GlobeNewswire Inc | Feb 10, 2021 05:19PM EST

February 10, 2021

HOUSTON, Feb. 10, 2021 (GLOBE NEWSWIRE) -- ION Geophysical Corporation (NYSE: IO) today reported net revenues of$27.3million in thefourthquarter2020, a 68% increase compared to $16.2 million in the third quarter and a 36% decrease compared to$42.7million one year ago. At December 31, 2020, backlog, which consists of commitments for multi-client programs and proprietary imaging and reservoir services work, was $19.7million or11% higher sequentially and4%higher versus last year.

Net loss attributable to ION for thefourthquarter2020was $13.1million, or a loss of$0.92per share, compared to$14.5million, or a loss of$1.02per share in thefourthquarter2019. Excluding special items in both periods, the Company reported an Adjusted net loss thefourthquarter2020of $6.2million, or a loss of $0.43per share, compared to $5.7million or a loss of $0.40per share in the fourth quarter 2019. The Company reported Adjusted EBITDAof $1.1million for thefourthquarter2020, a decreasefrom$9.2million one year ago.A reconciliation of special items to the reported financial results can be found in the tables of this press release.

Net revenues for the full year 2020 were$122.7million compared to $174.7million in 2019. The net loss attributable to ION for the full year 2020 was $37.2million, or a loss of $2.61per share, compared to $48.2million, or a loss of $3.41per share in 2019. Excluding special items in both periods, Adjusted net loss for the full year 2020 was $30.1million, or a loss of $2.11per share, compared to$33.9million, or a loss of $2.40per share in 2019.While full year 2020 revenues declined by $52.0million, net loss improved by $11.0million primarily due to the over $38.0 million of structural changes and associated cost reductions implemented during the first half of 2020.The Company reported Adjusted EBITDAof$17.6million for2020, compared to $31.9million for 2019.

At December 31, 2020, the Company's total liquidity of $44.9million consisted of $37.5million of cash (including net revolver borrowings of$22.5million) and $7.4million of remaining available borrowing capacity under the revolving credit facility. The Company's$120.6 millionSecond Lien Notes, which mature on December 15, 2021, are now classified as a current liability. As anticipated,this current liability classificationtriggered a going concern issuefor ION.

To address the upcoming maturity of the Second Lien Notes, ION executed a restructuring agreement in late December supported by a majority of bondholders. Once complete, thisdeal would extendthe bond maturity by four years to December 2025 with a lower 8% interest rate and is strategically structured via the conversion feature to reduce the Company's financial leverage as ION continues to execute its strategy in the next couple of years.In addition, shareholders have the opportunity to participate in a concurrent rights offering to minimize dilution from the transactions.In connection with the restructuring transactions, a Special Meeting is scheduled on February 23, 2021 to seek shareholder approval to, among other things, increase the number of our authorized shares available for issuance required to execute the deal.The Company currently anticipates the completion of these transactions by the end of March 2021.For additional information, including the dilutive impact of the transactions oncurrent shareholders,please see the press release issued on December 23, 2020 and theproxy statement for a Special Meeting of shareholders filed with the SEC on January 22, 2021.

Chris Usher, the Company's President and Chief Executive Officer, commented, We delivered substantial sequential improvement in our revenue and earnings in the fourth quarter. During the second half of the year, we began to fully benefitfrom the refocused strategy, restructuring and cost reductions we outlined in early 2020, which helped partially mitigate the impact of reduced E&P spending triggered by the pandemic across the oilfield service market.While our annual revenue decline is consistent with the reduction in E&P spending, our net loss improved by $11.0 million year-over-year, primarily due to the previously mentioned strategic structural changes and associated cost reductions.

