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Leverage our key technologies to provide integrated solutions to oil & gas companies.  More of our customers are seeking fully integrated offerings from seismic companies, from survey planning and design, to leading technology differentiation in acquisition and processing.  ION is transforming itself from an equipment provider to a more integrated service provider, where leading equipment technologies are only part of our offering.  Our recent ownership increase in OceanGeo is just one example of where ION is changing its go-to-market strategy, attempting to bundle many services as an integrated offering to customers who see large scale and experience as a differentiator.  The growth in our Solutions segment is a testament to our executing on this strategy.

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Expand and globalize our Solutions business. We seek to expand and grow our Solutions business to new regions, with new customers and new marine and land service offerings, including proprietary services for E&P companies. In addition, we intend to further globalize our Solutions data processing business by opening advanced imaging centers in strategic locations around the world and expanding our presence in land seismic processing where we believe onshore unconventional resource demand will drive the need for our products and services. While we anticipate continuing to grow and refine our seismic data equipment businesses in ocean-bottom marine (through OceanGeo) and land (through INOVA Geophysical), our emphasis on growth will continue to be in our Solutions segment’s data processing and GeoVentures multi-client businesses. For the foreseeable future, we expect the majority of our future investments to be in research and development and computing infrastructure for our data processing business and to support our GeoVentures multi-client projects. We believe this focus better positions our company as a full-service technology company with increasing revenues derived from E&P customers using our GXT data processing and GeoVentures services.

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Continue investing in advanced software and equipment technology to provide next generation products and services. We intend to continue investing in the development of new technologies for use by E&P companies. In particular, we intend to focus on the development of Calypso (the next generation of our ocean-bottom seismic data imaging technology), Narwhal (our ice management system), and derivative products, with the goal of obtaining technical and market leadership in what we continue to believe are important and expanding markets. In 2013, our investment in research and development was equal to approximately 7% of our total net revenue for the year.

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Collaborate with our customers to provide products and solutions designed to meet their needs. A key element of our business strategy has been to understand the challenges faced by E&P companies in survey planning, acquisition, processing, and interpretation. We will continue to develop and offer technology and services that enable us to work with E&P companies to solve their unique challenges, especially in the harshest and most extreme environments around the world. We have found that a collaborative relationship with E&P companies, with a goal of better understanding their imaging challenges and then working with them and our seismic contractor customers to assure them that the right technologies are properly applied, is the most effective method for meeting their needs. Our goal of being a full solutions provider to solve the most difficult challenges for our customers is an important element of our long-term business strategy, and we are implementing this partnership approach globally through local personnel in our regional organizations who understand the unique challenges in their areas.

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Leverage our technical research and development experience and partner in market-leading joint ventures. Through INOVA Geophysical, we seek to combine our technical research and development experience and expertise with the operational experience and global reach of BGP. Further, we believe working with INOVA Geophysical will allow us to tap into a broader set of global geophysical opportunities associated with the exploration, asset development and production operations of BGP’s parent, CNPC. Through our OceanGeo joint venture, we believe that we will be able to maximize the value of our R&D investments in the development of our Calypso ocean-bottom seismic acquisition technologies.

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We are leveraging our key technologies to provide integrated solutions to oil & gas companies.  More of our customers are seeking fully integrated offerings from seismic companies, from survey planning and design, to leading technology differentiation in acquisition and processing.  ION is transforming itself from an equipment provider to a more integrated service provider, where leading equipment technologies are only part of our offering.  Our recent ownership increase in OceanGeo is just one example of where ION is changing its go-to-market strategy, attempting to bundle many services as an integrated offering to customers who see large scale and experience as a differentiator.  The growth in our Solutions segment is a testament to our executing to this strength.

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We are a broad-based seismic solutions provider engaged in providing advanced software and equipment technology. We are a technology-focused full-value-chain service provider with capabilities extending beyond the manufacture of seismic equipment. Our offerings span the entire seismic workflow, which includes survey planning and data acquisition, processing and interpretation. Our offerings include seismic data acquisition hardware, command and control software, value-added services associated with seismic survey design, seismic data processing and interpretation, and seismic data libraries.

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Our “asset light” strategy enables us to avoid significant fixed costs and to remain financially flexible. We do not own a fleet of marine vessels and, with the exception of our OceanGeo joint venture, we do not provide our own seismic crews to acquire marine or land seismic data. We outsource a majority of our seismic acquisition activity to third parties that operate their own fleets of seismic acquisition vessels and equipment. Doing so enables us to avoid the fixed costs associated with these assets and personnel and to manage our business in a manner designed to afford us the flexibility to quickly decrease our costs or capital investments in the event of a downturn. We actively manage the costs of developing our multi-client data library business by requiring our customers to partially pre-fund, or underwrite, the investment for any new project. Our target goal is to have underwritten approximately 75% of the total cost of each new project’s data acquisition. We believe this conservative approach to data library investment is the most prudent way to avoid risks of any sudden reduction in the demand for seismic data giving us the flexibility to aggressively reduce costs in the event of an industry downturn.

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Our global footprint and ability to work in harsh conditions allow us to offset regional downturns. Our focus on conducting business around the world, even in the harshest and most extreme environments, has been and will continue to be a key component of our corporate strategy. This global focus has been helpful in minimizing the impact of any one regional slowdown for short or extended periods of time. We believe that our customers prefer to work with companies that are capable of delivering high quality, safe, and environmentally sensitive service in those environments. For example, our operational expertise and equipment and software technologies enable us to operate in the harsh Arctic environment and to acquire seismic data in areas for which no modern seismic data previously existed. This expertise and these technologies permit us to extend the time window for data acquisition, facilitate our customers’ drilling decisions, reducing exploration and production risk.

