ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 22-2286646 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
2105 CityWest Blvd. Suite 100 | ||
Houston, Texas | 77042-2839 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | ý | ||
Non-accelerated filer | o | Smaller reporting company | o | ||
Emerging growth company | o |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | IO | New York Stock Exchange |
PAGE | |
PART I. Financial Information | |
Item 1. Financial Statements (Unaudited) | |
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 | |
Item 3. Quantitative and Qualitative Disclosures about Market Risk | |
Item 4. Controls and Procedures | |
PART II. Other Information | |
Item 1. Legal Proceedings | |
Item 1A. Risk Factors | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 5. Other Information | |
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 |
Unbilled receivables at December 31, 2018 | $ | 44,032 | |
Recognition of unbilled receivables | 36,376 | ||
Revenues billed to customers | (65,966 | ) | |
Unbilled receivables at March 31, 2019 | $ | 14,442 |
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 |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2019 |
Apr. 29, 2019 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | ION GEOPHYSICAL CORP | |
Entity Central Index Key | 0000866609 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 14,069,520 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 26,666,667 | 26,666,667 |
Common stock, shares outstanding | 14,069,520 | 14,015,615 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Statement of Comprehensive Income [Abstract] | ||
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) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
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Restricted Cash and Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 38,407 | $ 33,551 | $ 50,750 | |
Total cash, cash equivalents, and restricted cash shown in statements of cash flows | 38,805 | $ 33,854 | 51,113 | $ 52,419 |
Prepaid expenses and other current assets | ||||
Restricted Cash and Cash Equivalents [Abstract] | ||||
Restricted cash | 398 | 60 | ||
Other long-term assets | ||||
Restricted Cash and Cash Equivalents [Abstract] | ||||
Restricted cash | $ 0 | $ 303 |
Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated balance sheet of ION Geophysical Corporation and its subsidiaries (collectively referred to as the “Company” or “ION,” unless the context otherwise requires) at December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date. The condensed consolidated balance sheet at March 31, 2019, and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2019 and 2018, are unaudited. In the opinion of management, all adjustments of a normal recurring nature that are necessary for a fair presentation of the results of the interim period have been included. Interim results are not necessarily indicative of the operating results for a full year or of future operations. Intercompany transactions and balances have been eliminated. The Company’s condensed consolidated financial statements reflect a non-redeemable noncontrolling interest in a majority-owned affiliate which is reported as a separate component of equity in “Noncontrolling interest” in the condensed consolidated balance sheets. Net income attributable to noncontrolling interest is stated separately in the condensed consolidated statements of operations. The activity for this noncontrolling interest relates to proprietary processing projects in Brazil. These condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements presented in accordance with GAAP have been omitted. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Certain prior period amounts have been reclassified to conform to the current period presentation, including the change in reportable segments presentation which had no impact on the condensed consolidated financial statements and the recognition of right-of-use (“ROU”) assets and operating lease liabilities on the condensed consolidated balance sheets as a result of the adoption of the new lease standard. Significant Accounting Policies The Company’s significant accounting policies are disclosed in Note 1 “Summary of Significant Accounting Policies.” of the Annual Report on Form 10-K for the year ended December 31, 2018. There have been no changes in such policies or the application of such policies during the three months ended March 31, 2019 except as discussed in Note 2 “Recent Accounting Pronouncements” and Note 11 “Lease Obligations.” Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management that affects the reported amounts in the condensed consolidated financial statements and accompanying notes. Areas involving significant estimates include, but not limited to, accounts and unbilled receivables, inventory valuation, sales forecast related to multi-client data libraries, impairment of property, plant and equipment and goodwill and deferred taxes. Actual results could materially differ from those estimates. |
Recent Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Recently Adopted On January 1, 2019, the Company adopted ASU 2016-2, “Leases (Topic 842)” using the modified retrospective method. This ASU requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under the previous guidance. The Company used January 1, 2018, the beginning of the earliest comparative period presented in its condensed consolidated financial statements, as the date of initial application. The Company elected the practical expedients upon transition which will retain the lease classification for leases and any unamortized initial direct costs that existed prior to the adoption of the standard. The adoption of the standard resulted in ROU assets of $59.5 million and operating lease liabilities of $70.6 million on the condensed consolidated balance sheets as of January 1, 2018. The difference between the ROU assets and operating lease liabilities is due to the derecognition of $11.1 million in deferred rent recorded within other long-term liabilities. There was no impact on the condensed consolidated statements of operations and cash flows. The standard had no impact on the debt covenant compliance under existing agreements. Short-term leases. which are leases with a duration of twelve months or less, have not been recorded in the condensed consolidated balance sheets. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.” The guidance will replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual periods beginning after December 15, 2018. The Company is in the initial stages of evaluating the impact of this standard on the condensed consolidated financial statements. