Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2020

Condensed Financial Information 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:

• 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.

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.

	March 31, 2020
Balance Sheet	ION Geophysical Corporation			The Guarantors			All Other Subsidiaries			Consolidating Adjustments			Total Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	28,602		$	54		$	14,007		$	—		$	42,663
Accounts receivable, net	8			42,390			8,751			—			51,149
Unbilled receivables	—			5,206			3,150			—			8,356
Inventories, net	—			7,603			5,217			—			12,820
Prepaid expenses and other current assets	3,168			1,319			1,194			—			5,681
Total current assets	31,778			56,572			32,319			—			120,669
Deferred income tax asset	—			7,799			106			—			7,905
Property, plant and equipment, net	1,609			7,711			3,386			—			12,706
Multi-client data library, net	—			46,771			7,573			—			54,344
Investment in subsidiaries	855,539			274,923			—			(1,130,462		)	—
Goodwill	—			—			18,298			—			18,298
Intercompany receivables	—			288,207			112,830			(401,037		)	—
Right-of-use assets	22,699			14,572			4,895			—			42,166
Other assets	2,381			865			53			—			3,299
Total assets	$	914,006		$	697,420		$	179,460		$	(1,531,499	)	$	259,387
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:
Current maturities of long-term debt	$	27,486		$	1,160		$	—		$	—		$	28,646
Accounts payable	2,008			40,192			1,627			—			43,827
Accrued expenses	13,536			8,371			7,171			—			29,078
Accrued multi-client data library royalties	—			21,209			215			—			21,424
Deferred revenue	—			3,610			1,272			—			4,882
Current maturities of operating lease liabilities	3,556			5,143			1,174			—			9,873
Total current liabilities	46,586			79,685			11,459			—			137,730
Long-term debt, net of current maturities	118,861			435			—			—			119,296
Operating lease liabilities, net of current maturities	21,900			14,283			4,348			—			40,531
Intercompany payables	766,521			—			—			(766,521		)	—
Other long-term liabilities	395			38			—			—			433
Total liabilities	954,263			94,441			15,807			(766,521		)	297,990
(Deficit) Equity:
Common stock	142			290,460			47,776			(338,236		)	142
Additional paid-in capital	957,254			180,700			203,909			(384,609		)	957,254
Accumulated earnings (deficit)	(976,554		)	406,440			20,550			(426,990		)	(976,554		)
Accumulated other comprehensive income (loss)	(21,099		)	4,238			(23,611		)	19,373			(21,099		)
Due from ION Geophysical Corporation	—			(278,859		)	(86,625		)	365,484			—
Total stockholders’ (deficit) equity	(40,257		)	602,979			161,999			(764,978		)	(40,257		)
Noncontrolling interest	—			—			1,654			—			1,654
Total (deficit) equity	(40,257		)	602,979			163,653			(764,978		)	(38,603		)
Total liabilities and (deficit) equity	$	914,006		$	697,420		$	179,460		$	(1,531,499	)	$	259,387

	December 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	$	8,426		$	26		$	24,613		$	—		$	33,065
Accounts receivable, net	8			19,493			10,047			—			29,548
Unbilled receivables	—			7,314			4,501			—			11,815
Inventories, net	—			6,902			5,285			—			12,187
Prepaid expenses and other current assets	3,292			1,513			1,207			—			6,012
Total current assets	11,726			35,248			45,653			—			92,627
Deferred income tax asset	402			8,417			(85		)	—			8,734
Property, plant and equipment, net	786			8,112			4,290			—			13,188
Multi-client data library, net	—			54,479			5,905			—			60,384
Investment in subsidiaries	841,522			279,327			—			(1,120,849		)	—
Goodwill	—			—			23,585			—			23,585
Intercompany receivables	—			287,692			99,884			(387,576		)	—
Right-of-use assets	11,934			15,802			4,810			—			32,546
Other assets	1,171			905			54			—			2,130
Total assets	$	867,541		$	689,982		$	184,096		$	(1,508,425	)	$	233,194
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:
Current maturities of long-term debt	$	972		$	1,135		$	—		$	—		$	2,107
Accounts payable	2,259			44,641			2,416			—			49,316
Accrued expenses	9,933			9,982			10,413			—			30,328
Accrued multi-client data library royalties	—			18,616			215			—			18,831
Deferred revenue	—			3,465			1,086			—			4,551
Current maturities of operating lease liabilities	4,429			5,469			1,157			—			11,055
Total current liabilities	17,593			83,308			15,287			—			116,188
Long-term debt, net of current maturities	118,618			734			—			—			119,352
Operating lease liabilities, net of current maturities	11,208			15,346			4,279			—			30,833
Intercompany payables	755,524			—			—			(755,524		)	—
Other long-term liabilities	1,418			35			—			—			1,453
Total liabilities	904,361			99,423			19,566			(755,524		)	267,826
(Deficit) Equity:
Common stock	142			290,460			47,776			(338,236		)	142
Additional paid-in capital	956,647			180,700			203,909			(384,609		)	956,647
Accumulated earnings (deficit)	(974,291		)	396,793			18,837			(415,630		)	(974,291		)
Accumulated other comprehensive income (loss)	(19,318		)	4,281			(21,907		)	17,626			(19,318		)
Due from ION Geophysical Corporation	—			(281,675		)	(86,273		)	367,948			—
Total stockholders’ (deficit) equity	(36,820		)	590,559			162,342			(752,901		)	(36,820		)
Noncontrolling interest	—			—			2,188			—			2,188
Total (deficit) equity	(36,820		)	590,559			164,530			(752,901		)	(34,632		)
Total liabilities and (deficit) equity	$	867,541		$	689,982		$	184,096		$	(1,508,425	)	$	233,194

