other
capital expenditures for property and equipment could be approximately $30 million, including approximately $13 million for the in-
process construction expenditures relating to the expansion of our Houston manufacturing and engineering facilities. We expect these
capital expenditures will be financed from our cash on hand, internal cash flow, rental equipment sales proceeds and/or from
borrowings under our Credit Agreement.

For fiscal year 2013, we generated approximately $5.8 million of cash from financing activities. We generated $4.8 million
from the exercise of stock options and related tax benefits and we borrowed $0.9 million under our Credit Facility for working capital
purposes. Such borrowings were subsequently repaid during October 2013.

Fiscal Year 2012

At September 30, 2012, we had $50.8 million in cash and cash equivalents. In addition, we had $20.0 million of short-term
investments at September 30, 2012. For fiscal year 2012, we generated approximately $43.2 million of cash from operating activities.
The primary sources of cash generated in our operating activities resulted from net income of $35.1 million. Additional sources of
cash included net non-cash charges of $13.3 million for deferred income tax expense, depreciation, amortization, stock-based
compensation, inventory obsolescence and bad debts. Other sources of cash from operating activities included (i) a $12.2 million
increase in accounts payable due to increased purchases of raw materials, (ii) a $7.9 million increase in deferred revenue resulting
from an increase in the amount of advanced payments received from our customers, (iii) a $3.8 million decrease in trade accounts and
notes receivable primarily resulting from improved cash receipts from customers during fiscal year 2012, and (iv) a $0.6 million
increase in accrued expenses and other, including a $1.6 million increase in incentive compensation expenses due to increased
consolidated pretax earnings. These sources of cash were offset by (i) a $15.6 million increase in inventories due to increasing levels
of work-in-process resulting from known and anticipated product orders, rental equipment demands and the production of a permanent
seabed acquisition for Shell Brasil Petróleo Ltda , (ii) a $10.0 million adjustment to transfer gross profits from rental equipment sales
to investing activities since such transactions involve the sale of long-lived assets, and (iii) a $4.5 million increase in prepaid income
taxes related to intercompany sales.

For fiscal year 2012, we used approximately $26.3 million of cash in investing activities. The uses of cash primarily resulted
from (i) our investment of $31.7 million for rental equipment, (ii) $4.0 million of capital expenditures for property and equipment, and
(iii) a $14.8 million net increase in our short-term investments. In addition, we transferred $2.0 million of inventories to our rental
equipment during fiscal year 2011 which had a non-cash impact. The uses of cash outlined above were partially offset by $24.2
million of proceeds from the sale of used rental equipment.

For fiscal year 2012, we generated approximately $2.5 million of cash in the financing activities from the exercise of stock

options and related tax benefits.

Fiscal Year 2011

At September 30, 2011, we had $31.4 million in cash and cash equivalents. For fiscal year 2011, we generated approximately
$1.1 million of cash in operating activities. Sources of cash generated in our operating activities resulted from net income of $29.7
million. Additional sources of cash included net non-cash charges of $11.8 million for deferred income tax benefit, depreciation,
amortization, stock-based compensation, inventory obsolescence and bad debts. Other sources of cash included (i) a $2.0 million
decrease in trade accounts and notes receivable primarily resulting from improved cash receipts from customers during fiscal year
2011, (ii) a $1.8 million increase in accrued expenses and other, primarily resulting from an increase of $0.8 million for incentive
compensation expenses due to increased consolidated pretax earnings, and a $0.7 million increase in warranty accruals due to
increased potential warranty exposure resulting from increased product sales, and (iii) a $1.2 million increase in accounts payable due
to increased purchases of raw materials. These sources of cash were offset by (i) a $29.5 million increase in inventories due to the
replenishment of low levels of our wireless data acquisition system inventories, and increasing levels of work-in-process resulting

from product orders and anticipated demand for wireless data acquisition system sales and rentals, (ii) a $11.2 million adjustment to
transfer gross profits from rental equipment sales to investing activities since such transactions involve the sale of long-lived assets,
(iii) a $2.5 million increase in other current assets resulting from the advanced payment of income taxes in certain tax jurisdictions,
(iv) a $1.7 million decrease in income tax payable resulting from the payment of income taxes owed on our pretax profits, and (v) a
$0.6 million decrease in deferred revenue resulting from a reduction in the amount of advanced payments received from our
customers.

For fiscal year 2011, we used approximately $5.2 million of cash in investing activities. The uses of cash primarily resulted
from (i) our investment of $15.4 million for rental equipment, (ii) $4.7 million of capital expenditures for property and equipment, and
(iii) a $4.9 million investment in short-term investments. In addition, we transferred $0.2 million of inventories to our rental
equipment during fiscal year 2011 which had a non-cash impact. The uses of cash outlined above were partially offset by $19.9
million of proceeds from the sale of used rental equipment.

For fiscal year 2011, we generated approximately $2.0 million of cash in the financing activities of our operations. During fiscal
year 2011, we generated $9.7 million of proceeds from the exercise of stock options and related tax benefits. Partially offsetting these
proceeds was a $7.7 million cash payment to pay off a mortgage loan obligation.

On March 2, 2011, we entered into a credit agreement with a bank. On September 27, 2013, we amended the credit agreement

and increased the borrowing availability to $50.0 million (as amended, the “Credit Agreement”). Our borrowings are principally
secured by our accounts receivable, inventories and equipment. In addition, certain of our domestic subsidiaries have guaranteed our
obligations under the Credit Agreement and such subsidiaries have secured the obligations by the pledge of certain of the assets of
such subsidiaries. The Credit Agreement expires on April 27, 2016 and all borrowed funds are due and payable at that time. We are
required to make quarterly interest payments on borrowed funds. The Credit Agreement limits the incurrence of additional
indebtedness, requires the maintenance of certain financial ratios, restricts us and our subsidiaries’ ability to pay cash dividends and
contains other covenants customary in agreements of this type. The interest rate for borrowings under the Credit Agreement is a
LIBOR based rate with a margin spread of 250-325 basis points depending upon the maintenance of certain ratios. At September 30,
2013, we were in compliance with all covenants. At September 30, 2013 and 2012, there were borrowings of $0.9 million and zero,
respectively, outstanding under the Credit Agreement. There were standby letters of credit outstanding in the amount of $42,000 and
additional borrowings available were $49.1 million. Please see “Risk Factors” for more information about the restrictive covenants
imposed on us by the Credit Agreement.

Off-Balance Sheet Arrangements

We do not have any obligations which meet the definition of an off-balance sheet arrangement and which have or are reasonably

likely to have a current or future effect on our financial statements or the items contained therein that are material to investors.

Contractual Obligations

For information regarding our contractual obligations over the course of the next five years, please refer to Note 10 and Note 17
to our consolidated financial statements contained in this Annual Report, which provide detailed information regarding repayment of
our Credit Agreement and an operating lease.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires

the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We
consider many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the
estimates and assumptions that are used in the preparation of these financial statements. We continually evaluate our estimates,
including those related to percentage of completion revenue recognition, bad debt reserves, inventory obsolescence reserves, self-
insurance reserves for medical expenses, product warranty reserves, intangible assets, stock-based compensation and deferred income
tax assets. We base our estimates on historical experience and various other factors, including the impact from the current economic
conditions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different
conditions or assumptions.

Our normal credit terms for trade receivables are 30 days. In certain situations, credit terms for trade receivables may be
extended to 60 days or longer and such receivables generally do not require collateral. Additionally, we provide long-term financing in
the form of promissory notes when competitive conditions require such financing and, in such cases, we may require collateral. We
perform ongoing credit evaluations of our customers’ accounts and notes receivable and allowances are recognized for potential credit
losses.

Our long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the carrying amount
of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of expected future
cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the
related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the
extent that the carrying value of the asset group exceeds its fair value.

Management makes judgments regarding the interpretation of tax laws that might be challenged upon an audit and causes

changes to previous estimates of tax liability. In addition, we operate within multiple taxing jurisdictions and are subject to audit in
these jurisdictions as well as by the Internal Revenue Service. In management’s opinion, adequate provisions for income taxes have
been made for all open tax years. The potential outcomes of examinations are regularly assessed in determining the adequacy of the
provision for income taxes and income tax liabilities. Management believes that adequate provisions have been made for reasonable
and foreseeable outcomes related to uncertain tax matters.

We record a write-down of our inventories when the cost basis of any manufactured product, including any estimated future
costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market
value. Cost is determined on a first-in, first-out method, except that our subsidiary in the Russian Federation uses an average cost
method to value its inventories.

We periodically review the composition of our inventories to determine if market demand, product modifications, technology

changes, excessive quantities on-hand and other factors hinder our ability to recover its investment in such inventories. Management’s
assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates.
Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of our inventory investment
will not be realized in our operating activities.

We primarily derive revenue from the sale and short-term rental under operating leases, of products. Our products are produced

in a standard manufacturing operation. We recognize revenue from product sales when (i) title passes to the customer, (ii) the
customer assumes risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales
price is reasonably assured, and (v) product delivery occurs as directed by our customer. We recognize rental revenues as earned over
the rental period. Rentals of our equipment generally range from daily rentals to rental periods of up to six months or longer. Service
revenues are recognized when services are rendered and are generally priced on a per day rate. Except for certain of our reservoir
characterization products, our products are generally sold without any customer acceptance provisions and our standard terms of sale
do not allow customers to return products for credit.

We utilize the percentage-of-completion method (the “POC Method”) to recognize revenues and costs on future contracts

having the following characteristics:



the contract requires significant custom designs for customer specific applications;

the product design requires significant engineering efforts;

the contract requires the customer to make progress payments during the contract term, and;

the contract requires at least 90-days of engineering and manufacturing effort.

The POC Method will require our senior management to make estimates, at least quarterly, of the (i) total costs of the contract,
(ii) manufacturing progress against the contract, and (iii) the estimated cost to complete the contract. These estimates will impact the
amount of revenue and gross profit we will recognize for each reporting period. Significant estimates that may affect future cost to
complete a contract include the cost and availability of raw materials and component parts, engineering services, manufacturing
equipment, labor, manufacturing capacity, factory productivity, contract penalties and disputes, product warranties and other

contingent factors. The cumulative impact of periodic revisions to the future cost to complete a contract will be reflected in the period
in which these changes become known, including, to the extent required, the recognition of losses at the time such losses are known
and estimable on contracts in progress. Due to the various estimates inherent in the POC Method, actual results could differ from those
estimates.

Most of our products do not require installation assistance or sophisticated instruction. We offer a standard product warranty,

which obligates us to repair or replace equipment with manufacturing defects. We maintain a reserve for future warranty costs based
on historical experience or, in the absence of historical experience, management estimates.