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information During the current quarter, the Company consolidated its operating segments from three into two therefore eliminating the separate presentation of Ocean Bottom Integrated Technologies segment. This consolidation aligns with the Company’s asset light business model and evolved strategy to commercialize components of the Company’s next generation ocean bottom nodal system, 4Sea, instead of operating a crew with vessel and equipment assets. The Company is offering 4Sea components more broadly to the growing number of OBS service providers under recurring revenue commercial strategies to enable it to share in the value the technology delivers. The Company may also license the right to manufacture and use the 4Sea nodal technology to a service provider on a value-based pricing model, such as a royalty stream. Such licensing would be recognized through the relevent segments, either E&P Technology & Services or Operations Optimization. Accordingly, effective for the first quarter of 2019, the Company evaluates and reviews its results of operations based on two reporting segments: E&P Technology & Services and Operations Optimization. Refer to Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information about each business segment’s business, products and services. The segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Operating Decision Maker in determining how to allocate resources and evaluate performance. The Company measures segment operating results based on income (loss) from operations. Previously reported segment information has been retrospectively revised throughout the condensed consolidated financial statements, as applicable, for all periods presented to reflect the changes in the Company’s reporting segments. These changes did not have an impact on the Company’s condensed consolidated financial statements. These changes did not affect the Company’s reporting units used for allocating and testing goodwill for impairment. The following table is a summary of segment information (in thousands):
(a) Relates to gross loss of previously reported Ocean Bottom Integrated Technologies segment. (b) Includes loss from operations of previously reported Ocean Bottom Integrated Technologies segment of $0.8 million and $2.8 million for the three months ended March 31, 2019 and 2018, respectively, which includes item (a) above and operating expenses of $0.8 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively. |
Revenue From Contracts With Customers |
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Revenue From Contracts with Customers | Revenue From Contracts With Customers The Company derives revenue from the (i) sale or license of multi-client and proprietary data, imaging services and E&P Advisors consulting services within its E&P Technologies & Services segment; (ii) sale, license and repair of seismic data acquisition systems and other seismic equipment; and (iii) sale or license of seismic command and control software systems and software solutions for operations management within its Operations Optimization segment. All E&P Technology & Services’ revenues and the services component of Optimization Software & Services’ revenues under Operations Optimization segment are classified as service revenues. All other revenues are classified as product revenues. The Company uses a five-step model to determine proper revenue recognition from customer contracts. Revenue is recognized when (i) a contract is approved by all parties; (ii) the goods or services promised in the contract are identified; (iii) the consideration we expect to receive in exchange for the goods or services promised is determined; (iv) the consideration is allocated to the goods and services in the contract; and (v) control of the promised goods or services is transferred to the customer. The Company does not disclose the value of contractual future performance obligations such as backlog with an original expected length of one year or less within the footnotes. Revenue by Geographic Area The following table is a summary of net revenues by geographic area (in thousands):
(a) Increase is primarily attributable to data library sales to European customers. See Footnote 3 “Segment Information” of footnotes to condensed consolidated financial statements for revenue by segment for the three months ended March 31, 2019 and 2018. Unbilled Receivables Unbilled receivables relate to revenues recognized on multi-client surveys, imaging services and devices equipment repairs on a proportionate basis, and on licensing of multi-client data libraries for which invoices have not yet been presented to the customer. The following table is a summary of unbilled receivables (in thousands):
The changes in unbilled receivables are as follows (in thousands):
Deferred Revenue Billing practices are governed by the terms of each contract based upon achievement of milestones or pre-agreed schedules. Billing does not necessarily correlate with revenue recognized on a proportionate basis as work is performed and control is transferred to the customer. Deferred revenue represents cash received in excess of revenue not yet recognized as of the reporting period, but will be recognized in future periods. The following table is a summary of deferred revenues (in thousands):
The changes in deferred revenues are as follows (in thousands):
(a) The majority of deferred revenue recognized relates to Company’s Ventures group. The Company expects to recognize all deferred revenue within the next 12 months. Credit Risks The Company had one customer with sales that exceeded 10% of the Company’s consolidated net revenues for the three months ended March 31, 2019. The Company had two customers with sales that each exceeded 10% of the Company’s consolidated net revenues for the three months ended March 31, 2018. Revenues related to these customers are included within the E&P Technology & Services segment. At March 31, 2019, the Company had two customers that accounted for 26% of the Company’s total combined accounts receivable and unbilled receivable balances. At March 31, 2018, the Company had no customers with a balance greater than 10% of the Company’s total combined accounts receivable and unbilled receivable balances. |
Long-term Debt |
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Long-term Debt | Long-term Debt The following table is a summary of long-term debt (in thousands):
(a) The maturity of the Credit Facility will accelerate to October 31, 2021 if the Company is unable to repay or extend the maturity of the Second Lien Notes. Revolving Credit Facility On August 16, 2018, ION Geophysical Corporation and its material U.S. subsidiaries; GX Technology Corporation, ION Exploration Products (U.S.A) Inc. and I/O Marine Systems Inc. (the “Material U.S. Subsidiaries”), along with GX Geoscience Corporation, S. de R.L. de C.V., a limited liability company (Sociedad de Responsibilidad Limitada de Capital Variable) organized under the laws of Mexico, and a subsidiary of the Company (the “Mexican Subsidiary”), (the Material U.S. Subsidiaries and the Mexican Subsidiary are collectively, the “Subsidiary Borrowers”, together with ION Geophysical Corporation are the “Borrowers”), the financial institutions party thereto, as lenders, and PNC Bank, National Association (“PNC”), as agent for the lenders, entered into that certain Third Amendment and Joinder to Revolving Credit and Security Agreement (the “Third Amendment”), amending the Revolving Credit and Security Agreement, dated as of August 22, 2014 (as previously amended by the First Amendment to Revolving Credit and Security Agreement, dated as of August 4, 2015 and the Second Amendment to Revolving Credit and Security Agreement, dated as of April 28, 2016, the “Credit Agreement”). The Credit Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment is herein called the “Credit Facility”). The Credit Facility is available to provide for the Borrowers’ general corporate needs, including working capital requirements, capital expenditures, surety deposits and acquisition financing. The Third Amendment amended the Credit Agreement to, among other things:
The maximum amount under the Credit Facility is the lesser of $50.0 million or a monthly borrowing base. The borrowing base under the Credit Facility will increase or decrease monthly using a formula based on certain eligible receivables, eligible inventory and other amounts, including a percentage of the net orderly liquidation value of the Borrowers’ multi-client library. As of March 31, 2019, the borrowing base under the Credit Facility was $39.7 million, and there was no indebtedness under the Credit Facility. The obligations of Borrowers under the Credit Facility are secured by a first-priority security interest in 100% of the stock of the Subsidiary Borrowers and 65% of the equity interest in ION International Holdings L.P., and by substantially all other assets of the Borrowers. However, the first-priority security interest in the other assets of the Mexican Subsidiary is capped to a maximum exposure of $5.0 million. The Credit Facility contains covenants that, among other things, limit or prohibit the Borrowers, subject to certain exceptions and qualifications, from incurring additional indebtedness in excess of permitted indebtedness (including capital lease obligations), repurchasing equity, paying dividends or distributions, granting or incurring additional liens on the Borrowers’ properties, pledging shares of the Borrowers’ subsidiaries, entering into certain merger transactions, entering into transactions with the Company’s affiliates, making certain sales or other dispositions of the Borrowers’ assets, making certain investments, acquiring other businesses and entering into sale-leaseback transactions with respect to the Borrowers’ property. The Credit Facility requires that the Borrowers maintain a minimum fixed charge coverage ratio of 1.1 to 1.0 as of the end of each fiscal quarter during the existence of a covenant testing trigger event. The fixed charge coverage ratio is defined as the ratio of (i) ION Geophysical Corporation’s EBITDA, minus unfunded capital expenditures made during the relevant period, minus distributions (including tax distributions) and dividends made during the relevant period, minus cash taxes paid during the relevant period, to (ii) certain debt payments made during the relevant period. A covenant testing trigger event occurs upon (a) the occurrence and continuance of an event of default under the Credit Facility or (b) by a two-step process based on (i) a minimum excess borrowing availability threshold (excess borrowing availability less than $6.25 million for five consecutive days or $5.0 million on any given day), and (ii) the Borrowers’ unencumbered cash maintained in a PNC deposit account is less than the Borrowers’ then outstanding obligations. At March 31, 2019, ION Geophysical Corporation was in compliance with all of the covenants under the Credit Facility. The Credit Facility contains customary event of default provisions (including a “change of control” event affecting ION Geophysical Corporation), the occurrence of which could lead to an acceleration of ION Geophysical Corporation’s obligations under the Credit Facility. Senior Secured Notes ION Geophysical Corporation’s 9.125% Senior Secured Second Priority Notes due December 2021 (the “Second Lien Notes”) are senior secured second-priority obligations guaranteed by the Material U.S. Subsidiaries and the Mexican Subsidiary (each as defined above and herein below, with the reference to the Second Lien Notes, the “Guarantors”). Interest on the Second Lien Notes is payable semiannually in arrears on June 15 and December 15 of each year during their term, except that the interest payment otherwise payable on June 15, 2021 will be payable on December 15, 2021. The April 2016 indenture governing the Second Lien Notes contains certain covenants that, among other things, limits or prohibits ION Geophysical Corporation’s ability and the ability of its restricted subsidiaries to take certain actions or permit certain conditions to exist during the term of the Second Lien Notes, including among other things, incurring additional indebtedness in excess of permitted indebtedness, creating liens, paying dividends and making other distributions in respect of ION Geophysical Corporation’s capital stock, redeeming ION Geophysical Corporation’s capital stock, making investments or certain other restricted payments, selling certain kinds of assets, entering into transactions with affiliates, and effecting mergers or consolidations. These and other restrictive covenants contained in the Second Lien Notes Indenture are subject to certain exceptions and qualifications. All of ION Geophysical Corporation’s subsidiaries are currently restricted subsidiaries. As of March 31, 2019, the Company was in compliance with the covenants with respect to the Second Lien Notes. On or after December 15, 2019, the Company may, on one or more occasions, redeem all or a part of the Second Lien Notes at the redemption prices set forth below, plus accrued and unpaid interest and special interest, if any, on the Second Lien Notes redeemed during the twelve-month period beginning on December 15th of the years indicated below:
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Net Loss Per Share |
3 Months Ended |
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Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing net loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is determined based on the assumption that dilutive restricted stock and restricted stock unit awards have vested and outstanding dilutive stock options have been exercised and the aggregate proceeds were used to reacquire common stock using the average price of such common stock for the period. The total number of shares issuable pursuant to outstanding stock options at March 31, 2019 and 2018 of 778,875 and 871,757, respectively, were excluded as their inclusion would have an anti-dilutive effect. The total number of shares issuable pursuant to restricted stock units awards outstanding at March 31, 2019 and 2018 of 988,426 and 182,053, respectively, were excluded as their inclusion would have an anti-dilutive effect. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company maintains a valuation allowance for substantially all of its deferred tax assets. A valuation allowance is established or maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. The Company will continue to record a valuation allowance for the substantial majority of its deferred tax assets until there is sufficient evidence to warrant reversal. The tax provision for the three months ended March 31, 2019 has been calculated using the Company’s overall estimated annual effective tax rate based on projected 2019 full year results. The Company’s effective tax rates for the three months ended March 31, 2019 and 2018 were (7.1)% and (6.2)%, respectively. The Company’s effective tax rates for the three months ended March 31, 2019 and 2018 were negatively impacted by the change in valuation allowance related to U.S. operating losses for which the Company cannot currently recognize a tax benefit. The Company’s income tax expense for the three months ended March 31, 2019 of $1.4 million primarily relates to results from the Company’s non-U.S. businesses. As of March 31, 2019, the Company has approximately $0.4 million of unrecognized tax benefits and does not expect to recognize significant increases in unrecognized tax benefits during the next twelve-month period. Interest and penalties, if any, related to unrecognized tax benefits are recorded in income tax expense. As of March 31, 2019, the Company’s U.S. federal tax returns for 2015 and subsequent years remain subject to examination by tax authorities. In the Company’s foreign tax jurisdictions, tax returns for 2012 and subsequent years generally remain open to examination. |
Litigation |
3 Months Ended |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation WesternGeco In June 2009, WesternGeco L.L.C. (“WesternGeco”) filed a lawsuit against the Company in the United States District Court for the Southern District of Texas (the “District Court”). In the lawsuit, styled WesternGeco L.L.C. v. ION Geophysical Corporation, WesternGeco alleged that the Company had infringed four of their patents concerning marine seismic surveys. Trial began in July 2012, and the jury returned a verdict in August 2012. The jury found that the Company infringed the “claims” contained in four of WesternGeco’s patents by supplying its DigiFIN® lateral streamer control units from the United States, and awarded WesternGeco more than $100 million in damages. (In patent law, a “claim” is a technical legal term; an infringer infringes on one or more “claims” of a given patent.) In May 2014, the District Court entered a Final Judgment against the Company in the amount of $123.8 million. This included the jury award ($12.5 million in reasonable royalties plus $93.4 million in lost profits), $10.9 million in pre-judgment interest on lost profits, and $9.4 million in supplemental damages that the judge imposed for DigiFIN units that were supplied from the U.S. during the trial and during other periods that the jury did not consider. The Final Judgment also enjoined the Company from supplying DigiFINs or any parts unique to DigiFINs in or from the United States. The Company has conducted its business in compliance with the District Court’s orders, and has reorganized its operations such that it no longer supply DigiFINs or any parts unique to DigiFINs in or from the United States. On July 2, 2015, the United States Court of Appeals for the Federal Circuit in Washington, D.C. (the “Court of Appeals”) reversed, in part, the District Court, holding that the lost profits, which were attributable to foreign seismic surveys, were not available to WesternGeco under the Patent Act. The Company had recorded a loss contingency accrual of $123.8 million because of the District Court’s ruling. As a result of the reversal by the Court of Appeals, the Company reduced the loss contingency accrual to $22.0 million. On November 14, 2016, the District Court ordered our sureties to pay principal and interest on the royalty damages previously awarded. On November 25, 2016, the Company paid WesternGeco the $20.8 million due pursuant to the order, and it reduced its loss contingency accrual to zero. On March 14, 2017, the District Court held a hearing on whether impose additional damages for willfulness. The Judge found that the Company’s infringement was willful, and awarded enhanced damages of $5.0 million to WesternGeco (WesternGeco had sought $43.6 million in such damages.) The District Court also ordered the appeal bond to be released and discharged. On June 30, 2017, the Company and WesternGeco agreed that neither would appeal the District Court's award of $5.0 million in enhanced damages. Upon assessment of the enhanced damages, the Company accrued $5.0 million in the first quarter of 2017 which was paid in full in 2018. WesternGeco filed a petition in the Supreme Court on February 17, 2017, appealing the Court of Appeal’s decision that had eliminated lost profits. On January 12, 2018, the Supreme Court agreed to hear the appeal. The specific issue before the Supreme Court was whether lost profits arising from use of prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. § 271(f)(2) (the statute under which the Company was held to have infringed WesternGeco’s patents, and upon which the District Court and Court of Appeals relied in entering their rulings). The Supreme Court heard oral arguments on April 16, 2018. The Company argued that the Court of Appeals’ decision that eliminated lost profits ought to be affirmed. WesternGeco and the U.S. Solicitor General argued that the Court of Appeals’ decision that eliminated lost profits ought to be reversed. On June 22, 2018, the Supreme Court reversed the judgment of the Court of Appeals, held that the award of lost profits to WesternGeco by the District Court was a permissible application of Section 284 of the Patent Act, and remanded the case back to the Court of Appeals for further proceedings consistent with its (the Supreme Court’s) opinion. On July 27, 2018, the Court of Appeals vacated its earlier decision with respect to lost profits damages, and ordered WesternGeco and the Company to submit supplemental briefing on what relief would be appropriate in light of the Supreme Court’s decision. The Company argued to the Court of Appeals that lost profits were not available to WesternGeco because the jury instructions required the jury to find that the Company had been WesternGeco’s direct competitor in the survey markets where WesternGeco had lost profits, and that the jury could not have found so. Additionally, the Company argued that the award of lost profits and reasonable royalties ought to be vacated and retried on separate grounds due to the outcome of an Inter Partes Review (“IPR”) filed with the Patent Trial and Appeal Board (“PTAB”) of the Patent and Trademark Office, in which the PTAB invalidated four of the six patent claims that formed the basis for the lawsuit judgment against the Company. (The Court of Appeals affirmed the PTAB’s findings, and on February 19, 2019, the Supreme Court declined to hear WesternGeco’s appeal on that issue.) On January 11, 2019, the Court of Appeals issued its ruling. In its ruling, the Court of Appeals refused to disturb the award of reasonable royalties to WesternGeco (which the Company paid in 2016), and rejected the Company’s “direct competitor” argument, but vacated the District Court’s award of lost profits damages and remanded the case back to the District Court to determine whether to hold a new trial as to lost profits. The Court of Appeals also ruled that its affirmance of the PTAB’s decision eliminated four of the five patent claims that could have