Year Ended January 31,
                                           2008         2007         2006
                                                   (in thousands)
              Revenues:
              Equipment Leasing          $ 51,701     $ 37,683     $ 30,569
              Seamap                       25,383       12,274        4,020
              Less inter-segment sales       (663 )     (1,047 )          -
              Total revenues               76,421       48,910       34,589

              Cost of sales:
              Equipment Leasing            23,830       17,531       15,129
              Seamap                       17,381        8,927        1,735
              Less inter-segment costs       (596 )       (631 )          -

              Total direct costs           40,615       25,827       16,864

                                                                 Year Ended January 31,
                                                          2008            2007            2006
                                                                     (in thousands)
Gross profit
Equipment Leasing                                         27,871          20,152          15,440
Seamap                                                     8,002           3,347           2,285
Less Inter-segment amounts                                   (67 )          (416 )             -

Total gross profit                                        35,806          23,083          17,725

Operating expenses:
General and administrative                                17,425          14,970           9,437
Provision for doubtful accounts                              460             251             188
Depreciation and amortization                              1,476           1,307             648

Total operating expenses                                  19,361          16,528          10,273

Operating income                                        $ 16,445        $  6,555        $  7,452


EBITDA (1)                                              $ 28,327        $ 15,540        $ 17,044
Adjusted EBITDA (1)                                     $ 30,580        $ 17,185        $ 17,197

Reconciliation of Net Income to EBITDA and
Adjusted EBITDA
Net income                                              $ 11,439        $  9,285        $ 10,855
Interest income, net                                        (479 )          (836 )          (422 )
Depreciation, amortization and impairment                 11,879           8,919           9,575
Provision for (benefit from) income taxes                  5,488          (1,828 )        (2,964 )

EBITDA (1)                                                28,327          15,540          17,044
Stock-based compensation                                   2,253           1,645             153

Adjusted EBITDA (1)                                     $ 30,580        $ 17,185        $ 17,197

(1) EBITDA is defined as net income
(loss) before
(i) interest income, net of interest expense,
(ii) provision for
(or benefit from) income taxes and
(iii) depreciation, amortization and impairment. Adjusted EBITDA excludes stock-based compensation. We consider EBITDA and Adjusted EBITDA to be important indicators for the performance of our business, but not measures of performance calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We have included these non-GAAP financial measures because they provide management with important information for assessing our performance and as indicators of our ability to make capital expenditures and finance working capital requirements. EBITDA and Adjusted
EBITDA are not
measures of
financial
performance under
GAAP and should not
be considered in
isolation or as
alternatives to
cash flow from
operating
activities or as
alternatives to net
income as
indicators of
operating
performance or any
other measures of
performance derived
in accordance with
GAAP. Other
companies in our
industry may
calculate EBITDA or
Adjusted EBITDA
differently than we
do and EBITDA and
Adjusted EBITDA may
not be comparable
with similarly
titled measures
reported by other
companies.

In our Equipment Leasing segment, we lease seismic data acquisition equipment primarily to seismic data acquisition companies conducting land, transition zone and marine seismic surveys worldwide. We provide short-term leasing of seismic equipment to meet a customer's requirements. The majority of all active leases at January 31, 2008 were for a term of less than one year. Seismic equipment held for lease is carried at cost, net of accumulated depreciation. We acquire some marine lease pool equipment from our Seamap segment. These amounts are carried in our lease pool at the cost to our Seamap segment, less accumulated depreciation. From time to time, we sell lease pool equipment to our customers. These sales are usually transacted when we have equipment for which we do not have near term needs in our leasing business. We also occasionally sell new seismic equipment that we acquire from other manufacturers. In addition to leasing seismic equipment, SAP sells equipment, consumables, systems integration, engineering hardware and software maintenance support services to the seismic, hydrographic, oceanographic, environmental and defense industries throughout Southeast Asia and Australia.
Our Seamap segment designs, manufactures and sells a variety of products used primarily in marine seismic applications. Seamap's primary products include the
(i) GunLink seismic source acquisition and control systems, which provide marine operators more precise control of exploration tools, and (ii) the BuoyLink GPS tracking system used to provide precise positioning of seismic sources and streamers (marine recording channels that are towed behind a vessel). Seismic equipment leasing is susceptible to weather patterns in certain geographic regions. In Canada and Russia, a significant percentage of the seismic survey activity occurs in the winter months, from December through March or April. During the months in which the weather is warmer, certain areas are not accessible to

