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Commission File No. 333-140274
and No. 333-140275
Underwriting | Proceeds (before | |||||||||||
Price to | discounts | expenses) to | ||||||||||
public(1) | and commissions | issuer(1) | ||||||||||
Per additional note | 100.00% | 1.75% | 98.25% | |||||||||
Total | $ | 200,000,000 | $ | 3,500,000 | $ | 196,500,000 | ||||||
Per new note | 100.00% | 1.75% | 98.25% | |||||||||
Total | $ | 400,000,000 | $ | 7,000,000 | $ | 393,000,000 |
(1) | In the case of the additional notes, plus accrued and unpaid interest from and including November 15, 2006 to but excluding the delivery date and in the case of the new notes, plus accrued and unpaid interest from and including the issue date of the new notes to but excluding the delivery date. |
BNP PARIBAS | Natexis Bleichroeder Inc. |
Calyon Securities | SOCIETE GENERALE |
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(a) | it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and |
(b) | in the case of any notes acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the notes acquired by it in the offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the underwriters has been given to the offer or resale; or (ii) where notes have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those notes to it is not treated under the Prospectus Directive as having been made to such persons. For the purposes of this representation, the expression an “offer of notes to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any notes to be offered so as to enable an investor to decide to purchase or subscribe for the notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/ EC and includes any relevant implementing measure in each Relevant Member State. |
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• | incorporated documents are considered part of this prospectus; | |
• | we can disclose important information to you by referring you to those documents; and | |
• | information that we file with the Commission after the date of this prospectus and incorporate by reference herein automatically updates and supersedes this prospectus and information previously incorporated by reference herein. |
SEC Filing | Filing Date | |||
CGG’s Form 20-F for the fiscal year ended December 31, 2005 | May 9, 2006 |
• | all annual reports on Form 20-F we file with the Commission; and | |
• | any future reports furnished on Form 6-K that indicate that they are incorporated by reference in this prospectus. |
Compagnie Générale de Géophysique-Veritas | |
Tour Maine-Montparnasse | |
33 avenue de Maine | |
BP 191 | |
75755 Paris CEDEX 15 | |
Attention: Investor Relations Officer | |
Tel: (33) 1 64 47 45 00 |
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• | our ability to develop an integrated strategy for CGGVeritas; | |
• | difficulties and delays in achieving synergies and cost savings; | |
• | our substantial indebtedness; | |
• | changes in international economic and political conditions and, in particular, in oil and gas prices; | |
• | exposure to the credit risk of customers; | |
• | our ability to finance our operations on acceptable terms; | |
• | the timely development and acceptance of our new products and services; | |
• | the complexity of products sold; | |
• | changes in demand for seismic products and services; | |
• | the effects of competition; | |
• | the social, political and economic risks of our global operations; | |
• | the costs and risks associated with pension and post-retirement benefit obligations; | |
• | changes to existing regulations or technical standards; | |
• | existing or future litigation; | |
• | difficulties and costs in protecting intellectual property rights and exposure to infringement claims by others; | |
• | the costs of compliance with environmental, health and safety laws; | |
• | the timing and extent of changes in currency exchange rates and interest rates; | |
• | the accuracy of our assessment of risks related to acquisitions, projects and contracts and whether these risks materialize; | |
• | our ability to integrate successfully the businesses or assets we acquire, including Veritas; | |
• | our ability to monitor existing and targeted partnerships; |
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• | our ability to sell our seismic data library; | |
• | our ability to access the debt and equity markets during the periods covered by the forward-looking statements, which will depend on general market conditions and on our credit ratings for our debt obligations; and | |
• | our success at managing the risks of the foregoing. |
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• | identifying new areas where subsurface conditions are favorable for the accumulation of oil and gas; | |
• | determining the size and structure of previously identified oil and gas fields; and | |
• | optimizing development and production of oil and gas reserves (reservoir management). |
• | the land business line for land and shallow water seismic acquisition and non-exclusive (“multi-client”) library sales; | |
• | the offshore business line for marine seismic acquisition,multi-client library sales and related services; and | |
• | the processing & reservoir business line for seismic data processing, data management and reservoir studies. |
Recent Developments |
The Merger |
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Merger Rationale |
• | the combination of CGG and Veritas took place in a strong business environment, as decreasing reserves of oil and gas companies have been coupled with growing energy consumption sustained by long-term demand, particularly in China and India; | |
• | the combination of CGG and Veritas creates a strong, global, pure-play seismic company, offering a broad range of seismic services, and, through Sercel, geophysical equipment to the industry across all markets; | |
• | the combination of CGG and Veritas brings together two companies with strong technological foundations in the geophysical services and equipment market, as both CGG and Veritas have a long tradition of providing seismic services both onshore and offshore; | |
• | the addition of Veritas’ fleet of seven vessels creates a combined seismic services business operating the world’s leading seismic fleet of 20 vessels, including 14 high capacity 3D vessels; | |
• | multi-client services benefits from two complementary, recent vintage, well-positioned seismic data libraries; | |
• | CGG’s and Veritas’ respective offerings for land acquisition services represent strong geographical and technological complementarities for high-end positioning and further development of local partnerships; | |
• | CGG’s and Veritas’ respective positions in data processing and imaging as well as the skills and reputation of their experts and geoscientists, allow us to create the industry reference in this segment, with particular strengths in advanced technologies such as depth imaging, 4D processing and reservoir characterization as well as a close link with clients through dedicated centers; | |
• | the merger will not affect Sercel’s open technology approach. Sercel will pursue its strategy of maintaining leading edge technology, offering new generations of differentiating products and focusing on key markets; and | |
• | with a combined workforce of approximately 7,000 staff operating worldwide, including Sercel, CGGVeritas will, through continued innovation, be an industry leader in seismic technology, services and equipment with a broad base of customers, including independent, international and national oil companies. |
Bridge Loan and Senior Credit Facilities |
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Nine months | |||||||||||||||||||||||||
ended | |||||||||||||||||||||||||
September 30, | Year ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | |||||||||||||||||||||||
(in€ millions, except percentages) | |||||||||||||||||||||||||
CGG — Operating Revenue by Business | |||||||||||||||||||||||||
Land | 96.9 | 10 | % | 119.8 | 14 | % | 77.3 | 11 | % | ||||||||||||||||
Offshore | 404.1 | 42 | % | 319.5 | 37 | % | 205.7 | 30 | % | ||||||||||||||||
Processing and Reservoir | 102.3 | 11 | % | 113.0 | 13 | % | 105.0 | 15 | % | ||||||||||||||||
Total Services | 603.3 | 63 | % | 552.3 | 64 | % | 388.0 | 56 | % | ||||||||||||||||
Products | 352.3 | 37 | % | 317.6 | 36 | % | 299.4 | 44 | % | ||||||||||||||||
Total | 955.6 | 100 | % | 869.9 | 100 | % | 687.4 | 100 | % | ||||||||||||||||
Three | |||||||||||||||||||||||||||||||||
months | |||||||||||||||||||||||||||||||||
ended | |||||||||||||||||||||||||||||||||
October 31, | Year ended July 31, | ||||||||||||||||||||||||||||||||
2006 | 2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||
(in $ millions, except percentages) | |||||||||||||||||||||||||||||||||
Veritas — Revenues by Business | |||||||||||||||||||||||||||||||||
Land | 85.4 | 37 | % | 286.9 | 35 | % | 195.5 | 31 | % | 200.7 | 36 | % | |||||||||||||||||||||
Offshore | 105.7 | 46 | % | 405.1 | 49 | % | 331.4 | 52 | % | 272.7 | 48 | % | |||||||||||||||||||||
Processing and Reservoir | 34.6 | 15 | % | 110.6 | 14 | % | 90.9 | 14 | % | 75.7 | 13 | % | |||||||||||||||||||||
Total Services | 225.7 | 98 | % | 802.6 | 98 | % | 617.8 | 97 | % | 549.1 | 97 | % | |||||||||||||||||||||
VHR | 5.1 | 2 | % | 19.6 | 2 | % | 16.2 | 3 | % | 15.4 | 3 | % | |||||||||||||||||||||
Total | 230.8 | 100 | % | 822.2 | 100 | % | 634.0 | 100 | % | 564.5 | 100 | % | |||||||||||||||||||||
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Nine months | ||||||||||||||||||||||||
ended | ||||||||||||||||||||||||
September 30, | Year ended December 31, | |||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
(in€ millions, except percentages) | ||||||||||||||||||||||||
CGG — Operating Revenue by Region | ||||||||||||||||||||||||
Americas | 314.0 | 33 | % | 291.7 | 34 | % | 207.7 | 30 | % | |||||||||||||||
Asia Pacific/Middle East | 313.2 | 33 | % | 297.3 | 34 | % | 274.5 | 40 | % | |||||||||||||||
Europe | 229.4 | 24 | % | 190.3 | 22 | % | 138.2 | 20 | % | |||||||||||||||
Africa | 99.0 | 10 | % | 90.6 | 10 | % | 67.0 | 10 | % | |||||||||||||||
Total | 955.6 | 100 | % | 869.9 | 100 | % | 687.4 | 100 | % | |||||||||||||||
Three | ||||||||||||||||||||||||||||||||
months | ||||||||||||||||||||||||||||||||
ended | ||||||||||||||||||||||||||||||||
October 31, | Year ended July 31, | |||||||||||||||||||||||||||||||
2006 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||
(in $ millions, except percentages) | ||||||||||||||||||||||||||||||||
Veritas — Revenues by Region | ||||||||||||||||||||||||||||||||
Americas | 143.4 | 62 | % | 552.4 | 67 | % | 397.8 | 63 | % | 390.6 | 70 | % | ||||||||||||||||||||
Asia Pacific/Middle East | 41.9 | 18 | % | 138.2 | 17 | % | 124.9 | 20 | % | 81.3 | 14 | % | ||||||||||||||||||||
Europe | 44.8 | 20 | % | 93.6 | 11 | % | 71.9 | 11 | % | 79.2 | 14 | % | ||||||||||||||||||||
Africa | 0.7 | — | 38.0 | 5 | % | 39.4 | 6 | % | 13.3 | 2 | % | |||||||||||||||||||||
Total | 230.8 | 100 | % | 822.2 | 100 | % | 634.0 | 100 | % | 564.5 | 100 | % | ||||||||||||||||||||
Land |
Offshore |
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Processing & Reservoir |
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• | Economic growth, particularly in more active regions such as Asia (notably China and India) and Brazil, is generating increased energy demand and leading to higher energy prices and increased exploration efforts; | |
• | The need to replace depleting reserves and maximize the recovery of oil in existing reservoirs should encourage capital expenditures by companies engaged in exploration and production, which we expect will benefit the seismic industry; | |
• | The scope of application of geophysical services has considerably increased over the last several years as a result of significant research and development efforts. Geophysical services can now potentially be applied to the entire sequence of exploration, development and production as opposed to exploration only. This is particularly true with technologies such as 4D (time lapse seismic data); and | |
• | The depth and duration of the contraction in the geophysical sector between 1999 and 2004 may have increased awareness among geophysical service providers of the risks related to market overcapacity. |
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(1) | We intend to enter into the French revolving facility of $200 million. To secure the obligations under the French revolving facility, we and our subsidiaries acting as guarantors under the senior facilities intend to grant the same guarantees and security interests as were granted to secure the obligations under the senior facilities. |
(2) | The senior facilities include the U.S. revolving facility of $140 million. There are no drawings under the U.S. revolving facility as of the date of this prospectus. The senior facilities are guaranteed by us and the initial guarantors of the notes shown in the diagram above, other than Sercel Canada Ltd. As security for CGGVeritas Services Inc.’s obligations under the senior facilities, we have pledged first-priority security in the shares of CGGVeritas Services Inc. and certain of our other first-tier subsidiaries, as well as material first-tier subsidiaries of Veritas. In addition, certain guarantors have provided (or will provide) first-priority security interests in certain of their respective tangible and intangible assets, including (without limitation) certain vessels, real property, mineral rights, deposit accounts and intellectual property. |
(3) | CGG issued, on April 28, 2005 and February 3, 2006, an aggregate of $330 million of its 71/2% Senior Notes due 2015. The additional notes are being issued as part of the same series as such notes and pursuant to the same indenture governing such notes. |
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The Issuer | Compagnie Générale de Géophysique-Veritas |
Additional notes | $200,000,000 aggregate principal amount of 71/2% Senior Notes due 2015 (the “additional notes”) issued under an indenture dated as of April 28, 2005. Notes in an aggregate principal amount of $330,000,000 have been previously issued under that indenture and are outstanding (the “existing notes”). The additional notes and the existing notes will be treated as the same series of notes under the indenture. | |
New notes | $400,000,000 aggregate principal amount of 73/4% Senior Notes due 2017 (the “new notes”, and together with the additional notes, the “notes”). The new notes will be issued under a new indenture. | |
Maturity | ||
Additional notes | May 15, 2015. | |
New notes | May 15, 2017. | |
Interest | ||
Additional notes | 71/2% per annum, payable semi-annually in arrears on May 15 and November 15. Interest on the additional notes will accrue from and including November 15, 2006 and will be paid commencing on May 15, 2007. | |
New notes | 73/4% per annum, payable semi-annually in arrears on May 15 and November 15. Interest on the new notes will accrue from and including the issue date and will be paid commencing on May 15, 2007. | |
Guarantees | Initially, the notes will be guaranteed on a senior unsecured basis by CGGVeritas Services Inc., Veritas DGC Land Inc., Veritas Geophysical Corporation, Veritas Investments Inc., Viking Maritime Inc., Veritas Geophysical (Mexico) LLC, Veritas DGC Asia Pacific Ltd. and Alitheia Resources Inc. (the “Veritas Guarantors”), Sercel Inc., Sercel Canada Ltd. and Sercel Australia Pty Ltd. (the “Sercel Guarantors”) and CGG Americas, Inc., CGG Canada Services Ltd. and CGG Marine Resources Norge A/ S (the “CGG Guarantors”, and together with the Veritas Guarantors and the Sercel Guarantors, the “Initial Guarantors”). Our other subsidiaries, including Exploration Resources, will not initially guarantee the notes and, in certain circumstances, we may elect to have the Sercel Guarantors released from their guarantees of the notes. | |
The Veritas Guarantors (excluding their subsidiaries that have not guaranteed the notes) generated, before consolidation entries, $384.1 million of revenues, $65.5 million of operating income and $49.5 million of net income in the year ended July 31, 2006 and held $807.9 million of total assets before consolidation entries as at July 31, 2006. They generated, before consolidation entries, $112.5 million of revenues, $15.2 million of operating income and |
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$20.4 million of net income in the three-month period ended October 31, 2006 and held $781.3 million of total assets before consolidation entries as at October 31, 2006. | ||
The CGG Guarantors (excluding their subsidiaries that have not guaranteed the notes) generated, before consolidation entries,€161.0 million of revenues,€49.8 million of operating income and€30.7 million of net income in the year ended December 31, 2005 and held€394.4 million of total assets before consolidation entries as at December 31, 2005. They generated, before consolidation entries,€194.2 million of revenues,€92.8 million of operating income and€54.7 million of net income in the nine-month period ended September 30, 2006 and held€402.1 million of total assets before consolidation entries as at September 30, 2006. | ||
The Sercel Guarantors (excluding their subsidiaries that have not guaranteed the notes) generated, before consolidation entries,€146.5 million of revenues,€10.9 million of operating income and€6.3 million of net income in the year ended December 31, 2005 and held€205.9 million of total assets before consolidation entries as at December 31, 2005. They generated, before consolidation entries,€229.3 million of revenues,€33.6 million of operating income and€22.3 million of net income in the nine-month period ended September 30, 2006 and held€208.7 million of total assets before consolidation entries as at September 30, 2006. | ||
Ranking | The notes will be our senior unsecured obligations, ranking equally in right of payment with all our other existing and future senior unsecured indebtedness and senior in right of payment to all our existing and future subordinated indebtedness. The notes and the subsidiary guarantees will be effectively subordinated to all our secured obligations and all secured obligations of the subsidiaries that guarantee the notes, including any indebtedness under our senior facilities or under the French revolving facility, to the extent of the value of the collateral. In addition, the notes will be effectively subordinated to all current and future indebtedness and other obligations, including trade payables, of our subsidiaries that do not guarantee the notes. As at September 30, 2006, on a pro forma basis for the merger and the financing transactions, there would have been€947 million of outstanding indebtedness, including accrued interest, effectively senior to the notes, of which€926 million would have been secured. As at October 31, 2006, Veritas’non-guarantor subsidiaries had no outstanding indebtedness. The Indentures permit us and our subsidiaries to incur additional indebtedness (including additional secured indebtedness), subject to certain conditions. See “Description of Certain Indebtedness”. | |
Optional Redemption | ||
Additional notes | We may redeem all or a part of the additional notes at any time on or after May 15, 2010 at the redemption prices described in this prospectus. We may redeem up to 35% of the aggregate principal amount of the existing notes and the additional notes prior to May 15, 2008 using the proceeds of certain equity offerings. At |
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any time prior to May 15, 2010, we may redeem all or part of the additional notes at a redemption price equal to 100% of the principal amount of the additional notes plus the applicable premium described in this prospectus. | ||
New notes | We may redeem all or a part of the new notes at any time on or after May 15, 2012 at the redemption prices described in this prospectus. We may redeem up to 35% of the aggregate principal amount of the new notes prior to May 15, 2010 using the proceeds of certain equity offerings. At any time prior to May 15, 2012, we may redeem all or part of the new notes at a redemption price equal to 100% of the principal amount of the new notes plus the applicable premium described in this prospectus. | |
Change of Control | If we undergo a change of control, each holder may require us to repurchase all or a portion of the notes held by such holder at 101% of the principal amount thereof, plus accrued and unpaid interest. | |
