8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: (Date of earliest event reported): November 4, 2015

ION Geophysical Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 1-12691 (Commission file number) 22-2286646 (I.R.S. Employer Identification No.)

2105 CityWest Blvd, Suite 400

Houston, Texas 77042-2839

(Address of principal executive offices, including Zip Code)

(281) 933-3339(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.    Results of Operations and Financial Condition

On November 4, 2015, ION Geophysical Corporation (the “Company”) issued a press release containing information regarding the Company’s results of operations for the quarter ended September 30, 2015. A copy of the press release is furnished as Exhibit 99.1 hereto.

Item 7.01.    Regulation FD Disclosure

In conjunction with the above press release, the Company has scheduled a conference call, which will be broadcast live over the Internet, for Thursday, November 5, at 10:00 a.m. Eastern Time (9:00 a.m. Central). The information for accessing the conference call is included in the press release. The webcast of the conference call will be accompanied by a slide presentation, a copy of which is furnished as Exhibit 99.2 hereto.

The information contained in Items 2.02 and 7.01 and the exhibits of this report (i) is not to be considered “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) shall not be incorporated by reference into any previous or future filings made by or to be made by the Company with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

2

The information contained in this report and the attached exhibits contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements may include statements concerning future sales, earnings, revenues and market growth, timing of sales, future liquidity and cash levels and future cash needs and sources of cash, including availability under our revolving line of credit facility, expected outcomes of litigation, future compliance with our debt financial covenants, sales expected to result from backlogs and pipelines, benefits expected to result from OceanGeo and the INOVA Geophysical joint venture and related transactions, estimates regarding future commodity prices, future investments and other statements that are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include risks associated with pending and future litigation, including the risk that an unfavorable outcome in the lawsuit brought by WesternGeco could have a materially adverse effect on our financial results and liquidity; audit adjustments and other modifications to the Company’s financial statements not currently foreseen; the timing and development of the Company’s products and services and market acceptance of the Company’s new and revised product offerings; economic downturns and volatile credit environments; international political and economic events and turmoil; the operation, prospects and performance of OceanGeo and the INOVA Geophysical joint venture; the Company’s level and terms of indebtedness, including compliance with debt covenants; competitors’ product offerings and pricing pressures resulting therefrom; risks that sources of capital may not prove adequate; collection of receivables; and technological and marketplace changes affecting the Company’s product line. Additional risk factors, which could affect actual results, are disclosed by the Company from time to time in its filings with the SEC, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

Item 9.01.    Financial Statements and Exhibits

(a)    Financial statements of businesses acquired.

Not applicable.

(b)    Pro forma financial information.

Not applicable.

(c)    Shell company transactions.

Not applicable.

(d)    Exhibits.

3

Exhibit Number	Description
99.1	Press Release dated November 4, 2015.
99.2	November 5, 2015 Conference Call Presentation Slides.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 5, 2015

ION GEOPHYSICAL CORPORATION
By:	/s/ Jamey S. Seely
	Jamey S. Seely
	Executive Vice President, General Counsel and Corporate Secretary

5

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated November 4, 2015
99.2	November 5, 2015 Conference Call Presentation Slides.

6

EX-99.1

ION reports third quarter2015 results

Revenues of $66.7 million and adjusted EPS of $(0.10)

HOUSTON– November 4, 2015– ION Geophysical Corporation (NYSE: IO) today reported third quarter2015 net loss of $20.4 million, or $(0.12) per share. The third quarter results were impacted by special items totaling $3.5 million, or $(0.02) per share, primarily related to severance charges. Excluding special items, the Company’s third quarter adjusted net loss was $16.9 million, or $(0.10) per share, on revenues of $66.7 million, compared to a net loss of $24.5 million, or $(0.15) per share, on revenues of $106.5 million in third quarter2014. A reconciliation of special items to 2015 and 2014 can be found in the financial tables of this press release.