trucks, earth vibrators and other heavy equipment because of the unstable terrain. In other areas of the world, such as Southeast Asia and Pacific Rim, periods of heavy rain, known as monsoons, can impair seismic operations. We are able, in many cases, to transfer our equipment from one region to another in order to deal with seasonal demand and to increase our equipment utilization.
The oil and gas exploration industry has enjoyed generally sustained growth in recent periods, fueled primarily by historically high commodity prices for oil and natural gas. We, along with much of the seismic industry, have benefited from this growth. Our revenues are directly related to the level of worldwide oil and gas exploration activities and to the profitability and cash flows of oil and gas companies and seismic contractors, which in turn are affected by expectations regarding the supply and demand for oil and natural gas, energy prices and finding and development costs. Land seismic data acquisition activity levels are measured in terms of the number of active recording crews, known as the "crew count," and the number of recording channels deployed by those crews, known as "channel count." Because an accurate and reliable census of active crews does not exist, it is not possible to make definitive statements regarding the absolute levels of seismic data acquisition activity. Furthermore, a significant number of seismic data acquisition contractors are either private or state-owned enterprises and information about their activities is not available in the public domain. Nonetheless, we believe the seismic industry is currently enjoying a period of stable and sustained growth. This is evidenced by increased demand for our equipment, improving financial results as reported by many seismic contractors and announcements by some seismic contractors of increased crew count and channel count. We believe that this increase is being driven by relatively high world oil and North American natural gas prices, combined with the maturation of the world's hydrocarbon producing basins. The future direction and magnitude of changes in seismic data acquisition activity levels will continue to be dependent upon oil and natural gas prices to a large degree.
The market for products sold by Seamap and the demand for the leasing of marine seismic equipment is dependent upon activity within the offshore, or marine, seismic industry, including the re-fitting of existing seismic vessels and the equipping of new vessels.
Current prices of oil and natural gas have resulted in increased activity in the oil and gas industry and in turn resulted in an increased demand for seismic services. This has contributed to an increased demand for leasing of our equipment. We cannot predict how long the current trend will last, but we believe that a depressed oil and gas industry results in lower demand, thus lower revenues from the leasing of our equipment. We do not quantitatively calculate utilization rates for our equipment lease pool. However, we do subjectively monitor factors which we believe reflect trends in utilization. We have relatively fixed costs within certain revenue ranges and, as a result, our earnings are particularly sensitive to changes in utilization and demand for our lease equipment.
We have responded to the increased demand for our services and products by adding new equipment to our lease pool and by introducing new products from our Seamap segment. During fiscal 2008 and 2007 we added approximately $26.0 million and $25.5 million, respectively, of equipment to our lease pool. We have also attempted to improve the utilization of our lease pool by establishing test facilities in Russia and in Singapore. Should the present growth for the seismic industry continue, we expect to add new equipment to our lease pool. We may also establish operating locations in new geographic areas, but we have no plans to do so at the current time.
We also may seek to expand our lease pool by acquiring different types of equipment or equipment which can be used in different types of seismic applications. We have done this in the past such as adding marine seismic equipment to our lease pool. We recently placed an order for equipment used in vertical seismic profiling ("VSP") applications. VSP is a technology in which seismic recording devices are introduced into a well bore, such as an oil or gas well. VSP technology has a wide array of application, some of which are not related to oil and gas exploration. These applications include 3D surface seismic surveys, well and reservoir monitoring, analysis of fluid treatments of oil and gas wells and underground storage monitoring. The amount of equipment that we have committed to acquire has not been material to date but could be in the future.
A significant portion of our revenues are generated from foreign sources. For the years ended January 31, 2008, 2007 and 2006, revenues from international customers totaled approximately $62.6 million, $37.3 million and $25.2 million, respectively. These amounts represent 82%, 76% and 73% of consolidated revenues in those fiscal years, respectively. The majority of our transactions with foreign customers are denominated in United States, Australian, Canadian and Singapore dollars, Russian rubles and British pounds sterling.
Our revenues and results of operations have not been materially impacted by inflation or changing prices in the past three fiscal years, except as described above.