Forward-Looking Statements and Assumptions

This Annual Report on Form 10-K and the documents incorporated by reference herein, if any, contain “forward-looking”
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”,
“intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or
similar words. Statements that contain these words should be read carefully because they discuss our future expectations, contain
projections of our future results of operations or of our financial position or state other forward-looking information. Examples of
forward-looking statements include, among others, statements that we make regarding our expected operating results, the adoption and
sale of our products in various geographic regions, anticipated levels of capital expenditures and the sources of funding therefore, and
our strategy for growth, product development, market position, financial results and reserves. These forward-looking statements
reflect our best judgment about future events and trends based on the information currently available to us. However, there will likely
be events in the future that we are not able to predict or control. The factors listed under the caption “Risk Factors”, as well as
cautionary language in this Annual Report on Form 10-K, provide examples of risks, uncertainties and events that may cause our
actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the
occurrence of the events described in these risk factors and elsewhere in this Annual Report on Form 10-K could have a material
adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary
materially from our current expectations.

Management’s Current Outlook and Assumptions

Our estimates as to future results and industry trends, to the extent described in this document, are primarily based on
assumptions regarding the future level of seismic exploration activity and seismic reservoir monitoring projects, and in turn, their
effect on the demand and pricing of our products and services. Our analysis of the market and its impact on us is based upon the
following assumptions:

 While crude oil prices have stabilized over the last three years, we believe the impact of the sovereign debt and austerity
issues in Europe, slower economic growth in the U.S. and China and the resulting recessionary fears, combined with
potentially volatile and unsteady energy commodity prices may constrain oil and gas exploration activities in North
America and also in certain international markets. The uncertainty of these global economic matters and their ultimate
impact on energy commodity prices and on exploration activities may cause demand for our seismic exploration products to
decrease.

 We believe the impact of political conditions and hostilities around the world, including those in North Africa and the

Middle East, which may impact oil and gas commodity prices, will not cause a significant increase or decrease in demand
for our seismic products for the foreseeable future.

 During fiscal year 2013, we recognized revenues of $127.6 million related to our permanent reservoir monitoring systems,
with such revenues representing 42.4% of our consolidated revenues during fiscal year 2013. We expect to complete
manufacturing of the Statoil order in mid-fiscal year 2014 and, therefore, we expect to recognize the remaining Statoil order
revenues of $57.3 million during fiscal year 2014. If we do not receive new large orders for our permanent reservoir
monitoring systems prior to our expected completion of the Statoil order in mid-fiscal year 2014, we expect revenues and
profits from our reservoir products to decline significantly during fiscal year 2014.

 As a result of distribution infrastructure bottlenecks in key crude oil producing areas in North America combined with

declining demand for crude oil in the United States, we expect demand for new seismic data and, consequently, demand for
many of our traditional seismic products in North America could be challenged in fiscal year 2014. Despite these market
conditions, based on orders we have already received in the first quarter of fiscal year 2014, we expect fiscal year 2014
sales and rentals of our land and marine wireless products to increase significantly over fiscal year 2013 levels. We believe
this growth will come from (i) the continued transition from cabled systems to wireless systems by our existing customers,
(ii) the addition of new international customers and (iii) acceptance by the industry of our new OBX marine wireless
system.

 Some of our traditional seismic products are characterized as low margin commodity products with intense international
competition. Sales levels for these products have been relatively flat or declining since fiscal year 2010 and we do not
expect sales levels for these lower margin products to grow during fiscal year 2014. As we focus our product development
and production activities toward higher margin specialty products and new technologies, especially our wireless and
reservoir products, we expect sales of these lower margin traditional seismic products to decline in the future.

 Seismic equipment rentals were less than 5% of our fiscal year 2013 consolidated revenues. Rental revenues are primarily
derived from short-term lease of our land and marine wireless products and, to a lesser extent, from our traditional and
reservoir products. We expect strong customer demand for rental equipment in fiscal year 2014 and, therefore, we plan to
significantly expand our rental equipment fleet. As a result, we expect rental revenues from our seismic products to increase
significantly over fiscal year 2013 levels.

 We expect sales of our non-seismic products, including our industrial products, offshore cables and thermal printing

equipment and film to increase marginally over fiscal year 2013 levels.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We have market risk relative to sensitive instruments entered into for trading purposes and have only very limited risk as to

arrangements entered into other than for trading purposes. We do not engage in commodity or commodity derivative instrument
purchase or sales transactions. Because of the inherent unpredictability of foreign currency rates and interest rates, as well as other
factors, actual results could differ materially from those projected in this Item 7A.

Foreign Currency and Operations Risk

One of our wholly-owned subsidiaries, Geospace Technologies Eurasia, is located in the Russian Federation. In addition,

another of our wholly-owned subsidiaries, Geospace Technologies Sucursal Sudamericana, is located in Colombia. Our financial
results for these entities may be affected by factors such as changes in foreign currency exchange rates, weak economic conditions, or
changes in the political climate. Our consolidated balance sheet at September 30, 2013 reflected approximately $7.1 million and $0.7
million of net working capital related to our Russian and Colombian operations, respectively. Both of these entities receive a portion
of their revenues and pay a majority of their expenses primarily in their local currency. To the extent that transactions of these entities
are settled in their local currency, a devaluation of these currencies versus the U.S. dollar could reduce any contribution from these
entities to our consolidated results of operations and total comprehensive income as reported in U.S. dollars. We do not hedge the
market risk with respect to our operations in these countries; therefore, such risk is a general and unpredictable risk of future
disruptions in the valuation of such currencies versus U.S. dollars to the extent such disruptions result in any reduced valuation of
these foreign entities’ net working capital or future contributions to our consolidated results of operations. At September 30, 2013, the
foreign exchange rate for $1.00 (one U.S. dollar) was equal to 32.4 Russian Rubles and 1,912 Colombian Pesos, respectively. If the
value of the U.S. dollar were to decline by ten percent against these foreign currencies, our working capital in the Russian Federation
and Colombia could decline by $0.7 million and $70,000, respectively.

Foreign Currency Intercompany Accounts and Notes Receivable

From time to time, we provide access to capital to our foreign subsidiaries through U.S. dollar denominated interest bearing
promissory notes. Such funds are generally used by our foreign subsidiaries to purchase capital assets and for general working capital
needs. In addition, we sell products to our foreign subsidiaries on trade credit terms in both U.S. dollars and in the subsidiary’s local
currency. Because we have intercompany debts denominated in foreign currencies, any appreciation or devaluation of such foreign
currencies against the U.S. dollar will result in a gain or loss, respectively, to our consolidated statement of operations. At
September 30, 2013, we had outstanding intercompany accounts receivable of $28.3 million from our Canadian subsidiary which are
denominated in Canadian dollars. We entered into an agreement with a United States bank to hedge $20.0 million of this foreign
exchange exposure, resulting in a net Canadian dollar denominated intercompany accounts payable exposure to the U.S. dollar of $8.3
million at September 30, 2013. At September 30, 2013, the foreign exchange rate for $1.00 (one U.S. dollar) was equal to 0.97
Canadian dollars. If the U.S. dollar exchange rate were to strengthen by ten percent against the Canadian dollar, we would recognize a
foreign exchange loss of $0.8 million in our consolidated financial statements.

Floating Interest Rate Risk

The Credit Agreement contains a floating interest rate, which subjects us to the risk of increased interest costs associated with
any upward movements in bank market interest rates. Under the Credit Agreement our borrowing interest rate is a LIBOR based rate
plus 250-325 basis points. The interest rate at September 30, 2013 was 2.7%. As of September 30, 2013 and 2012, we had $0.9 million
and zero, respectively, borrowed under the Credit Agreement. At September 30, 2013 based on our current level of borrowings, a
1.0% increase in interest rates would increase interest expense annually by approximately $9,000.

Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements, including the reports thereon, the notes thereto and supplementary data begin at page F-1

of this Annual Report on Form 10-K and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are

designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified under SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or
uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required
to be set forth in the Company’s reports.

In connection with the preparation of this Annual Report on Form 10-K, the Company carried out an evaluation under the
supervision and with the participation of the Company’s management, including the CEO and CFO, as of September 30, 2013 of the
effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act. Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective as of
September 30, 2013.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in

Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2013. In making
this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control Integrated Framework (1992). Based on this assessment, our management concluded that, as of September 30, 2013,
our internal control over financial reporting is effective based on those criteria.

Our internal control over financial reporting as of September 30, 2013 has been audited by UHY LLP, an independent registered

public accounting firm, as stated in their report which appears herein.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal

quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is contained in our definitive Proxy Statement to be distributed in connection with our

2014 Annual Meeting of Stockholders under the captions “Election of Directors”, “Executive Officers and Compensation,” “Section
16(a) Beneficial Ownership Reporting Compliance” and “Code of Ethics” and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by this Item is contained in our definitive Proxy Statement to be distributed in connection with our

2014 Annual Meeting of Stockholders under the caption “Executive Officers and Compensation” and is incorporated herein by
reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is contained in our definitive Proxy Statement to be distributed in connection with our

2014 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management” and is
incorporated herein by reference, and in Item 5, “Market for Registrant’s Common Equity and Related Stockholder Matters,”
contained in Part II hereof.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this Item is contained in our definitive Proxy Statement to be distributed in connection with our

2013 Annual Meeting of Stockholders under the caption “Certain Relationships and Related Transactions” and is incorporated herein
by reference.

Item 14. Principal Accountant Fees and Services

The information required by this Item is contained in our definitive Proxy Statement to be distributed in connection with our

2014 Annual Meeting of Stockholders under the caption “Independent Public Accountants” and is incorporated herein by reference.

Item 15. Exhibits, Financial Statement Schedules

Financial Statements and Financial Statement Schedules

PART IV

The financial statements and financial statement schedules listed on the accompanying Index to Financial Statements (see

page F-1) are filed as part of this Annual Report on Form 10-K.

Exhibits

Exhibit
Number Description of Documents

3.1

Restated Certificate of Incorporation of OYO Geospace Corporation (incorporated by reference to the Registrant’s

Registration Statement on Form S-1 filed September 30, 1997 (Registration No. 333-36727)).

