Record Quarter with Net Income at $162 M, up 73% year on year 2008 Objectives Confirmed Record Backlog of $1.9 B PARIS, Nov. 7 /PRNewswire-FirstCall/ -- CGGVeritas (ISIN: 0000120164 - NYSE: CGV) today announced its third quarter 2008 unaudited financial results. All comparisons are made on a year-on-year basis with third quarter 2007 figures unless otherwise stated. During the third quarter of 2008 CGGVeritas delivered its strongest quarter on record: -- Group revenue was up 28% to $1.062 billion. -- Group operating income was up 69% to $265 million, a 25% operating margin. -- Sercel external revenue grew 29% to $300 million as demand for 428 XL land technology continued to strengthen. Operating margin was 33%. -- Services revenue grew 28% to $762 million driven by high marine availability and production rates and strong multi-client prefunding. Operating margin was 23%. -- Net income was $162 million representing 15% of revenue. It corresponds to $1.14 per ADS. Net income in Euros was euro 105 million. It corresponds to euro 0.74 earnings per share (EPS). -- Net free cash flow was $65 million and the net debt/equity ratio stood at 42%. -- Backlog as of October 1, 2008 was a record $1.9 billion. CGGVeritas Chairman & CEO, Robert Brunck commented: "I am very pleased to report record operational and financial performance during the quarter confirming our previously communicated strong second half of 2008. Looking forward, based on very high deliveries of land equipment in Sercel and strengthening multi-client sales in the fourth quarter, I confirm our confidence in achieving our 2008 objectives. Despite the current instability of the global financial markets and uncertainties related to an economic slowdown, oil supply continues to be particularly challenging for our customers as reserve replacement rates remain low and decline rates are increasingly high. For this reason, through lowering the risks associated with finding and producing reserves, high-end differentiated seismic provides enhanced value and productivity to our clients. With our solid financial position including long term debt maturity, industrial strength and expertise, along with our record backlog of near $2 billion, I am confident in our capacity to deliver robust performance and strength in the market." Third Quarter 2008 Performance and Highlights Group Revenue was $1,062 million (euro 692 million), compared to $829 million (euro 607 million). The 28% growth in $ was driven by Sercel sales, marine performance, and multi-client sales. Group Operating Income was $265 million (euro 173 million), up 69% in $ and up 51% in euro , with a 25% operating margin, compared to $157 million (euro 115 million) and a 19% margin last year. Group EBITDAs was $467 million (euro 304 million) up 27% in $ and up 12% in euro compared to $369 million (euro 271 million) last year. EBITDAs margin was 44% this quarter. Group Net Income was $162 million (euro 105 million), up 73% in $ and up 53% in euro compared to $94 million (euro 69 million), resulting in earnings of $1.14 per ADS and euro 0.74 per ordinary share. The Effective Tax Rate, not including deferred tax on currency translation, was 30%. Net Free Cash Flow was $65 million (euro 42 million) and Group Net Debt decreased over the quarter to $1.57 billion (euro 1.1 billion), corresponding to a 42% net debt / equity gearing ratio. Industrial Capex was $52 million (euro 34 million) while multi-client Capex was $146 million (euro 95 million) as the acquisition of our Garden Banks wide-azimuth (WAZ) in the Gulf of Mexico (GoM) continued to progress well. Multi-client prefunding was 102%. The Net Book Value of the multi-client library was stable compared to last quarter and closed at $776 million (euro 542 million) distributed with $579 million (euro 405 million) for our marine library and $197 million (euro 138 million) for our land library. The multi-client amortization rate was 54%. Comparison with Third Quarter 2007 Consolidated Statement of Income Third Quarter Third Quarter (in million euros) (in million dollars) 2008 2007 2008 2007 Exchange rate 1.537 1.365 1.537 1.365 Operating revenue 691.6 607.2 1062.2 828.6 Sercel 204.1 213.1 313.5 290.8 Services 496.0 436.8 761.7 595.8 Elimination -8.5 -42.7 -13.1 -57.9 Gross profit 