HOUSTON, Feb. 11, 2015 /PRNewswire/ -- ION Geophysical
Corporation (NYSE: IO) today reported a fourth quarter 2014 net
loss of $180.9 million, or
$(1.10) per share, which included
restructuring and special items totaling $170 million that reduced reported earnings per
share by $(1.03). Excluding
these restructuring and special items, ION's fourth quarter 2014
net loss was $11.0 million on
revenues of $136.8 million, or
$(0.07) per share, compared to an
adjusted net income of $53.4 million
on revenues of $218.7 million, or
$0.33 per diluted share, in fourth
quarter 2013.
During the quarter, the Company recorded $170 million of restructuring charges and special
items as detailed below, with $2
million requiring a use of cash:
- $109 million of charges impacted
cost of sales, of which $101 million
was primarily related to a write-down of the multi-client data
library within the Solutions segment and $8
million related to inventory write-downs and
severance-related charges within the Systems segment;
- $33 million of charges impacted
operating expenses, of which $25
million was primarily related to the impairment of goodwill
within the Systems segment, $2
million was associated with the write-down of intangible
assets within the Solutions segment, and $6
million was primarily attributable to the write-down of
receivables due from INOVA Geophysical within the Corporate and
Other segment;
- $34 million of charges impacted
equity earnings, primarily due to the full write-down of the
Company's equity method investment in INOVA Geophysical; and
- $6 million of gains impacted
other income, income tax expense and non-controlling interests,
primarily related to the Company's sale of a cost method
investment.
A reconciliation of the restructuring and special items can be
found in the tables at the end of this press release.
At December 31, 2014, the
Company's cash and cash equivalents were $173.6 million. The Company generated net
cash flows before financing activities of $81.0 million during 2014, compared to a use of
cash before financing activities of $11.4
million in 2013. Full year 2014 Adjusted EBITDA was
$108.3 million, compared to
$154.3 million in 2013. A
reconciliation of Adjusted EBITDA can be found in the tables of
this press release.
Brian Hanson, the Company's
President and Chief Executive Officer, commented, "Our fourth
quarter and full year results were significantly impacted by the
continued slowdown in exploration spending by E&P
companies. The slowdown has been greater than we originally
expected, but our decision over a year ago to conservatively manage
our business has been evident through our ability to generate
positive cash flows throughout 2014. While managing for cash,
we have narrowed our focus and continue to strategically invest in
high potential technologies.
"During the fourth quarter we initiated a restructuring plan to
rightsize our segments, with the exception of our Ocean Bottom
Services segment, reducing our workforce by approximately
10%. This reduction should result in an annual cash savings
of approximately $15 million.
This restructuring is a significant move to better integrate and
align our entire workforce with our strategy of providing solutions
directly to E&P companies.
"In light of the expected prolonged slowdown, we recorded
several charges that impacted our fourth quarter results.
These charges included a write-down of data library investments
associated with our Arctic and onshore North America programs, and a full impairment
of goodwill associated with our marine equipment operations.
Also, we wrote down our investment in INOVA Geophysical and are
evaluating strategic options related to our ongoing participation
in the joint venture.
"We are pleased with our continued penetration into the ocean
bottom services market through OceanGeo. Our investment in
and success with OceanGeo and ocean bottom services has positioned
us to participate in the less volatile production phase of seismic
activity. During the fourth quarter, OceanGeo completed
acquisition of a survey offshore West
Africa and was awarded and completed another survey in an
adjacent area with a new customer. During 2014, as we
increased our ownership in OceanGeo to 100%, we upgraded our
vessels for more efficient operations. OceanGeo is ready to
take advantage of continued demand for ocean bottom seismic,
especially in West Africa, where
demand is especially high.
"Looking ahead, we expect 2015 exploration budgets across the
E&P industry to be down an estimated 25% to 35% compared to
2014. Consistent with 2014, we will continue to maximize cash and
to exercise spending discipline across all of our businesses,
funding new programs once we have obtained adequate levels of
industry underwriting and continuing to invest in key strategic
technologies and market opportunities."
FOURTH QUARTER
2014
|
|
|
|
The Company's segment
revenues for the fourth quarter were as follows (in
thousands):
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
Solutions
|
|
$
|
80,170
|
|
|
$
|
166,148
|
|
|
(52)%
|
|
Systems
|
|
16,469
|
|
|
40,470
|
|
|
(59)%
|
|
Software
|
|
8,411
|
|
|
12,059
|
|
|
(30)%
|
|
Ocean Bottom
Services
|
|
31,790
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
136,840
|
|
|
$
|
218,677
|
|
|
(37)%
|
|
Within the Solutions segment, new venture revenues were
$22.2 million, a 64% decrease from
fourth quarter 2013; data library revenues were $36.1 million, a 52% decrease; and data
processing revenues were $21.9
million, a 25% decrease. All businesses within the
Solutions segment were impacted by the continued softness of
exploration spending. Data library revenues were also
impacted by the record sales in fourth quarter 2013 that were not
repeated in 2014.
The decrease in Systems segment revenues was primarily due to a
reduction in sales of new marine positioning system and land
geophone strings compared to fourth quarter 2013.
Software segment revenues were down compared to record fourth
quarter revenues in 2013, primarily due to lower Orca®
licensing revenues. While Software segment revenues were down
year over year, the segment generated overall gross and operating
margins, as adjusted, of 66% and 41%, respectively, during the
quarter.
Ocean Bottom Services segment revenues were $31.8 million, related to work performed on
OceanGeo's projects offshore West
Africa, which were completed during the fourth quarter.
Excluding the impact of restructuring and special items,
consolidated gross margins were 34%, compared to 47% in fourth
quarter 2013, and operating margins were 4%, compared to 30% in the
earlier period. The decrease in gross and operating margins
was driven primarily by the decrease in revenues within the
Solutions and Systems segments, which more than offset the uplift
in margins provided by the Ocean Bottom Services segment.