3.2

Certificate of Ownership and Merger effective October 1, 2012 (incorporated by reference to Exhibit 3.1 to the Registrant’s

Current Report on Form 8-K filed October 1, 2012)

3.3

Amended and Restated Bylaws of Geospace Technologies Corporation dated September 27, 2012 (Incorporated by reference

to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed October 1, 2012)

4.1

Restated Certificate of Incorporation of OYO Geospace Corporation (incorporated by reference to the Registrant’s

Registration Statement on Form S-1 filed September 30, 1997 (Registration No. 333-36727))

10.1

Employment Agreement dated as of August 1, 1997, between the Company and Gary D. Owens (incorporated by reference to

the Registrant’s Registration Statement on Form S-1 filed September 30, 1997 (Registration No. 333-36727)).*

10.2

Employment Agreement dated as of August 1, 1997, between the Company and Michael J. Sheen (incorporated by reference

to the Registrant’s Registration Statement on Form S-1 filed September 30, 1997 (Registration No. 333-36727)).*

10.3

OYO Geospace Corporation 1997 Key Employee Stock Option Plan (incorporated by reference to Amendment No. 1 to the

Registrant’s Registration Statement on Form S-1 filed November 5, 1997 (Registration No. 333-36727)).*

10.4

10.5

Amendment No. 1 to OYO Geospace Corporation 1997 Key Employee Stock Option Plan, dated February 2, 1998
(incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended September 30, 1998).*

Amendment No. 2 to OYO Geospace Corporation 1997 Key Employee Stock Option Plan, dated November 16, 1998
(incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended September 30, 1998).*

10.6

Amendment No. 3 to OYO Geospace Corporation 1997 Key Employee Stock Option Plan, dated November 10, 2000

(incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed February 15, 2005. (Registration No.
333-122835)).*

10.7

Amendment No. 4 to OYO Geospace Corporation 1997 Key Employee Stock Option Plan, dated February 8, 2005

(incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed February 15, 2005. (Registration No.
333-122835)).*

10.10

Form of Director Indemnification Agreement (incorporated by reference to Amendment No. 2 to the Registrant’s

Registration Statement on Form S-1 filed November 18, 1997 (Registration No. 333-36727)).

10.11

Geospace Technologies Corporation Fiscal Year 2013 Bonus Plan (incorporated by reference to Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 filed February 7, 2013).*

10.12

First Amendment effective October 1, 2008 to Employment Agreement dated as of August 1, 1997, between the Company
and Gary D. Owens (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
December 31, 2009, filed February 5, 2010).*

Exhibit
Number Description of Documents
10.13

First Amendment effective October 1, 2008 to Employment Agreement dated as of August 1, 1997, between the Company
and Michael J. Sheen (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
December 31, 2009, filed February 5, 2010).*

10.14

Loan Agreement dated September 27, 2013 among Geospace Technologies Corporation, as borrower, certain subsidiaries of
Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 of
the registrant’s Current Report on Form 8-K filed October 1, 2013).

10.15

Revolving Promissory Note dated September 27, 2013 made by Geospace Technologies Corporation payable to Frost Bank

(incorporated by reference to Exhibit 10.2 of the registrant’s Current Report on Form 8-K filed October 1, 2013).

10.16

Employment Agreement effective as of January 1, 2012, by and between OYO Geospace Corporation and Walter R. Wheeler

(incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed December 9, 2011)*

10.17

Employment Agreement effective as of January 1, 2012, by and between OYO Geospace Corporation and Robbin B. Adams

(incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed December 9, 2011)*

10.18

Employment Agreement effective as of January 1, 2012, by and between OYO Geospace Corporation and Thomas T.

McEntire (incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed December 9,
2011)*

21.1

Subsidiaries of the Registrant**.

23.1

Consent of UHY LLP, Independent Registered Public Accounting Firm**.

31.1

Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**.

31.2

Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**.

32.1

Certification of the Company’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**.

32.2

Certification of the Company’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**.

101

Interactive data file.**

*
**

This exhibit is a management contract or a compensatory plan or arrangement.
Filed herewith.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

GEOSPACE TECHNOLOGIES CORPORATION

By:

/s/ GARY D. OWENS

Gary D. Owens, Chairman of the Board
President and Chief Executive Officer
November 22, 2013

Pursuant to the requirements of the Securities Exchange Act, this Annual Report on Form 10-K has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

Title

Chairman of the Board, President and Chief Executive

Officer (Principal Executive Officer)

Date
November 22, 2013

/s/

GARY D. OWENS

Gary D. Owens

/s/ THOMAS T. McENTIRE
Thomas T. McEntire

/s/ WILLIAM H. MOODY
William H. Moody

/s/ TINA M. LANGTRY
Tina M. Langtry

/s/ MICHAEL J. SHEEN
Michael J. Sheen

/s/ THOMAS L. DAVIS
Thomas L. Davis

/s/ CHARLES H. STILL
Charles H. Still

/s/ RICHARD F. MILES
Richard F. Miles

Vice President Chief Financial Officer (Principal

Financial Officer and Accounting Officer) and Secretary

November 22, 2013

Director

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm ......................................................................................................

Consolidated Balance Sheets as of September 30, 2013 and 2012 .............................................................................................

Consolidated Statements of Operations for the Years Ended September 30, 2013, 2012 and 2011 ...........................................

Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2013, 2012 and 2011 .......................

Consolidated Statement of Stockholders’ Equity for the Years Ended September 30, 2013, 2012 and 2011 ............................

Consolidated Statements of Cash Flows for the Years Ended September 30, 2013, 2012 and 2011 ..........................................

Notes to Consolidated Financial Statements ...............................................................................................................................

Schedule II—Valuation and Qualifying Accounts ......................................................................................................................

F-2

F-4

F-5

F-6

F-7

F-8

F-9

F-28

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Geospace Technologies Corporation:

We have audited the accompanying consolidated balance sheets of Geospace Technologies Corporation and subsidiaries (“the

Company”) as of September 30, 2013 and 2012, and the related consolidated statements of operations, comprehensive income,
stockholders’ equity and cash flows for each of the three fiscal years in the period ended September 30, 2013. Our audits also included
the financial statement schedule listed in the accompanying index. These consolidated financial statements and schedule are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements
and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Geospace Technologies Corporation and subsidiaries as of September 30, 2013 and 2012, and the consolidated
results of their operations and their cash flows for each of the three fiscal years in the period ended September 30, 2013, in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the

effectiveness of Geospace Technologies Corporation and subsidiaries’ internal control over financial reporting as of September 30,
2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated November 22, 2013 expressed an unqualified opinion on
the effectiveness of the Company’s internal control over financial reporting.

/s/ UHY LLP

Houston, Texas
November 22, 2013

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Geospace Technologies Corporation:

We have audited Geospace Technologies Corporation and subsidiaries’ (“the Company”) internal control over financial
reporting as of September 30, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in Part II, Item 9A of this Form 10-K. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Geospace Technologies Corporation and subsidiaries maintained, in all material respects, effective internal

control over financial reporting as of September 30, 2013, based on criteria established in Internal Control – Integrated Framework
(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the

consolidated balance sheets of Geospace Technologies Corporation and subsidiaries as of September 30, 2013 and 2012, and the
related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three fiscal
years in the period ended September 30, 2013, and our report dated November 22, 2013 expressed an unqualified opinion on those
consolidated financial statements.

/s/ UHY LLP

Houston, Texas
November 22, 2013

F-3

Geospace Technologies Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)

Current assets:

ASSETS

Cash and cash equivalents ...................................................................................................
Short-term investments ........................................................................................................
Trade accounts receivable, net of allowance of $376 and $280 ..........................................
Current portion of notes receivable .....................................................................................
Inventories, net ....................................................................................................................
Costs and estimated earnings in excess of billings ..............................................................
Deferred income tax assets ..................................................................................................
Prepaid expenses and other current assets ...........................................................................
Total current assets ....................................................................................................
Rental equipment, net ...................................................................................................................
Property, plant and equipment, net ...............................................................................................
Goodwill .......................................................................................................................................
Non-current deferred income tax assets ........................................................................................
Non-current notes receivable ........................................................................................................
Prepaid income taxes ....................................................................................................................
Other assets ...................................................................................................................................
Total assets .................................................................................................................

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable trade ........................................................................................................
Accrued expenses and other current liabilities ....................................................................
Deferred revenue .................................................................................................................
Deferred income tax liabilities ............................................................................................
Income tax payable ..............................................................................................................
Total current liabilities ...............................................................................................
Long-term debt .............................................................................................................................
Non-current deferred income tax liabilities...................................................................................
Total liabilities ...........................................................................................................

Commitments and contingencies
Stockholders’ equity:

Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding ................
Common stock, $.01 par value, 20,000,000 shares authorized,12,942,066 and 12,802,160
shares issued and outstanding .........................................................................................
Additional paid-in capital ....................................................................................................
Retained earnings ................................................................................................................
Accumulated other comprehensive loss ..............................................................................
Total stockholders’ equity ..........................................................................................
Total liabilities and stockholders’ equity ...................................................................

AS OF SEPTEMBER 30,
2012
2013

2,726 $
—
49,756
5,290
149,548
12,400
7,056
6,327
233,103
36,908
48,480
1,843
594
—
6,201
96
327,225 $

16,737 $
16,638
1,093
12
159
34,639
931
2,597
38,167

50,752
19,960
16,229
3,806
83,894
—
6,689
5,898
187,228
27,853
34,433
1,843
307
1,687
5,479
192
259,022

17,187
13,978
8,641
111
1,275
41,192
—
2,843
44,035

—

129
65,985
224,008
(1,064)
289,058
327,225 $

128
60,633
154,451
(225)
214,987
259,022

The accompanying notes are an integral part of the consolidated financial statements.

F-4

Geospace Technologies Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share amounts)

Sales ................................................................................................................................
Cost of sales ....................................................................................................................
Gross profit .....................................................................................................................
Operating expenses:

YEAR ENDED SEPTEMBER 30,
2012
191,664 $
109,600
82,064

2013
300,607 $
160,846
139,761

2011
172,970
98,857
74,113

Selling, general and administrative expenses ........................................................
Research and development expenses .....................................................................
Bad debt expense ...................................................................................................
Total operating expenses ..............................................................................
Income from operations ..................................................................................................
Other income (expense):

Interest expense .....................................................................................................
Interest income ......................................................................................................
Foreign exchange gains (losses) ............................................................................
Other, net ...............................................................................................................
Total other income (expense), net ................................................................
Income before income taxes ...........................................................................................
Income tax expense .........................................................................................................
Net income ......................................................................................................................

Earnings per common share:

Basic ......................................................................................................................

Diluted ...................................................................................................................

Weighted average common shares outstanding:

23,383
14,694
457
38,534
101,227

(260)
880
(708)
(46)
(134)
101,093
31,536
69,557 $

18,914
12,167
118
31,199
50,865

(199)
743
457
(4)
997
51,862
16,744
35,118 $

18,051
11,529
128
29,708
44,405

(43)
267
80
(90)
214
44,619
14,908
29,711

5.40 $
5.38 $

2.76 $
2.74 $

2.39

2.36

Basic ......................................................................................................................

Diluted ...................................................................................................................

12,886,372 12,735,520 12,441,313
12,938,661 12,836,239 12,572,647

The accompanying notes are an integral part of the consolidated financial statements.