I ampleased with the progress ION made this year executingthe Company's refined strategy in spite of unprecedented macroeconomicdisruptions. More specifically, we successfully acquired the initial phase of our Mid North Sea High 3D multi-client program and built backlog for the significantly larger second phase this summer.Wecommercialized our proprietary Gemini extended frequency source technology, a key ingredient for improving 3D subsurface imaging in complex geological settings, where some of the most attractive E&P investment areas reside.The combination of our strategic entry into the 3D new acquisition multi-client market and commercialization of Gemini enabled us to increase our backlog during the last two quarters, reversing several consecutive quarters of steady decline.We continued to build on our portfolio of low cost, high return 3D reimaging programs and started benefitting commercially from the global 2D data collaboration we signed with PGS.In addition, we installed our first Marlin SmartPort system, demonstrated several new valuable use cases through pilot projects outside of our core seismic market and won a highly competitive tender for 17 additional ports.We continued to build our sales pipeline to optimize port operations and maritime energy logistics and plan to convert a portion of these opportunities to revenuein 2021. From a corporate perspective, we also settled our decade-long patent litigation with WesternGeco, announced the divestiture of ION's non-strategic equity interest in the INOVA joint venture, and are in the process of executing an agreement to extend our bond maturity four years to 2025.

Looking ahead, while we expect the market will remain challenging in the near-term, there have been a number of positive developments.Oil prices have rebounded to their highest levels in a yearand the energy industry has started to recover.While clients are still setting budgets, analysts expect the offshore E&P market to modestly improve in 2021 as the year unfolds and the digitalization trend to continue growing at a rapid pace.

While the energy industry will remain important to ION, we are diversifying into attractive new markets where our technology and capability have the potential to create value. We have recrafted ION's platformfor growth, including recent realignments within our executive management team to more effectively map our strengths to the evolving industry dynamics.We are highly attuned to the industry's driving themes and rapid pace of change, and we are developing new offerings that capitalize on our strengths and address key industry needsassociated with the energy transition such as portfolio rebalancing, environmental compliance, sustainability and digitalization.

FOURTH QUARTER 2020

The Company's segment revenues for thefourthquarter were as follows (in thousands):

Three Months Ended December 31, 2020 2019 % Change E&P Technology & Services $ 19,934 $ 29,711 (33 )%Operations Optimization 7,361 12,998 (43 )%Total $ 27,295 $ 42,709 (36 )%

E&P Technology & Services segmentrevenues were $19.9million forfourth quarter2020compared to $29.7million for fourth quarter 2019.Within the E&P Technology & Services segment, multi-client revenues were$17.2million, adecreaseof27%. Thedecline in multi-client revenues was primarily due to delays in new program activity as well as reduced E&P spending levels.Imaging and Reservoir Services revenues were$2.8million, a55%decreasefrom fourth quarter 2019due to lower proprietary tender activity, and consistent with our strategy to preferentially utilize these resources to generate higher margin multi-client reimaging products.

Operations Optimization segment revenues were$7.4 million for fourth quarter2020compared to$13.0million for fourth quarter 2019.Within the Operations Optimization segment, Optimization Software & Services revenues were$3.3million, a39%declinefrom the fourth quarter2019 due to reduced seismic activity and associated services demand resulting from COVID-19.Devices revenues were$4.0million, a46%declinedue to lower sales of towed streamer equipment spares and repairs.

Consolidated gross margin for the quarter was27% compared to12% in thefourthquarter2019. Excluding special items in both periods, consolidated gross margin for the quarter, as adjusted, was 27%compared to 34% in the fourth quarter 2019. The decrease in consolidated gross margin, as adjusted, resulted from decline inrevenues.

Consolidated operating expenses were $11.7million, compared to$15.1million in thefourthquarter 2019.The decrease in operating expenseswasprimarily due reduced commission expenses resulting from lower fourth quarter 2020 revenues and, to a lesser extent, the effectof our cost reductionsimplemented during the first half of 2020.Operating marginwas(16)%, compared to(23)%in thefourthquarter2019. Excluding special items in both periods, operatingmargin, as adjusted,for the quarter was (17)%compared to (1)% in the fourth quarter 2019, resulting from decline in revenues.

Income tax expense was$5.6millionfor fourth quarter2020compared to $0.1million forfourthquarter 2019. The income tax expenseincludes $8.5million of non-cash valuation allowance established against our previously recognized deferred tax assets in our non-U.S. businesses.This additional valuation allowance was established due to the Company's going concern conclusion.