Redemption for Changes in Tax Law | We will be required to pay additional amounts to the holders of the notes to compensate them for any amounts deducted from payments to them in respect of the notes on account of certain taxes and other governmental charges. If we become obliged to pay such additional amounts as a result of a change in law, the notes will be subject to redemption, in whole but not in part, at our option at a price equal to 100% of the principal amount of the notes. | |
Certain Covenants and Events of Default | Each of the indentures governing the notes contains certain covenants and events of default that, among other things, limit our ability and that of certain of our subsidiaries to: | |
• incur or guarantee additional indebtedness or issue preferred shares; | ||
• pay dividends or make other distributions; | ||
• purchase equity interests or redeem subordinated indebtedness early; | ||
• create or incur certain liens; | ||
• create or incur restrictions on the ability to pay dividends or make other payments to us; | ||
• enter into transactions with affiliates; | ||
• issue or sell capital stock of our subsidiaries; | ||
• engage in sale-and-leaseback transactions; and | ||
• sell assets or merge or consolidate with another company. | ||
All of these limitations are subject to a number of important qualifications and exceptions. In addition, the starting dates for the calculation of the availability under the various “baskets” relating to restricted payments, indebtedness, liens and other covenants are the same as those under the indenture governing the existing notes, |
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namely either January 1, 2005 or April 28, 2005 (depending on the particular basket). | ||
If at any time the notes receive ratings of BBB- or higher from Standard & Poor’s and Baa3 or higher from Moody’s, and no default or event of default has occurred and is continuing, certain restrictions, covenants and events of default will cease to be applicable to the notes for so long as the notes maintain such ratings. | ||
Taxation | Because the notes constituteobligations and are deemed to be issued outside the Republic of France for the purposes of Article 131quaterof the French tax code (Code général des impôts), payments of principal or interest on, and other revenues with respect to the notes will be entitled to the exemption from the withholding tax on interest set out under Article 125 A III of the French tax code. Accordingly, such payments do not give the right to any tax credit from any French source. | |
Use of Proceeds | We intend to use the net proceeds of the offering, plus cash on hand, to repay in full all amounts outstanding under the bridge loan facility used to finance the merger. See “Use of Proceeds” and “Description of Certain Indebtedness — Bridge Loan Facility”. | |
Listing | Application has been made to admit the notes to listing on the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF. | |
Governing Law | New York. | |
Trustee and Principal Paying Agent | The Bank of New York Trust Company, National Association. | |
Luxembourg Listing and Paying Agent | Dexia Banque Internationale à Luxembourg, société anonyme. |
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• | as at and for the nine months ended September 30, 2006 and 2005 in accordance with both IFRS and U.S. GAAP; | |
• | as at and for the years ended December 31, 2005 and 2004 in accordance with IFRS; and | |
• | as at and for the years ended December 31, 2005, 2004 and 2003 in accordance with U.S. GAAP. |
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As at and for the nine | |||||||||||||||||
months ended | As at and for the | ||||||||||||||||
September 30, | year ended | ||||||||||||||||
December 31, | |||||||||||||||||
2006 | 2005 | ||||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | ||||||||||||||
(in€ millions, except for | |||||||||||||||||
per share and ratio data) | |||||||||||||||||
Amounts in accordance with IFRS: | |||||||||||||||||
Statement of Operations Data: | |||||||||||||||||
Operating revenues | 955.6 | 607.5 | 869.9 | 687.4 | |||||||||||||
Other revenues from ordinary activities | 1.4 | 1.2 | 1.9 | 0.4 | |||||||||||||
Cost of operations | (636.7 | ) | (473.2 | ) | (670.0 | ) | (554.0 | ) | |||||||||
Gross profit | 320.3 | 135.5 | 201.8 | 133.8 | |||||||||||||
Research and development expenses, net | (27.8 | ) | (23.6 | ) | (31.1 | ) | (28.8 | ) | |||||||||
Selling, general and administrative expenses | (86.9 | ) | (64.2 | ) | (91.2 | ) | (78.6 | ) | |||||||||
Other revenues (expenses) | 12.0 | 2.7 | (4.4 | ) | 19.3 | ||||||||||||
Operating income | 217.6 | 45.0 | 75.1 | 45.7 | |||||||||||||
Cost of financial debt, net | (19.2 | ) | (26.7 | ) | (42.3 | ) | (27.8 | ) | |||||||||
Derivative and other expenses on convertible bonds | (23.0 | ) | (38.0 | ) | (11.5 | ) | (23.5 | ) | |||||||||
Other financial income (loss) | (8.4 | ) | 1.3 | (14.5 | ) | 0.8 | |||||||||||
Income taxes | (54.9 | ) | (18.5 | ) | (26.6 | ) | (10.9 | ) | |||||||||
Equity in income of affiliates | 8.9 | 9.6 | 13.0 | 10.3 | |||||||||||||
Net income (loss) | 121.0 | (27.3 | ) | (6.8 | ) | (5.4 | ) | ||||||||||
Attributable to minority interests | 1.2 | 0.6 | (1.0 | ) | (1.0 | ) | |||||||||||
Attributable to shareholders | 119.8 | (27.9 | ) | (7.8 | ) | (6.4 | ) | ||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic(1) | 6.92 | (2.37 | ) | (0.64 | ) | (0.55 | ) | ||||||||||
Diluted(2) | 6.78 | (2.37 | ) | (0.64 | ) | (0.55 | ) | ||||||||||
Other Ratios: | |||||||||||||||||
Ratio of earnings to fixed charges(3) | 10.9 | x | 1.7 | x | 1.4 | x | 1.8 | x | |||||||||
Balance Sheet Data (at period end): | |||||||||||||||||
Cash and cash equivalents | 168.7 | 112.4 | 130.6 | ||||||||||||||
Working capital(4) | 254.0 | 154.1 | 116.4 | ||||||||||||||
Property, plant & equipment, net | 485.0 | 480.1 | 204.1 | ||||||||||||||
Multi-client surveys | 69.8 | 93.6 | 124.5 | ||||||||||||||
Total assets | 1,751.7 | 1,565.1 | 971.2 | ||||||||||||||
Financial debt(5) | 430.8 | 400.3 | 249.6 | ||||||||||||||
Stockholders’ equity | 850.5 | 698.5 | 393.2 |
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As at and for the nine | ||||||||||||||||
months ended | As at and for the | |||||||||||||||
September 30, | year ended | |||||||||||||||
December 31, | ||||||||||||||||
2006 | 2005 | |||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | |||||||||||||
(in€ millions, except for | ||||||||||||||||
per share and ratio data) | ||||||||||||||||
Other Historical Financial Data: | ||||||||||||||||
ORBDA(6) | 359.9 | 148.9 | 229.5 | 172.5 | ||||||||||||
Capital expenditures (property, plant & equipment)(7) | 117.2 | 75.4 | 125.1 | 49.8 | ||||||||||||
Capital expenditures for multi-client surveys | 38.9 | 19.2 | 32.0 | 51.1 | ||||||||||||
Net debt(8) | 273.0 | 500.5 | 297.2 | 121.8 | ||||||||||||
Net debt(8)/ ORBDA(6) | 1.3 | x | 0.7 | x |
As at and for the | |||||||||||||||||||||
nine months | |||||||||||||||||||||
ended September 30, | As at and for the year ended | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2006 | 2005 | ||||||||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | 2003 | |||||||||||||||||
(in€ millions, except for per share, ratio and operational data) | |||||||||||||||||||||
Amounts in accordance with U.S. GAAP: | |||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||
Operating revenues | 967.7 | 601.6 | 860.8 | 709.5 | 645.6 | ||||||||||||||||
Operating income | 215.0 | 38.2 | 61.9 | 55.0 | 42.7 | ||||||||||||||||
Net income (loss) | 94.0 | (15.3 | ) | 8.3 | (20.2 | ) | 3.1 | ||||||||||||||
Per share amounts: | |||||||||||||||||||||
Basic common stock holder(1) | 5.43 | (1.30 | ) | 0.69 | (1.73 | ) | 0.27 | ||||||||||||||
Diluted common stock holder(9) | 5.32 | (1.30 | ) | 0.67 | (1.73 | ) | 0.26 | ||||||||||||||
Other Ratios: | |||||||||||||||||||||
Ratio of earnings to fixed charges(3) | 8.8 | x | 2.0 | x | 1.6 | x | 1.4 | x | 0.5 | x | |||||||||||
Balance Sheet Data (at period end): | |||||||||||||||||||||
Total assets | 1,751.2 | 1,573.8 | 975.8 | 924.2 | |||||||||||||||||
Financial debt(5) | 436.7 | 416.7 | 266.5 | 232.4 | |||||||||||||||||
Stockholders’ equity | 811.7 | 689.5 | 372.2 | 413.4 | |||||||||||||||||
Operational Data (at period end): | |||||||||||||||||||||
Land teams in operations | 8 | 12 | 11 | 8 | 12 | ||||||||||||||||
Operational streamers(10) | 44 | 52 | 46 | 39 | 42 | ||||||||||||||||
Data processing centers | 31 | 30 | 27 | 26 | 26 |
(1) | Basic per share amounts under IFRS and U.S. GAAP have been calculated on the basis of 17,318,957 issued and outstanding shares in the nine month period ended September 30, 2006, 11,765,118 issued and outstanding shares in the nine month period ended September 30, 2005, 12,095,925 issued and outstanding shares in 2005 and 11,681,406 issued and outstanding shares in 2004. Basic per share amounts under U.S. GAAP have been calculated on the basis of 11,680,718 issued and outstanding shares in 2003. |
(2) | Diluted per share amount under IFRS has been calculated on the basis of 17,675,616 issued and outstanding shares in the nine month period ended September 30, 2006, 13,451,097 issued and outstanding shares in the nine month period ended September 30, 2005, 12,095,925 issued and outstanding shares in 2005 and 11,681,406 issued and outstanding shares in 2004. For the nine-month period ended September 30, 2005, the effect of convertible bonds was anti-dilutive. |
(3) | For purposes of calculating the ratio of earnings to fixed charges, earnings in IFRS consist of income (loss) from consolidated companies before income taxes, excluding derivative and other expenses on convertible bonds included in CGG’s income statement |
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for the relevant period included elsewhere in this prospectus. Earnings under U.S. GAAP consist of income from consolidated companies before income taxes and minority interests, excluding equity in income of affiliates included in CGG’s income statement for the relevant period included elsewhere in this prospectus. Fixed charges under each of IFRS and U.S. GAAP consist of net cost of financial debt (including amortization fees). For the year ended December 31, 2003, our earnings were insufficient to cover fixed charges by€13.5 million under U.S. GAAP. | |
(4) | Working capital consists of trade accounts and notes receivable, inventories andwork-in-progress, tax assets, other current assets and assets held for sale less trade accounts and notes payable, accrued payroll costs, income tax payable, advance billings to customers, current provisions and other current liabilities. |
(5) | “Financial debt” means total financial debt, including current maturities, capital leases and accrued interest but excluding bank overdrafts. Financial debt excludes fees relating to the raising of debt under IFRS, but includes such fees under U.S. GAAP. |
(6) | A discussion of “ORBDA” (Operating Result Before Depreciation and Amortization, previously denominated “Adjusted EBITDA”), including (i) a reconciliation to net cash provided by operating activities and (ii) the reasons why our management believes that a presentation of ORBDA provides useful information to investors regarding our financial condition and results of operations, is found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — ORBDA”. |
(7) | “Capital expenditures” is defined as purchases of property, plant and equipment plus equipment acquired under capital lease. |
The following table presents a reconciliation of capital expenditures to purchases of property, plant and equipment and equipment acquired under capital lease for the periods indicated: |
For the nine months | For the year | |||||||||||||||
ended September 30, | ended | |||||||||||||||
December 31, | ||||||||||||||||
2006 | 2005 | |||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | |||||||||||||
(in€ millions) | ||||||||||||||||
Purchase of property, plant and equipment | 117.0 | 61.8 | 107.7 | 41.1 | ||||||||||||
Equipment acquired under capital lease | 0.2 | 13.6 | 17.4 | 8.7 | ||||||||||||
Capital expenditures | 117.2 | 75.4 | 125.1 | 49.8 | ||||||||||||
(8) | “Net debt” means bank overdrafts, financial debt including current portion (including capital lease debt) net of cash and cash equivalents. A discussion of net debt, including (i) a reconciliation of net debt to financing items of the CGG balance sheet and (ii) the reasons why our management believes that a presentation of net debt provides useful information to investors regarding our financial condition and results of operations, is found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net Debt”. |
(9) | Diluted per share amounts under U.S. GAAP have been calculated on the basis of 17,675,616 issued and outstanding shares in the nine month period ended September 30, 2006, 13,451,097 issued and outstanding shares in the nine month period ended September 30, 2005, 12,378,209 issued and outstanding shares in 2005, 11,681,406 issued and outstanding shares in 2004, and 11,760,630 issued and outstanding shares in 2003. |
(10) | Data includes Exploration Resources ASA’s streamers (from and including December 31, 2005) and excludes streamers of vessels in transit or dry-dock. |
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As at and for the three | ||||||||||||||||||||
months ended October 31, | As at and for the year | |||||||||||||||||||
ended July 31, | ||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||
(unaudited) | (unaudited) | 2006(1) | 2005(2) | 2004(3) | ||||||||||||||||
(in $ millions, except per share amount) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues | 230.8 | 168.7 | 822.2 | 634.0 | 564.5 | |||||||||||||||
Cost of services | 165.8 | 136.7 | 623.2 | 519.0 | 495.7 | |||||||||||||||
Research and development | 5.4 | 4.9 | 22.9 | 18.9 | 15.5 | |||||||||||||||
General and administrative | 11.4 | 8.9 | 43.2 | 31.9 | 25.5 | |||||||||||||||
Operating income (loss) | 37.9 | 18.3 | 132.9 | 64.2 | 27.8 | |||||||||||||||
Interest expense | 2.2 | 1.5 | 7.3 | 4.0 | 18.9 | |||||||||||||||
Interest income | (5.0 | ) | (1.9 | ) | (12.0 | ) | (5.3 | ) | (1.6 | ) | ||||||||||
Gain on involuntary conversion of assets | — | (2.0 | ) | (2.0 | ) | (9.9 | ) | — | ||||||||||||
Other (income) expense, net | 0.03 | (.13 | ) | .12 | (.88 | ) | 1.6 | |||||||||||||
Provision (benefit) for income tax expense | 13.2 | 9.0 | 57.2 | (6.8 | ) | 3.7 | ||||||||||||||
Net income (loss) | 27.5 | 11.8 | 82.2 | 83.0 | 5.2 | |||||||||||||||
Net income (loss) per common share — basic | 0.77 | 0.34 | 2.33 | 2.45 | 0.16 | |||||||||||||||
Net income (loss) per common share — diluted | 0.68 | 0.32 | 2.08 | 2.37 | 0.15 | |||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||
Cash and cash equivalents | 353.8 | 228.0 | 402.0 | 249.4 | 116.3 | |||||||||||||||
Property and equipment, net | 141.9 | 128.8 | 110.6 | 127.9 | 121.7 | |||||||||||||||
Multi-client data library | 324.1 | 333.3 | 296.6 | 316.8 | 313.2 | |||||||||||||||
Total assets | 1,175.6 | 954.5 | 1,158.0 | 966.6 | 776.2 | |||||||||||||||
Long-term debt (including current maturities) | 155.0 | 155.0 | 155.0 | 155.0 | 155.0 | |||||||||||||||
Stockholders’ equity | 749.8 | 607.8 | 710.5 | 582.5 | 489.7 | |||||||||||||||
Other Historical Financial Data: | ||||||||||||||||||||
ORBDA(4) | 123.5 | 81.6 | 383.7 | 265.9 | 278.3 |
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(1) | Includes a gain on involuntary conversion of assets of $2.0 million. |
(2) | Includes a gain on involuntary conversion of assets of $9.9 million and a release of deferred tax valuation allowances of $36.9 million. |
(3) | Includes charges of $22.1 million related to a change in multi-client accounting policies and $7.4 million related to debt refinancing. The change in multi-client accounting policies may affect the comparability between periods and is more fully described in Note 1 of the Veritas consolidated financial statements included elsewhere in this prospectus. |
(4) | A discussion of “ORBDA” (Operating Result Before Depreciation and Amortization), including (i) a reconciliation to net cash provided by operating activities and (ii) the reasons why our management believes that a presentation of ORBDA provides useful information to investors regarding our financial condition and results of operations, is found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — ORBDA”. |
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• | under U.S. GAAP, the price of CGG ADSs was $32.44, the average price of CGG ADSs for the period beginning two days before and ending two days after September 5, 2006 (the date that the merger was announced); | |
• | under IFRS, the price of CGG ADSs was $40.50, the closing price on the closing date of the merger; | |
• | each outstanding share of Veritas common stock was converted in the merger into the right to receive either (i) 2.25 CGG ADSs (with respect to 50.664% of Veritas’ total common stock) or (ii) $75.00 in cash (with respect to 49.336% of Veritas’ total common stock); | |
• | the cash consideration paid by CGG in connection with the merger was financed by a $1.0 billion term loan facility, the issuance of $600 million in notes offered hereby and cash on hand; and | |
• | each employee option to purchase shares of Veritas common stock pursuant to any stock option plan, program or arrangement of Veritas outstanding at the time of the merger, whether or not vested, has been cancelled and converted into the right to receive, for each share of Veritas common stock subject to such option, an amount in cash equal to the excess, if any, of $75.00 over the exercise price per share under such option (less any applicable withholding taxes). |
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As at and | ||||||||
for the | ||||||||
nine | ||||||||
months | For the | |||||||
ended | year ended | |||||||
September 30, | December | |||||||
2006 | 31, 2005 | |||||||
(unaudited) | (unaudited) | |||||||
(in€ millions, except for per | ||||||||
share and ratio data) | ||||||||
IFRS | ||||||||
Statement of Income Data in accordance with IFRS: | ||||||||
Operating revenues | 1,470.1 | 1,489.1 | ||||||
Gross profit | 430.9 | 292.2 | ||||||
Operating income (loss) | 289.6 | 125.7 | ||||||
Net income attributable to shareholders | 122.9 | (18.3 | ) | |||||
Earnings per share — basic | 4.57 | (0.84 | ) | |||||
Earnings per share — diluted | 4.51 | (0.84 | ) | |||||
Ratio of earnings to fixed charges | 2.1x | — | ||||||
Balance Sheet Data in accordance with IFRS (at end of period): | ||||||||
Total assets | 4,863.4 | |||||||
Shareholders’ equity — attributable to shareholders | 2,405.5 | |||||||
Cash, cash equivalents and marketable securities | 300.5 | |||||||
Current portion of long-term debt | 60.6 | |||||||
Bonds and notes issued and long-term debt | 1,630.5 | |||||||
U.S. GAAP | ||||||||
Statement of Income Data in accordance with U.S. GAAP: | ||||||||
Operating revenues | 1,479.3 | 1,474.4 | ||||||
Gross profit | 439.2 | 288.3 | ||||||
Operating income (loss) | 278.5 | 105.8 | ||||||
Net income attributable to shareholders | 91.6 | 0.4 | ||||||
Earnings per share — basic | 3.40 | 0.02 | ||||||
Earnings per share — diluted | 3.36 | 0.02 | ||||||
Ratio of earnings to fixed charges | 1.2x | — | ||||||
Balance Sheet Data in accordance with U.S. GAAP (at end of period): | ||||||||
Total assets | 4,524.4 | |||||||
Shareholders’ equity — attributable to shareholders | 2,018.8 | |||||||
Cash, cash equivalents and marketable securities | 300.4 | |||||||
Current portion of long-term debt | 63.4 | |||||||
Bonds and notes issued and long-term debt | 1,656.5 |
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We are subject to certain risks related to acquisitions, including the merger, and these risks may materially adversely affect our revenues, expenses, operating results and financial condition. |
We are subject to risks related to our international operations that could harm our business and results of operations. |
• | instability of foreign economies and governments; | |
• | risks of war, terrorism, civil disturbance, seizure, renegotiation or nullification of existing contracts; and | |
• | foreign exchange restrictions, sanctions and other laws and policies affecting taxation, trade and investment. |
