ION Geophysical Announces Cost Reduction Initiative; To Cut 25% Workforce

(RTTNews) - ION Geophysical Corp. (IO) announced an aggressive cost reduction initiative as part of an overall plan to align operating expenses with business conditions and recent declines in the current commodity price environment for crude oil and natural gas.

The company said it believes this cost reduction program will more appropriately scale its operations to the current commodity price environment.

The cost reduction initiative is expected to result in an approximate 25% decrease in the company's global workforce and is expected to be substantially completed by September 30, 2015. The Company expects to incur $5 million to $6 million in termination costs, all of which are expected to require cash expenditures, and the majority of which are expected to be incurred in the current fiscal year.

In connection with this plan, the company expects to reduce annual operating costs by approximately $40 million. Such cost savings will consist primarily of payroll reductions and reductions in discretionary spending associated with a smaller workforce, as well as additional cost control measures.  When combined with the cost savings undertaken since December of 2014, the Company will have achieved a total estimated annual savings of $80 million and a 50% reduction in its workforce.

The company said it is adopting the aggressive cost reduction measures to reduce expenses to more closely align with the decreases in revenue experienced in the first half of the year. The Company remains rapidly scalable to respond to changes in revenues.  When market conditions improve, the Company will be well positioned to efficiently grow to meet demand.