supported the award of lost profits, leaving only one remaining patent claim that could support an award of lost profits. The Court of Appeals further held that the lost profits award can be reinstated by the District Court if the existing trial record establishes that the jury must have found that the technology covered by the one remaining patent claim was essential for performing the surveys upon which lost profits were based. To make such a finding, the District Court must conclude that the present trial record establishes that there was no dispute that the technology covered by the one remaining patent claim, independent of the technology of the now-invalid claims, was required to perform the surveys. The Court of Appeals ruling further provides that if, but only if, the District Court concludes that WesternGeco established at trial, with undisputed evidence, that the remaining claim covers technology that was necessary to perform the surveys, then the District Court may deny a new trial and reinstate lost profits. On February 19, 2019, the Company filed a motion for a new trial as to lost profits in the District Court. In the motion, the Company argued that a new trial on lost profits is necessary, since WesternGeco cannot demonstrate that it established, at trial, with undisputed evidence, that the one remaining patent claim covers technology that was necessary to perform the surveys upon which the lost profits award was based. On March 20, 2019, WesternGeco filed an opposition to our motion for a new trial, arguing that undisputed evidence established that the one remaining patent claim was necessary to perform the ten lost profits surveys. On that same date, WesternGeco filed a cross motion for entry of a judgment of $105.4 million in lost profits and pre- and post-judgment interest. The Company filed a reply to WesternGeco’s opposition motion on April 9, 2019 and an opposition to WesternGeco’s cross motion on April 18, 2019. The Company may not ultimately prevail in the litigation and it could be required to pay some or all of the lost profits that were awarded by the District Court, plus interest, if the District Court denies a new trial on lost profits, or if a new trial is granted and a new judgment issues. The Company’s assessment that it does not have a loss contingency may change in the future due to developments at the Supreme Court, Court of Appeals, or District Court, and other events, such as changes in applicable law, and such reassessment could lead to the determination that a significant loss contingency is probable, which could have a material effect on the Company’s business, financial condition and results of operations. The Company’s assessments disclosed in this Quarterly Report on Form 10-Q or elsewhere are based on currently available information and involve elements of judgment and significant uncertainties. Other Litigation The Company has been named in various other lawsuits or threatened actions that are incidental to its ordinary business. Litigation is inherently unpredictable. Any claims against the Company, whether meritorious or not, could be time-consuming, cause the Company to incur costs and expenses, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits and actions cannot be predicted with certainty. The Company currently believes that the ultimate resolution of these matters will not have a material adverse effect on its financial condition or results of operations. |
Details of Selected Balance Sheet Accounts |
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Details of Selected Balance Sheet Accounts | Details of Selected Balance Sheet Accounts Inventories
Property, Plant and Equipment
Total depreciation expense, including amortization of assets recorded under equipment finance leases, for the three months ended March 31, 2019 and 2018 was $0.8 million and $2.2 million, respectively. Multi-Client Data Library
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Stockholder's Equity and Stock-Based Compensation Expense |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholder's Equity and Stock-Based Compensation Expense | Stockholder's Equity and Stock-Based Compensation Expense Public Equity Offering On February 21, 2018, the Company completed a public equity offering (“Offering”) of its 1,820,000 shares of common stock at a public offering price of $27.50 per share, and warrants to purchase an additional 1,820,000 shares of the Company’s common stock pursuant to the Registration Statement on Form S-3 (No. 33-213769) filed with the Securities and Exchange Commission under the Securities Act of 1933 and declared effective on December 2, 2016. The net proceeds from this offering were $47.0 million, including transaction expenses. A portion of the net proceeds were used to retire the Company’s $28.5 million Third Lien Notes in March 2018. The warrants have an exercise price of $33.60 per share, are immediately exercisable and were to expire on March 21, 2019. On February 4, 2019, the Company extended expiration of the warrants to March 21, 2020. Stock-Based Compensation The total number of shares issued or reserved for future issuance under outstanding stock options at March 31, 2019 and 2018 was 778,875 and 871,757, respectively, and the total number of shares of restricted stock and shares reserved for restricted stock units outstanding at March 31, 2019 and 2018 was 988,426 and 182,053, respectively. The total number of stock appreciation rights awards outstanding at March 31, 2019 and 2018 was 1,305,013 and 530,865, respectively. The following table presents a summary of the activity related to stock options, restricted stock, restricted stock unit awards and stock appreciation rights awards for the three months ended March 31, 2019:
Stock-based compensation expense recognized for the three months ended March 31, 2019 and 2018, totaled $1.3 million and $0.8 million, respectively. Stock appreciation rights expense recognized for the three months ended March 31, 2019 and 2018, totaled $4.5 million and $0.8 million, respectively. |
Lease Obligations |
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Lease Obligations | Lease Obligations The Company determines if an arrangement is a lease at inception by considering whether (1) explicitly or implicitly identified assets have been deployed in the agreement and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the agreement. Operating leases are included in “ROU assets”, “Current maturities of operating lease liabilities” and “Operating lease liabilities, net of current maturities” in the condensed consolidated balance sheets. Finance leases are included in “Property, plant and equipment”, “Current maturities of long-term debt”, and “Long-term debt, net of current maturities” in the condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are recognized at the commencement date and consist of the present value of remaining lease payments over the lease term, initial direct costs, prepaid lease payments less any lease incentives. Operating lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. The Company used the implicit rate, when readily determinable or the incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease agreements with lease and non-lease components are accounted for separately. The Company will not recognize leases with terms of less than twelve months in the condensed consolidated balance sheets and will recognize those lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term. The Company leases offices, processing centers, warehouse spaces and, to a lesser extent, certain equipment. These leases have remaining terms of 1 year to 12 years, some of which have options to extend for up to 10 years and/or options to terminate within 1 year. The options to renew are not recognized as part of the Company’s ROU assets and operating lease liabilities as the Company is not reasonably certain that it will exercise these options. Total operating lease expense, including short-term lease expense was $3.1 million and $3.0 million for the three months ended March 31, 2019 and 2018, respectively. Future maturities of lease obligations follows (in thousands):