F-5

Geospace Technologies Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)

Net income ......................................................................................................................
Other comprehensive income (loss):

Change in unrealized gains (losses) on available-for-sale securities (net of tax) ..
Reclassification adjustment (gains) losses included in net income (net of tax) .....

Foreign currency translation adjustments ..............................................................
Other comprehensive income (loss) ................................................................................
Total comprehensive income ..........................................................................................

YEAR ENDED SEPTEMBER 30,
2012
35,118 $

2013
69,557 $

2011
29,711

(11)
(19)
(30)
(809)
(839)
68,718 $

41
1
42
(437)
(395)
34,723 $

(39)
27
(12)
338
326
30,037

The accompanying notes are an integral part of the consolidated financial statements.

F-6

Geospace Technologies Corporation and Subsidiaries
Consolidated Statement of Stockholders’ Equity
For the years ended September 30, 2013, 2012 and 2011
(In thousands, except share amounts)

Balance at September 30, 2010 ..............................
Net income .............................................................
Other comprehensive income .................................
Excess tax benefit from

share-based compensation .................................
Issuance of common stock pursuant to exercise of
options, net of tax ..............................................
Stock-based compensation .....................................
Balance at September 30, 2011 ..............................
Net income .............................................................
Other comprehensive loss ......................................
Excess tax benefit from

share-based compensation .................................
Issuance of common stock pursuant to exercise of
options, net of tax ..............................................
Stock-based compensation .....................................
Balance at September 30, 2012 ..............................
Net income .............................................................
Other comprehensive loss ......................................
Excess tax benefit from

Common Stock

Amount

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings

Total

12,234,716 $
—
—

122 $ 46,998 $ 89,622 $
— — 29,711
—
— —

(156) $136,586
— 29,711
326
326

—

6,896

—

6,896

467,800
—
12,702,516
—
—

—
2,752
6
—
—
736
128 57,382 119,333
— — 35,118
—
— —

2,758
—
—
736
170 177,013
— 35,118
(395)
(395)

—

1,131

—

1,131

99,644
—
12,802,160
—
—

—
1,358
—
—
762
—
128 60,633 154,451
— — 69,557
—
— —

1,358
—
762
—
(225) 214,987
— 69,557
(839)
(839)

—

3,390

—

3,390

139,906
—
12,942,066 $

1
1,418
—
—
544
—
129 $ 65,985 $224,008 $

—
—

1,419
544
(1,064) $289,058

The accompanying notes are an integral part of the consolidated financial statements.

F-7

Geospace Technologies Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)

YEAR ENDED SEPTEMBER 30,
2012

2011

2013

Cash flows from operating activities:

Net income .................................................................................................................
Adjustments to reconcile net income to net cash provided by (used in) operating

69,557 $

35,118 $

29,711

activities: ...............................................................................................................
Deferred income tax expense (benefit) ..................................................................
Depreciation and amortization ...............................................................................
Accretion of discounts on short-term-investments ................................................
Stock-based compensation.....................................................................................
Bad debt expense ...................................................................................................
Inventory obsolescence expense ............................................................................
Gross profit from sale of used rental equipment ....................................................
(Gain) loss on disposal of property, plant and equipment .....................................
Realized (gain) loss on short-term investments .....................................................
Effects of changes in operating assets and liabilities: ............................................
Trade accounts and notes receivable .................................................................
Inventories ........................................................................................................
Costs and estimated earnings in excess of billings ...........................................
Prepaid expenses and other current assets ........................................................
Prepaid income taxes ........................................................................................
Accounts payable trade .....................................................................................
Accrued expenses and other ..............................................................................
Deferred revenue ...............................................................................................
Income taxes payable ........................................................................................
Net cash provided by (used in) operating activities .....................................

Cash flows from investing activities:

Purchase of property, plant and equipment ................................................................
Proceeds from the sale of property, plant and equipment ...........................................
Investment in rental equipment ..................................................................................
Proceeds from the sale of used rental equipment .......................................................
Purchases of short-term investments ..........................................................................
Proceeds from the sale of short-term investments ......................................................
Net cash provided by (used in) investing activities ......................................

Cash flows from financing activities:

(523 )
12,229
162
544
457
187
(13,627 )
301
(19 )

(33,717 )
(73,357 )
(12,400 )
(458 )
(722 )
(442 )
3,324
(7,541 )
(1,116 )
(57,161 )

(19,384 )
—
(22,275 )
25,497
(1,587 )
21,139
3,390

808
9,587
208
762
118
1,793
(9,992)
(34)
1

3,781
(15,630)
—
(293)
(4,500)
12,151
576
7,897
873
43,224

(4,013)
17
(31,716)
24,184
(16,823)
2,030
(26,321)

Principal payments under mortgage loans ..................................................................
Net borrowings under line of credit ............................................................................
Excess tax benefits from stock-based compensation ..................................................
Proceeds from exercise of stock options and other ....................................................
Net cash provided by financing activities ....................................................
Effect of exchange rate changes on cash .........................................................................
Increase (decrease) in cash and cash equivalents ............................................................
Cash and cash equivalents, beginning of fiscal year .......................................................
Cash and cash equivalents, end of fiscal year .................................................................

—
931
3,390
1,419
5,740
5
(48,026 )
50,752
2,726 $

—
—
1,131
1,358
2,489
(28)
19,364
31,388
50,752 $

The accompanying notes are an integral part of the consolidated financial statements.

F-8

(718)
7,047
—
736
128
4,608
(11,165)
—
27

2,006
(29,528)
—
(2,539)
1,023
1,227
787
(558)
(1,656)
1,136

(4,730)
1
(15,414)
19,917
(4,926)
—
(5,152)

(7,700)
—
6,896
2,758
1,954
(3)
(2,065)
33,453
31,388

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies:

The Company

Geospace Technologies Corporation (“Geospace”) designs and manufactures instruments and equipment used by the oil and gas

industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs. Geospace and its
subsidiaries are referred to collectively as the “Company”. Geospace also designs and manufactures non-seismic products, including
industrial products, offshore cables, thermal imaging equipment and film.

The significant accounting policies followed by the Company are summarized below.

Basis of Presentation

The accompanying financial statements present the consolidated financial position, results of operations and cash flows of the
Company in accordance with U.S. generally accepted accounting principles. All intercompany balances and transactions have been
eliminated.

Reclassifications

Certain amounts previously presented in the consolidated financial statements have been reclassified to conform to the current

year presentation. Such reclassifications had no effect on net income, stockholders’ equity or cash flows.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in
developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually
evaluates its estimates, including those related to bad debt reserves, inventory obsolescence reserves, percentage-of-completion
revenue recognition, self-insurance reserves, product warranty reserves, long-lived assets, intangible assets and deferred income tax
assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different conditions or assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase

of three months or less to be cash equivalents.

Short-term Investments

The Company classifies its short-term investments consisting of corporate bonds, government bonds and other such similar

investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding
gains and losses reported each period as a component of comprehensive income in stockholders’ equity. At September 30, 2013, the
Company did not hold any short-term investments. See Note 2 for additional information.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts that, at times, exceed federally insured limits. Management of the

Company believes that the financial strength of the financial institutions holding such deposits minimizes the credit risk of such
deposits.

F-9

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

The Company sells products to customers throughout the United States and various foreign countries. The Company’s normal
credit terms for trade receivables are 30 days. In certain situations, credit terms may be extended to 60 days or longer. The Company
performs ongoing credit evaluations of its customers and generally does not require collateral for its trade receivables. Additionally,
the Company provides long-term financing in the form of promissory notes when competitive conditions require such financing. In
such cases, the Company may require collateral. Allowances are recognized for potential credit losses. At September 30, 2013, the
Company had one customer comprising 25.4% of its trade accounts receivable. At September 30, 2012, the Company had one
customer comprising 17.7% of its trade accounts receivable. The Company had two customers comprising 60.0% and 39.1% of its
notes receivable balance at September 30, 2013. The Company had two customers comprising 60.4% and 39.6% of its notes
receivable balance at September 30, 2012. One customer comprised 36.5% of the Company’s revenues during fiscal year 2013. One
customer comprised 17.7% of the Company’s revenues during fiscal year 2012. Two customers comprised 20.2% and 11.1% of the
Company’s revenues during fiscal year 2011.

The Company has a subsidiary located in the Russian Federation. Therefore, the Company’s financial results may be affected by

factors such as changes in foreign currency exchange rates, weak economic conditions or changes in political climate within the
Russian Federation. The Company’s consolidated balance sheet at September 30, 2013 and 2012 reflected approximately $7.1 million
and $6.3 million, respectively, of net working capital related to this subsidiary. This subsidiary receives a substantial portion of its
revenues and pays its expenses primarily in rubles. During the fiscal years ended September 30, 2013 and 2012, this subsidiary
received approximately $7.7 million and $4.1 million, respectively, of its revenues in U.S. dollars as a result of intercompany sales to
the Company’s subsidiary located in the United States. To the extent that transactions of this subsidiary are settled in rubles, a
devaluation of the ruble versus the United States dollar could reduce any contribution from this subsidiary to its consolidated results of
operations as reported in U.S. dollars. The Company does not hedge the market risk with respect to its operations in the Russian
Federation; therefore, such risk is a general and unpredictable risk of future disruptions in the valuation of rubles versus U.S. dollars to
the extent such disruptions result in any reduced valuation of the subsidiary’s net working capital or future contributions to its
consolidated results of operations.

Inventories

The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated

future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or
market value. Cost is determined on the first-in, first-out method, except that the Company’s subsidiary in the Russian Federation uses
an average cost method to value its inventories.

Property, Plant and Equipment and Rental Equipment

Property, plant and equipment and rental equipment are stated at cost. Depreciation expense is calculated using the straight-line

method over the following estimated useful lives:

Rental equipment ..............................................................................................
Property, plant and equipment:

Machinery and equipment .......................................................................
Buildings and building improvements ....................................................
Other .......................................................................................................

Years
3-10

3-15
10-50
5-10

Expenditures for renewals and betterments are capitalized. Repairs and maintenance expenditures are charged to expense as

incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any gain
or loss thereon is reflected in the statement of operations.

F-10

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

Patents

Patents are amortized over the legal life of the patent or the estimated useful life of the patent, whichever is shorter. Patent

amortization expense was approximately $0.1 million, $0.2 million and $0.2 million, respectively, during each of fiscal years 2013,
2012 and 2011. At September 30, 2013, the Company’s patents were fully amortized.

Impairment of Long-lived Assets

The Company’s long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the
carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of
expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying
value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is
recognized to the extent that the carrying value of the asset group exceeds its fair value.

Goodwill

For the fiscal year ended September 30, 2013, the Company follows simplified procedures for analyzing goodwill impairment.