FULL YEAR2020

The Company's segment revenues for the full year were as follows (in thousands):

Years Ended December 31, 2020 2019 % Change E&P Technology & Services $ 91,767 $ 125,578 (27 )%Operations Optimization 30,907 49,101 (37 )%Total $ 122,674 $ 174,679 (30 )%

E&P Technology & Services segment revenues were $91.8million for 2020compared to $125.6million for2019. Within the E&P Technology & Services segment, multi-client revenues were$76.6 million, adecreaseof26%. This decline was primarily drivenby decreased new venture revenues due to delays in new program activity this year and, to a lesser extent, a decrease in data library revenues primarily due to reduced E&P spending levels.The COVID-19travel and border restrictions impacted the timing and availability of crews for new acquisition programs and delayed access to existing data for new reimaging programs.Imaging and ReservoirServices revenues were$15.2million, adecreaseof33%due to lower proprietary tender activity, and consistent with our strategy to preferentially utilize these resources to generate higher margin multi-client reimaging products.

Operations Optimization segment revenues were$30.9 million for2020compared to$49.1 million for 2019. Within the Operations Optimization segment, Optimization Software & Services revenues were$14.1million, adecreaseof39%from2019. Thedecreasein Optimization Software & Services revenues for the full year was the result of COVID-19 related reduced seismic activity and associated services demand. Devices revenues were$16.8million, a35%decrease from2019, driven by decreased sales of towed streamer equipment spares and repairs.

Consolidated gross margin was consistent at34%in2020and 2019. Gross margin in E&P Technology & Services was32% compared to28%in2019. Excluding special items in both periods, gross margin in E&P Technology & Services, as adjusted, was 33% compared to 36% in 2019. The decreaseinE&P Technology & Services gross margin, as adjusted primarily resulted from decline in revenues. Operations Optimization gross margin was 40%compared to50%in2019primarily resulting from the decline in revenues.

Consolidated operating expenses were $56.2millioncompared to $84.5million in2019. The decrease in operating expenses was due primarily to the over $38.0 million of structural changes and associated cost reductions implemented during the first half of 2020. Operating marginwas(12)% in2020compared to(14)% in2019.Excluding special items in both periods, operatingmargin, as adjusted,for the quarter was (4)%compared to (6)% inthe fourth quarter 2019.

Income tax expense in2020 was $15.6million compared to $8.1 million in2019.The income tax expense includes a $10.7million non-cash valuation allowance established against our previously recognized deferred tax assets in our non-U.S. businesses. Of this amount, $8.5million relates to the additional valuation allowance established in the fourth quarter due to the Company's going concern conclusion. Excluding the valuation allowance, the Company's income tax expense primarily relates to results generated by its non-U.S. businesses in Latin America.

CONFERENCE CALL

The Company has scheduled a conference call for Thursday, February 11, 2020, 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 (833) 362-0195at 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 18, 2021. To access the replay, dial (855) 859-2056 and use pass code 8154095.Investors, analysts and the general public will also have the opportunity to listen to the conference call live over the Internet by visiting iongeo.com. An archive of the webcast will be available shortly after the call on the Company's website.

About ION

ION develops and leverages innovative technologies, creating value through data capture, analysis and optimization to enhance critical decision-making, enabling superior returns. For more information, visit iongeo.com.

Contact

Mike Morrison

Executive Vice President and Chief Financial Officer

+1.281.879.3615

Registration statements relating to the securities to be offered in the exchange offer and the rights offering in connection with the restructuring transactions have been filed with the Securities and Exchange Commission, but have not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statements become effective. This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities, nor shall there be any offer, solicitation or sale of the securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of such state or jurisdiction. The exchange offer and the rights offering will be made only by means of a prospectus. Copies of each such prospectus, when they become available, will be distributed, as applicable, to our bondholders and shareholders and may also be obtained free of charge at the website maintained by the SEC at or by contacting the appropriate agent for the offerings. Contact information for such agents will be provided when available.

The information 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 information 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 the risks associated with the timing and development of ION Geophysical Corporation's products and services; pricing pressure; decreased demand; changes in oil prices; agreements made or adhered to by members of OPEC and other oil producing countries to maintain production levels; the COVID-19 pandemic; our ability to complete the Restructuring Transactions and other related matters in a timely manner, if at all; and political, execution, regulatory, and currency risks. For additional information regarding these various risks and uncertainties, see our Form 10-K for the year ended December 31, 2019, filed on February 6, 2020 andour Form S-1 and S-4, filed on January 29, 2021. Additional risk factors, which could affect actual results, are disclosed by the Company in its filings with the Securities and Exchange Commission (SEC), including its Form 10-K, Form 10-Qs and Form 8-Ks filed during the year. The Company expressly disclaims any obligation to revise or update any forward-looking statements.

