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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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22-2286646
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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2105 CityWest Blvd.
|
|
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Suite 400
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|
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Houston, Texas
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77042-2839
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
|
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ý
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Accelerated filer
|
o
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|
|
|
|
|
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
|
o
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PAGE
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PART I. Financial Information
|
|
Item 1. Financial Statements
|
|
Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014
|
|
Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2015 and 2014
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014
|
|
Footnotes to Unaudited Condensed Consolidated Financial Statements
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3. Quantitative and Qualitative Disclosures about Market Risk
|
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Item 4. Controls and Procedures
|
|
|
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PART II. Other Information
|
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Item 1. Legal Proceedings
|
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Item 1A. Risk Factors
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
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Item 5. Other Information
|
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Item 6. Exhibits
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
( In thousands, except share data)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
144,438
|
|
|
$
|
173,608
|
|
Accounts receivable, net
|
39,369
|
|
|
114,325
|
|
||
Unbilled receivables
|
24,098
|
|
|
22,599
|
|
||
Inventories
|
42,976
|
|
|
51,162
|
|
||
Prepaid expenses and other current assets
|
13,007
|
|
|
13,662
|
|
||
Total current assets
|
263,888
|
|
|
375,356
|
|
||
Deferred income tax asset
|
8,605
|
|
|
8,604
|
|
||
Property, plant, equipment and seismic rental equipment, net
|
79,739
|
|
|
69,840
|
|
||
Multi-client data library, net
|
128,598
|
|
|
118,669
|
|
||
Goodwill
|
26,289
|
|
|
27,388
|
|
||
Intangible assets, net
|
6,276
|
|
|
6,788
|
|
||
Other assets
|
10,064
|
|
|
10,612
|
|
||
Total assets
|
$
|
523,459
|
|
|
$
|
617,257
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
7,242
|
|
|
$
|
7,649
|
|
Accounts payable
|
29,150
|
|
|
36,863
|
|
||
Accrued expenses
|
50,849
|
|
|
65,264
|
|
||
Accrued multi-client data library royalties
|
15,604
|
|
|
35,219
|
|
||
Deferred revenue
|
11,327
|
|
|
8,262
|
|
||
Total current liabilities
|
114,172
|
|
|
153,257
|
|
||
Long-term debt, net of current maturities
|
182,421
|
|
|
182,945
|
|
||
Other long-term liabilities
|
144,979
|
|
|
143,804
|
|
||
Total liabilities
|
441,572
|
|
|
480,006
|
|
||
Redeemable noncontrolling interest
|
1,325
|
|
|
1,539
|
|
||
Equity:
|
|
|
|
||||
Common stock, $0.01 par value; authorized 200,000,000 shares; outstanding 164,686,976 and 164,484,095 shares at March 31, 2015 and December 31, 2014, respectively, net of treasury stock
|
1,647
|
|
|
1,645
|
|
||
Additional paid-in capital
|
889,255
|
|
|
887,749
|
|
||
Accumulated deficit
|
(789,673
|
)
|
|
(734,409
|
)
|
||
Accumulated other comprehensive loss
|
(14,152
|
)
|
|
(12,807
|
)
|
||
Treasury stock, at cost, 849,539 shares at both March 31, 2015 and December 31, 2014
|
(6,565
|
)
|
|
(6,565
|
)
|
||
Total stockholders’ equity
|
80,512
|
|
|
135,613
|
|
||
Noncontrolling interest
|
50
|
|
|
99
|
|
||
Total equity
|
80,562
|
|
|
135,712
|
|
||
Total liabilities and equity
|
$
|
523,459
|
|
|
$
|
617,257
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In thousands, except per share data)
|
||||||
Service revenues
|
$
|
20,080
|
|
|
$
|
110,696
|
|
Product revenues
|
20,498
|
|
|
34,002
|
|
||
Total net revenues
|
40,578
|
|
|
144,698
|
|
||
Cost of services
|
45,534
|
|
|
72,071
|
|
||
Cost of products
|
10,832
|
|
|
15,773
|
|
||
Gross profit (loss)
|
(15,788
|
)
|
|
56,854
|
|
||
Operating expenses:
|
|
|
|
||||
Research, development and engineering
|
7,720
|
|
|
9,039
|
|
||
Marketing and sales
|
7,833
|
|
|
9,213
|
|
||
General, administrative and other operating expenses
|
15,348
|
|
|
18,931
|
|
||
Total operating expenses
|
30,901
|
|
|
37,183
|
|
||
Income (loss) from operations
|
(46,689
|
)
|
|
19,671
|
|
||
Interest expense, net
|
(4,625
|
)
|
|
(4,797
|
)
|
||
Equity in losses of investments
|
—
|
|
|
(1,688
|
)
|
||
Other income (expense), net
|
(3,219
|
)
|
|
68,526
|
|
||
Income (loss) before income taxes
|
(54,533
|
)
|
|
81,712
|
|
||
Income tax expense
|
983
|
|
|
5,263
|
|
||
Net income (loss)
|
(55,516
|
)
|
|
76,449
|
|
||
Net (income) loss attributable to noncontrolling interests
|
252
|
|
|
(470
|
)
|
||
Net income (loss) attributable to ION
|
$
|
(55,264
|
)
|
|
$
|