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We have a diversified and blue chip customer base. We provide products and services to a diverse, global customer base that includes many of the largest oil and gas and geophysical companies in the world, including national oil companies (NOCs) and international oil companies (IOCs). Over the past decade, we have made significant progress in expanding our customer list and revenue sources to include significantly more types of customers than seismic contractors. Whereas almost all of our revenues in 2003 were derived principally from seismic contracting companies, E&P companies accounted for approximately 62% of our total revenues in 2013. Even though we provide services and products to some of the largest companies in the world, no single customer accounted for more than 10% of our total revenue in 2011, 2012 or 2013. We focus our sales and marketing efforts on high-quality, historically creditworthy customers.

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the expected outcome of the WesternGeco litigation (see “ — An unfavorable judgment in our pending litigation matter with WesternGeco could have a materially adverse effect on our financial results and liquidity.” below) and future potential adverse effects on our liquidity in the event that we must post and collateralize an appeal bond for the amount of damages entered in a judgment or are unsuccessful in our appeal of an adverse judgment in this matter;

•	predictions of future industry-wide increases or decreases in capital expenditures for seismic activities;

•	the timing of anticipated revenues and the recognition of those revenues for financial accounting purposes;

•	future levels of spending by our customers;

•	the effects of current and future unrest in the Middle East, North Africa and other regions;

•	the effects of current and future worldwide economic conditions (particularly in developing countries) and demand for oil and natural gas and seismic equipment and services;

•	the effects of ongoing and future industry consolidation, including, in particular, the effects of consolidation and vertical integration in the towed marine seismic streamers market;

•	future oil and gas commodity prices;

•	the timing of future revenue realization of anticipated orders for multi-client seismic survey projects and data processing work in our Solutions segment;

•	future levels of our capital expenditures;

•	expected net revenues, income from operations and net income;

•	expected gross margins for our products and services;

•	future benefits to be derived from our INOVA Geophysical and OceanGeo joint ventures;

•	future seismic industry fundamentals, including future demand for seismic services and equipment;

•	future benefits to our customers to be derived from new products and services;

•	future benefits to be derived from our investments in technologies, joint ventures and acquired companies;

•	future growth rates for our products and services;

•	the degree and rate of future market acceptance of our new products and services;

•	expectations regarding E&P companies and seismic contractor end-users purchasing our more technologically-advanced products and services;

•	anticipated timing and success of commercialization and capabilities of products and services under development and start-up costs associated with their development;

•	future cash needs and future availability of cash to fund our operations and pay our obligations;

•	potential future acquisitions;

•	future opportunities for new products and projected research and development expenses;

•	expected continued compliance with our debt financial covenants;

•	expectations regarding realization of deferred tax assets; and

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•	anticipated results with respect to certain estimates we make for financial accounting purposes.

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Seismic data acquisition activities in marine ocean-bottom areas are subject to the risk of downtime or reduced productivity, as well as to the risks of loss to property and injury to personnel, mechanical failures and natural disasters. In addition to losses caused by human errors and accidents, we may also become subject to losses resulting from, among other things, political instability, business interruption, strikes and weather events; and

•	OceanGeo’s products and services may expose us to litigation and legal proceedings, including those related to product liability, personal injury and contract liability.

•	increased costs associated with the operation of the business and the management of geographically dispersed operations;

•	the joint venture’s cash flows may be inadequate to fund its capital requirements, thereby requiring additional contributions to the capital of the joint venture by us and by Georadar;

•	risks associated with our new Calypso ocean-bottom product that is intended to be utilized by OceanGeo in its operations, including risks that the new technology may not perform as well as we anticipate;

•	Georadar’s future financial capacity and capabilities to make future contributions and advances of capital to the joint venture;

•	difficulties in retaining and integrating key technical, sales and marketing personnel and the possible loss of such employees and costs associated with their loss;

•	the diversion of management’s attention and other resources from other business operations and related concerns;

•	the requirement to maintain uniform standards, controls and procedures;

•	the divergence of our interests from Georadar’s interests in the future, disagreements with Georadar on ongoing business and operational activities or strategies, or the amount, timing or nature of further investments in the joint venture;

•	the terms of our joint venture arrangements may turn out to be unfavorable to us;

•	we may not be able to realize operating efficiencies, cost savings or other benefits that we expect from the joint venture’s operations;

•	joint venture profits and cash flows may prove inadequate to fund cash distributions from the joint venture to the joint venture partners; and

•	the joint venture may experience difficulties and delays in securing new business and customer projects.

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•	as a condition in our senior secured revolving line of credit facility, INOVA Geophysical must provide a bank stand-by letter of credit as credit support for our obligations under the facility;

•	increased costs associated with the integration and operation of the new business and the management of geographically dispersed operations;

•	risks associated with the assimilation of new technologies, operations, sites and personnel;

•	difficulties in retaining and integrating key technical, sales and marketing personnel and the possible loss of such employees and costs associated with their loss;

•	difficulties associated with preserving relationships with our customers, partners and vendors;

•	risks that any technology developed by the joint venture may not perform as well as we had anticipated;

•	the strength of future seismic contractor demand for land seismic equipment and the highly competitive nature of the land seismic equipment manufacturing industry;

•	the diversion of management’s attention and other resources from other business operations and related concerns;

•	the potential inability to replicate operating efficiencies in the joint venture’s operations;

•	potential impairments of goodwill and intangible assets, as well as write-downs of inventory due to obsolescence or changes in marketplace demand for INOVA Geophysical’s products and services;

•	the requirement to maintain uniform standards, controls and procedures;

•	the impairment of relationships with employees and customers as a result of the integration of management personnel from different companies;

•	the divergence of our interests from BGP’s interests in the future, disagreements with BGP on ongoing manufacturing, research and development and operational activities, or the amount, timing or nature of further investments in the joint venture;

•	the terms of our joint venture arrangements may turn out to be unfavorable to us;

•	because we currently own only 49% of the total equity interests in INOVA Geophysical, there are certain decisions affecting the business of the joint venture that we cannot control or influence;

•	we may not be able to realize the operating efficiencies, cost savings or other benefits that we expect from the joint venture;

•	the joint venture’s cash flows may be inadequate to fund its capital requirements, thereby requiring additional contributions to the capital of the joint venture by us and by BGP;

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•	joint venture profits and cash flows may prove inadequate to fund cash dividends or other distributions from the joint venture to the joint venture partners; and

•	the joint venture may experience difficulties and delays in production of the joint venture’s products.