The weighted average remaining lease term as of March 31, 2019 and December 31, 2018 was 5.19 years and 5.26 years, respectively. The weighted average discount rate used to determine the operating lease liability as of March 31, 2019 and December 31, 2018 was 6.47% and 6.25%, respectively. Equipment Finance Leases The Company has entered into equipment finance leases that are due in installments for the purpose of financing the purchase of computer equipment through August 2021. Interest accrues under these leases at rates from 4.3% to 8.7% per annum, and the leases are collateralized by liens on the computer equipment. The assets are amortized over the lesser of their related lease terms or their estimated useful lives and such charges are reflected within depreciation expense. |
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Lease Obligations | Lease Obligations The Company determines if an arrangement is a lease at inception by considering whether (1) explicitly or implicitly identified assets have been deployed in the agreement and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the agreement. Operating leases are included in “ROU assets”, “Current maturities of operating lease liabilities” and “Operating lease liabilities, net of current maturities” in the condensed consolidated balance sheets. Finance leases are included in “Property, plant and equipment”, “Current maturities of long-term debt”, and “Long-term debt, net of current maturities” in the condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are recognized at the commencement date and consist of the present value of remaining lease payments over the lease term, initial direct costs, prepaid lease payments less any lease incentives. Operating lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. The Company used the implicit rate, when readily determinable or the incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease agreements with lease and non-lease components are accounted for separately. The Company will not recognize leases with terms of less than twelve months in the condensed consolidated balance sheets and will recognize those lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term. The Company leases offices, processing centers, warehouse spaces and, to a lesser extent, certain equipment. These leases have remaining terms of 1 year to 12 years, some of which have options to extend for up to 10 years and/or options to terminate within 1 year. The options to renew are not recognized as part of the Company’s ROU assets and operating lease liabilities as the Company is not reasonably certain that it will exercise these options. Total operating lease expense, including short-term lease expense was $3.1 million and $3.0 million for the three months ended March 31, 2019 and 2018, respectively. Future maturities of lease obligations follows (in thousands):
The weighted average remaining lease term as of March 31, 2019 and December 31, 2018 was 5.19 years and 5.26 years, respectively. The weighted average discount rate used to determine the operating lease liability as of March 31, 2019 and December 31, 2018 was 6.47% and 6.25%, respectively. Equipment Finance Leases The Company has entered into equipment finance leases that are due in installments for the purpose of financing the purchase of computer equipment through August 2021. Interest accrues under these leases at rates from 4.3% to 8.7% per annum, and the leases are collateralized by liens on the computer equipment. The assets are amortized over the lesser of their related lease terms or their estimated useful lives and such charges are reflected within depreciation expense. |
Supplemental Cash Flow Information and Non-cash Activity |
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Supplemental Cash Flow Information and Non-cash Activity | Supplemental Cash Flow Information and Non-cash Activity Supplemental disclosure of cash flow information are as follows (in thousands):
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Authoritative guidance on fair value measurements defines fair value, establishes a framework for measuring fair value and stipulates the related disclosure requirements. The Company follows a three-level hierarchy, under which the fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels, moving from quoted prices in active markets in (Level 1) to unobservable inputs in (Level 3). Due to their highly liquid nature, the amount of the Company’s other financial instruments, including cash and cash equivalents, restricted cash, accounts and unbilled receivables, short term investments, accounts payable and accrued multi-client data library royalties, represent their approximate fair value. The carrying amounts of the Company’s long-term debt as of March 31, 2019 and December 31, 2018 were $124.0 million and $124.7 million, respectively, compared to its fair values of $116.7 million and $120.7 million as of March 31, 2019 and December 31, 2018, respectively. The fair value of the long-term debt was calculated using Level 1 inputs, including an active market price. Fair value measurements are applied with respect to non-financial assets and liabilities on a non-recurring basis, which would consist measurement primarily of goodwill, multi-client data library and property, plant and equipment. |
Condensed Consolidating Financial Information |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information | Condensed Consolidating Financial Information The Second Lien Notes were issued by ION Geophysical Corporation and are guaranteed by Guarantors, all of which are wholly-owned subsidiaries. The Guarantors have fully and unconditionally guaranteed the payment obligations of ION Geophysical Corporation with respect to the Second Lien Notes. The following condensed consolidating financial information presents the results of operations, financial position and cash flows for:
This condensed consolidating financial information should be read in conjunction with the accompanying condensed consolidated financial statements and footnotes. For additional information pertaining to the Second Lien Notes, See Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of this Form 10-Q.
