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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. Suite 100
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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
|
|
o
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Accelerated filer
|
ý
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Non-accelerated filer
|
|
o
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Smaller reporting company
|
o
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Emerging growth company
|
o
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Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
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Common Stock, $0.01 par value
|
IO
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New York Stock Exchange
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PAGE
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PART I. Financial Information
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|
Item 1. Financial Statements (Unaudited)
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|
Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018
|
|
Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018
|
|
Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2019 and 2018
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018
|
|
Condensed Consolidated Statements of Stockholders' (Deficit) Equity for the three months ended March 31, 2019 and 2018
|
|
Footnotes to Condensed Consolidated Financial Statements
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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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, 2019
|
|
December 31, 2018
|
||||
|
(In thousands, except share data)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
38,407
|
|
|
$
|
33,551
|
|
Accounts receivable, net
|
29,104
|
|
|
26,128
|
|
||
Unbilled receivables
|
14,442
|
|
|
44,032
|
|
||
Inventories, net
|
14,094
|
|
|
14,130
|
|
||
Prepaid expenses and other current assets
|
7,486
|
|
|
7,782
|
|
||
Total current assets
|
103,533
|
|
|
125,623
|
|
||
Deferred income tax asset, net
|
8,594
|
|
|
7,191
|
|
||
Property, plant and equipment, net
|
13,257
|
|
|
13,041
|
|
||
Multi-client data library, net
|
66,932
|
|
|
73,544
|
|
||
Goodwill
|
23,592
|
|
|
22,915
|
|
||
Right-of-use assets
|
44,979
|
|
|
47,803
|
|
||
Other assets
|
1,819
|
|
|
2,435
|
|
||
Total assets
|
$
|
262,706
|
|
|
$
|
292,552
|
|
LIABILITIES AND (DEFICIT) EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
1,787
|
|
|
$
|
2,228
|
|
Accounts payable
|
30,384
|
|
|
34,913
|
|
||
Accrued expenses
|
32,277
|
|
|
31,411
|
|
||
Accrued multi-client data library royalties
|
26,310
|
|
|
29,256
|
|
||
Deferred revenue
|
7,410
|
|
|
7,710
|
|
||
Current maturities of operating lease liabilities
|
11,964
|
|
|
12,214
|
|
||
Total current liabilities
|
110,132
|
|
|
117,732
|
|
||
Long-term debt, net of current maturities
|
119,482
|
|
|
119,513
|
|
||
Operating lease liabilities, net of current maturities
|
42,721
|
|
|
45,592
|
|
||
Other long-term liabilities
|
1,810
|
|
|
1,891
|
|
||
Total liabilities
|
274,145
|
|
|
284,728
|
|
||
(Deficit) Equity:
|
|
|
|
||||
Common stock, $0.01 par value; authorized 26,666,667 shares; outstanding 14,069,520 and 14,015,615 shares at March 31, 2019 and December 31, 2018, respectively.
|
141
|
|
|
140
|
|
||
Additional paid-in capital
|
953,679
|
|
|
952,626
|
|
||
Accumulated deficit
|
(947,452
|
)
|
|
(926,092
|
)
|
||
Accumulated other comprehensive loss
|
(19,472
|
)
|
|
(20,442
|
)
|
||
Total stockholders’ (deficit) equity
|
(13,104
|
)
|
|
6,232
|
|
||
Noncontrolling interest
|
1,665
|
|
|
1,592
|
|
||
Total (deficit) equity
|
(11,439
|
)
|
|
7,824
|
|
||
Total liabilities and (deficit) equity
|
$
|
262,706
|
|
|
$
|
292,552
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands, except per share data)
|
||||||
Service revenues
|
$
|
28,128
|
|
|
$
|
25,086
|
|
Product revenues
|
8,828
|
|
|
8,422
|
|
||
Total net revenues
|
36,956
|
|
|
33,508
|
|
||
Cost of services
|
22,446
|
|
|
22,329
|
|
||
Cost of products
|
4,598
|
|
|
4,326
|
|
||
Gross profit
|
9,912
|
|
|
6,853
|
|
||
Operating expenses:
|
|
|
|
||||
Research, development and engineering
|
5,357
|
|
|
4,255
|
|
||
Marketing and sales
|
5,793
|
|
|
5,098
|
|
||
General, administrative and other operating expenses
|
14,699
|
|
|
10,140
|
|
||
Total operating expenses
|
25,849
|
|
|
19,493
|
|
||
Loss from operations
|
(15,937
|
)
|
|
(12,640
|
)
|
||
Interest expense, net
|
(3,112
|
)
|
|
(3,836
|
)
|
||
Other expense, net
|
(792
|
)
|
|
(791
|
)
|
||
Loss before income taxes
|
(19,841
|
)
|
|
(17,267
|
)
|
||
Income tax expense
|
1,407
|
|
|
1,072
|
|
||
Net loss
|
(21,248
|
)