The Company recognized $40.5
million of equity losses, which included the full write-down
of its investment in INOVA Geophysical, compared to equity losses
of $19.4 million in fourth quarter
2013. INOVA Geophysical experienced a 70% decline in revenues
year over year, a result of a soft land seismic equipment market
and reduced purchases by BGP, the majority partner in the joint
venture. See the attached financial tables for the summarized
financial results of INOVA.
The Company's fourth quarter 2013 results included equity losses
of $12.4 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 $6.3
million for fourth quarter 2014, 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.
FULL YEAR
2014
|
|
The Company's segment
revenues for the full year were as follows (in
thousands):
|
|
|
|
Years Ended December
31,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
Solutions
|
|
$
|
277,904
|
|
|
$
|
387,384
|
|
|
(28)%
|
|
Systems
|
|
88,417
|
|
|
122,432
|
|
|
(28)%
|
|
Software
|
|
39,993
|
|
|
39,351
|
|
|
2%
|
|
Ocean Bottom
Services
|
|
103,244
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
509,558
|
|
|
$
|
549,167
|
|
|
(7)%
|
|
Within the Solutions segment, new venture revenues were
$98.6 million, down 36% year over
year; data library revenues were $66.2
million, down 41%; and data processing revenues were
$113.1 million, down 6%. All
businesses within the Solutions segment were impacted by the
continued softness of exploration spending throughout 2014.
The decline in data processing was partially offset by $15.0 million of revenues recognized in 2014 that
related to work performed for a customer in 2013.
The decrease in Systems segment revenues was primarily due to
(i) lower sales of new marine positioning systems; (ii) a lack of
ocean bottom cable systems sales in 2014 compared to 2013; (iii)
reduced land geophone string sales; partially offset by (iv)
additional marine repair and replacement revenues.
Software segment revenues were up slightly compared to
2013. The Software segment experienced record revenues in the
first half of 2014, which were mostly offset by a reduction in
revenues in the fourth quarter. The Software segment
generated gross and operating margins, as adjusted, of 72% and 51%,
respectively, during 2014.
Ocean Bottom Services segment revenues were $103.2 million, related to work performed on
OceanGeo's project in Trinidad,
completed in May, and from its projects offshore West Africa that were completed in the fourth
quarter.
Excluding the impact of restructuring and special items,
consolidated gross margins were 34%, compared to 35% in 2013, and
operating margins were 5%, compared to 11% in 2013. The
decreases in gross and operating margins were primarily due to the
decrease in revenues within the Solutions segment, which more than
offset the uplift in margins provided by the Ocean Bottom Services
segment.
The Company recognized $50.2
million of equity losses related to INOVA Geophysical, which
included the full write-down of the remaining balance of its
investment, compared to equity losses of $22.5 million in 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 $19.8
million in 2013.
Income tax expense was $20.6
million for 2014, related to income from the Company's
non-U.S. businesses, including OceanGeo.
The Company reported a net loss of $128.3
million, or $(0.78) per share,
compared to a net loss of $251.9
million, or $(1.59) per share,
in 2013. Both periods included special items related to the
WesternGeco legal matter and certain restructuring and other
special items. Excluding these special items, in 2014, the
Company reported a net loss of $34.1
million, or $(0.21) per share,
compared to net income of $19.3
million, or $0.12 per diluted
share, in 2013.
CONFERENCE CALL
The Company has scheduled a conference call for Thursday, February 12, 2015, at 10:00 a.m. Eastern Time that will include a slide
presentation to be posted in the Investor Relations section of the
ION website by 9:00 a.m. Eastern
Time. To participate in the conference call, dial
(877) 407-0672 at least 10 minutes before the call begins and ask
for the ION conference call. A replay of the call will be
available approximately two hours after the live broadcast ends and
will be accessible until February 26,
2015. To access the replay, dial (877) 660-6853 and use pass
code 13598876#.
Investors, analysts and the general public will also have the
opportunity to listen to the conference call live over the Internet
by visiting www.iongeo.com. An archive of the webcast will be
available shortly after the call on the Company's website.
About ION
ION is a leading provider of technology-driven solutions to the
global oil & gas industry. ION's offerings are designed
to help companies reduce risk and optimize assets throughout the
E&P lifecycle. For more information, visit www.iongeo.com.