75,979
|
|
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
(0.34
|
)
|
|
$
|
0.46
|
|
Diluted
|
$
|
(0.34
|
)
|
|
$
|
0.46
|
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
164,567
|
|
|
163,847
|
|
||
Diluted
|
164,567
|
|
|
164,061
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In thousands)
|
||||||
Net income (loss)
|
$
|
(55,516
|
)
|
|
$
|
76,449
|
|
Other comprehensive loss, net of taxes, as appropriate:
|
|
|
|
||||
Foreign currency translation adjustments
|
(1,345
|
)
|
|
486
|
|
||
Equity interest in investees' other comprehensive loss
|
—
|
|
|
(1,173
|
)
|
||
Other changes in other comprehensive income
|
—
|
|
|
26
|
|
||
Total other comprehensive loss, net of taxes
|
(1,345
|
)
|
|
(661
|
)
|
||
Comprehensive net income (loss)
|
(56,861
|
)
|
|
75,788
|
|
||
Comprehensive (income) loss attributable to noncontrolling interest
|
252
|
|
|
(470
|
)
|
||
Comprehensive net income (loss) attributable to ION
|
$
|
(56,609
|
)
|
|
$
|
75,318
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(55,516
|
)
|
|
$
|
76,449
|
|
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization (other than multi-client data library)
|
6,525
|
|
|
7,904
|
|
||
Amortization of multi-client data library
|
5,289
|
|
|
16,326
|
|
||
Stock-based compensation expense
|
1,480
|
|
|
2,777
|
|
||
Equity in losses of investments
|
—
|
|
|
1,688
|
|
||
Reduction of accrual for loss contingency related to legal proceedings
|
—
|
|
|
(69,557
|
)
|
||
Deferred income taxes
|
(12
|
)
|
|
(884
|
)
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
74,388
|
|
|
60,646
|
|
||
Unbilled receivables
|
(1,523
|
)
|
|
(18,945
|
)
|
||
Inventories
|
(468
|
)
|
|
(144
|
)
|
||
Accounts payable, accrued expenses and accrued royalties
|
(39,144
|
)
|
|
(5,359
|
)
|
||
Deferred revenue
|
3,137
|
|
|
(4,678
|
)
|
||
Other assets and liabilities
|
(862
|
)
|
|
(3,541
|
)
|
||
Net cash (used in) provided by operating activities
|
(6,706
|
)
|
|
62,682
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Cash invested in multi-client data library
|
(9,088
|
)
|
|
(22,353
|
)
|
||
Purchase of property, plant, equipment and seismic rental assets
|
(11,994
|
)
|
|
(1,997
|
)
|
||
Repayment of advance to INOVA Geophysical
|
—
|
|
|
1,000
|
|
||
Net investment in and advances to OceanGeo B.V. prior to its consolidation
|
—
|
|
|
(3,074
|
)
|
||
Other investing activities
|
257
|
|
|
605
|
|
||
Net cash used in investing activities
|
(20,825
|
)
|
|
(25,819
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under revolving line of credit
|
—
|
|
|
15,000
|
|
||
Payments on notes payable and long-term debt
|
(2,066
|
)
|
|
(2,755
|
)
|
||
Other financing activities
|
31
|
|
|
166
|
|
||
Net cash (used in) provided by financing activities
|
(2,035
|
)
|
|
12,411
|
|
||
Effect of change in foreign currency exchange rates on cash and cash equivalents
|
396
|
|
|
(24
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(29,170
|
)
|
|
49,250
|
|
||
Cash and cash equivalents at beginning of period
|
173,608
|
|
|
148,056
|
|
||
Cash and cash equivalents at end of period
|
$
|
144,438
|
|
|
$
|
197,306
|
|
|
Severance Charges
(a)
|
|
Facility Charges
(b)
|
|
Total
|
||||||
Cost of goods sold
|
$
|
1,813
|
|
|
$
|
—
|
|
|
$
|
1,813
|
|
Operating expenses
|
198
|
|
|
—
|
|
|
198
|
|
|||
Other expense
|
—
|
|
|
1,913
|
|
|
1,913
|
|
|||
Net income attributable to noncontrolling interest
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
|||
Consolidated total
|
$
|
1,839
|
|
|
$
|
1,913
|
|
|
$
|
3,752
|
|
(a)
|
Represents severance charges related to first quarter 2015 restructuring, a portion of which relates to a noncontrolling interest.
|
(b)
|
Represents facility charges related to first quarter 2015 restructuring.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues:
|
|
|
|
||||
Solutions:
|
|
|
|
||||
New Venture
|
$
|
5,029
|
|
|
$
|
32,738
|
|
Data Library
|
2,137
|
|
|
13,217
|
|
||
Total multi-client revenues
|
7,166
|
|
|
45,955
|
|
||
Data Processing
|
11,833
|
|
|
43,286
|
|
||
Total
|
$
|
18,999
|
|
|
$
|
89,241
|
|
Systems:
|
|
|
|
||||
Towed Streamer
|
$
|
5,165
|
|
|
$
|
11,851
|
|
Other
|
7,604
|
|
|
12,997
|
|
||
Total
|
$
|
12,769
|
|
|
$
|
24,848
|
|
Software:
|
|
|
|
||||
Software Systems
|
$
|
7,729
|
|
|
$
|
9,154
|
|
Services
|
1,081
|
|
|
885
|
|
||
Total
|
$
|
8,810
|
|
|
$
|
10,039
|
|
Ocean Bottom Services
|
$
|
—
|
|
|
$
|
20,570
|
|
Total
|
$
|
40,578
|
|
|
$
|
144,698
|
|
Gross profit (loss):
|
|
|
|
||||
Solutions
|
$
|
(10,392
|
)
|
|
$
|
33,011
|
|
Systems
|
4,559
|
|
|
11,417
|
|
||
Software
|
5,590
|
|
|
7,257
|
|
||
Ocean Bottom Services
|
(15,545
|
)
|
|
5,169
|
|
||
Total
|
$
|
(15,788
|
)
|
|
$
|
56,854
|
|
Gross margin:
|
|
|
|
||||
Solutions
|
(55
|
)%
|
|
37
|
%
|
||
Systems
|
36
|
%
|
|
46
|
%
|
||
Software
|
63
|
%
|
|
72
|
%
|
||
Ocean Bottom Services
|
—
|
%
|
|
25
|
%
|
||
Total
|
(39
|
)%
|
|
39
|
%
|
||
Income (loss) from operations:
|
|
|
|
||||
Solutions
|
$
|
(21,778
|
)
|
|
$
|
19,112
|
|
Systems
|
1,014
|
|
|
3,371
|
|
||
Software
|
3,335
|
|
|
5,128
|
|
||
Ocean Bottom Services
|
(17,559
|
)
|
|
4,162
|
|
||
Corporate and other
|
(11,701
|
)
|
|
(12,102
|
)
|
||
Income (loss) from operations
|
(46,689
|
)
|
|
19,671
|
|
||
Interest expense, net
|
(4,625
|
)
|
|
(4,797
|
)
|
||