Tables to follow

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)

Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 Service revenues $ 20,113 $ 30,755 $ 93,347 $ 131,280 Product revenues 7,182 11,954 29,327 43,399 Total net revenues 27,295 42,709 122,674 174,679 Cost of services 16,022 21,588 63,055 83,519 Cost of products 3,833 6,810 16,795 22,066 Impairment ofmulti-client data ? 9,072 1,167 9,072 libraryGross profit 7,440 5,239 41,657 60,022 Operating expenses: Research, development 3,022 3,604 12,965 19,025 and engineeringMarketing and sales 2,787 5,763 11,675 23,207 General, administrativeand other operating 5,910 5,699 27,456 42,249 expensesImpairment of goodwill ? ? 4,150 ? Total operating 11,719 15,066 56,246 84,481 expensesLoss from operations (4,279 ) (9,827 ) (14,589 ) (24,459 )Interest expense, net (3,501 ) (3,696 ) (13,805 ) (13,074 )Other income (expense), 223 (679 ) 6,898 (1,617 )netLoss before income (7,557 ) (14,202 ) (21,496 ) (39,150 )taxesIncome tax expense 5,634 148 15,616 8,064 Net loss (13,191 ) (14,350 ) (37,112 ) (47,214 )Net (income) lossattributable to 55 (144 ) (113 ) (985 )noncontrollinginterestsNet loss attributable $ (13,136 ) $ (14,494 ) $ (37,225 ) $ (48,199 )to IONNet loss per share: Basic $ (0.92 ) $ (1.02 ) $ (2.61 ) $ (3.41 )Diluted $ (0.92 ) $ (1.02 ) $ (2.61 ) $ (3.41 )Weighted average numberof common shares outstanding:Basic 14,320 14,209 14,272 14,131 Diluted 14,320 14,209 14,272 14,131

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except per share data)(Unaudited)

December 31, 2020 2019 (In thousands, except share data)ASSETSCurrent assets: Cash and cash equivalents $ 37,486 $ 33,065 Accounts receivable, net 8,045 29,548 Unbilled receivables 11,262 11,815 Inventories, net 11,267 12,187 Prepaid expenses and other current assets 7,116 6,012 Total current assets 75,176 92,627 Deferred income tax asset, net ? 8,734 Property, plant and equipment, net 9,511 13,188 Multi-client data library, net 50,914 60,384 Goodwill 19,565 23,585 Right-of-use assets 35,501 32,546 Other assets 2,926 2,130 Total assets $ 193,593 $ 233,194

LIABILITIES AND STOCKHOLDERS? DEFICITCurrent liabilities: Current maturities of long-term debt $ 143,731 $ 2,107 Accounts payable 33,418 49,316 Accrued expenses 16,363 30,328 Accrued multi-client data library royalties 21,359 18,831 Deferred revenue 3,648 4,551 Current maturities of operating lease 7,570 11,055 liabilitiesTotal current liabilities 226,089 116,188 Long-term debt, net of current maturities ? 119,352 Operating lease liabilities, net of current 38,372 30,833 maturitiesOther long-term liabilities 222 1,453 Total liabilities 264,683 267,826 Deficit: Common stock, $0.01 par value; authorized26,666,667 shares; outstanding 14,333,101 and 143 142 14,224,787 shares at December 31, 2020 and2019, respectivelyAdditional paid-in capital 958,584 956,647 Accumulated deficit (1,011,516 ) (974,291 )Accumulated other comprehensive loss (19,913 ) (19,318 )Total stockholders? deficit (72,702 ) (36,820 )Noncontrolling interests 1,612 2,188 Total deficit (71,090 ) (34,632 )Total liabilities and stockholders' deficit $ 193,593 $ 233,194

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)

