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 (Do not check if a smaller reporting company) | Smaller reporting company | o | ||
Emerging growth company | o |
PAGE | |
PART I. Financial Information | |
Item 1. Financial Statements | |
Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 | |
Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 | |
Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2017 and 2016 | |
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 | |
Footnotes to Unaudited Condensed Consolidated Financial Statements | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures about Market Risk | |
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, 2017 | December 31, 2016 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 49,640 | $ | 52,652 | |||
Accounts receivable, net | 16,173 | 20,770 | |||||
Unbilled receivables | 17,423 | 13,415 | |||||
Inventories | 15,220 | 15,241 | |||||
Prepaid expenses and other current assets | 7,262 | 9,559 | |||||
Total current assets | 105,718 | 111,637 | |||||
Property, plant, equipment and seismic rental equipment, net | 63,173 | 67,488 | |||||
Multi-client data library, net | 101,493 | 105,935 | |||||
Goodwill | 22,542 | 22,208 | |||||
Intangible assets, net | 2,745 | 3,103 | |||||
Other assets | 2,457 | 2,845 | |||||
Total assets | $ | 298,128 | $ | 313,216 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 12,966 | $ | 14,581 | |||
Accounts payable | 26,662 | 26,889 | |||||
Accrued expenses | 29,878 | 26,240 | |||||
Accrued multi-client data library royalties | 23,613 | 23,663 | |||||
Deferred revenue | 10,834 | 3,709 | |||||
Total current liabilities | 103,953 | 95,082 | |||||
Long-term debt, net of current maturities | 144,373 | 144,209 | |||||
Other long-term liabilities | 18,026 | 20,527 | |||||
Total liabilities | 266,352 | 259,818 | |||||
Equity: | |||||||
Common stock, $0.01 par value; authorized 26,666,667 shares; outstanding 11,871,647 and 11,792,447 shares at March 31, 2017 and December 31, 2016, respectively | 119 | 118 | |||||
Additional paid-in capital | 900,056 | 899,198 | |||||
Accumulated deficit | (848,021 | ) | (824,679 | ) | |||
Accumulated other comprehensive loss | (21,231 | ) | (21,748 | ) | |||
Total stockholders’ equity | 30,923 | 52,889 | |||||
Noncontrolling interest | 853 | 509 | |||||
Total equity | 31,776 | 53,398 | |||||
Total liabilities and equity | $ | 298,128 | $ | 313,216 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(In thousands, except per share data) | |||||||
Service revenues | $ | 23,828 | $ | 13,156 | |||
Product revenues | 8,728 | 9,509 | |||||
Total net revenues | 32,556 | 22,665 | |||||
Cost of services | 22,299 | 25,837 | |||||
Cost of products | 4,156 | 5,758 | |||||
Gross profit (loss) | 6,101 | (8,930 | ) | ||||
Operating expenses: | |||||||
Research, development and engineering | 3,495 | 5,609 | |||||
Marketing and sales | 4,486 | 4,010 | |||||
General, administrative and other operating expenses | 12,032 | 11,580 | |||||
Total operating expenses | 20,013 | 21,199 | |||||
Loss from operations | (13,912 | ) | (30,129 | ) | |||
Interest expense, net | (4,464 | ) | (4,734 | ) | |||
Other income (expense), net | (5,068 | ) | 120 | ||||
Loss before income taxes | (23,444 | ) | (34,743 | ) | |||
Income tax expense (benefit) | (418 | ) | 293 | ||||
Net loss | (23,026 | ) | (35,036 | ) | |||
Net (income) loss attributable to noncontrolling interests | (316 | ) | 22 | ||||
Net loss attributable to ION | $ | (23,342 | ) | $ | (35,014 | ) | |
Net loss per share: | |||||||
Basic | $ | (1.98 | ) | $ | (3.30 | ) | |
Diluted | $ | (1.98 | ) | $ | (3.30 | ) | |
Weighted average number of common shares outstanding: | |||||||
Basic | 11,818 | 10,600 | |||||
Diluted | 11,818 | 10,600 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Net loss | $ | (23,026 | ) | $ | (35,036 | ) | |
Other comprehensive income (loss), net of taxes, as appropriate: | |||||||
Foreign currency translation adjustments | 517 | (1,462 | ) | ||||
Comprehensive net loss | (22,509 | ) | (36,498 | ) | |||
Comprehensive (income) loss attributable to noncontrolling interest | (316 | ) | 22 | ||||
Comprehensive net loss attributable to ION | $ | (22,825 | ) | $ | (36,476 | ) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (23,026 | ) | $ | (35,036 | ) | |
Adjustments to reconcile net loss to cash provided by operating activities: | |||||||
Depreciation and amortization (other than multi-client data library) | 4,677 | 5,672 | |||||
Amortization of multi-client data library | 9,258 | 7,139 | |||||
Stock-based compensation expense | 634 | 743 | |||||
Accrual for loss contingency related to legal proceedings | 5,000 | — | |||||
Deferred income taxes | (1,909 | ) | 54 | ||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 4,756 | 29,211 | |||||
Unbilled receivables | (5,348 | ) | 2,212 | ||||
Inventories | (274 | ) | 350 | ||||
Accounts payable, accrued expenses and accrued royalties | (2,488 | ) | (10,558 | ) | |||
Deferred revenue | 7,193 | (527 | ) | ||||
Other assets and liabilities | 3,510 | 3,219 | |||||
Net cash provided by operating activities | 1,983 | 2,479 | |||||
Cash flows from investing activities: | |||||||
Cash invested in multi-client data library | (3,363 | ) | (6,327 | ) | |||
Purchase of property, plant, equipment and seismic rental assets | (49 | ) | (266 | ) | |||
Net cash used in investing activities | (3,412 | ) | (6,593 | ) | |||
Cash flows from financing activities: | |||||||
Repurchase of common stock | — | (964 | ) | ||||
Payments on notes payable and long-term debt | (1,706 | ) | (2,212 | ) | |||
Costs associated with issuance of debt | — | (1,315 | ) | ||||
Costs associated with issuance of equity | (123 | ) | — | ||||
Other financing activities | (163 | ) | 13 | ||||
Net cash used in financing activities | (1,992 | ) | (4,478 | ) | |||
Effect of change in foreign currency exchange rates on cash and cash equivalents | 409 | 329 | |||||
Net decrease in cash, and cash equivalents | (3,012 | ) | (8,263 | ) | |||
Cash and cash equivalents at beginning of period | 52,652 | 84,933 | |||||
Cash and cash equivalents at end of period | $ | 49,640 | $ | 76,670 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net revenues: | ||||||||
E&P Technology & Services: | ||||||||
New Venture | $ | 6,949 | $ | 3,306 | ||||
Data Library | 10,606 | 4,272 | ||||||
Total multi-client revenues | 17,555 | 7,578 | ||||||
Imaging Services | 5,755 | 5,440 | ||||||
Total | 23,310 | 13,018 | ||||||
E&P Operations Optimization: | ||||||||
Devices | 4,990 | 5,359 | ||||||
Optimization Software & Services | 4,256 | 4,288 | ||||||
Total | 9,246 | 9,647 | ||||||
Ocean Bottom Seismic Services | — | — | ||||||
Total | $ | 32,556 | $ | 22,665 | ||||
Gross profit (loss): | ||||||||
E&P Technology & Services | $ | 4,010 | $ | (9,773 | ) | |||
E&P Operations Optimization | 4,787 | 4,719 | ||||||
Ocean Bottom Seismic Services | (2,696 | ) | (3,876 | ) | ||||
Total | $ | 6,101 | $ | (8,930 | ) | |||
Gross margin: | ||||||||
E&P Technology & Services | 17 | % | (75 | )% | ||||
E&P Operations Optimization | 52 | % | 49 | % | ||||
Ocean Bottom Seismic Services | — | % | — | % | ||||
Total | 19 | % | (39 | )% | ||||
Income (loss) from operations: | ||||||||
E&P Technology & Services | $ | (1,096 | ) | $ | (14,714 | ) | ||
E&P Operations Optimization | 1,549 | 1,601 | ||||||
Ocean Bottom Seismic Services | (4,008 | ) | (7,631 | ) | ||||
Support and other | (10,357 | ) | (9,385 | ) | ||||
Loss from operations | (13,912 | ) | (30,129 | ) | ||||
Interest expense, net | (4,464 | ) | (4,734 | ) | ||||
Other income (expense), net | (5,068 | ) | 120 | |||||
Loss before income taxes | $ | (23,444 | ) | $ | (34,743 | ) | ||
Obligations (in thousands) | March 31, 2017 | December 31, 2016 | ||||||
Senior secured second-priority lien notes (maturing December 15, 2021) | $ | 120,569 | $ | 120,569 | ||||
Senior secured third-priority lien notes (maturing May 15, 2018) | 28,497 | 28,497 | ||||||
Revolving line of credit (maturing August 22, 2019) | 10,000 | 10,000 | ||||||
Equipment capital leases | 2,304 | 3,446 | ||||||
Other debt | 852 | 1,415 | ||||||
Costs associated with issuances of debt (1) | (4,883 | ) | (5,137 | ) | ||||
Total | 157,339 | 158,790 | ||||||
Current portion of long-term debt and lease obligations | (12,966 | ) | (14,581 | ) | ||||
Non-current portion of long-term debt and lease obligations | $ | 144,373 | $ | 144,209 |
(1) | Represents debt issuance costs presented as a direct deduction from the carrying amount of the debt liability associated with the Senior Secured Second-Priority and Senior Secured Third-Priority Lien Notes. These amounts do not include $0.9 million and $1.2 million of debt issuance costs associated with the Revolving Credit Facility as of March 31, 2017 and December 31, 2016 respectively, which are included within other assets on the balance sheet. |