Equity in losses of investments
|
—
|
|
|
(1,688
|
)
|
||
Other income (expense), net
|
(3,219
|
)
|
|
68,526
|
|
||
Income (loss) before income taxes
|
$
|
(54,533
|
)
|
|
$
|
81,712
|
|
|
|
|
|
Obligations (in thousands)
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Senior secured second-priority notes
|
|
$
|
175,000
|
|
|
$
|
175,000
|
|
Equipment capital leases
|
|
14,391
|
|
|
15,059
|
|
||
Other debt
|
|
272
|
|
|
535
|
|
||
Total
|
|
189,663
|
|
|
190,594
|
|
||
Current portion of long-term debt and lease obligations
|
|
(7,242
|
)
|
|
(7,649
|
)
|
||
Non-current portion of long-term debt and lease obligations
|
|
$
|
182,421
|
|
|
$
|
182,945
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net income (loss) attributable to ION
|
$
|
(55,264
|
)
|
|
$
|
75,979
|
|
Weighted average number of common shares outstanding
|
164,567
|
|
|
163,847
|
|
||
Effect of dilutive stock awards
|
—
|
|
|
214
|
|
||
Weighted average number of diluted common shares outstanding
|
164,567
|
|
|
164,061
|
|
||
Basic net income (loss) per share
|
$
|
(0.34
|
)
|
|
$
|
0.46
|
|
Diluted net income (loss) per share
|
$
|
(0.34
|
)
|
|
$
|
0.46
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Reduction of loss contingency related to legal proceedings (Footnote 7)
|
$
|
—
|
|
|
$
|
69,557
|
|
Facility restructuring charge (Footnote 2)
|
(1,913
|
)
|
|
—
|
|
||
Other expense, net
|
(1,306
|
)
|
|
(1,031
|
)
|
||
Total other income (expense), net
|
$
|
(3,219
|
)
|
|
$
|
68,526
|
|
The following table is a summary of inventories (in thousands):
|
March 31, 2015
|
|
December 31, 2014
|
||||
Raw materials and subassemblies
|
$
|
43,641
|
|
|
$
|
41,461
|
|
Work-in-process
|
9,074
|
|
|
18,221
|
|
||
Finished goods
|
15,148
|
|
|
21,284
|
|
||
Reserve for excess and obsolete inventories
|
(24,887
|
)
|
|
(29,804
|
)
|
||
Total
|
$
|
42,976
|
|
|
$
|
51,162
|
|
The following table is a summary of other long-term liabilities (in thousands):
|
March 31, 2015
|
|
December 31, 2014
|
||||
Accrual for loss contingency related to legal proceedings (Footnote 7)
|
$
|
123,770
|
|
|
$
|
123,770
|
|
Deferred rents
|
13,896
|
|
|
13,416
|
|
||
Facility restructuring accrual
|
4,018
|
|
|
3,353
|
|
||
Other long-term liabilities
|
3,295
|
|
|
3,265
|
|
||
Total
|
$
|
144,979
|
|
|
$
|
143,804
|
|
|
|
Foreign currency translation adjustments
|
|
Total
|
||||
Accumulated other comprehensive loss at December 31, 2014
|
|
$
|
(12,807
|
)
|
|
$
|
(12,807
|
)
|
Net current-period other comprehensive income (loss)
|
|
(1,345
|
)
|
|
(1,345
|
)
|
||
Accumulated other comprehensive loss at March 31, 2015
|
|
$
|
(14,152
|
)
|
|
$
|
(14,152
|
)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
497
|
|
|
$
|
912
|
|
Income taxes
|
$
|
5,041
|
|
|
$
|
5,020
|
|
Non-cash items from investing and financing activities:
|
|
|
|
||||
Purchases of computer equipment financed through capital leases
|
$
|
1,178
|
|
|
$
|
1,952
|
|
Investment in multi-client data library financed through accounts payable
|
$
|
7,018
|
|
|
$
|
—
|
|
Transfer of inventory to property, plant, equipment and seismic rental equipment
|
$
|
8,485
|
|
(a)
|
$
|
2,308
|
|
(a)
|
This transfer of inventory to property, plant, equipment and seismic rental equipment relates to ocean bottom seismic equipment manufactured by the Company to be deployed in the acquisition of ocean bottom seismic data.
|
Pro forma Consolidated ION Income Statement Information
|
|
Three Months Ended March 31, 2014
|
|||
Net revenues
|
|
$
|
153,882
|
|
|
Income from operations
|
|
$
|
22,788
|
|
|
Net income
|
|
$
|
77,009
|
|
|
Net income attributable to ION
|
|
$
|
76,539
|
|
|
Basic and diluted net income per common share
|
|
$
|
0.47
|
|
|
March 1, 2015
|
Risk-free interest rates
|
2.03%
|
Expected lives (in years)
|
2.7
|
Expected dividend yield
|
—%
|
Expected volatility
|
60.27%
|
•
|
ION Geophysical Corporation and the Guarantors (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting).
|
•
|
All other subsidiaries of ION Geophysical Corporation that are not Guarantors.
|
•
|
The consolidating adjustments necessary to present ION Geophysical Corporation’s results on a consolidated basis.
|
|
March 31, 2015
|
||||||||||||||||||
Balance Sheet
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
73,704
|
|
|
$
|
—
|
|
|
$
|
70,734
|
|
|
$
|
—
|
|
|
$
|
144,438
|
|
Accounts receivable, net
|
—
|
|
|
20,410
|
|
|
18,959
|
|
|
—
|
|
|
39,369
|
|
|||||
Unbilled receivables
|
—
|
|
|
20,604
|
|
|
3,494
|
|
|
—
|
|
|
24,098
|
|
|||||
Inventories
|
—
|
|
|
3,966
|
|
|
39,010
|
|
|
—
|
|
|
42,976
|
|
|||||
Prepaid expenses and other current assets
|
5,827
|
|
|
3,273
|
|
|
8,404
|
|
|
(4,497
|
)
|
|
13,007
|
|
|||||
Total current assets
|
79,531
|
|
|
48,253
|
|
|
140,601
|
|
|
(4,497
|
)
|
|
263,888
|
|
|||||
Deferred income tax asset
|
(7,852
|
)
|
|
6,675
|
|
|
750
|
|
|
9,032
|
|
|
8,605
|
|
|||||
Property, plant, equipment and seismic rental equipment, net
|
5,972
|
|
|
30,748
|
|
|
43,019
|
|
|
—
|
|
|
79,739
|
|
|||||
Multi-client data library, net
|
—
|
|
|
112,417
|
|
|
16,181
|
|
|
—
|
|
|
128,598
|
|
|||||
Investment in subsidiaries
|
631,284
|
|
|
258,010
|
|
|
—
|
|
|
(889,294
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
26,289
|
|
|
—
|
|
|
26,289
|
|
|||||
Intangible assets, net
|