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We invest significant amounts of money in acquiring and processing seismic data for multi-client surveys and for our data library without knowing precisely how much of the data we will be able to sell or when and at what price we will be able to sell the data. |
• | We may not fully recover the costs of acquiring and processing the data through future sales. The amounts of these data sales are uncertain and depend on a variety of factors, many of which are beyond our control. In addition, the timing of these sales is unpredictable and sales can vary greatly from period to period. Technological or regulatory changes or other developments could also materially adversely affect the value of the data. | |
• | 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 in the areas where we acquire multi-client data. | |
• | Any reduction in the market value of such data will require us to write down our recorded value, which could have a significant material adverse effect on our results of operations. |
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Our results of operations may be significantly affected by currency fluctuations. |
Our working capital needs are difficult to forecast and may vary significantly, which could result in additional financing requirements that we may not be able to meet on satisfactory terms, or at all. |
Technological changes and new products and services are frequently introduced in the market, and our technology could be rendered obsolete by these introductions, or we may not be able to develop and produce new and enhanced products on a cost-effective and timely basis. |
We rely on significant customers, so the loss of a single customer or a few customers could have a material adverse effect on our operating revenues and business. |
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The nature of our business subjects us to significant ongoing operating risks for which we may not have adequate insurance or for which we may not be able to procure adequate insurance on economical terms, if at all. |
A reduction in our seismic fleet could materially adversely affect our operating revenues and business. |
Compliance with internal controls procedures and evaluations and attestation requirements will require significant efforts and resources and may result in the identification of significant deficiencies or material weaknesses. |
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We depend on proprietary technology and are exposed to risks associated with the misappropriation or infringement of that technology. |
A failure to attract and retain qualified employees may materially adversely affect our future business and operations. |
The financial statements and other financial information of Veritas presented in this prospectus and used to prepare the unaudited pro forma condensed combined financial information presented in this prospectus and the pro forma financial information itself may not be indicative of the results of Veritas as part of our group. |
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CGG and Veritas have had losses in the past and we cannot assure that we will be profitable in the future. |
We depend on capital expenditures by the oil and gas industry, and reductions in such expenditures may have a material adverse effect on our business. |
• | demand for oil, natural gas and natural gas liquids; | |
• | worldwide political, military and economic conditions, including political developments in the Middle East, economic growth levels and the ability of OPEC to set and maintain production levels and prices for oil; | |
• | levels of oil and gas production; | |
• | the price and availability of alternative fuels; | |
• | policies of governments regarding the exploration for and production and development of oil and gas reserves in their territories; and | |
• | global weather conditions. |
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We are subject to intense competition, which could limit our ability to maintain or increase our market share or to maintain our prices at profitable levels. |
We have high levels of fixed costs that are incurred regardless of our level of business activity. |
Our land and marine seismic acquisition revenues vary significantly during the year. |
Our business is subject to governmental regulation, which may adversely affect our future operations. |
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Our substantial debt could adversely affect our financial health and prevent us from fulfilling our obligations. |
• | make it more difficult to satisfy our obligations with respect to the notes; | |
• | increase our vulnerability to general adverse economic and industry conditions; | |
• | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; | |
• | limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; | |
• | place us at a competitive disadvantage compared to our competitors that have less debt; and | |
• | limit, along with the financial and other restrictive covenants of our indebtedness, among other things, our ability to borrow additional funds. |
Our debt agreements contain restrictive covenants that may limit our ability to respond to changes in market conditions or pursue business opportunities. |
• | incur or guarantee additional indebtedness or issue preferred shares; | |
• | pay dividends or make other distributions; | |
• | purchase equity interests; | |
• | create or incur certain liens; | |
• | create or incur restrictions on the ability to pay dividends or make other payments to us; | |
• | enter into transactions with affiliates; | |
• | issue or sell capital stock of subsidiaries; | |
• | engage in sale-and-leaseback transactions; and | |
• | sell assets or merge or consolidate with another company. |
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If we are unable to comply with the restrictions and covenants in the indentures and debt agreements governing the notes and other debt, there could be a default under the terms of these indentures and agreements, which could result in an acceleration of repayment. |
We and our subsidiaries may incur substantially more debt. |
To service our indebtedness, we will require a significant amount of cash, and our ability to generate cash will depend on many factors beyond our control. |
Our results of operations could be materially adversely affected by changes in interest rates. |
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Your right to receive payments on the notes is effectively junior to most of our existing indebtedness and possibly all of our future borrowings. |
We will rely in part on our subsidiaries for funds necessary to meet our financial obligations, including the notes. |
Although the occurrence of specific change of control events affecting us will permit you to require us to repurchase your notes, we may not be able to repurchase your notes. |
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Certain affiliates or associated entities of underwriters participating in this offering will receive the net proceeds of this offering, which may present a conflict of interest. |
Insolvency laws in France may not be as favorable to you as U.S. or other insolvency laws. |
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• | the opening of judicial reorganization or safeguard proceedings against such company, or | |
• | the existence of the state of suspension of payments (i.e., the inability to pay due debts out of available assets) against such company |
Courts, under certain circumstances, may void the guarantees of the notes provided by certain of our subsidiaries. |
• | a guarantor delivered its guarantee with the intent to defeat, hinder, delay, defraud or otherwise interfere with its existing or future creditors; | |
• | the guarantor did not receive fair consideration or benefit for the delivery of the guarantee and the guarantor was insolvent at the time it delivered the guarantee; | |
• | the guarantor delivered its guarantee in contravention of laws relating to the provision of financial assistance; | |
• | the guarantor was insolvent at the time of execution of the guarantee or was rendered insolvent by reason of its execution of the guarantee or the observance of its obligations under the guarantee; | |
• | a reasonable person in the guarantor’s circumstances would not have entered into the transaction having regard to the benefits (if any) to the guarantor, the detriment to the guarantor and the respective benefits to other parties; | |
• | the guarantor was engaged, or was about to engage, in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business; | |
• | the guarantor intended to incur, or believed it would incur, debts beyond its ability to pay the debts as they matured; |
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• | the guarantor was a defendant in an action for money damage, or had a judgment for money damages docketed against it (if, in either case, after final judgment, the judgment is unsatisfied); or | |
• | the availability of certain equitable remedies that are in the discretion of the courts. |
Judgments of U.S. courts may not be enforceable against CGGVeritas. |
A trading market for the new notes may not develop and a trading market for the notes may not continue to exist. |
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Dollars per euro exchange rate | ||||||||||||||||
Year ended December 31, | Period-end | High | Low | Average(1) | ||||||||||||
2002 | 1.05 | 1.05 | 0.86 | 0.95 | ||||||||||||
2003 | 1.26 | 1.26 | 1.04 | 1.14 | ||||||||||||
2004 | 1.35 | 1.36 | 1.18 | 1.24 | ||||||||||||
2005 | 1.18 | 1.35 | 1.17 | 1.24 | ||||||||||||
2006 | 1.32 | 1.33 | 1.19 | 1.26 |
Year ended July 31, | ||||||||||||||||
2002 | 0.98 | 1.02 | 0.86 | 0.91 | ||||||||||||
2003 | 1.12 | 1.19 | 0.96 | 1.06 | ||||||||||||
2004 | 1.20 | 1.29 | 1.08 | 1.20 | ||||||||||||
2005 | 1.21 | 1.36 | 1.19 | 1.27 | ||||||||||||
2006 | 1.28 | 1.30 | 1.17 | 1.22 |
Nine months ended September 30, | ||||||||||||||||
2005 | 1.21 | 1.35 | 1.19 | 1.26 | ||||||||||||
2006 | 1.27 | 1.30 | 1.19 | 1.25 |
Three months ended October 31, | ||||||||||||||||
2005 | 1.20 | 1.25 | 1.19 | 1.22 | ||||||||||||
2006 | 1.28 | 1.29 | 1.25 | 1.27 |
Month | ||||||||||||||||
August 2006 | — | 1.29 | 1.27 | — | ||||||||||||
September 2006 | — | 1.28 | 1.26 | — | ||||||||||||
October 2006 | — | 1.28 | 1.25 | — | ||||||||||||
November 2006 | — | 1.33 | 1.27 | — | ||||||||||||
December 2006 | — | 1.33 | 1.31 | — | ||||||||||||
January 2007 | — | 1.33 | 1.29 | — | ||||||||||||
February 2007 (through February 2) | — | 1.30 | 1.30 | — |
(1) | The annual average rate is the average of the Noon Buying Rates on the last business day of each month. |
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• | on an historical CGG basis; and | |
• | as adjusted to reflect the merger and the financing transactions. |
As at September 30, 2006 | |||||||||||||||||||||
Other Pro | |||||||||||||||||||||
Forma | |||||||||||||||||||||
Adjustments | |||||||||||||||||||||
CGG | Veritas | for the | |||||||||||||||||||
Actual | Actual | Merger and | |||||||||||||||||||
September 30, | October 31, | Pro Forma | the | ||||||||||||||||||
2006 | 2006 | Consistency | Financing | As | |||||||||||||||||
(IFRS) | (U.S. GAAP) | Adjustments(1) | Transactions | Adjusted | |||||||||||||||||
(in€ millions) | |||||||||||||||||||||
Cash and cash equivalents | 169 | 280 | — | (148 | )(2) | 301 | |||||||||||||||
Bank overdrafts | 11 | — | — | — | 11 | ||||||||||||||||
Current portion of financial debt | 44 | 122 | (3 | ) | (103 | ) | 61 | ||||||||||||||
Capital lease (current portion) | — | 1 | — | — | 1 | ||||||||||||||||
Other financial debt (current including accrued interest) | 44 | — | — | — | 44 | ||||||||||||||||
Veritas convertible notes | — | 121 | (3 | ) | (103 | )(3) | 15 | ||||||||||||||
Financial debt | 387 | — | — | 1,244 | 1,631 | ||||||||||||||||
Capital lease | 50 | — | — | — | 50 | ||||||||||||||||
Other financial debt (including accrued interest) | 82 | — | — | — | 82 | ||||||||||||||||
Senior facilities | — | — | — | 778 | (4) | 778 | |||||||||||||||
Senior notes due 2015 | 255 | — | — | 155 | (5) | 410 | |||||||||||||||
Senior notes due 2017 | — | — | — | 311 | (5) | 311 | |||||||||||||||
Total financial debt (including bank overdrafts) | 442 | 122 | (3 | ) | 1,141 | 1,702 | |||||||||||||||
Shareholders’ equity | 851 | 592 | (5 | ) | 968 | (6) | 2,406 | ||||||||||||||
Minority interests | 24 | — | — | — | 24 | ||||||||||||||||
Total shareholders’ equity and minority interests | 874 | 592 | (5 | ) | 968 | 2,429 | |||||||||||||||
Net debt/(Cash) | 273 | (157 | ) | (3 | ) | (1,288 | ) | 1,402 |
(1) | Adjustments to Veritas’ consolidated balance sheet as at October 31, 2006 have been made to ensure consistency of accounting principles with CGG under IFRS. See Notes 2 and 3 to our unaudited pro forma condensed combined financial statements included elsewhere in this prospectus. |
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(2) | Net effect of pro forma adjustment on cash as described in Note 4.2.5 to our unaudited pro forma condensed combined financial statements included elsewhere in this prospectus. |
(3) | See discussion in Note 4.1.1.1 to our unaudited pro forma condensed combined financial statements included elsewhere in this prospectus. |
(4) | Net proceeds of $1.0 billion from the term loan facility. |
(5) | The estimated net proceeds of the offering of the notes hereby. |
(6) | Reflects the net impact of the ordinary shares underlying ADSs issued to holders of Veritas common stock as consideration in the merger. |
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The Merger |
Merger Rationale |
• | the combination of CGG and Veritas took place in a strong business environment. Decreasing reserves of oil and gas companies have been coupled with growing energy consumption sustained by long-term demand, particularly in China and India. This environment has created a need to accelerate the pace of exploration in new areas, to revisit existing exploration areas with new technologies and to optimize reservoir management to maximize recovery rates. Seismic technology plays a key role in this process and CGGVeritas, with its combined technology and worldwide geographic fit, is expected to be well positioned to compete to lead and meet the industry’s needs; | |
• | the combination of CGG and Veritas creates a strong global pure-play seismic company, offering a broad range of seismic services, and, through Sercel, geophysical equipment to the industry across all markets. The business, geographic and client complementarities of CGG and Veritas are expected to respond to the growing demand for seismic imaging and reservoir solutions. CGGVeritas is expected to be well positioned to provide an improved technological advanced product offering in seismic services as most oil and gas companies attempt to replace diminishing reserves in a more complex exploration environment, to strengthen long-term relationships with a broad range of clients and to improve financial performance through business cycles; | |
• | the combination of CGG and Veritas brings together two companies with strong technological foundations in the geophysical services and equipment market. Both CGG and Veritas have a long tradition in providing seismic services both onshore and offshore. In particular, Veritas’ strong offshore positions will effectively complete the repositioning to offshore that CGG has been implementing during the last few years. Both companies already use a broad range of Sercel technologies for their data acquisition activities, thereby providing a homogeneous equipment base for the combined CGGVeritas. In addition, Veritas’ strong focus on North America fits well with CGG’s international presence. Combining the two customer bases is expected to provide a good balance between national oil companies (a strong position of CGG), major oil and gas operators (a strong position of both CGG and Veritas) andU.S.-based operators, both majors and independent (a |
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strong position of Veritas). The combined technology and know-how of the two companies will strengthen research and development capabilities to best serve the CGGVeritas client base with a broader range of technologies that CGGVeritas would be able to deliver more rapidly to the market; | ||
• | the addition of Veritas’ fleet of seven vessels creates a combined seismic services business operating the world’s leading seismic fleet of 20 vessels, including 14 high capacity 3D vessels. Capacity in the combined fleet is well balanced between large (more than 10 streamers), medium (six to eight streamers) and smaller sizes, with all vessels equipped with Sercel’s solid or fluid streamers. The combined fleet will provide highly flexible fleet management potential with a balanced distribution of fully owned, chartered, new built and significantly depreciated capacity. Additionally, most of the vessels in the combined fleet have been recently equipped with relatively new technology which will provide CGGVeritas with a fleet that can be managed without significant investments in the near term; | |
• | offshore multi-client services benefits from two complementary, recent vintage, well-positioned seismic data libraries. For example, the Veritas library will bring to CGG complementary data in the Gulf of Mexico, with Veritas data library being positioned in the Western and Central Gulf while CGG’s data library is in the Central and Eastern Gulf. Data merging from the CGG and Veritas libraries will provide potential for cross imaging enhancement and value creation. All these benefits take place in a market where a global library portfolio is increasingly attractive to clients; | |
• | CGG’s and Veritas’ respective offerings for land acquisition services represent strong geographical and technological complementarities for high-end positioning and further development of local partnerships. Veritas’ strong presence in the western hemisphere, in particular North America and particularly in multi-client surveys, complements CGG’s main geographic footprint in the eastern hemisphere and its strong focus on the Middle East. In addition, CGG’s and Veritas’ technological complementarities will enhance CGGVeritas’ land offering, ranging from exploration seismic to field seismic monitoring; | |
• | CGG’s and Veritas’ respective positions in data processing and imaging as well as the skills and reputation of their experts and geoscientists, allows CGGVeritas to create the industry reference in this segment, with particular strengths in advanced technologies such as depth imaging, 4D processing and reservoir characterization as well as a close link with clients through dedicated centers; | |
• | the merger will not affect Sercel’s open technology approach. Sercel will pursue its strategy of maintaining leading edge technology, offering new generations of differentiating products and focusing on key markets; and | |
• | with a combined workforce of 7,000 staff operating worldwide, including Sercel, CGGVeritas will, through continued innovation, be an industry leader in seismic technology, services and equipment with a broad base of customers including independent, international and national oil companies. |
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• | as at and for the nine months ended September 30, 2006 and 2005 in accordance with both IFRS and U.S. GAAP; | |
• | as at and for the years ended December 31, 2005 and 2004 in accordance with IFRS; and | |
• | as at and for each of the five years in the period ending December 31, 2005 in accordance with U.S. GAAP. |
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As at and for the nine | |||||||||||||||||
months ended | As at and for the | ||||||||||||||||
September 30, | year ended | ||||||||||||||||
December 31, | |||||||||||||||||
2006 | 2005 | ||||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | ||||||||||||||
(in€ millions, except for | |||||||||||||||||
per share and ratio data) | |||||||||||||||||
Amounts in accordance with IFRS: | |||||||||||||||||
Statement of Operations Data: | |||||||||||||||||
Operating revenues | 955.6 | 607.5 | 869.9 | 687.4 | |||||||||||||
Other revenues from ordinary activities | 1.4 | 1.2 | 1.9 | 0.4 | |||||||||||||
Cost of operations | (636.7 | ) | (473.2 | ) | (670.0 | ) | (554.0 | ) | |||||||||
Gross profit | 320.3 | 135.5 | 201.8 | 133.8 | |||||||||||||
Research and development expenses, net | (27.8 | ) | (23.6 | ) | (31.1 | ) | (28.8 | ) | |||||||||