Three Months Ended Years Ended December 31, December 31, 2020 2019 2020 2019 Cash flows from operating activities:Net loss $ (13,191 ) $ (14,350 ) $ (37,112 ) $ (47,214 )Adjustments toreconcile net loss to net cash provided byoperating activities:Depreciation andamortization (other 1,061 754 3,997 3,657 than multi-clientlibrary)Amortization ofmulti-client data 5,625 9,754 22,299 39,541 libraryImpairment ofmulti-client data ? 9,072 1,167 9,072 libraryImpairment of goodwill ? ? 4,150 ? Stock-based 406 965 2,043 4,701 compensation expenseAmortization ofgovernment relief ? ? (6,923 ) ? funding expected to beforgivenProvision for expected 2,413 ? 2,413 ? credit lossesWrite-down of excess 378 517 378 517 and obsolete inventoryDeferred income taxes 8,310 (692 ) 8,547 (1,940 )Change in operating assets and liabilities:Accounts receivable (1,457 ) (5,380 ) 19,608 (3,265 )Unbilled receivables (1,564 ) 19,283 (383 ) 32,055 Inventories 203 338 280 1,067 Accounts payable,accrued expenses and (6,155 ) (4,020 ) (12,584 ) (2,492 )accrued royaltiesDeferred revenue 1,453 (809 ) (793 ) (3,207 )Other assets and (1,491 ) (586 ) 2,072 1,658 liabilitiesNet cash provided by(used in) operating (4,009 ) 14,846 9,159 34,150 activitiesCash flows from investing activities:Investment inmulti-client data (7,406 ) (7,579 ) (27,247 ) (28,804 )libraryPurchase of property, (256 ) (1,139 ) (1,121 ) (2,411 )plant and equipmentNet cash used in (7,662 ) (8,718 ) (28,368 ) (31,215 )investing activitiesCash flows from financing activities:Borrowings underrevolving line of 250 25,000 27,250 40,000 creditRepayments underrevolving line of (250 ) (25,000 ) (4,750 ) (40,000 )creditPayments on notespayable and long-term (595 ) (593 ) (2,409 ) (2,553 )debtReceipt of Paycheck ? ? 6,923 ? Protection Program loanCosts associated with (924 ) ? (924 ) ? debt issuanceProceeds from employeestock purchases and ? 141 ? 141 exercise of stockoptionsOther financing (14 ) (479 ) (322 ) (1,134 )activitiesNet cash provided by(used in) financing (1,533 ) (931 ) 25,768 (3,546 )activitiesEffect of change inforeign currencyexchange rates on cash, (365 ) (276 ) 136 (125 )cash equivalents andrestricted cashNet increase (decrease)in cash, cash (13,569 ) 4,921 6,695 (736 )equivalents andrestricted cashCash, cash equivalentsand restricted cash at 53,382 28,197 33,118 33,854 beginning of periodCash, cash equivalentsand restricted cash at $ 39,813 $ 33,118 $ 39,813 $ 33,118 end of period

The following table is a reconciliation of cash, cash equivalents and restricted cash (In thousands):

December 31, 2020 2019 Cash and cash equivalents $ 37,486 $ 33,065 Restricted cash included in prepaid expenses 2,327 53 and other current assetsTotal cash, cash equivalents, and restricted $ 39,813 $ 33,118 cash shown in statements of cash flows

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESSUMMARY OF SEGMENT INFORMATION(In thousands, except per share data)(Unaudited)