—
|
|
|
5,822
|
|
|
454
|
|
|
—
|
|
|
6,276
|
|
|||||
Intercompany receivables
|
43,490
|
|
|
—
|
|
|
—
|
|
|
(43,490
|
)
|
|
—
|
|
|||||
Other assets
|
8,935
|
|
|
167
|
|
|
962
|
|
|
—
|
|
|
10,064
|
|
|||||
Total assets
|
$
|
761,360
|
|
|
$
|
462,092
|
|
|
$
|
228,256
|
|
|
$
|
(928,249
|
)
|
|
$
|
523,459
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of long-term debt
|
$
|
—
|
|
|
$
|
6,880
|
|
|
$
|
362
|
|
|
$
|
—
|
|
|
$
|
7,242
|
|
Accounts payable
|
2,260
|
|
|
16,246
|
|
|
10,644
|
|
|
—
|
|
|
29,150
|
|
|||||
Accrued expenses
|
5,268
|
|
|
24,505
|
|
|
16,259
|
|
|
4,817
|
|
|
50,849
|
|
|||||
Accrued multi-client data library royalties
|
—
|
|
|
15,040
|
|
|
564
|
|
|
—
|
|
|
15,604
|
|
|||||
Deferred revenue
|
—
|
|
|
8,346
|
|
|
2,981
|
|
|
—
|
|
|
11,327
|
|
|||||
Total current liabilities
|
7,528
|
|
|
71,017
|
|
|
30,810
|
|
|
4,817
|
|
|
114,172
|
|
|||||
Long-term debt, net of current maturities
|
175,000
|
|
|
7,345
|
|
|
76
|
|
|
—
|
|
|
182,421
|
|
|||||
Intercompany payables
|
495,667
|
|
|
25,268
|
|
|
18,218
|
|
|
(539,153
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
2,653
|
|
|
130,545
|
|
|
12,063
|
|
|
(282
|
)
|
|
144,979
|
|
|||||
Total liabilities
|
680,848
|
|
|
234,175
|
|
|
61,167
|
|
|
(534,618
|
)
|
|
441,572
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
1,325
|
|
|
—
|
|
|
1,325
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
1,647
|
|
|
290,460
|
|
|
19,138
|
|
|
(309,598
|
)
|
|
1,647
|
|
|||||
Additional paid-in capital
|
889,255
|
|
|
180,700
|
|
|
234,234
|
|
|
(414,934
|
)
|
|
889,255
|
|
|||||
Accumulated earnings (deficit)
|
(789,673
|
)
|
|
170,153
|
|
|
3,895
|
|
|
(174,048
|
)
|
|
(789,673
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
(14,152
|
)
|
|
4,869
|
|
|
(14,155
|
)
|
|
9,286
|
|
|
(14,152
|
)
|
|||||
Due from ION Geophysical Corporation
|
—
|
|
|
(418,265
|
)
|
|
(77,398
|
)
|
|
495,663
|
|
|
—
|
|
|||||
Treasury stock
|
(6,565
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,565
|
)
|
|||||
Total stockholders’ equity
|
80,512
|
|
|
227,917
|
|
|
165,714
|
|
|
(393,631
|
)
|
|
80,512
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|||||
Total equity
|
80,512
|
|
|
227,917
|
|
|
165,764
|
|
|
(393,631
|
)
|
|
80,562
|
|
|||||
Total liabilities and equity
|
$
|
761,360
|
|
|
$
|
462,092
|
|
|
$
|
228,256
|
|
|
$
|
(928,249
|
)
|
|
$
|
523,459
|
|
|
December 31, 2014
|
||||||||||||||||||
Balance Sheet
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
109,514
|
|
|
$
|
—
|
|
|
$
|
64,094
|
|
|
$
|
—
|
|
|
$
|
173,608
|
|
Accounts receivable, net
|
123
|
|
|
49,892
|
|
|
64,310
|
|
|
—
|
|
|
114,325
|
|
|||||
Unbilled receivables
|
—
|
|
|
18,548
|
|
|
4,051
|
|
|
—
|
|
|
22,599
|
|
|||||
Inventories
|
—
|
|
|
4,013
|
|
|
47,149
|
|
|
—
|
|
|
51,162
|
|
|||||
Prepaid expenses and other current assets
|
6,692
|
|
|
2,697
|
|
|
8,769
|
|
|
(4,496
|
)
|
|
13,662
|
|
|||||
Total current assets
|
116,329
|
|
|
75,150
|
|
|
188,373
|
|
|
(4,496
|
)
|
|
375,356
|
|
|||||
Deferred income tax asset
|
(7,852
|
)
|
|
6,675
|
|
|
749
|
|
|
9,032
|
|
|
8,604
|
|
|||||
Property, plant, equipment and seismic rental equipment, net
|
6,412
|
|
|
33,065
|
|
|
30,363
|
|
|
—
|
|
|
69,840
|
|
|||||
Multi-client data library, net
|
—
|
|
|
96,423
|
|
|
22,246
|
|
|
—
|
|
|
118,669
|
|
|||||
Investment in subsidiaries
|
675,499
|
|
|
278,294
|
|
|
—
|
|
|
(953,793
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
27,388
|
|
|
—
|
|
|
27,388
|
|
|||||
Intangible assets, net
|
—
|
|
|
6,254
|
|
|
534
|
|
|
—
|
|
|
6,788
|
|
|||||
Intercompany receivables
|
29,979
|
|
|
—
|
|
|
—
|
|
|
(29,979
|
)
|
|
—
|
|
|||||
Other assets
|
10,191
|
|
|
147
|
|
|
274
|
|
|
—
|
|
|
10,612
|
|
|||||
Total assets
|
$
|
830,558
|
|
|
$
|
496,008
|
|
|
$
|
269,927
|
|
|
$
|
(979,236
|
)
|
|
$
|
617,257
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of long-term debt
|
$
|
—
|
|
|
$
|
6,965
|
|
|
$
|
684
|
|
|
$
|
—
|
|
|
$
|
7,649
|
|
Accounts payable
|
4,308
|
|
|
12,028
|
|
|
20,527
|
|
|
—
|
|
|
36,863
|
|
|||||
Accrued expenses
|
3,904
|
|
|
34,738
|
|
|
21,807
|
|
|
4,815
|
|
|
65,264
|
|
|||||
Accrued multi-client data library royalties
|
—
|
|
|
34,624
|
|
|
595
|
|
|
—
|
|
|
35,219
|
|
|||||
Deferred revenue
|
—
|
|
|
5,263
|
|
|
2,999
|
|
|
—
|
|
|
8,262
|
|
|||||
Total current liabilities
|
8,212
|
|
|
93,618
|
|
|
46,612
|
|
|
4,815
|
|
|
153,257
|
|
|||||
Long-term debt, net of current maturities
|
175,000
|
|
|
7,839
|
|
|
106
|
|
|
—
|
|
|
182,945
|
|
|||||
Intercompany payables
|
509,124
|
|
|
8,892
|
|
|
21,087
|
|
|
(539,103
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
2,609
|
|
|
130,985
|
|
|
10,489
|
|
|
(279
|
)
|
|
143,804
|
|
|||||
Total liabilities
|
694,945
|
|
|
241,334
|
|
|
78,294
|
|
|
(534,567
|
)
|
|
480,006
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
1,539
|
|
|
—
|
|
|
1,539
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
1,645
|
|
|
290,460
|
|
|
19,138
|
|
|
(309,598
|
)
|
|
1,645
|
|
|||||
Additional paid-in capital
|
887,749
|
|
|
180,700
|
|
|
234,234
|
|
|
(414,934
|
)
|
|
887,749
|
|
|||||
Accumulated earnings (deficit)
|
(734,409
|
)
|
|
208,846
|
|
|
26,981
|
|
|
(235,827
|
)
|
|
(734,409
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
(12,807
|
)
|
|
6,229
|
|
|
(12,795