•	we may have difficulty satisfying our obligations with respect to our outstanding debt;

•	we may have difficulty obtaining financing in the future for working capital, capital expenditures, acquisitions or other purposes;

•	we may need to use all, or a substantial portion, of our available cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities;

•	our vulnerability to general economic downturns and adverse industry conditions could increase;

•	our flexibility in planning for, or reacting to, changes in our business and in our industry in general could be limited;

•	our amount of debt and the amount we must pay to service our debt obligations could place us at a competitive disadvantage compared to our competitors that have less debt;

•	our customers may react adversely to our significant debt level and seek or develop alternative licensors or suppliers;

•	we may have insufficient funds, and our debt level may also restrict us from raising the funds necessary to repurchase all of the Notes tendered to us upon the occurrence of a change of control, which would constitute an event of default under the Notes; and

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•	our failure to comply with the restrictive covenants in our debt instruments which, among other things, limit our ability to incur debt and sell assets, could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects.

•	incur additional indebtedness;

•	create liens;

•	pay dividends and make other distributions in respect of our capital stock;

•	redeem our capital stock;

•	make investments or certain other restricted payments;

•	sell certain kinds of assets;

•	enter into transactions with affiliates; and

•	effect mergers or consolidations.

•	limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans; and

•	adversely affect our ability to finance our operations, acquisitions, investments or strategic alliances or other capital needs or to engage in other business activities that would be in our interest.

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•	future competition from more established companies entering the market;

•	technology obsolescence;

•	dependence upon continued growth of the market for seismic data processing;

•	the rate of change in the markets for these segments’ technology and services;

•	research and development efforts not proving sufficient to keep up with changing market demands;

•	dependence on third-party software for inclusion in these segments’ services and products;

•	misappropriation of these segments’ technology by other companies;

•	alleged or actual infringement of intellectual property rights that could result in substantial additional costs;

•	difficulties inherent in forecasting sales for newly developed technologies or advancements in technologies;

•	recruiting, training and retaining technically skilled, experienced personnel that could increase the costs for these segments, or limit their growth; and

•	the ability to maintain traditional margins for certain of their technology or services.

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•	We may not fully recover our costs of acquiring and processing seismic data through future sales. The ultimate amounts involved in these data sales are uncertain and depend on a variety of factors, many of which are beyond our control.

•	The timing of these sales is unpredictable and can vary greatly from period to period. The costs of each survey are capitalized and then amortized as a percentage of sales and/or over the expected useful life of the data. This amortization will affect our earnings and, when combined with the sporadic nature of sales, will result in increased earnings volatility.

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Regulatory changes that affect companies’ ability to drill, either generally or in a specific location where we have acquired seismic data, could materially adversely affect the value of the seismic data contained in our library. Technology changes could also make existing data sets obsolete. Additionally, each of our individual surveys has a limited book life based on its location and oil and gas companies’ interest in prospecting for reserves in such location, so a particular survey may be subject to a significant decline in value beyond our initial estimates.

•	The value of our multi-client data could be significantly adversely affected if any material adverse change occurs in the general prospects for oil and gas exploration, development and production activities.

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The cost estimates upon which we base our pre-commitments of funding could be wrong. The result could be losses that have a material adverse effect on our financial condition and results of operations. These pre-commitments of funding are subject to the creditworthiness of our clients. In the event that a client refuses or is unable to pay its commitment, we could incur a substantial loss on that project.

•	As part of our asset-light strategy, we routinely charter vessels from third-party vendors to acquire seismic data for our multi-client business. As a result, our cost to acquire our multi-client data could significantly increase if vessel charter prices rise materially.

•	disruption of oil and natural gas E&P activities;

•	restriction on the movement and exchange of funds;

•	inhibition of our ability to collect advances and receivables;

•	enactment of additional or stricter U.S. government or international sanctions;

•	limitation of our access to markets for periods of time;

•	expropriation and nationalization of assets of our company or those of our customers;

•	political and economic instability, which may include armed conflict and civil disturbance;

•	currency fluctuations, devaluations and conversion restrictions;

•	confiscatory taxation or other adverse tax policies; and

•	governmental actions that may result in the deprivation of our contractual rights.

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•	the supply of and demand for oil and gas;

•	the level of prices, and expectations about future prices, of oil and gas;

•	the cost of exploring for, developing, producing and delivering oil and gas;

•	the expected rates of decline for current production;

•	the discovery rates of new oil and gas reserves;

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•	weather conditions, including hurricanes, that can affect oil and gas operations over a wide area, as well as less severe inclement weather that can preclude or delay seismic data acquisition;

•	domestic and worldwide economic conditions;

•	political instability in oil and gas producing countries;

•	technical advances affecting energy consumption;

•	government policies regarding the exploration, production and development of oil and gas reserves;

•	the ability of oil and gas producers to raise equity capital and debt financing; and

•	merger and divestiture activity among oil and gas companies and seismic contractors.

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•	operating results that vary from the expectations of securities analysts and investors;

•	factors influencing the levels of global oil and natural gas exploration and exploitation activities, such as depressed prices for natural gas in North America or disasters such as the Deepwater Horizon incident in the Gulf of Mexico in 2010;

•	the operating and securities price performance of companies that investors or analysts consider comparable to us;

•	actions by rating agencies related to the Notes;

•	announcements of strategic developments, acquisitions and other material events by us or our competitors; and

•	changes in global financial markets and global economies and general market conditions, such as interest rates, commodity and equity prices and the value of financial assets.

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•	authorizing the issuance of “blank check” preferred stock without any need for action by stockholders;

•	providing for a classified board of directors with staggered terms;

•	requiring supermajority stockholder voting to effect certain amendments to our certificate of incorporation and bylaws;

•	eliminating the ability of stockholders to call special meetings of stockholders;

•	prohibiting stockholder action by written consent; and

•	establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

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Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

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(i)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and

(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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(1)	R. Brian Hanson, the Company’s President and Chief Executive Officer, is not included in this table because he was an employee of the Company during 2013, and therefore received no compensation for his services as director. The compensation received by Mr. Hanson as an employee of the Company during 2013 is shown in the Summary Compensation Table contained in “— Executive Compensation” below.