Selling, general and administrative expenses | (86.9 | (64.2 | ) | (91.2 | ) | (78.6 | ) | ||||||||||
Other revenues (expenses) | 12.0 | 2.7 | (4.4 | ) | 19.3 | ||||||||||||
Operating income | 217.6 | 45.0 | 75.1 | 45.7 | |||||||||||||
Cost of financial debt, net | (19.2 | ) | (26.7 | ) | (42.3 | ) | (27.8 | ) | |||||||||
Derivative and other expenses on convertible bonds | (23.0 | ) | (38.0 | ) | (11.5 | ) | (23.5 | ) | |||||||||
Other financial income (loss) | (8.4 | 1.3 | (14.5 | ) | 0.8 | ||||||||||||
Income taxes | (54.9 | ) | (18.5 | ) | (26.6 | ) | (10.9 | ) | |||||||||
Equity in income of affiliates | 8.9 | 9.6 | 13.0 | 10.3 | |||||||||||||
Net income (loss) | 121.0 | (27.3 | ) | (6.8 | ) | (5.4 | ) | ||||||||||
Attributable to minority interests | 1.2 | 0.6 | (1.0 | ) | (1.0 | ) | |||||||||||
Attributable to shareholders | 119.8 | (27.9 | ) | (7.8 | ) | (6.4 | ) | ||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic(1) | 6.92 | (2.37 | ) | (0.64 | ) | (0.55 | ) | ||||||||||
Diluted(2) | 6.78 | (2.37 | ) | (0.64 | ) | (0.55 | ) | ||||||||||
Other Ratios: | |||||||||||||||||
Ratio of earnings to fixed charges(3) | 10.9 | x | 1.7 | x | 1.4 | x | 1.8 | x | |||||||||
Balance Sheet Data (at period end): | |||||||||||||||||
Cash and cash equivalents | 168.7 | 112.4 | 130.6 | ||||||||||||||
Working capital(4) | 254.0 | 154.1 | 116.4 | ||||||||||||||
Property, plant & equipment, net | 485.0 | 480.1 | 204.1 | ||||||||||||||
Multi-client surveys | 69.8 | 93.6 | 124.5 | ||||||||||||||
Total assets | 1,751.7 | 1,565.1 | 971.2 | ||||||||||||||
Financial debt(5) | 430.8 | 400.3 | 249.6 | ||||||||||||||
Stockholders’ equity | 850.5 | 698.5 | 393.2 | ||||||||||||||
Other Historical Financial Data: | |||||||||||||||||
ORBDA(6) | 359.9 | 148.9 | 229.5 | 172.5 | |||||||||||||
Capital expenditures (property, plant & equipment)(7) | 117.2 | 75.4 | 125.1 | 49.8 | |||||||||||||
Capital expenditures for multi-client surveys | 38.9 | 19.2 | 32.0 | 51.1 | |||||||||||||
Net debt(8) | 273.0 | 500.5 | 297.2 | 121.8 | |||||||||||||
Net debt(8)/ ORBDA(6) | 1.3 | x | 0.7x |
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As at and for the nine | |||||||||||||||||||||||||||||
months ended | |||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||
As at and for the year ended December 31, | |||||||||||||||||||||||||||||
2006 | 2005 | ||||||||||||||||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||||||
(in€ millions, except for per share, ratio and operational data) | |||||||||||||||||||||||||||||
Amounts in accordance with U.S. GAAP: | |||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||
Operating revenues | 967.7 | 601.6 | 860.8 | 709.5 | 645.6 | 719.0 | 795.0 | ||||||||||||||||||||||
Operating income | 215.0 | 38.2 | 61.9 | 55.0 | 42.7 | 81.9 | 48.6 | ||||||||||||||||||||||
Net income (loss) | 94.0 | (15.3 | ) | 8.3 | (20.2 | ) | 3.1 | 15.1 | 9.3 | ||||||||||||||||||||
Per share amounts: | |||||||||||||||||||||||||||||
Basic common stock holder(1) | 5.43 | (1.30 | ) | 0.69 | (1.73 | ) | 0.27 | 1.29 | 0.80 | ||||||||||||||||||||
Diluted common stock holder(9) | 5.32 | (1.30 | ) | 0.67 | (1.73 | ) | 0.26 | 1.29 | 0.80 | ||||||||||||||||||||
Other Ratios: | |||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(3) | 8.8 | x | 2.0 | x | 1.6 | x | 1.4 | x | 0.5 | x | 2.2 | x | 2.0 | x | |||||||||||||||
Balance Sheet Data (at period end): | |||||||||||||||||||||||||||||
Total assets | 1,751.2 | 1,573.8 | 975.8 | 924.2 | 1,036.8 | 1,008.0 | |||||||||||||||||||||||
Financial debt(5) | 436.7 | 416.7 | 266.5 | 232.4 | 307.8 | 279.5 | |||||||||||||||||||||||
Stockholders’ equity | 811.7 | 689.5 | 372.2 | 413.4 | 431.0 | 456.4 | |||||||||||||||||||||||
Operational Data (end of period): | |||||||||||||||||||||||||||||
Land teams in operations | 8 | 12 | 11 | 8 | 12 | 14 | 12 | ||||||||||||||||||||||
Operational streamers(10) | 44 | 52 | 46 | 39 | 42 | 42 | 48 | ||||||||||||||||||||||
Data processing centers | 31 | 30 | 27 | 26 | 26 | 26 | 26 |
(1) | Basic per share amounts under IFRS and U.S. GAAP have been calculated on the basis of 17,318,957 issued and outstanding shares in the nine month period ended September 30, 2006, 11,765,118 issued and outstanding shares in the nine month period ended September 30, 2005, 12,095,925 issued and outstanding shares in 2005 and 11,681,406 issued and outstanding shares in 2004. Basic per share amounts under U.S. GAAP have been calculated on the basis of 11,680,718 issued and outstanding shares in 2003 and 2002 and 11,609,393 issued and outstanding shares in 2001. | |
(2) | Diluted per share amount under IFRS has been calculated on the basis of 17,675,616 issued and outstanding shares in the nine month period ended September 30, 2006, 13,451,097 issued and outstanding shares in the nine month period ended September 30, 2005, 12,095,925 issued and outstanding shares in 2005 and 11,681,406 issued and outstanding shares in 2004. For the nine-month period ended September 30, 2005, the effect of convertible bonds was anti-dilutive. | |
(3) | For purposes of calculating the ratio of earnings to fixed charges, earnings in IFRS consist of income (loss) from consolidated companies before income taxes, excluding derivative and other expenses on convertible bonds included in CGG’s income statement for the relevant period included elsewhere in this prospectus. Earnings under U.S. GAAP consist of income from consolidated companies before income taxes and minority interests, excluding equity in income of affiliates included in CGG’s income statement for the relevant period included elsewhere in this prospectus. Fixed charges under each of IFRS and U.S. GAAP consist of net cost of financial debt (including amortization fees). For the year ended December 31, 2003, our earnings were insufficient to cover fixed charges by€13.5 million under U.S. GAAP. | |
(4) | Working capital consists of trade accounts and notes receivable, inventories andwork-in-progress, tax assets, other current assets and assets held for sale less trade accounts and notes payable, accrued payroll costs, income tax payable, advance billings to customers, current provisions and other current liabilities. | |
(5) | “Financial debt” means total financial debt, including current maturities, capital leases and accrued interest but excluding bank overdrafts. | |
(6) | A discussion of “ORBDA” (Operating Result Before Depreciation and Amortization, previously denominated “Adjusted EBITDA”), including (i) a reconciliation to net cash provided by operating activities and (ii) the reasons why our management believes that a presentation of ORBDA provides useful information to investors regarding our financial condition and results of operations, is found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — ORBDA”. | |
(7) | “Capital expenditures” is defined as purchases of property, plant and equipment plus equipment acquired under capital lease. |
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The following table presents a reconciliation of capital expenditures to purchases of property, plant and equipment and equipment acquired under capital lease for the periods indicated: |
For the nine months | For the year | |||||||||||||||
ended September 30, | ended | |||||||||||||||
December 31, | ||||||||||||||||
2006 | 2005 | |||||||||||||||
(unaudited) | (unaudited) | 2005 | 2004 | |||||||||||||
(in€ millions) | ||||||||||||||||
Purchase of property, plant and equipment | 117.0 | 61.8 | 107.7 | 41.1 | ||||||||||||
Equipment acquired under capital lease | 0.2 | 13.6 | 17.4 | 8.7 | ||||||||||||
Capital expenditures | 117.2 | 75.4 | 125.1 | 49.8 | ||||||||||||
(8) | “Net debt” means bank overdrafts, financial debt including current portion (including capital lease debt) net of cash and cash equivalents. A discussion of net debt, including (i) a reconciliation of net debt to financing items of the CGG balance sheet and (ii) the reasons why our management believes that a presentation of net debt provides useful information to investors regarding our financial condition and results of operations, is found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net Debt”. | |
(9) | Diluted per share amounts under U.S. GAAP have been calculated on the basis of 17,675,616 issued and outstanding shares in the nine month period ended September 30, 2006, 13,451,097 issued and outstanding shares in the nine month period ended September 30, 2005, 12,378,209 issued and outstanding shares in 2005, 11,681,406 issued and outstanding shares in 2004, 11,760,630 issued and outstanding shares in 2003, 11,680,718 issued and outstanding shares in 2002 and 11,609,393 issued and outstanding shares in 2001. In 2002 and 2001, the effects of stock options were not dilutive (as a result of applying the treasury stock method). | |
(10) | Data includes Exploration Resources ASA’s streamers (from and including December 31, 2005) and excludes streamers of vessels in transit or dry-dock. |
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As at and for the three | ||||||||||||||||||||||||||||
months ended October 31, | As at and for the year ended July 31, | |||||||||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||||||||||
(unaudited) | (unaudited) | 2006(1) | 2005(2) | 2004(3) | 2003(4) | 2002(5) | ||||||||||||||||||||||
(in $ millions, except per share amount) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Revenues | 230.8 | 168.7 | 822.2 | 634.0 | 564.5 | 501.8 | 452.2 | |||||||||||||||||||||
Cost of services | 165.8 | 136.7 | 623.2 | 519.0 | 495.7 | 423.2 | 347.9 | |||||||||||||||||||||
Research and development | 5.4 | 4.9 | 22.9 | 18.9 | 15.5 | 11.6 | 11.5 | |||||||||||||||||||||
General and administrative | 11.4 | 8.9 | 43.2 | 31.9 | 25.5 | 27.2 | 23.8 | |||||||||||||||||||||
Operating income (loss) | 37.9 | 18.3 | 132.9 | 64.2 | 27.8 | (12.1 | ) | (.83 | ) | |||||||||||||||||||
Interest expense | 2.2 | 1.5 | 7.2 | 4.0 | 18.9 | 18.5 | 13.6 | |||||||||||||||||||||
Interest income | (5.0 | ) | (1.9 | ) | (12.0 | ) | (5.3 | ) | (1.6 | ) | (.96 | ) | (1.4 | ) | ||||||||||||||
Gain on involuntary conversion of assets | — | (2.0 | ) | (2.0 | ) | (9.9 | ) | — | — | — | ||||||||||||||||||
Other (income) expense, net | 0.3 | (.13 | ) | .12 | (.88 | ) | 1.6 | 1.2 | 5.8 | |||||||||||||||||||
Provision (benefit) for income tax expense | 13.2 | 9.0 | 57.2 | (6.8 | ) | 3.7 | 28.3 | 5.2 | ||||||||||||||||||||
Net income (loss) | 27.5 | 11.8 | 82.2 | 83.0 | 5.2 | (59.1 | ) | (24.1 | ) | |||||||||||||||||||
Net income (loss) per common share — basic | 0.77 | 0.34 | 2.33 | 2.45 | 0.16 | (1.77 | ) | (.74 | ) | |||||||||||||||||||
Net income (loss) per common share — diluted | 0.68 | 0.32 | 2.08 | 2.37 | 0.15 | (1.77 | ) | (.74 | ) | |||||||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||||||||||
Cash and cash equivalents | 353.8 | 228.0 | 402.0 | 249.4 | 116.3 | 72.1 | 10.0 | |||||||||||||||||||||
Property and equipment, net | 141.9 | 128.8 | 110.6 | 127.9 | 121.7 | 149.7 | 189.8 | |||||||||||||||||||||
Multi-client data library | 324.1 | 333.3 | 296.6 | 316.8 | 313.2 | 373.1 | 338.8 | |||||||||||||||||||||
Total assets | 1,175.6 | 954.5 | 1,158.0 | 966.6 | 776.2 | 790.9 | 781.4 | |||||||||||||||||||||
Long-term debt (including current maturities) | 155.0 | 155.0 | 155.0 | 155.0 | 155.0 | 194.2 | 140.0 | |||||||||||||||||||||
Stockholders’ equity | 749.8 | 607.8 | 710.5 | 582.5 | 489.7 | 487.5 | 520.7 | |||||||||||||||||||||
Other Historical Financial Data: | ||||||||||||||||||||||||||||
ORBDA(6) | 123.5 | 81.6 | 383.7 | 265.9 | 278.3 |
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(1) | Includes a gain on involuntary conversion of assets of $2.0 million. | |
(2) | Includes a gain on involuntary conversion of assets of $9.9 million and a release of deferred tax valuation allowances of $36.9 million. | |
(3) | Includes charges of $22.1 million related to a change in multi-client accounting policies and $7.4 million related to debt refinancing. The change in multi-client accounting policies may affect the comparability between periods and is more fully described in Note 1 to the Veritas audited consolidated financial statements included elsewhere in this prospectus. | |
(4) | Includes charges of $39.3 million for goodwill impairment, $4.9 million for impairment of a multi-client survey, $7.6 million loss related to the sale of Veritas’ (RC)2 software operations and $21.0 million related to deferred tax asset valuation allowances. | |
(5) | Includes charges of $55.3 million for impairment of multi-client surveys, $14.6 million for costs of a terminated merger and $6.5 million valuation allowance for deferred tax assets. | |
(6) | A discussion of “ORBDA” (Operating Result Before Depreciation and Amortization, previously denominated “Adjusted EBITDA”), including (i) a reconciliation to net cash provided by operating activities and (ii) the reasons why our management believes that a presentation of ORBDA provides useful information to investors regarding our financial condition and results of operations, is found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — ORBDA”. |
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• | under U.S. GAAP, the price of CGG ADSs was $32.44, the average price of CGG ADSs for the period beginning two days before and ending two days after September 5, 2006 (the date that the merger was announced); | |
• | under IFRS, the price of CGG ADSs was $40.50, the closing price on the closing date of the merger; | |
• | each outstanding share of Veritas common stock was converted in the merger into the right to receive either (i) 2.25 CGG ADSs (with respect to 50.664% of Veritas’ total common stock) or (ii) $75.00 in cash (with respect to 49.336% of Veritas’ total common stock); | |
• | the cash consideration paid by CGG in connection with the merger was financed by a $1.0 billion term loan facility, the issuance of $600 million in notes offered hereby and cash on hand; and | |
• | each employee option to purchase shares of Veritas common stock pursuant to any stock option plan, program or arrangement of Veritas outstanding at the time of the merger, whether or not vested, has been cancelled and converted into the right to receive, for each share of Veritas common stock subject to such option, an amount in cash equal to the excess, if any, of $75.00 over the exercise price per share under such option (less any applicable withholding taxes). |
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Historical | Other | |||||||||||||||||||||||||||
Exploration | pro forma | |||||||||||||||||||||||||||
Resources | adjustments for the | Combined | ||||||||||||||||||||||||||
and related | merger and the | pro forma | ||||||||||||||||||||||||||
Historical | pro forma | Historical | Pro forma | financing | income | |||||||||||||||||||||||
CGG 12 | adjustments | Veritas 12 | adjustments | transactions | statement 12 | |||||||||||||||||||||||
months | 8 months | months | 12 months | 12 months | months | |||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||
December 31, | August 31, | January 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||
2005 | 2005 | 2006 | 2005 | 2005 | 2005 | |||||||||||||||||||||||
IFRS | IFRS | U.S. GAAP | IFRS | IFRS | IFRS | |||||||||||||||||||||||
Note 1 | Note 1 | Note 1 | Notes 2 & 3 | Note 2 & 4 | Ref. | |||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||
(in€ millions, except per share data) | ||||||||||||||||||||||||||||
Operating revenues | 869.9 | 68.7 | 579.6 | (26.7 | ) | (2.4 | ) | 2.7 | 1,489.1 | |||||||||||||||||||
Other income from ordinary activities | 1.9 | — | — | — | — | 1.9 | ||||||||||||||||||||||
Total income from ordinary activities | 871.8 | 68.7 | 579.6 | (26.7 | ) | (2.4 | ) | 1,491.0 | ||||||||||||||||||||
4.3.1; | ||||||||||||||||||||||||||||
Cost of operations | (670.0 | ) | (69.7 | ) | (453.2 | ) | 26.1 | (32.0 | ) | 4.3.4 | (1,198.8 | ) | ||||||||||||||||
Gross profit | 201.8 | (1.0 | ) | 126.4 | (0.6 | ) | (34.4 | ) | 292.2 | |||||||||||||||||||
Research and development expenses — net | (31.1 | ) | — | (16.5 | ) | 5.0 | — | (42.6 | ) | |||||||||||||||||||
4.3.1; | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | (91.2 | ) | (5.8 | ) | (30.0 | ) | — | (2.3 | ) | 4.3.4 | (129.4 | ) | ||||||||||||||||
Other revenues (expenses) — net | (4.4 | ) | — | — | 9.9 | — | 5.5 | |||||||||||||||||||||
Operating income | 75.1 | (6.8 | ) | 79.9 | 14.2 | (36.7 | ) | 125.7 | ||||||||||||||||||||
4.3.2; | ||||||||||||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (56.8 | ) | (11.3 | ) | 12.8 | (9.6 | ) | (95.5 | ) | 4.3.3 | (160.4 | ) | ||||||||||||||||
Variance on derivative of convertible bonds | (11.5 | ) | — | — | — | — | (11.5 | ) | ||||||||||||||||||||
Income (loss) of consolidated companies before income taxes | 6.8 | (18.1 | ) | 92.7 | 4.7 | (132.2 | ) | (46.2 | ) | |||||||||||||||||||
Income taxes | (26.6 | ) | 3.9 | (6.1 | ) | (1.6 | ) | 46.3 | 4.3.5 | 15.9 | ||||||||||||||||||
Net income (loss) of consolidated companies | (19.8 | ) | (14.2 | ) | 86.6 | 3.1 | (86.0 | ) | (30.3 | ) | ||||||||||||||||||
Equity in income of affiliates | 13.0 | — | — | — | — | 13.0 | ||||||||||||||||||||||
Net income (loss) | (6.8 | ) | (14.2 | ) | 86.6 | 3.1 | (86.0 | ) | (17.3 | ) | ||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||
— shareholders | (7.8 | ) | (14.2 | ) | 86.6 | 3.1 | (86.0 | ) | (18.3 | ) | ||||||||||||||||||
— minority interests | 1.0 | — | — | — | — | 1.0 | ||||||||||||||||||||||
Weighted average number of outstanding shares (in thousands) | 12,095 | 9,609 | 21,704 | |||||||||||||||||||||||||
Weighted average number of potential shares (in thousands) | 12,095 | 9,609 | 21,704 | |||||||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||||
— basic | (0.64 | ) | (0.84 | ) | ||||||||||||||||||||||||
— diluted | (0.64 | ) | (0.84 | ) | ||||||||||||||||||||||||
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Other pro forma | ||||||||||||||||||||||||
adjustments for | ||||||||||||||||||||||||
the merger and | ||||||||||||||||||||||||
Historical | Historical | Pro forma | the financing | Combined | ||||||||||||||||||||
CGG 9 | Veritas | adjustments | transactions | pro forma | ||||||||||||||||||||
months | 9 months | 9 months | 9 months | statement of | ||||||||||||||||||||
ended | ended | ended | ended | income | ||||||||||||||||||||
September 30, | October 31, | September 30, | September 30, | ended | ||||||||||||||||||||
2006 | 2006 | 2006 | 2006 | September 30, | ||||||||||||||||||||
IFRS | U.S. GAAP | IFRS | IFRS | 2006 IFRS | ||||||||||||||||||||
Note 1 | Note 1 | Notes 2 & 3 | Note 4 | Ref. | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||
(in€ millions, except per share data) | ||||||||||||||||||||||||
Operating revenues | 955.6 | 519.7 | (5.1 | ) | — | 1,470.1 | ||||||||||||||||||
Other income from ordinary activities | 1.4 | — | — | — | 1.4 | |||||||||||||||||||
Total income from ordinary activities | 957.0 | 519.7 | (5.1 | ) | — | 1,471.5 | ||||||||||||||||||
4.3.1; | ||||||||||||||||||||||||
Cost of operations | (636.7 | ) | (390.0 | ) | 9.5 | (23.4 | ) | 4.3.4 | (1,040.6 | ) | ||||||||||||||
Gross profit | 320.3 | 129.7 | 4.4 | (23.4 | ) | 430.9 | ||||||||||||||||||
Research and development expenses — net | (27.8 | ) | (14.2 | ) | 4.3 | (37.7 | ) | |||||||||||||||||
4.3.1; | ||||||||||||||||||||||||
Selling, general and administrative expenses | (86.9 | ) | (35.8 | ) | 8.3 | (1.0 | ) | 4.3.4 | (115.5 | ) | ||||||||||||||
Other revenues (expenses) — net | 12.0 | — | (0.2 | ) | 11.9 | |||||||||||||||||||
Operating income (loss) | 217.6 | 79.7 | 16.8 | (24.4 | ) | 289.6 | ||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (27.6 | ) | 4.4 | — | (70.4 | ) | 4.3.2; 4.3.3 | (93.5 | ) | |||||||||||||||
Derivative of convertible bonds and related costs | (23.0 | ) | — | — | — | (23.0 | ) | |||||||||||||||||
Income (loss) of consolidated companies before income taxes | 167.0 | 84.1 | 16.8 | (94.8 | ) | 173.1 | ||||||||||||||||||
Income taxes | (54.9 | ) | (30.2 | ) | (5.9 | ) | 33.2 | 4.3.5 | (57.9 | ) | ||||||||||||||
Net income (loss) of consolidated companies | 112.1 | 53.9 | 10.9 | (61.6 | ) | 115.2 | ||||||||||||||||||
Equity in income of affiliates | 8.9 | — | — | — | 8.9 | |||||||||||||||||||
Net income (loss) | 121.0 | 53.9 | 10.9 | (61.6 | ) | 124.1 | ||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||
— shareholders | 119.8 | 53.9 | 10.9 | (61.6 | ) | 122.9 | ||||||||||||||||||
— minority interests | 1.2 | — | — | — | 1.2 | |||||||||||||||||||
Weighted average number of outstanding shares (in thousands) | 17,318 | 9,609 | 26,927 | |||||||||||||||||||||