The following table is a reconciliation of cash and cash equivalents to total cash, cash equivalents, and restricted cash:
The following table is a reconciliation of cash and cash equivalents to total cash, cash equivalents, and restricted cash:
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Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated balance sheet of ION Geophysical Corporation and its subsidiaries (collectively referred to as the “Company” or “ION,” unless the context otherwise requires) at December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date. The condensed consolidated balance sheet at March 31, 2019, and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2019 and 2018, are unaudited. In the opinion of management, all adjustments of a normal recurring nature that are necessary for a fair presentation of the results of the interim period have been included. Interim results are not necessarily indicative of the operating results for a full year or of future operations. Intercompany transactions and balances have been eliminated. The Company’s condensed consolidated financial statements reflect a non-redeemable noncontrolling interest in a majority-owned affiliate which is reported as a separate component of equity in “Noncontrolling interest” in the condensed consolidated balance sheets. Net income attributable to noncontrolling interest is stated separately in the condensed consolidated statements of operations. The activity for this noncontrolling interest relates to proprietary processing projects in Brazil. These condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements presented in accordance with GAAP have been omitted. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Certain prior period amounts have been reclassified to conform to the current period presentation, including the change in reportable segments presentation which had no impact on the condensed consolidated financial statements and the recognition of right-of-use (“ROU”) assets and operating lease liabilities on the condensed consolidated balance sheets as a result of the adoption of the new lease standard. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management that affects the reported amounts in the condensed consolidated financial statements and accompanying notes. Areas involving significant estimates include, but not limited to, accounts and unbilled receivables, inventory valuation, sales forecast related to multi-client data libraries, impairment of property, plant and equipment and goodwill and deferred taxes. Actual results could materially differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Recently Adopted On January 1, 2019, the Company adopted ASU 2016-2, “Leases (Topic 842)” using the modified retrospective method. This ASU requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under the previous guidance. The Company used January 1, 2018, the beginning of the earliest comparative period presented in its condensed consolidated financial statements, as the date of initial application. The Company elected the practical expedients upon transition which will retain the lease classification for leases and any unamortized initial direct costs that existed prior to the adoption of the standard. The adoption of the standard resulted in ROU assets of $59.5 million and operating lease liabilities of $70.6 million on the condensed consolidated balance sheets as of January 1, 2018. The difference between the ROU assets and operating lease liabilities is due to the derecognition of $11.1 million in deferred rent recorded within other long-term liabilities. There was no impact on the condensed consolidated statements of operations and cash flows. The standard had no impact on the debt covenant compliance under existing agreements. Short-term leases. which are leases with a duration of twelve months or less, have not been recorded in the condensed consolidated balance sheets. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.” The guidance will replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual periods beginning after December 15, 2018. The Company is in the initial stages of evaluating the impact of this standard on the condensed consolidated financial statements. |
Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Information | The following table is a summary of segment information (in thousands):
(a) Relates to gross loss of previously reported Ocean Bottom Integrated Technologies segment. (b) Includes loss from operations of previously reported Ocean Bottom Integrated Technologies segment of $0.8 million and $2.8 million for the three months ended March 31, 2019 and 2018, respectively, which includes item (a) above and operating expenses of $0.8 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively. |
Revenue From Contracts With Customers (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table is a summary of net revenues by geographic area (in thousands):
(a) Increase is primarily attributable to data library sales to European customers. |
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Contract with Customer, Asset and Liability | The following table is a summary of deferred revenues (in thousands):
The changes in deferred revenues are as follows (in thousands):
(a) The majority of deferred revenue recognized relates to Company’s Ventures group. The following table is a summary of unbilled receivables (in thousands):
The changes in unbilled receivables are as follows (in thousands):
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Long-term Debt (Tables) |
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations | The following table is a summary of long-term debt (in thousands):
(a) The maturity of the Credit Facility will accelerate to October 31, 2021 if the Company is unable to repay or extend the maturity of the Second Lien Notes. |
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Debt Instrument Redemption | On or after December 15, 2019, the Company may, on one or more occasions, redeem all or a part of the Second Lien Notes at the redemption prices set forth below, plus accrued and unpaid interest and special interest, if any, on the Second Lien Notes redeemed during the twelve-month period beginning on December 15th of the years indicated below:
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Details of Selected Balance Sheet Accounts (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of inventories |
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Summary of property, plant, equipment and seismic rental equipment |
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Schedule of multi-client data library |
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Stockholder's Equity and Stock-Based Compensation Expense (Tables) |
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | The following table presents a summary of the activity related to stock options, restricted stock, restricted stock unit awards and stock appreciation rights awards for the three months ended March 31, 2019:
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Schedule of Restricted Stock and Units Awards Activity | The following table presents a summary of the activity related to stock options, restricted stock, restricted stock unit awards and stock appreciation rights awards for the three months ended March 31, 2019:
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Lease Obligations (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of maturities of lease obligations, finance lease | Future maturities of lease obligations follows (in thousands):