	Three Months Ended March 31, 2020
Income Statement	ION Geophysical Corporation			The Guarantors			All Other Subsidiaries			Consolidating Adjustments			Total Consolidated
	(In thousands)
Net revenues	$	—		$	40,422		$	15,992		$	—		$	56,414
Cost of sales	—			21,800			5,103			—			26,903
Impairment of multi-client data library	—			1,167			—			—			1,167
Gross profit	—			17,455			10,889			—			28,344
Total operating expenses	8,120			6,980			6,918			—			22,018
Income (loss) from operations	(8,120		)	10,475			3,971			—			6,326
Interest expense, net	(3,245		)	(38		)	62			—			(3,221		)
Intercompany interest, net	(190		)	(1,927		)	2,117			—			—
Equity in earnings of investments	9,628			1,732			—			(11,360		)	—
Other income (expense), net	1,385			—			(956		)	—			429
Net income (loss) before income taxes	(542		)	10,242			5,194			(11,360		)	3,534
Income tax expense	1,721			595			3,558			—			5,874
Net income (loss)	(2,263		)	9,647			1,636			(11,360		)	(2,340		)
Net loss attributable to noncontrolling interest	—			—			77			—			77
Net income (loss) attributable to ION	$	(2,263	)	$	9,647		$	1,713		$	(11,360	)	$	(2,263	)
Comprehensive net income (loss)	$	(4,044	)	$	13,754		$	4,082		$	(17,913	)	$	(4,121	)
Comprehensive loss attributable to noncontrolling interest	—			—			77			—			77
Comprehensive net income (loss) attributable to ION	$	(4,044	)	$	13,754		$	4,159		$	(17,913	)	$	(4,044	)

	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), net	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 (loss)	$	(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, 2020
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	$	330		$	(1,570	)	$	(5,726	)	$	(6,966	)
Cash flows from investing activities:
Cash invested in multi-client data library	—			(5,382		)	(4,286		)	(9,668		)
Purchase of property, plant and equipment	(398		)	(98		)	—			(496		)
Net cash used in investing activities	(398		)	(5,480		)	(4,286		)	(10,164		)
Cash flows from financing activities:
Borrowings under revolving line of credit	27,000			—			—			27,000
Payments on notes payable and long-term debt	(485		)	(275		)	—			(760		)
Intercompany lending	(6,289		)	7,353			(1,064		)	—
Other financing activities	(10		)	—			—			(10		)
Net cash provided by (used in) financing activities	20,216			7,078			(1,064		)	26,230
Effect of change in foreign currency exchange rates on cash, cash equivalents and restricted cash	—			—			470			470
Net increase (decrease) in cash, cash equivalents and restricted cash	20,148			28			(10,606		)	9,570
Cash, cash equivalents and restricted cash at beginning of period	8,479			26			24,613			33,118
Cash, cash equivalents and restricted cash at end of period	$	28,627		$	54		$	14,007		$	42,688

The following table is a reconciliation of cash and cash equivalents to total cash, cash equivalents, and restricted cash:

	March 31, 2020
	ION Geophysical Corporation		The Guarantors		All Other Subsidiaries		Total Consolidated
	(In thousands)
Cash and cash equivalents	$	28,602	$	54	$	14,007	$	42,663
Restricted cash included in other long-term assets	25		—		—		25
Total cash, cash equivalents, and restricted cash shown in statements of cash flows	$	28,627	$	54	$	14,007	$	42,688

	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:
Investment in multi-client data library	—			(5,363		)	(3,404		)	(8,767		)
Proceeds from sale (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

The following table is a reconciliation of cash and cash equivalents to total cash, cash equivalents, and restricted cash:

	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 statement of cash flows	$	5,093	$	25	$	33,687	$	38,805