Weighted average number of potential shares (in thousands) | 17,675 | 9,609 | 27,284 | |||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||
— basic | 6.92 | 4.57 | ||||||||||||||||||||||
— diluted | 6.78 | 4.51 | ||||||||||||||||||||||
51
Table of Contents
Other pro forma | ||||||||||||||||||||||||
adjustments for | ||||||||||||||||||||||||
Historical | Historical | the merger and | Combined pro | |||||||||||||||||||||
CGG | Veritas | Pro forma | the financing | forma | ||||||||||||||||||||
IFRS at | U.S. GAAP at | adjustments at | transactions at | balance sheet at | ||||||||||||||||||||
September 30, | October 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||
2006 | 2006 | 2006 | 2006 | 2006 IFRS | ||||||||||||||||||||
Note 1 | Note 1 | Notes 2 & 3 | Note 4 | Ref. | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||
(in€ millions) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and cash equivalents | 168.7 | 279.5 | 0.1 | (147.8 | ) | 4.2.5 | 300.5 | |||||||||||||||||
Current assets, net | 576.4 | 230.5 | (8.5 | ) | — | 798.4 | ||||||||||||||||||
Total current assets | 745.1 | 510.0 | (8.4 | ) | (147.8 | ) | 1,098.9 | |||||||||||||||||
Goodwill | 273.9 | — | — | 2,110.0 | 4.2.1 | 2,383.8 | ||||||||||||||||||
Intangible assets, net | 134.5 | 256.0 | 6.4 | 207.7 | 4.2.1 | 604.6 | ||||||||||||||||||
4.2.1; | ||||||||||||||||||||||||
Other non-current assets, net | 598.2 | 162.6 | (3.0 | ) | 18.3 | 4.3.5 | 776.0 | |||||||||||||||||
Total non-current assets | 1,006.6 | 418.6 | 3.4 | 2,335.8 | 3,764.4 | |||||||||||||||||||
Total assets | 1,751.7 | 928.6 | (5.0 | ) | 2,188.0 | 4,863.4 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
Bank overdrafts | 10.9 | — | — | — | 10.9 | |||||||||||||||||||
Current portion of financial debt | 44.0 | 122.4 | (2.8 | ) | (103.1 | ) | 4.2.5 | 60.6 | ||||||||||||||||
Current liabilities | 322.4 | 186.8 | (15.2 | ) | 9.8 | 4.2.1 | 503.8 | |||||||||||||||||
Total current liabilities | 377.3 | 309.2 | (18.0 | ) | (93.3 | ) | 575.3 | |||||||||||||||||
Financial debt | 386.8 | — | — | 1,243.7 | 4.2.5 | 1,630.5 | ||||||||||||||||||
4.2.1; | ||||||||||||||||||||||||
Other non-current liabilities | 113.6 | 27.1 | 18.0 | 69.9 | 4.3.5 | 228.6 | ||||||||||||||||||
Total non-current liabilities | 500.4 | 27.1 | 18.0 | 1,313.6 | 1,859.1 | |||||||||||||||||||
Total shareholders’ equity | 850.5 | 592.3 | (5.0 | ) | 967.7 | 4.2.2 | 2,405.5 | |||||||||||||||||
Minority interests | 23.5 | — | — | — | 23.5 | |||||||||||||||||||
Total shareholders’ equity and minority interests | 874.0 | 592.3 | (5.0 | ) | 967.7 | 2,429.0 | ||||||||||||||||||
Total liabilities and shareholders’ equity | 1,751.7 | 928.6 | (5.0 | ) | 2,188.0 | 4,863.4 | ||||||||||||||||||
52
Table of Contents
Other | |||||||||||||||||||||||||||||
Historical | pro forma | ||||||||||||||||||||||||||||
Exploration | adjustments | ||||||||||||||||||||||||||||
Resources | for the | Combined | |||||||||||||||||||||||||||
and related | merger and | pro forma | |||||||||||||||||||||||||||
Historical | pro forma | Historical | Pro forma | the financing | income | ||||||||||||||||||||||||
CGG | adjustments | Veritas | adjustments | transactions | statement | ||||||||||||||||||||||||
12 months | 8 months | 12 months | 12 months | 12 months | 12 months | ||||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ||||||||||||||||||||||||
December 31, | August 31, | January 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||
2005 | 2005 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | ||||||||||||||||||||||||
Note 1 | Note 1 | Note 1 | Notes 2 & 3 | Note 4 | Ref. | ||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||
(in€ millions, except per share data) | |||||||||||||||||||||||||||||
Operating revenues | 860.8 | 63.8 | 579.6 | (29.8 | ) | 1,474.4 | |||||||||||||||||||||||
Cost of operations | (665.4 | ) | (68.8 | ) | (453.2 | ) | 31.8 | (30.6 | ) | 4.3.1 | (1,186.1 | ) | |||||||||||||||||
Gross profit | 195.4 | (5.0 | ) | 126.4 | 2.0 | (30.6 | ) | 288.3 | |||||||||||||||||||||
Research and development expenses — net | (39.3 | ) | — | (16.5 | ) | — | — | (55.8 | ) | ||||||||||||||||||||
Selling, general and administrative expenses | (92.7 | ) | (8.4 | ) | (30.0 | ) | — | (3.6 | ) | 4.3.1 | (134.8 | ) | |||||||||||||||||
Other revenues (expenses) — net | (1.5 | ) | — | 9.6 | 8.1 | ||||||||||||||||||||||||
Operating income (loss) | 61.9 | (13.4 | ) | 79.9 | 11.6 | (34.2 | ) | 105.8 | |||||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and | 4.3.2 | ; | |||||||||||||||||||||||||||
losses, net and others | (31.9 | ) | (4.6 | ) | 12.8 | (9.6 | ) | (95.5 | ) | 4.3.3 | (128.8 | ) | |||||||||||||||||
Variance on derivative of convertible bonds | (11.5 | ) | — | — | — | — | (11.5 | ) | |||||||||||||||||||||
Equity in income of affiliates | 13.0 | — | — | — | — | 13.0 | |||||||||||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 31.5 | (18.0 | ) | 92.7 | 2.0 | (129.7 | ) | (21.5 | ) | ||||||||||||||||||||
Income taxes | (22.2 | ) | 5.2 | (6.1 | ) | (0.7 | ) | 45.4 | 4.3.5 | 21.6 | |||||||||||||||||||
Minority interests | (1.0 | ) | 0.2 | — | — | — | (0.8 | ) | |||||||||||||||||||||
Net income (loss) | 8.3 | (12.6 | ) | 86.6 | 1.3 | (84.3 | ) | (0.7 | ) | ||||||||||||||||||||
Weighted average number of outstanding shares (in thousands) | 12,095 | 9,609 | 21,704 | ||||||||||||||||||||||||||
Weighted average number of potential shares (in thousands) | 12,357 | 9,609 | 21,966 | ||||||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||||||||
— basic | 0.69 | (0.03 | ) | ||||||||||||||||||||||||||
— diluted | 0.67 | (0.03 | ) | ||||||||||||||||||||||||||
53
Table of Contents
Other | |||||||||||||||||||||||||
pro forma | |||||||||||||||||||||||||
adjustments | |||||||||||||||||||||||||
for the | |||||||||||||||||||||||||
merger and | Combined | ||||||||||||||||||||||||
Historical | Historical | Pro forma | the financing | pro forma | |||||||||||||||||||||
CGG | Veritas | adjustments | transactions | statement of | |||||||||||||||||||||
9 months | 9 months | 9 months | 9 months | income | |||||||||||||||||||||
ended | ended | ended | ended | ended | |||||||||||||||||||||
September 30, | October 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||
2006 | 2006 | 2006 | 2006 | 2006 | |||||||||||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | |||||||||||||||||||||
Note 1 | Note 1 | Notes 2 & 3 | Note 4 | Ref. | (unaudited) | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||
(in€ millions, except per share data) | |||||||||||||||||||||||||
Operating revenues | 967.7 | 519.7 | (8.1 | ) | 1,479.3 | ||||||||||||||||||||
Cost of operations | (636.4 | ) | (390.0 | ) | 9.2 | (22.9 | ) | 4.3.1 | (1,040.1 | ) | |||||||||||||||
Gross profit | 331.3 | 129.7 | 1.1 | (22.9 | ) | 439.2 | |||||||||||||||||||
Research and development expenses — net | (37.7 | ) | (14.2 | ) | — | — | (51.9 | ) | |||||||||||||||||
Selling, general and administrative expenses | (87.4 | ) | (35.8 | ) | 8.3 | (2.7 | ) | 4.3.1 | (117.7 | ) | |||||||||||||||
Other revenues (expenses) — net | 8.8 | — | — | — | 8.8 | ||||||||||||||||||||
Operating income (loss) | 215.0 | 79.7 | 9.4 | (25.6 | ) | 278.5 | |||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, | 4.3.2; | ||||||||||||||||||||||||
net and others | (64.3 | ) | 4.4 | (70.4 | ) | 4.3.3 | (130.2 | ) | |||||||||||||||||
Derivative of convertible bonds and related costs | (23.0 | ) | — | — | — | (23.0 | ) | ||||||||||||||||||
Equity in income of affiliates | 8.9 | — | — | — | 8.9 | ||||||||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 136.6 | 84.1 | 9.4 | (96.0 | ) | 134.2 | |||||||||||||||||||
Income taxes | (41.4 | ) | (30.3 | ) | (3.3 | ) | 33.6 | 4.3.5 | (41.4 | ) | |||||||||||||||
Minority interests | (1.2 | ) | — | — | — | (1.2 | ) | ||||||||||||||||||
Net income (loss) | 94.0 | 53.9 | 6.1 | (62.4 | ) | 91.6 | |||||||||||||||||||
Weighted average number of outstanding shares (in thousands) | 17,318 | 9,609 | 26,927 | ||||||||||||||||||||||
Weighted average number of potential shares (in thousands) | 17,675 | 9,609 | 27,284 | ||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||||
— basic | 5.43 | 3.40 | |||||||||||||||||||||||
— diluted | 5.32 | 3.316 | |||||||||||||||||||||||
54
Table of Contents
Other pro forma | ||||||||||||||||||||||||
Historical | adjustments for | Combined pro | ||||||||||||||||||||||
Historical CGG | Veritas | Pro forma | the merger and | forma balance | ||||||||||||||||||||
U.S. GAAP at | U.S. GAAP at | adjustments at | the financing | sheet at | ||||||||||||||||||||
September 30, | October 31, | September 30, | transactions at | September 30, | ||||||||||||||||||||
2006 | 2006 | 2006 | September 30, 2006 | 2006 U.S. GAAP | ||||||||||||||||||||
Note 1 | Note 1 | Notes 2 and 3 | Note 4 | Ref. | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||
(in€ millions) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and cash equivalents | 168.7 | 279.5 | (147.8 | ) | 4.2.5 | 300.4 | ||||||||||||||||||
Current assets, net | 581.5 | 230.5 | (1.0 | ) | 20.1 | 4.2.3 | 831.1 | |||||||||||||||||
Total current assets | 750.2 | 510.0 | (1.0 | ) | (127.6 | ) | 1,131.5 | |||||||||||||||||
Goodwill | 286.4 | — | 1,747.4 | 4.2.1 | 2,033.8 | |||||||||||||||||||
Intangible assets, net | 99.3 | 256.0 | 207.7 | 4.2.1 | 563.0 | |||||||||||||||||||
Other non-current assets, net | 615.3 | 162.6 | 18.2 | 4.2.1 | 796.2 | |||||||||||||||||||
Total non-current assets | 1,001.0 | 418.6 | 1,973.3 | 3,392.9 | ||||||||||||||||||||
Total assets | 1,751.2 | 928.6 | (1.0 | ) | 1,845.6 | 4,524.4 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
Bank overdrafts | 10.9 | — | — | — | 10.9 | |||||||||||||||||||
Current portion of financial debt | 44.0 | 122.4 | (103.1 | ) | 4.2.5 | 63.4 | ||||||||||||||||||
Current liabilities | 352.6 | 186.8 | (9.1 | ) | 10.0 | 4.2.1 | 540.2 | |||||||||||||||||
Total current liabilities | 407.5 | 309.2 | (9.1 | ) | (93.1 | ) | 614.5 | |||||||||||||||||
Financial debt | 392.7 | — | — | 1,263.8 | 4.2.3 | 1,656.5 | ||||||||||||||||||
Other non-current liabilities | 115.8 | 27.1 | 2.8 | 65.4 | 4.3.5 | 211.2 | ||||||||||||||||||
Total non-current liabilities | 508.5 | 27.1 | 2.8 | 1,329.2 | 1,867.7 | |||||||||||||||||||
Total shareholders’ equity | 811.7 | 592.3 | 5.3 | 609.5 | 2,018.8 | |||||||||||||||||||
Minority interests | 23.5 | — | — | — | 23.5 | |||||||||||||||||||
Total liabilities and shareholders’ equity | 1,751.2 | 928.6 | (1.0 | ) | 1,845.6 | 4,524.4 | ||||||||||||||||||
55
Table of Contents
Description of transaction |
Basis of presentation |
Historical financial statements and currency translation |
56
Table of Contents
Historical | Historical | Historical | Historical | Historical | ||||||||||||||||
Veritas | Veritas | Veritas | Veritas | Veritas | ||||||||||||||||
12 months | 6 months | 6 months | 12 months | 12 months | ||||||||||||||||
ended | ended | ended | ended | ended | ||||||||||||||||
July 31, | January 31, | January 31, | January 31, | January 31, | ||||||||||||||||
2005 | 2005 | 2006 | 2006 | 2006 | ||||||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | ||||||||||||||||
(in $ millions) | (in $ millions) | (in $ millions) | (in $ millions) | (in€ millions) | ||||||||||||||||
(A) | (B) | (C) | (A) - (B) + (C) | (unaudited) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
Operating revenues | 634.0 | 321.8 | 407.5 | 719.7 | 579.6 | |||||||||||||||
Cost of operations | (519.0 | ) | (260.9 | ) | (304.6 | ) | (562.7 | ) | (453.2 | ) | ||||||||||
Gross profit | 115.0 | 60.9 | 102.9 | 157.0 | 126.4 | |||||||||||||||
Research and development expenses — net | (18.9 | ) | (9.1 | ) | (10.7 | ) | (20.5 | ) | (16.5 | ) | ||||||||||
Selling, general and administrative expenses | (31.9 | ) | (15.0 | ) | (20.4 | ) | (37.3 | ) | (30.0 | ) | ||||||||||
Operating income | 64.2 | 36.8 | 71.8 | 99.2 | 79.9 | |||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 12.0 | (0.1 | ) | 3.8 | 15.9 | 12.8 | ||||||||||||||
Income of consolidated companies before income taxes and minority interests | 76.2 | 36.7 | 75.6 | 115.1 | 92.7 | |||||||||||||||
Income taxes | 6.8 | (18.4 | ) | (32.8 | ) | (7.6 | ) | (6.1 | ) | |||||||||||
Net income (loss) | 83.0 | 18.3 | 42.8 | 107.5 | 86.6 | |||||||||||||||
Weighted average number of outstanding shares (in thousands) | 33,843 | 34,393 | ||||||||||||||||||
Weighted average number of potential shares (in thousands) | 35,054 | 36,442 | ||||||||||||||||||
Earning per share: | ||||||||||||||||||||
— basic | 2.45 | 2.52 | ||||||||||||||||||
— diluted | 2.37 | 2.38 | ||||||||||||||||||
57
Table of Contents
Historical | Historical | Historical | Historical | Historical | ||||||||||||||||
Veritas | Veritas | Veritas | Veritas | Veritas | ||||||||||||||||
12 months | 6 months | 3 months | 9 months | 9 months | ||||||||||||||||
ended | ended | ended | ended | ended | ||||||||||||||||
July 31, | January 31, | October 31, | October 31, | October 31, | ||||||||||||||||
2006 | 2006 | 2006 | 2006 | 2006 | ||||||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | ||||||||||||||||
(in $ millions) | (in $ millions) | (in $ millions) | (in $ millions) | (in€ millions) | ||||||||||||||||
(A) | (B) | (C) | (A) - (B) + (C) | (unaudited) | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
Operating revenues | 822.2 | 407.5 | 230.8 | 645.5 | 519.7 | |||||||||||||||
Cost of operations | (623.2 | ) | (304.6 | ) | (165.8 | ) | (484.4 | ) | (390.0 | ) | ||||||||||
Gross profit | 199.0 | 102.9 | 65.0 | 161.1 | 129.7 | |||||||||||||||
Research and development expenses — net | (22.9 | ) | (10.7 | ) | (5.4 | ) | (17.1 | ) | (14.2 | ) | ||||||||||
Selling, general and administrative expenses | (43.2 | ) | (20.4 | ) | (21.7 | ) | (44.5 | ) | (35.8 | ) | ||||||||||
Operating income | 132.9 | 71.8 | 37.9 | 99.0 | 79.7 | |||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 6.5 | 3.8 | 2.8 | 5.5 | 4.4 | |||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 139.4 | 75.6 | 40.7 | 104.5 | 84.1 | |||||||||||||||
Income taxes | (57.2 | ) | (32.8 | ) | (13.2 | ) | (37.6 | ) | (30.3 | ) | ||||||||||
Net income (loss) | 82.2 | 42.8 | 27.5 | 66.9 | 53.9 | |||||||||||||||
Weighted average number of outstanding shares (in thousands) | 35,260 | 35,973 | ||||||||||||||||||
Weighted average number of potential shares (in thousands) | 39,623 | 40,748 | ||||||||||||||||||
Earning per share: | ||||||||||||||||||||
— basic | 2.33 | 1.50 | ||||||||||||||||||
— diluted | 2.08 | 1.32 | ||||||||||||||||||
58
Table of Contents
Historical | ||||||||||||||||
Exploration | ||||||||||||||||
Purchase | Other | Resources and | ||||||||||||||
Historical | accounting | adjustments | related | |||||||||||||
Exploration | Exploration | Exploration | pro forma | |||||||||||||
Resources | Resources | Resources | adjustments | |||||||||||||
8 months | 8 months | 8 months | 8 months | |||||||||||||
ended | ended | ended | ended | |||||||||||||
August 31, | August 31, | August 31, | August 31, | |||||||||||||
2005 | 2005 | 2005 | 2005 | |||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
(in€ millions) | ||||||||||||||||
Operating revenues | 66.3 | (2.5 | )(b) | 63.8 | ||||||||||||
Cost of operations | (58.7 | ) | (10.0 | )(a) | (0.1 | )(b)(c) | (68.8 | ) | ||||||||
Gross profit | 7.6 | (10.0 | ) | (2.6 | ) | (5.0 | ) | |||||||||
Selling, general and administrative expenses | (8.4 | ) | (8.4 | ) | ||||||||||||
Operating income | (0.8 | ) | (10.0 | ) | (2.6 | ) | (13.4 | ) | ||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 1.1 | — | (5.7 | )(d)(f) | (4.6 | ) | ||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 0.3 | (10.0 | ) | (8.3 | ) | (18.0 | ) | |||||||||
Income taxes | (1.2 | ) | 2.8 | (a) | 3.6 | (e) | 5.2 | |||||||||
Minority interests | 0.6 | (0.4 | ) | 0.2 | ||||||||||||
Net income (loss) | (0.3 | ) | (7.2 | ) | (5.1 | ) | (12.6 | ) |
(a) | Reflects the impact (depreciation adjustment and related income tax adjustment) of the reassessment of the value of Exploration Resources’ assets in accordance with the principles of purchase method accounting under IFRS, which reassessment resulted notably in an increase in the book value of the vessels of€116.8 million as at September 1, 2005. |
(b) | Reflects the elimination of materialinter-company transactions pursuant to which members of the CGG group sold equipment to Exploration Resources during the period presented but prior to September 1, 2005. |
(c) | Conforming Exploration Resourcesmulti-client survey amortization method to CGG’s accounting policies for such amortization. |
(d) | Reflects the interest on the $165,000,000 of existing notes issued on April 28, 2005 and the $165,000,000 of existing notes issued on February 3, 2006 in connection with the financing of the acquisition of Exploration Resources as if such notes were issued at par on January 1, 2005 and amortization of related fees. |
(e) | Recognition of the impact of deferred tax liabilities to the adjustments set forth in the column “Other Adjustments”. |
(f) | Elimination of interest on the bridge credit facility from September 1, 2005 through September 30, 2005, that was put in place and drawn in connection with the acquisition of Exploration Resources. |
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Historical | ||||||||||||||||||||
Purchase | Exploration | |||||||||||||||||||
Historical | accounting | Resources | ||||||||||||||||||
Exploration | Exploration | Exploration | Other pro | and related pro | ||||||||||||||||
Resources | Resources | Resources | forma | forma | ||||||||||||||||
9 months | 8 months | 1 month | adjustments | adjustments | ||||||||||||||||
IFRS ended | IFRS ended | IFRS ended | Exploration | 8 months ended | ||||||||||||||||
September 30, | September 30, | September 30, | Resources (a) | August 31, 2005 | ||||||||||||||||
2005 | 2005 | 2005 | IFRS | IFRS | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Operating revenues | 78.6 | (8.7 | ) | (1.3 | )(b) | 68.7 | ||||||||||||||
Cost of operations | (67.4 | ) | (9.4 | )(a) | 7.0 | — | (b)(c) | (69.7 | ) | |||||||||||
Gross profit | 11.2 | (9.4 | ) | (1.6 | ) | (1.2 | ) | (1.0 | ) | |||||||||||
Selling, general and administrative expenses | (6.3 | ) | 0.5 | — | (5.8 | ) | ||||||||||||||
Operating income | 4.9 | (9.4 | ) | (1.2 | ) | (1.2 | ) | (6.8 | ) | |||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (2.1 | ) | 0.4 | (9.6 | )(d)(f) | (11.3 | ) | |||||||||||||
Income (loss) of consolidated companies before income taxes | 2.8 | (9.4 | )(a) | (0.8 | ) | (10.7 | )(e) | (18.1 | ) | |||||||||||
Income taxes | 0.4 | 2.6 | (0.8 | ) | 1.6 | 3.9 | ||||||||||||||
Net income (loss) | 3.2 | (6.8 | ) | (1.5 | ) | (9.2 | ) | (14.2 | ) | |||||||||||
— attributable to shareholders | 3.8 | (7.5 | ) | (1.5 | ) | (9.2 | ) | (14.2 | ) | |||||||||||
— attributable to minority interests | (0.6 | ) | 0.7 | (0.1 | ) | — | — |
(a) | Reflects the impact (depreciation adjustments and related income for adjustment) of the reassessment of the value of Exploration Resources’ assets in accordance with the principles of purchase method accounting under IFRS, which reassessment resulted notably in an increase in the book value of the vessels of€116.8 as at September 1, 2005. |
(b) | Reflects the elimination of materialinter-company transactions pursuant to which members of the CGG group sold equity. |
(c) | Conforming Exploration Resourcesmulti-client survey amortization method to CGG’s accounting policies for such amortization. |
(d) | Reflects the interest on the $165,000,000 of existing notes issued on April 28, 2005 and the $165,000,000 of existing notes issued on February 3, 2006 in connection with the financing of the acquisition of Exploration Resources as if such notes were issued at par on January 1, 2005 and amortization of related fees. |
(e) | Recognition of the impact of deferred tax liabilities to the adjustments set forth in the column “Other Adjustments”. |
(f) | Elimination of interest on the bridge credit facility from September 1, 2005 through September 30, 2005, that was put in place and drawn in connection with the acquisition of Exploration Resources. |
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Pro forma | ||||||||||||||||||||
adjustments | ||||||||||||||||||||
Pro forma | to income | |||||||||||||||||||
intercompany | statement | |||||||||||||||||||
Pro forma consistency | elimination | 12 months ended | ||||||||||||||||||
adjustments | and other | December 31, 2005 | ||||||||||||||||||
under IFRS | adjustments | IFRS | ||||||||||||||||||