The guidance on the testing of goodwill for impairment provides the option to first assess qualitative factors to determine if the annual
two-step test of goodwill for impairment must be performed. If, based on the qualitative assessment of events or circumstances, an
entity determines it is more likely than not that the goodwill fair value is more than its carrying amount then it is not necessary to
perform the two-step impairment test. However, if an entity concludes otherwise, then the two-step impairment test must be performed
to identify potential impairment and to measure the amount of goodwill impairment, if any. The Company determined that it is more
likely than not that the fair value of its goodwill was more than its carrying amount and the two-step process was not necessary for the
fiscal year ended September 30, 2013.

Revenue Recognition

The Company primarily derives revenue from the sale of its manufactured products, including revenues derived from the sale of
its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its
manufactured products. Except for revenues recognized using the percentage-of-completion method discussed below, the Company
recognizes revenue from product sales, including the sale of used rental equipment, when (i) title passes to the customer, (ii) the
customer assumes risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales
price is reasonably assured, and (v) product delivery occurs as directed by the customer. Except for certain of the Company’s reservoir
characterization products, the Company’s products are generally sold without any customer acceptance provisions and the Company’s
standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenues as earned over
the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or
longer. Revenues from engineering services are recognized as services are rendered over the duration of a project, or as billed on a per
hour basis. Field service revenues are recognized when services are rendered and are generally priced on a per day rate.

Revenue Recognition – Percentage of Completion

The Company utilizes the percentage-of-completion method (the “POC Method”) to recognize revenues and costs on contracts

having the following characteristics:






the order/contract requires significant custom designs for customer specific applications;
the product design requires significant engineering efforts;
the order/contract requires the customer to make progress payments during the contract term, and;
the order/contract requires at least 90 days of engineering and manufacturing effort.

The POC Method requires the Company’s senior management to make estimates, at least quarterly, of the (i) total expected

costs of the contract, (ii) manufacturing progress against the contract and (iii) the estimated cost to complete the contract. These

F-11

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

estimates impact the amount of revenue and gross profit the Company recognizes for each reporting period. Significant estimates that
may affect the future cost to complete a contract include the cost and availability of raw materials and component parts, engineering
services, manufacturing equipment, labor, manufacturing capacity, factory productivity, contract penalties and disputes, product
warranties and other contingent factors. Change orders are included in the total estimated contract revenue when it is probable that the
change order will result in additional value that can be reliably estimated and realized. The Company defers recognition of the entire
amount of revenue or portion thereof associated with unapproved change orders if there is substantial uncertainty as to amounts
involved or ultimate realization. The cumulative impact of periodic revisions to the future cost to complete a contract will be reflected
in the period in which these changes become known, including, to the extent required, the recognition of losses at the time such losses
are known and estimable. Due to the various estimates inherent in the POC Method, actual final results at the conclusion of a contract
could differ from management’s previous estimates.

The Company analyzes a variety of indicators to determine manufacturing progress, including actual costs incurred to date

compared to total estimated costs and actual quantities produced to date compared to total contract quantities.

Cost of sales includes direct contract costs, such as materials and labor, and indirect costs that are attributable to a contract’s

production activity. The timing of when the Company invoices its customer is dependent upon the completion of certain production
milestones as defined in the contract. Cumulative contract costs and estimated earnings to date in excess of cumulative billings are
reported as a current asset on the consolidated balance sheet as “costs and estimated earnings in excess of billings.” Cumulative
billings in excess of cumulative costs and estimated earnings are reported as a current liability on the consolidated balance sheet as
“billings in excess of costs and estimated earnings.” Any uncollected billed revenue, including contract retentions, is included in trade
accounts receivable, net.

Deferred Revenue

The Company records deferred revenue when funds are received prior to the recognition of the associated revenue.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs include salaries, employee

benefit costs, department supplies, direct project costs and other related costs.

F-12

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

Product Warranties

Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a
standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve
for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates.
Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance
sheets.

Changes in the product warranty reserve are reflected in the following table (in thousands):

Balance at October 1, 2010 ............................................................
Accruals for warranties issued during the year ..............................
Settlements made (in cash or in kind) during the year ...................
Balance at September 30, 2011 ......................................................
Accruals for warranties issued during the year ..............................
Settlements made (in cash or in kind) during the year ...................
Balance at September 30, 2012 ......................................................
Accruals for warranties issued during the year ..............................
Settlements made (in cash or in kind) during the year ...................
Balance at September 30, 2013 ......................................................

$ 1,378
2,675

(1,930 )
2,123
1,354
(1,169 )
2,308
681

(1,037 )
$ 1,952

Stock-Based Compensation

The Company expenses the grant date fair value of equity awards over the requisite service period. The Company uses the
Black-Scholes model to value its new stock option grants. The share-based payment framework also requires the Company to estimate
forfeitures in calculating the expense related to stock-based compensation. In addition, the share-based payment framework requires
the Company to reflect the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash
inflow. The Company recorded stock-based compensation expense of $0.5 million, $0.8 million and $0.7 million for the fiscal years
ended September 30, 2013, 2012 and 2011, respectively.

There were no stock options granted during fiscal years 2013, 2012 and 2011.

The computation of expected volatility was based on the historical volatility. Historical volatility was calculated from historical

data for the time approximately equal to the expected term of the option award starting from the date of grant. The risk-free interest
rate assumption is based upon the U.S. Treasury yield curve in effect at the time of grant for the period corresponding with the
expected life of the option. The expected term of options granted is derived from the vesting period and historical information and
represents the period of time that options granted are expected to be outstanding.

Foreign Currency Gains and Losses

The assets and liabilities of the Company’s foreign subsidiaries have been translated into U.S. dollars using the exchange rates

in effect at the balance sheet date. Results of operations have been translated using the average exchange rates during the year.
Resulting translation adjustments have been recorded as a component of accumulated other comprehensive income (loss) in
stockholders’ equity. Foreign currency transaction gains and losses are included in the statement of operations as they occur.

Shipping and Handling Costs

Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenues

and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of sales. The

F-13

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

Company had shipping and handling expenses of $1.4 million, $1.0 million and $0.7 million for each of the fiscal years ended
September 30, 2013, 2012 and 2011, respectively.

Income Taxes

Income taxes are presented in accordance with FASB guidance for accounting for income taxes. The estimated future tax effects

of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated
balance sheets, as well as operating loss and tax credit carrybacks and carryforwards are recorded. Deferred tax assets and liabilities
are determined based on differences between financial reporting and tax basis of assets and liabilities (temporary differences) and are
measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company
periodically reviews the recoverability of tax assets recorded on the balance sheet and provides valuation allowances if it is more
likely than not that such assets will not be realized.

2. Short-term Investments

The Company had no short-term investments outstanding at September 30, 2013. During the fiscal year ended September 30,

2013, the Company sold $21.1 million of short-term investments and realized gains of $19,000. During the fiscal years ended
September 30, 2012 and 2011, the Company sold short-term investments and realized losses of $1,000 and $27,000, respectively. The
realized gains and losses are recorded in Other Income (Expense). At September 30, 2012, the Company’s short-term investments
were composed of the following:

As of September 30, 2012 (in thousands)

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Estimated
Fair Value

Short-term investments:

Corporate bonds ....................................................
Government bonds ................................................
Total ......................................................................

11,072 $
8,842
19,914 $

37 $
9
46 $

— $
—
— $

11,109
8,851
19,960

3. Derivative Financial Instruments

At September 30, 2013, the Company’s Canadian subsidiary had $28.3 million of Canadian dollar denominated intercompany
accounts payable owed to the Company’s U.S. subsidiaries. In order to mitigate its exposure to movements in foreign currency rates
between the U.S. dollar and Canadian dollar, the Company routinely enters into foreign currency forward contracts to hedge a portion
of its exposure to changes in the value of the Canadian dollar. At September 30, 2013, the Company was a party to a $20.0 million
foreign currency forward contract. This contract reduces the impact on cash flows from movements in the Canadian dollar/U.S. dollar
currency exchange rate. At September 30, 2013, the Company had accrued unrealized foreign exchange losses of $0.4 million under
this contract.

The following table summarizes the gross fair value of all derivative instruments, which are not designated as hedging

instruments and their location in the consolidated balance sheets (in thousands):

Derivative Instrument

Foreign Currency Forward Contracts

Location

September 30,
2013

September 30,
2012

Accrued Expenses $
$

351 $
351 $

215
215

F-14

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

The Company did not have derivatives prior to the fiscal year ended September 30, 2012. The following table summarizes the
impact of the Company’s derivatives on the consolidated statements of operations for the fiscal years ended September 30, 2013 and
2012 (in thousands):

Derivative Instrument

Foreign Currency Forward Contracts

Location of Gain (loss) on
Derivative Instrument

September 30,
2013

September 30,
2012

For the Years Ended

Other Income (Expense)
$

398
398 $

(394)
(394)

Amounts in the above table include realized and unrealized derivative gains and losses.

4. Fair Value of Financial Instruments

At September 30, 2013, the Company’s financial instruments included cash and cash equivalents, trade and other receivables,
other current assets, accounts payable, other current liabilities and long-term debt. Due to the short-term maturities of cash and cash
equivalents, trade and other receivables, other current assets, accounts payable, other current liabilities and long-term debt, the
carrying amounts approximate fair value on the respective balance sheet dates.

The Company measures short-term investments and derivatives at fair value on a recurring basis.

The fair value measurement of the Company’s foreign currency forward contracts was determined using the following inputs:

Foreign currency forward contract .......................................
Total ............................................................................

Short-term investments:

Corporate bonds ..........................................................
Government bonds ......................................................
Foreign currency forward contract .......................................
Total ............................................................................

As of September 30, 2013 (in thousands)

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
(Level 2)

Significant
Unobservable
(Level 3)

Total

(351) $
(351) $

— $
— $

(351) $
(351) $

—
—

As of September 30, 2012 (in thousands)

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
(Level 2)

Significant
Unobservable
(Level 3)

Total

11,109 $
8,851
(215)
19,745 $

11,109 $
8,851
—

19,960 $

— $
—
(215)
(215) $

—
—
—
—

$
$

F-15

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

5. Accumulated Other Comprehensive Income (Loss):

Accumulated other comprehensive income (loss) consisted of the following (in thousands):

Unrealized Gains
and Losses on
Available-for-
Sale Securities

Foreign
Currency
Translation
Adjustments

Total

Balance at September 30, 2010 ..........................................................
Other comprehensive income before reclassifications ..............
Amounts reclassified from accumulated other comprehensive
income ..................................................................................
Net period other comprehensive income (loss) ..................................
Balance at September 30, 2011 ..........................................................
Other comprehensive income before reclassifications ..............
Amounts reclassified from accumulated other comprehensive
income ..................................................................................
Net period other comprehensive income (loss) ..................................
Balance at September 30, 2012 ..........................................................
Other comprehensive income before reclassifications ..............
Amounts reclassified from accumulated other comprehensive
income ..................................................................................
Net period other comprehensive loss ..................................................
Balance at September 30, 2013 ..........................................................

