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Regulatory News:

CGGVeritas (Paris:GA) (NYSE:CGV) announced today its non-audited second quarter 2012 consolidated1 results. All comparisons are made on a year-on-year basis unless stated otherwise.

• Revenue at $831 million, up 11%
• Strong increase in Operating Income at $85 million, a 10% margin
• Services return to profitability
• Positive Outlook for 2012 confirmed

Second Quarter 2012 Key Figures

  In million $ Second Quarter2012 Second Quarter

2011*

Revenue 831 751 EBITDAs 228 149 Operating Income 85 15 Net Income 34 -38 Cash Flow from Operations 104 162 Free Cash Flow -129 -7 Backlog 1 300 1 310

*Restated figures

 

CGGVeritas CEO, Jean-Georges Malcor, commented:

“Our Performance Plan continues to bear fruit with the recovery of our marine operations, as illustrated by the very good utilization rate of our fleet since the beginning of the year. Combined with the sustained level of activity in Processing & Imaging, and a more favorable seasonality in Land Acquisition, our marine performance enabled Services to deliver a positive operating income this quarter (typically the weakest quarter in the year), despite the reduced contribution from multi-client sales. Sercel continued to deliver an excellent performance.

"The commercial visibility is improving: exploration spending is expected to increase by more than 15% this year, and tendering activity in marine acquisition is firming up for the fourth quarter of 2012 and first quarter of 2013.

"CGGVeritas remains at the forefront of innovation. We launched in early June the new generation of Sercel streamers, Sentinel® RD with a reduced diameter. We continue to capitalize on the commercial success of BroadSeisTM and CGGVeritas is returning to the US waters of the Gulf of Mexico with StagSeisTM, a major innovation in marine acquisition and imaging, with its new multi-client survey called IBALT.

"Within this context, I am confident in our ability to reach our 2012 objectives.”

1Effective January 1, 2012, CGGVeritas changed the presentation currency of its consolidated financial statements from the euro to the U.S. dollar to better reflect the profile of an industry with revenues, costs and cash flows primarily generated in U.S. dollars. The first and second quarter 2011 figures shown in this press release have been restated as if the change in the Group presentation currency had been effective since January 1, 2004 (IFRS transition). In the context of our new presentation of cash indicators, first and second quarter 2011 EBITDAs and multi-client Capex figures have been restated.

Second Quarter 2012 Results

• Group revenue was $831 million, up 11% year-on-year and up 6% sequentially.
• Group operating income was $85 million, a 10% margin:
• Sercel margin was at 32% driven by sustained demand for land and marine high-resolution surveys.
• Services operating income was positive at $19 million mainly due to our improved operational efficiency in marine and to a more favorable seasonality for our Land activity.
• The contribution from equity investees was at $10 million, mainly related to the good performance of Argas.
• Net income was at $34 million, compared to a loss of $38 million in the second quarter 2011.
• Earnings Before Interest Tax Depreciation and Amortization (EBITDAs) was at $228 million, up 53% year-on-year and up 8% sequentially.
• The operational cash flow was $104 million, down 36% year-on-year, due to opposite changes in working capital during the quarter. The increase in working capital is mainly related to the high level of invoicing in June both at Sercel and Services.
• Total Capex was at $179 million this quarter, industrial capex was at $97 million and multi-client capex reached $82 million as 17% of the fleet was dedicated to multi-client programs.
• After payment of interests and capital expenditure, net free cash flow was negative at $129 million.
• Backlog was at $1.3 billion at the end of June 2012, stable year-on-year, up in Services at $1.130 billion and down at Sercel at $170 million.

Post Closing Events

• Start of IBALT, our new multi-client GoM survey, using StagSeis the innovative solution for marine acquisition and imaging.
• Signature of a strategic alliance with SMNG, the main Russian geophysical company.

Positive Outlook for 2012 confirmed

• Group revenue expected to grow 10%-15%.
• 2011-2012 performance plan: $150 million additional operating income target confirmed.
• Industrial Capex:
  • As planned, 2/3 of original industrial capex spent on H1 (including the upgrade of the Champion vessel).
  • H2 capex could potentially be revised up to take advantage of the positive market cycle.
• Multi-Client Cash Capex:
  • Marine at around $250 million including StagSeis and Land at around $130 million.
  • Prefunding confirmed at 80%-85%.
• Positive Free Cash Flow.