At September 30, 2015, the Company’s total liquidity was $128.2 million consisting of cash and cash equivalents of $88.2 million and the $40.0 million available on the Company’s recently amended revolving credit facility. The Company consumed cash before financing activities of $80.5 million during the first nine months of 2015 and generated cash before financing activities of $36.0 million in the prior year period. The Company reported a positive Adjusted EBITDA for third quarter 2015 of $7.5 million, compared to $13.0 million one year ago. Year-to-date 2015 Adjusted EBITDA was $(60.0) million, compared to $83.0 million in the prior year period. A reconciliation of Adjusted EBITDA can be found in the financial tables of this press release.

Brian Hanson, ION’s President and Chief Executive Officer, commented, “We indicated on our second quarter earnings call that we anticipated our third quarter revenues to be up over the first two quarters primarily as a result of beginning data acquisition on our industry-funded MexicoSPAN^TM program. We completed acquisition in late October and are currently processing the data. Our clients are very pleased with the quality of the fast track data we have delivered so far.

“However, the virtual shutdown in exploration spending continues to have a negative impact on all parts of our business, and we are managing through this downturn by employing strict cost controls and spending discipline. During the quarter, we reduced our employee headcount by an additional 25% and implemented additional cost control measures. A majority of the reductions occurred in September and therefore had minimal cash savings impact on our third quarter. Once complete later this year, these additional cost controls will yield an estimated $40 million in annualized savings. While we have taken out cost across the company, we have appropriately scaled our businesses to reflect our current revenue streams while still maintaining all of our core capabilities. Consistent with our asset light strategy, we are ready to scale up or down as business dictates.

“In light of the current economic environment, we were successful in amending our credit facility with PNC bank. The amended credit facility has improved financial covenants, and we had full availability on the maximum $40.0 million borrowing capacity at the end of September.

“Looking ahead, we believe that the exploration landscape in 2016, as it impacts our business, will be similar to 2015. Our objective during this period is to maintain our strategic capabilities and advance our key R&D initiatives while

1

minimizing our cash burn. We believe we have moved quickly and cut deep, as we currently do not expect to see early signs of recovery in our area of the industry until 2017.”

THIRD QUARTER2015

The Company’s segment revenues for the third quarter were as follows (in thousands):

	Three Months Ended September 30,
	2015		2014		% Change
Solutions	$	52,645	$	45,859	15	%
Systems	7,290		24,695		(70	)%
Software	6,739		11,010		(39	)%
Ocean Bottom Services	—		24,976		(100	)%
Total	$	66,674	$	106,540	(37	)%

Within the Solutions segment, new venture revenues were $26.7 million, a 44%increase from third quarter2014; data library revenues were $15.3 million, an increase of over 350%; and data processing revenues were $10.7 million, a 56%decrease. While all businesses within the Solutions segment continue to be impacted by the slowdown in exploration spending, the increase in new venture and data library revenues was primarily related to the Company’s acquisition of its industry-funded MexicoSPAN^TM program and increased sales of its South American data libraries.

The decrease in Systems segment revenues was primarily due to a reduction in new marine positioning system sales and repair and replacement revenues attributable to reduced activity by seismic contractors as they have taken vessels out of service.

The decrease in Software segment revenues was primarily due to lower Orca^® licensing revenues and, to a lesser extent, the effects of foreign currency translation. While Software segment revenues were down 39% year over year, the segment generated positive gross and operating margins of 65% and 36%, respectively, during the quarter.

The Company’s Ocean Bottom Services segment was impacted by OceanGeo’s crew being idle, resulting in a lack of revenue generation in third quarter 2015.

Consolidated gross margins were 17%, compared to 27% in third quarter2014, and operating margins were (19)%, compared to (5)% in the prior year quarter. The decreases in gross and operating margins were driven by the significant decline in revenues within the Systems segment, the lack of revenues generated in the Ocean Bottom Services segment and, to a lesser extent, the decline in revenues within the Software segment. These decreases were partially offset by the increase in revenues within the Solutions segment and by the Company’s ongoing cost reduction efforts.

As the Company wrote its investment in INOVA Geophysical down to zero at the end of last year, the Company did not record any losses on its share of the joint venture in third quarter 2015, compared to its share of losses of $5.6 million in third quarter 2014.

