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Revenues increased 33% to $107 million

HOUSTON, Nov. 5, 2014 /PRNewswire/ — ION Geophysical Corporation (NYSE: IO) today reported a third quarter 2014 net loss of $24.5 million, or $(0.15) per share, on revenues of $106.5 million, compared to a net loss of $202.1 million, or $(1.29) per share, on revenues of $79.8 million in third quarter 2013.  Excluding restructuring and special items from the prior year’s results, third quarter 2013 net loss, as adjusted, was $20.1 million, or $(0.13) per share.

At September 30, 2014, the Company’s cash and cash equivalents were $129.8 million.  The Company generated net cash flows before financing activities of $36.0 million during the first nine months of 2014, compared to a use of cash before financing activities of $(36.6) million in the prior year period.   Year-to-date Adjusted EBITDA was $89.5 million, a 68% increase over the first nine months of 2013, and was $13.0 million for the third quarter 2014, compared to $(4.2) million in the prior year quarter.  Reconciliations of special items and Adjusted EBITDA can be found in the financial tables of this press release.

Brian Hanson, ION’s President and Chief Executive Officer, commented, “As we anticipated, the continued slowdown in exploration spending had a significant impact on our third quarter and year-to-date base business results.  Fortunately, our decision a year ago to focus more on production activities through OceanGeo, our Ocean Bottom Services segment, has helped cushion the weakness in other parts of our business.

“In light of this challenging environment, we are conservatively managing our business to generate positive cash flow and further strengthen our balance sheet.  We have made significant progress during the third quarter in a couple key areas of strategic importance.

“First, we continued our penetration into the ocean bottom services market through OceanGeo.   During the third quarter, we began acquisition on a three-month project offshore West Africa.  We are currently negotiating with clients on potential extensions to this program, which should result in additional work in the fourth quarter.  This is consistent with our strategy of putting this crew to work offshore West Africa, a growing market with significant tendering activities.  We are currently participating in several large tenders, which, if awarded, would provide us with a backlog of longer-term projects.

“Also, in collaboration with Polarcus, we completed acquisition on a multi-client 3D seismic survey offshore Ireland.  This was the first survey under our previously announced multi-year strategic alliance with Polarcus to jointly develop, execute and market 3D multi-client seismic programs globally.  The survey was an industry funded opportunity in advance of an upcoming licensing round and represented a key opportunity for ION to enter the 3D multi-client market, a natural extension of our traditional 2D BasinSPANTM expertise.  We see this market as a growth opportunity for us and are currently working to secure client commitments for additional 3D multi-client programs in other areas of the world.

“While we are pleased with our recent progress in execution of our key strategies, our outlook for the remainder of 2014 and into 2015 remains cautious.  We plan to continue exercising spending discipline across all businesses, maximizing cash generation, funding new programs only when they have been adequately underwritten by our customers, while continuing to invest in key strategic technologies and market opportunities.”

THIRD QUARTER 2014

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

Three Months Ended September 30,

2014

2013

% Change

Solutions

$

45,859

$

43,447

6

%

Systems

24,695

26,267

(6)

%

Software

11,010

10,124

9

%

Ocean Bottom Services

24,976

Total

$

106,540

$

79,838

33

%

Within the Solutions segment, new venture revenues were $18.4 million, a 54% increase from third quarter 2013; data library revenues were $3.3 million, a 37% decrease; and data processing revenues were $24.2 million, an 8% decrease.  While new ventures revenues were up, all businesses within the Solutions segment were impacted by the continued softness of exploration spending.  

The decrease in Systems segment revenues was due to a reduction in sales of land geophone strings, while new marine positioning system sales and repair and replacement revenues were relatively flat compared to third quarter 2013.

Software segment revenues were up primarily due to higher Orca® and Gator® licensing revenues, which generated overall gross and operating margins of 76% and 56%, respectively, during the quarter. 

Ocean Bottom Services segment revenues were $25.0 million, related to work performed on OceanGeo’s project offshore West Africa, which began work in late July and is expected to be completed in the fourth quarter this year.