Three Months Ended Twelve Months Ended December December 31, 31, 2020 2019 2020 2019 Net revenues: E&PTechnology & Services:New Venture $ 3,458 $ 6,794 $ 10,798 $ 31,188 Data Library 13,707 16,817 65,790 71,847 Totalmulti-client 17,165 23,611 76,588 103,035 revenuesImagingServices and 2,769 6,100 15,179 22,543 ReservoirServicesTotal 19,934 29,711 $ 91,767 125,578 Operations Optimization:OptimizationSoftware & 3,326 5,492 $ 14,137 23,140 ServicesDevices 4,035 7,506 16,770 25,961 Total 7,361 12,998 $ 30,907 49,101 Total net $ 27,295 $ 42,709 $ 122,674 $ 174,679 revenuesGross profit (loss):E&PTechnology & $ 4,341 $ (414 ) (a) $ 29,243 (a) $ 35,699 (a)ServicesOperations 3,099 5,653 12,414 24,323 OptimizationTotal gross $ 7,440 $ 5,239 $ 41,657 $ 60,022 profitGross margin: E&PTechnology & 22 % (1 )% 32 % 28 % ServicesOperations 42 % 43 % 40 % 50 % OptimizationTotal gross 27 % 12 % 34 % 34 % marginIncome (loss)from operations:E&PTechnology & $ (669 ) $ (6,667 ) (a) $ 13,134 (a) $ 8,833 (a)ServicesOperations (591 ) 2,381 (4,556 ) (b) 8,189 OptimizationSupport and (3,019 ) (5,541 ) (23,167 ) (41,481 ) otherLoss from (4,279 ) (9,827 ) (14,589 ) (24,459 ) operationsInterest (3,501 ) (3,696 ) (13,805 ) (13,074 ) expense, netOther income(expense), 223 (679 ) 6,898 (c) (1,617 ) netLoss before $ (7,557 ) $ (14,202 ) $ (21,496 ) $ (39,150 ) income taxes

Includes an impairment of multi-client data library of$1.2 million for(a) the twelve months ended December 31, 2020and $9.1million for thethree and twelve months ended December 31, 2019.(b) Includes impairment of goodwill of$4.2 million for the twelve months ended December 31, 2020.(c) Includesamortization of the government relief funding expected to be forgiven of$6.9million for the twelve months ended December 31, 2020.

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESSummary of Net Revenues by Geographic Area(In thousands)(Unaudited)

Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 Latin America $ 7,411 $ 12,934 $ 43,389 $ 64,627 Africa 10,413 12,293 27,132 28,203 Europe 2,537 4,467 17,950 22,102 Asia Pacific 3,971 5,412 16,696 18,321 North America 1,936 6,458 9,521 27,953 Middle East 817 983 3,187 7,347 Other 210 162 4,799 6,126 Total net $ 27,295 $ 42,709 $ 122,674 $ 174,679 revenues



Reconciliation of Adjusted EBITDA to Net Loss(Non-GAAP Measure) (In thousands)(Unaudited)

The term EBITDA (excluding non-recurring items) represents net loss before net interest expense, income taxes, depreciation and amortization and other non-recurring charges such as impairment of long-lived assets. severance expenses and government relief. The term Adjusted EBITDA is EBITDA (excluding non-recurring items) but also excludes the impact of fair value adjustments related to the Companys outstanding stock appreciation awards. EBITDA (excluding non-recurring items) and Adjusted EBITDA are not measures 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, EBITDA (excluding non-recurring items) and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA (excluding non-recurring items) and Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA (excluding non-recurring items) and Adjusted EBITDA 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 Twelve Months Ended 31, December 31, 2020 2019 2020 2019 Net loss $ (13,191 ) $ (14,350 ) $ (37,112 ) $ (47,214 )Interest 3,501 3,696 13,805 13,074 expense, netIncome tax 5,634 (a) 148 15,616 (a) 8,064 expenseDepreciationand 6,686 10,508 26,296 43,198 amortizationexpenseImpairment ofmulti-client ? 9,072 1,167 9,072 data libraryImpairment of ? ? 4,150 ? goodwillSeverance ? ? 3,102 2,810 expenseAmortization ofgovernmentrelief funding ? ? (6,923 ) ? expected to beforgivenEBITDAexcluding 2,630 9,074 20,101 29,004 non-recurringitemsStockappreciation (1,541 ) 168 (2,493 ) 2,910 rights (credit)expenseAdjusted EBITDA $ 1,089 $ 9,242 $ 17,608 $ 31,914

Includes valuation allowance on our net deferred tax assets resulting from(a) the going concern conclusion of $8.5million for the three and twelve months ended December 31, 2020.

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESDescription of Special Items and Reconciliation of GAAP (As Reported) to Non-GAAP (As Adjusted) Measures(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, 2020 and 2019.