Second Quarter 2012 Financial Results

Second Quarter 2012 key figures

In million $   First Quarter

2012

  Second Quarter     2012   2011* Group Revenue   787   831   751 Sercel   348   285   266 Services   531   599   533 Group Operating Income   54   85   15 Margin   7%   10%   2% Sercel   116   92   76 Margin   33%   32%   28% Services   -8   19   -29 Margin   -1%   3%   -5% Net Income   -3   34   -38 Margin   0%   4%   -5% Net Debt   1 512   1 600   1 492 Net Debt to Equity Ratio   39%   42%   40%

*Restated figures

Revenue

Group revenue was up 11% year-on-year and up 6% sequentially. Services revenue was up 13% year-on-year, and Sercel revenue up 7%.

      In million $ First Quarter Second Quarter   2012   2012   2011* Group Revenue   787   831   751 Sercel Revenue   348   285   266 Services Revenue   531   599   533 Eliminations   -92   -54   -48 Marine contract   189   288   242 Land contract   123   112   81 Processing   106   113   106 Multi-client   114   87   104 Marine MC   87   52   78 Land MC   27   35   26

*Restated figures

Sercel

Revenue was up 7% year-on-year and down 18% sequentially compared to the historically high first quarter 2012. Sercel particularly benefited from a high level of land equipment deliveries. The first two Sercel 428 XL high-channel-count crews equipped with the new Sercel Giga Transverse technology, which offers increasing seismic data acquisition capabilities and transmission rate, successfully started their operations in the Middle East. The commercial success of UNITE, Sercel’s wireless system, is continuing, particularly with a growing penetration in the North American market.

In marine equipment, Sercel launched the Sentinel® RD, the latest generation of its Sentinel solid streamer, at the recent European geophysical convention. Fully compatible with the Seal 428, the Sercel Sentinel® RD has a reduced diameter with a weight gain of 15%, allowing reduced water drag and easier storage onboard seismic vessels. The first deliveries of this new equipment started in June. Finally, internal sales were at $54 million and represented 19% of Sercel total revenue.

Services

Revenue was up 13% both year-on-year and sequentially. Improving marine operational performance, a more favorable land acquisition seasonality and a sustained activity in Processing & Imaging offset lower multi-client sales this quarter.

• Marine contract revenue was up 19% year-on-year. It was up 53% sequentially with a better utilization rate and the slightly positive impact of price increases. The improvement in our marine operational performance continued with both our vessel availability rate2 and production rate3 at 91%. A large part of our fleet was transiting to the North Sea where five vessels are in operation currently. The commercial success of BroadSeis was confirmed with 2/3 of the fleet acquiring BroadSeis surveys at the end of June. The Oceanic Vega and Oceanic Sirius successfully completed the largest high-resolution wide-azimuth survey ever conducted in the Mexican waters of the Gulf of Mexico. They were redeployed at the end of June in the US waters of the Gulf of Mexico to acquire the first StagSeis multi-client survey, the new marine acquisition solution of CGGVeritas which provides full wide-azimuth coverage and unrivalled long offsets, designed to illuminate the complex subsalt geologies.
• Land contract revenue was up 38% compared to an exceptionally low second quarter 2011, due to a stronger seasonality. Sequentially, it was down 9%. 5 crews operated in North America and 13 crews in the rest of the world with 5 operating in transition zones and in shallow waters especially in Asia-Pacific. Our operations in Saudi Arabia reached a record level of productivity and, in North Africa, CGGVeritas is returning to Algeria after 15 years of absence. Worldwide demand for high-channel-count crews, for shallow water and OBC operations continues to be sustained.
• Processing, Imaging & Reservoir revenue was up 7% both year-on-year and sequentially. Demand for high-end processing is strengthening, sustained by high-resolution land and marine acquisitions and by the growth of BroadSeis. Activity remained at high levels in our major international centers and backlog was at record levels at the end of June.

• Multi-client revenue was down 17% year-on-year and down 24% sequentially. This decrease was mainly related to marine after-sales, after two consecutive quarters with a particularly high level of after-sales in the Gulf of Mexico, ahead of the June lease sale. Capex was $82 million with a low prefunding of 55%, as the formal commitments of some clients were postponed to the next quarter. With a depreciation rate averaging 74%, this quarter, the Net Book Value at the end of June 2012 stands at $561 million compared to $536 million at the end of March 2012.
  • Marine multi-client revenue was at $52 million, down 34% year-on-year. Prefunding revenue was at $20 million and after-sales were at $32 million. Capex was $41 million and was concentrated on offshore Brazil and Angola where CGGVeritas started a multi-client program on block 22. With a depreciation rate at 67% this quarter, the Net Book Value at the end of June 2012 stands at $411 million.
  • Land multi-client revenue was at $35 million, up 34% year-on-year. Prefunding revenue was at $25 million and after-sales were at $10 million. Capex was $41 million dedicated to the pursuit of our Marcellus and Alaska programs. With a depreciation rate at 84%, the Net Book Value at the end of June 2012 stands at $150 million.