Contact
Steve Bate
Executive Vice President and Chief Financial Officer
+1.281.552.3011
The information included herein contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These forward-looking statements may include
future sales, earnings and market growth, timing of sales, future
liquidity and cash levels, future estimated revenues and earnings,
sales expected to result from backlog, benefits expected to result
from OceanGeo 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
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Service
revenues
|
$
|
112,552
|
|
|
$
|
167,086
|
|
|
$
|
384,938
|
|
|
$
|
391,317
|
Product
revenues
|
24,288
|
|
|
51,591
|
|
|
124,620
|
|
|
157,850
|
Total net
revenues
|
136,840
|
|
|
218,677
|
|
|
509,558
|
|
|
549,167
|
Cost of
services
|
77,930
|
|
|
89,014
|
|
|
278,627
|
|
|
272,047
|
Cost of
products
|
20,892
|
|
|
26,821
|
|
|
68,608
|
|
|
112,346
|
Impairment of
multi-client data library
|
100,100
|
|
|
—
|
|
|
100,100
|
|
|
5,461
|
Gross profit
(loss)
|
(62,082)
|
|
|
102,842
|
|
|
62,223
|
|
|
159,313
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Research, development
and engineering
|
10,755
|
|
|
9,077
|
|
|
41,009
|
|
|
37,742
|
Marketing and
sales
|
12,072
|
|
|
13,219
|
|
|
39,682
|
|
|
38,583
|
General,
administrative and other operating expenses
|
27,843
|
|
|
16,315
|
|
|
76,177
|
|
|
66,592
|
Impairment of
goodwill and intangible assets
|
23,284
|
|
|
—
|
|
|
23,284
|
|
|
—
|
Total operating
expenses
|
73,954
|
|
|
38,611
|
|
|
180,152
|
|
|
142,917
|
Income (loss) from
operations
|
(136,036)
|
|
|
64,231
|
|
|
(117,929)
|
|
|
16,396
|
Interest expense,
net
|
(4,603)
|
|
|
(4,241)
|
|
|
(19,382)
|
|
|
(12,344)
|
Equity in losses of
investments
|
(40,458)
|
|
|
(31,906)
|
|
|
(49,485)
|
|
|
(42,320)
|
Other income
(expense)
|
5,890
|
|
|
(2,138)
|
|
|
79,860
|
|
|
(182,530)
|
Income (loss) before
income taxes
|
(175,207)
|
|
|
25,946
|
|
|
(106,936)
|
|
|
(220,798)
|
Income tax
expense
|
6,321
|
|
|
6,270
|
|
|
20,582
|
|
|
25,720
|
Net income
(loss)
|
(181,528)
|
|
|
19,676
|
|
|
(127,518)
|
|
|
(246,518)
|
Net (income) loss
attributable to noncontrolling interests
|
650
|
|
|
143
|
|
|
(734)
|
|
|
658
|
Net income (loss)
attributable to ION
|
(180,878)
|
|
|
19,819
|
|
|
(128,252)
|
|
|
(245,860)
|
Preferred stock
dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
1,014
|
Conversion payment of
preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000
|
Net income (loss)
applicable to common shares
|
$
|
(180,878)
|
|
|
$
|
19,819
|
|
|
$
|
(128,252)
|
|
|
$
|
(251,874)
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.10)
|
|
|
$
|
0.12
|
|
|
$
|
(0.78)
|
|
|
$
|
(1.59)
|
Diluted
|
$
|
(1.10)
|
|
|
$
|
0.12
|
|
|
$
|
(0.78)
|
|
|
$
|
(1.59)
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
164,290
|
|
|
163,445
|
|
|
164,089
|
|
|
158,506
|
Diluted
|
164,290
|
|
|
163,772
|
|
|
164,089
|
|
|
158,506
|
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
173,608
|
|
|
$
|
148,056
|
|
Accounts receivable,
net
|
114,325
|
|
|
149,448
|
|
Unbilled
receivables
|
22,599
|
|
|
49,468
|
|
Inventories
|
51,162
|
|
|
57,173
|
|
Prepaid expenses and
other current assets
|
13,662
|
|
|
24,772
|
|
Total current
assets
|
375,356
|
|
|
428,917
|
|
Deferred income tax
asset
|
8,604
|
|
|
14,650
|
|
Property, plant,
equipment and seismic rental equipment, net
|
69,840
|
|
|
46,684
|
|
Multi-client data
library, net
|
118,669
|
|
|
238,784
|
|
Equity method
investments
|
—
|
|
|
53,865
|
|
Goodwill
|
27,388
|
|
|
55,876
|
|
Intangible assets,
net
|
6,788
|
|
|
11,247
|
|
Other
assets
|
10,612
|
|
|
14,648
|
|
Total
assets
|
$
|
617,257
|
|
|
$
|
864,671
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current maturities of
long-term debt
|
$
|
7,649
|
|
|
$
|
5,906
|
|
Accounts
payable
|
36,863
|
|
|
22,654
|
|
Accrued
expenses
|
65,264
|
|
|
84,358
|
|
Accrued multi-client
data library royalties
|
35,219
|
|
|
46,460
|
|
Deferred
revenue
|
8,262
|
|
|
20,682
|
|
Total current
liabilities
|
153,257
|
|
|
180,060
|
|
Long-term debt, net
of current maturities
|
182,945
|
|
|
214,246
|
|
Other long-term
liabilities
|
143,804
|
|
|
210,602
|
|
Total
liabilities
|
480,006
|
|
|
604,908
|
|
Redeemable
noncontrolling interest
|
1,539
|
|
|
1,878
|
|
Equity:
|
|
|
|
|
|
Common
stock
|
1,645
|
|
|
1,637
|
|
Additional paid-in
capital
|
887,749
|
|
|
879,969
|
|
Accumulated
deficit
|
(734,409)
|
|
|
(606,157)
|
|
Accumulated other
comprehensive loss
|
(12,807)
|
|
|
(11,138)
|
|
Treasury
stock
|
(6,565)
|
|
|
(6,565)
|
|
Total stockholders'
equity
|
135,613
|
|
|
257,746
|
|
Noncontrolling
interests
|
99
|
|
|
139
|
|
Total
equity
|
135,712
|
|
|
257,885
|
|
Total liabilities and
equity
|
$
|
617,257
|
|
|
$
|
864,671
|
|
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
Years Ended
December 31,
|
|
2014
|
|
|
2013