|
|
(18,339
|
)
|
||
Net income attributable to noncontrolling interest
|
(112
|
)
|
|
(87
|
)
|
||
Net loss attributable to ION
|
$
|
(21,360
|
)
|
|
$
|
(18,426
|
)
|
Net loss per share:
|
|
|
|
||||
Basic
|
$
|
(1.52
|
)
|
|
$
|
(1.44
|
)
|
Diluted
|
$
|
(1.52
|
)
|
|
$
|
(1.44
|
)
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
14,033
|
|
|
12,813
|
|
||
Diluted
|
14,033
|
|
|
12,813
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Net loss
|
$
|
(21,248
|
)
|
|
$
|
(18,339
|
)
|
Other comprehensive loss, net of taxes, as appropriate:
|
|
|
|
||||
Foreign currency translation adjustments
|
970
|
|
|
1,825
|
|
||
Comprehensive net loss
|
(20,278
|
)
|
|
(16,514
|
)
|
||
Comprehensive income attributable to noncontrolling interest
|
(112
|
)
|
|
(87
|
)
|
||
Comprehensive net loss attributable to ION
|
$
|
(20,390
|
)
|
|
$
|
(16,601
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(21,248
|
)
|
|
$
|
(18,339
|
)
|
Adjustments to reconcile net loss to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization (other than multi-client data library)
|
1,035
|
|
|
2,523
|
|
||
Amortization of multi-client data library
|
11,100
|
|
|
9,793
|
|
||
Stock-based compensation expense
|
1,293
|
|
|
812
|
|
||
Deferred income taxes
|
(1,398
|
)
|
|
(117
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(2,870
|
)
|
|
(10,084
|
)
|
||
Unbilled receivables
|
29,498
|
|
|
20,919
|
|
||
Inventories
|
81
|
|
|
(164
|
)
|
||
Accounts payable, accrued expenses and accrued royalties
|
(2,013
|
)
|
|
(10,155
|
)
|
||
Deferred revenue
|
(333
|
)
|
|
2,381
|
|
||
Other assets and liabilities
|
253
|
|
|
3,039
|
|
||
Net cash provided by operating activities
|
15,398
|
|
|
608
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Investment in multi-client data library
|
(8,767
|
)
|
|
(9,240
|
)
|
||
Purchase of property, plant and equipment
|
(807
|
)
|
|
(61
|
)
|
||
Net cash used in investing activities
|
(9,574
|
)
|
|
(9,301
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments under revolving line of credit
|
—
|
|
|
(10,000
|
)
|
||
Payments on notes payable and long-term debt
|
(715
|
)
|
|
(29,144
|
)
|
||
Net proceeds from issuance of stock
|
—
|
|
|
47,219
|
|
||
Other financing activities
|
(239
|
)
|
|
(575
|
)
|
||
Net cash (used in) provided by financing activities
|
(954
|
)
|
|
7,500
|
|
||
Effect of change in foreign currency exchange rates on cash, cash equivalents and restricted cash
|
81
|
|
|
(113
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
4,951
|
|
|
(1,306
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
33,854
|
|
|
52,419
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
38,805
|
|
|
$
|
51,113
|
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
38,407
|
|
|
$
|
50,750
|
|
Restricted cash included in prepaid expenses and other current assets
|
398
|
|
|
60
|
|
||
Restricted cash included in other long-term assets
|
—
|
|
|
303
|
|
||
Total cash, cash equivalents, and restricted cash shown in statements of cash flows
|
$
|
38,805
|
|
|
$
|
51,113
|
|
|
Three Months Ended March 31, 2019
|
|||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests
|
|
Total Equity
(Deficit)
|
|||||||||||||||
(In thousands, except shares)
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at January 1, 2019
|
14,015,615
|
|
|
$
|
140
|
|
|
$
|
952,626
|
|
|
$
|
(926,092
|
)
|
|
$
|
(20,442
|
)
|
|
$
|
1,592
|
|
|
$
|
7,824
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,360
|
)
|
|
—
|
|
|
112
|
|
|
(21,248
|
)
|
||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
970
|
|
|
(39
|
)
|
|
931
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,293
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,293
|
|
||||||
Exercise of stock options
|
5,750
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
||||||
Vesting of restricted stock units/awards
|
68,199
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock cancelled for employee minimum income taxes
|
(20,044
|
)
|
|
—
|
|
|
(257
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(257
|
)
|
||||||
Balance at March 31, 2019
|
14,069,520
|
|
|
$
|
141
|
|
|
$
|
953,679
|
|
|
$
|
(947,452
|
)
|
|
$
|
(19,472
|
)
|
|
$
|
1,665
|
|
|
$
|
(11,439
|
)
|
|
Three Months Ended March 31, 2018
|
|||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||
(In thousands, except shares)
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at January 1, 2018
|
12,019,701
|
|
|
$
|
120
|
|
|
$
|
903,247
|
|
|
$
|
(854,921
|
)
|
|
$
|
(18,879
|
)
|
|
$
|
1,239
|
|
|
$
|
30,806
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,426
|
)
|
|
—
|
|
|
87
|
|
|
(18,339
|
)
|
||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,825
|
|
|
(9
|
)
|
|
1,816
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