2

YEAR-TO-DATE 2015

The Company’s segment revenues for the first nine months of the year were as follows (in thousands):

	Nine Months Ended September 30,
	2015		2014		% Change
Solutions	$	93,994	$	197,734	(52	)%
Systems	27,733		71,948		(61	)%
Software	22,320		31,582		(29	)%
Ocean Bottom Services	—		71,454		(100	)%
Total	$	144,047	$	372,718	(61	)%

Within the Solutions segment, new venture revenues were $35.3 million, a 54% decrease from the first nine months of 2014; data library revenues were $24.9 million, a 17% decrease; and data processing revenues were $33.7 million, a 63% decrease. All businesses within the Solutions segment were impacted by the slowdown in exploration spending. Also, a portion of the year-over-year decline in data processing revenues was due to $15.0 million of revenues recognized in the first quarter 2014 for work performed in 2013 that did not recur in 2015.

The decrease in Systems segment revenues was primarily due to a reduction in new marine positioning system sales and repair and replacement revenues attributable to reduced activity by seismic contractors as they have taken vessels out of service.

Software segment revenues were down primarily due to lower Orca licensing revenues and, to a lesser extent, the effects of foreign currency translation. While Software segment revenues were down 29% year over year, the segment generated positive gross and operating margins of 64% and 35%, respectively, during the first nine months of 2015.

The Company’s Ocean Bottom Services segment was impacted by OceanGeo’s crew being idle, resulting in a lack of revenue generation in the first nine months of 2015.

Consolidated gross margins were (10)%, compared to 33% in the first nine months of 2014, and operating margins were (70)%, compared to 5% in the prior year period. The decreases in gross and operating margins were driven by the significant decline in revenues within the Solutions and Systems segments and, to a lesser extent, the Software segment, and from the lack of revenues generated in the Company’s Ocean Bottom Services segment.

For the first nine months of 2015, the Company reported a net loss of $19.6 million, or $(0.12) per share, compared to net income of $52.6 million, or $0.32 per diluted share, in the first nine months of 2014. Both periods included special items related to the reductions in the accrual for the WesternGeco legal matter, in addition to restructuring and other special items. Excluding these special items, in the first nine months of 2015, the Company reported an adjusted net loss of $113.2 million, or $(0.69) per share, compared to an adjusted net loss of $23.1 million, or $(0.14) per share, in the prior year period.

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CONFERENCE CALL

The Company has scheduled a conference call for Thursday, November 5, 2015, at 10:00 a.m. Eastern Time that will include a slide presentation to be posted in the Investor Relations section of the ION website by 9:00 a.m. Eastern Time. To participate in the conference call, dial (877) 407-0672 at least 10 minutes before the call begins and ask for the ION conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until November 19, 2015. To access the replay, dial (877) 660-6853 and use pass code 13621442#.

Investors, analysts and the general public will also have the opportunity to listen to the conference call live over the Internet by visiting www.iongeo.com. An archive of the webcast will be available shortly after the call on the Company’s website.

About ION

ION is a leading provider of technology-driven solutions to the global oil & gas industry. ION’s offerings are designed to help companies reduce risk and optimize assets throughout the E&P lifecycle. For more information, visit www.iongeo.com.

Contact

Steve Bate

Executive Vice President and Chief Financial Officer

+1.281.552.3011

The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include future sales, earnings and market growth, timing of sales, future liquidity and cash levels, future estimated revenues and earnings, sales expected to result from backlog, benefits expected to result from OceanGeo, expected outcome of litigation and other statements that are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include risks associated with pending and future litigation, including the risk that the Company does not prevail in its appeal of the judgment in the lawsuit with WesternGeco and that the ultimate outcome of the lawsuit could have a material adverse effect on the Company’s financial results and liquidity; the timing and development of the Company’s products and services and market acceptance of the Company’s new and revised product offerings; the performance of OceanGeo; the Company’s level and terms of indebtedness; competitors’ product offerings and pricing pressures resulting therefrom; the relatively small number of customers that the Company currently relies upon; the fact that a significant portion of the Company’s revenues is derived from foreign sales; that sources of capital may not prove adequate; the Company’s inability to produce products to preserve and increase market share; collection of receivables; and technological and marketplace changes affecting the Company’s product lines. Additional risk factors, which could affect actual results, are disclosed by the Company from time to time in its filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2014 and its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed during 2015.