$
—
(12)

—
(12)
(12) $
43

(1)
42
30
(11)

(19)
(30)
$
—

(156 ) $
338

—
338
182
$
(437 )

(437 )
(255 )
(809 )

(809 )
(1,064 ) $

(156)
326

—
326
170
(394)

(1)
(395)
(225)
(820)

(19)
(839)
(1,064)

6. Inventories:

Inventories consisted of the following (in thousands):

Finished goods and sub-assemblies .....................................................................
Work in progress ..................................................................................................
Raw materials ......................................................................................................
Obsolescence reserve ...........................................................................................

AS OF SEPTEMBER 30,

2013
44,391 $
25,156
86,933
(6,932)
149,548 $

2012
32,845
19,585
40,788
(9,324)
83,894

Inventory obsolescence expense was approximately $0.2 million, $1.8 million and $4.6 million during fiscal years 2013, 2012

and 2011, respectively.

7. Percentage of Completion:

The Company utilizes the POC Method to recognize revenues under a contract with a customer. The balance sheets reflect cost

and estimated earnings in excess of billings as follows (in thousands):

Contract revenues earned .....................................................................................
Less contract billings ...........................................................................................
Costs and estimated earnings in excess of billings

$ 109,565 $
97,165
12,400 $

—
—
—

AS OF SEPTEMBER 30,

2013

2012

F-16

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

8. Accounts and Notes Receivable:

The Company’s current trade accounts receivable consisted of the following (in thousands):

Trade accounts receivable ....................................................................................
Allowance for doubtful accounts .........................................................................

AS OF SEPTEMBER 30,

2013
50,132 $
(376)
49,756 $

2012
16,509
(280)
16,229

The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses. The Company

determines the allowance based upon historical experience and a review of its balances. Accounts receivable balances are charged off
against the allowance whenever it is probable that the receivable will not be recoverable. The Company does not have any off-
balance-sheet credit exposure related to its customers.

Notes receivable are reflected in the following table (in thousands):

Notes receivable ....................................................................................
Allowance for doubtful notes ...............................................................

Less current portion ..............................................................................

September 30, 2013 September 30, 2012
5,493
$
—
5,493
3,806
1,687

5,290 $
—
5,290
5,290
— $

Notes receivable are generally collateralized by the products sold, and bear interest at rates ranging up to 11.0% per year. The

notes receivable of $5.3 million will mature at various times through March 2014. The Company has, on occasion, extended or
renewed notes receivable as they mature, but there is no obligation to do so.

9. Rental Equipment:

Rental equipment consisted of the following (in thousands):

Rental equipment, primarily geophones and related products .............................
Accumulated depreciation ...................................................................................

AS OF SEPTEMBER 30,

2013
50,878 $
(13,970)
36,908 $

2012
39,766
(11,913)
27,853

Rental equipment depreciation expense was $7.3 million, $5.5 million and $2.8 million in fiscal years 2013, 2012 and 2011,

respectively. We transferred $4.9 million and $2.0 million of inventories to our rental equipment during fiscal years 2013 and 2012,
respectively, which had a non-cash impact.

F-17

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

10. Property, Plant and Equipment:

Property, plant and equipment consisted of the following (in thousands):

Land and land improvements ...............................................................................
Buildings and building improvements .................................................................
Machinery and equipment ...................................................................................
Furniture and fixtures ..........................................................................................
Transportation equipment ....................................................................................
Tools and molds ...................................................................................................
Leasehold improvements .....................................................................................
Construction in progress ......................................................................................

Accumulated depreciation ...................................................................................

AS OF SEPTEMBER 30,

2013

2012

8,714 $
30,075
43,627
1,343
30
1,496
8
2,495
87,788
(39,308)
48,480 $

3,261
26,582
37,067
1,237
30
498
—
1,100
69,775
(35,342)
34,433

Property, plant and equipment depreciation expense was $4.8 million, $3.8 million and $3.9 million in fiscal years 2013, 2012

and 2011, respectively.

11. Long-Term Debt:

Long-term debt consisted of the following (in thousands):

Working capital line of credit ..............................................................................

Less current portion .............................................................................................

AS OF SEPTEMBER 30,

2013

2012

931 $
931
—
931 $

—
—
—
—

On March 2, 2011, the Company entered into a credit agreement with a bank. On September 27, 2013, the Company amended

the credit agreement and increased its borrowing availability to $50.0 million (as amended, the “Credit Agreement”). The Company’s
borrowings are principally secured by its accounts receivable, inventories and equipment. In addition, certain domestic subsidiaries of
the Company have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured the
obligations by the pledge of certain of the assets of such subsidiaries. The Credit Agreement expires on April 27, 2016 and all
borrowed funds are due and payable at that time. The Company is required to make quarterly interest payments on borrowed funds.
The Credit Agreement limits the incurrence of additional indebtedness, requires the maintenance of certain financial ratios, restricts
the Company and its subsidiaries’ ability to pay cash dividends and contains other covenants customary in agreements of this type.
The interest rate for borrowings under the Credit Agreement is a LIBOR based rate with a margin spread of 250-325 basis points
depending upon the maintenance of certain ratios. At September 30, 2013, the Company was in compliance with all covenants. At
September 30, 2013 and 2012, there were borrowings of $0.9 million and zero, respectively, outstanding under the Credit Agreement.
At September 30, 2013 and 2012, there were standby letters of credit outstanding in the amount of $42,000 and $0.2 million,
respectively. Additional borrowings available under the Credit Agreement at September 30, 2013 were $49.1 million.

F-18

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

12. Accrued Expenses and Other Current Liabilities:

Accrued expenses and other current liabilities consisted of the following (in thousands):

Employee bonuses ...............................................................................................
Product warranty ..................................................................................................
Compensated absences ........................................................................................
Legal and professional fees ..................................................................................
Payroll ..................................................................................................................
Property taxes ......................................................................................................
Medical claims .....................................................................................................
Other ....................................................................................................................

AS OF SEPTEMBER 30,

2013

2012

6,598 $
1,952
1,614
258
923
2,652
576
2,065
16,638 $

5,736
2,308
1,266
502
674
1,386
470
1,636
13,978

The Company is self-insured for certain losses related to employee medical claims. The Company has purchased stop-loss

coverage for individual claims in excess of $150,000 per claimant per year in order to limit its exposure to any significant levels of
employee medical claims. Self-insured losses are accrued based on the Company’s historical experience and on estimates of aggregate
liability for uninsured claims incurred using certain actuarial assumptions followed in the insurance industry.

13. Employee Benefits:

The Company’s U.S. employees are participants in the Geospace Technologies Corporation’s Employee’s 401(k) Retirement

Plan (the “Plan”), which covers substantially all eligible employees in the United States. The Plan is a qualified salary reduction plan
in which all eligible participants may elect to have a percentage of their compensation contributed to the Plan, subject to certain
guidelines issued by the Internal Revenue Service. The Company’s share of discretionary matching contributions was approximately
$0.9 million, $0.7 million and $0.6 million in fiscal years 2013, 2012 and 2011, respectively.

The Company’s stock incentive plans in which employees may participate are discussed in Note 13 to these Consolidated

Financial Statements.

14. Stockholders’ Equity:

In September 1997, the board of directors and stockholders approved the 1997 Key Employee Stock Option Plan (as amended

the “Employee Plan”) and, following amendments thereto, there has been reserved an aggregate of 2,250,000 shares of common stock
for issuance thereunder. In August 2013, the board of directors and stockholders approved an amendment to the Employee Stock
Option Plan that extends the plan to November 14, 2017. Under the Amended Employee Plan, at September 30, 2013, there are an
aggregate of approximately 184,350 shares of common stock reserved for issuance thereunder. During the fiscal year ended
September 30, 2013, the Company incurred payroll related expenditures of $0.9 million in order to compensate certain employees
which were delayed in exercising their stock options.

Under the Employee Plan, the Company is authorized to grant nonqualified and incentive stock options to purchase common
stock and restricted stock awards of common stock to key employees of the Company. Options have a term not to exceed ten years,
with the exception of incentive stock options granted to employees owning ten percent or more of the outstanding shares of common
stock, which have a term not to exceed five years. The exercise price of any option may not be less than the fair market value of the
common stock on the date of grant. In the case of incentive stock options granted to an employee owning ten percent or more of the
outstanding shares of common stock, the exercise price of such option may not be less than 110% of the fair market value of the
common stock on the date of grant. Options vest over a four-year period commencing on the date of grant in 25% annual increments.
Under the Employee Plan, the Company may issue shares of restricted stock to employees for no payment by the employee or for a
payment below the fair market value on the date of grant. The restricted stock is subject to certain restrictions described in the
Employee Plan, with no restrictions continuing for more than ten years from the date of the award.

F-19

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

The Company has never issued any incentive stock options under the Employee Plan and the Company has not issued any

shares of restricted stock under the Employee Plan since August 1, 2001. All issued shares of restricted stock are fully vested; thus
there are no outstanding shares of restricted stock. The prior issuances by the Company of restricted stock were recorded at the fair
value of the stock subject to those awards and were recorded as a component of stockholders’ equity, with a credit to additional paid-
in capital. The Company recorded compensation expense based on the vesting criteria of the individual awards. The Company will
account for any future issuances of restricted stock awards in accordance with applicable guidelines, which require that stock-based
awards be measured and recognized at fair value.

A summary of the activity with respect to stock options is as follows:

Outstanding at September 30, 2010 .....................................................................
Granted .......................................................................................................
Exercised ....................................................................................................
Forfeited .....................................................................................................
Expired .......................................................................................................
Outstanding at September 30, 2011 .....................................................................
Granted .......................................................................................................
Exercised ....................................................................................................
Forfeited .....................................................................................................
Expired .......................................................................................................
Outstanding at September 30, 2012 .....................................................................
Granted .......................................................................................................
Exercised ....................................................................................................
Forfeited .....................................................................................................
Expired .......................................................................................................
Outstanding at September 30, 2013 .....................................................................

Weighted
Average
Exercise
Price

9.26
—
5.89
8.78
—
13.82
—
13.63
—
—
13.90
—
10.36
—
—
18.61

Shares
817,400 $
—
(467,800)
(4,000)
—
345,600
—
(99,644)
—
—
245,956
—
(139,906)
—
—
106,050 $

The number of stock options vested during fiscal years 2013, 2012 and 2011 were 106,500, 102,500 and 104,500, respectively.