812
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
812
|
|
||||||
Exercise of stock options
|
11,250
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||||
Vesting of restricted stock units/awards
|
81,014
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock cancelled for employee minimum income taxes
|
(22,456
|
)
|
|
—
|
|
|
(610
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(610
|
)
|
||||||
Public equity offering
|
1,820,000
|
|
|
18
|
|
|
46,981
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,999
|
|
||||||
Balance at March 31, 2018
|
13,909,509
|
|
|
$
|
139
|
|
|
$
|
950,464
|
|
|
$
|
(873,347
|
)
|
|
$
|
(17,054
|
)
|
|
$
|
1,317
|
|
|
$
|
61,519
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2019
|
|
2018
|
|
||||
Net revenues:
|
|
|
|
|
||||
E&P Technology & Services:
|
|
|
|
|
||||
New Venture
|
$
|
13,471
|
|
|
$
|
13,726
|
|
|
Data Library
|
9,948
|
|
|
5,948
|
|
|
||
Total multi-client revenues
|
23,419
|
|
|
19,674
|
|
|
||
Imaging Services
|
3,684
|
|
|
4,894
|
|
|
||
Total
|
27,103
|
|
|
24,568
|
|
|
||
Operations Optimization:
|
|
|
|
|
||||
Devices
|
4,820
|
|
|
4,158
|
|
|
||
Optimization Software & Services
|
5,033
|
|
|
4,782
|
|
|
||
Total
|
9,853
|
|
|
8,940
|
|
|
||
Total
|
$
|
36,956
|
|
|
$
|
33,508
|
|
|
Gross profit (loss):
|
|
|
|
|
||||
E&P Technology & Services
|
$
|
5,440
|
|
|
$
|
4,343
|
|
|
Operations Optimization
|
4,516
|
|
|
4,311
|
|
|
||
Segment gross profit
|
9,956
|
|
|
8,654
|
|
|
||
Other
|
(44
|
)
|
(a)
|
(1,801
|
)
|
(a)
|
||
Total
|
$
|
9,912
|
|
|
$
|
6,853
|
|
|
Gross margin:
|
|
|
|
|
||||
E&P Technology & Services
|
20
|
%
|
|
18
|
%
|
|
||
Operations Optimization
|
46
|
%
|
|
48
|
%
|
|
||
Segment gross margin
|
27
|
%
|
|
26
|
%
|
|
||
Other
|
—
|
%
|
|
—
|
%
|
|
||
Total
|
27
|
%
|
|
20
|
%
|
|
||
Income (loss) from operations:
|
|
|
|
|
||||
E&P Technology & Services
|
$
|
(1,615
|
)
|
|
$
|
(794
|
)
|
|
Operations Optimization
|
170
|
|
|
786
|
|
|
||
Support and other
|
(14,492
|
)
|
(b)
|
(12,632
|
)
|
(b)
|
||
Loss from operations
|
(15,937
|
)
|
|
(12,640
|
)
|
|
||
Interest expense, net
|
(3,112
|
)
|
|
(3,836
|
)
|
|
||
Other expense, net
|
(792
|
)
|
|
(791
|
)
|
|
||
Loss before income taxes
|
$
|
(19,841
|
)
|
|
$
|
(17,267
|
)
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Latin America
|
$
|
13,531
|
|
|
$
|
9,852
|
|
Europe
|
10,392
|
|
(a)
|
5,549
|
|
||
North America
|
7,157
|
|
|
8,048
|
|
||
Africa
|
2,389
|
|
|
5,019
|
|
||
Asia Pacific
|
1,867
|
|
|
3,934
|
|
||
Middle East
|
1,359
|
|
|
749
|
|
||
Commonwealth of Independent States
|
261
|
|
|
357
|
|
||
Total
|
$
|
36,956
|
|
|
$
|
33,508
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
New Venture
|
$
|
7,342
|
|
|
$
|
38,430
|
|
Imaging Services
|
6,159
|
|
|
5,075
|
|
||
Devices
|
941
|
|
|
527
|
|
||
Total
|
$
|
14,442
|
|
|
$
|
44,032
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
New Venture
|
$
|
6,059
|
|
|
$
|
5,797
|
|
Imaging Services
|
51
|
|
|
307
|
|
||
Devices
|
562
|
|
|
626
|
|
||
Optimization Software & Services
|
738
|
|
|
980
|
|
||
Total
|
$
|
7,410
|
|
|
$
|
7,710
|
|
Deferred revenue at December 31, 2018
|
$
|
7,710
|
|
Cash collected in excess of revenue recognized
|
280
|
|
|
Recognition of deferred revenue
(a)
|
(580
|
)
|
|
Deferred revenue at March 31, 2019
|
$
|
7,410
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Senior secured second-priority lien notes
(maturing December 15, 2021)
|
|
$
|
120,569
|
|
|
$
|
120,569
|
|
Revolving credit facility
(maturing August 16, 2023)
(a)
|
|
—
|
|
|
—
|
|
||
Equipment finance leases (Note 11)
|
|
2,658
|
|
|
2,938
|
|
||
Other debt
|
|
724
|
|
|
1,159
|
|
||
Costs associated with issuances of debt
|
|
(2,682
|
)
|
|
(2,925
|
)
|
||
Total
|
|
121,269
|
|
|
121,741
|
|
||
Current maturities of long-term debt
|
|
(1,787
|
)
|
|
(2,228
|
)
|
||
Long-term debt, net of current maturities
|
|
$
|
119,482
|
|
|
$
|
119,513
|
|
•
|
extend the maturity date of the Credit Facility by approximately
four
years (from August 22, 2019 to August 16, 2023), subject to the Company’s retirement or extension of the maturity date of its Second Lien Notes, as defined below, which mature on December 15, 2021;
|
•
|
increase the maximum revolver amount by
$10.0 million
(from
$40.0 million
to
$50.0 million
);
|
•
|
increase the borrowing base percentage of the net orderly liquidation value as it relates to the multi-client data library (not to exceed
$28.5 million
, up from the previous maximum of
$15.0 million
for the multi-client data library component);
|
•
|
include the eligible billed receivables of the Mexican Subsidiary up to a maximum of
$5.0 million
in the borrowing base calculation and joins the Mexican Subsidiary as a borrower thereunder (with a maximum exposure of