2 - The vessel availability rate, a metric measuring the structural availability of our vessels to meet demand; this metric is related to the entire fleet, and corresponds to the total vessel time reduced by the sum of the standby time, the shipyard time and the steaming time (the “available time”), all divided by total vessel time.

3 - The vessel production rate, a metric measuring the effective utilization of the vessels once available; this metric is related to the entire fleet, and corresponds to the available time reduced by the operational downtime, all then divided by available time.

Group EBITDAs was $228 million, a margin of 27%.

  First Quarter   Second Quarter In million $   2012   2012   2011* Group EBITDAs   212   228   149 Margin   27%   27%   20% Sercel EBITDAs   127   103   89 Margin   36%   36%   33% Services EBITDAs   136   150   90 Margin   26%   25%   17%

*Restated figures

Group Operating Income was $85 million. Operating margin was 10%.

  First Quarter   Second Quarter In million $   2012   2012   2011* Group Operating Income   54   85   15 Margin   7%   10%   2% Sercel Operating Income   116   92   76 Margin   33%   32%   28% Services Operating Income   -8   19   -29 Margin   -1%   3%   -5%

*Restated figures

Financial Charges

Financial charges were $34 million:

• Cost of debt was $39 million, while the total amount of paid interests during the quarter was $55 million.
• Other financial items represented a positive contribution of $5 million, mainly related to the favorable impact of currency variations.

Taxes were $24 million including the unfavorable impact of $3 million of currency variations.

After the impact of the income from equity investments of $10 million, Group Net Income was at $34 million compared to a loss of $38 million in the second quarter 2011.

Net Income attributable to the owners of CGGVeritas was at $29 million/€22 million after the impact of minority interests of $4 million/€3 million. EPS was positive at €0.15 per ordinary share and positive at $0.19 per ADS.

Cash Flow

Cash Flow from Operations

Cash flow from operations was at $104 million, compared to $162 million in the second quarter 2011.

Capex

Global Capex was $179 million this quarter, up 26% year-on-year.

• Industrial Capex was $97 million, down 3% year-on-year
• Multi-client Cash Capex was $82 million, up 95% year-on-year with a 55% prefunding rate.

In million $   First Quarter   Second Quarter   2012   2012   2011* Capex   203   179   142 Industrial   127   97   100 Multi-client Cash 76 82   42 Marine MC 52 41 10 Land MC   24   41   33

*Restated figures

Free Cash Flow

After interests expenses paid during the quarter and Capex, net free cash flow was negative at $129 million compared to a negative free cash flow of $7 million in the second quarter of 2011.

Second Quarter 2012 Comparisons with Second Quarter 2011

Consolidated Income Statement   First Quarter   Second Quarter In million $   2012   2012   2011* Exchange rate euro/dollar   1.318   1.298   1.448 Operating Revenue   786.6   831.0   750.7 Sercel   347.8   285.2   266.3 Services   531.1   599.4   532.7 Elimination   -92.3   -53.6   -48.3 Gross Profit   138.6   177.8   103.4 Operating Income   53.8   84.6   14.8 Sercel   115.5   91.7   75.6 Services   -7.7   19.3   -29.1 Corporate and Elimination   -54.0   -26.4   -31.7 Net Financial Costs   -41.9   -34.0   -54.6 Income Tax   -21.8   -24.1   -5.3 Deferred Tax on Currency Variations   2.8   -2.8   1.1 Income from Equity Investments   3.6   10.1   5.7 Net Income   -3.5   33.8   -38.3 Earnings per share (€)   -0.04   0.15   -0.19 Earnings per ADS ($)   -0.06   0.19   -0.27 EBITDAs   212.0   228.0   148.9 Sercel   126.9   102.5   89.1 Services   136.3   150.5   90.5 Industrial Capex   127.1   97.1   99.6 Multi-client Cash Capex   75.5   81.9   42.2 *Restated figures  

First Half 2012 Financial Results

Group Revenue

Group Revenue was up 9% year-on-year. Services revenue was up 6% and Sercel revenue up 17%.