Three Months Ended December 31, 2020 Three Months Ended December 31, 2019 As Special As As Special As Reported Items Adjusted Reported Items AdjustedNet revenues $ 27,295 $ ? $ 27,295 $ 42,709 $ ? $ 42,709 Cost of sales 19,855 ? 19,855 37,470 (9,072 ) (a) 28,398 Gross profit 7,440 ? 7,440 5,239 9,072 14,311 Operating 11,719 1,541 (b) 13,260 15,066 (168 ) (b) 14,898 expensesLoss from (4,279 ) (1,541 ) (5,820 ) (9,827 ) 9,240 (587 )operationsInterest (3,501 ) ? (3,501 ) (3,696 ) ? (3,696 )expense, netOther income 223 ? 223 (679 ) ? (679 )(expense), netIncome taxexpense 5,634 (8,492 ) (c) (2,858 ) 148 445 (a) 593 (benefit)Net loss (13,191 ) 6,951 (6,240 ) (14,350 ) 8,795 (5,555 )Net incomeattributableto 55 ? 55 (144 ) ? (144 )noncontrollinginterestsNet lossattributable $ (13,136 ) $ 6,951 $ (6,185 ) $ (14,494 ) $ 8,795 $ (5,699 )to IONNet loss per share:Basic $ (0.92 ) $ (0.43 ) $ (1.02 ) $ (0.40 )Diluted $ (0.92 ) $ (0.43 ) $ (1.02 ) $ (0.40 )Weightedaverage numberof common sharesoutstanding:Basic 14,320 14,320 14,209 14,209 Diluted 14,320 14,320 14,209 14,209

Twelve Months Ended December 31, 2020 Twelve Months Ended December 31, 2019 As Special As As Special As Reported Items Adjusted Reported Items AdjustedNet revenues $ 122,674 $ ? $ 122,674 $ 174,679 $ ? $ 174,679 Cost of sales 81,017 (1,167 ) (a) 79,850 114,657 (9,072 ) (a) 105,585 Gross profit 41,657 1,167 42,824 60,022 9,072 69,094 Operating 56,246 (4,759 ) (b) 51,487 84,481 (5,720 ) (b) 78,761 expensesLoss from (14,589 ) 5,926 (8,663 ) (24,459 ) 14,792 (9,667 )operationsInterest (13,805 ) ? (13,805 ) (13,074 ) ? (13,074 )expense, netOther income 6,898 (6,923 ) (d) (25 ) (1,617 ) ? (1,617 )(expense), netIncome tax 15,616 (8,142 ) (c) 7,474 8,064 445 (a) 8,509 expenseNet loss (37,112 ) 7,145 (29,967 ) (47,214 ) 14,347 (32,867 )Net incomeattributableto (113 ) ? (113 ) (985 ) ? (985 )noncontrollinginterestsNet lossattributable $ (37,225 ) $ 7,145 $ (30,080 ) $ (48,199 ) $ 14,347 $ (33,852 )to IONNet loss per share:Basic $ (2.61 ) $ (2.11 ) $ (3.41 ) $ (2.40 )Diluted $ (2.61 ) $ (2.11 ) $ (3.41 ) $ (2.40 )Weightedaverage numberof common sharesoutstanding:Basic 14,272 14,272 14,131 14,131 Diluted 14,272 14,272 14,131 14,131

Represents the impairment of multi-client data library of(a) $1.2millionfor the twelve months ended December 31, 2020 and $9.1 million and the related tax impact of $0.4 million for thethree and twelve months ended December 31, 2019. Represents impairment ofgoodwill of$4.2 million for the twelve months ended December 31, 2020,stock appreciation rights award (credit) expense and other related expenses, net,of $(1.5)million and$(2.5)million(b) for the three and twelve months ended December 31, 2020, respectively, and$0.2 million and $2.9 million for thethree and twelve months ended December 31, 2019, respectively. In addition, the twelve months ended December 31, 2020 and 2019 includeseverance expense of$3.1and$2.8million, respectively. Represents a full valuation allowance on our net deferred tax assetsof$8.5million for the three and twelve months ended December(c) 31, 2020 and the tax impact of $0.4 million related to impairment of multi-client data library for the twelve months ended December 31, 2020.(d) Represents amortization of the government relief funding expected to be forgiven of$6.9million for the twelve months ended December 31, 2020.