Ref. | Note 3 | Ref. | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Operating revenues | 3.1 | 2.6 | (29.8 | ) | 3.1 | (26.7 | ) | |||||||||||||
Other income from ordinary activities | — | — | — | |||||||||||||||||
Total income from ordinary activities | 3.1 | (29.8 | ) | (26.7 | ) | |||||||||||||||
Cost of operations | 7.1 | 2.1, 2.4, 2.5, 2.6 | 19.0 | 3.1 | 26.1 | |||||||||||||||
Gross profit | 10.2 | (10.8 | ) | 3.1 | (0.6 | ) | ||||||||||||||
Research and development expenses — net | 5.0 | 2.8 | 5.0 | |||||||||||||||||
Selling, general and administrative expenses | — | — | — | |||||||||||||||||
Other revenues (expenses) — net | 9.9 | 2.2, 2.6 | — | 9.9 | ||||||||||||||||
Operating income | 25.1 | (10.8 | ) | 14.2 | ||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (9.6 | ) | 2.2 | — | (9.6 | ) | ||||||||||||||
Income (loss) of consolidated companies before income taxes | 15.5 | (10.8 | ) | 4.7 | ||||||||||||||||
Income taxes | (5.4 | ) | 4.3.5 | 3.8 | 4.3.5 | (1.6 | ) | |||||||||||||
Net income (loss) | 10.1 | (7.0 | ) | 3.1 | ||||||||||||||||
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Pro forma | ||||||||||||||||||||
intercompany | Pro forma | |||||||||||||||||||
elimination | adjustments to | |||||||||||||||||||
Pro forma consistency | and other | balance sheet at | ||||||||||||||||||
adjustments | adjustments | September 30, 2006 | ||||||||||||||||||
Ref. | Note 3 | Ref. | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | 0.1 | 0.1 | ||||||||||||||||||
Current assets, net | (7.5 | ) | 2.3, 2.4, 2.6 | (1.0 | ) | 3.1 | (8.5 | ) | ||||||||||||
Total current assets | (7.4 | ) | (1.0 | ) | (8.4 | ) | ||||||||||||||
Intangible assets, net | 6.4 | 2.3, 2.8 | — | 6.4 | ||||||||||||||||
Other non-current assets, net | (3.0 | ) | 2.3, 2.4, 2.6 | — | (3.0 | ) | ||||||||||||||
Total non-current assets | 3.4 | — | 3.4 | |||||||||||||||||
TOTAL ASSETS | (4.0 | ) | (1.0 | ) | (5.0 | ) | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current portion of financial debt | (2.8 | ) | 2.3 | — | (2.8 | ) | ||||||||||||||
Current liabilities | (6.0 | ) | 2.3, 2.6 | (9.2 | ) | 3.1, 3.2 | (15.2 | ) | ||||||||||||
Total current liabilities | (8.8 | ) | (9.2 | ) | (18.0 | ) | ||||||||||||||
Other non-current liabilities | 15.2 | 2.3, 2.5, 2.8 | 2.8 | 3.2 | 18.0 | |||||||||||||||
Total non-current liabilities | 15.2 | 2.8 | 18.0 | |||||||||||||||||
Total shareholders’ equity | (10.1 | ) | 2.4 | 5.4 | (5.0 | ) | ||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | (4.0 | ) | (1.0 | ) | (5.0 | ) | ||||||||||||||
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Pro forma | ||||||||||||||||||||
adjustments | ||||||||||||||||||||
Pro forma | to statement | |||||||||||||||||||
Pro forma | intercompany | of income | ||||||||||||||||||
consistency | elimination | 9 months ended | ||||||||||||||||||
adjustments | and other | September 30, 2006 | ||||||||||||||||||
under IFRS | adjustments | IFRS | ||||||||||||||||||
Ref. | Note 3 | Ref. | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Operating revenues | 3.0 | 2.6 | (8.1 | ) | 3.1 | (5.1 | ) | |||||||||||||
Other income from ordinary activities | — | — | — | |||||||||||||||||
Total income from ordinary activities | 3.0 | (8.1 | ) | (5.1 | ) | |||||||||||||||
Cost of operations | 4.8 | 2.1, 2.4, 2.5, 2.6 | 4.7 | 3.1 | 9.5 | |||||||||||||||
Gross profit | 7.8 | (3.4 | ) | 4.4 | ||||||||||||||||
Research and development expenses — net | 4.3 | 2.8 | — | 4.3 | ||||||||||||||||
Selling, general and administrative expenses | — | 8.3 | 3.2 | 8.3 | ||||||||||||||||
Other revenues (expenses) — net | (0.1 | ) | 2.6 | — | (0.2 | ) | ||||||||||||||
Operating income | 11.9 | 4.9 | 16.8 | |||||||||||||||||
Income (loss) of consolidated companies before income taxes | 11.9 | 4.8 | 16.8 | |||||||||||||||||
Income taxes | (4.2 | ) | 4.3.5 | (1.7 | ) | 4.3.5 | (5.9 | ) | ||||||||||||
Net income (loss) | 7.8 | 3.1 | 10.9 | |||||||||||||||||
Attributable to: | ||||||||||||||||||||
— shareholders | 7.8 | 3.1 | 10.9 | |||||||||||||||||
— minority interests | — | — | — |
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Pro forma | ||||||||||||||||||||
Pro forma | Pro forma | adjustments | ||||||||||||||||||
consistency | intercompany | to income statement | ||||||||||||||||||
adjustments | elimination | 12 months ended | ||||||||||||||||||
under | and other | December 31, 2005 | ||||||||||||||||||
U.S. GAAP | adjustments | U.S. GAAP | ||||||||||||||||||
Ref. | Note 3 | Ref. | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Operating revenues | (29.8 | ) | 3.1 | (29.8 | ) | |||||||||||||||
Cost of operations | 12.8 | 2.1 | 19.0 | 3.1 | 31.8 | |||||||||||||||
Gross profit | 12.8 | (10.8 | ) | 2.0 | ||||||||||||||||
Other revenues (expenses) — net | 9.6 | 2.2 | — | 9.6 | ||||||||||||||||
Operating income | 22.4 | (10.8 | ) | 11.6 | ||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (9.6 | ) | 2.2 | — | (9.6 | ) | ||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 12.8 | (10.8 | ) | 2.0 | ||||||||||||||||
Income taxes | (4.5 | ) | 4.3.5 | 3.8 | 4.3.5 | (0.7 | ) | |||||||||||||
Net income (loss) | 8.3 | (7.0 | ) | 1.3 | ||||||||||||||||
Pro forma | ||||||||||||||||||||
adjustments | ||||||||||||||||||||
Pro forma | Pro forma | to statement of | ||||||||||||||||||
consistency | intercompany | income | ||||||||||||||||||
adjustments | elimination | 9 months ended | ||||||||||||||||||
under | and other | September 30, 2006 | ||||||||||||||||||
U.S. GAAP | adjustments | U.S. GAAP | ||||||||||||||||||
Ref. | Note 3 | Ref. | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Operating revenues | — | (8.1 | ) | 3.1 | (8.1 | ) | ||||||||||||||
Cost of operations | 4.6 | 2.1 | 4.7 | 3.1 | 9.2 | |||||||||||||||
Gross profit | 4.6 | (3.4 | ) | 1.1 | ||||||||||||||||
Selling, general and administrative expenses | 8.3 | 3.2 | 8.3 | |||||||||||||||||
Operating income | 4.6 | 4.9 | 9.4 | |||||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 4.6 | 4.9 | 9.4 | |||||||||||||||||
Income taxes | (1.6 | ) | 4.3.5 | (1.8 | ) | 4.3.5 | (3.3 | ) | ||||||||||||
Net income (loss) | 3.0 | 3.1 | 6.1 |
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Pro forma | ||||||||||||||||||||
intercompany | Pro forma | |||||||||||||||||||
Pro forma | elimination | adjustments to | ||||||||||||||||||
consistency | and other | balance sheet at | ||||||||||||||||||
adjustments | adjustments | September 30, 2006 | ||||||||||||||||||
Ref. | Note 3 | Ref. | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets, net | — | (1.0 | ) | 3.1 | (1.0 | ) | ||||||||||||||
Total current assets | — | (1.0 | ) | (1.0 | ) | |||||||||||||||
Total non-current assets | — | — | ||||||||||||||||||
TOTAL ASSETS | — | (1.0 | ) | (1.0 | ) | |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities | — | (9.1 | ) | 3.1, 3.2 | (9.1 | ) | ||||||||||||||
Total current liabilities | — | (9.1 | ) | (9.1 | ) | |||||||||||||||
Other non-current liabilities | — | 2.8 | 3.2 | 2.8 | ||||||||||||||||
Total non-current liabilities | — | 2.8 | 2.8 | |||||||||||||||||
Total shareholders’ equity | — | 5.3 | 3.2 | 5.3 | ||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | — | (1.0 | ) | (1.0 | ) | |||||||||||||||
2.1 | Adjustment on multi-client surveys amortization of Veritas |
• | Gulf of Mexico surveys are amortized on the basis of 66.6% of revenues. Starting at the time of data delivery, a minimum straight-line depreciation scheme is applied on a three-year period, should total accumulated depreciation from the 66.6% of revenues amortization method below this minimum level; | |
• | Rest of the world surveys: same as above except depreciation is 83.3% of revenues and straight-line depreciation is over a five-year period from data delivery; and | |
• | Long-term strategic 2D surveys are amortized on the basis of revenues according to the above area split and straight-line depreciation a seven-year period from data delivery. |
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2.2 Reclassification of specific items in the statement of income of Veritas |
2.3 Reclassification of specific items in the balance sheet of Veritas (IFRS) |
2.4 Cancellation of deferred charges in Veritas’ financial statements (IFRS) |
2.5 Veritas’ actuarial gain and losses recorded directly in equity (IFRS) |
2.6 Application of proportional method to two Veritas’ subsidiaries (IFRS) |
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2.7 Cancellation of deferred revenues in Veritas’ financial statements (IFRS) |
2.8 Capitalization of development costs (IFRS) |
3.1 Intercompany transactions |
3.2 Other pro forma adjustments |
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4.1 Purchase Price Computation and Purchase Price Allocation |
4.1.1 Purchase Price Computation |
Number of Veritas common stock outstanding at the merger closing date of January 12, 2007 (in thousands) | 36,478 | |||
Number of shares of Veritas common stock issued upon the conversion of Veritas’ outstanding Convertible Senior Notes due 2024 (in thousands)(1) | 3,872 | |||
Number of shares of Veritas common stock reserved for the issuance upon the conversion of Deferred Shares Units | 1 | |||
Total number of shares of Veritas common stock at the merger closing date of January 12, 2007(in thousands) | 40,351 | |||
Ratio to be applied for shares of Veritas common stock to be exchanged for CGG ADSs | 50.664 | % | ||
Shares of Veritas common stock exchanged for CGG ADSs at the merger closing date of January 12, 2007 | 20,443 | |||
Exchange ratio per Veritas share | 2.25 CGG ADSs | |||
Total number of CGG ADSs issued (in thousands) | 45,997 | |||
Remaining outstanding shares of outstanding Veritas’ Convertible Senior Note due 2024 (ADS) (in thousands) | 2,050 | |||
Total (in thousands) | 48,047 |
Under U.S. GAAP | Under IFRS | |||||||||||||||
$ | € | $ | € | |||||||||||||
(in millions, except share data) | ||||||||||||||||
Under U.S. GAAP: Multiplied by CGG’s average ADS price (in U.S. dollars) for the period beginning two days before and ending two days after the September 5, 2006 (the date the merger was announced), and | ||||||||||||||||
Under IFRS: Multiplied by CGG’s closing ADS price (in U.S. dollars) at the merger closing date of January 12, 2007 | $ | 32.44 | $ | 40.50 | ||||||||||||
Fair value of CGG ADSs issued(A) | 1,559 | 1,231 | 1,946 | 1,537 | ||||||||||||
Total number of shares of Veritas common stock at the merger closing date of January 12, 2007(in thousands) | 40,351 | |||||||||||||||
Ratio to be applied for shares of Veritas common stock to be exchanged for cash | 49.336 | % | ||||||||||||||
Shares of Veritas common stock to be exchanged for cash at July 31, 2006 (in thousands) | 19,908 | |||||||||||||||
Cash paid per Veritas share | 75 | |||||||||||||||
Fair value of compensation paid(B) | 1,493 | 1,179 | 1,493 | 1,179 | ||||||||||||
Total consideration given in exchange for Veritas shares(A)+(B) | 3,052 | 2,410 | 3,439 | 2,716 | ||||||||||||
Cash paid in exchange for Veritas outstanding stock options | 45 | 35 | 45 | 35 | ||||||||||||
Estimated transaction costs(2) | 31 | 25 | 31 | 25 | ||||||||||||
Conversion option | 59 | 46 | ||||||||||||||
Purchase price | 3,128 | 2,470 | 3,574 | 2,822 | ||||||||||||
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4.1.2 Purchase Price Allocation |
As at October 31, 2006 | ||||||||||||||||
U.S. GAAP | IFRS | |||||||||||||||
$ | € | $ | € | |||||||||||||
(in millions) | ||||||||||||||||
Net book value of net assets acquired at October 31, 2006 (net of merger related costs incurred) | 731 | 577 | 723 | 571 | ||||||||||||
Allocation of purchase price: | ||||||||||||||||
— Acquired technologies and in-process research and development(1) | 39 | 31 | 39 | 31 | ||||||||||||
— Acquired customer relationships(2) | 90 | 71 | 90 | 71 | ||||||||||||
— Reassessment of multi-client library(3) | 74 | 58 | 74 | 58 | ||||||||||||
— Reassessment of property, plant & equipment(4) | 26 | 20 | 26 | 20 | ||||||||||||
— Favorable contracts(5) | 60 | 47 | 60 | 47 | ||||||||||||
— Contingent liabilities(6) | (13 | ) | (10 | ) | (13 | ) | (10 | ) | ||||||||
— Deferred taxes on the above adjustments and other(7)(8) | (91 | ) | (71 | ) | (96 | ) | (76 | ) | ||||||||
— Goodwill (residual balance not allocated) | 2,212 | 1,747 | 2,671 | 2,110 | ||||||||||||
Purchase price | 3,128 | 2,470 | 3,574 | 2,822 | ||||||||||||
(1) | Acquired technologies (useful life of 5 years) and in-process research and development |
(2) | Acquired customer relationship (useful life of 20 years) |
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(3) | Reassessment of multi-client library (maximum useful life of 5 years) |
(4) | Reassessment of property, plant & equipment |
(5) | Favorable contracts (weighted average remaining life of 6 years) |
(6) | Contingent liabilities |
(7) | Deferred taxes on the above adjustments |
(8) | Deferred revenues |
4.2 Pro forma adjustments on the unaudited pro forma combined balance sheet under IFRS and U.S. GAAP |
4.2.1 Allocation of purchase price |
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At September 30, | ||||||||
2006 | ||||||||
$ | € | |||||||
(in millions) | ||||||||
Identifiable intangible assets | 263 | 208 | ||||||
Identifiable tangible assets | 26 | 20 | ||||||
Identifiable liabilities | 13 | 10 | ||||||
Additional goodwill at September 30, 2006 | 2,212 | 1,747 | ||||||
Deferred taxes on the above adjustments | 91 | 71 |
At September 30, | ||||||||
2006 | ||||||||
$ | € | |||||||
(in millions) | ||||||||
Identifiable intangible assets | 263 | 208 | ||||||
Identifiable tangible assets | 26 | 20 | ||||||
Identifiable liabilities | 13 | 10 | ||||||
Additional goodwill at September 30, 2006 | 2,671 | 2,110 | ||||||
Deferred taxes on the above adjustments | 96 | 76 |
4.2.2 Adjustments to shareholders’ equity |
• | to remove the historical balance of Veritas for an amount of $750 million (€592 million) at September 30, 2006; | |
• | to cancel deferred revenues that do not correspond to a performance obligation for an amount of $5.5 million before tax (€4.3 million) at September 30, 2006; | |
• | to record the value at January 12, 2007 of CGG’s ADSs issued in the merger for an amount of $1,946 million (€1,537 million) at September 30, 2006, under IFRS; and | |
• | to record the value at September 5, 2006 of CGG’s ADSs issued in the merger for an amount of $1,558.5 million (€1,231 million) at September 30, 2006, under U.S. GAAP. |
4.2.3 Financing of the acquisition |
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4.2.4 Share-based payment adjustments |
4.2.5 Net effect of pro forma adjustment on cash |
in $ million | in€ million | |||||||
Cash-out for purchase price as disclosed in 4.1.1 | ||||||||
Compensation paid for Veritas shares | (1,493.0 | ) | (1,179.3 | ) | ||||
Cash paid in exchange for Veritas outstanding stock options | (45.0 | ) | (35.6 | ) | ||||
Estimated transaction costs | (31.0 | ) | (24.4 | ) | ||||
Cash-out for reimbursement of Convertible Notes due 2024 as disclosed in 4.1.1(1) | (130.0 | ) | (102.8 | ) | ||||
Fees paid or engaged by Veritas and severance package as disclosed in 4.1.2(6) | (46.0 | ) | (36.5 | ) | ||||
Cash-in for financing of the acquisition as disclosed in 4.2.3 composed of $1,000 million term loan facility and $600 million notes offered hereby | 1,600.0 | 1,263.8 | ||||||
Less: issuance costs paid on the term loan facility and the notes offered hereby | (26.0 | ) | (20.1 | ) | ||||
Net financing | 1,574.0 | 1,243.7 | ||||||
Less: issuance costs paid on the bridge loan facility | (16.0 | ) | (12.6 | ) | ||||
Total net effect of pro forma adjustments on cash | (187.0 | ) | (147.7 | ) |
4.3 Pro forma adjustments on the unaudited pro forma combined statement of income under IFRS and U.S. GAAP |
4.3.1 Amortization of tangible and intangible assets at fair value |
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4.3.2 Interests costs and amortization of issuance costs related to the financing of the acquisition |
4.3.3 Interests costs on convertible bonds |
4.3.4 Share-based payment adjustments |
4.3.5 Deferred taxes effect |
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• | the Land SBU for land and shallow water seismic acquisition activities; | |
• | the Offshore SBU for marine seismic acquisition and multi-client library sales; and | |
• | the Processing & Reservoir SBU for seismic data processing, data management and reservoir studies. |
• | the land business line for land and shallow water seismic acquisition and non-exclusive (“multi-client”) library sales; | |
• | the offshore business line for marine seismic acquisition, multi-client library sales and related services; and | |
• | the processing & reservoir business line for seismic data processing, data management and reservoir studies. |
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Geophysical Market Environment |
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Change in Scope of Offshore Activities |
• | the technological upgrade of one source vessel, theLaurentian, into a 3D seismic vessel in the second half of 2005; and | |
• | the addition to its existing fleet, through the acquisition of Exploration Resources on September 1, 2005, of three owned seismic vessels equipped for 2D studies (Princess,DukeandVenturer), two owned vessels equipped for 3D studies (Search andC-Orion, the latter of which was launched as a 3D vessel with 8 streamers in early 2006), one chartered cable vessel (Geo Challenger) that was converted to a 3D seismic vessel and started seismic operations as a 3D vessel since mid-May 2006 and one chartered 2D vessel (Pacific Titan). |
Acquisitions and Disposals |
• | PT Alico. On February 14, 2005, CGG ended its cooperation agreements with PT Alico, an Indonesian company. On that date, PT Alico, which was fully consolidated in CGG’s accounts until 2004 as a consequence of CGG’s contractual relationship with them, was excluded from CGG’s scope of consolidation. Under CGG’s agreements with PT Alico, CGG indemnified PT Alico against certain specific risks. This liability is limited and was accrued in our financial statements as at |
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December 31, 2004. The liability expired on June 30, 2006, at which date CGG had no further commitment to PT Alico or its shareholders. | ||
• | Vostok. On July 27, 2005, CGG established a new company in Russia, CGG Vostok, which will undertake seismic services. CGG Vostok has been part of CGG’s consolidated group from the date of its creation. | |
• | Exploration Resources. On August 29, 2005, CGG acquired a controlling stake of 60% of Exploration Resources ASA (“Exploration Resources”), a Norwegian provider of marine seismic acquisition services. The total cost to CGG of the acquisition of 100% of the share capital was€303.3 million, including€8.6 million related to acquisition fees. The reassessment of Exploration Resources’ net assets, along with CGG’s evaluation of the seismic business’s economic prospects, led CGG primarily to increase the book value of the vessels (by€115 million at September 1, 2005) and to record corresponding deferred tax liabilities. CGG has included Exploration Resources in its consolidated financial statements from September 1, 2005. | |
• | TAQA. On March 27, 2006, CGG signed a memorandum of understanding with Industrialization & Energy Services Company (TAQA), its long term Saudi Partner in Argas (Arabian Geophysical and Surveying Company), which is 51% owned by TAQA and 49% by CGG. Pursuant to this agreement, on June 24, 2006, TAQA acquired 49% of the capital of CGG Ardiseis, a newly formed CGG subsidiary dedicated to land and shallow water seismic data acquisition in the Middle East, and CGG kept a 51% interest. | |
• | Cybernetix. On July 10, 2006, Sercel acquired for€4.0 million a 20% interest in Cybernetix, a specialist in innovative solutions in robotics and certain automatic machines, with the aim of strengthening its technical partnership with Cybernetix in offshore oil equipment. | |
• | Veritas. On January 12, 2007, CGG acquired Veritas pursuant to the merger agreement. See “The Veritas Merger”. | |
• | Vibtech. On September 28, 2006, Sercel acquired all the outstanding shares in Vibration Technologies Limited (“Vibtech”) in a private transaction, for cash consideration of€49.5 million, with the preliminary goodwill recorded in connection with the transaction amounting to€34.4 million. Based in Scotland and founded in 1996, Vibtech has pioneered the use of advanced wireless technologies for seismic recording. |
Backlog |
CGG |
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Veritas |