(2)	All of the amounts shown represent the value of common stock granted under the Company’s 2004 Long-Term Incentive Plan ("2004 LTIP"). On December 1, 2013, each of the Company’s non-employee directors was granted an award of 25,000 shares of the Company’s common stock. The values contained in the table are based on the grant-date fair value of awards of stock during the fiscal year.

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•	the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the Company to the director; and

•	whether the director is affiliated with the Company, a subsidiary or affiliate.

•	other services provided to the Company by Performensation Consulting;

•	the amount of fees paid by the Company as a percentage of Performensation Consulting's total revenues;

•	policies or procedures maintained by Performensation Consulting that are designed to prevent a conflict of interest;

•	any business or personal relationships between the individual consultants involved in the engagement and any member of the committee;

•	any of the Company’s common stock owned by the individual consultants involved in the engagement; and

•	any business or personal relationships between the Company’s executive officers and Performensation Consulting or the individual consultants involved in the engagement.

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•	attract and retain qualified and productive executive officers and key employees by providing total compensation competitive with that of other executives and key employees employed by companies of similar size, complexity and industry of business;

•	encourage executives and key employees to achieve strong financial and operational performance;

•	structure compensation to create meaningful links between corporate performance, individual performance and financial rewards;

•	align the interests of executives with those of stockholders by providing a significant portion of total pay in the form of stock-based incentives;

•	encourage long-term commitment to the Company; and

•	limit corporate perquisites to seek to avoid perceptions both within and outside of the Company of “soft” compensation.

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The compensation programs consist of both fixed and variable compensation. The fixed (or salary) portion is designed to provide a steady income regardless of the Company’s stock price performance so that executives do not focus exclusively on stock price performance to the detriment of other important business metrics. The variable (cash bonus and equity) portions of compensation are designed to reward both short- and long-term corporate performance. The Compensation Committee believes that the variable elements of compensation are a sufficient percentage of overall compensation to motivate executives to produce positive short- and long-term corporate results, while the fixed element is also sufficiently high such that the executives are not encouraged to take unnecessary or excessive risks in doing so.

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The financial metrics used to determine the amount of an executive’s bonus are measures the committee believes contribute to long-term stockholder value and ensure the continued viability of the Company. Moreover, the committee attempts to set ranges for these measures that encourage success without encouraging excessive risk taking to achieve short-term results. In addition, the overall maximum bonus for each participating named executive officer other than the Company’s Chief Executive Officer is not expected to exceed 100% of the executive’s base salary under the bonus plan, and the overall bonus for the Chief Executive Officer under his employment agreement will not exceed 150% of his base salary under the bonus plan, in each case no matter how much the Company’s financial performance exceeds the ranges established at the beginning of the year.

•	The Company has strict internal controls over the measurement and calculation of the financial metrics that determine the amount of an executive’s bonus, designed to keep it from being susceptible to manipulation by an employee, including executives.

•	Stock options become exercisable over a four-year period and remain exercisable for up to ten years from the date of grant, encouraging executives to look to long-term appreciation in equity values.

•	Restricted stock becomes exercisable over a three-year period, again encouraging executives to look to long-term appreciation in equity values.

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Senior executives, including named executive officers, are required to acquire over time and hold shares of the Company’s stock having a value of between one and four times the executive’s annual base salary, depending on the level of the executive. The Compensation Committee believes that the stock ownership guidelines provide a considerable incentive for management to consider the Company’s long-term interests, since a portion of their personal investment portfolio consists of company stock.

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In addition, the Company does not permit any executive officers or directors to enter into any derivative or hedging transactions involving its stock, including short sales, market options, equity swaps and similar instruments, thereby preventing executives from insulating themselves from the effects of poor company stock price performance. Please refer to “— Stock Ownership Requirements; Hedging Policy” below.

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The Company has a compensation recoupment (clawback) policy that provides, in the event of a restatement of its financial results due to material noncompliance with financial reporting requirements, for reimbursement of the incremental portion of performance-based compensation, including performance-based bonuses and long-term incentive awards, paid to current or former executive officers within three years of the restatement date, in excess of the compensation that would have been paid had such compensation amount been based on the restated financial results. Please refer to “— Clawback Policy” above.

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Pursuant to his prior employment agreement then in effect, on March 1, 2011, Mr. Hanson received an award of 38,561 shares of restricted stock, which is equal to $327,000 (the amount of cash incentive plan compensation that Mr. Hanson earned for fiscal 2010) divided by $8.48, which was the average of the closing sales price per share on the NYSE of the Company’s shares of common stock for the last ten business days of 2010. The shares of restricted stock will vest on March 1, 2014.

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At the beginning of 2011, Mr. Hanson was serving as Executive Vice President and Chief Financial Officer. In August 2011, Mr. Hanson was promoted to President and Chief Operating Officer in addition to his role as Chief Financial Officer. In November 2011, Mr. Heinlein was hired as Senior Vice President and Chief Financial Officer and Mr. Hanson continued as President and Chief Operating Officer. On January 1, 2012, Mr. Hanson was appointed as President and Chief Executive Officer. In connection with his promotion to President and Chief Operating Officer in August 2011, on September 1, 2011, Mr. Hanson received an award of 42,000 shares of restricted stock.

•	On December 1, 2012, Mr. Hanson received an award of 45,000 shares of restricted stock.

•	In connection with his hire on November 30, 2012, as Executive Vice President & Chief Operating Officer, GeoScience Division, on December 1, 2012, Mr. Usher received an award of 50,000 shares of restricted stock.

•	On December 1, 2011, Mr. Williamson received an award of 15,000 shares of restricted stock.

•	On December 1, 2012, Mr. Williamson received an award of 15,000 shares of restricted stock.