Results of Operations
For the fiscal year ended January 31, 2008, we recorded operating income of approximately $16.4 million, compared to approximately $6.6 million for the fiscal year ended January 31, 2007 and approximately $7.5 million for the fiscal year ended January 31, 2006. The improvements in operating income are primarily attributable to increased equipment leasing activity and the contribution of the Seamap segment. However, our results for the year ended January 31, 2007 were negatively impacted by issues in our Seamap segment related to a new product that was introduced during this period as more fully discussed below.
Our Equipment Leasing segment recorded increased gross profit in the year ended January 31, 2008 of approximately $27.9 million, as compared to approximately $20.2 million and $15.4 million for the years ended January 31, 2007 and 2006, respectively. These increases were due primarily to the increased rental activity and the expansion of our lease pool of equipment during these periods.
Our Seamap segment recorded gross profits of $8.0 million, $3.3 million and $2.3 million in the years ended January 31, 2008, 2007 and 2006, respectively. These increases are primarily the result of increased sales of our GunLink and BuoyLink products and are in spite of the new product issues identified above.
Effective February 1, 2006, we adopted the provisions of Statement of Financial Accounting Standard ("SFAS") No. 123R, Share-Based Payment ("SFAS 123R"). Accordingly, the amount of expense recognized related to stock based compensation during the year ended January 31, 2008 was approximately $2.3 million, as compared to approximately $1.6 million in the year ended January 31, 2007 and $153,000 in the year ended January 31, 2006. Revenues and Cost of Sales
Equipment Leasing
Revenues and cost of sales from our Equipment Leasing segment is comprised of the following:

                                                     Year Ended January 31,
                                                 2008         2007         2006
                                                         (in thousands)
         Revenues:
         Equipment leasing                     $ 34,364     $ 24,942     $ 22,104
         Lease pool equipment sales               3,488        4,297        5,218
         New seismic equipment sales              9,350        5,071        1,046
         SAP equipment sales                      4,499        3,373        2,201

                                                 51,701       37,683       30,569
         Cost of sales:
         Lease pool depreciation                 10,403        7,612        8,310
         Lease pool impairment                        -            -          617
         Direct costs - equipment leasing         1,846        2,167        2,907
         Cost of lease pool equipment sales       1,019        1,961          950
         Cost of new seismic equipment sales      7,376        3,884          826
         Cost of SAP equipment sales              3,186        1,907        1,519

                                                 23,830       17,531       15,129

         Gross profit                          $ 27,871     $ 20,152     $ 15,440

         Gross profit margin                         54 %         53 %         51 %

In fiscal 2008 our equipment leasing revenues increased approximately $9.4 million, or 38% over fiscal 2007, and fiscal 2007 equipment leasing revenues increased approximately $2.8 million, or 13% over fiscal 2006. Equipment leasing revenues have increased in each of the past three fiscal years due to increased demand for seismic equipment, expansion into new geographic markets, including Russia and the CIS, and expansion of our lease pool, including equipment for marine applications. The demand for seismic equipment is primarily driven by the global oil and gas exploration issues discussed above. In fiscal 2008, we acquired approximately $26.0 million of new lease pool equipment due to additional demand from customers. However, approximately $13.0 million of this equipment was acquired in the fourth quarter and did not contribute significantly to our leasing revenues in fiscal 2008. Likewise, in fiscal 2007 we added approximately $25.5 million of new lease pool equipment, of which approximately $15.4 million was added in the fourth quarter of that year.