• | increased the applicable margin for loans by 0.50% per annum (from 2.50% per annum to 3.00% per annum for alternate base rate loans and from 3.50% per annum to 4.00% per annum for LIBOR-based loans); |
• | increased the minimum excess availability threshold to avoid triggering the agent’s rights to exercise dominion over cash and deposit accounts and increases certain of the thresholds upon which such dominion ceases; |
• | increased the minimum liquidity threshold to avoid triggering the Company’s obligation to calculate and comply with the existing fixed charge coverage ratio and increased certain of the thresholds upon which such required calculation and compliance cease; |
• | establish a reserve that will reduce the amount available to be borrowed by the aggregate amount owing under all Third Lien Notes that remain outstanding (if any) on or after February 14, 2018 (i.e., 90 days prior to the stated maturity of the Third Lien Notes); |
• | increased the maximum amount of certain permitted junior indebtedness to $200.0 million (from $175.0 million); |
• | incorporated technical and conforming changes to reflect that the Second Lien Notes and the remaining Third Lien Notes (and any permitted refinancing thereof or subsequently incurred replacement indebtedness meeting certain requirements) constitute permitted indebtedness; |
• | clarified the circumstances and mechanics under which the Company may prepay, repurchase or redeem the Second Lien Notes, the remaining Third Lien Notes and certain other junior indebtedness; |
• | modified the cross-default provisions to incorporated defaults under the Second Lien Notes, the remaining Third Lien Notes and certain other junior indebtedness; and |
• | eliminated the potential early commitment termination date and early maturity date that would otherwise have occurred ninety (90) days prior to the maturity date of the Third Lien Notes if any of the Third Lien Notes then remained outstanding. |
Date | Percentage | |
2015 | 104.063% | |
2016 | 102.031% | |
2017 and thereafter | 100.000% |
Date | Percentage | |
2019 | 105.500% | |
2020 | 103.500% | |
2021 and thereafter | 100.000% |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Accrual for loss contingency related to legal proceedings (Footnote 6) | $ | (5,000 | ) | $ | — | ||
Other income (expense), net | (68 | ) | 120 | ||||
Total other income (expense), net | $ | (5,068 | ) | $ | 120 |
The following table is a summary of inventories (in thousands): | March 31, 2017 | December 31, 2016 | |||||
Raw materials and subassemblies | $ | 20,609 | $ | 21,454 | |||
Work-in-process | 1,999 | 2,255 | |||||
Finished goods | 7,634 | 6,581 | |||||
Reserve for excess and obsolete inventories | (15,022 | ) | (15,049 | ) | |||
Total | $ | 15,220 | $ | 15,241 |
The following table is a summary of other long-term liabilities (in thousands): | March 31, 2017 | December 31, 2016 | |||||
Deferred rents | 13,684 | 13,955 | |||||
Facility restructuring accrual | 1,434 | 1,765 | |||||
Deferred income tax liability | 1,774 | 3,679 | |||||
Other long-term liabilities | 1,134 | 1,128 | |||||
Total | $ | 18,026 | $ | 20,527 |
Foreign currency translation adjustments | Total | |||||||
Accumulated other comprehensive loss at December 31, 2016 | $ | (21,748 | ) | $ | (21,748 | ) | ||
Net current-period other comprehensive loss | 517 | 517 | ||||||
Accumulated other comprehensive loss at March 31, 2017 | $ | (21,231 | ) | $ | (21,231 | ) | ||
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash paid during the period for: | |||||||
Interest | $ | 206 | $ | 154 | |||
Income taxes (refunds) | 819 | (762 | ) | ||||
Non-cash items from investing and financing activities: | |||||||
Investment in multi-client data library financed through accounts payable | 1,654 | 3,885 | |||||
Purchases of property, plant, and equipment financed through accounts payable | 730 | 179 |
Stock Options | Restricted Stock and Unit Awards | ||||
Number of Shares | |||||
Outstanding at December 31, 2016 | 847,635 | 285,308 | |||
Granted | — | 17,500 | |||
Stock options exercised/restricted stock/unit awards vested | — | (99,186 | ) | ||
Cancelled/forfeited | (9,053 | ) | — | ||
Outstanding at March 31, 2017 | 838,582 | 203,622 |
• | 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, 2017 | |||||||||||||||||||
Balance Sheet | ION Geophysical Corporation | The Guarantors | All Other Subsidiaries | Consolidating Adjustments | Total Consolidated | ||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 28,366 | $ | — | $ | 21,274 | $ | — | $ | 49,640 | |||||||||
Accounts receivable, net | — | 5,489 | 10,684 | — | 16,173 | ||||||||||||||
Unbilled receivables | — | 6,250 | 11,173 | — | 17,423 | ||||||||||||||
Inventories | — | 8,583 | 6,637 | — | 15,220 | ||||||||||||||
Prepaid expenses and other current assets | 2,591 | 2,219 | 2,452 | — | 7,262 | ||||||||||||||
Total current assets | 30,957 | 22,541 | 52,220 | — | 105,718 | ||||||||||||||
Property, plant, equipment and seismic rental equipment, net | 1,576 | 11,216 | 50,381 | — | 63,173 | ||||||||||||||
Multi-client data library, net | — | 91,474 | 10,019 | — | 101,493 | ||||||||||||||
Investment in subsidiaries | 660,937 | 261,565 | — | (922,502 | ) | — | |||||||||||||
Goodwill | — | — | 22,542 | — | 22,542 | ||||||||||||||
Intangible assets, net | — | 2,673 | 72 | — | 2,745 | ||||||||||||||
Intercompany receivables | — | 193,054 | 46,606 | (239,660 | ) | — | |||||||||||||
Other assets | 2,049 | 145 | 263 | — | 2,457 | ||||||||||||||
Total assets | $ | 695,519 | $ | 582,668 | $ | 182,103 | $ | (1,162,162 | ) | $ | 298,128 | ||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current maturities of long-term debt | $ | 10,852 | $ | 2,114 | $ | — | $ | — | $ | 12,966 | |||||||||
Accounts payable | 3,123 | 19,887 | 3,652 | — | 26,662 | ||||||||||||||
Accrued expenses | 14,525 | 7,782 | 7,571 | — | 29,878 | ||||||||||||||
Accrued multi-client data library royalties | — | 23,613 | — | — | 23,613 | ||||||||||||||
Deferred revenue | — | 2,199 | 8,635 | — | 10,834 | ||||||||||||||
Total current liabilities | 28,500 | 55,595 | 19,858 | — | 103,953 | ||||||||||||||
Long-term debt, net of current maturities | 144,183 | 190 | — | — | 144,373 | ||||||||||||||
Intercompany payables | 491,440 | — | — | (491,440 | ) | — | |||||||||||||
Other long-term liabilities | 473 | 11,744 | 5,809 | — | 18,026 | ||||||||||||||
Total liabilities | 664,596 | 67,529 | 25,667 | (491,440 | ) | 266,352 | |||||||||||||
Equity: | |||||||||||||||||||
Common stock | 119 | 290,460 | 49,394 | (339,854 | ) | 119 | |||||||||||||
Additional paid-in capital | 900,056 | 180,699 | 202,291 | (382,990 | ) | 900,056 | |||||||||||||
Accumulated earnings (deficit) | (848,021 | ) | 212,973 | 3,850 | (216,823 | ) | (848,021 | ) | |||||||||||
Accumulated other comprehensive income (loss) | (21,231 | ) | 4,372 | (21,537 | ) | 17,165 | (21,231 | ) | |||||||||||
Due from ION Geophysical Corporation | — | (173,365 | ) | (78,415 | ) | 251,780 | — | ||||||||||||
Total stockholders’ equity | 30,923 | 515,139 | 155,583 | (670,722 | ) | 30,923 | |||||||||||||
Noncontrolling interests | — | — | 853 | — | 853 | ||||||||||||||
Total equity | 30,923 | 515,139 | 156,436 | (670,722 | ) | 31,776 | |||||||||||||
Total liabilities and equity | $ | 695,519 | $ | 582,668 | $ | 182,103 | $ | (1,162,162 | ) | $ | 298,128 |
December 31, 2016 | |||||||||||||||||||
Balance Sheet | ION Geophysical Corporation | The Guarantors | All Other Subsidiaries | Consolidating Adjustments | Total Consolidated | ||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 23,042 | $ | — | $ | 29,610 | $ | — | $ | 52,652 | |||||||||
Accounts receivable, net | — | 12,775 | 7,995 | — | 20,770 | ||||||||||||||
Unbilled receivables | — | 5,275 | 8,140 | — | 13,415 | ||||||||||||||
Inventories | — | 8,610 | 6,631 | — | 15,241 | ||||||||||||||
Prepaid expenses and other current assets | 3,387 | 4,624 | 1,548 | — | 9,559 | ||||||||||||||
Total current assets | 26,429 | 31,284 | 53,924 | — | 111,637 | ||||||||||||||
Property, plant, equipment and seismic rental equipment, net | 1,745 | 12,369 | 53,374 | — | 67,488 | ||||||||||||||
Multi-client data library, net | — | 97,369 | 8,566 | — | 105,935 | ||||||||||||||
Investment in subsidiaries | 660,880 | 257,732 | — | (918,612 | ) | — | |||||||||||||
Goodwill | — | — | 22,208 | — | 22,208 | ||||||||||||||
Intangible assets, net | — | 3,008 | 95 | — | 3,103 | ||||||||||||||
Intercompany receivables | — | — | 32,174 | (32,174 | ) | — | |||||||||||||
Other assets | 2,469 | 145 | 231 | — | 2,845 | ||||||||||||||