•	In connection with his hire on November 28, 2011 as Senior Vice President and Chief Financial Officer, on December 1, 2011, Mr. Heinlein received an award of 28,700 shares of restricted stock.

•	On December 1, 2012, Mr. Heinlein received an award of 5,000 shares of restricted stock.

•	In connection with his promotion to President and Chief Operating Officer in August 2011, on September 1, 2011, Mr. Hanson received an award of nonqualified stock options to purchase 250,000 shares of the Company’s common stock for an exercise price of $7.07 per share.

•	On December 1, 2012, Mr. Hanson received an award of options to purchase 75,000 shares of common stock for an exercise price of $5.96 per share.

•	In connection with his hire on November 30, 2012, as Executive Vice President & Chief Operating Officer, GeoScience Division, on December 1, 2012, Mr. Usher received an award of options to purchase 50,000 shares of common stock for an exercise price of $5.96 per share.

•	On December 1, 2011, Mr. Williamson received an award of options to purchase 50,000 shares of common stock for an exercise price of $5.81 per share.

•	On December 1, 2012, Mr. Williamson received an award of options to purchase 50,000 shares of common stock for an exercise price of $5.96 per share.

•	In connection with his hire on November 28, 2011 as Senior Vice President and Chief Financial Officer, on December 1, 2011, Mr. Heinlein received an award of options to purchase 172,000 shares of common stock for an exercise price of $5.81 per share.

•	On December 1, 2012, Mr. Heinlein received an award of options to purchase 25,000 shares of common stock for an exercise price of $5.96 per share.

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(1)

Reflects the estimated threshold, target and maximum award amounts for payouts under the Company’s 2013 incentive plan to its named executive officers. Under the plan, every participating executive other than Mr. Hanson, who served as President and Chief Executive Officer during 2013, had the opportunity to earn a maximum of 100% of his base salary depending on performance of the Company against the designated performance goal, and performance of the executive against personal performance criteria. Under separate terms approved by the Compensation Committee and contained in his employment agreement, Mr. Hanson participated in the plan with the potential to earn a target incentive payment of 75% of his base salary, depending on achievement of the Company’s target consolidated performance goal and pre-designated personal critical success factors, and a maximum of 150% of his base salary upon achievement of the maximum consolidated performance goal and the personal critical success factors. Mr. Hanson's employment agreement does not specify that he will earn a bonus upon achievement of a threshold consolidated performance goal. Because award determinations under the plan were based in part on outcomes of personal evaluations of employee performance by the Chief Executive Officer and the Compensation Committee, the computation of actual awards generated under the plan upon achievement of threshold and target company performance criteria differed from the above estimates. See “— Compensation Discussion and Analysis — Elements of Compensation — Bonus Incentive Plan” above. For actual payout amounts to named executive officers under the 2013 bonus incentive plan, see the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table” above.

(2)	The Company does not offer or sponsor any “equity incentive plans” (as that term is defined in Item 402(a) of Regulation S-K) for employees.

(3)	All stock awards reflect the number of shares of restricted stock granted under the 2004 LTIP. While unvested, a holder of restricted stock is entitled to the same voting rights as all other holders of common stock. In each case, unless stated otherwise below, the awards of shares of restricted stock vest in one-third increments each year, over a three-year period.

(4)

All amounts reflect awards of stock options granted under the 2004 LTIP. In each case, unless stated otherwise below, the options vest 25% each year over a four-year period. All of the exercise prices for the options reflected in the above chart equal or exceed the fair market value per share of Company common stock on the date of grant (on November 29, 2013, the last completed trading day prior to the December 1, 2013 grant date, the closing price per share on the NYSE was $3.86).

(5)	The values contained in the table are based on the grant date fair value of the award computed in accordance with ASC Topic 718 for financial statement reporting purposes, but exclude any impact of assumed forfeiture rates. For a discussion of valuation assumptions, see Note 9, Stockholders’ Equity and Stock-Based Compensation — Valuation Assumptions.

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(1)	All stock option information in this table relates to nonqualified stock options granted under the 2004 LTIP. All of the unvested options in this table vest 25% each year over a four-year period.

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(2)

The amounts shown represent shares of restricted stock granted under the 2004 LTIP. While unvested, the holder is entitled to the same voting rights as all other holders of common stock. Except for certain shares of restricted stock held by Mr. Hanson, in each case the grants of shares of restricted stock vest in one-third increments each year, over a three-year period. See “—Discussion of Summary Compensation Table—Stock Awards Column” above.

(3)	Pursuant to SEC rules, the market value of each executive’s shares of unvested restricted stock was calculated by multiplying the number of shares by $3.30 (the closing price per share of the Company’s common stock on the NYSE on December 31, 2013).

(4)	The amounts shown reflect awards of cash-settled SARs granted to Mr. Hanson on December 1, 2008 under the Company’s Stock Appreciation Rights Plan. Mr. Hanson’s SARs vested in full on December 1, 2011. See “— Summary Compensation Table — Discussion of Summary Compensation Table” above.

(5)	The Company does not have outstanding any Equity Incentive Plan Awards as defined by the SEC rules. As a result, the above table omits the following columns:

•	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options

•	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested

•	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

(1)	The values realized upon vesting of stock awards contained in the table are based on the market value of the Company’s common stock on the date of vesting.

(2)

The value realized by Mr. Hanson on the vesting of his restricted stock awards was calculated by multiplying (a) 6,515 shares by $6.19 (the closing price per share of the Company’s common stock on the NYSE on June 3, 2013, the first NYSE trading date after his June 1, 2013 vesting date); (b) 14,000 shares by $4.75 (the closing price per share of common stock on the NYSE on September 3, 2013, the first NYSE trading date after his September 1, 2013 vesting date and (c) 15,000 shares by $3.58 (the closing price per share of common stock on the NYSE on December 2, 2013, the first NYSE trading date after his December 1, 2013 vesting date).