|
)
|
|
6,566
|
|
|
(12,807
|
)
|
|||||
Due from ION Geophysical Corporation
|
—
|
|
|
(431,561
|
)
|
|
(77,563
|
)
|
|
509,124
|
|
|
—
|
|
|||||
Treasury stock
|
(6,565
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,565
|
)
|
|||||
Total stockholders’ equity
|
135,613
|
|
|
254,674
|
|
|
189,995
|
|
|
(444,669
|
)
|
|
135,613
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
|||||
Total equity
|
135,613
|
|
|
254,674
|
|
|
190,094
|
|
|
(444,669
|
)
|
|
135,712
|
|
|||||
Total liabilities and equity
|
$
|
830,558
|
|
|
$
|
496,008
|
|
|
$
|
269,927
|
|
|
$
|
(979,236
|
)
|
|
$
|
617,257
|
|
|
Three Months Ended March 31, 2015
|
||||||||||||||||||
Income Statement
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
18,849
|
|
|
$
|
22,135
|
|
|
$
|
(406
|
)
|
|
$
|
40,578
|
|
Cost of sales
|
—
|
|
|
24,775
|
|
|
31,997
|
|
|
(406
|
)
|
|
56,366
|
|
|||||
Gross loss
|
—
|
|
|
(5,926
|
)
|
|
(9,862
|
)
|
|
—
|
|
|
(15,788
|
)
|
|||||
Total operating expenses
|
7,916
|
|
|
13,080
|
|
|
9,905
|
|
|
—
|
|
|
30,901
|
|
|||||
Loss from operations
|
(7,916
|
)
|
|
(19,006
|
)
|
|
(19,767
|
)
|
|
—
|
|
|
(46,689
|
)
|
|||||
Interest expense, net
|
(4,551
|
)
|
|
(72
|
)
|
|
(2
|
)
|
|
—
|
|
|
(4,625
|
)
|
|||||
Intercompany interest, net
|
139
|
|
|
(657
|
)
|
|
518
|
|
|
—
|
|
|
—
|
|
|||||
Equity in losses of investments
|
(42,857
|
)
|
|
(18,922
|
)
|
|
—
|
|
|
61,779
|
|
|
—
|
|
|||||
Other income (expense)
|
(29
|
)
|
|
15
|
|
|
(3,205
|
)
|
|
—
|
|
|
(3,219
|
)
|
|||||
Net loss before income taxes
|
(55,214
|
)
|
|
(38,642
|
)
|
|
(22,456
|
)
|
|
61,779
|
|
|
(54,533
|
)
|
|||||
Income tax expense
|
50
|
|
|
51
|
|
|
882
|
|
|
—
|
|
|
983
|
|
|||||
Net loss
|
(55,264
|
)
|
|
(38,693
|
)
|
|
(23,338
|
)
|
|
61,779
|
|
|
(55,516
|
)
|
|||||
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|
252
|
|
|||||
Net loss attributable to ION
|
(55,264
|
)
|
|
(38,693
|
)
|
|
(23,086
|
)
|
|
61,779
|
|
|
(55,264
|
)
|
|||||
Comprehensive net loss
|
$
|
(56,609
|
)
|
|
$
|
(40,053
|
)
|
|
$
|
(24,698
|
)
|
|
$
|
64,499
|
|
|
$
|
(56,861
|
)
|
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|
252
|
|
|||||
Comprehensive net loss attributable to ION
|
$
|
(56,609
|
)
|
|
$
|
(40,053
|
)
|
|
$
|
(24,446
|
)
|
|
$
|
64,499
|
|
|
$
|
(56,609
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2014
|
||||||||||||||||||
Income Statement
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
78,122
|
|
|
$
|
66,576
|
|
|
$
|
—
|
|
|
$
|
144,698
|
|
Cost of sales
|
—
|
|
|
43,996
|
|
|
43,848
|
|
|
—
|
|
|
87,844
|
|
|||||
Gross profit
|
—
|
|
|
34,126
|
|
|
22,728
|
|
|
—
|
|
|
56,854
|
|
|||||
Total operating expenses
|
9,021
|
|
|
15,255
|
|
|
12,907
|
|
|
—
|
|
|
37,183
|
|
|||||
Income (loss) from operations
|
(9,021
|
)
|
|
18,871
|
|
|
9,821
|
|
|
—
|
|
|
19,671
|
|
|||||
Interest expense, net
|
(4,573
|
)
|
|
(42
|
)
|
|
(182
|
)
|
|
—
|
|
|
(4,797
|
)
|
|||||
Intercompany interest, net
|
66
|
|
|
(435
|
)
|
|
369
|
|
|
—
|
|
|
—
|
|
|||||
Equity in earnings (losses) of investments
|
89,488
|
|
|
3,856
|
|
|
738
|
|
|
(95,770
|
)
|
|
(1,688
|
)
|
|||||
Other income (expense)
|
497
|
|
|
69,911
|
|
|
(1,882
|
)
|
|
—
|
|
|
68,526
|
|
|||||
Net income before income taxes
|
76,457
|
|
|
92,161
|
|
|
8,864
|
|
|
(95,770
|
)
|
|
81,712
|
|
|||||
Income tax expense
|
478
|
|
|
332
|
|
|
4,453
|
|
|
—
|
|
|
5,263
|
|
|||||
Net income
|
75,979
|
|
|
91,829
|
|
|
4,411
|
|
|
(95,770
|
)
|
|
76,449
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(470
|
)
|
|
—
|
|
|
(470
|
)
|
|||||
Net income attributable to ION
|
75,979
|
|
|
91,829
|
|
|
3,941
|
|
|
(95,770
|
)
|
|
75,979
|
|
|||||
Comprehensive net income
|
$
|
75,318
|
|
|
$
|
91,828
|
|
|
$
|
4,901
|
|
|
$
|
(96,259
|
)
|
|
$
|
75,788
|
|
Comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(470
|
)
|
|
—
|
|
|
(470
|
)
|
|||||
Comprehensive net income attributable to ION
|
$
|
75,318
|
|
|
$
|
91,828
|
|
|
$
|
4,431
|
|
|
$
|
(96,259
|
)
|
|
$
|
75,318
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
||||||||||||||
Statement of Cash Flows
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Total Consolidated
|
||||||||
|
(In thousands)
|
||||||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Net cash provided by (used in) operating activities
|
$
|
(62,480
|
)
|
|
$
|
41,328
|
|
|
$
|
14,446
|
|
|
$
|
(6,706
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Cash invested in multi-client data library
|
—
|
|
|
(9,055
|
)
|
|
(33
|
)
|
|
(9,088
|
)
|
||||
Purchase of property, plant, equipment and seismic rental equipment
|
(329
|
)
|
|
(1,133
|
)
|
|
(10,532
|
)
|
|
(11,994
|
)
|
||||
Other investing activities
|
—
|
|
|
257
|
|
|
—
|
|
|
257
|
|
||||
Net cash used in investing activities
|
(329
|
)
|
|
(9,931
|
)
|
|
(10,565
|
)
|
|
(20,825
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Payments on notes payable and long-term debt
|
—
|
|
|
(1,725
|
)
|
|
(341
|
)
|
|
(2,066
|
)
|
||||
Intercompany lending
|
26,968
|
|
|
(29,672
|
)
|
|
2,704
|
|
|
—
|
|
||||
Other financing activities
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
||||
Net cash provided by (used in) financing activities
|
26,999
|
|
|
(31,397
|
)
|
|
2,363
|
|
|
(2,035
|
)
|
||||
Effect of change in foreign currency exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