Consolidated gross margins were 27% compared to 19%, as adjusted, in third quarter 2013, and operating margins were (5)% compared to (18)%, as adjusted, in the prior year quarter.  The third quarter increase in both gross and operating margins was driven primarily by the mix of revenues from new venture programs within the Solutions segment and the continued strong margins within the Software segment.  

The Company recognized $5.6 million of equity losses related to INOVA Geophysical, compared to equity losses of $0.2 million in the third quarter 2013.  This decline was due to continued softening within the land seismic market.  See the attached financial tables for the summarized financial results of INOVA.

The Company’s third quarter 2013 results included equity losses of $5.0 million related to OceanGeo. In late January 2014, the Company increased its ownership interest to 70%, and subsequently to 100% in July, at that time taking over direct management of OceanGeo.

Income tax expense was $8.3 million for third quarter 2014, at an effective tax rate of (50.3)%, related to income from the Company’s non-U.S. businesses, including OceanGeo.  This foreign tax expense has not been offset by the tax benefits on losses within the U.S. and other jurisdictions, from which the Company cannot currently benefit, resulting in an income tax expense on a consolidated pre-tax loss.

During the third quarter, the Company successfully secured a new credit facility with a group of Western banks, replacing its previous credit facility with China Merchants Bank.  The lenders under this facility have currently committed $80 million of revolving credit, subject to a borrowing base, but the facility allows for an additional $95 million of indebtedness through a combination of revolving credit capacity and term loan, up to $175 million in total.  The Company has not drawn upon any amounts under this new credit facility.

YEAR-TO-DATE 2014

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

Nine Months Ended September 30,

2014

2013

% Change

Solutions

$

197,734

$

221,236

(11)

%

Systems

71,948

81,962

(12)

%

Software

31,582

27,292

16

%

Ocean Bottom Services

71,454

Total

$

372,718

$

330,490

13

%

Within the Solutions segment, new venture revenues were $76.5 million, an 18% decrease from the first nine months of 2013; data library revenues were $30.1 million, a 17% decrease; and data processing revenues were $91.1 million, essentially flat to the prior year period.  The decrease in new venture and data library revenues was due to the continued softness in exploration spending.  Data processing revenues were also impacted by the softness in exploration spending, but benefited from $15.0 million of revenues recognized in first quarter 2014 related to work performed for a customer in 2013.  

The decrease in Systems segment revenues was primarily due to (i) a lack of ocean bottom cable systems sales in 2014 compared to 2013; (ii) reduced land geophone string sales; and (iii) lower sales of new marine positioning systems; partially offset by (iv) additional marine repair and replacement revenues.

Software segment revenues were up primarily due to higher Orca and Gator licensing revenues, which generated overall gross and operating margins of 74% and 54%, respectively, during the first nine months of 2014. 

Ocean Bottom Services segment revenues were $71.5 million, related to work performed on OceanGeo’s project in Trinidad, completed in May, and from its current project offshore West Africa.  

Consolidated gross margins increased to 33% compared to 26%, as adjusted, in the first nine months of 2013, and operating margins were 5% compared to (2)%, as adjusted, in the previous year period.  The increase in both gross and operating margins was primarily due to (i) the positive impact from the consolidation of OceanGeo’s results; (ii) the mix of revenues within the Solutions segment, which included the recognition of data processing revenues following execution of a significant customer contract in the first quarter this year; and (iii) reduced expenses within the Systems segment resulting from 2013 restructuring efforts.  

The Company recognized $9.8 million of equity losses related to INOVA Geophysical, compared to equity losses of $3.0 million in the first nine months of 2013.  Also, prior to the consolidation of OceanGeo in late January of this year, the Company recorded $0.7 million of equity earnings, compared to equity losses of $7.4 million in the first nine months of 2013.

Income tax expense was $14.3 million for the first nine months of 2014, at an effective tax rate of 20.9%, related to income from the Company’s non-U.S. businesses, including OceanGeo.

The Company reported net income of $52.6 million, or $0.32 per diluted share, compared to a net loss of $271.7 million, or $(1.73) per share, in the first nine months of 2013.  Both periods included special items related to the WesternGeco legal matter, while 2013 also reflected certain restructuring and other special items.  Excluding these special items, in the first nine months of 2014, the Company reported a net loss of $23.1 million, or $(0.14) per share, compared to net loss of $18.2 million, or $(0.12) per share, in the prior year period.