In million $   Second Half   First Half   2011*   2012   2011* Group Revenue   1 702   1 618   1 479 Sercel Revenue   601   633   541 Services Revenue   1 224   1 130   1 066 Eliminations   -123   -146   -128 Marine contract   536   477   441 Land contract   132   235   241 Processing   237   219   206 Multi-client   319   200   178 Marine MC   243   138   123 Land MC   76   62   56

*Restated figures

Sercel

Revenue was up 17% year-on-year with strong land equipment deliveries. Internal sales traditionally concentrated on the first half-year represented 23% of Sercel total revenue.

Services

Revenue was up 6% year-on-year and is due to a better operational performance by the fleet, sustained activity in Processing and Imaging and an increase in multi-client revenue, in line with the growth in capex.

Group EBITDAs was $440 million, a margin of 27%.

  Second Half   First Half In million $   2011*   2012   2011* Group EBITDAs   519   440   305 margin   31%   27%   21% Sercel EBITDAs   210   229   197 margin   35%   36%   36% Services EBITDAs   384   287   182 margin   31%   25%   17%

*Restated figures

Group Operating Income was $138 million, a margin of 9%.

  Second Half   First Half In million $   2011*   2012   2011* Group Operating Income   168   138   38 margin   10%   9%   3% Sercel Op. Income   183   207   170 margin   31%   33%   31% Services Op. Income   64   12   -55 margin   5%   1%   -5%

*Restated figures

Financial Charges

Financial charges were $76 million including:

• Cost of debt was $77 million, while the total amount of paid interests during the first half was $62 million.
• Other financial items represented a positive contribution of $1 million, mainly related to the favorable impact of currency variations.

Taxes were $46 million.

After the impact of the income from equity investments of $14 million, Group Net Income was at $30 million, compared to a loss of $75 million in the first half of 2011.

Net Income attributable to owners of CGGVeritas was at $21 million/€16 million, after the impact of minority interests of $10 million/€7 million, resulting in a positive EPS of €0.10 per ordinary share and $0.14 per ADS.

Cash Flow

Cash Flow from Operations

Cash flow from operations was $296 million, compared to $360 million in the first half 2011.

Capex

Global Capex was $382 million in the first half of the year, up 46% year-on-year.

• Industrial Capex was $224 million, up 25% year-on-year.
• Multi-client Cash Capex was $157 million, up 90% year-on-year with a 56% prefunding rate.

In million $   First Half   2012   2011* Capex   382   262 Industrial   224   179 Multi-client Cash 157   83 MC marine 92 27 MC land   66   56

*Restated figures

Free Cash Flow

After interest expenses paid during the first half, net free cash flow was negative at $136 million, compared to a positive net free cash flow at $58 million in the first half 2011.

Balance Sheet

Net Debt to Equity Ratio

Group gross debt was $1.918 billion at the end of June 2012.

Available cash was $319 million. Group net debt was $1.600 billion at the end of June 2012 compared to $1.512 billion at the end of March 2012.

Net debt to equity ratio, at the end of June 2012, was 42% compared to 39% at the end of March 2012.

First Half 2012 Comparisons with First Half 2011

Consolidated Income Statement   First Half In million $   2012   2011* Exchange rate euro/dollar   1.308   1.406 Operating Revenue   1 617.6   1 479.3 Sercel   633.0   541.3 Services   1 130.5   1 065.6 Elimination   -145.9   -127.6 Gross Profit   316.4   200.0 Operating Income   138.4   37.9 Sercel   207.2   170.3 Services   11.6   -55.1 Corporate and Elimination   -80.4   -77.3 Financial Items   -75.9   -113.7 Income Tax   -45.9   -13.4 Deferred Tax on Currency Translation   0.0   6.3 Income from Equity Investments   13.7   7.7 Net Income   30.3   -75.2 Earnings per share (€)   0.10   -0.38 Earnings per ADS ($)   0.14   -0.54 EBITDAs   440.0   304.7 Sercel   229.4   197.3 Services   286.8   181.7 Industrial Capex   224.2   179.0 Multi-client Cash Capex   157.4   82.7

Other Information

• A French language conference call is scheduled today, Friday 27th of July 2012, at 9:00am (Paris), 8:00am (London).