The fair values of stock options vested during fiscal years 2013, 2012 and 2011 were $0.8 million, $0.7 million and $0.3 million,
respectively.

The following table summarizes information about stock options outstanding and exercisable at September 30, 2013:

Options Outstanding

Options Exercisable

Range of Exercise Prices
$6.76 to $9.99 ....
$10.00 to $26.98

Shares
38,700
67,350
106,050

Weighted
Average
Remaining
Term

(in years)

Weighted
Average
Exercise
Price

Intrinsic
Value

Weighted
Average
Remaining
Term

(in years)

Weighted
Average
Exercise
Price

Intrinsic
Value

8.78 2,922,044 38,700
5.2 $
6.6
24.26 4,042,821 39,850
6.1 $ 18.61 6,964,865 78,550

8.78 $ 2,922,044
5.2 $
6.6
23.86 2,407,834
5.9 $ 16.43 $ 5,329,878

The total intrinsic value of options exercised during fiscal years 2013, 2012 and 2011 were $10.4 million, $4.0 million and
$20.8 million, respectively. As of September 30, 2013 total compensation expense associated with unvested stock options amounted to
$0.2 million and will be recognized in the Company’s fiscal year ending September 30, 2014.

In October 2012, the Company implemented a 2-for-1 split of its common stock effected in the legal form of a stock dividend.

Other than the disclosure of the authorized number of shares of the Company’s common stock, all share and per-share disclosures

F-20

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

have been adjusted for all periods presented in the consolidated financial statements to give effect to the stock split. Common stock
and additional paid-in-capital at September 30, 2012 and 2011 has been adjusted to reflect the effect of the stock split.

15. Income Taxes:

Components of income (loss) before income taxes were as follows (in thousands):

United States ..............................................................................
Foreign .......................................................................................

YEAR ENDED SEPTEMBER 30,
2012
50,819 $
1,043
51,862 $

2013
103,349 $
(2,256)
101,093 $

2011
43,414
1,205
44,619

The provision (benefit) for income taxes consisted of the following (in thousands):

YEAR ENDED SEPTEMBER 30,
2012

2013

2011

Current:

Federal ..............................................................................
Foreign .............................................................................
State ..................................................................................

Deferred:

Federal ..............................................................................
Foreign .............................................................................

31,954 $
(19)
124
32,059

43
(566)
(523)
31,536 $

15,543 $
24
369
15,936

15,281
66
279
15,626

413
395
808
16,744 $

(1,228)
510
(718)
14,908

Actual income tax expense (benefit) differs from income tax expense computed by applying the statutory federal tax rate of

35.0% for each of the fiscal years ended September 30, 2013, 2012 and 2011 as follows (in thousands):

YEAR ENDED SEPTEMBER 30,
2012
18,153 $
(140 )
(1,868 )
(99 )
240
165
544
(335 )
84
16,744 $
32.3 %

2013
35,382 $
130
(3,048)
(661)
81
253
(467)
(51)
(83)
31,536 $
31.2%

2011
15,617
(244)
(921)
(750)
181
504
(116)
632
5
14,908

33.4%

Provision for U.S. federal income tax at statutory rate ..............
Effect of foreign income taxes ...................................................
Manufacturers’/producers’ deduction ........................................
Research and experimentation tax credits ..................................
State income taxes, net of federal income tax benefit ................
Nondeductible expenses.............................................................
Resolution of prior years’ tax matters ........................................
Contingency for uncertainty in income taxes .............................
Other items .................................................................................

F-21

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

Deferred income taxes under the liability method reflect the net tax effects of temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s net deferred income tax asset were as follows (in thousands):

Deferred income tax assets:

Allowance for doubtful accounts ...
Inventories .....................................
Capitalized research and development
costs ..........................................

Property, plant and equipment

and other ...................................
Net operating loss carryforwards, tax
credits and deferrals ..................
Stock-based compensation.............
Accrued product warranty .............
Accrued compensated absences .....
Comprehensive income .................
Insurance and other reserves ..........

Deferred income tax liabilities:

Allowance for doubtful accounts ...
Intangible assets .............................
Property, plant and equipment

AS OF SEPTEMBER 30, 2013
Non U.S.

U. S.

Total

AS OF SEPTEMBER 30, 2012
Non U.S.

U. S.

Total

120 $
4,762

4 $
(71)

124 $
4,691

47 $
4,472

3 $
(28)

50
4,444

—
298
644
549
573
973
7,919

—
(230)

—

(632)

—

—
347
787
443
121
938
7,244

1,204
298
666
549
573
1,036
8,509

—
(230)

—
(144 )

(3,238)
5,041
—
5,041 $

(3,056 )
4,044
—
4,044 $

—

393
—
12
—
—
27
408

(122)
—

(201)
85
(87)
(2) $

393
347
799
443
121
965
7,652

(122)
(144)

(3,257)
4,129
(87)
4,042

1,204
—
22
—
—
63
590

—
—

—
590
—
590 $

and other ...................................
Subtotal deferred income tax asset ..........
Valuation allowance ................................
Net deferred income tax asset .................

(3,238)
4,451
—
4,451 $

Deferred income taxes are reported as follows in the accompanying consolidated balance sheets (in thousands):

Current deferred income tax asset .............................................................................
Noncurrent deferred income tax asset .......................................................................
Current deferred income tax liability ........................................................................
Noncurrent deferred income tax liability ..................................................................

AS OF SEPTEMBER 30,

2013

$ 7,056 $
594
(12 )
(2,597 )
$ 5,041 $

2012
6,689
307
(111)
(2,843)
4,042

The financial reporting basis of investments in foreign subsidiaries exceed their tax basis. A deferred tax liability is not recorded

for this temporary difference because the investment is essentially permanent. A reversal of the Company’s plans to permanently
invest in these foreign operations would cause the excess to become taxable. At September 30, 2013 and 2012, the temporary
difference related to undistributed earnings for which no deferred taxes have been provided was approximately $12.7 million and
$15.2 million, respectively. The Company will need to reassess and reassert its ability and intent to indefinitely reinvest the remaining
foreign earnings in order to continue the application of the exception under FASB guidelines.

The Company follows the provisions of the FASB guidance for accounting for uncertainty in income taxes. The Company
classifies interest and penalties associated with the payment of income taxes in the Other Income (Expense) section of its consolidated
statements of operations. Tax return filings which are subject to review by local tax authorities by major jurisdiction are as follows:




United States—fiscal years ended September 30, 2010 through 2013
State of Texas—fiscal years ended September 30, 2009 through 2013

F-22

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)







State of New York—fiscal years ended September 30, 2002 through 2013
Russian Federation—calendar years 2010 through 2013
Canada—fiscal years ended September 30, 2009 through 2013
United Kingdom—fiscal years ended September 30, 2006, 2011, 2012 and 2013
Colombia—calendar years 2012 and 2013

The following table is a reconciliation of the total amounts of unrecognized tax benefits (in thousands):

Balance at October 1, 2010 ..........................................................................................
Change in prior year tax positions ................................................................................
Current tax positions ....................................................................................................
Lapse of statute of limitations ......................................................................................
Balance at September 30, 2011 ....................................................................................
Change in prior year tax positions ................................................................................
Current tax positions ....................................................................................................
Settlements with taxing authorities ..............................................................................
Lapse of statute of limitations ......................................................................................
Balance at September 30, 2012 ....................................................................................
Change in prior year tax positions ................................................................................
Current tax positions ....................................................................................................
Settlements with taxing authorities ..............................................................................
Lapse of statute of limitations ......................................................................................
Balance at September 30, 2013 ....................................................................................

220
581
61
(10)
852
(420)
63
(145)
5
355
(22)
142
(47)
(114)
314

As of September 30, 2013, the Company had available approximately $4.8 million of net operating loss (“NOL”) carryforwards
in Canada to offset future taxable income in that jurisdiction. The Company, using the “more likely than not” criteria, has determined
that the NOL carryforwards will be utilized in full before they begin to expire in 2021. Therefore, no valuation allowance against the
Company’s deferred tax assets was considered necessary.

The Company believes that it is reasonably possible the unrecognized tax benefits could change within the next twelve months

based on the resolution of on-going income tax audits. At this time it is not possible to determine the range of such changes. These
unrecognized tax benefits would favorably affect the Company’s effective tax rate in future periods if they are favorably resolved.

Management believes that adequate provisions for income taxes have been reflected in the financial statements and it is not
aware of any significant exposure items that have not been reflected in the financial statements. Amounts considered probable of
settlement within one year have been included in the accrued expenses and other liabilities in the accompanying consolidated balance
sheets.

16. Earnings Per Common Share:

Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings per share is determined on the assumption that outstanding
dilutive stock options have been exercised and the aggregate proceeds as defined were used to reacquire common stock using the
average price of such common stock for the period. Other than the disclosure of the authorized number of shares of the Company’s
common stock, all share and per-share disclosures have been adjusted for all periods presented in the consolidated financial statements
to give effect to the recent 2-for-1 stock split.

F-23

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

The following table summarizes the calculation of weighted average common shares and common equivalent shares outstanding

for purposes of basic and diluted earnings per share (in thousands, except share and per share amounts):

YEAR ENDED SEPTEMBER 30,
2012

2013

2011

Net income ....................................................................................................$
Weighted average common shares and common share equivalents:

69,557 $

35,118 $

29,711

Common shares ............................................................................
Common share equivalents ..........................................................

Total weighted average common shares and common

12,886,372 12,735,520 12,441,313
131,334

100,719

52,289

share equivalents ..............................................................................

12,938,661 12,836,239 12,572,647

Earnings per share:

Basic .................................................................................................
Diluted ..............................................................................................

$
$

5.40 $
5.38 $

2.76 $
2.74 $

2.39
2.36

For the calculation of diluted earnings per share for each of fiscal years 2013, 2012 and 2011, no stock options were excluded in

the calculation of weighted average shares outstanding as a result of their impact being antidilutive.

17. Commitments and Contingencies:

Operating Leases

The Company leases certain warehouse and office space under non-cancelable operating leases.

The approximate future minimum rental commitments under non-cancelable operating leases are as follows (in thousands):

YEAR ENDING SEPTEMBER 30,

2014 ..................................................................................................................................
2015 ..................................................................................................................................
2016 ..................................................................................................................................

189
189
95
473

The Company also leases office space and certain equipment under short-term operating leases. Rent expense was

approximately $0.4 million, $87,000 and $40,000 during fiscal years 2013, 2012 and 2011, respectively.

Legal Proceedings

The Company is involved in various pending or potential legal actions in the ordinary course of our business. Management is

unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of litigation. However, management
believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on the Company’s
consolidated financial position, results of operations or cash flows.

F-24

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

18. Supplemental Cash Flow Information:

Supplemental cash flow information is as follows (in thousands):

Cash paid for:

Interest ..............................................................................
Income taxes .....................................................................