396
|
|
|
396
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
(35,810
|
)
|
|
—
|
|
|
6,640
|
|
|
(29,170
|
)
|
||||
Cash and cash equivalents at beginning of period
|
109,514
|
|
|
—
|
|
|
64,094
|
|
|
173,608
|
|
||||
Cash and cash equivalents at end of period
|
$
|
73,704
|
|
|
$
|
—
|
|
|
$
|
70,734
|
|
|
$
|
144,438
|
|
|
Three Months Ended March 31, 2014
|
||||||||||||||
Statement of Cash Flows
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Total Consolidated
|
||||||||
|
(In thousands)
|
||||||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
15,105
|
|
|
$
|
19,989
|
|
|
$
|
27,588
|
|
|
$
|
62,682
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Investment in multi-client data library
|
—
|
|
|
(22,299
|
)
|
|
(54
|
)
|
|
(22,353
|
)
|
||||
Purchase of property, plant, equipment and seismic rental equipment
|
(551
|
)
|
|
(1,230
|
)
|
|
(216
|
)
|
|
(1,997
|
)
|
||||
Repayment of advance to INOVA Geophysical
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Net investment in and advances to OceanGeo B.V. prior to its consolidation
|
—
|
|
|
—
|
|
|
(3,074
|
)
|
|
(3,074
|
)
|
||||
Other investing activities
|
579
|
|
|
26
|
|
|
—
|
|
|
605
|
|
||||
Net cash provided by (used in) investing activities
|
1,028
|
|
|
(23,503
|
)
|
|
(3,344
|
)
|
|
(25,819
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Borrowings under revolving line of credit
|
15,000
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
||||
Payments on notes payable and long-term debt
|
—
|
|
|
(1,365
|
)
|
|
(1,390
|
)
|
|
(2,755
|
)
|
||||
Intercompany lending
|
(1,155
|
)
|
|
6,418
|
|
|
(5,263
|
)
|
|
—
|
|
||||
Other financing activities
|
166
|
|
|
—
|
|
|
—
|
|
|
166
|
|
||||
Net cash provided by (used in) financing activities
|
14,011
|
|
|
5,053
|
|
|
(6,653
|
)
|
|
12,411
|
|
||||
Effect of change in foreign currency exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
(24
|
)
|
||||
Net increase in cash and cash equivalents
|
30,144
|
|
|
1,539
|
|
|
17,567
|
|
|
49,250
|
|
||||
Cash and cash equivalents at beginning of period
|
124,701
|
|
|
—
|
|
|
23,355
|
|
|
148,056
|
|
||||
Cash and cash equivalents at end of period
|
$
|
154,845
|
|
|
$
|
1,539
|
|
|
$
|
40,922
|
|
|
$
|
197,306
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues:
|
|
|
|
||||
Solutions:
|
|
|
|
||||
New Venture
|
$
|
5,029
|
|
|
$
|
32,738
|
|
Data Library
|
2,137
|
|
|
13,217
|
|
||
Total multi-client revenues
|
7,166
|
|
|
45,955
|
|
||
Data Processing
|
11,833
|
|
|
43,286
|
|
||
Total
|
$
|
18,999
|
|
|
$
|
89,241
|
|
Systems:
|
|
|
|
||||
Towed Streamer
|
$
|
5,165
|
|
|
$
|
11,851
|
|
Other
|
7,604
|
|
|
12,997
|
|
||
Total
|
$
|
12,769
|
|
|
$
|
24,848
|
|
Software:
|
|
|
|
||||
Software Systems
|
$
|
7,729
|
|
|
$
|
9,154
|
|
Services
|
1,081
|
|
|
885
|
|
||
Total
|
$
|
8,810
|
|
|
$
|
10,039
|
|
Ocean Bottom Services
|
$
|
—
|
|
|
$
|
20,570
|
|
Total
|
$
|
40,578
|
|
|
$
|
144,698
|
|
Gross profit (loss):
|
|
|
|
||||
Solutions
|
$
|
(10,392
|
)
|
|
$
|
33,011
|
|
Systems
|
4,559
|
|
|
11,417
|
|
||
Software
|
5,590
|
|
|
7,257
|
|
||
Ocean Bottom Services
|
(15,545
|
)
|
|
5,169
|
|
||
Total
|
$
|
(15,788
|
)
|
|
$
|
56,854
|
|
Gross margin:
|
|
|
|
||||
Solutions
|
(55
|
)%
|
|
37
|
%
|
||
Systems
|
36
|
%
|
|
46
|
%
|
||
Software
|
63
|
%
|
|
72
|
%
|
||
Ocean Bottom Services
|
—
|
%
|
|
25
|
%
|
||
Total
|
(39
|
)%
|
|
39
|
%
|
||
Income (loss) from operations:
|
|
|
|
||||
Solutions
|
$
|
(21,778
|
)
|
|
$
|
19,112
|
|
Systems
|
1,014
|
|
|
3,371
|
|
||
Software
|
3,335
|
|
|
5,128
|
|
||
Ocean Bottom Services
|
(17,559
|
)
|
|
4,162
|
|
||
Corporate and other
|
(11,701
|
)
|
|
(12,102
|
)
|
||
Total
|
$
|
(46,689
|
)
|
|
$
|
19,671
|
|
Operating margin:
|
|
|
|
||||
Solutions
|
(115
|
)%
|
|
21
|
%
|
||
Systems
|
8
|
%
|
|
14
|
%
|
||
Software
|
38
|
%
|
|
51
|
%
|
||
Ocean Bottom Services
|
—
|
%
|
|
20
|
%
|
||
Corporate and other
|
(29
|
)%
|
|
(8
|
)%
|
||
Total
|
(115
|
)%
|
|
14
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Reduction of loss contingency related to legal proceedings (Footnote 7)
|
$
|
—
|
|
|
$
|
69,557
|
|
Facility restructuring charge (Footnote 2)
|
(1,913
|
)
|
|
—
|
|
||
Other expense, net
|
(1,306
|
)
|
|
(1,031
|
)
|
||
Total other income (expense), net
|
$
|
(3,219
|
)
|
|
$
|
68,526
|
|
Date
|
|
Percentage
|
2015
|
|
104.063%
|
2016
|
|
102.031%
|
2017 and thereafter
|
|
100.000%
|
The following table is a summary of net revenues by geographic area (in thousands):
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues by geographic area:
|
|
|
|
||||
North America
|
$
|
11,283
|
|
|
$
|
34,277
|
|
Europe
|
9,548
|
|
|
23,955
|
|
||
Asia Pacific
|
6,784
|
|
|
12,900
|
|
||
Latin America
|
4,297
|
|
|
53,848
|
|
||
Middle East
|
4,258
|
|
|
9,733
|
|
||
Africa
|
3,862
|
|
|
9,173
|
|
||
Other
|
546
|
|
|
812
|
|
||
Total
|
$
|
40,578
|
|
|
$
|
144,698
|
|
•
|
the expected outcome of the WesternGeco litigation and future potential adverse effects on our liquidity in the event that we must collateralize our appeal bond for the full amount of the bond or are unsuccessful in our appeal of the judgment;
|
•
|
future oil and gas commodity prices;
|
•
|
future levels of capital expenditures of our customers for seismic activities;
|
•
|