(3)	The value realized by Mr. Usher on the vesting of his restricted stock awards was calculated by multiplying 16,668 shares by $3.58 (the closing price per share of common stock on the NYSE on December 2, 2013, the first NYSE trading date after his December 1, 2013 vesting date).

(4)	The value realized by Mr. Williamson on the vesting of his restricted stock awards was calculated by multiplying 13,333 shares by $3.58 (the closing price per share of common stock on the NYSE on December 2, 2013, the first NYSE trading date after his December 1, 2013 vesting date).

(5)	The value realized by Mr. Heinlein on the vesting of his restricted stock awards was calculated by multiplying 11,234 shares by $3.58 (the closing price per share of common stock on the NYSE on December 2, 2013, the first NYSE trading date after his December 1, 2013 vesting date).

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(6)

The value realized by Mr. Hulme on the vesting of his restricted stock awards was calculated by multiplying (a) 6,668 shares by $6.19 (the closing price per share of common stock on the NYSE on June 3, 2013, the first NYSE trading date after his June 1, 2013 vesting date) and (b) 3,334 shares by $3.58 (the closing price per share of common on the NYSE on December 2, 2013, the first NYSE trading date after his December 1, 2013 vesting date).

•	the Company terminates his employment other than for cause, death or disability;

•	Mr. Hanson resigns for “good reason”; or

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•

a “change in control” involving the Company occurs and, within 12 months following the change in control, (a) the Company or its successor terminates Mr. Hanson’s employment or (b) Mr. Hanson terminates his employment after the Company or its successor (i) elects not to extend the term of his employment agreement, (ii) assigns to Mr. Hanson duties inconsistent with his CEO position, duties, functions, responsibilities, authority or reporting relationship to the Board under his employment agreement, (iii) becomes a privately-owned company as a result of a transaction in which Mr. Hanson does not participate within the acquiring group, (iv) is rendered a subsidiary or division or other unit of another company; or (v) takes any action that would constitute “good reason” under his employment agreement.

(1)	the acquisition by a person or group of beneficial ownership of 40% or more of the Company’s outstanding shares of common stock other than any acquisitions directly from the Company, acquisitions by the Company or an employee benefit plan maintained by the Company, or certain permitted acquisitions in connection with a “Merger” (as defined in sub-paragraph (3) below);

(2)

changes in directors on the Company’s board of directors such that the individuals that constitute the entire board cease to constitute at least a majority of directors of the board, other than new directors whose appointment or nomination for election was approved by a vote of at least a majority of the directors then constituting the entire board of directors (except in the case of election contests);

(3)

consummation of a “Merger” — that is, a reorganization, merger, consolidation or similar business combination involving the Company — unless (i) owners of the Company’s common stock immediately following such business combination together own more than 50% of the total outstanding stock or voting power of the entity resulting from the business combination in substantially the same proportion as their ownership of the Company’s voting securities immediately prior to such Merger and (ii) at least a majority of the members of the board of directors of the corporation resulting from such Merger (or its parent corporation) were members of the Company’s board at the time of the execution of the initial agreement providing for the Merger; or

(4)	the sale or other disposition of all or substantially all of the Company’s assets.

•	over a two-year period, a cash amount equal to two times his annual base salary and two times his target bonus amount in effect for the year of termination;

•	a prorated portion of any unpaid target incentive plan bonus for the year of termination; and

•	continuation of insurance coverage for Mr. Hanson as of the date of his termination for a period of two years at the same cost to him as prior to the termination.

(1)	the acquisition by a person or group of beneficial ownership of 40% or more of the outstanding shares of common stock other than acquisitions directly from the Company, acquisitions by the Company or an employee benefit plan maintained by the Company, or certain permitted acquisitions in connection with a business combination described in sub−paragraph (3) below;

(2)	changes in directors such that the individuals that constitute the entire board of directors cease to constitute at least a majority of directors of the board, other than new directors whose appointment or nomination for election was approved by a vote of at least a majority of the directors then constituting the entire board of directors (except in the case of election contests);

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(3)

consummation of a reorganization, merger, consolidation or similar business combination involving the Company, unless (i) owners of the Company’s common stock immediately following such transaction together own more than 50% of the total outstanding stock or voting power of the entity resulting from the transaction and (ii) at least a majority of the members of the board of directors of the entity resulting from the transaction were members of the Company’s board of directors at the time the agreement for the transaction is signed; or

(4)	the sale of all or substantially all of the Company’s assets.

(1)	Payable over a two-year period. In addition to the listed amounts, if Mr. Hanson resigns or his employment is terminated for any reason, he may be paid for his unused vacation days. Mr. Hanson is currently entitled to 20 vacation days per year. The above table assumes that there is no earned but unpaid base salary as of the time of termination.

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(2)	Represents two times the estimate of the target bonus payment Mr. Hanson would be entitled to receive pursuant to the 2013 bonus incentive plan. The actual bonus payment he would be entitled to receive upon his termination may be different from the estimated amount, depending on the achievement of payment criteria under the bonus plan.

(3)	The value of insurance continuation contained in the above table is the total cost of COBRA continuation coverage for Mr. Hanson, maintaining his same levels of medical, dental and other insurance as in effect on December 31, 2013, less the amount of premiums to be paid by Mr. Hanson for such coverage.

(4)

As of December 31, 2013, Mr. Hanson held (i) 38,561 unvested shares of restricted stock granted prior to August 31, 2011, and 104,000 unvested shares of restricted stock granted after August 30, 2011 and (ii) unvested stock options to purchase 281,250 shares of common stock. Options held by him having an exercise price greater than $3.30 were calculated as having a zero value. The value of the restricted stock that would accelerate and fully vest in the event of a Change in Control, death or disability was calculated by multiplying 142,561 shares by $3.30. The value of unvested restricted stock to accelerate in the event of retirement was calculated by multiplying 38,561 shares by $3.30.

(1)	If Mr. Usher resigns or his employment is terminated for any reason, he may be paid for his unused vacation days. Mr. Usher is currently entitled to 20 vacation days per year. The above table assumes that there is no earned but unpaid base salary as of the time of termination.