From time to time, we sell equipment from our lease pool based on specific customer demand or in order to redeploy our capital in other lease pool assets. These transactions tend to occur as opportunities arise and accordingly are difficult to predict. The gross profit and related gross profit margin from the sales of lease pool equipment amounted to approximately $2.5 million (71%) in fiscal 2008, $2.3 million (54%) in fiscal 2007, and $4.3 million (82%) in fiscal 2006. Often the equipment that is sold from our lease pool has been held by us, and therefore depreciated, for some period of time. Accordingly, the equipment sold may have a relatively low net book value at the time of the sale, resulting in a relatively high gross profit from the transaction. The amount of the gross profit on a particular transaction varies greatly based primarily upon the age of the equipment.
Occasionally, we sell new seismic equipment that we acquire from other manufacturers. Often these arrangements are structured with a significant down payment, with the balance financed over a period of time at a market rate of interest. In the year ended January 31, 2008, we entered into two such transactions in which we financed a portion of the selling price for periods of approximately 12 to 24 months. SAP regularly sells new hydrographic and oceanographic equipment to customers in Australia and throughout the Pacific Rim. The gross profit and related gross profit margin from the sale of new seismic, hydrographic and oceanographic equipment amounted to approximately $3.3 million (24%), $2.7 million (31%), and $895,000 (28%) in the years ended January 31, 2008, 2007 and 2006, respectively.
Depreciation expense related to lease pool equipment for fiscal 2008 amounted to approximately $10.4 million, as compared to approximately $7.6 million in fiscal 2007 and approximately $8.3 million in fiscal 2006. The increase in depreciation expense from fiscal 2007 to fiscal 2008 was attributable to the additions we made to our lease pool in fiscal 2007 and fiscal 2008. However, as a significant portion of the equipment was added in the fourth quarter of fiscal 2008 the impact of that equipment on depreciation expense for fiscal 2008 was not significant. The decline in depreciation expense from fiscal 2006 to fiscal 2007 was due to more of our equipment becoming fully depreciated. At January 31, 2008, lease pool assets with an acquisition cost of approximately $46.7 million were fully depreciated, yet remained in service. This compares to $41.0 million at January 31, 2007 and approximately $41.1 million at January 31, 2006. These assets, though fully depreciated, are expected to continue to generate revenues through leasing activity.
Our business generally parallels trends in the oil and gas industry. When the oil and gas industry was depressed over the period from 1998 to 2004, we experienced net losses for those periods. As the oil and gas industry is on an upward trend, we are experiencing increased demand for our equipment, including equipment that has been fully depreciated. Increased demand for our equipment results in higher revenues and generally has no impact on depreciation in the short term as our equipment is depreciated from the first month it is placed in service until it is fully depreciated. Depreciation expense is recorded monthly whether or not the equipment is actually generating revenues on a lease contract. During periods of high demand, such as the one we are currently experiencing, our ability to lease older equipment, (including fully depreciated equipment) is enhanced; whereas in periods of low demand, the opposite is true. As a result, revenues and depreciation expense will not necessarily directly correlate. Over the long-term, depreciation expense is impacted by increases in equipment purchases to meet growing demand for our leased equipment. We have been able to purchase equipment at discounts through volume purchase arrangements. A lower purchase price results in lower depreciation expense than in previous periods. Although some of the equipment in our lease pool has reached the end of its depreciable life, given the increased demand, the equipment continues to be in service and continues to generate revenues. Because the depreciable life of our equipment in our industry is determined more by technical obsolescence than by usage or wear and tear, some of our equipment, although fully depreciated, is still capable of functioning appropriately. Currently, in our industry, higher demand is generating more leasing revenues and older equipment is more in demand than in prior periods.
We recorded direct costs related to seismic leasing for fiscal 2008 in the amount of approximately $1.8 million as compared to approximately $2.2 million in fiscal 2007 and approximately $2.9 million in fiscal 2006. Direct costs typically fluctuate with leasing revenues, as the three main components of direct costs are freight, repairs and sublease expense. Costs in fiscal 2008 and fiscal 2007 decreased in spite of higher leasing revenues, primarily due to greater reimbursement of costs from our customers and lower costs to lease certain equipment from others.
We recorded a non-cash impairment charge of approximately $600,000 against our seismic equipment lease pool in fiscal 2006 attributable to land systems, cables, geophones, land peripherals, marine and other equipment.