Total assets | $ | 691,523 | $ | 401,907 | $ | 170,572 | $ | (950,786 | ) | $ | 313,216 | ||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current maturities of long-term debt | $ | 11,281 | $ | 3,166 | $ | 134 | $ | — | $ | 14,581 | |||||||||
Accounts payable | 2,101 | 19,720 | 5,068 | — | 26,889 | ||||||||||||||
Accrued expenses | 8,579 | 10,016 | 7,645 | — | 26,240 | ||||||||||||||
Accrued multi-client data library royalties | — | 23,663 | — | — | 23,663 | ||||||||||||||
Deferred revenue | — | 2,667 | 1,042 | — | 3,709 | ||||||||||||||
Total current liabilities | 21,961 | 59,232 | 13,889 | — | 95,082 | ||||||||||||||
Long-term debt, net of current maturities | 143,930 | 279 | — | — | 144,209 | ||||||||||||||
Intercompany payables | 472,276 | 10,155 | — | (482,431 | ) | — | |||||||||||||
Other long-term liabilities | 467 | 12,117 | 7,943 | — | 20,527 | ||||||||||||||
Total liabilities | 638,634 | 81,783 | 21,832 | (482,431 | ) | 259,818 | |||||||||||||
Equity: | |||||||||||||||||||
Common stock | 118 | 290,460 | 19,138 | (309,598 | ) | 118 | |||||||||||||
Additional paid-in capital | 899,198 | 180,700 | 232,590 | (413,290 | ) | 899,198 | |||||||||||||
Accumulated earnings (deficit) | (824,679 | ) | 216,730 | (3,639 | ) | (213,091 | ) | (824,679 | ) | ||||||||||
Accumulated other comprehensive income (loss) | (21,748 | ) | 4,420 | (21,787 | ) | 17,367 | (21,748 | ) | |||||||||||
Due from ION Geophysical Corporation | — | (372,186 | ) | (78,071 | ) | 450,257 | — | ||||||||||||
Total stockholders’ equity | 52,889 | 320,124 | 148,231 | (468,355 | ) | 52,889 | |||||||||||||
Noncontrolling interests | — | — | 509 | — | 509 | ||||||||||||||
Total equity | 52,889 | 320,124 | 148,740 | (468,355 | ) | 53,398 | |||||||||||||
Total liabilities and equity | $ | 691,523 | $ | 401,907 | $ | 170,572 | $ | (950,786 | ) | $ | 313,216 |
Three Months Ended March 31, 2017 | |||||||||||||||||||
Income Statement | ION Geophysical Corporation | The Guarantors | All Other Subsidiaries | Consolidating Adjustments | Total Consolidated | ||||||||||||||
(In thousands) | |||||||||||||||||||
Net revenues | $ | — | $ | 13,034 | $ | 19,522 | $ | — | $ | 32,556 | |||||||||
Cost of sales | — | 17,587 | 8,868 | — | 26,455 | ||||||||||||||
Gross profit (loss) | — | (4,553 | ) | 10,654 | — | 6,101 | |||||||||||||
Total operating expenses | 9,340 | 6,159 | 4,514 | — | 20,013 | ||||||||||||||
Income (loss) from operations | (9,340 | ) | (10,712 | ) | 6,140 | — | (13,912 | ) | |||||||||||
Interest expense, net | (4,460 | ) | (27 | ) | 23 | — | (4,464 | ) | |||||||||||
Intercompany interest, net | 328 | (1,497 | ) | 1,169 | — | — | |||||||||||||
Equity in earnings (losses) of investments | (5,044 | ) | 8,776 | — | (3,732 | ) | — | ||||||||||||
Other income (expense) | (4,759 | ) | (339 | ) | 30 | — | (5,068 | ) | |||||||||||
Net income (loss) before income taxes | (23,275 | ) | (3,799 | ) | 7,362 | (3,732 | ) | (23,444 | ) | ||||||||||
Income tax expense (benefit) | 67 | (42 | ) | (443 | ) | — | (418 | ) | |||||||||||
Net income (loss) | (23,342 | ) | (3,757 | ) | 7,805 | (3,732 | ) | (23,026 | ) | ||||||||||
Net income attributable to noncontrolling interests | — | — | (316 | ) | — | (316 | ) | ||||||||||||
Net income (loss) attributable to ION | $ | (23,342 | ) | $ | (3,757 | ) | $ | 7,489 | (3,732 | ) | $ | (23,342 | ) | ||||||
Comprehensive net loss | $ | (22,825 | ) | $ | (3,805 | ) | $ | 8,054 | $ | (3,933 | ) | $ | (22,509 | ) | |||||
Comprehensive income attributable to noncontrolling interest | — | — | (316 | ) | — | (316 | ) | ||||||||||||
Comprehensive net income (loss) attributable to ION | $ | (22,825 | ) | $ | (3,805 | ) | $ | 7,738 | $ | (3,933 | ) | $ | (22,825 | ) | |||||
Three Months Ended March 31, 2016 | |||||||||||||||||||
Income Statement | ION Geophysical Corporation | The Guarantors | All Other Subsidiaries | Consolidating Adjustments | Total Consolidated | ||||||||||||||
(In thousands) | |||||||||||||||||||
Net revenues | $ | — | $ | 11,162 | $ | 11,501 | $ | 2 | $ | 22,665 | |||||||||
Cost of sales | — | 21,427 | 10,166 | 2 | 31,595 | ||||||||||||||
Gross profit (loss) | — | (10,265 | ) | 1,335 | — | (8,930 | ) | ||||||||||||
Total operating expenses | 7,411 | 7,816 | 5,972 | — | 21,199 | ||||||||||||||
Loss from operations | (7,411 | ) | (18,081 | ) | (4,637 | ) | — | (30,129 | ) | ||||||||||
Interest expense, net | (4,693 | ) | (70 | ) | 29 | — | (4,734 | ) | |||||||||||
Intercompany interest, net | 232 | (1,017 | ) | 785 | — | — | |||||||||||||
Equity in losses of investments | (23,135 | ) | (1,808 | ) | — | 24,943 | — | ||||||||||||
Other income (expense) | 26 | (359 | ) | 453 | — | 120 | |||||||||||||
Net loss before income taxes | (34,981 | ) | (21,335 | ) | (3,370 | ) | 24,943 | (34,743 | ) | ||||||||||
Income tax expense | 33 | 253 | 7 | — | 293 | ||||||||||||||
Net loss | (35,014 | ) | (21,588 | ) | (3,377 | ) | 24,943 | (35,036 | ) | ||||||||||
Net loss attributable to noncontrolling interests | — | — | 22 | — | 22 | ||||||||||||||
Net loss attributable to ION | $ | (35,014 | ) | $ | (21,588 | ) | $ | (3,355 | ) | 24,943 | $ | (35,014 | ) | ||||||
Comprehensive net loss | $ | (36,498 | ) | $ | (21,588 | ) | $ | (4,839 | ) | $ | 26,427 | $ | (36,498 | ) | |||||
Comprehensive loss attributable to noncontrolling interest | — | — | 22 | — | 22 | ||||||||||||||
Comprehensive net loss attributable to ION | $ | (36,498 | ) | $ | (21,588 | ) | $ | (4,817 | ) | $ | 26,427 | $ | (36,476 | ) | |||||
Three Months Ended March 31, 2017 | |||||||||||||||
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 | $ | 7,690 | $ | 3,373 | $ | (9,080 | ) | $ | 1,983 | ||||||
Cash flows from investing activities: | |||||||||||||||
Cash invested in multi-client data library | — | (1,527 | ) | (1,836 | ) | (3,363 | ) | ||||||||
Purchase of property, plant, equipment and seismic rental equipment | — | — | (49 | ) | (49 | ) | |||||||||
Net cash used in investing activities | — | (1,527 | ) | (1,885 | ) | (3,412 | ) | ||||||||
Cash flows from financing activities: | |||||||||||||||
Payments on notes payable and long-term debt | (506 | ) | (1,142 | ) | (58 | ) | (1,706 | ) | |||||||
Intercompany lending | (1,574 | ) | (704 | ) | 2,278 | — | |||||||||
Costs associated with issuance of equity | (123 | ) | — | — | (123 | ) | |||||||||
Other financing activities | (163 | ) | — | — | (163 | ) | |||||||||
Net cash provided by (used in) financing activities | (2,366 | ) | (1,846 | ) | 2,220 | (1,992 | ) | ||||||||
Effect of change in foreign currency exchange rates on cash and cash equivalents | — | — | 409 | 409 | |||||||||||
Net increase (decrease) in cash and cash equivalents | 5,324 | — | (8,336 | ) | (3,012 | ) | |||||||||
Cash and cash equivalents at beginning of period | 23,042 | — | 29,610 | 52,652 | |||||||||||
Cash and cash equivalents at end of period | $ | 28,366 | $ | — | $ | 21,274 | $ | 49,640 |
Three Months Ended March 31, 2016 | |||||||||||||||
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 | $ | (8,953 | ) | $ | (3,804 | ) | $ | 15,236 | $ | 2,479 | |||||
Cash flows from investing activities: | |||||||||||||||
Investment in multi-client data library | — | (6,327 | ) | — | (6,327 | ) | |||||||||
Purchase of property, plant, equipment and seismic rental equipment | — | (266 | ) | — | (266 | ) | |||||||||
Net cash used in investing activities | — | (6,593 | ) | — | (6,593 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Repurchase of common stock | (964 | ) | — | — | (964 | ) | |||||||||
Payments on notes payable and long-term debt | (167 | ) | (1,859 | ) | (186 | ) | (2,212 | ) | |||||||
Cost associated with issuance of notes | (1,315 | ) | — | — | (1,315 | ) | |||||||||
Intercompany lending | 4,749 | 12,256 | (17,005 | ) | — | ||||||||||
Other financing activities | 13 | — | — | 13 | |||||||||||
Net cash provided by (used in) financing activities | 2,316 | 10,397 | (17,191 | ) | (4,478 | ) | |||||||||
Effect of change in foreign currency exchange rates on cash and cash equivalents | — | — | 329 | 329 | |||||||||||
Net decrease in cash and cash equivalents | (6,637 | ) | — | (1,626 | ) | (8,263 | ) | ||||||||
Cash and cash equivalents at beginning of period | 33,734 | — | 51,199 | 84,933 | |||||||||||
Cash and cash equivalents at end of period | $ | 27,097 | $ | — | $ | 49,573 | $ | 76,670 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net revenues: | |||||||
E&P Technology & Services: | |||||||
New Venture | $ | 6,949 | $ | 3,306 | |||
Data Library | 10,606 | 4,272 | |||||
Total multi-client revenues | 17,555 | 7,578 | |||||
Imaging Services | 5,755 | 5,440 | |||||
Total | 23,310 | 13,018 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
E&P Operations Optimization: | |||||||