$5.0 million
) and require the equity and assets of the Mexican Subsidiary to be pledged to secure obligations under the facility;
|
•
|
modify the interest rate such that the maximum interest rate remains consistent with the fixed interest rate prior to the Third Amendment (that is,
3.00%
per annum for domestic rate loans and
4.00%
per annum for LIBOR rate loans), but now lowers the range down to a minimum interest rate of
2.00%
for domestic rate loans and
3.00%
for LIBOR rate loans based on a leverage ratio for the preceding four-quarter period;
|
•
|
decrease the minimum excess borrowing availability threshold which (if the Borrowers have minimum excess borrowing availability below any such threshold) triggers the agent’s right to exercise dominion over cash and deposit accounts; and
|
•
|
modify the trigger required to test for compliance with the fixed charges coverage ratio, which is further described below.
|
Date
|
|
Percentage
|
2019
|
|
105.500%
|
2020
|
|
103.500%
|
2021 and thereafter
|
|
100.000%
|
A summary of inventories follows (in thousands):
|
March 31, 2019
|
|
December 31, 2018
|
||||
Raw materials and subassemblies
|
$
|
20,242
|
|
|
$
|
20,011
|
|
Work-in-process
|
895
|
|
|
1,032
|
|
||
Finished goods
|
7,095
|
|
|
8,111
|
|
||
Reserve for excess and obsolete inventories
|
(14,138
|
)
|
|
(15,024
|
)
|
||
Inventories, net
|
$
|
14,094
|
|
|
$
|
14,130
|
|
A summary of property, plant and equipment follows (in thousands):
|
March 31, 2019
|
|
December 31, 2018
|
||||
Buildings
|
$
|
15,734
|
|
|
$
|
15,707
|
|
Machinery and equipment
|
132,699
|
|
|
132,135
|
|
||
Seismic rental equipment
|
1,484
|
|
|
1,423
|
|
||
Furniture and fixtures
|
3,870
|
|
|
3,859
|
|
||
Other
|
30,525
|
|
|
30,104
|
|
||
Total
|
184,312
|
|
|
183,228
|
|
||
Less accumulated depreciation
|
(134,502
|
)
|
|
(133,634
|
)
|
||
Less impairment of long-lived assets
|
(36,553
|
)
|
|
(36,553
|
)
|
||
Property, plant and equipment, net
|
$
|
13,257
|
|
|
$
|
13,041
|
|
The change in multi-client data library are as follows (in thousands):
|
March 31, 2019
|
|
December 31, 2018
|
||||
Gross costs of multi-client data creation
|
$
|
976,797
|
|
|
$
|
972,309
|
|
Less accumulated amortization
|
(787,960
|
)
|
|
(776,860
|
)
|
||
Less impairments to multi-client data library
|
(121,905
|
)
|
|
(121,905
|
)
|
||
Multi-client data library, net
|
$
|
66,932
|
|
|
$
|
73,544
|
|
|
Stock Options
|
|
Restricted Stock and Unit Awards
|
|
Stock Appreciation Rights
|
|||
|
Number of Shares
|
|||||||
Outstanding at December 31, 2018
|
785,890
|
|
|
1,044,125
|
|
|
1,481,541
|
|
Granted
|
—
|
|
|
15,000
|
|
|
—
|
|
Stock options and stock appreciation rights exercised/restricted stock and unit awards vested
|
(5,750
|
)
|
|
(68,199
|
)
|
|
—
|
|
Cancelled/forfeited
|
(1,265
|
)
|
|
(2,500
|
)
|
|
(176,528
|
)
|
Outstanding at March 31, 2019
|
778,875
|
|
|
988,426
|
|
|
1,305,013
|
|
For the year ending March 31,
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
2020
|
$
|
13,169
|
|
|
$
|
1,254
|
|
|
$
|
14,423
|
|
2021
|
12,775
|
|
|
1,254
|
|
|
14,029
|
|
|||
2022
|
11,281
|
|
|
443
|
|
|
11,724
|
|
|||
2023
|
11,286
|
|
|
—
|
|
|
11,286
|
|
|||
2024
|
8,323
|
|
|
—
|
|
|
8,323
|
|
|||
Thereafter
|
11,684
|
|
|
—
|
|
|
11,684
|
|
|||
Total lease payments
|
68,518
|
|
|
2,951
|
|
|
71,469
|
|
|||
Less imputed interest
|
(13,833
|
)
|
|
(293
|
)
|
|
(14,126
|
)
|
|||
Total
|
$
|
54,685
|
|
|
$
|
2,658
|
|
|
$
|
57,343
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
198
|
|
|
$
|
1,039
|
|
Income taxes
|
3,176
|
|
|
546
|
|
||
Non-cash items from investing and financing activities:
|
|
|
|
||||
Purchase of property, plant and equipment financed through accounts payable and accrued expenses
|
185
|
|
|
—
|
|
•
|
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, 2019
|
||||||||||||||||||
Balance Sheet
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
4,695
|
|
|
$
|
25
|
|
|
$
|
33,687
|
|
|
$
|
—
|
|
|
$
|
38,407
|
|
Accounts receivable, net
|
8
|
|
|
16,295
|
|
|
12,801
|
|
|
—
|
|
|
29,104
|
|
|||||
Unbilled receivables
|
—
|
|
|
7,610
|
|
|
6,832
|
|
|
—
|
|
|
14,442
|
|
|||||
Inventories
|
—
|
|
|
8,461
|
|
|
5,633
|
|
|
—
|
|
|
14,094
|
|
|||||
Prepaid expenses and other current assets
|
3,914
|
|
|
1,120
|
|
|
2,452
|
|
|
—
|
|
|
7,486
|
|
|||||
Total current assets
|
8,617
|
|
|
33,511
|
|
|
61,405
|
|
|
—
|
|
|
103,533
|
|
|||||
Deferred income tax asset
|
805
|
|
|
7,660
|
|
|
129
|
|
|
—
|
|
|
8,594
|
|
|||||
Property, plant and equipment, net
|
504
|
|
|
8,351
|
|
|
4,402
|
|
|
—
|
|
|
13,257
|
|
|||||
Multi-client data library, net
|
—
|
|
|
63,522
|
|
|
3,410
|
|
|
—
|
|
|
66,932
|
|
|||||
Investment in subsidiaries
|
834,683
|
|
|
246,331
|
|
|
—
|
|
|
(1,081,014