Foreign Exchange Fluctuations |
Operating revenues |
• | Multi-client surveys |
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• | Exclusive surveys |
• | Other geophysical services |
• | Equipment sales |
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• | Software and hardware sales |
Multi-client surveys |
• | Gulf of Mexico surveys are amortized on the basis of 66.6% of revenues. Starting at time of data delivery, a minimum straight-line depreciation scheme is applied on a three-year period, should total accumulated depreciation from the 66.6% of revenues amortization method be below this minimum level; | |
• | Rest of the world surveys: same as above except depreciation is 83.3% of revenues and straight-line depreciation is over a five-year period from data delivery; and | |
• | Long term strategic 2D surveys are amortized on the basis of revenues according to the above area split and straight-line depreciation on a seven-year period from data delivery. |
Development costs |
• | the project is clearly defined, and costs are separately identified and reliably measured, | |
• | the product or process is technically and commercially feasible, | |
• | CGG has sufficient resources to complete development, and | |
• | the intangible asset is likely to generate future economic benefits, either because it is useful to CGG or through an existing market for the intangible asset itself or for its products. |
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Impairment |
• | significant underperformance relative to expected operating results based upon historical and/or projected data; | |
• | significant changes in the manner of CGG’s use of the acquired assets or the strategy for its overall business; and | |
• | significant negative industry or economic trends. |
Onerous contracts |
Convertible bonds |
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Revenue Recognition |
Multi-Client Data Library |
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Deferred Tax Asset |
Software Capitalization and Amortization |
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Share Based Compensation |
Pension Plan |
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Operating Revenues |
Revenues by Activity |
Nine months ended September 30, | |||||||||||||||||
2006 | 2005 | ||||||||||||||||
(in€ millions, except percentages) | |||||||||||||||||
Services | |||||||||||||||||
Land SBU | 96.9 | 10 | % | 88.2 | 15 | % | |||||||||||
Offshore SBU | 404.1 | 42 | % | 222.3 | 37 | % | |||||||||||
Processing & Reservoir SBU | 102.3 | 11 | % | 81.1 | 13 | % | |||||||||||
Total Services | 603.3 | 63 | % | 391.6 | 65 | % | |||||||||||
Products | 352.3 | 37 | % | 215.9 | 35 | % | |||||||||||
Total | 955.6 | 100 | % | 607.5 | 100 | % | |||||||||||
Services |
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Operating Expenses |
Operating Income (Loss) |
Financial Income and Expenses, Net |
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Equity in Income (Losses) of Investees |
Income Taxes |
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Operating Revenues |
Revenues by Activity |
Year ended December 31, | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
(in€ millions, except percentages) | |||||||||||||||||
Services | |||||||||||||||||
Land SBU | 119.8 | 14 | % | 77.3 | 11 | % | |||||||||||
Offshore SBU | 319.5 | 37 | % | 205.7 | 30 | % | |||||||||||
Processing and Reservoir SBU | 113.0 | 13 | % | 105.0 | 15 | % | |||||||||||
Total Services | 552.3 | 64 | % | 388.0 | 56 | % | |||||||||||
Products | 317.6 | 36 | % | 299.4 | 44 | % | |||||||||||
Total | 869.9 | 100 | % | 687.4 | 100 | % | |||||||||||
Services |
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Products |
Operating Expenses |
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• | €2.9 million expense related to the application of CGG’s hedging policy (a€0.9 million expense in the Services segment, a€3.6 million expense in the Products segment and a€1.6 million elimination on hedging on intra-group sales of equipment); and | |
• | €1.0 million net loss on fixed assets sold or written-off. |
• | €7.9 million gain on the sale of PGS shares; | |
• | €1.8 million of insurance proceeds related to the seismic vessel theCGG Mistral(in the Services segment); | |
• | €2.2 million gain on the sale of a building (in the Services segment); and | |
• | €4.5 million income related to the application of CGG’s hedging policy (in the Products segment). |
Operating Income |
Cost of Financial Debt, Net |
Variance on derivative on convertible bonds |
Other Financial Income |
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Equity in Income of Affiliates |
Income Taxes |
Net Loss |
Liquidity and Capital Resources |
Operations |
Investing Activities |
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Financing Activities |
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As at September 30, | As at December 31, | |||||||||||||||
2006 | 2005 | 2005 | 2004 | |||||||||||||
(in€ millions) | ||||||||||||||||
Bank overdrafts | 10.9 | 15.7 | 9.3 | 2.8 | ||||||||||||
Current portion of financial debt | 44.0 | 357.5 | 157.9 | 73.1 | ||||||||||||
Financial debt | 386.8 | 265.4 | 242.4 | 176.5 | ||||||||||||
Less cash and cash equivalents | (168.7 | ) | (138.1 | ) | (112.4 | ) | (130.6 | ) | ||||||||
Net debt | 273.0 | 500.5 | 297.2 | 121.8 | ||||||||||||
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Currency Fluctuations |
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Inflation |
Income Taxes |
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Revenues |
Three months ended October 31, | ||||||||||||||||
Change | ||||||||||||||||
2006 | 2005 | $ | % | |||||||||||||
(in $ thousands, except percentages) | ||||||||||||||||
NASA | 139,294 | 102,842 | 36,452 | 35 | % | |||||||||||
EAME | 54,248 | 34,769 | 19,479 | 56 | % | |||||||||||
APAC | 32,202 | 26,783 | 5,419 | 20 | % | |||||||||||
VHR | 5,087 | 4,284 | 803 | 19 | % | |||||||||||
Total Revenue | 230,831 | 168,678 | 62,153 | 37 | % | |||||||||||
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Three months ended October 31, | |||||||||||||||||
Change | |||||||||||||||||
2006 | 2005 | $ | % | ||||||||||||||
(in $ thousands, except percentages) | |||||||||||||||||
Multi-Client: | |||||||||||||||||
Land | 43,747 | 25,899 | 17,848 | 69 | % | ||||||||||||
Marine | 64,549 | 48,558 | 15,991 | 33 | % | ||||||||||||
Total Multi-Client | 108,296 | 74,457 | 33,839 | 45 | % | ||||||||||||
Contract: | |||||||||||||||||
Land | 48,817 | 47,647 | 1,170 | 2 | % | ||||||||||||
Marine | 73,718 | 46,574 | 27,144 | 58 | % | ||||||||||||
Total Contract | 122,536 | 94,221 | 28,314 | 30 | % | ||||||||||||
Total Revenue | 230,831 | 168,678 | 62,153 | 37 | % | ||||||||||||
Operating income |
Interest expense |
Interest income |
Involuntary conversion of assets |
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Other income (expense), net |
Income taxes |
Revenue |
Year ended July 31, | ||||||||||||||||
Change | ||||||||||||||||
2006 | 2005 | $ | % | |||||||||||||
(in $ millions, except percentages) | ||||||||||||||||
NASA | 541.4 | 388.6 | 152.8 | 39 | % | |||||||||||
EAME | 148.7 | 131.0 | 17.7 | 14 | % | |||||||||||
APAC | 112.5 | 98.2 | 14.3 | 15 | % | |||||||||||
VHR | 19.6 | 16.2 | 3.4 | 21 | % | |||||||||||
Total Revenue | 822.2 | 634.0 | 188.2 | 30 | % | |||||||||||
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Year ended July 31, | |||||||||||||||||
Change | |||||||||||||||||
2006 | 2005 | $ | % | ||||||||||||||
(in $ millions, except percentages) | |||||||||||||||||
Multi-client: | |||||||||||||||||
Land | 109.8 | 54.7 | 55.1 | 101 | % | ||||||||||||
Marine | 242.3 | 190.3 | 52.0 | 27 | % | ||||||||||||
Subtotal | 352.1 | 245.0 | 107.1 | 44 | % | ||||||||||||
Contract: | |||||||||||||||||
Land | 203.1 | 161.6 | 41.5 | 26 | % | ||||||||||||
Marine | 267.0 | 227.4 | 39.6 | 17 | % | ||||||||||||
Subtotal | 470.1 | 389.0 | 81.1 | 21 | % | ||||||||||||
Total Revenue | 822.2 | 634.0 | 188.2 | 30 | % | ||||||||||||
Operating income |
Interest expense and interest income |
Involuntary conversion of assets |
Income taxes |
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Revenue |
Year ended July 31, | ||||||||||||||||
Change | ||||||||||||||||
2005 | 2004 | $ | % | |||||||||||||
(in $ millions, except percentages) | ||||||||||||||||
NASA | 388.6 | 370.9 | 17.7 | 5 | % | |||||||||||
EAME | 131.0 | 118.5 | 12.5 | 11 | % | |||||||||||
APAC | 98.2 | 60.1 | 38.1 | 63 | % | |||||||||||
VHR | 16.2 | 15.0 | 1.2 | 8 | % | |||||||||||
Total Revenue | 634.0 | 564.5 | 69.5 | 12 | % | |||||||||||
Year ended July 31, | |||||||||||||||||
Change | |||||||||||||||||
2005 | 2004 | $ | % | ||||||||||||||
(in $ millions, except percentages) | |||||||||||||||||
Multi-client: | |||||||||||||||||
Land | 54.7 | 66.0 | (11.3 | ) | (17 | )% | |||||||||||
Marine | 190.3 | 209.1 | (18.8 | ) | (9 | )% | |||||||||||
Subtotal | 245.0 | 275.1 | (30.1 | ) | (11 | )% | |||||||||||
Contract: | |||||||||||||||||
Land | 161.6 | 154.0 | 7.6 | 5 | % | ||||||||||||
Marine | 227.4 | 135.4 | 92.0 | 68 | % | ||||||||||||
Subtotal | 389.0 | 289.4 | 99.6 | 34 | % | ||||||||||||
Total Revenue | 634.0 | 564.5 | 69.5 | 12 | % | ||||||||||||
Operating income (loss) |
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Interest expense and interest income |
Involuntary conversion of assets |
Income taxes |
Sources and Uses |
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Seasonality |
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ORBDA |
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Nine months | ||||||||||||||||
ended | Year ended | |||||||||||||||
September 30, | December 31, | |||||||||||||||
2006 | 2005 | 2005 | 2004 | |||||||||||||
(in€ millions) | ||||||||||||||||
ORBDA | 359.9 | 148.9 | 229.5 | 172.5 | ||||||||||||
Other financial income (expense) — net | (31.4 | ) | (36.7 | ) | (26.0 | ) | (22.7 | ) | ||||||||
Income tax paid | (60.6 | ) | (28.1 | ) | (31.7 | ) | (17.0 | ) | ||||||||
Non-recurring gains (losses) | — | (0.3 | ) | (0.5 | ) | 3.3 | ||||||||||
Increase (decrease) in other long-term liabilities | 3.3 | 0.3 | 6.7 | (3.5 | ) | |||||||||||
Income calculated on stock-option | 4.0 | 0.3 | 0.4 | 0.5 | ||||||||||||
Less net gain on sale of asset | (6.0 | ) | 0.1 | 1.6 | (11.5 | ) | ||||||||||
Other non-cash items | 28.1 | 36.8 | 27.5 | 21.4 | ||||||||||||
(Increase) decrease in trade accounts and notes receivables | (52.2 | ) | (25.4 | ) | (24.3 | ) | (26.8 | ) | ||||||||
(Increase) decrease in inventories and work in progress | (28.3 | ) | (17.1 | ) | (45.2 | ) | (16.4 | ) | ||||||||
(Increase) decrease in other current assets | (5.0 | ) | (5.5 | ) | (3.1 | ) | 17.4 | |||||||||
Increase (decrease) in trade accounts and notes payables | (12.5 | ) | 13.1 | 38.8 | 9.0 | |||||||||||
Increase (decrease) in other current liabilities | 8.4 | 9.9 | 1.0 | (5.5 | ) | |||||||||||
Impact of changes in exchange rate | (12.1 | ) | 13.1 | 11.2 | (0.5 | ) | ||||||||||
Less variation of current assets allowance included above | (1.3 | ) | (0.1 | ) | (3.5 | ) | 6.7 | |||||||||
Net cash provided by operating activities | 194.3 | 109.3 | 182.4 | 126.9 | ||||||||||||
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Three months | |||||||||||||||||||||
ended | |||||||||||||||||||||
October 31, | Year ended July 31, | ||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2004 | |||||||||||||||||
(in $ millions) | |||||||||||||||||||||
ORBDA | 123.5 | 81.6 | 383.7 | 265.9 | 278.3 | ||||||||||||||||
Income tax provision (benefit) | (13.2 | ) | (9.0 | ) | (57.2 | ) | 6.8 | (3.7 | ) | ||||||||||||
Gain on involuntary conversion of assets | — | 2.0 | 2.0 | 9.9 | — | ||||||||||||||||
Interest income | 5.0 | 1.9 | 12.0 | 5.3 | 1.6 | ||||||||||||||||
Interest expense | (2.2 | ) | (1.5 | ) | (7.3 | ) | (4.0 | ) | (18.9 | ) | |||||||||||
Other (income) expense | (11.7 | ) | 0.1 | (0.1 | ) | 0.9 | (0.6 | ) | |||||||||||||
Loss (gain) on disposition of property and equipment | (0.5 | ) | 0.04 | 0.3 | (0.4 | ) | (0.3 | ) | |||||||||||||
Deferred income taxes | 0.5 | 0.4 | 3.5 | (39.3 | ) | (9.7 | ) | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||
Account receivable | (23.0 | ) | (5.3 | ) | (62.3 | ) | 3.1 | (34.5 | ) | ||||||||||||
Materials and supplies inventory | (0.6 | ) | (1.3 | ) | (1.4 | ) | (1.2 | ) | 0.8 | ||||||||||||
Prepayments and other | (13.7 | ) | 0.6 | (4.9 | ) | (3.3 | ) | (1.8 | ) | ||||||||||||
Accrued income taxes | 6.8 | 2.9 | 23.0 | 12.1 | 2.6 | ||||||||||||||||
Accounts payable, deferred revenue, and other accrued liabilities | (27.8 | ) | (44.5 | ) | 40.6 | 69.0 | 33.0 | ||||||||||||||
Other non-current liabilities | 4.0 | 5.1 | (1.8 | ) | |||||||||||||||||
Other | (0.3 | ) | 1.5 | 0.6 | 1.4 | (2.0 | ) | ||||||||||||||
Net cash provided by operating activities (as reported by Veritas) | 42.7 | 29.4 | 336.6 | 331.3 | 243.0 | ||||||||||||||||
Payments due by period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | ||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Financial Debt(1) | 135.7 | 17.7 | 10.1 | 147.3 | 310.8 | |||||||||||||||
Capital Lease Obligations | 23.8 | 32.2 | 14.5 | 30.1 | 100.6 | |||||||||||||||
Operating Leases | 51.6 | 43.2 | 10.3 | 0.8 | 105.9 | |||||||||||||||
Other Long-term Obligations (interest on existing notes) | 11.5 | 23.0 | 23.0 | 47.2 | 104.7 | |||||||||||||||
Total Contractual Obligations | 222.6 | 116.1 | 57.9 | 225.4 | 622.0 | |||||||||||||||
(1) | Includes principal due on the existing notes issued on April 28, 2005 and principal and interest due on bank debt. |
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Payments due by period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | ||||||||||||||||
(in€ millions) | ||||||||||||||||||||
Financial Debt(1) | 27.4 | 44.1 | 35.8 | 256.2 | 363.5 | |||||||||||||||
Capital Lease Obligations (not discounted) | 12.0 | 17.8 | 37.8 | — | 67.6 | |||||||||||||||
Operating Leases | 45.7 | 36.1 | 12.7 | 2.1 | 96.6 | |||||||||||||||
Other Long-Term Obligations (interest on existing notes) | 19.6 | 39.1 | 39.1 | 78.2 | 176.0 | |||||||||||||||
Total Contractual Obligations | 104.7 | 137.1 | 125.4 | 336.5 | 703.7 | |||||||||||||||
(1) | Includes principal due on the existing notes issued on each of April 28, 2005 and February 3, 2006 and principal and interest due on bank debt. |
Payments due by period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Contractual Obligations | 1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | |||||||||||||||
(in $ millions) | ||||||||||||||||||||
Long-term debt(1) | — | — | — | 155.0 | 155.0 | |||||||||||||||
Estimated interest payments(2) | 7.1 | 14.2 | 14.2 | 89.9 | 125.4 | |||||||||||||||
Operating leases | 49.1 | 64.9 | 49.7 | 59.0 | 222.8 | |||||||||||||||
Capital leases | 1.5 | 0.3 | — | — | 1.8 | |||||||||||||||
Purchase obligations | 86.6 | — | — | — | 86.6 | |||||||||||||||
Potential payments under letters of credit | 4.6 | 0.2 | — | — | 4.8 | |||||||||||||||
Other long-term liabilities(3) | 0.1 | 1.4 | — | 33.0 | 34.6 | |||||||||||||||
Total | 148.9 | 81.0 | 63.9 | 337.0 | 630.9 | |||||||||||||||
(1) | The debt of $155 million has been classified as a current liability since October 31, 2005 because the stock price has remained above the level that triggers the convertibility features of the debt. | |
(2) | The interest rate on Veritas’ debt is LIBOR less 0.75% For purposes of this table, we used Veritas’ current interest rate of 4.58% based on a LIBOR of 5.33%. Each 100 basis point increase in LIBOR will increase our annual interest expense by $1.55 million per year. | |
(3) | Includes income tax, deferred revenue, pension and retirement obligations for which the timing of payment is uncertain. |
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Payments due by period | |||||||||||||||||||||
Less than | After | ||||||||||||||||||||
Pro Forma Combined | 1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | ||||||||||||||||
(in€ millions) | |||||||||||||||||||||
Financial debt | 47.9 | 104.8 | 74.9 | 334.4 | 562.0 | ||||||||||||||||
Additional notes offered hereby due 2015 | 11.8 | 23.7 | 23.7 | 297.7 | 386.6 | ||||||||||||||||
Principal | 158.0 | 158.0 | |||||||||||||||||||
Interest(1) | 11.8 | 23.7 | 23.7 | 40.5 | 99.7 | ||||||||||||||||
New notes offered hereby due 2017 | 24.5 | 49.0 | 49.0 | 333.2 | 422.1 | ||||||||||||||||
Principal | 316.0 | 316.0 | |||||||||||||||||||
Interest(1) | 24.5 | 49.0 | 49.0 | 132.6 | 255.1 | ||||||||||||||||
Term loan facility | 65.3 | 128.9 | 126.6 | 858.9 | 1,179.8 | ||||||||||||||||
Principal | 7.9 | 15.8 | 15.8 | 750.4 | 789.9 | ||||||||||||||||
Interest(2) | 57.4 | 113.1 | 110.8 | 108.5 | 389.9 | ||||||||||||||||
Capital leases | 13.0 | 17.8 | 37.8 | 0.0 | 68.6 | ||||||||||||||||
Operating leases | 88.0 | 115.0 | 71.2 | 89.7 | 363.9 | ||||||||||||||||
Total Contractual Obligations | 250.5 | 439.2 | 383.2 | 1,930.1 | 3,003.1 | ||||||||||||||||
(1) | Assuming that the notes offered hereby were issued on September 30, 2006. |
(2) | Based on LIBOR plus a margin of 2% for the term loan facility corresponding to a 7.3% interest rate. A change in LIBOR by 50 basis points would have changed the total interest cost by approximately€4.0 million (approximately $5.0 million per year). |
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• | identifying new areas where subsurface conditions are favorable for the accumulation of oil and gas; | |
• | determining the size and structure of previously identified oil and gas fields; and | |
• | optimizing development and production of oil and gas reserves (reservoir management). |
Focus on Growth Areas for Geophysical Services |
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Develop Technological Synergies for Products and Capitalize on New Generation Equipment |
Develop and Utilize Innovative Technology |
• | land and transition zone seismic data acquisition systems and know-how; | |
• | innovative marine or subsea acquisition systems and services; | |
• | seismic data processing and reservoir services; and | |
• | manufacturing of land, marine and subsea data acquisition equipment. |
Emphasize Client Service |
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• | tailoring our data acquisition operations to meet specific client demands; | |
• | expanding regional multi-client and dedicatedon-site processing centers; | |
• | recruiting and training customer-oriented service staff; | |
• | organizing client training seminars focused on our products and services; | |
• | developing easy access to our multi-client data library through the increasing application ofe-business technologies; | |
• | developing corporate contracts with our main clients; and | |
• | gaining access to new data acquisition markets, such as subsea and newly opening territories. |
Provide Integrated Services |
Exploit Strong Data Libraries |
Develop Reservoir Applications |
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• | Economic growth, particularly in more active regions such as Asia (notably China, India and Brazil), is generating increased energy demand and leading to higher energy prices and increased exploration efforts; |
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• | The need to replace depleting reserves and maximize the recovery of oil in existing reservoirs should encourage capital expenditures by companies engaged in exploration and production, which we expect will benefit the seismic industry; | |
• | The scope of application of geophysical services has considerably increased over the last several years as a result of significant research and development efforts. Geophysical services can now potentially be applied to the entire sequence of exploration, development and production as opposed to exploration only. This is particularly true with technologies such as 4D (time lapse seismic data); and | |
• | Finally, the depth and duration of the contraction in the geophysical sector between 1999 and 2004 may have increased awareness among geophysical service providers of the risks related to market overcapacity. |
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Revenues by Activity |
Nine months ended | |||||||||||||||||||||||||||||||||
September 30, | Year ended December 31, | ||||||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | ||||||||||||||||||||||||||||||
(in€ millions, except percentages) | |||||||||||||||||||||||||||||||||
Services | |||||||||||||||||||||||||||||||||
Land SBU | 96.9 | 10 | % | 88.2 | 15 | % | 119.8 | 14 | % | 77.3 | 11 | % | |||||||||||||||||||||