Devices | 4,990 | 5,359 | |||||
Optimization Software & Services | 4,256 | 4,288 | |||||
Total | 9,246 | 9,647 | |||||
Ocean Bottom Seismic Services | — | — | |||||
Total | $ | 32,556 | $ | 22,665 | |||
Gross profit (loss): | |||||||
E&P Technology & Services | $ | 4,010 | $ | (9,773 | ) | ||
E&P Operations Optimization | 4,787 | 4,719 | |||||
Ocean Bottom Seismic Services | (2,696 | ) | (3,876 | ) | |||
Total | $ | 6,101 | $ | (8,930 | ) | ||
Gross margin: | |||||||
E&P Technology & Services | 17 | % | (75 | )% | |||
E&P Operations Optimization | 52 | % | 49 | % | |||
Ocean Bottom Seismic Services | — | % | — | % | |||
Total | 19 | % | (39 | )% | |||
Income (loss) from operations: | |||||||
E&P Technology & Services | $ | (1,096 | ) | $ | (14,714 | ) | |
E&P Operations Optimization | 1,549 | 1,601 | |||||
Ocean Bottom Seismic Services | (4,008 | ) | (7,631 | ) | |||
Support and other | (10,357 | ) | (9,385 | ) | |||
Loss from operations | $ | (13,912 | ) | $ | (30,129 | ) | |
Operating margin: | |||||||
E&P Technology & Services | (5 | )% | (113 | )% | |||
E&P Operations Optimization | 17 | % | 17 | % | |||
Ocean Bottom Seismic Services | — | % | — | % | |||
Support and other | (32 | )% | (41 | )% | |||
Total | (43 | )% | (133 | )% | |||
Net loss attributable to ION | $ | (23,342 | ) | $ | (35,014 | ) | |
Net loss per share: | |||||||
Basic | $ | (1.98 | ) | $ | (3.30 | ) | |
Diluted | $ | (1.98 | ) | $ | (3.30 | ) | |
Loss contingency accrual related to legal proceedings (special item) | 5,000 | (a) | — | ||||
Net loss attributable to ION as adjusted | $ | (18,342 | ) | $ | (35,014 | ) | |
Net loss per share as adjusted: | |||||||
Basic | $ | (1.55 | ) | $ | (3.30 | ) | |
Diluted | $ | (1.55 | ) | $ | (3.30 | ) |
(a) | Represents a loss contingency accrual related to legal proceedings. See footnote 7 “Litigation” of Footnotes to Consolidated Financial Statements. |
Date | Percentage | |
2015 | 104.063% | |
2016 | 102.031% | |
2017 and thereafter | 100.000% |
Date | Percentage | |
2019 | 105.500% | |
2020 | 103.500% | |
2021 and thereafter | 100.000% |
The following table is a summary of net revenues by geographic area (in thousands): | Three Months Ended March 31, | ||||||
2017 | 2016 | ||||||
Net revenues by geographic area: | |||||||
North America | $ | 7,395 | $ | 5,203 | |||
CIS | 6,977 | 344 | |||||
Latin America | 6,585 | 1,237 | |||||
Europe | 5,636 | 7,201 | |||||
Asia Pacific | 4,823 | 3,816 | |||||
Middle East | 580 | 3,122 | |||||
Africa | 560 | 1,742 | |||||
Total | $ | 32,556 | $ | 22,665 |
• | any additional damages or adverse rulings in the WesternGeco litigation and future potential adverse effects on our liquidity; |
• | future levels of capital expenditures 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, North Africa, Korea 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 levels of our capital expenditures; |
• | future government regulations pertaining to the oil and gas industry; |
• | expected net revenues, income from operations and net income; |
• | expected gross margins for our services and products; |
• | future benefits to be derived from our OceanGeo subsidiary; |
• | future seismic industry fundamentals, including future demand for seismic services and equipment; |
• | future benefits to our customers to be derived from new services and products; |
• | future benefits to be derived from our investments in technologies, joint ventures and acquired companies; |
• | future growth rates for our services and products; |
• | the degree and rate of future market acceptance of our new services and products; |
• | expectations regarding E&P companies and seismic contractor end-users purchasing our more technologically-advanced services and products; |
• | anticipated timing and success of commercialization and capabilities of services and products under development and start-up costs associated with their development; |
• | future 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; |
• | anticipated results with respect to certain estimates we make for financial accounting purposes; 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, 2017 to January 31, 2017 | — | $ | — | Not applicable | Not applicable | ||||||
February 1, 2017 to February 28, 2017 | — | $ | — | Not applicable | Not applicable | ||||||
March 1, 2017 to March 31, 2017 | 19,985 | $ | 5.35 | Not applicable | Not applicable | ||||||
Total | 19,985 | $ | 5.35 |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a). | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a). | |
32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350. | |
32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350. | |
101 | The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, (v) Footnotes to Unaudited Condensed Consolidated Financial Statements. | |
ION GEOPHYSICAL CORPORATION | |||
By | /s/ Steven A. Bate | ||
Steven A. Bate | |||
Executive Vice President and Chief Financial Officer |
Exhibit No. | Description | |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a). | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a). | |
32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350. | |
32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350. | |
101 | The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, (v) Footnotes to Unaudited Condensed Consolidated Financial Statements. |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2017, 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 4, 2017 | /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, 2017, 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 4, 2017 | /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 4, 2017 | /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 4, 2017 | /s/ Steven A. Bate | |
Steven A. Bate | ||
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
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, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,871,647 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
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 | 11,871,647 | 11,792,447 |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (23,026) | $ (35,036) |
Other comprehensive income (loss), net of taxes, as appropriate: | ||
Foreign currency translation adjustments | 517 | (1,462) |
Comprehensive net loss | (22,509) | (36,498) |
Comprehensive (income) loss attributable to noncontrolling interest | (316) | 22 |
Comprehensive net loss attributable to ION | $ (22,825) | $ (36,476) |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [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, 2016 has been derived from the Company’s audited consolidated financial statements at that date. The condensed consolidated balance sheet at March 31, 2017, and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2017 and 2016, are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three months ended March 31, 2017, are not necessarily indicative of the operating results for a full year or of future operations. The Company has non-redeemable noncontrolling interests. Non-redeemable noncontrolling interests in majority-owned affiliates are reported as a separate component of equity in “Noncontrolling interests” in the Consolidated Balance Sheets. These condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States 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, 2016. |
Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company evaluates and reviews its results based on three business segments: E&P Technology & Services, E&P Operations Optimization, and Ocean Bottom Seismic Services. The Company measures segment operating results based on income (loss) from operations. The following table is a summary of segment information (in thousands):
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Long-term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term Debt The following table is a summary of long-term debt obligations, net (in thousands):
Revolving Credit Facility In August 2014, ION and its material U.S. subsidiaries, GX Technology Corporation, ION Exploration Products (U.S.A.), Inc., I/O Marine Systems, Inc. and (collectively, the “Subsidiary Borrowers”), and together with the Company, (collectively, the “Borrowers”) entered into a Revolving Credit and Security Agreement with PNC Bank, National Association (“PNC”), as agent (the “Original Credit Agreement”), which was amended by the First Amendment to Revolving Credit and Security Agreement in August 2015 (the “First Amendment”) and the Second Amendment (as defined below) (the Original Credit Agreement, as amended by the First Amendment, and the Second Amendment, the “Credit Facility”). For a complete discussion of the terms, available credit and security of this Credit Facility, prior to the effectiveness of the Second Amendment, see Footnote 4 to the Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. 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 maximum amount of the revolving line of credit under the Credit Facility is the lesser of $40.0 million or a monthly borrowing base. On April 28, 2016, the Borrowers and PNC entered into a second amendment (the “Second Amendment”) to the Credit Facility. The Second Amendment, among other things:
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 (not to exceed $15.0 million for the multi-client data library data component). As of March 31, 2017, the borrowing base under the Credit Facility was $19.5 million, and there was $10.0 million of indebtedness under the Credit Facility. The Credit Facility is scheduled to mature on August 22, 2019. 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. The Credit Facility contains covenants that, among other things, limit or prohibit the Borrowers, subject to certain exceptions and qualifications, from incurring additional 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 ION and the Subsidiary 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’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) the failure to maintain a measure of liquidity greater than (i) $7.5 million for five consecutive business days or (ii) $6.5 million on any given business day. Liquidity, as defined in the Credit Facility, is the Company’s excess availability to borrow ($9.5 million at March 31, 2017) plus the aggregate amount of unrestricted cash held by ION, the Subsidiary Borrowers and their domestic subsidiaries. At March 31, 2017, the Company 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), the occurrence of which could lead to an acceleration of the Company’s obligations under the Credit Facility as amended. Senior Secured Notes In May 2013, the Company sold $175.0 million aggregate principal amount of 8.125% Senior Secured Second-Priority Notes due 2018 (the “Third Lien Notes”) in a private offering pursuant to an Indenture dated as of May 13, 2013 (the “Third Lien Notes Indenture”). On April 28, 2016, the Company successfully completed an exchange offer (the “Exchange Offer”) and consent solicitation (the “Consent Solicitation”) related to the Third Lien Notes. For a complete discussion of the terms of the Exchange Offer and Consent Solicitation, see Footnote 4 to the Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Prior to the completion of the Exchange Offer and Consent Solicitation the Third Lien Notes were senior secured second-priority obligations of the Company. After giving effect to the Exchange Offer and Consent Solicitation, the remaining aggregate principal amount of approximately $28.5 million of outstanding Third Lien Notes became senior secured third-priority obligations of the Company subordinated to the liens securing all senior and second priority indebtedness of the Company, including under the Credit Facility and Second-Priority Lien Notes (defined below). Pursuant to the Exchange Offer and Consent Solicitation, the Company (i) issued approximately $120.6 million in aggregate principal amount of the Company’s new 9.125% Senior Secured Second Priority Notes due 2021 (the “Second Lien Notes,” and collectively with the Third Lien Notes, the “Notes”) and 1,205,477 shares of the Company’s common stock in exchange for approximately $120.6 million in aggregate principal amount of Third Lien Notes, and (ii) purchased approximately $25.9 million in aggregate principal amount of Third Lien Notes in exchange for aggregate cash consideration totaling approximately $15.0 million, plus accrued and unpaid interest on the Third Lien Notes from the applicable last interest payment date to, but not including, April 28, 2016. After giving effect to the Exchange Offer and Consent Solicitation, the aggregate principal amount of the Third Lien Notes remaining outstanding was approximately $28.5 million and the aggregate principal amount of Second Lien Notes outstanding was approximately $120.6 million. The Third Lien Notes are guaranteed by the Company’s material U.S. subsidiaries, GX Technology Corporation, ION Exploration Products (U.S.A.), Inc. and I/O Marine Systems, Inc. (the “Guarantors”), and mature on May 15, 2018. Interest on the Third Lien Notes accrues at the rate of 8.125% per annum and will be payable semiannually in arrears on May 15 and November 15 of each year during their term. Prior to the completion of the Exchange Offer and Consent Solicitation, the Third Lien Notes Indenture contained certain covenants that, among other things, limited or prohibited the Company’s ability and the ability of its restricted subsidiaries to take certain actions or permit certain conditions to exist during the term of the Third Lien Notes, including among other things, incurring additional indebtedness, creating liens, paying dividends and making other distributions in respect of the Company’s capital stock, redeeming the Company’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 Third Lien Notes Indenture are subject to certain exceptions and qualifications. After giving effect to the Exchange Offer and Consent Solicitation, the Third Lien Notes Indenture was amended to, among other things, provide for the release of the second priority security interest in the collateral securing the remaining Third Lien Notes and the grant of a third priority security interest in the collateral, subordinate to liens securing all senior and second priority indebtedness of the Company, including the Credit Facility and the Second Lien Notes, and eliminate substantially all of the restrictive covenants and certain events of default pertaining to the remaining Third Lien Notes. As of March 31, 2017, the Company was in compliance with the covenants with respect to the Third Lien Notes. On or after May 15, 2015, the Company may on one or more occasions redeem all or a part of the Third Lien Notes at the redemption prices set forth below, plus accrued and unpaid interest and special interest, if any, on the Third Lien Notes redeemed during the 12-month period beginning on May 15th of the years indicated below:
The Second Lien Notes are senior secured second-priority obligations guaranteed by the Guarantors. The Second Lien Notes mature on December 15, 2021. Interest on the Second Lien Notes accrues at the rate of 9.125% per annum and 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 indenture dated April 28, 2016, governing the Second Lien Notes (the “Second Lien Notes Indenture”) contains certain covenants that, among other things, limits or prohibits the Company’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, creating liens, paying dividends and making other distributions in respect of the Company’s capital stock, redeeming the Company’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 the Company’s subsidiaries are currently restricted subsidiaries. As of March 31, 2017, 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, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Net Loss per Share Basic net loss per common 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 outstanding stock options were anti-dilutive for all periods presented. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company maintains a valuation allowance for substantially all of its deferred tax assets. The valuation allowance is calculated in accordance with the provisions of the Financial Accounting Standards Board’s (“FASB”) Accounting Standard Codification (“ASC”) Topic 740 “Income Taxes,” which requires that a valuation allowance be established or maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. In the event the Company’s expectations of future operating results change, the valuation allowance may need to be adjusted downward. As of March 31, 2017, the Company has no unreserved U.S. deferred tax assets. The provision for the three months ended March 31, 2017, has been calculated based on the actual tax expense incurred for the period. Given the current uncertainty in expected income generated in various foreign jurisdictions, where tax rates can vary greatly, the Company’s actual tax rate is the best estimate of year-to-date tax expense. The Company’s effective tax rates for the three months ended March 31, 2017 and 2016 were 1.8% and (0.8)%, respectively. The Company’s effective tax rates for the three months ended March 31, 2017 were impacted by the change in valuation allowance related to operating losses for which the Company cannot currently recognize a tax benefit. The Company’s income tax benefit for the three months ended March 31, 2017 of $(0.4) million primarily relates to results from the Company’s non-U.S. businesses. The Company cannot currently benefit from U.S. losses which negatively impacted the Company’s effective tax rate. The Company has approximately $1.3 million of unrecognized tax benefits and does not expect to recognize significant increases in unrecognized tax benefits during the next 12-month period. Interest and penalties, if any, related to unrecognized tax benefits are recorded in income tax expense. As of March 31, 2017, the Company’s U.S. federal tax returns for 2013 and subsequent years remain subject to examination by tax authorities. The Company is no longer subject to U.S. Internal Revenue Service (“IRS”) examination for periods prior to 2013, although carryforward attributes related to losses generated prior to 2013 may still be adjusted upon examination by the IRS if they either have been or will be used in an open year. In the Company’s foreign tax jurisdictions, tax returns for 2010 and subsequent years generally remain open to examination. |