CONFERENCE CALL

The Company has scheduled a conference call for Thursday, November 6, 2014, at 10:00 a.m. Eastern Time that will include a slide presentation to be posted in the Investor Relations section of the ION website by 9:00 a.m. Eastern Time.  To participate in the conference call, dial (888) 504-7963 at least 10 minutes before the call begins and ask for the ION conference call.  A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until November 13, 2014.  To access the replay, dial (888) 203-1112 and use pass code 9061808#.

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

About ION

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

Contact

Greg Heinlein

Senior Vice President and Chief Financial Officer

+1.281.552.3011

The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements may include future sales, earnings and market growth, timing of sales, future liquidity and cash levels, future estimated revenues and earnings, sales expected to result from backlog, benefits expected to result from OceanGeo and the INOVA Geophysical joint venture and related transactions, expected outcome of litigation and other statements that are not of historical fact.  Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties.  These risks and uncertainties include risks associated with pending and future litigation, including the risk that the Company does not prevail in its appeal of the judgment in the lawsuit with WesternGeco and that the ultimate outcome of the lawsuit could have a material adverse effect on the Company’s financial results and liquidity; the timing and development of the Company’s products and services and market acceptance of the Company’s new and revised product offerings; the operation of OceanGeo and the INOVA Geophysical joint venture; the Company’s level and terms of indebtedness; competitors’ product offerings and pricing pressures resulting therefrom; the relatively small number of customers that the Company currently relies upon; the fact that a significant portion of the Company’s revenues is derived from foreign sales; that sources of capital may not prove adequate; the Company’s inability to produce products to preserve and increase market share; collection of receivables; and technological and marketplace changes affecting the Company’s product lines.  Additional risk factors, which could affect actual results, are disclosed by the Company from time to time in its filings with the Securities and Exchange Commission (“SEC“), including its Annual Report on Form 10-K for the year ended December 31, 2013 and its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed during 2014.

Tables to follow

 

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

Service revenues

$

71,923

$

44,679

$

272,386

$

224,231

Product revenues

34,617

35,159

100,332

106,259

Total net revenues

106,540

79,838

372,718

330,490

Cost of services

60,285

52,256

200,697

188,494

Cost of products

17,032

42,686

47,716

85,525

Gross profit (loss)

29,223

(15,104)

124,305

56,471

Operating expenses:

Research, development and engineering

10,910

10,288

30,254

28,665

Marketing and sales

8,480

8,416

27,610

25,364

General, administrative and other operating expenses

15,182

22,720

48,334

50,277

Total operating expenses

34,572

41,424

106,198

104,306

Income (loss) from operations

(5,349)

(56,528)

18,107

(47,835)

Interest expense, net

(5,048)

(4,281)

(14,779)

(8,103)

Equity in losses of investments

(5,558)

(5,192)

(9,027)

(10,414)

Other income (expense), net

(622)

(74,301)

73,970

(180,392)

Income (loss) before income taxes

(16,577)

(140,302)

68,271

(246,744)

Income tax expense

8,345

56,954

14,261

19,450

Net income (loss)

(24,922)

(197,256)

54,010

(266,194)

Net (income) loss attributable to noncontrolling interests

381

498

(1,384)

515

Net income (loss) attributable to ION

(24,541)

(196,758)

52,626

(265,679)

Preferred stock dividends

338

1,014

Conversion payment of preferred stock

5,000

5,000

Net income (loss) applicable to common shares

$

(24,541)

$

(202,096)

$

52,626

$

(271,693)

Net income (loss) per share:

Basic

$

(0.15)

$

(1.29)

$

0.32

$

(1.73)

Diluted

$

(0.15)

$

(1.29)

$

0.32

$

(1.73)

Weighted average number of common shares outstanding:

Basic

164,149

157,143

164,021

156,842

Diluted

164,149

157,143

164,326

156,842

 

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

ASSETS

September 30,
 2014

December 31,
 2013

Current assets:

Cash and cash equivalents

$

129,847

$

148,056

Accounts receivable, net

86,738

149,448

Unbilled receivables

57,477

49,468

Inventories

55,376

57,173

Prepaid expenses and other current assets

26,453

24,772

Total current assets

355,891

428,917

Deferred income tax asset

14,340

14,650

Property, plant, equipment and seismic rental equipment, net

60,365

46,684

Multi-client data library, net

243,917

238,784

Equity method investments

40,174

53,865

Goodwill

50,385

55,876

Intangible assets, net

9,191

11,247

Other assets

19,482

14,648

Total assets

$

793,745

$

864,671

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of long-term debt

$

5,901

$

5,906

Accounts payable

30,666

22,654

Accrued expenses

75,608

84,358

Accrued multi-client data library royalties

24,416

46,460

Deferred revenue

16,495

20,682

Total current liabilities

153,086

180,060

Long-term debt, net of current maturities

179,583

214,246

Other long-term liabilities

142,776

210,602

Total liabilities

475,445

604,908

Redeemable noncontrolling interests

2,086

1,878

Equity:

Common stock

1,642

1,637

Additional paid-in capital

886,170

879,969

Accumulated deficit

(553,531)

(606,157)

Accumulated other comprehensive loss

(11,720)

(11,138)

Treasury stock

(6,565)

(6,565)

Total stockholders’ equity

315,996

257,746

Noncontrolling interests

218

139

Total equity

316,214

257,885

Total liabilities and equity

$

793,745

$

864,671

 

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended September 30,

2014

2013

Cash flows from operating activities:

Net income (loss)

$

54,010

$

(266,194)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization (other than multi-client data library)

20,989

13,146

Amortization of multi-client data library

46,014

50,892

Stock-based compensation expense

7,058

5,707

Equity in losses of investments

9,027

10,414

Accrual for (reduction of) loss contingency related to legal proceedings

(69,557)

181,776

Gain on sale of Source product line

(6,522)

Gain on sale of cost-method investment

(3,591)

Write-down of multi-client data library

5,461

Write-down of receivables from OceanGeo

9,157

Write-down of excess and obsolete inventory

21,197

Deferred income taxes

(1,536)

7,768

Change in operating assets and liabilities:

Accounts receivable

71,540

57,481

Unbilled receivables

(8,036)

6,890

Inventories

(4,272)

(13,157)

Accounts payable, accrued expenses and accrued royalties

(31,324)

(6,179)

Deferred revenue

(4,153)

(6,527)

Other assets and liabilities

3,738

4,274

Net cash provided by operating activities

86,976

78,515

Cash flows from investing activities:

Cash invested in multi-client data library

(57,340)

(86,346)

Purchase of property, plant, equipment and seismic rental assets

(6,842)

(13,539)

Repayment of (advances to) INOVA Geophysical

1,000

(8,000)

Investment in and advances to OceanGeo B.V.

(3,683)

(9,500)

Cash of OceanGeo B.V. upon acquiring a controlling interest

609

Net proceeds from sale of Source product line

14,394

Proceeds from sale of a cost-method investment

4,150

Investment in convertible note

(2,000)

Other investing activities

928

76

Net cash used in investing activities

(50,934)

(115,159)

Cash flows from financing activities:

Proceeds from issuance of notes

175,000

Borrowings under revolving line of credit

15,000

Payments under revolving line of credit

(50,000)

(97,250)

Payments on notes payable and long-term debt

(11,737)

(3,296)

Costs associated with issuance of debt

(2,126)

(6,731)

Acquisition of non-controlling interest

(6,000)

Payment of preferred dividends

(1,014)

Conversion payment of preferred stock

(5,000)

Proceeds from employee stock purchases and exercise of stock options

577

2,367

Other financing activities

(154)

790

Net cash (used in) provided by financing activities

(54,440)

64,866

Effect of change in foreign currency exchange rates on cash and cash equivalents

189

(608)

Net (decrease) increase in cash and cash equivalents

(18,209)

27,614

Cash and cash equivalents at beginning of period

148,056

60,971

Cash and cash equivalents at end of period

$

129,847

$

88,585

 

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

SUMMARY OF SEGMENT INFORMATION

(In thousands)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

Net revenues:

Solutions:

New Venture

$

18,446

$

11,945

$

76,499

$

93,630

Data Library

3,262

5,184

30,104

36,153

Total multi-client revenues

21,708

17,129

106,603

129,783

Data Processing

24,151

26,318

91,131

91,453

Total

$

45,859

$

43,447

$

197,734

$

221,236

Systems:

Towed Streamer

$

13,666

$

15,342

$

35,782

$

41,461

Ocean Bottom Equipment

159

7,307

Other

11,029

10,766

36,166

33,194

Total

$

24,695

$

26,267

$

71,948

$

81,962

Software:

Software Systems

$

9,922

$

8,892

$

28,384

$

24,297

Services

1,088

1,232

3,198

2,995

Total

$

11,010

$

10,124

$

31,582

$

27,292

Ocean Bottom Services

$

24,976

$

$

71,454

$

Total

$

106,540

$

79,838

$

372,718

$

330,490

 

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

As Reported

As Adjusted(1)

As Reported

As Adjusted(1)

Gross profit (loss):

Solutions

$

5,927

$

(8,487)

$

(3,026)

$

51,207

$

33,600

$

39,061

Systems

10,123

(13,987)

11,093

31,288

3,195

28,275

Software

8,326

7,370

7,370

23,388

19,676

19,676

Ocean Bottom Services

4,847

18,422

Total

$

29,223

$

(15,104)

$

15,437

$

124,305

$

56,471

$

87,012

Gross margin:

Solutions

13

%

(20)

%

(7)

%

26

%

15

%

18

%

Systems

41

%

(53)

%

42

%

43

%

4

%

34

%

Software

76

%

73

%

73

%

74

%

72

%

72

%

Ocean Bottom Services

19

%

%

%

26

%

%

%

Total

27

%

(19)

%

19

%

33

%

17

%

26

%

Income (loss) from operations:

Solutions

$

(5,960)

$

(18,163)

$

(12,702)

$

11,733

$

215

$

5,676

Systems

2,917

(23,610)

3,686

9,835

(21,172)

6,124

Software

6,227

6,280

6,280

16,985

16,396

16,396

Ocean Bottom Services

1,677

12,333

Corporate and other

(10,210)

(21,035)

(11,878)

(32,779)

(43,274)

(34,117)

Total

$

(5,349)

$

(56,528)

$

(14,614)

$

18,107

$

(47,835)

$

(5,921)

Operating margin:

Solutions

(13)

%

(42)

%

(29)

%

6

%

%

3

%

Systems

12

%

(90)

%

14

%

14

%

(26)

%

7

%

Software

56

%

62

%

62

%

54

%

60

%

60

%

Ocean Bottom Services

7

%

%

%

17

%

%

%

Corporate and other

(10)

%

(26)

%

(15)

%

(9)

%

(13)

%

(10)

%

Total

(5)

%

(71)

%

(18)

%

5

%

(14)

%

(2)

%

(1)      

The “As Adjusted” columns remove the impact of the restructuring and other special items as presented and described in further detail by the Company in its Third Quarter 2013 earnings release on November 6, 2013.

 

INOVA GEOPHYSICAL EQUIPMENT LIMITED

SUMMARIZED FINANCIAL HIGHLIGHTS

(In thousands)

(Unaudited)

The Company accounts for its 49% interest in INOVA Geophysical as an equity method investment and records its share of earnings and losses of INOVA Geophysical on a one fiscal quarter lag basis. The following table reflects the summarized financial information for INOVA Geophysical for the three months ended June 30, 2014 and 2013 and the nine-month periods from October 1 to June 30, 2014 and 2013:

Three Months Ended June 30,

Nine-Month Periods from October 1
through June 30,

2014

2013

2014

2013

Net revenues

$

11,092

$

61,241

$

77,774

$

142,947

Gross profit (loss)

$

(2,164)

$

12,243

$

8,020

$

26,378

Income (loss) from operations

$

(9,851)

$

1,658

$

(16,094)

$

(7,103)

Net loss

$

(11,425)

$

(488)

$

(20,010)

$

(6,518)

 

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(Non-GAAP Measure)

(In thousands)

(Unaudited)

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

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

Net income (loss)

$

(24,922)

$

(197,256)

$

54,010

$

(266,194)