(2)

As of December 31, 2013, Mr. Usher held 53,332 unvested shares of restricted stock and unvested stock options to purchase 97,500 shares of common stock. Options held by him having an exercise price greater than $3.30 were calculated as having a zero value. The value of the restricted stock that would accelerate and fully vest in the event of a Change in Control, death or disability was calculated by multiplying 53,332 shares by $3.30.

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(1)	If Mr. Williamson resigns or his employment is terminated for any reason, he may be paid for his unused vacation days. Mr. Williamson is currently entitled to 20 vacation days per year. The above table assumes that there is no earned but unpaid base salary as of the time of termination.

(2)

As of December 31, 2013, Mr. Williamson held 35,000 unvested shares of restricted stock and unvested stock options to purchase 150,000 shares of common stock. Options held by him having an exercise price greater than $3.30 were calculated as having a zero value. The value of the restricted stock that would accelerate and fully vest in the event of a Change in Control, death or disability was calculated by multiplying 35,000 shares by $3.30.

•	the Company terminates his employment for reasons other than for cause, death or disability; or

•	Mr. Heinlein resigns for “good reason.”

•	over a two-year period, a cash amount equal to two times his annual base salary; and

•	any unpaid incentive plan bonuses earned by him pursuant to the terms of the relevant incentive compensation plan with respect to the year of termination.

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(1)	Payable over a two-year period. In addition to the listed amounts, if Mr. Heinlein resigns or his employment is terminated for any reason, he may be entitled to be paid for his unused vacation days. Mr. Heinlein is currently entitled to 20 vacation days per year. The above table assumes that there is no earned but unpaid base salary as of the time of termination.

(2)

As of December 31, 2013, Mr. Heinlein held 27,898 unvested shares of restricted stock and unvested stock options to purchase 144,750 shares of common stock. Options held by him having an exercise price greater than $3.30 were calculated as having a zero value. The value of the restricted stock that would accelerate and fully vest in the event of a Change in Control, death or disability was calculated by multiplying 27,898 shares by $3.30.

(1)	If Mr. Hulme resigns or his employment is terminated for any reason, he may be paid for his unused vacation days. Mr. Hulme is currently entitled to 20 vacation days per year. The above table assumes that there is no earned but unpaid base salary as of the time of termination.

(2)

As of December 31, 2013, Mr. Hulme held 34,998 unvested shares of restricted stock and unvested stock options to purchase 110,000 shares of common stock. Options held by him having an exercise price greater than $3.30 were calculated as having a zero value. The value of the restricted stock that would accelerate and fully vest in the event of a Change in Control, death or disability was calculated by multiplying 34,998 shares by $3.30.

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•	No executive officer of the Company served as a member of the compensation committee of another entity, one of whose executive officers served as a director or on the Compensation Committee of the Company; and

•	No executive officer of the Company served as a director of another entity, one of whose executive officers served on the Compensation Committee of the Company.

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(1)	Represents shares for which the named person (a) has sole voting and investment power or (b) has shared voting and investment power. Excluded are shares that (i) are unvested restricted stock holdings or (ii) may be acquired through stock option exercises.

(2)	Represents shares of common stock that may be acquired upon the exercise of stock options held by the Company’s officers and directors that are currently exercisable or will be exercisable on or before April 16, 2014.

(3)	Represents unvested shares subject to a vesting schedule, forfeiture risk and other restrictions. Although these shares are subject to risk of forfeiture, the holder has the right to vote the unvested shares unless and until they are forfeited.

(4)	Assumes shares subject to outstanding stock options that such person has rights to acquire upon exercise, presently and on or before April 16, 2014, are outstanding.

(5)	The address for Invesco Ltd. is 1555 Peachtree Street NE, Atlanta, Georgia, 30309.

(6)	The address for BGP Inc., China National Petroleum Corporation is No. 189 Fanyang Middle Road, ZhuoZhou City, HeBei Province 072750 P.R. China.

(7)	The address for BlackRock, Inc. is 40 East 52nd Street, New York, New York 10022. Blackrock, Inc. reported that it has sole voting power with respect to 12,240,678 shares and sole dispositive power with respect to 12,698,946 shares.

(8)	The address for St. Denis J. Villere & Company L.L.C. is 601 Poydras Street, Suite 1808, New Orleans, Louisiana 70130. St. Denis J. Villere & Company L.L.C. reported that it has sole voting and dispositive power with respect to 3,988,284 shares and shared voting and dispositive power with respect to 6,620,235 shares.

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(9)

These shares of common stock include 1,100,580 shares that Mr. Lapeyre holds as a custodian or trustee for the benefit of his children, 7,605,345 shares owned by Laitram, and 10,500 shares that Mr. Lapeyre holds as a co-trustee with his wife for the benefit of his children, in all of which Mr. Lapeyre disclaims any beneficial interest. Please read note 11 below. Mr. Lapeyre has sole voting power over only 1,534,113 of these shares of common stock.

(10)

Wells Fargo & Company filed its Schedule 13G with the SEC on behalf of itself and the following subsidiaries: Wells Capital Management Incorporated, Wells Fargo Advisors, LLC, Wells Fargo Advisors Financial Network, LLC, and Wells Fargo Funds Management, LLC. The address for Wells Fargo & Company is 420 Montgomery Street, San Francisco, California 94104. Wells Fargo & Company reported that it has sole voting and dispositive power with respect to 2 shares, shared voting power with respect to 8,292,010 shares, and shared dispositive power with respect to 8,304,250 shares.

(11)	The address for Laitram, L.L.C. is 220 Laitram Lane, Harahan, Louisiana 70123. Mr. Lapeyre is the President and Chief Executive Officer of Laitram. Please read note 9 above. Mr. Lapeyre disclaims beneficial ownership of any shares held by Laitram.

(12)	These shares of common stock include 1,000 shares owned by Mr. Heinlein's wife, in which Mr. Heinlein disclaims any beneficial interest.