Litigation |
3 Months Ended |
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Mar. 31, 2017 | |
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, Houston Division. In the lawsuit, styled WesternGeco L.L.C. v. ION Geophysical Corporation, WesternGeco alleged that the Company had infringed several method and apparatus claims contained in four of its United States patents regarding marine seismic streamer steering devices. The trial began in July 2012. A verdict was returned by the jury in August 2012, finding that the Company infringed the claims contained in the four patents by supplying its DigiFIN® lateral streamer control units and the related software from the United States and awarded WesternGeco the sum of $105.9 million in damages, consisting of $12.5 million in reasonable royalty and $93.4 million in lost profits. In June 2013, the presiding judge entered a Memorandum and Order, ruling that WesternGeco is entitled to be awarded supplemental damages for the additional DigiFIN units that were supplied from the United States before and after the trial that were not included in the jury verdict due to the timing of the trial. In October 2013, the judge entered another Memorandum and Order, ruling on the number of DigiFIN units that are subject to supplemental damages and also ruling that the supplemental damages applicable to the additional units should be calculated by adding together the jury’s previous reasonable royalty and lost profits damages awards per unit, resulting in supplemental damages of $73.1 million. In April 2014, the judge entered another Order, ruling that lost profits should not have been included in the calculation of supplemental damages in the October 2013 Memorandum and Order and reduced the supplemental damages award in the case from $73.1 million to $9.4 million. In the Order, the judge also further reduced the damages award in the case by $3.0 million to reflect a settlement and license that WesternGeco entered into with a customer of the Company that had purchased and used DigiFIN units that were also included in the damage amounts awarded against the Company. In May 2014, the judge signed and entered a Final Judgment in the amount of $123.8 million related to the case. The Final Judgment also included an injunction that enjoins the Company, its agents and anyone acting in concert with it, from supplying in or from the United States the DigiFIN product or any parts unique to the DigiFIN product, or any instrumentality no more than colorably different from any of these products or parts, for combination outside of the United States. The Company has conducted its business in compliance with the district court’s orders in the case, and the Company has reorganized its operations such that it no longer supplies the DigiFIN product or any parts unique to the DigiFIN product in or from the United States. The Company and WesternGeco each appealed the Final Judgment to the United States Court of Appeals for the Federal Circuit in Washington, D.C. On July 2, 2015, the Court of Appeals reversed in part the judgment, holding the district court erred by including lost profits in the Final Judgment. Lost profits were $93.4 million and prejudgment interest was approximately $10.9 million of the $123.8 million Final Judgment. Pre-judgment interest on the lost profits portion will be treated in the same way as the lost profits. Post-judgment interest will likewise be treated in the same fashion. On July 29, 2015, WesternGeco filed a petition for rehearing en banc before the Court of Appeals. On October 30, 2015 the Court of Appeals denied WesternGeco’s petition for rehearing en banc. On February 26, 2016, WesternGeco filed a petition for writ of certiorari by the Supreme Court. The Company filed its response on April 27, 2016. Subsequently, on June 20, 2016, the Supreme Court refused to disturb the Court of Appeals ruling finding no lost profits as a matter of law. Separately, in light of the changes in case law regarding the standard of proof for willfulness in the Halo and Stryker cases, the Supreme Court indicated that the case should be remanded to the Federal Circuit for a determination of whether or not the willfulness determination by the District Court was appropriate. On November 14, 2016, the District Court issued an order reducing the amount of the appeal bond from $120.0 million to $65.0 million, ordered the sureties to pay principal and interest on the royalty previously awarded and declined to issue a final judgment until after consideration of whether enhanced damages related to willfulness should be awarded in the case. While the Company does not agree with the unusual decision by the District Court ordering payment of the royalty damages and interest without a final judgment, the Company paid the $20.8 million due pursuant to the order to WesternGeco on November 25, 2016. On March 14, 2017, the District Court held a hearing on whether or not additional damages for willfulness would be payable. In a ruling from the bench, the District Court stated that additional damages in the amount of $5.0 million would be awarded by the court. The District Court has not yet issued a final order to memorialize the ruling, but it is anticipated that the final order will be consistent with the ruling from the bench. After a final order is issued, ION will decide whether to appeal the $5.0 million or pay the award without further appeal. WesternGeco filed a second petition for writ of certiorari in the U.S. Supreme Court on February 17, 2017, appealing the lost profits issue again. The Company filed its response to WesternGeco’s second attempt to appeal to the Supreme Court the lost profits issue, raising both the substantive matters addressed by ION in opposing WesternGeco’s first petition, and also raising a procedural argument that WesternGeco cannot raise the same issue for a second time in a second petition for certiorari. At present, the only remaining issues in the litigation are payment or appeal of the $5.0 million in enhanced damages and WesternGeco’s second appeal of the same issue to the Supreme Court on lost profits. Pending issuance of the final order for $5.0 million from the District Court, ION has taken a loss contingency accrual of $5.0 million. The Company’s assessment of the need for and amount of its potential loss contingency may change in the future. Any such reassessment could have a material effect on the Company’s financial condition or results of operations. Prior to the reduction in damages by the Court of Appeals, the Company arranged with sureties to post an appeal bond at the District Court. The appeal bond is uncollateralized. The sureties have a new motion to release the bond that is currently pending. In light of the payment of the $20.8 million in royalty damages by the Company, the only liquidated exposure to the sureties under the bond is the $5.0 million, when the order is issued. Other 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. Management currently believes that the ultimate resolution of these matters will not have a material adverse impact on the financial condition, results of operations or liquidity of the Company. |
Other Income (Expense), Net |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense), Net | Other Income (Expense), Net The following table is a summary of other income (expense), net (in thousands):
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Details of Selected Balance Sheet Accounts |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Selected Balance Sheet Accounts | Details of Selected Balance Sheet Accounts Inventories
Other Long-term Liabilities