Tables to follow

4

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited) 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Service revenues	$	53,515		$	71,923		$	96,918		$	272,386
Product revenues	13,159			34,617			47,129			100,332
Total net revenues	66,674			106,540			144,047			372,718
Cost of services	47,883			60,285			132,234			200,697
Cost of products	7,683			17,032			26,628			47,716
Gross profit (loss)	11,108			29,223			(14,815		)	124,305
Operating expenses:
Research, development and engineering	6,537			10,910			21,496			30,254
Marketing and sales	6,904			8,480			23,375			27,610
General, administrative and other operating expenses	10,541			15,182			40,566			48,334
Total operating expenses	23,982			34,572			85,437			106,198
Income (loss) from operations	(12,874		)	(5,349		)	(100,252		)	18,107
Interest expense, net	(4,854		)	(5,048		)	(14,086		)	(14,779		)
Equity in losses of investments	—			(5,558		)	—			(9,027		)
Other income (expense), net	(346		)	(622		)	98,035			73,970
Income (loss) before income taxes	(18,074		)	(16,577		)	(16,303		)	68,271
Income tax expense	2,082			8,345			3,597			14,261
Net income (loss)	(20,156		)	(24,922		)	(19,900		)	54,010
Net (income) loss attributable to noncontrolling interests	(227		)	381			322			(1,384		)
Net income (loss) attributable to ION	$	(20,383	)	$	(24,541	)	$	(19,578	)	$	52,626
Net income (loss) per share:
Basic	$	(0.12	)	$	(0.15	)	$	(0.12	)	$	0.32
Diluted	$	(0.12	)	$	(0.15	)	$	(0.12	)	$	0.32
Weighted average number of common shares outstanding:
Basic	164,755			164,149			164,672			164,021
Diluted	164,755			164,149			164,672			164,326

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ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited) 

ASSETS	September 30, 2015			December 31, 2014
Current assets:
Cash and cash equivalents	$	88,239		$	173,608
Accounts receivable, net	21,587			114,325
Unbilled receivables	32,387			22,599
Inventories	34,683			51,162
Prepaid expenses and other current assets	10,124			13,662
Total current assets	187,020			375,356
Deferred income tax asset	5,706			8,604
Property, plant, equipment and seismic rental equipment, net	77,081			69,840
Multi-client data library, net	135,907			118,669
Goodwill	26,809			27,388
Intangible assets, net	5,306			6,788
Other assets	9,380			10,612
Total assets	$	447,209		$	617,257
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	6,612		$	7,649
Accounts payable	27,950			36,863
Accrued expenses	54,302			65,264
Accrued multi-client data library royalties	12,443			35,219
Deferred revenue	5,575			8,262
Total current liabilities	106,882			153,257
Long-term debt, net of current maturities	179,666			182,945
Other long-term liabilities	39,830			143,804
Total liabilities	326,378			480,006
Redeemable noncontrolling interest	1,200			1,539
Equity:
Common stock	1,648			1,645
Additional paid-in capital	892,007			887,749
Accumulated deficit	(753,987		)	(734,409		)
Accumulated other comprehensive loss	(13,564		)	(12,807		)
Treasury stock	(6,565		)	(6,565		)
Total stockholders’ equity	119,539			135,613
Noncontrolling interest	92			99
Total equity	119,631			135,712
Total liabilities and equity	$	447,209		$	617,257

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ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited) 