119 $
29,837

10 $
14,068

44
12,966

Noncash investing and financing activities:

Accrued capital expenditures ............................................
Inventory transferred to fixed assets .................................

—
4,902

—
2,000

2
200

YEAR ENDED SEPTEMBER 30,
2012

2011

2013

19. Segment and Geographic Information:

Effective October 1, 2012, the Company reports and categorizes its sales and products into two business segments: Seismic and

Non-Seismic. Prior to October 1, 2012, the Company reported its business segments as Seismic and Thermal Solutions. Effective
October 1, 2012, the Seismic product lines include land and marine wireless data acquisition systems, seabed reservoir
characterization products and services, geophones and hydrophones, leader wire, geophone string and acquisition system connectors,
telemetry cables, marine streamer retrieval and steering devices and various other products. The Non-Seismic product lines include
thermal imaging products and industrial products. The Company frequently has a minor amount of Seismic product sales to its Non-
Seismic customers.

The following tables summarize the Company’s segment information:

YEAR ENDED SEPTEMBER 30,
2012

2013

2011

Sales:

Seismic.........................................................................................
Non-Seismic ................................................................................
Corporate .....................................................................................
Total .............................................................................................

275,201 $
24,578
828
300,607

178,221 $
12,642
801
191,664

158,653
13,519
798
172,970

Income (loss) from operations:

Depreciation, amortization and stock-based compensation expenses:

Interest income:

Interest expense:

110,118
3,344
(12,235)
101,227

11,207
289
1,277
12,773

781
2
97
880

141
—
119
260

59,455
1,014
(9,604)
50,865

8,533
320
1,496
10,349

581
5
157
743

199
—
—
199

53,477
(37)
(9,035)
44,405

5,990
345
1,448
7,783

139
—
128
267

—
—
43
43

* The Company’s manufacturing operations for its Seismic and Non-Seismic business segments are combined. Therefore, the Company does not segregate and report

separate balance sheet accounts for these segments. As a result, the Company does not report business segment balance sheet information.

F-25

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

“Corporate” sales consists of rental revenue earned from an operating lease of a surplus building located in Houston, Texas.
“Corporate” loss from operations primarily consists of the Company’s Houston headquarter general and administrative expenses.

The Company generates product sales and rentals from its subsidiaries in the United States, Canada, Colombia, the Russian

Federation and the United Kingdom. Sales information for the Company is as follows (in thousands):

United States .........................................................................................
Canada ...................................................................................................
Colombia ...............................................................................................
Russian Federation ................................................................................
United Kingdom ....................................................................................
Eliminations ..........................................................................................

YEAR ENDED SEPTEMBER 30,
2012
216,741 $
23,741
—
9,837
4,064
(62,719)
191,664 $

2013
300,131 $
39,415
608
10,758
2,021
(52,326)
300,607 $

2011
155,781
8,966
—
10,144
4,883
(6,804)
172,970

Summaries of sales by geographic area for fiscal years 2013, 2012 and 2011 are as follows (in thousands):

YEAR ENDED SEPTEMBER 30,
2012

2013

2011

Asia (excluding Middle East) ................................................................
Canada ...................................................................................................
Europe ...................................................................................................
Middle East ...........................................................................................
United States .........................................................................................
Other .....................................................................................................

8,789 $
74,839
115,226
2,385
88,512
10,856
300,607 $

10,753 $
59,602
3,043
8,542
102,378
7,346
191,664 $

22,772
13,158
34,278
6,588
92,368
3,806
172,970

Sales are attributed to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not

known, sales are attributed to countries based on the geographic location of the initial shipment.

Long-lived assets were as follows (in thousands):

United States .......................................................................................................................
Canada .................................................................................................................................
Colombia .............................................................................................................................
Russian Federation ..............................................................................................................
United Kingdom ..................................................................................................................
China ...................................................................................................................................

AS OF SEPTEMBER 30,

2013

2012

$ 46,712 $ 35,577
29,696
32,078
—
7,554
5,760
6,820
442
350
11
14
$ 93,528 $ 71,486

F-26

Geospace Technologies Corporation and Subsidiaries
Notes to Consolidated Financial Statements—(Continued)

20. Selected Quarterly Information (Unaudited):

The following table represents summarized data for each of the quarters in fiscal years 2013 and 2012 (in thousands, except per

share amounts):

2013

Third
Quarter

Second
Quarter

First
Fourth
Quarter
Quarter
$ 68,288 $ 78,148 $ 76,420 $ 77,751
29,780 33,875 35,561 40,545
19,132 24,991 25,556 31,548
174
13,684 16,991 16,869 22,013
1.72
$
1.70
$

1.31 $
1.30 $

1.32 $
1.31 $

1.06 $
1.05 $

(532)

274

(50 )

2012

Third
Quarter

Second
Quarter

Fourth
First
Quarter
Quarter
$ 36,949 $ 55,201 $ 56,233 $ 43,281
13,386 22,960 25,060 20,658
6,194 15,601 16,472 12,598
334
8,685
0.68
0.68

351
(14 )
4,266 10,736 11,431
0.90 $
0.84 $
0.33 $
0.89 $
0.83 $
0.33 $

326

$
$

Sales ..............................................................................................................
Gross profit ....................................................................................................
Income from operations .................................................................................
Other income (expense), net ..........................................................................
Net income ....................................................................................................
Basic earnings per share ................................................................................
Diluted earnings per share .............................................................................

F-27

Schedule II

Geospace Technologies Corporation and Subsidiaries
Valuation and Qualifying Accounts
(In thousands)

Balance at
Beginning
of Period

Charged
to Costs
And
Expenses

Charged
to Other
Assets

(Deductions)
And
Additions

Balance at
End
of Period

Year ended September 30, 2013
Allowance for doubtful accounts on

accounts and notes receivable .......

280 $

457 $

— $

(361) $

376

Year ended September 30, 2012
Allowance for doubtful accounts on

accounts and notes receivable .......

Year ended September 30, 2011
Allowance for doubtful accounts on

accounts and notes receivable .......

Year ended September 30, 2013
Inventory obsolescence reserve ..........
Year ended September 30, 2012
Inventory obsolescence reserve ..........
Year ended September 30, 2011
Inventory obsolescence reserve ..........

411

118

—

(249)

280

334

128

—

(51)

411

Balance at
Beginning
of Period

Charged
to Costs
And
Expenses

Charged
to Other
Assets

(Deductions)
And
Additions

Balance at
End
of Period

9,324 $

187 $

— $

(2,579) $

6,932

9,552

1,793

—

(2,021)

9,324

6,645

4,608

—

(1,701)

9,552

F-28

Exhibit 21.1

Subsidiaries of
Geospace Technologies Corporation

GTC, Inc., a Texas corporation

Geospace Technologies Canada, Inc., an Alberta corporation

Geospace Technologies Corporation Azerbaijan Branch, an Azerbaijan company

Geospace Engineering Resources International, Inc., a Texas corporation

Geospace Finance Corp., a Texas corporation

GTC Inc. Beijing Representative Office, a Chinese company

Exile Technologies Corporation, a Texas Corporation

Exile Technologies Limited, a United Kingdom company

Geospace J.V., Inc., a Texas corporation

Geospace Technologies Eurasia, LLC, a Russian limited liability company

Geospace Technologies, Sucursal Sudamericana LLC, a Texas Limited Liability Company

Geospace Technologies Sucursal Sudamericana a Colombia Branch Office

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-40893, No. 333-80003,
No. 333-122834 and No. 333-122835) and Form S-3 (No. 333-177964) of Geospace Technologies Corporation of our reports dated
November 22, 2013, relating to the consolidated financial statements and financial statement schedule as of September 30, 2013 and
2012 and for each of the three fiscal years in the period ended September 30, 2013, and the effectiveness of internal control over
financial reporting as of September 30, 2013, which appear in this Form 10-K.

Exhibit 23.1

/s/ UHY LLP

Houston, Texas
November 22, 2013

CERTIFICATIONS

Exhibit 31.1

I, Gary D. Owens, certify that:

I have reviewed this annual report on Form 10-K of Geospace Technologies Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing
the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

November 22, 2013

/s/ Gary D. Owens
Name: Gary D. Owens
Title: Chairman of the Board, President and Chief Executive

Officer

CERTIFICATIONS

Exhibit 31.2

I, Thomas T. McEntire, certify that:

I have reviewed this annual report on Form 10-K of Geospace Technologies Corporation;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

November 22, 2013

/s/ Thomas T. McEntire

Name: Thomas T. McEntire
Title: Vice President, Chief Financial Officer and Secretary

Informational Addendum to Annual Report on Form 10-K
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

Exhibit 32.1

The undersigned Chairman of the Board, President and Chief Executive Officer of Geospace Technologies Corporation does hereby
certify as follows:

Solely for the purpose of meeting the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and solely to the extent
this certification may be applicable to this Annual Report on Form 10-K, the undersigned hereby certifies that this Annual
Report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
the information contained in this Annual Report on Form 10-K fairly presents, in all material respects, the financial condition
and results of operations of Geospace Technologies Corporation.

/s/ Gary D. Owens

Name: Gary D. Owens
Title: Chairman of the Board, President and Chief Executive

Officer
November 22, 2013

Informational Addendum to Annual Report on Form 10-K
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

Exhibit 32.2

The undersigned Chief Financial Officer and Secretary of Geospace Technologies Corporation does hereby certify as follows:

/s/ Thomas T. McEntire
Name: Thomas T. McEntire
Title: Vice President, Chief Financial Officer and Secretary
November 22, 2013

Sixteen years ago our company went

public. At that time we made a fervent

commitment to persistently innovate

new technologies that anticipate and

solve our customer’s greatest challenges.

That commitment has never wavered,

and today we are known for consistently

introducing game-changing products

that previously were unimaginable

in the industry. At our core we are

engineers with vision – a characteristic

that continues to produce positive results

for our customers and our shareholders.

OFFICERS

DIRE

CT ORS

Gary D. Owens
Chairman of the Board
President & Chief Executive Officer

Rick Wheeler
Executive Vice President &
Chief Operating Officer

Michael J. Sheen
Senior Vice President
Chief Technical Officer

Thomas T. McEntire
Vice President, Chief Financial
Officer & Secretary

Robbin Adams
Executive Vice President &
Chief Project Engineer

Thomas L. Davis, Ph.D.
Professor of Geophysics,
Colorado School of Mines

Tina M. Langtry
Retired Senior Manager
ConocoPhillips

William H. Moody
Retired Partner
KPMG

Michael J. Sheen
Senior Vice President
Chief Technical Officer

Charles H. Still
Retired Partner
Fulbright & Jaworski L.L.P.

Richard F. Miles
Retired Industry Executive