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Schedule of maturities of lease obligations, operating lease | Future maturities of lease obligations follows (in thousands):
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Supplemental Cash Flow Information and Non-cash Activity (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Non-cash Items from Investing and Financing Activities | Supplemental disclosure of cash flow information are as follows (in thousands):
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Condensed Consolidating Financial Information (Tables) |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheet |
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Condensed Income Statement |
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Condensed Cash Flow Statement |
The following table is a reconciliation of cash and cash equivalents to total cash, cash equivalents, and restricted cash:
The following table is a reconciliation of cash and cash equivalents to total cash, cash equivalents, and restricted cash:
|
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Jan. 01, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use assets | $ 44,979 | $ 47,803 | |
Lease liabilities | $ 54,685 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use assets | $ 59,500 | ||
Lease liabilities | 70,600 | ||
Derecognition of deferred rent | $ (11,100) |
Revenue From Contracts With Customers - Revenue by Geographic Area (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 36,956 | $ 33,508 |
Latin America | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 13,531 | 9,852 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 10,392 | 5,549 |
North America | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 7,157 | 8,048 |
Africa | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 2,389 | 5,019 |
Asia Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 1,867 | 3,934 |
Middle East | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | 1,359 | 749 |
Commonwealth of Independent States | ||
Disaggregation of Revenue [Line Items] | ||
Net revenues | $ 261 | $ 357 |
Revenue From Contracts With Customers - Unbilled Receivables (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Unbilled Revenues [Roll Forward] | |
Unbilled receivables at December 31, 2018 | $ 44,032 |
Recognition of unbilled receivables | 36,376 |
Revenues billed to customers | (65,966) |
Unbilled receivables at March 31, 2019 | 14,442 |
New Venture | |
Unbilled Revenues [Roll Forward] | |
Unbilled receivables at December 31, 2018 | 38,430 |
Unbilled receivables at March 31, 2019 | 7,342 |
Imaging Services | |
Unbilled Revenues [Roll Forward] | |
Unbilled receivables at December 31, 2018 | 5,075 |
Unbilled receivables at March 31, 2019 | 6,159 |
Devices | |
Unbilled Revenues [Roll Forward] | |
Unbilled receivables at December 31, 2018 | 527 |
Unbilled receivables at March 31, 2019 | $ 941 |
Revenue From Contracts With Customers - Deferred Revenue (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Revenue, Remaining Performance Obligation [Roll Forward] | |
Deferred revenue at December 31, 2018 | $ 7,710 |
Cash collected in excess of revenue recognized | 280 |
Recognition of deferred revenue | (580) |
Deferred revenue at March 31, 2019 | 7,410 |
New Venture | |
Revenue, Remaining Performance Obligation [Roll Forward] | |
Deferred revenue at December 31, 2018 | 5,797 |
Deferred revenue at March 31, 2019 | 6,059 |
Imaging Services | |
Revenue, Remaining Performance Obligation [Roll Forward] | |
Deferred revenue at December 31, 2018 | 307 |
Deferred revenue at March 31, 2019 | 51 |
Devices | |
Revenue, Remaining Performance Obligation [Roll Forward] | |
Deferred revenue at December 31, 2018 | 626 |
Deferred revenue at March 31, 2019 | 562 |
Optimization Software & Services | |
Revenue, Remaining Performance Obligation [Roll Forward] | |
Deferred revenue at December 31, 2018 | 980 |
Deferred revenue at March 31, 2019 | $ 738 |
Long-term Debt - Summary of obligations (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Obligations | ||
Equipment finance leases | $ 2,658 | $ 2,938 |
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 |
Senior secured notes | Senior secured second-priority lien notes (maturing December 15, 2021) | ||
Obligations | ||
Gross debt | 120,569 | 120,569 |
Revolving credit facility (maturing August 16, 2023) | ||
Obligations | ||
Gross debt | 0 | 0 |
Other debt | ||
Obligations | ||
Gross debt | $ 724 | $ 1,159 |
Long-term Debt - Debt Instrument Redemption Percentages (Details) - Senior secured notes - Senior secured second-priority lien notes (maturing December 15, 2021) - Forecast |
Dec. 15, 2019 |
---|---|
2019 | |
Debt Instrument [Line Items] | |
Redemption price percentages | 105.50% |
2020 | |
Debt Instrument [Line Items] | |
Redemption price percentages | 103.50% |
2021 and thereafter | |
Debt Instrument [Line Items] | |
Redemption price percentages | 100.00% |
Net Loss Per Share (Details) - shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
---|---|---|---|
Earnings Per Share [Abstract] | |||
Number of shares issued or committed for issuance under outstanding stock options | 778,875 | 871,757 | |
Restricted stock and shares reserved for restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of restricted stock and shares reserved for restricted stock units outstanding | 988,426 | 1,044,125 | 182,053 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rates | (7.10%) | (6.20%) |
Income tax expense | $ 1,407 | $ 1,072 |
Unrecognized tax benefits | $ 400 |
Details of Selected Balance Sheet Accounts - Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
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 |
Details of Selected Balance Sheet Accounts - Multi-Client Data Library (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
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 |
Lease Obligations - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Lessee, Lease, Description [Line Items] | |||
Option to extend | 10 years | ||
Option to terminate | 1 year | ||
Operating lease expense | $ 3.1 | $ 3.0 | |
Weighted average remaining lease term | 5 years 2 months 8 days | 5 years 3 months 4 days | |
Weighted average discount rate | 6.47% | 6.25% | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining term | 1 year | ||
Interest rate | 4.30% | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining term | 12 years | ||
Interest rate | 8.70% |
Lease Obligations - Maturities of Lease Obligations (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Operating Leases | ||
2020 | $ 13,169 | |
2021 | 12,775 | |
2022 | 11,281 | |
2023 | 11,286 | |
2024 | 8,323 | |
Thereafter | 11,684 | |
Total lease payments | 68,518 | |
Less imputed interest | (13,833) | |
Total | 54,685 | |
Finance Leases | ||
2020 | 1,254 | |
2021 | 1,254 | |
2022 | 443 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total lease payments | 2,951 | |
Less imputed interest | (293) | |
Total | 2,658 | $ 2,938 |
Total | ||
2020 | 14,423 | |
2021 | 14,029 | |
2022 | 11,724 | |
2023 | 11,286 | |
2024 | 8,323 | |
Thereafter | 11,684 | |
Total lease payments | 71,469 | |
Less imputed interest | (14,126) | |
Total | $ 57,343 |
Supplemental Cash Flow Information and Non-cash Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 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 | $ 0 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Carrying amounts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | $ 124.0 | $ 124.7 |
Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | $ 116.7 | $ 120.7 |
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