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	(19,900	)	$	54,010
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:
Depreciation and amortization (other than multi-client data library)	19,660			20,989
Amortization of multi-client data library	24,531			46,014
Stock-based compensation expense	4,174			7,058
Reductions of accrual for loss contingency related to legal proceedings	(101,978		)	(69,557		)
Equity in losses of investments	—			9,027
Gain on sale of Source product line	—			(6,522		)
Deferred income taxes	5,992			(1,536		)
Change in operating assets and liabilities:
Accounts receivable	92,424			71,540
Unbilled receivables	(9,837		)	(8,036		)
Inventories	464			(4,272		)
Accounts payable, accrued expenses and accrued royalties	(43,676		)	(31,324		)
Deferred revenue	(2,576		)	(4,153		)
Other assets and liabilities	(5,274		)	3,738
Net cash (used in) provided by operating activities	(35,996		)	86,976
Cash flows from investing activities:
Cash invested in multi-client data library	(28,152		)	(57,340		)
Purchase of property, plant, equipment and seismic rental assets	(17,601		)	(6,842		)
Repayment of advance to INOVA Geophysical	—			1,000
Net investment in and advances to OceanGeo B.V. prior to its consolidation	—			(3,074		)
Net proceeds from sale of Source product line	—			14,394
Other investing activities	1,262			928
Net cash used in investing activities	(44,491		)	(50,934		)
Cash flows from financing activities:
Borrowings under revolving line of credit	—			15,000
Payments under revolving line of credit	—			(50,000		)
Payments on notes payable and long-term debt	(5,431		)	(11,737		)
Costs associated with issuance of debt	(146		)	(2,126		)
Acquisition of non-controlling interest	—			(6,000		)
Other financing activities	94			423
Net cash used in financing activities	(5,483		)	(54,440		)
Effect of change in foreign currency exchange rates on cash and cash equivalents	601			189
Net decrease in cash and cash equivalents	(85,369		)	(18,209		)
Cash and cash equivalents at beginning of period	173,608			148,056
Cash and cash equivalents at end of period	$	88,239		$	129,847

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ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

SUMMARY OF SEGMENT INFORMATION

(In thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net revenues:
Solutions:
New Venture	$	26,650		$	18,446		$	35,315		$	76,499
Data Library	15,302			3,262			24,948			30,104
Total multi-client revenues	41,952			21,708			60,263			106,603
Data Processing	10,693			24,151			33,731			91,131
Total	$	52,645		$	45,859		$	93,994		$	197,734
Systems:
Towed Streamer	$	4,426		$	13,666		$	12,273		$	35,782
Other	2,864			11,029			15,460			36,166
Total	$	7,290		$	24,695		$	27,733		$	71,948
Software:
Software Systems	$	5,869		$	9,922		$	19,396		$	28,384
Services	870			1,088			2,924			3,198
Total	$	6,739		$	11,010		$	22,320		$	31,582
Ocean Bottom Services	$	—		$	24,976		$	—		$	71,454
Total	$	66,674		$	106,540		$	144,047		$	372,718
Gross profit (loss):
Solutions	$	11,294		$	5,927		$	(6,954	)	$	51,207
Systems	1,366			10,123			7,425			31,288
Software	4,399			8,326			14,197			23,388
Ocean Bottom Services	(5,951		)	4,847			(29,483		)	18,422
Total	$	11,108		$	29,223		$	(14,815	)	$	124,305
Gross margin:
Solutions	21		%	13		%	(7		)%	26		%
Systems	19		%	41		%	27		%	43		%
Software	65		%	76		%	64		%	74		%
Ocean Bottom Services	—		%	19		%	—		%	26		%
Total	17		%	27		%	(10		)%	33		%
Income (loss) from operations:
Solutions	$	768		$	(5,960	)	$	(40,766	)	$	11,733
Systems	(1,295		)	2,917			(2,660		)	9,835
Software	2,444			6,227			7,874			16,985
Ocean Bottom Services	(7,289		)	1,677			(34,856		)	12,333
Corporate and other	(7,502		)	(10,210		)	(29,844		)	(32,779		)
Total	$	(12,874	)	$	(5,349	)	$	(100,252	)	$	18,107
Operating margin:
Solutions	1		%	(13		)%	(43		)%	6		%
Systems	(18		)%	12		%	(10		)%	14		%
Software	36		%	57		%	35		%	54		%
Ocean Bottom Services	—		%	7		%	—		%	17		%
Corporate and other	(11		)%	(10		)%	(21		)%	(9		)%
Total	(19		)%	(5		)%	(70		)%	5		%

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ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(Non-GAAP Measure)

(In thousands)

(Unaudited)