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
(loss)
|
$
|
(127,518)
|
|
|
$
|
(246,518)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization (other than multi-client library)
|
27,656
|
|
|
18,158
|
|
Amortization of
multi-client data library
|
64,374
|
|
|
86,716
|
|
Stock-based
compensation expense
|
8,707
|
|
|
7,476
|
|
Equity in losses of
investments
|
49,485
|
|
|
42,320
|
|
Gain on sale of
Source product line
|
(6,522)
|
|
|
—
|
|
Gain on sale of cost
method investments
|
(5,463)
|
|
|
(3,591)
|
|
Accrual for
(reduction of) loss contingency related to legal
proceedings
|
(69,557)
|
|
|
183,327
|
|
Impairment of
goodwill and intangible assets
|
23,284
|
|
|
—
|
|
Impairment of
multi-client data library
|
100,100
|
|
|
5,461
|
|
Write-down of excess
and obsolete inventory
|
6,952
|
|
|
21,197
|
|
Write-down of
receivables from INOVA Geophysical
|
5,510
|
|
|
—
|
|
Write-down of
receivables from OceanGeo
|
—
|
|
|
9,157
|
|
Deferred income
taxes
|
(437)
|
|
|
4,844
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
41,943
|
|
|
(27,571)
|
|
Unbilled
receivables
|
26,762
|
|
|
40,211
|
|
Inventories
|
(13,892)
|
|
|
(8,906)
|
|
Accounts payable,
accrued expenses and accrued royalties
|
(4,771)
|
|
|
8,482
|
|
Deferred
revenue
|
(8,382)
|
|
|
(6,253)
|
|
Other assets and
liabilities
|
11,549
|
|
|
13,077
|
|
Net cash provided by
operating activities
|
129,780
|
|
|
147,587
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Investment in
multi-client data library
|
(67,785)
|
|
|
(114,582)
|
|
Purchase of property,
plant, equipment and seismic rental equipment
|
(8,264)
|
|
|
(16,914)
|
|
Repayment of (net
advances to) INOVA Geophysical
|
1,000
|
|
|
(5,000)
|
|
Net investment in and
advances to OceanGeo B.V. prior to its consolidation
|
(3,074)
|
|
|
(24,755)
|
|
Net proceeds from
sale of Source product line
|
14,394
|
|
|
—
|
|
Proceeds from sale of
cost method investments
|
14,051
|
|
|
4,150
|
|
Investment in
convertible notes
|
—
|
|
|
(2,000)
|
|
Other investing
activities
|
928
|
|
|
128
|
|
Net cash used in
investing activities
|
(48,750)
|
|
|
(158,973)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of notes
|
—
|
|
|
175,000
|
|
Payments under
revolving line of credit
|
(50,000)
|
|
|
(97,250)
|
|
Borrowings under
revolving line of credit
|
15,000
|
|
|
35,000
|
|
Payments on notes
payable and long-term debt
|
(12,998)
|
|
|
(4,361)
|
|
Cost associated with
issuance of debt
|
(2,194)
|
|
|
(6,773)
|
|
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
|
|
|
2,527
|
|
Other financing
activities
|
(359)
|
|
|
573
|
|
Net cash provided by
(used in) financing activities
|
(55,974)
|
|
|
98,702
|
|
Effect of change in
foreign currency exchange rates on cash and cash
equivalents
|
496
|
|
|
(231)
|
|
Net increase in cash
and cash equivalents
|
25,552
|
|
|
87,085
|
|
Cash and cash
equivalents at beginning of period
|
148,056
|
|
|
60,971
|
|
Cash and cash
equivalents at end of period
|
$
|
173,608
|
|
|
$
|
148,056
|
|
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
|
SUMMARY OF SEGMENT
INFORMATION
|
|
(In
thousands)
|
|
(Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Solutions:
|
|
|
|
|
|
|
|
|
|
|
New
Venture
|
$
|
22,150
|
|
|
$
|
60,948
|
|
|
$
|
98,649
|
|
|
$
|
154,578
|
Data
Library
|
36,076
|
|
|
75,845
|
|
|
66,180
|
|
|
111,998
|
Total multi-client
revenues
|
58,226
|
|
|
136,793
|
|
|
164,829
|
|
|
266,576
|
Data
Processing
|
21,944
|
|
|
29,355
|
|
|
113,075
|
|
|
120,808
|
Total
|
$
|
80,170
|
|
|
$
|
166,148
|
|
|
$
|
277,904
|
|
|
$
|
387,384
|
Systems:
|
|
|
|
|
|
|
|
|
|
|
Towed
Streamer
|
$
|
8,213
|
|
|
$
|
25,530
|
|
|
$
|
43,995
|
|
|
$
|
66,991
|
Ocean bottom
equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
7,307
|
Other
|
8,256
|
|
|
14,940
|
|
|
44,422
|
|
|
48,134
|
Total
|
$
|
16,469
|
|
|
$
|
40,470
|
|
|
$
|
88,417
|
|
|
$
|
122,432
|
Software:
|
|
|
|
|
|
|
|
|
|
|
Software
Systems
|
$
|
7,819
|
|
|
$
|
11,121
|
|
|
$
|
36,203
|
|
|
$
|
35,418
|
Services
|
592
|
|
|
938
|
|
|
3,790
|
|
|
3,933
|
Total
|
$
|
8,411
|
|
|
$
|
12,059
|
|
|
$
|
39,993
|
|
|
$
|
39,351
|
Ocean Bottom
Services
|
$
|
31,790
|
|
|
$
|
—
|
|
|
$
|
103,244
|
|
|
$
|
—
|
Total
|
$
|
136,840
|
|
|
$
|
218,677
|
|
|
$
|
509,558
|
|
|
$
|
549,167
|
|
Three Months Ended
December 31, 2014
|
|
Three Months Ended
December 31, 2013
|
|
As
Reported
|
|
Special
Items(1)
|
|
As
Adjusted
|
|
As
Reported
|
|
Special
Items(1)
|
|
As
Adjusted
|
Gross profit
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
$
|
(75,552)
|
|
|
$
|
100,825
|
|
|
$
|
25,273
|
|
|
$
|
77,508
|
|
|
$
|
—
|
|
|
$
|
77,508
|
|
Systems
|
(1,459)
|
|
|
7,580
|
|
|
6,121
|
|
|
16,804
|
|
|
608
|
|
|
17,412
|
|
Software
|
5,447
|
|
|
137
|
|
|
5,584
|
|
|
8,530
|
|
|
—
|
|
|
8,530
|
|
Ocean Bottom
Services
|
9,482
|
|
|
—
|
|
|
9,482
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
(62,082)