Interest expense, net

5,048

4,281

14,779

8,103

Income tax expense

8,345

56,954

14,261

19,450

Depreciation and amortization expense

18,961

19,057

67,003

64,038

Equity in losses of investments

5,558

5,192

9,027

10,414

Accrual for (reduction of) loss contingency related to legal proceedings

71,776

(69,557)

181,776

Write-down of multi-client data library

5,461

5,461

Write-down of receivables from OceanGeo

9,157

9,157

Write-down of excess and obsolete inventory

21,197

21,197

Adjusted EBITDA

$

12,990

$

(4,181)

$

89,523

$

53,402

 

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIES

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

(Non-GAAP Measure)

(In thousands, except per share data)

(Unaudited)

The financial results are reported in accordance with GAAP. However, management believes that certain non-GAAP performance measures may provide users of this financial information, additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure is income (loss) from operations or net income (loss) excluding certain charges or amounts. This adjusted income (loss) amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for income (loss) from operations, net income (loss) or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and the corresponding reconciliation to GAAP financials for the nine months ended September 30, 2014, and three and nine months ended September 30, 2013:

Nine Months Ended September 30, 2014

As Reported

Special Items(1)

As Adjusted

Net revenues

$

372,718

$

$

372,718

Cost of sales

248,413

248,413

Gross profit

124,305

124,305

Operating expenses

106,198

106,198

Income from operations

18,107

18,107

Interest expense, net

(14,779)

(14,779)

Equity in losses of investments

(9,027)

(9,027)

Other income (expense), net

73,970

(76,079)

(2,109)

Income tax expense

14,261

(357)

13,904

Net income (loss)

54,010

(75,722)

(21,712)

Net (income) attributable to noncontrolling interests

(1,384)

(1,384)

Net income (loss) applicable to common shares

$

52,626

$

(75,722)

$

(23,096)

Net income (loss) per share:

Basic

$

0.32

$

(0.14)

Diluted

$

0.32

$

(0.14)

Weighted average number of common shares outstanding:

Basic

164,021

164,021

Diluted

164,326

164,021

 

Three Months Ended September 30, 2013

Nine Months Ended September 30, 2013

As Reported

Special Items(2)

As Adjusted

As Reported

Special Items(2)

As Adjusted

Net revenues

$

79,838

$

$

79,838

$

330,490

$

$

330,490

Cost of sales

94,942

(30,541)

64,401

274,019

(30,541)

243,478

Gross profit (loss)

(15,104)

30,541

15,437

56,471

30,541

87,012

Operating expenses

41,424

(11,373)

30,051

104,306

(11,373)

92,933

Income (loss) from operations

(56,528)

41,914

(14,614)

(47,835)

41,914

(5,921)

Interest expense, net

(4,281)

(4,281)

(8,103)

(8,103)

Equity in losses of investments

(5,192)

(5,192)

(10,414)

(10,414)

Other income (expense), net

(74,301)

72,940

(1,361)

(180,392)

182,940

2,548

Income tax expense (benefit)

56,954

(62,106)

(5,152)

19,450

(23,606)

(4,156)

Net income (loss)

(197,256)

176,960

(20,296)

(266,194)

248,460

(17,734)

Net (income) attributable to noncontrolling interests

498

498

515

515

Net income (loss) attributable to ION

(196,758)

176,960

(19,798)

(265,679)

248,460

(17,219)

Preferred stock dividends

5,338

(5,000)

338

6,014

(5,000)

1,014

Net income (loss) applicable to common shares

$

(202,096)

$

181,960

$

(20,136)

$

(271,693)

$

253,460

$

(18,233)

Net income (loss) per share:

Basic

$

(1.29)

$

(0.13)

$

(1.73)

$

(0.12)

Diluted

$

(1.29)

$

(0.13)

$

(1.73)

$

(0.12)

Weighted average number of common shares outstanding:

Basic

157,143

157,143

156,842

156,842

Diluted

157,143

157,143

156,842

156,842

(1)

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

(2)

The three and nine months ended September 30, 2013 were impacted by restructuring and other special items as presented and described in further detail by the Company in its Third Quarter 2013 earnings release on November 6, 2013.

 

SOURCE ION Geophysical Corporation