The term Adjusted EBITDA represents net income (loss) before interest expense, interest income, income taxes, depreciation and amortization, gain on sale of Source product line, and other similar non-cash charges including, without limitation, equity in losses of investments and the reductions of accrual for loss contingency related to legal proceedings. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included Adjusted EBITDA as a supplemental disclosure because its management believes that Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss)	$	(20,156	)	$	(24,922	)	$	(19,900	)	$	54,010
Interest expense, net	4,854			5,048			14,086			14,779
Income tax expense	2,082			8,345			3,597			14,261
Depreciation and amortization expense	20,736			18,961			44,191			67,003
Reductions of accrual for loss contingency related to legal proceedings	—			—			(101,978		)	(69,557		)
Equity in losses of investments	—			5,558			—			9,027
Gain on sale of Source product line	—			—			—			(6,522		)
Adjusted EBITDA	$	7,516		$	12,990		$	(60,004	)	$	83,001

9

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

Reconciliation of Special Items to Diluted Earnings (Loss) per Share

(Non-GAAP Measure)

(In thousands, except per share data)

(Unaudited)

The financial results are reported in accordance with GAAP. However, management believes that certain non-GAAP performance measures may provide users of this financial information, additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure is adjusted income (loss) from operations or adjusted net income (loss), which excludes certain charges or amounts. This adjusted income (loss) amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for income (loss) from operations, net income (loss) or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and the corresponding reconciliation to GAAP financials for the three and nine months ended September 30, 2015 and the nine months ended September 30, 2014:

	Three Months Ended September 30, 2015
	As Reported			Special Items				As Adjusted
Net revenues	$	66,674		$	—			$	66,674
Cost of sales	55,566			(2,168		)	(1)	53,398
Gross profit	11,108			2,168				13,276
Operating expenses	23,982			(1,711		)	(1)	22,271
Loss from operations	(12,874		)	3,879				(8,995		)
Interest expense, net	(4,854		)	—				(4,854		)
Other expense, net	(346		)	(295		)	(2)	(641		)
Income tax expense	2,082			122				2,204
Net loss	(20,156		)	3,462				(16,694		)
Net income attributable to noncontrolling interest	(227		)	—				(227		)
Net loss attributable to ION	$	(20,383	)	$	3,462			$	(16,921	)
Net income (loss) per share:
Basic	$	(0.12	)					$	(0.10	)
Diluted	$	(0.12	)					$	(0.10	)
Weighted average number of common shares outstanding:
Basic	164,755							164,755
Diluted	164,755							164,755

10

	Nine Months Ended September 30, 2015										Nine Months Ended September 30, 2014
	As Reported			Special Items				As Adjusted			As Reported			Special Items				As Adjusted
Net revenues	$	144,047		$	—			$	144,047		$	372,718		$	—			$	372,718
Cost of sales	158,862			(3,981		)	(3)	154,881			248,413			—				248,413
Gross profit (loss)	(14,815		)	3,981				(10,834		)	124,305			—				124,305
Operating expenses	85,437			(3,233		)	(3)	82,204			106,198			—				106,198
Income (loss) from operations	(100,252		)	7,214				(93,038		)	18,107			—				18,107
Interest expense, net	(14,086		)	—				(14,086		)	(14,779		)	—				(14,779		)
Equity in losses of investments	—			—				—			(9,027		)	—				(9,027		)
Other income (expense), net	98,035			(100,360		)	(4)	(2,325		)	73,970			(76,079		)	(5)	(2,109		)
Income tax expense	3,597			269			(6)	3,866			14,261			(357		)	(6)	13,904
Net income (loss)	(19,900		)	(93,415		)		(113,315		)	54,010			(75,722		)		(21,712		)
Net (income) loss attributable to noncontrolling interest	322			(172		)		150			(1,384		)	—				(1,384		)
Net income (loss) attributable to ION	$	(19,578	)	$	(93,587	)		$	(113,165	)	$	52,626		$	(75,722	)		$	(23,096	)
Net income (loss) per share:
Basic	$	(0.12	)					$	(0.69	)	$	0.32						$	(0.14	)
Diluted	$	(0.12	)					$	(0.69	)	$	0.32						$	(0.14	)
Weighted average number of common shares outstanding:
Basic	164,672							164,672			164,021							164,021
Diluted	164,672							164,672			164,326							164,021

⁽¹⁾  Represents severance charges related to the third quarter 2015 restructurings.

⁽²⁾  Represents a gain on disposal of the Company’s Denver land processing operations in the third quarter 2015.