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
23,592
|
|
|
—
|
|
|
23,592
|
|
|||||
Intercompany receivables
|
—
|
|
|
95,861
|
|
|
62,922
|
|
|
(158,783
|
)
|
|
—
|
|
|||||
Right-of-use assets
|
17,394
|
|
|
20,005
|
|
|
7,580
|
|
|
—
|
|
|
44,979
|
|
|||||
Other assets
|
1,354
|
|
|
395
|
|
|
70
|
|
|
—
|
|
|
1,819
|
|
|||||
Total assets
|
$
|
863,357
|
|
|
$
|
475,636
|
|
|
$
|
163,510
|
|
|
$
|
(1,239,797
|
)
|
|
$
|
262,706
|
|
LIABILITIES AND (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of long-term debt
|
$
|
724
|
|
|
$
|
1,063
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,787
|
|
Accounts payable
|
2,689
|
|
|
24,610
|
|
|
3,085
|
|
|
—
|
|
|
30,384
|
|
|||||
Accrued expenses
|
13,958
|
|
|
7,457
|
|
|
10,862
|
|
|
—
|
|
|
32,277
|
|
|||||
Accrued multi-client data library royalties
|
—
|
|
|
26,095
|
|
|
215
|
|
|
—
|
|
|
26,310
|
|
|||||
Deferred revenue
|
—
|
|
|
6,232
|
|
|
1,178
|
|
|
—
|
|
|
7,410
|
|
|||||
Current maturities of operating lease liabilities
|
5,112
|
|
|
5,540
|
|
|
1,312
|
|
|
—
|
|
|
11,964
|
|
|||||
Total current liabilities
|
22,483
|
|
|
70,997
|
|
|
16,652
|
|
|
—
|
|
|
110,132
|
|
|||||
Long-term debt, net of current maturities
|
117,887
|
|
|
1,595
|
|
|
—
|
|
|
—
|
|
|
119,482
|
|
|||||
Operating lease liabilities, net of current maturities
|
16,577
|
|
|
19,876
|
|
|
6,268
|
|
|
—
|
|
|
42,721
|
|
|||||
Intercompany payables
|
717,875
|
|
|
—
|
|
|
—
|
|
|
(717,875
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
1,639
|
|
|
171
|
|
|
—
|
|
|
—
|
|
|
1,810
|
|
|||||
Total liabilities
|
876,461
|
|
|
92,639
|
|
|
22,920
|
|
|
(717,875
|
)
|
|
274,145
|
|
|||||
(Deficit) Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
141
|
|
|
290,460
|
|
|
47,776
|
|
|
(338,236
|
)
|
|
141
|
|
|||||
Additional paid-in capital
|
953,679
|
|
|
180,700
|
|
|
203,909
|
|
|
(384,609
|
)
|
|
953,679
|
|
|||||
Accumulated earnings (deficit)
|
(947,452
|
)
|
|
386,799
|
|
|
(11,751
|
)
|
|
(375,048
|
)
|
|
(947,452
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
(19,472
|
)
|
|
4,281
|
|
|
(21,160
|
)
|
|
16,879
|
|
|
(19,472
|
)
|
|||||
Due from ION Geophysical Corporation
|
—
|
|
|
(479,243
|
)
|
|
(79,849
|
)
|
|
559,092
|
|
|
—
|
|
|||||
Total stockholders’ (deficit) equity
|
(13,104
|
)
|
|
382,997
|
|
|
138,925
|
|
|
(521,922
|
)
|
|
(13,104
|
)
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,665
|
|
|
—
|
|
|
1,665
|
|
|||||
Total (deficit) equity
|
(13,104
|
)
|
|
382,997
|
|
|
140,590
|
|
|
(521,922
|
)
|
|
(11,439
|
)
|
|||||
Total liabilities and (deficit) equity
|
$
|
863,357
|
|
|
$
|
475,636
|
|
|
$
|
163,510
|
|
|
$
|
(1,239,797
|
)
|
|
$
|
262,706
|
|
|
December 31, 2018
|
||||||||||||||||||
Balance Sheet
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
13,782
|
|
|
$
|
47
|
|
|
$
|
19,722
|
|
|
$
|
—
|
|
|
$
|
33,551
|
|
Accounts receivable, net
|
8
|
|
|
17,349
|
|
|
8,771
|
|
|
—
|
|
|
26,128
|
|
|||||
Unbilled receivables
|
—
|
|
|
12,697
|
|
|
31,335
|
|
|
—
|
|
|
44,032
|
|
|||||
Inventories
|
—
|
|
|
8,721
|
|
|
5,409
|
|
|
—
|
|
|
14,130
|
|
|||||
Prepaid expenses and other current assets
|
3,891
|
|
|
1,325
|
|
|
2,566
|
|
|
—
|
|
|
7,782
|
|
|||||
Total current assets
|
17,681
|
|
|
40,139
|
|
|
67,803
|
|
|
—
|
|
|
125,623
|
|
|||||
Deferred income tax asset
|
805
|
|
|
6,261
|
|
|
125
|
|
|
—
|
|
|
7,191
|
|
|||||
Property, plant and equipment, net
|
489
|
|
|
8,922
|
|
|
3,630
|
|
|
—
|
|
|
13,041
|
|
|||||
Multi-client data library, net
|
—
|
|
|
70,380
|
|
|
3,164
|
|
|
—
|
|
|
73,544
|
|
|||||
Investment in subsidiaries
|
836,002
|
|
|
247,359
|
|
|
—
|
|
|
(1,083,361
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
22,915
|
|
|
—
|
|
|
22,915
|
|
|||||
Intercompany receivables
|
—
|
|
|
305,623
|
|
|
60,255
|
|
|
(365,878
|
)
|
|
—
|
|
|||||
Right-of-use assets
|
18,513
|
|
|
21,350
|
|
|
7,940
|
|
|
—
|
|
|
47,803
|
|
|||||
Other assets
|
1,723
|
|
|
643
|
|
|
69
|
|
|
—
|
|
|
2,435
|
|
|||||
Total assets
|
$
|
875,213
|
|
|
$
|
700,677
|
|
|
$
|
165,901
|
|
|
$
|
(1,449,239
|
)
|
|
$
|
292,552
|
|
LIABILITIES AND (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of long-term debt
|
$
|
1,159
|
|
|
$
|
1,069
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,228
|
|
Accounts payable
|
2,407
|
|
|
29,602
|
|
|
2,904
|
|
|
—
|
|
|
34,913
|
|
|||||
Accrued expenses
|
7,011
|
|
|
10,036
|
|
|
14,364
|
|
|
—
|
|
|
31,411
|
|
|||||
Accrued multi-client data library royalties
|
—
|
|
|
29,040
|
|
|
216
|
|
|
—
|
|
|
29,256
|
|
|||||
Deferred revenue
|
—
|
|
|
6,515
|
|
|
1,195
|
|
|
—
|
|
|
7,710
|
|
|||||
Current maturities of operating lease liabilities
|
5,155
|
|
|
5,633
|
|
|
1,426
|
|
|
—
|
|
|
12,214
|
|
|||||
Total current liabilities
|
15,732
|
|
|
81,895
|
|
|
20,105
|
|
|
—
|