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The Company issued and sold 23,789,536 shares of its common stock to BGP for an effective purchase price of $2.80 per share pursuant to (i) a Stock Purchase Agreement the Company entered into with BGP and (ii) the conversion of the principal balance of indebtedness outstanding under a Convertible Promissory Note dated as of October 23, 2009. As of February 15, 2014, BGP held beneficial ownership of approximately 14.5% of the Company’s outstanding shares of common stock. The shares of common stock acquired by BGP are subject to the terms and conditions of an Investor Rights Agreement that the Company entered into with BGP in connection with its purchase of the shares. Under the Investor Rights Agreement, for so long as BGP owns as least 10% of the Company’s outstanding shares of common stock, BGP will have the right to nominate one director to serve on the Company’s Board. The appointment of Mr. Hao to the Company’s Board was made pursuant to this agreement. The Investor Rights Agreement also provides that whenever the Company may issue shares of its common stock or other securities convertible into, exercisable or exchangeable for its common stock, BGP will have certain pre-emptive rights to subscribe for a number of such shares or other securities as may be necessary to retain its proportionate ownership of the Company’s common stock that would exist before such issuance. These pre-emptive rights are subject to usual and customary exceptions, such as issuances of securities as equity compensation to the Company’s directors, employees and consultants, under employee stock purchase plans and under the Company’s currently outstanding convertible and exercisable securities.

•

The Company formed the INOVA Geophysical joint venture with BGP, owned 49% by the Company and 51% by BGP, to design, develop, manufacture and sell land-based seismic data acquisition equipment for the petroleum industry. Under the terms of the joint venture transaction, INOVA Geophysical was initially formed as a wholly-owned direct subsidiary of the Company, and BGP acquired its interest in the joint venture by paying the Company aggregate consideration of (i) $108.5 million in cash and (ii) 49% of certain assets owned by BGP relating to the business of the joint venture. In addition, INOVA Geophysical provided a bank stand-by letter of credit as credit support for the Company’s obligations under the Company’s commercial bank revolving and term loans.

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(a)

Audit fees consist primarily of the audit and quarterly reviews of the consolidated financial statements, the audit of the effectiveness of internal control over financial reporting, audits of subsidiaries, statutory audits of subsidiaries required by governmental or regulatory bodies, attestation services required by statute or regulation, comfort letters, consents, assistance with and review of documents filed with the SEC, work performed by tax professionals in connection with the audit and quarterly reviews, and accounting and financial reporting consultations and research work necessary to comply with generally accepted auditing standards.

(b)	Audit-related fees relate primarily to due diligence services. Also included are licensing fees related to accounting research software.

(c)	Tax fees consist of financial and tax due diligence services.

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(a)	Net income attributable to noncontrolling interests for 2013, 2012 and 2011 excludes $(0.3) million, $(0.5) million and $(0.1) million, respectively, related to the redeemable noncontrolling interests, which is reported in the mezzanine equity section of the Consolidated Balance Sheet.

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•	Make certain investments; pay certain dividends or distributions on the capital stock or other equity interests of the Company or any restricted subsidiary; purchase, redeem or retire capital stock or certain indebtedness or make other types of restricted payments, unless

*	No default under the Indenture has occurred or would occur as a result of such payment or investment,

*	The Company would, after giving pro forma effect to such investment or payment, have been permitted to incur at least $1.00 of additional indebtedness under a Fixed Charge Coverage Ratio test under the Indenture and

*	The aggregate cumulative amount of all such payments or investments would not exceed a sum calculated by reference to, among other items, the Company's consolidated net income, proceeds from certain sales of equity or assets, certain conversions or exchanges of debt for equity and certain other reductions in indebtedness;

•	Incur additional indebtedness or issue certain preferred stock, unless the Fixed Charge Coverage Ratio for the four most recently completed fiscal quarters immediately prior to such incurrence or issuance would have been 2.0 to 1.0, as determined on a pro forma basis as if the debt had been incurred or the stock issued at the beginning of such four-quarter period;

•	Create, incur or assume any lien, except certain permitted liens;

•

Restrict or encumber the ability of any restricted subsidiary to (i) pay dividends on or make any other distributions with respect to its equity interests, (ii) pay indebtedness owed to the Company or any restricted subsidiary, (iii) make loans or advances to the Company or any of its restricted subsidiaries or (iv) sell, lease or transfer properties or assets to the Company or any restricted subsidiary;

•	Carry out certain mergers or consolidations with another entity, or sell, assign or lease all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, unless

*	No default under the Indenture has occurred or would occur as a result of such merger or sale, and

*

The Fixed Charge Coverage Ratio of the Company or its successor for the four most recently completed fiscal quarters immediately prior to such merger or sale would have been 2.0 to 1.0, as determined on a pro forma basis as if the merger or sale and any related financing transactions had occurred at the beginning of such four-quarter period, which would permit the Company or its successor to incur additional indebtedness under the Indenture;

•	Create unrestricted subsidiaries; or

•	Enter into certain transactions with affiliates of the Company.

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•	An alternate base rate equal to the sum of (i) the greatest of (a) the prime rate of CMB, (b) a federal funds effective rate plus 0.50%, or (c) an adjusted LIBOR-based rate plus 1.0% and (ii) an applicable interest margin of 1.4% (reduced from 2.5%); or

•	For eurodollar borrowings and borrowings in Euros, Pounds Sterling or Canadian Dollars, the sum of (i) an adjusted LIBOR-based rate, and (ii) an applicable interest margin of 2.4% (reduced from 3.5%).

•	Maintain a minimum fixed charge coverage ratio, as defined, in an amount equal to at least 1.125 to 1;

•	Not exceed a maximum leverage ratio, as defined, of 3.25 to 1; and

•	Maintain a minimum tangible net worth of at least 60% of ION’s tangible net worth as of March 31, 2010, as defined.

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•	ION Geophysical Corporation and the guarantor subsidiaries (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting).

•	All other nonguarantor subsidiaries.

•	The consolidating adjustments necessary to present ION Geophysical Corporation’s results on a consolidated basis.

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