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table is a summary of changes in accumulated other comprehensive loss by component (in thousands):
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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 The following table is a summary of cash paid for Interest and Income taxes and non-cash items from investing and financing activities (in thousands):
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Fair Value of Financial Instruments |
3 Months Ended |
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Mar. 31, 2017 | |
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, prioritizing and defining the types of inputs used to measure fair value. The carrying amounts of the Company’s long-term debt as of March 31, 2017 and December 31, 2016 were $162.2 million and $163.9 million, respectively, compared to its fair values of $114.7 million and $114.8 million as of March 31, 2017 and December 31, 2016, respectively. The fair value of the long-term debt was calculated using a readily observable price (Level 1). Fair Value of Other Financial Instruments. Due to their highly liquid nature, the amount of the Company’s other financial instruments, including cash and cash equivalents, accounts and unbilled receivables, notes receivable, accounts payable, and accrued multi-client data library royalties, represent their approximate fair value. |
Stockholder's Equity, Stock-Based Compensation Expense and Repurchase Plan |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholder's Equity, Stock-Based Compensation Expense and Repurchase Plan | Stockholder's Equity, Stock-Based Compensation Expense and Repurchase Plan At-The-Market Equity Offering Program On December 22, 2016 the Company announced that it has filed a prospectus supplement under which it may sell up to $20 million of its common stock through an "at-the-market" equity offering program (the "ATM Program"). ION would intend to use the net proceeds from sales under the ATM Program to be positioned to capitalize on opportunities such as acquiring complementary distressed assets, or other value-added transactions. The timing of any sales will depend on a variety of factors to be determined by ION. Effective May 2, 2017, the Company terminated and canceled the ATM Program. No shares were sold pursuant to the ATM Program. Stock-Based Compensation The total number of shares issued or reserved for future issuance under outstanding stock options at March 31, 2017 and 2016 was 838,582 and 938,606, respectively, and the total number of shares of restricted stock and shares reserved for restricted stock units outstanding at March 31, 2017 and 2016 was 203,622 and 253,738, respectively. The following table presents a summary of the activity related to stock options, restricted stock and restricted stock unit awards for the three months ended March 31, 2017:
Stock-based compensation expense recognized for the three months ended March 31, 2017 and 2016, totaled $0.6 million and $0.7 million, respectively. In the first quarter 2017, the Company adopted ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," that changed how the Company accounts for certain aspects of share-based payments to employees. The Company is required to recognize the income tax effects of awards in the statement of income when the awards vest or are settled. The guidance on employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation and for forfeitures is changing and the update requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. There was no impact of adoption of ASU 2016-09 on net income, basic and diluted earnings per share, deferred tax assets or net cash from operations. Stock Repurchase Program On November 4, 2015, the Company’s board of directors approved a stock repurchase program authorizing a Company stock repurchase, from time to time from November 10, 2015, through November 10, 2017, up to $25 million in shares of the Company’s outstanding common stock. The stock repurchase program may be implemented through open market repurchases or privately negotiated transactions, at management’s discretion. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors including the market price of the shares of our common stock and general market and economic conditions, applicable legal requirements and compliance with the terms of our outstanding indebtedness. The repurchase program does not obligate the Company to acquire any particular amount of common stock and may be modified or suspended at any time and could be terminated prior to completion. As of March 31, 2017, the Company was authorized to repurchase up to $25 million through November 17, 2017, and had repurchased $3.0 million or 451,792 shares of its common stock under the repurchase program at an average price per share of $6.41. |
Recent Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue Recognition — In May 2014, the FASB and the International Accounting Standards Board (“IASB”) jointly issued new accounting guidance for recognition of revenue. In August 2015, the FASB issued guidance deferring the effective date to years beginning after December 15, 2017, and interim periods within those years. This new guidance replaces virtually all existing U.S. GAAP and IFRS guidance on revenue recognition. The underlying principle is that the entity will recognize revenue to depict the transfer of goods and services to customers at an amount that the entity expects to be entitled to in the exchange of goods and services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In December 2016, the FASB issued amendments to Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. The amendments allow entities not to make quantitative disclosures about remaining performance obligations in certain cases and require entities that use any of the new or previously existing optional exemptions to expand their qualitative disclosures. It also makes additional technical corrections and improvements to the new revenue standard. The guidance will be effective with the same date and transition requirements as those in ASC 606. While the Company continues to evaluate the two allowed adoption methods (either the full retrospective method or the modified retrospective method) to determine which method it plans to use, the Company currently expects to use the modified retrospective method. The Company also continues to assess whether the implementation of this new guidance will have a material impact on the Company’s New Venture and Devices groups’ consolidated financial position or results of operations for the periods presented. While the Company continues to evaluate the impact on its consolidated financial statements for all of its business segments, the Company does not currently expect the adoption of ASC 606 to have a material impact on its consolidated balance sheets or consolidated statement of operations for its Imaging Services group, Optimization Software & Services group or its Ocean Bottom Services segment. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The guidance will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The Company currently expects that the adoption of ASU 2016-002 may have a material impact related to its facility operating leases on its consolidated financial statements, and continues to evaluate the impact of vessel leases in the Company’s Ocean Bottom Services segment. In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments” that will change how companies measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount. The amendments in this update will be effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018. The Company is evaluating the effect of ASU 2016-13 on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash (a consensus of the FASB Emerging Issues Task Force) (ASU 2016-18),” that will require entities to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet is required. The guidance will be effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. The Company does not currently expect the adoption of ASU 2016-18 to have a material impact on its consolidated financial statements. |
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 Notes were issued by ION Geophysical Corporation and are guaranteed by the Guarantors, all of which are 100-percent-owned subsidiaries. The Guarantors have fully and unconditionally guaranteed the payment obligations of ION Geophysical Corporation with respect to the 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 consolidated financial statements and footnotes. For additional information pertaining to the Notes, See Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of this Form 10-Q.