To take part in the French language conference, simply dial in 5 to 10 minutes prior to the scheduled start time.

- France call-in +33 1 70 77 09 25

- International call-in +44 203 367 94 58

- Replay +33 1 72 00 15 01 or +44 203 367 94 60

Code: 277619#

• An English language conference call is scheduled today at 3:00pm (Paris), 2:00pm (London), 8:00am (US CT), 9:00am (US ET).

To take part in the English language conference, simply dial in 5 to 10 minutes prior to the scheduled start time.

- US Toll-Free 1-877-317-6789

- International call-in 1-412-317-6789

- Replay 1-877-344-7529 or 1-412-317-0088

Code: 10009286

You will be connected to the conference: “CGGVeritas Q2 2012 results”.

• Copies of the presentation are posted on the Company website www.cggveritas.com and can be downloaded.
• The conference call will be broadcast live on the CGGVeritas website www.cggveritas.com and a replay will be available for two weeks thereafter.

About CGGVeritas

CGGVeritas (www.cggveritas.com) is a leading international pure-play geophysical company delivering a wide range of technologies, services and equipment through Sercel, to its broad base of customers mainly throughout the global oil and gas industry. CGGVeritas is listed on the Euronext Paris SA (ISIN: 0000120164) and the New York Stock Exchange (in the form of American Depositary Shares, NYSE: CGV).

The information included herein contains certain forward-looking statements within the meaning of Section 27A of the securities act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties as disclosed by the Company from time to time in its filings with the Securities and Exchange Commission. Actual results may vary materially.

CGGVeritas

Second Quarter 2012

CONSOLIDATED FINANCIAL STATEMENTS

   

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF OPERATIONS

  Six months ended June 30,

 

2012

 

2011(restated)

Amounts in millions of U.S.$, except per share data or unless indicated   Operating revenues 1,617.6 1,479.3 Other income from ordinary activities 2.1 1.7 Total income from ordinary activities 1,619.7 1,481.0 Cost of operations (1,303.3) (1,281.0) Gross profit 316.4 200.0 Research and development expenses, net (44.5) (38.0) Marketing and selling expenses (46.6) (40.2) General and administrative expenses (92.9) (95.7) Other revenues (expenses), net 6.0 11.8 Operating income 138.4 37.9 Expenses related to financial debt (78.7) (96.5) Income provided by cash and cash equivalents 1.4 1.2 Cost of financial debt, net (77.3) (95.3) Other financial income (loss) 1.4 (18.4) Income (loss) of consolidated companies before income taxes 62.5 (75.8) Deferred taxes on currency translation – 6.3 Other income taxes (45.9) (13.4) Total income taxes (45.9) (7.1) Net income (loss) from consolidated companies 16.6 (82.9) Share of income (loss) in companies accounted for under equity method 13.7 7.7 Net income (loss) 30.3 (75.2) Attributable to : Owners of CGGVeritas $ 20.7 (82.2) Owners of CGGVeritas (1) € 15.8 (58.5) Non-controlling interests $ 9.6 7.0   Weighted average number of shares outstanding 151,898,100 151,684,340 Dilutive potential shares from stock-options 658,216 (2) Dilutive potential shares from performance share plan 678,850 (2) Dilutive potential shares from convertible bonds (3) (3) Dilutive weighted average number of shares outstanding adjusted when dilutive 153,235,166 151,684,340 Net income (loss) per share

Basic

$

0.14 (0.54) Basic € 0.10 (0.38) Diluted $ 0.14 (0.54) Diluted € 0.10 (0.38)  

(1) Converted at the average exchange rate of U.S.$1.308 and U.S.$1.406 per € for the periods ended June 30, 2012 and 2011, respectively.

(2) As our net result was a loss, stock-options and performance shares plans had an anti-dilutive effect; as a consequence, potential shares linked to those instruments were not taken into account in the dilutive weighted average number of shares or in the calculation of diluted loss per share.

(3) Convertible bonds had an accretive effect (increase of our earning per share); as a consequence, potential shares linked to those instruments were not taken into account in the dilutive weighted average number of shares or in the calculation of diluted income per share.