|
|
|
$
|
108,542
|
|
|
$
|
46,460
|
|
|
$
|
102,842
|
|
|
$
|
608
|
|
|
$
|
103,450
|
|
Gross
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
(94)%
|
|
|
126
|
%
|
|
32
|
%
|
|
47
|
%
|
|
—
|
%
|
|
47
|
%
|
Systems
|
(9)%
|
|
|
46
|
%
|
|
37
|
%
|
|
42
|
%
|
|
1
|
%
|
|
43
|
%
|
Software
|
65
|
%
|
|
1
|
%
|
|
66
|
%
|
|
71
|
%
|
|
—
|
%
|
|
71
|
%
|
Ocean Bottom
Services
|
30
|
%
|
|
—
|
%
|
|
30
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(45)%
|
|
|
79
|
%
|
|
34
|
%
|
|
47
|
%
|
|
—
|
%
|
|
47
|
%
|
Income (loss) from
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
$
|
(92,386)
|
|
|
$
|
102,740
|
|
|
$
|
10,354
|
|
|
$
|
60,931
|
|
|
$
|
—
|
|
|
$
|
60,931
|
|
Systems
|
(33,356)
|
|
|
32,492
|
|
|
(864)
|
|
|
11,215
|
|
|
754
|
|
|
11,969
|
|
Software
|
3,227
|
|
|
223
|
|
|
3,450
|
|
|
7,206
|
|
|
—
|
|
|
7,206
|
|
Ocean Bottom
Services
|
6,737
|
|
|
—
|
|
|
6,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Corporate and
other
|
(20,258)
|
|
|
6,487
|
|
|
(13,771)
|
|
|
(15,121)
|
|
|
—
|
|
|
(15,121)
|
|
Total
|
$
|
(136,036)
|
|
|
$
|
141,942
|
|
|
$
|
5,906
|
|
|
$
|
64,231
|
|
|
$
|
754
|
|
|
$
|
64,985
|
|
Operating
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
(115)%
|
|
|
128
|
%
|
|
13
|
%
|
|
37
|
%
|
|
—
|
%
|
|
37
|
%
|
Systems
|
(203)%
|
|
|
198
|
%
|
|
(5)%
|
|
|
28
|
%
|
|
2
|
%
|
|
30
|
%
|
Software
|
38
|
%
|
|
3
|
%
|
|
41
|
%
|
|
60
|
%
|
|
—
|
%
|
|
60
|
%
|
Ocean Bottom
Services
|
21
|
%
|
|
—
|
%
|
|
21
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Corporate and
other
|
(15)%
|
|
|
5
|
%
|
|
(10)%
|
|
|
(7)%
|
|
|
—
|
%
|
|
(7)%
|
|
Total
|
(99)%
|
|
|
103
|
%
|
|
4
|
%
|
|
29
|
%
|
|
1
|
%
|
|
30
|
%
|
|
Twelve Months
Ended December 31, 2014
|
|
Twelve Months
Ended December 31, 2013
|
|
As
Reported
|
|
Special
Items(1)
|
|
As
Adjusted
|
|
As
Reported
|
|
Special
Items(1)
|
|
As
Adjusted
|
Gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
$
|
(24,345)
|
|
|
$
|
100,825
|
|
|
$
|
76,480
|
|
|
$
|
111,108
|
|
|
$
|
5,461
|
|
|
$
|
116,569
|
|
Systems
|
29,829
|
|
|
7,580
|
|
|
37,409
|
|
|
19,999
|
|
|
25,688
|
|
|
45,687
|
|
Software
|
28,835
|
|
|
137
|
|
|
28,972
|
|
|
28,206
|
|
|
—
|
|
|
28,206
|
|
Ocean Bottom
Services
|
27,904
|
|
|
—
|
|
|
27,904
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
62,223
|
|
|
$
|
108,542
|
|
|
$
|
170,765
|
|
|
$
|
159,313
|
|
|
$
|
31,149
|
|
|
$
|
190,462
|
|
Gross
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
(9)%
|
|
|
37
|
%
|
|
28
|
%
|
|
29
|
%
|
|
1
|
%
|
|
30
|
%
|
Systems
|
34
|
%
|
|
8
|
%
|
|
42
|
%
|
|
16
|
%
|
|
21
|
%
|
|
37
|
%
|
Software
|
72
|
%
|
|
—
|
%
|
|
72
|
%
|
|
72
|
%
|
|
—
|
%
|
|
72
|
%
|
Ocean Bottom
Services
|
27
|
%
|
|
—
|
%
|
|
27
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
12
|
%
|
|
22
|
%
|
|
34
|
%
|
|
29
|
%
|
|
6
|
%
|
|
35
|
%
|
Income (loss) from
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
$
|
(80,653)
|
|
|
$
|
102,740
|
|
|
$
|
22,087
|
|
|
$
|
61,146
|
|
|
$
|
5,461
|
|
|
$
|
66,607
|
|
Systems
|
(23,521)
|
|
|
32,492
|
|
|
8,971
|
|
|
(9,957)
|
|
|
28,050
|
|
|
18,093
|
|
Software
|
20,212
|
|
|
223
|
|
|
20,435
|
|
|
23,602
|
|
|
—
|
|
|
23,602
|
|
Ocean Bottom
Services
|
19,070
|
|
|
—
|
|
|
19,070
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Corporate and
other
|
(53,037)
|
|
|
6,487
|
|
|
(46,550)
|
|
|
(58,395)
|
|
|
9,157
|
|
|
(49,238)
|
|
Total
|
$
|
(117,929)
|
|
|
$
|
141,942
|
|
|
$
|
24,013
|
|
|
$
|
16,396
|
|
|
$
|
42,668
|
|
|
$
|
59,064
|
|
Operating
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions
|
(29)%
|
|
|
37
|
%
|
|
8
|
%
|
|
16
|
%
|
|
1
|
%
|
|
17
|
%
|
Systems
|
(27)%
|
|
|
37
|
%
|
|
10
|
%
|
|
(8)%
|
|
|
23
|
%
|
|
15
|
%
|
Software
|
51
|
%
|
|
—
|
%
|
|
51
|
%
|
|
60
|
%
|
|
—
|
%
|
|
60
|
%
|
Ocean Bottom
Services
|
18
|
%
|
|
—
|
%
|
|
18
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Corporate and
other
|
(10)%
|
|
|
1
|
%
|
|
(9)%
|
|
|
(11)%
|
|
|
2
|
%
|
|
(9)%
|
|
Total
|
(23)%
|
|
|
28
|
%
|
|
5
|
%
|
|
3
|
%
|
|
8
|
%
|
|
11
|
%
|
|
|
|
|
|
(1)
|
See the tables titled
'Reconciliation of Restructuring and Special Items to Diluted
Earnings per Share' for descriptions of these restructuring and
special items for three and twelve months ended December 31, 2014
and 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
September 30, 2014 and 2013 and the twelve-month periods from
October 1 to September 30, 2014
and 2013:
|
|
|
Three Months Ended
September 30,
|
|
Period from
October 1
through September
30,
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
Net
revenues
|
$
|
12,201
|
|
|
$
|
40,672
|
|
|
$
|
89,975
|
|
|
$
|
183,619
|
|
|
Gross profit
(loss)
|
$
|
(7,773)
|
(1)
|
|
$
|
(28,366)
|
(2)
|
|
$
|
247
|
(1)
|
|
$
|
(1,988)
|
(2)
|
|
Income (loss) from
operations
|
$
|
(18,446)
|
(1)
|
|
$
|
(37,360)
|
|
|
$
|
(34,540)
|
(1)
|
|
$
|