⁽³⁾  In addition to note ⁽¹⁾ , the nine months ended September 30, 2015 includes severance and facility charges related to the first half 2015 restructurings.

⁽⁴⁾  In addition to note ⁽²⁾, the nine months ended September 30, 2015 includes an additional partial reduction in the WesternGeco legal contingency from the second quarter 2015.

⁽⁵⁾ The nine months ended September 30, 2014 was impacted by the first quarter reduction of $69.6 million in the WesternGeco legal contingency, in addition to a second quarter non-recurring gain on the sale of the marine source product line of $6.5 million (before tax).

⁽⁶⁾ As the Company maintains a valuation allowance for substantially all its deferred tax assets, a majority of these special items have no associated net tax effect.

11

EX-99.2

ION Earnings Call – Q3 2015 Earnings Call Presentation November 5, 2015

Corporate Participants and Contact Information CONTACT INFORMATION If you have technical problems during the call, please contact DENNARD–LASCAR Associates at 713 529 6600. If you would like to view a replay of today's call, it will be available via webcast in the Investor Relations section of the Company's website at www.iongeo.com for approximately 12 months. BRIAN HANSON President and Chief Executive Officer STEVE BATE Executive Vice President and Chief Financial Officer 2

Forward-Looking Statements The information included herein contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may vary fundamentally from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include risk factors that are disclosed by ION from time to time in its filings with the Securities and Exchange Commission. 3

ION Q3 15 Overview  Financial highlights – Q3 revenues $67M; adjusted net loss of $17M or $(0.10) per share – Q3 revenues up as result of industry-funded MexicoSPANTM program  Continued strict cost controls – Additional Q3 25% headcount reduction and cost control measures to yield an additional annualized savings of $40M – Maintaining core capabilities and flexibility to scale up or down  Segment highlights – Multi-client shift from new venture underwriting to late sales – Continued pressure on data processing – Software softening due to vessel stacking – OBS project delays making start dates uncertain 4 MexicoSPAN Phase 1: 22,000 km deep-imaged 2D data

(0.15) (0.10) $(0.20) $(0.15) $(0.10) $(0.05) $- Adjusted Diluted EPS Q3 14 5 - 25 50 75 100 125 Q3 14 Q3 15 Software Systems Solutions Revenue $M • Revenues down 37% Y/Y • Solutions up 15% • Systems down 70% • Software down 39% • No revenues from Ocean Bottom •Operating Margin down to (19)% • Significant revenue declines in Systems & Software segments • Lack of Ocean Bottom Services revenues • Partially offset by revenue increase in Solutions segment & cost savings • Adjusted EPS of ($0.10) • Adjusted EBITDA of $8M Ocean Bottom (5) (13) -14 -12 -10 -8 -6 -4 -2 0 Op. Profit $M Q3 14 Q3 15 Q3 15 13 8 0 2 4 6 8 10 12 14 Adjusted EBITDA $M Q3 14 Q3 15 ION Financial Overview Q3 15 Highlights

ION Financial Overview Cash Flow 6 $ Millions YTD YTD Sept 14 Sept 15 Q3 14 Q3 15 Cash from operations 59.5$ (67.5)$ 5.7$ 7.7$ Working capital 27.5 31.5 4.5 (21.2) Multi-client investment (57.3) (28.2) (23.0) (14.6) PP&E Capital Expenditures (6.8) (17.6) (2.3) (0.4) Free Cash Flow 22.9 (81.8) (15.1) (28.5) Net Repayments under revolver (35.0) - - - Other Investing & Financing (6.2) (3.6) (12.9) (0.4) Net Change in Cash (18.3) (85.4) (28.0) (28.9) Cash & Cash Equiv. (Beg. Of Period) 148.1 173.6 157.8 117.1 Cash & Cash Equiv. (End Of Period) 129.8$ 88.2$ 129.8$ 88.2$ Cash balances of $88M at September 30, 2015 Full availability under $40M credit facility

Summary  Maintaining strict focus on cost control  Expect 2016 to be similar to 2015  Scaled business to maintain strategic capabilities and advance key R&D initiatives, while minimizing cash burn 7

8 Q&A