|
|
117,732
|
|
|||||
Long-term debt, net of current maturities
|
117,644
|
|
|
1,869
|
|
|
—
|
|
|
—
|
|
|
119,513
|
|
|||||
Operating lease liabilities, net of current maturities
|
17,841
|
|
|
21,237
|
|
|
6,514
|
|
|
—
|
|
|
45,592
|
|
|||||
Intercompany payables
|
716,051
|
|
|
—
|
|
|
|
|
|
(716,051
|
)
|
|
—
|
|
|||||
Other long-term liabilities
|
1,713
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|
1,891
|
|
|||||
Total liabilities
|
868,981
|
|
|
105,179
|
|
|
26,619
|
|
|
(716,051
|
)
|
|
284,728
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
140
|
|
|
290,460
|
|
|
47,776
|
|
|
(338,236
|
)
|
|
140
|
|
|||||
Additional paid-in capital
|
952,626
|
|
|
180,700
|
|
|
203,908
|
|
|
(384,608
|
)
|
|
952,626
|
|
|||||
Accumulated earnings (deficit)
|
(926,092
|
)
|
|
390,691
|
|
|
(12,475
|
)
|
|
(378,216
|
)
|
|
(926,092
|
)
|
|||||
Accumulated other comprehensive income (loss)
|
(20,442
|
)
|
|
4,324
|
|
|
(22,023
|
)
|
|
17,699
|
|
|
(20,442
|
)
|
|||||
Due from ION Geophysical Corporation
|
—
|
|
|
(270,677
|
)
|
|
(79,496
|
)
|
|
350,173
|
|
|
—
|
|
|||||
Total stockholders’ (deficit) equity
|
6,232
|
|
|
595,498
|
|
|
137,690
|
|
|
(733,188
|
)
|
|
6,232
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,592
|
|
|
—
|
|
|
1,592
|
|
|||||
Total equity
|
6,232
|
|
|
595,498
|
|
|
139,282
|
|
|
(733,188
|
)
|
|
7,824
|
|
|||||
Total liabilities and equity
|
$
|
875,213
|
|
|
$
|
700,677
|
|
|
$
|
165,901
|
|
|
$
|
(1,449,239
|
)
|
|
$
|
292,552
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
Income Statement
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
17,613
|
|
|
$
|
19,343
|
|
|
$
|
—
|
|
|
$
|
36,956
|
|
Cost of sales
|
—
|
|
|
20,200
|
|
|
6,844
|
|
|
—
|
|
|
27,044
|
|
|||||
Gross profit (loss)
|
—
|
|
|
(2,587
|
)
|
|
12,499
|
|
|
—
|
|
|
9,912
|
|
|||||
Total operating expenses
|
12,839
|
|
|
9,075
|
|
|
3,935
|
|
|
—
|
|
|
25,849
|
|
|||||
Income (loss) from operations
|
(12,839
|
)
|
|
(11,662
|
)
|
|
8,564
|
|
|
—
|
|
|
(15,937
|
)
|
|||||
Interest expense, net
|
(3,166
|
)
|
|
(49
|
)
|
|
103
|
|
|
—
|
|
|
(3,112
|
)
|
|||||
Intercompany interest, net
|
300
|
|
|
4,649
|
|
|
(4,949
|
)
|
|
—
|
|
|
—
|
|
|||||
Equity in earnings (losses) of investments
|
(5,169
|
)
|
|
2,001
|
|
|
—
|
|
|
3,168
|
|
|
—
|
|
|||||
Other income (expense)
|
7
|
|
|
(122
|
)
|
|
(677
|
)
|
|
—
|
|
|
(792
|
)
|
|||||
Net income (loss) before income taxes
|
(20,867
|
)
|
|
(5,183
|
)
|
|
3,041
|
|
|
3,168
|
|
|
(19,841
|
)
|
|||||
Income tax expense (benefit)
|
493
|
|
|
(1,291
|
)
|
|
2,205
|
|
|
—
|
|
|
1,407
|
|
|||||
Net income (loss)
|
(21,360
|
)
|
|
(3,892
|
)
|
|
836
|
|
|
3,168
|
|
|
(21,248
|
)
|
|||||
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(112
|
)
|
|
—
|
|
|
(112
|
)
|
|||||
Net income (loss) attributable to ION
|
$
|
(21,360
|
)
|
|
$
|
(3,892
|
)
|
|
$
|
724
|
|
|
3,168
|
|
|
$
|
(21,360
|
)
|
|
Comprehensive net income
|
$
|
(20,390
|
)
|
|
$
|
(3,935
|
)
|
|
$
|
1,699
|
|
|
$
|
2,348
|
|
|
$
|
(20,278
|
)
|
Comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(112
|
)
|
|
—
|
|
|
(112
|
)
|
|||||
Comprehensive net income (loss) attributable to ION
|
$
|
(20,390
|
)
|
|
$
|
(3,935
|
)
|
|
$
|
1,587
|
|
|
$
|
2,348
|
|
|
$
|
(20,390
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
Income Statement
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Consolidating Adjustments
|
|
Total Consolidated
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Net revenues
|
$
|
—
|
|
|
$
|
11,788
|
|
|
$
|
21,720
|
|
|
$
|
—
|
|
|
$
|
33,508
|
|
Cost of sales
|
—
|
|
|
16,795
|
|
|
9,860
|
|
|
—
|
|
|
26,655
|
|
|||||
Gross profit (loss)
|
—
|
|
|
(5,007
|
)
|
|
11,860
|
|
|
—
|
|
|
6,853
|
|
|||||
Total operating expenses
|
8,909
|
|
|
6,994
|
|
|
3,590
|
|
|
—
|
|
|
19,493
|
|
|||||
Income (loss) from operations
|
(8,909
|
)
|
|
(12,001
|
)
|
|
8,270
|
|
|
—
|
|
|
(12,640
|
)
|
|||||
Interest expense, net
|
(3,883
|
)
|
|
(6
|
)
|
|
53
|
|
|
—
|
|
|
(3,836
|
)
|
|||||
Intercompany interest, net
|
273
|
|
|
(2,319
|
)
|
|
2,046
|
|
|
—
|
|
|
—
|
|
|||||
Equity in earnings (losses) of investments
|
(4,915
|
)
|
|
10,220
|
|
|
—
|
|
|
(5,305
|
)
|
|
—
|
|
|||||
Other income (expense)
|
(188
|
)
|
|
65
|
|
|
(668
|
)
|
|
—
|
|
|
(791
|
)
|
|||||
Net income (loss) before income taxes
|
(17,622
|
)
|
|
(4,041
|
)
|
|
9,701
|
|
|
(5,305
|
)
|
|
(17,267
|
)
|
|||||
Income tax expense (benefit)
|
804
|
|
|
(365
|
)
|
|
633
|
|
|
—
|
|
|
1,072
|
|
|||||
Net income (loss)
|
(18,426
|
)
|
|
(3,676
|
)
|
|
9,068
|
|
|
(5,305
|
)
|
|
(18,339
|
)
|
|||||
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
|||||
Net income (loss) attributable to ION
|
$
|
(18,426
|
)
|
|
$
|
(3,676
|
)
|
|
$
|
8,981
|
|
|
(5,305
|
)
|
|
$
|
(18,426
|
)
|
|