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF OPERATIONS

  Three months ended June 30, 2012   2011(restated) Amounts in millions of U.S.$, except per share data or unless indicated     Operating revenues 831.0 750.7 Other income from ordinary activities 0.9 0.8 Total income from ordinary activities 831.9 751.5 Cost of operations (654.1) (648.1) Gross profit 177.8 103.4 Research and development expenses, net (22.7) (17.9) Marketing and selling expenses (24.6) (21.7) General and administrative expenses (45.8) (48.7) Other revenues (expenses), net (0.1) (0.3) Operating income 84.6 14.8 Expenses related to financial debt (39.2) (51.6) Income provided by cash and cash equivalents 0.5 0.7 Cost of financial debt, net (38.7) (50.9) Other financial income (loss) 4.7 (3.7) Income (loss) of consolidated companies before income taxes 50.6 (39.8) Deferred taxes on currency translation (2.8) 1.1 Other income taxes (24.1) (5.3) Total income taxes (26.9) (4.2) Net income (loss) from consolidated companies 23.7 (44.0) Share of income (loss) in companies accounted for under equity method 10.1 5.7 Net income (loss) 33.8 (38.3) Attributable to : Owners of CGGVeritas $ 29.4 (41.5) Owners of CGGVeritas (1) € 22.4 (29.5) Non-controlling interests $ 4.4 3.2   Weighted average number of shares outstanding 151,932,036 151,806,882 Dilutive potential shares from stock-options 578,040 (2) Dilutive potential shares from performance share plan 678,850 (2) Dilutive potential shares from convertible bonds (3) (3) Dilutive weighted average number of shares outstanding adjusted when dilutive 153,188,926 151,806,882 Net income (loss) per share

Basic

$

0.19 (0.27) Basic € 0.15 (0.19) Diluted $ 0.19 (0.27) Diluted € 0.15 (0.19)  

______________

(1) Corresponding to the half-year amount in euros less the first quarter amount in euros.

(2) As our net result was a loss, stock-options and performance shares plans had an anti-dilutive effect; as a consequence, potential shares linked to those instruments were not taken into account in the dilutive weighted average number of shares or in the calculation of diluted loss per share.

(3) Convertible bonds had an accretive effect (increase of our earning per share); as a consequence, potential shares linked to those instruments were not taken into account in the dilutive weighted average number of shares or in the calculation of diluted income per share.

Analysis by operating segment

  Six months ended June 30, 2012     2011 (restated)

In millions of U.S.$

Services   Equipment   Eliminations

and

Adjustments

  Consolidated Total

Services

  Equipment   Eliminations

and

Adjustments

  Consolidated Total   Revenues from unaffiliated customers 1,130.5   487.1   –   1,617.6 1,065.6   413.7   –   1,479.3 Inter-segment revenues – 145.9 (145.9) – 0.5 127.6 (128.1) - Operating revenues 1,130.5 633.0 (145.9) 1,617.6 1,066.1 541.3 (128.1) 1,479.3

Depreciation and amortization (excluding multi-clients survey)

(149.1) (20.9) – (170.0) (142.8) (25.7) – (168.5) Depreciation and amortization of multi-client surveys (144.9) – – (144.9) (97.8) – – (97.8)  

Operating income

11.6 207.2 (80.4) (a) 138.4 (55.1) 170.3 (77.3) (a) 37.9

Share of income in companies accounted for under equity method (b)

13.7 – – 13.7 7.7 – – 7.7

Capital expenditures (excluding multi-client surveys) (c)

212.5 11.7 – 224.2 168.1 10.9 – 179.0

Investments in multi-clients survey

179.8 – – 179.8 89.4 – – 89.4     Investment in companies under equity method 27.5 – – 27.5 4.8 4.8

Identifiable assets

5,788.9 1,549.3 (663.4) 6,674.8 5,698.9 1,183.0 (335.7) 6,546.2

 

Unallocated and corporate assets

464.6 632.6

Total assets

7,139.4 7,178.8  

______________

(a) Includes general corporate expenses of U.S.$27.1 million and U.S.$28.4 million for the six months ended June 30, 2012 and 2011, respectively.

(b) Of which U.S.$20.7 million and U.S.$7.4 million relate to operational results for the six months ended June 30, 2012 and 2011, respectively.

(c) Includes (i) no equipment acquired under finance leases for the six months ended June 30, 2012 and U.S.$15.9 million for the six months ended June 30, 2011 (ii) capitalized development costs of U.S.$9.2 million and U.S.$7.3million for the six months ended June 30, 2012 and 2011, respectively, in the Services segment; capitalized development costs of U.S.$4.9 million and U.S.$2.9 million for the six months ended June 30, 2012 and 2011, respectively, in the Equipment segment.