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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):
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Long-term Debt (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations | The following table is a summary of long-term debt obligations, net (in thousands):
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Debt Instrument Redemption | On or after May 15, 2015, the Company may on one or more occasions redeem all or a part of the Third Lien Notes at the redemption prices set forth below, plus accrued and unpaid interest and special interest, if any, on the Third Lien Notes redeemed during the 12-month period beginning on May 15th of the years indicated below:
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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Other Income (Expense), Net (Tables) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Nonoperating Income (Expense) | The following table is a summary of other income (expense), net (in thousands):
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Details of Selected Balance Sheet Accounts (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories | Inventories
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Summary of Other Long-term Liabilities | Other Long-term Liabilities
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Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Accumulated Other Comprehensive Loss | The following table is a summary of changes in accumulated other comprehensive loss by component (in thousands):
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Supplemental Cash Flow Information and Non-Cash Activity (Tables) |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Non-cash Items from Investing and Financing Activities | The following table is a summary of cash paid for Interest and Income taxes and non-cash items from investing and financing activities (in thousands):
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Stockholder's Equity, Stock-Based Compensation Expense and Repurchase Plan (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The following table presents a summary of the activity related to stock options, restricted stock and restricted stock unit awards for the three months ended March 31, 2017:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table presents a summary of the activity related to stock options, restricted stock and restricted stock unit awards for the three months ended March 31, 2017:
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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 |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Income Statement |
|
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Condensed Cash Flow Statement |
|
Long-term Debt - Obligations (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
Apr. 28, 2016 |
---|---|---|---|
Obligations | |||
Total debt | $ 157,339 | $ 158,790 | |
Costs associated with issuances of debt | (4,883) | (5,137) | |
Current portion of long-term debt and lease obligations | (12,966) | (14,581) | |
Non-current portion of long-term debt and lease obligations | 144,373 | 144,209 | |
Senior secured second-priority notes [Member] | Senior secured second-priority lien notes (maturing December 15, 2021) [Member] | |||
Obligations | |||
Total debt | 120,569 | 120,569 | $ 120,600 |
Senior secured second-priority notes [Member] | Senior secured third-priority lien notes (maturing May 15, 2018) [Member] | |||
Obligations | |||
Total debt | 28,497 | 28,497 | $ 28,500 |
Revolving credit facility [Member] | |||
Obligations | |||
Total debt | 10,000 | 10,000 | |
Equipment capital leases [Member] | |||
Obligations | |||
Total debt | 2,304 | 3,446 | |
Other debt [Member] | |||
Obligations | |||
Total debt | $ 852 | $ 1,415 |
Long-term Debt - Obligations Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 4,883 | $ 5,137 |
Other assets [Member] | Revolving credit facility [Member] | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 900 | $ 1,200 |
Long-term Debt - Debt Instrument Redemption Percentages (Details) - Senior notes [Member] |
Dec. 15, 2019 |
May 15, 2015 |
---|---|---|
Redemption Period 1 [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price percentages | 104.063% | |
Redemption Period 1 [Member] | Forecast [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price percentages | 105.50% | |
Redemption Period 2 [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price percentages | 102.031% | |
Redemption Period 2 [Member] | Forecast [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price percentages | 103.50% | |
Redemption Period 3 [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price percentages | 100.00% | |
Redemption Period 3 [Member] | Forecast [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price percentages | 100.00% |
Income Taxes (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Operating Loss Carryforwards [Line Items] | ||
Effective income tax rates | 1.80% | (0.80%) |
Income tax expense (benefit) | $ (418,000) | $ 293,000 |
Unrecognized tax benefits | 1,300,000 | |
United States Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net deferred tax assets | $ 0 |
Litigation (Details) - WesternGeco [Member] $ in Millions |
1 Months Ended | 36 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 14, 2017
USD ($)
|
Nov. 25, 2016
USD ($)
|
May 31, 2014
USD ($)
|
Apr. 30, 2014
USD ($)
|
Oct. 31, 2013
USD ($)
|
Aug. 31, 2012
USD ($)
|
Jun. 30, 2009
Patent
|
Jul. 02, 2015
USD ($)
|
Nov. 14, 2016
USD ($)
|
Nov. 13, 2016
USD ($)
|
|
Loss Contingencies [Line Items] | ||||||||||
Number of patent apparatus claims contained | Patent | 4 | |||||||||
Pending Litigation [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Damages awarded | $ 5.0 | $ 123.8 | $ 9.4 | $ 73.1 | $ 105.9 | |||||
Reduction in damages award in the case | $ (3.0) | |||||||||
Prejudgment interest expense accrued | $ 10.9 | |||||||||
Amount of appeal bond | $ 65.0 | $ 120.0 | ||||||||
Amount of royalty damages paid | $ 20.8 | |||||||||
Pending Litigation [Member] | Lost Royalties [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Damages awarded | $ 12.5 | |||||||||
Pending Litigation [Member] | Lost Profits [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Damages awarded | $ 93.4 |
Other Income (Expense), Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Other Income and Expenses [Abstract] | ||
Accrual for loss contingency related to legal proceedings (Footnote 6) | $ (5,000) | $ 0 |
Other income (expense), net | (68) | 120 |
Total other income (expense), net | $ (5,068) | $ 120 |
Details of Selected Balance Sheet Accounts - Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials and subassemblies | $ 20,609 | $ 21,454 |
Work-in-process | 1,999 | 2,255 |
Finished goods | 7,634 | 6,581 |
Reserve for excess and obsolete inventories | (15,022) | (15,049) |
Total | $ 15,220 | $ 15,241 |
Details of Selected Balance Sheet Accounts - Other Long-term Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Deferred rents | $ 13,684 | $ 13,955 |
Facility restructuring accrual | 1,434 | 1,765 |
Deferred income tax liability | 1,774 | 3,679 |
Other long-term liabilities | 1,134 | 1,128 |
Total | $ 18,026 | $ 20,527 |
Supplemental Cash Flow Information and Non-Cash Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Cash paid during the period for: | ||
Interest | $ 206 | $ 154 |
Income taxes (refunds) | 819 | (762) |
Non-cash items from investing and financing activities: | ||
Investment in multi-client data library financed through accounts payable | 1,654 | 3,885 |
Purchases of property, plant, and equipment financed through accounts payable | $ 730 | $ 179 |
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Long-term Debt And Capital Lease Obligations, Current And Noncurrent | $ 162.2 | $ 163.9 |
Fair value of long-term debt | $ 114.7 | $ 114.8 |
Stockholder's Equity, Stock-Based Compensation Expense and Repurchase Plan - Narrative (Details) - USD ($) |
3 Months Ended | 14 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 22, 2016 |
Nov. 04, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||
Maximum number of shares available for sale through the ATM Program | 20,000,000 | ||||
Number of shares issued or committed for issuance under outstanding stock options | 838,582 | 938,606 | |||
Number of shares of restricted stock and shares reserved for restricted stock units outstanding | 203,622 | 253,738 | |||
Stock-based compensation expense | $ 634,000 | $ 743,000 | |||
Stock repurchase amount, authorized amount | $ 25,000,000 | ||||
Shares repurchased, value | $ 3,000,000 | ||||
Number of shares repurchased | 451,792 | ||||
Repurchased shares, average price per share (usd per share) | $ 6.41 |
Stockholder's Equity, Stock-Based Compensation Expense and Repurchase Plan - Activity Related to Stock Options, Restricted Stock and Restricted Stock Unit Awards (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
shares
| |
Stock Options, Number of Shares | |
Ending balance | 838,582 |
Stock Options [Member] | |
Stock Options, Number of Shares | |
Beginning balance | 847,635,000 |
Cancelled/forfeited | (9,053,000) |
Ending balance | 838,582,000 |
Restricted Stock and Restricted Stock Unit [Member] | |
Restricted Stock and Unit Awards, Number of Shares | |
Beginning balance | 285,308,000 |
Granted | 17,500,000 |
Stock options exercised/restricted stock/unit awards vested | (99,186,000) |
Ending balance | 203,622,000 |
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