Comprehensive net income (loss)
|
$
|
(16,601
|
)
|
|
$
|
(3,724
|
)
|
|
$
|
10,802
|
|
|
$
|
(6,991
|
)
|
|
$
|
(16,514
|
)
|
Comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
|||||
Comprehensive net income (loss) attributable to ION
|
$
|
(16,601
|
)
|
|
$
|
(3,724
|
)
|
|
$
|
10,715
|
|
|
$
|
(6,991
|
)
|
|
$
|
(16,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||
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
|
$
|
5,216
|
|
|
$
|
(825
|
)
|
|
$
|
11,007
|
|
|
$
|
15,398
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Cash invested in multi-client data library
|
—
|
|
|
(5,363
|
)
|
|
(3,404
|
)
|
|
(8,767
|
)
|
||||
Purchase of property, plant and equipment
|
(24
|
)
|
|
(48
|
)
|
|
(735
|
)
|
|
(807
|
)
|
||||
Net cash used in investing activities
|
(24
|
)
|
|
(5,411
|
)
|
|
(4,139
|
)
|
|
(9,574
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Payments on notes payable and long-term debt
|
(434
|
)
|
|
(281
|
)
|
|
—
|
|
|
(715
|
)
|
||||
Intercompany lending
|
(13,511
|
)
|
|
6,495
|
|
|
7,016
|
|
|
—
|
|
||||
Other financing activities
|
(239
|
)
|
|
—
|
|
|
—
|
|
|
(239
|
)
|
||||
Net cash provided by (used in) financing activities
|
(14,184
|
)
|
|
6,214
|
|
|
7,016
|
|
|
(954
|
)
|
||||
Effect of change in foreign currency exchange rates on cash, cash equivalents and restricted cash
|
—
|
|
|
—
|
|
|
81
|
|
|
81
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(8,992
|
)
|
|
(22
|
)
|
|
13,965
|
|
|
4,951
|
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
14,085
|
|
|
47
|
|
|
19,722
|
|
|
33,854
|
|
||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
5,093
|
|
|
$
|
25
|
|
|
$
|
33,687
|
|
|
$
|
38,805
|
|
|
March 31, 2019
|
||||||||||||||
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Total Consolidated
|
||||||||
|
(In thousands)
|
||||||||||||||
Cash and cash equivalents
|
$
|
4,695
|
|
|
$
|
25
|
|
|
$
|
33,687
|
|
|
$
|
38,407
|
|
Restricted cash included in prepaid expenses and other current assets
|
398
|
|
|
—
|
|
|
—
|
|
|
398
|
|
||||
Total cash, cash equivalents, and restricted cash shown in statements of cash flows
|
$
|
5,093
|
|
|
$
|
25
|
|
|
$
|
33,687
|
|
|
$
|
38,805
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
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
|
$
|
(13,119
|
)
|
|
$
|
16,961
|
|
|
$
|
(3,234
|
)
|
|
$
|
608
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Investment in multi-client data library
|
—
|
|
|
(7,642
|
)
|
|
(1,598
|
)
|
|
(9,240
|
)
|
||||
Purchase of property, plant and equipment
|
—
|
|
|
—
|
|
|
(61
|
)
|
|
(61
|
)
|
||||
Net cash used in investing activities
|
—
|
|
|
(7,642
|
)
|
|
(1,659
|
)
|
|
(9,301
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Payments under revolving line of credit
|
(10,000
|
)
|
|
—
|
|
|
—
|
|
|
(10,000
|
)
|
||||
Payments on notes payable and long-term debt
|
(29,054
|
)
|
|
(90
|
)
|
|
—
|
|
|
(29,144
|
)
|
||||
Intercompany lending
|
7,565
|
|
|
(9,229
|
)
|
|
1,664
|
|
|
—
|
|
||||
Net proceeds from issuance of stock
|
47,219
|
|
|
—
|
|
|
—
|
|
|
47,219
|
|
||||
Other financing activities
|
(575
|
)
|
|
—
|
|
|
—
|
|
|
(575
|
)
|
||||
Net cash provided by (used in) financing activities
|
15,155
|
|
|
(9,319
|
)
|
|
1,664
|
|
|
7,500
|
|
||||
Effect of change in foreign currency exchange rates on cash, cash equivalents and restricted cash
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
(113
|
)
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
2,036
|
|
|
—
|
|
|
(3,342
|
)
|
|
(1,306
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
39,707
|
|
|
—
|
|
|
12,712
|
|
|
52,419
|
|
||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
41,743
|
|
|
$
|
—
|
|
|
$
|
9,370
|
|
|
$
|
51,113
|
|
|
March 31, 2018
|
||||||||||||||
|
ION Geophysical Corporation
|
|
The Guarantors
|
|
All Other Subsidiaries
|
|
Total Consolidated
|
||||||||
|
(In thousands)
|
||||||||||||||
Cash and cash equivalents
|
$
|
41,380
|
|
|
$
|
—
|
|
|
$
|
9,370
|
|
|
$
|
50,750
|
|
Restricted cash included in prepaid expenses and other current assets
|
60
|
|
|
—
|
|
|
—
|
|
|
60
|
|
||||
Restricted cash included in other long-term assets
|
303
|
|
|
—
|
|
|
—
|
|
|
303
|
|
||||
Total cash, cash equivalents, and restricted cash shown in statement of cash flows
|
$
|
41,743
|
|
|
$
|
—
|
|
|
$
|
9,370
|
|
|
$
|
51,113
|
|
|
|
Average Price
(a)
|
|||||||
Quarter Ended
|
|
Brent Crude (per bbl)
|
|
WTI Crude (per bbl)
|
|
Henry Hub Natural Gas (per mcf)
|
|||
3/31/2019
|
|
63.10
|
|
|
54.82
|
|
|
2.92
|
|
12/31/2018
|
|
67.99
|
|
|
59.50
|
|
|
3.77
|
|
9/30/2018
|
|
75.07
|
|
|
69.69
|
|
|
2.93
|
|
6/30/2018
|
|
74.44
|
|
|
67.60
|
|
|
2.84
|
|
3/31/2018
|
|
66.95
|
|
|
62.96
|
|
|
3.08
|
|
(a)
|
Source: U.S. Energy Information Administration (“EIA”).