  Three months ended June 30, 2012     2011 (restated)

In millions of U.S.$

Services   Equipment   Eliminations

and

Adjustments

  Consolidated Total

Services

  Equipment   Eliminations

and

Adjustments

  Consolidated Total   Revenues from unaffiliated customers 599.4   231.6   –   831.0

532.7

 

218.0

 

–

 

750.7

Inter-segment revenues – 53.6 (53.6) – 0.5 48.3 (48.8) - Operating revenues 599.4 285.2 (53.6) 831.0 533.2 266.3 (48.8) 750.7

Depreciation and amortization (excluding multi-clients survey)

(75.6) (10.4) – (86.0) (70.6) (13.6) – (84.2) Depreciation and amortization of multi-client surveys (63.7) – – (63.7) (50.7) – – (50.7)  

Operating income

19.3 91.7 (26.4) (a) 84.6 (29.1) 75.6 (31.7) (a) 14.8

Share of income in companies accounted for under equity method (b)

10.1 – – 10.1 5.7 – – 5.7

Capital expenditures (excluding multi-client surveys) (c)

90.6 6.5 – 97.1 94.2 5.4 – 99.6

Investments in multi-clients survey

91.1 – – 91.1 45.0 – – 45.0  

______________

(a) Includes general corporate expenses of U.S.$13.0 million and U.S.$14.2 million for the three months ended June 30, 2012 and 2011, respectively.

(b) Of which U.S.$13.5 million and U.S.$5.5 million relate to operational results for the three months ended June 30, 2012 and 2011, respectively.

(c) Includes (i) no equipment acquired under finance leases for the three months ended June 30, 2012 and U.S. $12.7 million for the three months ended June 30, 2011 (ii) capitalized development costs of U.S. $4.6 million and U.S.$3.4 million for the three months ended June 30, 2012 and 2011, respectively, in the Services segment; capitalized development costs of U.S.$2.3 million and U.S.$1.7 million for the three months ended June 30, 2012 and 2011, respectively, in the Equipment segment.

UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET

 

  June 30, 2012

(unaudited)

  December 31, 2011

(restated)

Amounts in millions of U.S.$, unless indicated   ASSETS Cash and cash equivalents 318.8 531.4 Trade accounts and notes receivable, net 896.8 876.0 Inventories and work-in-progress, net 393.5 361.5 Income tax assets 98.1 119.4 Other current assets, net 162.9 157.0 Assets held for sale, net 21.3 64.5 Total current assets 1,891.4 2,109.8 Deferred tax assets 187.7 188.8 Investments and other financial assets, net 50.6 24.7 Investments in companies under equity method 140.6 131.7 Property, plant and equipment, net 1,230.0 1,183.2 Intangible assets, net 930.2 865.1 Goodwill, net 2,708.9 2,688.2 Total non-current assets 5,248.0 5,081.7 TOTAL ASSETS 7,139.4 7,191.5   LIABILITIES AND EQUITY Bank overdrafts 4.1 6.0 Current portion of financial debt 54.8 64.5 Trade accounts and notes payable 455.5 386.4 Accrued payroll costs 163.6 185.7 Income taxes liability payable 80.9 159.7 Advance billings to customers 22.2 51.0 Provisions – current portion 28.3 34.6 Other current liabilities 302.6 272.3 Total current liabilities 1,112.0 1,160.2 Deferred tax liabilities 104.7 110.8 Provisions – non-current portion 97.0 106.7 Financial debt 1,859.5 1,871.6 Other non-current liabilities 41.1 49.8 Total non-current liabilities 2,102.3 2,138.9

Common stock: 251,651,010 shares authorized and 151,972,073 shares with a €0.40 nominal value issued and outstanding at June 30, 2012 and 151,861,932 at December 31, 2011

79.8 79.8 Additional paid-in capital 2,669.9 2,669.3 Retained earnings 1,138.8 1,161.1 Other reserves 5.1 (17.0) Treasury shares (20.6) (20.6) Net income (loss) for the period attributable to the owners of CGGVeritas 20.7 (28.2) Cumulative income and expense recognized directly in equity (7.8) (11.5) Cumulative translation adjustment (51.7) (27.6) Equity attributable to owners of CGGVeritas SA (1) 3,834.2 3,805.3 Non-controlling interests 90.9 87.1 Total equity 3,925.1 3,892.4 TOTAL LIABILITIES AND EQUITY 7,139.4 7,191.5  

1) Effective January 1, 2012, we changed the presentation currency of our consolidated financial statements from the euro to the U.S. dollar to better reflect the profile of our revenues, costs and cash-flows, which are primarily generated in U.S. dollars, and hence, to better present the financial performance of the Group. As a change in presentation currency is a change of accounting policy, all comparative financial information has been restated into U.S. dollars. The currency translation adjustment was set to nil as of January 1, 2004 on transition to IFRS and has been re-presented on the basis that the Group has reported in U.S. dollars since that date.The functional currency of the parent company remains the euro. The currency translation adjustment resulting from the parent company is presented in other reserves.