(44,463)
|
|
|
Net income
(loss)
|
$
|
(20,077)
|
|
|
$
|
(38,972)
|
(2)
|
|
$
|
(40,087)
|
|
|
$
|
(46,149)
|
(2)
|
|
|
|
|
|
|
(1)
|
Impacting INOVA's
gross profit (loss) for the three months ended September 30, 2014,
is $3.8 million of a write-down of excess and obsolete
inventory. In addition to the special item impacting gross
profit (loss), income (loss) from operations was also impacted by
$3.4 million of charges related to customer bad debts.
|
|
|
(2)
|
Impacting INOVA's
gross profit (loss) for the three months ended September 30, 2013,
is $36.5 million of restructuring and special items associated with
the impairment of intangible assets, write-down of excess and
obsolete inventory and rental equipment, and severance-related
charges. In addition to the restructuring and special items
impacting gross profit (loss), net income (loss) was also impacted
by $1.8 million of other restructuring and special
items.
|
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, gains on sale of cost method investments and the
Source product line, and other non-cash charges including, without
limitation, equity in (earnings) losses of investments, accrual for
(reduction of) loss contingency related to legal proceedings and
the impairment and write-down of assets. 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
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net income
(loss)
|
$
|
(181,528)
|
|
|
$
|
19,676
|
|
|
$
|
(127,518)
|
|
|
$
|
(246,518)
|
|
Interest expense,
net
|
4,603
|
|
|
4,241
|
|
|
19,382
|
|
|
12,344
|
|
Income tax
expense
|
6,321
|
|
|
6,270
|
|
|
20,582
|
|
|
25,720
|
|
Depreciation and
amortization expense
|
25,027
|
|
|
40,836
|
|
|
92,030
|
|
|
104,874
|
|
Equity in losses of
investments
|
40,458
|
|
|
31,906
|
|
|
49,485
|
|
|
42,320
|
|
Write-down of
multi-client data library
|
100,100
|
|
|
—
|
|
|
100,100
|
|
|
5,461
|
|
Impairment of
goodwill and intangible assets
|
23,284
|
|
|
—
|
|
|
23,284
|
|
|
—
|
|
Write-down of
receivables from INOVA Geophysical
|
5,510
|
|
|
—
|
|
|
5,510
|
|
|
—
|
|
Write-down of excess
and obsolete inventory
|
6,952
|
|
|
—
|
|
|
6,952
|
|
|
21,197
|
|
Gain on sale of cost
method investments
|
(5,463)
|
|
|
—
|
|
|
(5,463)
|
|
|
(3,591)
|
|
Gain on sale of
Source product line
|
—
|
|
|
—
|
|
|
(6,522)
|
|
|
—
|
|
Accrual for
(reduction of) loss contingency related to legal
proceedings
|
—
|
|
|
1,551
|
|
|
(69,557)
|
|
|
183,327
|
|
Write-down of
receivables from OceanGeo
|
—
|
|
|
—
|
|
|
—
|
|
|
9,157
|
|
Adjusted
EBITDA
|
$
|
25,264
|
|
|
$
|
104,480
|
|
|
$
|
108,265
|
|
|
$
|
154,291
|
|
Reconciliation of Restructuring and Special
Items to Diluted Earnings 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 three and twelve months ended December 31, 2014 and 2013:
|
Three Months Ended
December 31, 2014
|
|
|
|
|
Restructuring and
Special Items by Segment
|
|
|
|
|
As
Reported
|
|
Solutions(1)
|
|
Systems(2)
|
|
Software(3)
|
|
Corporate and
Other
|
|
As
Adjusted
|
Net
revenues
|
$
|
136,840
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
136,840
|
|
Cost of
sales
|
198,922
|
|
|
(100,825)
|
|
|
(7,580)
|
|
|
(137)
|
|
|
—
|
|
|
90,380
|
|
Gross profit
(loss)
|
(62,082)
|
|
|
100,825
|
|
|
7,580
|
|
|
137
|
|
|
—
|
|
|
46,460
|
|
Operating
expenses
|
73,954
|
|
|
(1,915)
|
|
|
(24,912)
|
|
|
(86)
|
|
|
(6,487)
|
|
(4)
|
40,554
|
|
Income (loss) from
operations
|
(136,036)
|
|
|
102,740
|
|
|
32,492
|
|
|
223
|
|
|
6,487
|
|
|
5,906
|
|
Operating
margin
|
(99)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
Interest expense,
net
|
(4,603)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,603)
|
|
Equity in losses of
investments
|
(40,458)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,199
|
|
(5)
|
(6,259)
|
|
Other income
(expense), net
|
5,890
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,463)
|
|
(6)
|
427
|
|
Income tax
expense
|
6,321
|
|
|
283
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
6,630
|
|
Net income
(loss)
|
(181,528)
|
|
|
102,457
|
|
|
32,492
|
|
|
197
|
|
|
35,223
|
|
|
(11,159)
|
|
Net loss attributable
to noncontrolling interests
|
650
|
|
|
(504)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
146
|
|
Net income (loss)
applicable to common shares
|
$
|
(180,878)
|
|
|
$
|
101,953
|
|
|
$
|
32,492
|
|
|
$
|
197
|
|
|
$
|
35,223
|
|
|
$
|
(11,013)
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.07)
|
|
Diluted
|
$
|
(1.10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.07)
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
164,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,290
|
|
Diluted
|
164,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,290
|
|
|
|
|
|
|
(1)
|
Primarily relates to
the write-down of the multi-client data library, in addition to the
impairment of intangible assets and severance-related charges
within the Solutions segment.