|
|
Three Months Ended March 31,
|
|
||||||
|
2019
|
|
2018
|
|
||||
|
(in thousands, except share data)
|
|
||||||
Net revenues:
|
|
|
|
|
||||
E&P Technology & Services:
|
|
|
|
|
||||
New Venture
|
$
|
13,471
|
|
|
$
|
13,726
|
|
|
Data Library
|
9,948
|
|
|
5,948
|
|
|
||
Total multi-client revenues
|
23,419
|
|
|
19,674
|
|
|
||
Imaging Services
|
3,684
|
|
|
4,894
|
|
|
||
Total
|
27,103
|
|
|
24,568
|
|
|
||
Operations Optimization:
|
|
|
|
|
||||
Devices
|
4,820
|
|
|
4,158
|
|
|
||
Optimization Software & Services
|
5,033
|
|
|
4,782
|
|
|
||
Total
|
9,853
|
|
|
8,940
|
|
|
||
Total
|
$
|
36,956
|
|
|
$
|
33,508
|
|
|
Gross profit (loss):
|
|
|
|
|
||||
E&P Technology & Services
|
$
|
5,440
|
|
|
$
|
4,343
|
|
|
Operations Optimization
|
4,516
|
|
|
4,311
|
|
|
||
Segment gross profit
|
9,956
|
|
|
8,654
|
|
|
||
Other
|
(44
|
)
|
(a)
|
(1,801
|
)
|
(a)
|
||
Total
|
$
|
9,912
|
|
|
$
|
6,853
|
|
|
Gross margin:
|
|
|
|
|
||||
E&P Technology & Services
|
20
|
%
|
|
18
|
%
|
|
||
Operations Optimization
|
46
|
%
|
|
48
|
%
|
|
||
Segment gross margin
|
27
|
%
|
|
26
|
%
|
|
||
Other
|
—
|
%
|
|
—
|
%
|
|
||
Total
|
27
|
%
|
|
20
|
%
|
|
||
Income (loss) from operations:
|
|
|
|
|
||||
E&P Technology & Services
|
$
|
(1,615
|
)
|
|
$
|
(794
|
)
|
|
Operations Optimization
|
170
|
|
|
786
|
|
|
||
Support and other
|
(14,492
|
)
|
(b)
|
(12,632
|
)
|
(b)
|
||
Loss from operations
|
$
|
(15,937
|
)
|
|
$
|
(12,640
|
)
|
|
Operating margin:
|
|
|
|
|
||||
E&P Technology & Services
|
(6
|
)%
|
|
(3
|
)%
|
|
||
Operations Optimization
|
2
|
%
|
|
9
|
%
|
|
||
Support and other
|
(39
|
)%
|
|
(38
|
)%
|
|
||
Total
|
(43
|
)%
|
|
(38
|
)%
|
|
||
Net loss attributable to ION
|
$
|
(21,360
|
)
|
|
$
|
(18,426
|
)
|
|
Net loss per share:
|
|
|
|
|
||||
Basic
|
$
|
(1.52
|
)
|
|
$
|
(1.44
|
)
|
|
Diluted
|
$
|
(1.52
|
)
|
|
$
|
(1.44
|
)
|
|
•
|
extend the maturity date of the Credit Facility by approximately four years (from August 22, 2019 to August 16, 2023), subject to our retirement or extension of the maturity date of its Second Lien Notes, as defined below, which matures on December 15, 2021;
|
•
|
increase the maximum revolver amount by
$10.0 million
(from
$40.0 million
to
$50.0 million
);
|
•
|
increase the borrowing base percentage of the net orderly liquidation value as it relates to the multi-client data library (not to exceed
$28.5 million
, up from the previous maximum of
$15.0 million
for the multi-client data library component);
|
•
|
include the eligible billed receivables of the Mexican Subsidiary up to a maximum of
$5.0 million
in the borrowing base calculation and joins the Mexican Subsidiary as a borrower thereunder (with a maximum exposure of
$5.0 million
) and require the equity and assets of the Mexican Subsidiary to be pledged to secure obligations under the facility;
|
•
|
modify the interest rate such that the maximum interest rate remains consistent with the fixed interest rate prior to the Third Amendment (that is, 3.00% per annum for domestic rate loans and 4.00% per annum for LIBOR rate loans), but now lowers the range down to a minimum interest rate of 2.00% for domestic rate loans and 3.00% for LIBOR rate loans based on a leverage ratio for the preceding four-quarter period;
|
•
|
decrease the minimum excess borrowing availability threshold which (if the Borrowers have minimum excess borrowing availability below any such threshold) triggers the agent’s right to exercise dominion over cash and deposit accounts; and
|
•
|
modify the trigger required to test for compliance with the fixed charges coverage ratio.
|
Date
|
|
Percentage
|
2019
|
|
105.500%
|
2020
|
|
103.500%
|
2021 and thereafter
|
|
100.000%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net revenues by geographic area:
|
(In thousands)
|
||||||
Latin America
|
$
|
13,531
|
|
|
$
|
9,852
|
|
Europe
|
10,392
|
|
(a)
|
5,549
|
|
||
North America
|
7,157
|
|
|
8,048
|
|
||
Africa
|
2,389
|
|
|
5,019
|
|
||
Asia Pacific
|
1,867
|
|
|
3,934
|
|
||
Middle East
|
1,359
|
|
|
749
|
|
||
Commonwealth of Independent States
|
261
|
|
|
357
|
|
||
Total
|
$
|
36,956
|
|
|
$
|
33,508
|
|
•
|
any additional damages or adverse rulings in the WesternGeco litigation and future potential adverse effects on our financial results and liquidity;
|
•
|
future levels of our capital expenditures and of our customers for seismic activities;
|
•
|
future oil and gas commodity prices;
|
•
|
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 cash needs and availability of cash to fund our operations and pay our obligations;
|
•
|
the effects of current and future unrest in the Middle East, Africa, South America, and other regions;
|
•
|
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 E&P Technology & Services segment;
|
•
|
future government laws or regulations pertaining to the oil and gas industry, including trade restrictions, embargoes and sanctions imposed by the U.S government;
|
•
|
future government actions that may result in the deprivation of our contractual rights, including the potential for adverse decisions by judicial or administrative bodies in foreign countries with unpredictable or corrupt judicial systems;
|
•
|
expected net revenues, gross margins, income from operations and net income for our services and products;
|
•
|
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, including 4Sea;
|
•
|
future opportunities for new products and projected research and development expenses;
|
•
|
expected continued compliance with our debt financial covenants;
|
•
|
expectations regarding realization of deferred tax assets;
|
•
|
expectations regarding the impact of the U.S. Tax Cuts and Jobs Act;
|
•
|
anticipated results with respect to certain estimates we make for financial accounting purposes;
|
•
|
future success dependent on our continuing ability to identify, hire, develop, motivate and retain skilled personnel for all areas of our organization;
|
•
|
breaches to our systems could lead to loss of intellectual property, dissemination of highly confidential information, increased costs and impairment of our ability to conduct our operations; and
|
•
|
compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties.
|
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, 2019 to January 31, 2019
|
|
—
|
|
|
—
|
|
|
Not applicable
|
|
Not applicable
|
|
February 1, 2019 to February 28, 2019
|
|
—
|
|
|
$
|
—
|
|
|
Not applicable
|
|
Not applicable
|
March 1, 2019 to March 31, 2019
|
|
20,044
|
|
|
$
|
13.16
|
|
|
Not applicable
|
|
Not applicable
|
Total
|
|
20,044
|
|
|
$
|
13.16
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
10.21
|
|
|
|
|
|
101
|
|
The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018, (v) Condensed Consolidated Statements of Stockholders' (Deficit) Equity for the three months ended March 31, 2019 and 2018 and (vi) Footnotes to Condensed Consolidated Financial Statements.
|
|
|
|
|
|
ION GEOPHYSICAL CORPORATION
|
||
|
|
|
|
|
By
|
|
/s/ Steven A. Bate
|
|
|
|
Steven A. Bate
|
|
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2019
, 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 2, 2019
|
|
/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, 2019
, 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 2, 2019
|
|
/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 2, 2019
|
|
/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 2, 2019
|
|
/s/ Steven A. Bate
|
|
|
Steven A. Bate
|
|
|
Executive Vice President and Chief Financial Officer
|