Main restatements related to the change in the presentation currency from euro to U.S. dollar are as follows (in millions):

  Historical consolidated financial statements as of Dec.31, 2011 in euros   Historical consolidated financial statements of Dec.31, 2011 converted into U.S. dollars (a)   Restatements (b)   Restated consolidated financial statements as of Dec.31, 2011 to U.S. dollars Common stock, additional paid-in capital, retained earnings and other

2,883.1

 

3,730.5

 

+102.4

 

3,832.9

Cumulative translation adjustment 55.8   72.2   (99.8)   (27.6) Equity attributable to owners of CGGVeritas

2,938.9

 

3,802.7

 

+2.6

 

3,805.3

 

a) Converted at the closing exchange rate of 1.2939 U.S.$ per euro

b) Differences between historical currency exchange rates and the closing rate of 1.2939 U.S.$ per 1 euro, including U.S.$(17) millions translation adjustments from the parent company presented in other reserves.

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

  Six months ended June 30, 2012  

2011

(restated)

Amounts in millions of U.S.$   OPERATING Net income (loss) 30.3 (75.2) Depreciation and amortization 170.0 168.5 Multi-client surveys depreciation and amortization 144.9 97.8 Depreciation and amortization capitalized to multi-client surveys (22.4) (6.7) Variance on provisions (10.8) (9.4) Stock based compensation expenses 9.1 7.2 Net gain (loss) on disposal of fixed assets (7.9) (4.6) Equity income (loss) of investees (13.7) (7.7) Dividends received from affiliates 22.1 6.9 Other non-cash items 0.8 0.5 Net cash including net cost of financial debt and income tax 322.4 177.3 Less net cost of financial debt 77.3 95.3 Less income tax expense 45.9 7.1 Net cash excluding net cost of financial debt and income tax 445.6 279.7 Income tax paid (84.4) (48.9) Net cash before changes in working capital 361.2 230.8 - change in trade accounts and notes receivables (39.7) 207.0 - change in inventories and work-in-progress (27.9) (45.8) - change in other current assets (4.8) 20.2 - change in trade accounts and notes payable 52.4 (52.7) - change in other current liabilities (51.4) 1.7 Impact of changes in exchange rate on financial items 6.3 (1.0) Net cash provided by operating activities 296.1 360.2 INVESTING Capital expenditures (including variation of fixed assets suppliers, excluding multi-client surveys) (213.2) (157.1) Investment in multi-client surveys, net cash (157.4) (82.7) Proceeds from disposals of tangible and intangible assets 2.5 6.0 Total net proceeds from financial assets 11.8 4.5 Acquisition of investments, net of cash and cash equivalents acquired (52.5) (0.7) Impact of changes in consolidation scope – (0.1) Variation in loans granted 0.6 1.1 Variation in subsidies for capital expenditures (1.2) – Variation in other non-current financial assets (0.7) 0.9 Net cash used in investing activities (410.1) (228.1) FINANCING Repayment of long-term debts (47.3) (1,048.6) Total issuance of long-term debts 39.2 1,069.8 Lease repayments (17.1) (27.7) Change in short-term loans (1.9) (2.1) Financial expenses paid (61.7) (62.5) Net proceeds from capital increase - from shareholders 0.6 3.2 - from non-controlling interests of integrated companies – – Dividends paid and share capital reimbursements - to shareholders – (0.1) - to non-controlling interests of integrated companies (5.6) (3.9) Acquisition/disposal from treasury shares – – Net cash provided by (used in) financing activities (93.8) (71.9) Effects of exchange rates on cash (4.8) 11.2 Net increase (decrease) in cash and cash equivalents (212.6) 71.4 Cash and cash equivalents at beginning of year 531.4 448.8 Cash and cash equivalents at end of period 318.8 520.2