the effects of current and future worldwide economic conditions (particularly in developing countries) and demand for oil and natural gas and seismic equipment and services;
|
•
|
future borrowing capcity on our
Credit Facility
based on future levels of our borrowing base;
|
•
|
the effects of current and future unrest in the Middle East, North Africa and other regions, including Ukraine;
|
•
|
the timing of anticipated revenues and the recognition of those revenues for financial accounting purposes;
|
•
|
the effects of ongoing and future industry consolidation, including, in particular, the effects of consolidation and vertical integration in the towed marine seismic streamers market;
|
•
|
the timing of future revenue realization of anticipated orders for multi-client survey projects and data processing work in our Solutions segment;
|
•
|
future levels of our capital expenditures;
|
•
|
future government regulations, particularly in the Gulf of Mexico;
|
•
|
expected net revenues, income from operations and net income;
|
•
|
expected gross margins for our services and products;
|
•
|
future benefits to be derived from our OceanGeo subsidiary;
|
•
|
future seismic industry fundamentals, including future demand for seismic services and equipment;
|
•
|
future benefits to our customers to be derived from new services and products;
|
•
|
future benefits to be derived from our investments in technologies, joint ventures and acquired companies;
|
•
|
future growth rates for our services and products;
|
•
|
the degree and rate of future market acceptance of our new services and products;
|
•
|
expectations regarding E&P companies and seismic contractor end-users purchasing our more technologically-advanced services and products;
|
•
|
anticipated timing and success of commercialization and capabilities of services and products under development and start-up costs associated with their development;
|
•
|
future cash needs and future availability of cash to fund our operations and pay our obligations;
|
•
|
potential future acquisitions;
|
•
|
future opportunities for new services and products and projected research and development expenses;
|
•
|
expected continued compliance with our debt financial covenants;
|
•
|
expectations regarding realization of deferred tax assets; and
|
•
|
anticipated results with respect to certain estimates we make for financial accounting purposes.
|
Period
|
|
(a)
Total Number of
Shares Acquired
|
|
(b)
Average Price Paid Per Share |
|
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program |
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Program |
|||
January 1, 2015 to January 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
Not applicable
|
|
Not applicable
|
February 1, 2015 to February 28, 2015
|
|
—
|
|
|
$
|
—
|
|
|
Not applicable
|
|
Not applicable
|
March 1, 2015 to March 31, 2015
|
|
46,148
|
|
|
$
|
2.28
|
|
|
Not applicable
|
|
Not applicable
|
Total
|
|
46,148
|
|
|
$
|
2.28
|
|
|
|
|
|
10.1
|
|
Form of Rights Agreement dated March 1, 2015 issued under the ION Stock Appreciation Rights Plan dated November 17, 2008.
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a).
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a).
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350.
|
|
|
|
101
|
|
The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2015 and 2014, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014, (v) Footnotes to Unaudited Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
ION GEOPHYSICAL CORPORATION
|
||
|
|
|
|
|
By
|
|
/s/ Steven A. Bate
|
|
|
|
Steven A. Bate
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Form of Rights Agreement dated March 1, 2015 issued under the ION Stock Appreciation Rights Plan dated November 17, 2008.
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a).
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a).
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350.
|
|
|
|
101
|
|
The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2015 and 2014, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014, (v) Footnotes to Unaudited Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
1.
|
Grant of Rights
.
The grant of the stock appreciation rights (“SARs”) under this Stock Appreciation Rights Agreement (this “Agreement”) by ION Geophysical Corporation (the ‘’Company”) is made subject and pursuant to the terms of the ION Geophysical Corporation Stock Appreciation Rights Plan (the “Plan”) for directors, employees and consultants of the Company. This SAR award and its exercise are subject in all respects to the grant terms as set forth in the Plan, a copy of which is attached hereto, and to any rules promulgated pursuant to the Plan by the Committee. Capitalized terms not otherwise defined herein are as defined in the Plan.
|
2.
|
Grantee.
The Grantee of the SAR award is [Grantee Name] (the “Grantee”)
|
3.
|
Award.
The Company grants the Grantee this SAR award in relation to [Shares Granted] Shares (the “Covered Shares”)
.
|
4.
|
Exercise Price.
The Exercise Price of this SAR award is $[Exercise Price] per SAR Covered Share granted hereunder (being not less than the greater of the fair market value or par value per share of the Common Stock on the Date of Grant as defined by the Plan).
|
5.
|
Date of Grant.