|
|
|
(2)
|
Primarily relates to
the write-down of goodwill, in addition to inventory write-downs,
bad debt and severance-related charges within the Systems
segment.
|
|
|
(3)
|
Represents
severance-related charges within the Software segment.
|
|
|
(4)
|
Represents the
write-down of receivables due from INOVA Geophysical, in addition
to severance-related charges.
|
|
|
(5)
|
Represents the full
write-down of Company's equity method investment in INOVA
Geophysical of $30.7 million, in addition to the Company's share of
charges related excess and obsolete inventory and customer bad
debts of $3.5 million.
|
|
|
(6)
|
Represents a
non-recurring gain on sale of a cost method investment.
|
|
Twelve Months
Ended December 31, 2014
|
|
|
|
|
Restructuring and
Special Items by Segment
|
|
|
|
|
As
Reported
|
|
Solutions(a)
|
|
Systems(a)
|
|
Software(a)
|
|
Corporate and
Other
|
|
As
Adjusted
|
Net
revenues
|
$
|
509,558
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
509,558
|
|
Cost of
sales
|
447,335
|
|
|
(100,825)
|
|
|
(7,580)
|
|
|
(137)
|
|
|
—
|
|
|
338,793
|
|
Gross
profit
|
62,223
|
|
|
100,825
|
|
|
7,580
|
|
|
137
|
|
|
—
|
|
|
170,765
|
|
Operating
expenses
|
180,152
|
|
|
(1,915)
|
|
|
(24,912)
|
|
|
(86)
|
|
|
(6,487)
|
|
(a)
|
146,752
|
|
Income (loss) from
operations
|
(117,929)
|
|
|
102,740
|
|
|
32,492
|
|
|
223
|
|
|
6,487
|
|
|
24,013
|
|
Operating
margin
|
(23)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
%
|
Interest expense,
net
|
(19,382)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,382)
|
|
Equity in losses of
investments
|
(49,485)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,199
|
|
(a)
|
(15,286)
|
|
Other income
(expense), net
|
79,860
|
|
|
—
|
|
|
(6,522)
|
|
|
—
|
|
|
(75,020)
|
|
(b)
|
(1,682)
|
|
Income tax
expense
|
20,582
|
|
|
283
|
|
|
(357)
|
|
|
26
|
|
|
—
|
|
|
20,534
|
|
Net income
(loss)
|
(127,518)
|
|
|
102,457
|
|
|
26,327
|
|
|
197
|
|
|
(34,334)
|
|
|
(32,871)
|
|
Net income
attributable to noncontrolling interests
|
(734)
|
|
|
(504)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,238)
|
|
Net income (loss)
applicable to common shares
|
$
|
(128,252)
|
|
|
$
|
101,953
|
|
|
$
|
26,327
|
|
|
$
|
197
|
|
|
$
|
(34,334)
|
|
|
$
|
(34,109)
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.78)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.21)
|
|
Diluted
|
$
|
(0.78)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.21)
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
164,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,089
|
|
Diluted
|
164,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,089
|
|
|
|
|
|
|
(a)
|
Relates to the
restructuring and special items impacting the fourth quarter
2014. See the notes for the three months ended December
31, 2014 for description of these restructuring and special
items.
|
|
|
(b)
|
In addition to the
sale of a cost method investment of $5.5 million in the fourth
quarter, the Company's first quarter results were impacted by a
reduction in the WesternGeco legal contingency by $69.6 million and
in the second quarter a non-recurring gain on the sale of the
marine source product line of $6.5 million (before tax).