Seamap
   Revenues and cost of sales for our Seamap segment are as follows:

                                              Year Ended January 31,
                                           2008         2007        2006
                                                  (in thousands)
               Equipment sales           $ 25,383     $ 12,274     $ 4,020
               Cost of equipment sales     17,381        8,927       1,735

               Gross profit              $  8,002     $  3,347     $ 2,285

               Gross profit margin             32 %         27 %        57 %

We acquired Seamap in July 2005; accordingly, our fiscal 2006 results do not include results related to Seamap for the full period. Aside from this effect, sales of Seamap equipment have increased significantly due primarily to sales of our GunLink and BuoyLink products, as well as ancillary products such as umbilicals and handling systems. In addition, fiscal 2007 and 2008 results were impacted by certain timing issues as discussed more fully below.
In September 2006, we were notified by a customer of certain mechanical failures relating to a specific version of our GunLink 4000 product that was introduced by our Seamap segment earlier that year. The GunLink product line is utilized on seismic vessels to coordinate and control the energy sources utilized in marine seismic surveys. This version of the GunLink 4000 product is designed to operate with an energy source, an air gun in this case, recently introduced by another manufacturer. In cooperation with our customer, we immediately began to investigate the cause of the failure. The investigation revealed a design flaw in this particular version of the GunLink 4000 product. The design flaw did not affect the functionality of the conventional air gun version of this product, which we confirmed through an evaluation of the conventional version. We have completed changes to correct the design flaw. Certain of these changes were implemented in all versions of the GunLink 4000 product to ensure compatibility in the production process. During this process we incurred significant costs, which we expect to be non-recurring, amounting to approximately $1.7 million in fiscal 2007. These costs include the cost to investigate and redesign the product, costs to support the operations of our customers during the process, including replacement components and on-site support, and replacement and refurbishment of some components of our inventory.
As a result of these problems, one GunLink 4000 system that we had expected to ship during the year was delayed and not delivered until March 2007. In addition, the order for an additional GunLink 4000 that had been scheduled for delivery during the year ended January 31, 2008 was converted to an order for a GunLink 2000 system, which was delivered in fiscal 2008. Had these shipments occurred as originally anticipated, revenues for equipment sales would have increased by approximately $2.0 million for the year ended January 31, 2007 and decreased by the same amount in fiscal 2008.
The gross profit margin for fiscal 2006 is not comparable to fiscal 2007 or fiscal 2008 due to the significantly lower level of sales and the product mix during that period. The gross profit margin increased in fiscal 2008 to 32% from 27% in fiscal 2007. This increase is impacted by a number of factors. During fiscal 2008 we moved the production of our GunLink products to our Singapore facility from our facility in the U.K. which resulted in generally lower labor and material costs for these products. Additionally, as the production process for the GunLink products has matured we have gained production efficiencies which have contributed to higher gross margins. Furthermore, the gross margin for fiscal 2007 was negatively impacted by the costs related to the design issue discussed above. Offsetting these factors, however, was the impact of sales in fiscal 2008 of various ancillary products such as umbilicals and handling systems which produced a much lower gross margin than our other products.
Prior to December 2007 in connection with the sale of each GunLink system we were required to pay a royalty to a party who had developed certain software utilized by those products. In December 2007 we purchased the intellectual property related to that software and, accordingly, are no longer required to pay the royalty. Had we owned this intellectual property during fiscal 2008 and 2007, we estimate that our gross profit for those periods would have been improved by approximately $1.7 million and $964,000, respectively. Operating Expenses
General and administrative expenses for fiscal 2008 amounted to approximately . . .