The Date of Grant of this SAR award is [Grant Date].
|
6.
|
Vesting.
The total number of SARs and Covered Shares shall vest according to the following schedule:
|
Vesting Date
|
|
Number of SARs & Vesting Schedule
|
On the date on which the
volume weighted average price per Share for the 20 trading days prior to the date of determination,
(“Volume Weighted Average Price Threshold”), as determined by the Company based on New York Stock Exchange reported closing Share prices, is:
|
|
|
20% or more higher but less 25% higher than the Exercise Price per SAR hereunder
|
|
[●] Covered Shares
|
25% or more higher but less than 30% higher than the Exercise Price per SAR hereunder
|
|
[●] Covered Shares
|
30% or more:
|
|
All Covered Shares under the SAR award
|
7.
|
Term
.
|
(a)
|
This SAR award will commence on the Date of Grant and, unless terminated earlier pursuant to Section 7(b) of this Agreement, or the SAR expires (pursuant to Section 8 of this Agreement), this SAR shall terminate at 12:01 a.m. on the date which is ten (10) years from the Date of Grant (the “Term”).
|
(b)
|
Early Termination of Unvested Portion of SAR Award
. This SAR award will have four (4) years from the Date of the Grant in which to achieve the 20%, 25% and 30% performance thresholds set forth in Section 6 of this Agreement (the “Performance Period”). Any portion of the SAR award which fails to vest during the Performance Period shall terminate at 12:01 a.m. on the day after the last day of the Performance Period.
|
(c)
|
Notwithstanding anything else to the contrary in Section 6 or this Section 7 of this Agreement, for a period of one (1) year following the Date of Grant, by written notice to the Grantee, the Committee may, without the consent of the Grantee, reduce the Performance Period to a period which is three (3) years from the Date of Grant. In the event the Committee elects to do so, beginning on the second anniversary of the Grant Date, this SAR award may be cumulatively exercised to the extent vested, until the Expiration Date.
|
8.
|
Expiration
.
The SAR award shall not be exercisable after the Company’s close of business on the last business day that occurs prior to the Expiration Date. The “Expiration Date” shall be the earliest to occur of:
|
(a)
|
the last day of the Term;
|
(b)
|
if a termination of Employment occurs by reason of Retirement, death or Disability, the one-year anniversary of the termination of Employment;
|
(c)
|
if a termination of Employment occurs due to the Grantee’s termination by the Company for Cause, 12:01 a.m., Houston, Texas time, on the date of the termination of Employment; and
|
(d)
|
if a termination of Employment occurs for reasons other than Retirement, death, Disability, or for Cause
,
the one-hundred and eighty (180) day anniversary of the termination of Employment.
|
9.
|
Who May Exercise, Transferability.
During the lifetime of the Grantee, this SAR award may be exercised only by the Grantee, or by the Grantee’s guardian or legal representative. In all other circumstances, exercise and transfer of the SAR award is permitted subject to the terms of the Plan; provided that the SAR award shall remain subject to the other terms of this Agreement, the Plan, and applicable laws, rules, and regulations.
|
10.
|
Manner of Exercise.
The SAR award may be exercised by filing a written notice with the Company at its corporate headquarters or by following such other instructions as the Company may deliver to the Grantee from time to time. Upon the exercise of the SAR award, the Grantee shall receive a cash amount from the Company that is equal to the Spread multiplied by the number of Covered Shares for which the SAR award is being exercised. Such amount shall be paid to the Grantee in cash after receipt by the Company of Grantee’s written notice of exercise of the SAR award.
|
11.
|
Tax Withholding.
All payments under this Agreement are subject to withholding of all applicable taxes.
|
12.
|
Administration.
The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan.
|
13.
|
Plan Governs.
Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Grantee from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan.
|
14.
|
Not an Employment Contract.
The SAR Award will not confer on the Grantee any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Grantee’s employment or other service at any time.
|
15.
|
Notices.
Any written notices provided for in this SAR Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail. Notices sent by U.S. mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Grantee, at the Grantee’s address indicated by the Company’s records, and if to the Company, at the Company’s principal executive office.
|
16.
|
Amendment.
This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Grantee and the Company without the consent of any other person.
|
17.
|
Applicable Law.
The provisions of this Agreement shall be construed in accordance with the laws of the State of Texas, without regard to the conflict of law provisions of any jurisdiction.
|
18.
|
Settlement in Shares
. If, subsequent to the Grant Date, the Plan is amended to permit the delivery of Shares in settlement of SARs in lieu of cash payments, and such amendment is duly approved by the Company’s shareholders in accordance with applicable law and the New York Stock Exchange rules (or the rules of such other principal securities exchange on which Shares are then listed or admitted to trading), the Committee shall have the discretion, without the consent of the Grantee, to settle the exercise of the SAR or any portion exercised after such amendment and approval, by the delivery of Shares with a Fair Market Value equal to the Spread, or by the delivery of a
|
19.
|
280G Cutback.
Notwithstanding any other provision in this Agreement to the contrary, if any payment received or to be received by the Grantee under this Agreement in connection with a Change in Control or the termination of employment (collectively, the “Payments”) would, whether payable under the terms of this Agreement alone or together with any payment or benefit under any other plan, arrangement or agreement with the Company or one of its Subsidiaries constitute a “parachute payment” within the meaning of Section 280G of the Code, the payment or payments due to the Grantee under this Agreement shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”). Whether and how the limitation under this Section 19 is applicable shall be determined under the Section 280G Rules set forth in Exhibit A, which shall be enforceable as if set forth in this Agreement.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2015
, of ION Geophysical Corporation;
|
2.
|
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;
|
3.
|
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;
|
4.
|
The registrant’s other certifying officer 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;
|
c)
|
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
|
5.
|
The registrant’s other certifying officer 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 the 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.
|
Date: May 7, 2015
|
|
/s/ R. Brian Hanson
|
|
|
R. Brian Hanson
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2015
, of ION Geophysical Corporation;
|
2.
|
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;
|
3.
|
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;
|
4.
|
The registrant’s other certifying officer 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;
|
c)
|
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
|
5.
|
The registrant’s other certifying officer 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 the 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.
|
Date: May 7, 2015
|
|
/s/ Steven A. Bate
|
|
|
Steven A. Bate
|
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 7, 2015
|
|
/s/ R. Brian Hanson
|
|
|
R. Brian Hanson
|
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 7, 2015
|
|
/s/ Steven A. Bate
|
|
|
Steven A. Bate
|
|
|
Executive Vice President and Chief Financial Officer
|