246.9 175.5 379.0 240.1 Operating income 172.8 114.7 265.1 156.8 Sercel 66.7 72.4 102.5 98.8 Services 112.7 71.8 172.9 98.1 Corporate and Elimination -6.5 -29.5 -10.1 -40.1 Cost of financial debt -18.7 -25.1 -28.6 -34.4 Income tax -52.1 -19.3 -80.0 -26.8 Income from equity investments -0.6 1.3 -0.9 1.7 Net income 105.4 68.7 161.7 93.5 Earnings per share (euro )/ per ADS ($) 0.74 0.51 1.14 0.69 EBITDAs 304.3 271.2 467.2 369.4 Sercel 72.8 77.6 111.8 105.8 Services 239.2 220.2 367.3 299.7 Industrial Capex 33.4 67.8 51.5 92.4 Multi-client Capex 94.9 134.1 145.8 181.6 Net debt / Equity gearing ratio 42% 46% 42% 46% Third Quarter 2008 Business Review Sercel Total Revenue for Sercel was $314 million (euro 204 million) and external revenue was $300 million (euro 196 million), up 29% in $ and 15% in euro. Internal sales accounted for 4% of total sales. Growing requirement for high resolution high productivity seismic drove Sercel revenue, particularly in land. Operating Income was $103 million (euro 67 million), with a 33% operating margin, compared to $99 million (euro 72 million) and a 34% margin a year ago. EBITDAs was $112 million (euro 73 million), with a 36% EBITDAs margin, compared to $106 million (euro 78 million) and a 36% margin last year. Services Revenue for Services was $762 million (euro 496 million), up 28% in $ and up 14% in euro mainly supported by strong growth in marine contract. Operating Income was $173 million (euro 113 million), with a 23% operating margin, compared to $98 million (euro 72 million) and a 17% margin a year ago. Strengthening multi-client sales, especially our WAZ projects and high vessel utilization rates were the main drivers of third quarter performance. EBITDAs was $367 million (euro 239 million), a 48% EBITDAs margin compared to $300 million (euro 220 million) a 50% margin last year. -- Marine contract revenue reached $320 million (euro 208 million) up 86% in $ and up 66% in euro. We operated 65% of our high-end 3D fleet on contract, mainly in Asia Pacific, the North Sea and the east coast of Canada. -- Land contract revenue was $131 million (euro 85 million) up 3% in $ and down 8% in euro. We operated 19 crews in select locations with 10 in the E. Hemisphere and 9 in the W. Hemisphere. During the quarter, we implemented our first V1 patented technology in Egypt. -- Processing & Imaging revenue was $99 million (euro 65 million) up 13% in $ and flat in euro based on growing interest in our new high-end imaging and depth migration technologies, that led to increased direct awards and the renewal of dedicated centers. -- Multi-client revenue was $212 million (euro 138 million) up 3% in $ and down 10% in euro. The amortization rate for multi-client sales was 54% and split 50% in marine and 69% in land. Multi-client marine revenue was $169 million (euro 110 million) up 9% in $ and down 4% in euro. Marine multi-client Capex reached $118 million (euro 77 million) as 4 vessels were shooting in the GoM, Brazil and the North Sea in our core areas. Prefunding for marine multi-client was $125 million (euro 81 million) with a prefunding rate of 106% driven by sales of our leading WAZ programs. After-sales revenue was $44 million (euro 28 million). Multi-client land revenue was $44 million (euro 28 million) down 20% in $ and 29% in euro while our Capex eased as planned to $28 million (euro 18 million). Prefunding revenue was $24 million (euro 16 million) with a prefunding rate of 88%. After-sales revenue was $19 million (euro 13 million). Cash and Balance Sheet Cash generated by operations increased 21% sequentially to $298 million (euro 194 million). Group net free cash flow for the quarter was $65 million (euro 42 million) and at the end of September 2008, the net debt decreased to $1,572 million (euro 1,099 million). The net debt to equity ratio was 42%. The gross debt was $2,026 million (euro 1,416 million). The main components of the debt are as follows: -- Term Loan B: Senior secured facility, Libor + 2% - $883M outstanding - maturity 2014 -- 7 1/2% Senior Notes: $530M outstanding - maturity 2015 -- 7 3/4% Senior Notes: $400M outstanding - maturity 2017 Year to Date 2008 Performance and Highlights Group Revenue was $2,809 million (euro 1,836 million), up 18% in $ and up 4% in euro compared to $2,375 million (euro 1,771 million) a year ago. Growth was driven by sustained sales of Sercel equipment and a high level of land and marine contract activity in Services. Group Operating Income was $600 million (euro 392 million), up 25% in $ and up 10% in euro, with a 21% operating margin, compared to $481 million (euro 359 million) and a 20% margin last year. Group EBITDAs was $1,150 million (euro 751 million) compared to $992 million (euro 739 million), EBITDAs margin was 41%. Group Net Income was $339 million (euro 221 million) up 38% compared to $245 million (euro 182 million) last year, resulting in an EPS of euro 1.55 per ordinary share and $2.38 per ADS. The Effective Tax Rate, not including deferred tax on currency translation, was 33%. Industrial Capex was $189 million (euro 123 million) while multi-client Capex was $434 million (euro 283 million). Prefunding rate was 82% and the amortization rate at the end of September was 51%. Year to Date Comparison with 2007 Consolidated Statement of Income Year to Date Year To Date (in million euros) (in million dollars) 2008 2007 2008 2007 Exchange rate 1.530 1.341 1.530 1.341 Operating revenue 1835.6 1770.5 2809.1 2374.6 Sercel 572.7 613.7 876.4 823.1 Services 1320.9 1252.4 2021.5 1679.7 Elimination -58.0 -95.6 -88.8 -128.2 Gross profit 603.0 556.9 922.9 746.8 Operating income 392.2 358.7 600.2 481.0 Sercel 180.7 208.7 276.6 279.9 Services 254.4 218.6 389.3 293.2 Corporate and Elimination -42.9 -68.6 -65.7 -92.1 Cost of financial debt -59.8 -85.1 -91.7 -114.1 Income tax -116.5 -91.3 -178.2 -122.4 Income from equity investments 2.4 2.5 3.7 3.4 Net income 221.2 182.3 338.5 244.5 Earnings per share (euro )/ per ADS ($) 1.55 1.34 2.38 1.80 EBITDAs 751.1 739.3 1149.5 991.6 Sercel 199.0 223.4 304.5 299.7 Services 601.7 577.6 920.7 774.7 Industrial Capex 123.2 189.3 188.6 253.8 Multi-client Capex 283.4 278.4 433.7 373.4 Net debt / Equity gearing ratio 42% 46% 42% 46% Outlook Looking forward, we expect a stronger second half of the year. This is driven by very high levels of confirmed land deliveries in Sercel and the typical strengthening of multi-client sales ahead of lease rounds. Based on this, we confirm our 2008 objectives including a reduction of our net debt to equity ratio to near 35% compared to 46% at the end of 2007. Our backlog of near $1.9 billion a 15% increase year over year is at a record level and provides us with good visibility well into 2009. Within the context of the current oil supply challenges and the global financial market conditions, CGGVeritas with its high-end seismic equipment and services and its solid financial position is well positioned for the future. Other information The quarterly financial information including press release, 6K and presentation are available on our website at http://www.cggveritas.com/ today November 7th, 2008. -- The English language conference call is scheduled today for 3:00 PM (Paris) - 2:00 PM (London) - 8:00 AM (US CT) - 9:00 AM (US ET). - US call-in +1 888 241-0558 - International call-in +1 647 427-3417 - Replay +1 402 220-7735 or +1 800 766-3735 code 35067177 -- The French language conference call is scheduled today for 4:30 PM (Paris) - 3:30 PM (London) - 9:30 AM (US CT) - 10:30 AM (US ET). - French call-in +33 1 72 28 25 82 - International call-in +44 161 601 8912 - Replay +33 1 7228 01 39 & +44 207 075 3214 code 233591# To take part in the conference calls, simply dial five to ten minutes prior to the scheduled start time to register and to check your connection is working properly. You will be asked for the name of the conference: "CGGVeritas 2008 Q3 results". CGGVeritas will also provide a streaming audio webcast of the conference calls accessible for two weeks following the conference calls on our website. About CGGVeritas CGGVeritas (http://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). Investor Relations Contacts Paris: Houston: Christophe Barnini Hovey Cox Tel: +33 1 64 47 38 10 Tel: +1 (832) 351-8821 E-Mail: E-Mail: 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. DATASOURCE: CGGVeritas CONTACT: Investor Relations, Christophe Barnini (Paris), +33 1 64 47 38 10, ; or Hovey Cox (Houston), +1-832-351-8821, Web site: http://www.cggveritas.com/

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