|
|
|
|
Three Months Ended
December 31, 2013
|
|
|
|
|
Restructuring and
Special Items by Segment
|
|
|
|
|
As
Reported
|
|
Systems(1)
|
|
Corporate and
Other
|
|
As
Adjusted
|
Net
revenues
|
$
|
218,677
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
218,677
|
|
Cost of
sales
|
115,835
|
|
|
(608)
|
|
|
—
|
|
|
115,227
|
|
Gross
profit
|
102,842
|
|
|
608
|
|
|
—
|
|
|
103,450
|
|
Operating
expenses
|
38,611
|
|
|
(146)
|
|
|
—
|
|
|
38,465
|
|
Income from
operations
|
64,231
|
|
|
754
|
|
|
—
|
|
|
64,985
|
|
Operating
margin
|
29
|
%
|
|
|
|
|
|
|
|
30
|
%
|
Interest expense,
net
|
(4,241)
|
|
|
—
|
|
|
—
|
|
|
(4,241)
|
|
Equity in losses of
investments
|
(31,906)
|
|
|
—
|
|
|
31,238
|
|
(2)
|
(668)
|
|
Other expense,
net
|
(2,138)
|
|
|
—
|
|
|
1,551
|
|
(3)
|
(587)
|
|
Income tax
expense
|
6,270
|
|
|
—
|
|
|
—
|
|
|
6,270
|
|
Net income
|
19,676
|
|
|
754
|
|
|
32,789
|
|
|
53,219
|
|
Net loss attributable
to noncontrolling interests
|
143
|
|
|
—
|
|
|
—
|
|
|
143
|
|
Net income applicable
to common shares
|
$
|
19,819
|
|
|
$
|
754
|
|
|
$
|
32,789
|
|
|
$
|
53,362
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.12
|
|
|
|
|
|
|
|
|
$
|
0.33
|
|
Diluted
|
$
|
0.12
|
|
|
|
|
|
|
|
|
$
|
0.33
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
163,445
|
|
|
|
|
|
|
|
|
163,445
|
|
Diluted
|
163,772
|
|
|
|
|
|
|
|
|
163,772
|
|
|
|
|
|
|
(1)
|
Represents
restructuring charges related to the Systems segment vacating
certain leased facilities in the fourth quarter 2013.
|
|
|
(2)
|
$18.8 million
represents ION's 49% share of restructuring charges within the
INOVA joint venture, associated with the impairment of intangible
assets, write-down of excess and obsolete inventory and rental
equipment, and severance-related charges and $12.4 million
represents losses incurred as a result of ION taking a larger
ownership position in OceanGeo.
|
|
|
(3)
|
Represents additional
accrued interest related to the WesternGeco legal
contingency.
|
|
|
|
Twelve Months
Ended December 31, 2013
|
|
|
|
|
Restructuring and
Special Items by Segment
|
|
|
|
As
Reported
|
|
Solutions(a)
|
|
Systems(b)
|
|
Corporate and
Other
|
|
As
Adjusted
|
Net
revenues
|
$
|
549,167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
549,167
|
|
Cost of
sales
|
389,854
|
|
|
(5,461)
|
|
|
(25,688)
|
|
|
—
|
|
|
358,705
|
|
Gross
profit
|
159,313
|
|
|
5,461
|
|
|
25,688
|
|
|
—
|
|
|
190,462
|
|
Operating
expenses
|
142,917
|
|
|
—
|
|
|
(2,362)
|
|
|
(9,157)
|
|
(c)
|
131,398
|
|
Income from
operations
|
16,396
|
|
|
5,461
|
|
|
28,050
|
|
|
9,157
|
|
|
59,064
|
|
Operating
margin
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
11
|
%
|
Interest expense,
net
|
(12,344)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,344)
|
|
Equity in losses of
investments
|
(42,320)
|
|
|
—
|
|
|
—
|
|
|
31,238
|
|
(d)
|
(11,082)
|
|
Other income
(expense), net
|
(182,530)
|
|
|
—
|
|
|
—
|
|
|
184,491
|
|
(e)
|
1,961
|
|
Income tax
expense
|
25,720
|
|
|
—
|
|
|
—
|
|
|
(7,811)
|
|
(f)
|
17,909
|
|
Net income
(loss)
|
(246,518)
|
|
|
5,461
|
|
|
28,050
|
|
|
232,697
|
|
|
19,690
|
|
Net loss attributable
to noncontrolling interests
|
658
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
658
|
|
Net income (loss)
attributable to ION
|
(245,860)
|
|
|
5,461
|
|
|
28,050
|
|
|
232,697
|
|
|
20,348
|
|
Preferred stock
dividends
|
6,014
|
|
|
—
|
|
|
—
|
|
|
(5,000)
|
|
(g)
|
1,014
|
|
Net income (loss)
applicable to common shares
|
$
|
(251,874)
|
|
|
$
|
5,461
|
|
|
$
|
28,050
|
|
|
$
|
237,697
|
|
|
$
|
19,334
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.59)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
(1.59)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.12
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
158,506
|
|
|
|
|
|
|
|
|
|
|
|
158,506
|
|
Diluted
|
158,506
|
|
|
|
|
|
|
|
|
|
|
|
159,117
|
|
|
|
|
|
|
(a)
|
Represents the
partial write-down of a multi-client data library.
|
|
|
(b)
|
Represents excess and
obsolete inventory write-downs and severance-related charges as a
result of restructuring of the Systems segment.
|
|
|
(c)
|
Represents the
write-down of the carrying value of all receivables due from
OceanGeo at September 30, 2013.
|
|
|
(d)
|
$18.8 million
represents ION's 49% share of restructuring charges within the
INOVA joint venture, associated with the impairment of intangible
assets, write-down of excess and obsolete inventory and rental
equipment, and severance-related charges and $12.4 million
represents losses incurred as a result of ION taking a larger
ownership position in OceanGeo.
|
|
|
(e)
|
Primarily represents
the loss contingency accrual related to the WesternGeco legal
matter.
|
|
|
(f)
|
Represents a charge
to income tax expense related to the Company establishing a
valuation allowance on its net deferred tax assets.
|
|
|
|
|
|
(g)
|
Represents a payment
related to the conversion of ION preferred stock into ION common
shares.
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ion-reports-fourth-quarter-and-year-end-2014-results-300034846.html
SOURCE ION Geophysical Corporation