Offshore SBU | 404.1 | 42 | % | 222.3 | 37 | % | 319.5 | 37 | % | 205.7 | 30 | % | |||||||||||||||||||||
Processing & Reservoir SBU | 102.3 | 11 | % | 81.1 | 13 | % | 113.0 | 13 | % | 105.0 | 15 | % | |||||||||||||||||||||
Total Services | 603.3 | 63 | % | 391.6 | 64 | % | 552.3 | 64 | % | 388.0 | 56 | % | |||||||||||||||||||||
Products | 352.3 | 37 | % | 215.9 | 36 | % | 317.6 | 36 | % | 299.4 | 44 | % | |||||||||||||||||||||
Total | 955.6 | 100 | % | 607.5 | 100 | % | 869.9 | 100 | % | 687.4 | 100 | % | |||||||||||||||||||||
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Revenues by Region (by location of customers) |
Nine months ended | ||||||||||||||||||||||||||||||||
September 30, | Year ended December 31, | |||||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | |||||||||||||||||||||||||||||
(in€ millions, except percentages) | ||||||||||||||||||||||||||||||||
Americas | 314.0 | 33 | % | 178.7 | 29 | % | 291.7 | 34 | % | 207.7 | 30 | % | ||||||||||||||||||||
Asia-Pacific/ Middle East | 313.2 | 33 | % | 217.1 | 36 | % | 297.3 | 34 | % | 274.5 | 40 | % | ||||||||||||||||||||
Europe and CIS | 229.4 | 24 | % | 138.6 | 23 | % | 190.3 | 22 | % | 138.2 | 20 | % | ||||||||||||||||||||
Africa | 99.0 | 10 | % | 73.1 | 12 | % | 90.6 | 10 | % | 67.0 | 10 | % | ||||||||||||||||||||
Total | 955.6 | 100 | % | 607.5 | 100 | % | 869.9 | 100 | % | 687.4 | 100 | % | ||||||||||||||||||||
Land Seismic Acquisition |
Description of Activity |
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• | the Sercel 408UL seismic data recorders, which feature 24-bit digital recording technology; | |
• | Geoland quality control software, which is used to verify that the location of field data points during a survey corresponds to their theoretical position; | |
• | the Sercel VE 432 vibrator electronic control system, used to synchronize and verify the emission of acoustical waves by vibrators; and | |
• | Geocluster software, used foron-site processing and quality control of acquired data. |
Restructuring |
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Description of Activity |
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Seabed |
Multi-client Library |
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Description of Activity |
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IT and Data Management |
Processing Software Development and Sales |
• | Geovista, a set of software products used to produce accurate images of geological structures and showing depth; | |
• | Stratavista, advanced software used to determine specific rock properties from stratigraphic inversion of seismic data; | |
• | WaveVista, a depth migration service based on wave equations; | |
• | VectorVista, designed to provide greater understanding of seismic data acquired with multi-component techniques; and | |
• | ChronoVista, a set of software products used to produce accurate images of geological structures over time. |
Description of Activity |
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• | clusters of ultra-light acquisition modules allowing total flexibility of configuration; | |
• | the option of mixing different communication media (cable, radio, micro-wave, laser, fiber-optic) to form a true network allowing the user to define data routing and hence avoid obstacles in the field; and | |
• | an architecture fully supported by a new generation of object-oriented software. |
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Jurisdiction of | % of | |||||||||
Subsidiary | organization | Head office | interest | |||||||
Sercel S.A. | France | Carquefou, France | 100.0 | |||||||
CGG Services SA | France | Massy, France | 100.0 | |||||||
CGG Americas, Inc. | Texas | Houston, Texas, United States | 100.0 | |||||||
CGG Marine Resources Norge A/ S | Norway | Hovik, Norway | 100.0 | |||||||
Companía Mexicana de Geofisica | Mexico | Mexico City, Mexico | 100.0 | |||||||
CGG do Brasil Participaçoes Ltda. | Brazil | Rio de Janeiro, Brazil | 100.0 | |||||||
Exploration Resources ASA | Norway | Oslo, Norway | 100.0 | |||||||
Sercel Inc. | Oklahoma | Tulsa, Oklahoma, United States | 100.0 | |||||||
CGGVeritas Services Inc. | Delaware | Houston, Texas, United States | 100.0 |
Owned/ | ||||||||
Location | Type of facilities | Size | Leased | |||||
Paris, France | Registered offices of CGGVeritas and executive offices for the group | 725 m | (2) | Leased | ||||
Massy, France | Registered offices of CGG Services SA | 9,174 m | (2) | Owned | ||||
Massy, France | Data processing center | 7,371 m | (2) | Owned | ||||
London, England | Data processing center | 2,320 m | (2) | Leased | ||||
Redhill, England | Administrative offices | 2,095 m | (2) | Leased | ||||
Houston, Texas, U.S.A. | Offices of CGG Americas, Inc. | 6,905 m | (2) | Leased | ||||
Houston, Texas, U.S.A. | Offices and manufacturing premises of Sercel | 24,154 m | (2) | Owned | ||||
Cairo, Egypt | Data processing center | 2,653 m | (2) | Leased | ||||
Kuala Lumpur, Malaysia | Data processing center and administrative offices | 1,152 m | (2) | Leased |
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Owned/ | ||||||||
Location | Type of facilities | Size | Leased | |||||
Perth, Australia | Data processing center | 429 m | (2) | Leased | ||||
Calgary, Canada | Administrative offices and data processing center | 1,764 m | (2) | Leased | ||||
Rio de Janeiro, Brazil | Offices of CGG Do Brazil | 326 m | (2) | Leased | ||||
Oslo, Norway | Data processing center CGG Norge Offices of CGG | 1,431 m | (2) | Leased | ||||
Marine Resources Norge A/S | 243 m | (2) | Leased | |||||
Bergen, Norway | Offices of Exploration Resources AS and Multiwave AS | 992 m | (2) | Leased | ||||
Mexico City, Mexico | Registered office of CMG | 570 m | (2) | Leased | ||||
Caracas, Venezuela | Administrative offices | 315 m | (2) | Leased | ||||
Processing activities | 1,394 m | (2) | Leased | |||||
Carquefou, France | Sercel factory. Activities include research and development relating to, and manufacture of, seismic data recording equipment | 23,318 m | (2) | Owned | ||||
Saint Gaudens, France | Sercel factory. Activities include research and development relating to, and manufacture of, geophysical cables, mechanical equipment and borehole seismic tools | 16,000 m | (2) | Owned | ||||
Sydney, Australia | Activities include research and development relating to, and manufacture and marketing of, marine streamers | 7,096 m | (2) | Leased | ||||
Xu Shui, China | Activities include research and development relating to, and manufacture of geophones | 59,247 m | (2) | Leased | ||||
Calgary, Canada | Manufacture of geophysical cables | 8,357 m | (2) | Owned | ||||
Alfreton, England | Manufacture of geophysical cables | 5,665 m | (2) | Owned | ||||
Singapore | Manufacture of geophysical cables | 5,595 m | (2) | Owned |
Year added | Charter | Number of | Vessel length | |||||||||||||||||||||
Vessel Name | Year built | to fleet | expires | 2D/3D | streamers | (in meters) | ||||||||||||||||||
CGG Föhn | 1985 | 1985 | 2008 | 3D | 8 | (1) | 84.5 | |||||||||||||||||
CGG Harmattan | 1993 | 1993 | 2008 | 3D | 8 | (1) | 96.5 | |||||||||||||||||
CGG Alizé | 1999 | 1999 | 2007 | 3D | 10 | 100.0 | ||||||||||||||||||
Laurentian | 1983 | 2003 | 2008 | 3D | 6 | 84.4 | ||||||||||||||||||
CGG Amadeus | 1999 | 2001 | N/A | 3D | 8 | 87.0 | ||||||||||||||||||
CGG Symphony | 1999 | 2001 | N/A | 3D | 10 | 120.7 | ||||||||||||||||||
Search(2) | 1982 | 2005 | N/A | 3D | 6 | 98.5 | ||||||||||||||||||
C-Orion(2) | 1979 | 2005 | N/A | 3D | 8 | 81.0 | ||||||||||||||||||
Geo Challenger(2) | 1999 | 2005 | 2010 | 3D | 12 | 96.4 | ||||||||||||||||||
Princess(2) | 1985 | 2005 | N/A | 2D | 1-2 | (3) | 76.2 | |||||||||||||||||
Duke(2) | 1983 | 2005 | N/A | 2D | 1 | 66.7 | ||||||||||||||||||
Venturer(2) | 1986 | 2005 | N/A | 2D | 1-4 | (3) | 89.5 | |||||||||||||||||
Pacific Titan(2) | 1982 | 2005 | 2006 | 2D | 1-4 | (3) | 64.5 |
(1) | In high-resolution mode. |
(2) | Vessel in the Exploration Resources fleet. |
(3) | One streamer if long or multistreamer mode for shorter streamers. |
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Three months ended | ||||||||||||||||||||
October 31, | Years ended July 31, | |||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2004 | ||||||||||||||||
(in $ thousands) | ||||||||||||||||||||
Revenue by Contract Type | ||||||||||||||||||||
Contract work | 122,536 | 94,221 | 470,132 | 389,046 | 289,404 | |||||||||||||||
Licensing of multi-client data | 108,296 | 74,457 | 352,056 | 244,980 | 275,065 | |||||||||||||||
Total | 230,831 | 168,678 | 822,188 | 634,026 | 564,469 | |||||||||||||||
Three | ||||||||||||||||||||||||||||||||
months | ||||||||||||||||||||||||||||||||
ended | ||||||||||||||||||||||||||||||||
October 31, | Year ended July 31, | |||||||||||||||||||||||||||||||
2006 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||
(in $ millions, except percentages) | ||||||||||||||||||||||||||||||||
Revenue by Region | ||||||||||||||||||||||||||||||||
Americas | 143.4 | 62 | % | 552.4 | 67 | % | 397.8 | 63 | % | 390.6 | 70 | % | ||||||||||||||||||||
Asia Pacific/Middle East | 41.9 | 18 | % | 138.2 | 17 | % | 124.9 | 20 | % | 81.3 | 14 | % | ||||||||||||||||||||
Europe | 44.8 | 20 | % | 93.6 | 11 | % | 71.9 | 11 | % | 79.2 | 14 | % | ||||||||||||||||||||
Africa | 0.7 | — | 38.0 | 5 | % | 39.4 | 6 | % | 13.3 | 2 | % | |||||||||||||||||||||
Total | 230.8 | 100 | % | 822.2 | 100 | % | 634.0 | 100 | % | 564.5 | 100 | % | ||||||||||||||||||||
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Land Acquisition |
Marine Acquisition |
Year entered | Charter | |||||||||||||
Vessel | service | Length | Beam | expiration | ||||||||||
Pacific Sword | 1999 | 189 feet | 40 feet | October 2006(1) | ||||||||||
Seisquest | 2001 | 300 feet | 60 feet | May 2007(1) | ||||||||||
Veritas Viking | 1998 | 305 feet | 72 feet | May 2011 | ||||||||||
Veritas Viking II | 1999 | 305 feet | 72 feet | May 2007 | ||||||||||
Veritas Vantage | 2002 | 305 feet | 72 feet | April 2010 | ||||||||||
Veritas Voyager | 2006 | 220 feet | 52 feet | July 2011(1) | ||||||||||
Veritas Searcher | 1982 | 217 feet | 44 feet | Owned(1) |
(1) | See the following discussions related to various changes in the status of the charters and the vessels subsequent to July 31, 2006. |
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Data Processing and Interpretation |
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Board of Directors |
Initially | Term | |||||||||
Name | Position | appointed | expires | |||||||
Robert Brunck(1) | Chairman of the Board and Chief Executive Officer | 1998 | 2008 | |||||||
Olivier Appert(2) | Director | 2003 | 2008 | |||||||
Loren Carroll | Director | 2007 | 2013 | |||||||
Rémi Dorval(3) | Director | 2005 | 2010 | |||||||
Jean Dunand(3) | Director | 1999 | 2007 | |||||||
Yves Lesage(3) | Director | 1988 | 2009 | |||||||
Christian Marbach(1) | Director | 1995 | 2007 | |||||||
Thierry Pilenko | Director | 2007 | 2013 | |||||||
Robert Semmens(2)(3) | Director | 1999 | 2011 | |||||||
Daniel Valot(2) | Director | 2001 | 2012 | |||||||
David Work | Director | 2007 | 2013 | |||||||
Terence Young | Director | 2007 | 2013 |
(1) | Member of Strategic Planning Committee. |
(2) | Member of Appointment-Remuneration Committee. |
(3) | Member of Audit Committee. |
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Executive Officers |
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Executive | ||||||
Name | Current position | officer since | ||||
Robert Brunck | Chairman and Chief Executive Officer | 1989 | ||||
Thierry Le Roux | President and Chief Operating Officer | 1995 | ||||
Stephane-Paul Frydman | Chief Financial Officer | 2003 | ||||
Gérard Chambovet | Senior Executive Vice President, QHSE, Career Development and Training, Investor Relations, Communication and Audit | 1995 | ||||
Christophe Pettenati-Auzière | President, Geophysical Services | 1997 | ||||
Luc Benoît-Cattin | President Eastern Hemisphere | 2003 | ||||
Timothy Wells | President Western Hemisphere | 2007 | ||||
Pascal Rouiller | Chief Executive Officer, Sercel Group | 1997 |
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Amount paid to CGG | ||||
Name | directors for 2005 | |||
(in€) | ||||
Robert Brunck(1) | 39,216.55 | |||
Olivier Appert | 24,249.47 | |||
Patrick de la Chevardière(2) | 2,534.64 | |||
Rémi Dorval | 23,235.10 | |||
Jean Dunand | 35,641.60 | |||
Gérard Friès(3) | 31,355.82 | |||
Yves Lesage | 30,879.70 | |||
John J. MacWilliams(3) | 22,564.61 | |||
Christian Marbach | 27,777.03 | |||
Robert F. Semmens(4) | 55,183.85 | |||
Andrew Sheiner(5) | 1,775.15 | |||
Daniel Valot | 20,586.46 |
(1) | Mr. Brunck does not receive any compensation as member of the Supervisory Board of Sercel Holding or as Chairman of the Board of Directors of CGG Americas Inc. |
(2) | Resigned from the Board on March 8, 2005. |
(3) | Resigned from the board on January 12, 2007. |
(4) | Includes€40,183.85 paid by CGG to Mr. Semmens as a director and€15,000 paid by Sercel Holding to Mr. Semmens as a member of the Supervisory Board. |
(5) | Resigned from the Board on March 7, 2005. |
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• | the proposed acquisition by Sercel of Cybernetix S.A. and Vibtech; | |
• | the proposed modification of the terms and conditions of the CGG 7.75% subordinated convertible bonds due 2012 before the modification was proposed to bondholders’ and shareholders’ meetings in April and May 2006, respectively; and | |
• | the Board performance evaluation. |
Audit Committee |
Responsibilities |
• | Reviewing and discussing with management and our statutory auditors (i) the consistency and appropriateness of the accounting methods we adopt to prepare our corporate and consolidated financial statements; (ii) the consolidation perimeter and requesting, when necessary, all appropriate explanations; (iii) our draft annual, semi-annual and quarterly financial statements together with the notes to them, and especially off-balance sheet arrangements; and (iv) the quality, comprehensiveness, accuracy and veracity of the financial statements; |
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• | Receiving reports from our statutory auditors on their review, including any comments and suggestions they may have made in the scope of their audit; and | |
• | Raising any financial or accounting question that the Committee deems important. |
• | Reviewing our annual report on Form 20-F and our“Document de Référence” filed with the French securities market regulator. | |
• | In consultation with our statutory auditors, our internal auditors and management, reviewing the structure of our internal control procedures and the way in which they operate, notably those procedures relating to the preparation and treatment of accounting and financial information used to prepare our financial statements, to assess and manage risks, to comply with the principal regulations applicable to us, and to review the comments and observations made by the statutory auditors on our internal control procedures. | |
• | With respect to internal audit, reviewing and discuss with management particularly: |
• | its organization and operation, | |
• | its activities and the responsibilities proposed in the scope of the internal audit plan approved by the general management and presented to the Audit Committee. |
• | Reviewing and discussing with management and, when appropriate, our statutory auditors the transactions directly or indirectly binding the Group and its executive officers. | |
• | With respect to external audit: |
• | Reviewing and discussing with the statutory auditors their annual audit plan, | |
• | Meeting, if necessary, with the statutory auditors outside the presence of management, | |
• | Ensuring the independence of the statutory auditors by managing the procedure for selection of the auditors. The Audit Committee submits its choice to the Board of Directors, which, pursuant to law, must submit the appointment of auditors to a vote at a shareholders’ meeting, | |
• | Discussing the extent and results of the audit work with the statutory auditors and management and reviewing the amount of auditors’ fees regularly with management. The Audit Committee has sole authority to authorize performance of non-audit services by our auditors or members of their network. |
• | Overseeing the anonymous handling of any report concerning a possible internal control problem or any problem of an accounting or financial nature. | |
• | Finally, the management of the company must report to the Audit Committee any suspected fraud of a significant amount so that the committee may proceed with any verification that it deems appropriate. |
2006 Activities |
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Appointment-Remuneration Committee |
• | to propose to the Board of Directors: |
— the implementation of stock option and performance share plans and employee shareholding plans; | |
— the remuneration of the executive officers(mandataires sociaux); and | |
— the appointment of directors, executive officers(mandataires sociaux) or members of Board committees. |
• | to be kept informed of the remuneration of the members of the Executive Committee. |
• | the remuneration of the Chairman and Chief Executive Officer and the Presidents, | |
• | the proposal to be subject to the annual general meeting with respect to stock-options and performance shares and the final allocation of such performance shares and stock-options to employees of the Group, | |
• | the protection letters of the Chairman and Chief Executive Officer and the Presidents, | |
• | the proposal to be made to the extraordinary general meeting for the appointment of the four new directors after completion of the merger with Veritas, | |
• | the reorganization of the Group Management Committee to be effective after completion of the merger with Veritas, and | |
• | the implementation of the evaluation process of the Board of Directors and the Chief Executive Officer. |
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Options | ||||||||||||||||||||
exercised | Options | |||||||||||||||||||
(ordinary | outstanding | Exercise | ||||||||||||||||||
Options | shares) at | at | price per | |||||||||||||||||
initially | December 31, | December 31, | ordinary | |||||||||||||||||
Date of board of directors’ resolution | granted(1) | 2006 | 2006(2) | share(1) | Expiration date | |||||||||||||||
January 18, 2000(3) | 231,000 | 181,194 | 39,625 | € | 45.83 | January 17, 2008 | ||||||||||||||
March 14, 2001(4) | 256,000 | 113,911 | 147,297 | € | 65.39 | March 13, 2009 | ||||||||||||||
May 15, 2002(5) | 138,100 | 41,896 | 97,214 | € | 39.92 | May 14, 2010 | ||||||||||||||
May 15, 2003(6) | 169,900 | 15,717 | 164,711 | € | 14.53 | May 14, 2011 | ||||||||||||||
May 11, 2006(7) | 202,500 | 0 | 201,950 | € | 131.26 | May 10, 2014 | ||||||||||||||
Total | 997,500 | 187,649 | 650,797 | |||||||||||||||||
(1) | Pursuant to French law and the terms of the stock option plans, the numbers of options granted and the exercise price were adjusted following our share capital increase in December 2005. |
(2) | The stock option plans provide for the cancellation of the options if the holder is no longer our employee, director or executive officer. |
(3) | Options under the 2000 plan could not be exercised before January 2003. |
(4) | Options under the 2001 plan vest by one-fifth each year from March 2001 and could not be exercised before March 14, 2004. |
(5) | Options under the 2002 plan vest by one-fifth each year from May 2002 and could not be exercised before May 16, 2005. |
(6) | Options under the 2003 plan vest by one-fourth each year from May 2003 and could not be exercised before May 16, 2006. |
(7) | Options under the 2006 plan vest by one-fourth each year from May 2006 and can be exercised at any time. However resulting shares cannot be sold before May 12, 2010. |
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January 25, | December 31, | |||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||
% of | % of | % of | % of | |||||||||||||||||||||||||||||
% of | voting | % of | voting | % of | voting | % of | voting | |||||||||||||||||||||||||
shares | rights | shares | rights | shares | rights | shares | rights | |||||||||||||||||||||||||
Identity of Person or Group | ||||||||||||||||||||||||||||||||
The Beacon Group | — | — | — | — | — | — | 15.21 | 25.51 | ||||||||||||||||||||||||
EBPF-Financière de l’Echiquier | — | — | — | — | — | — | 4.58 | 3.84 | ||||||||||||||||||||||||
Fidelity International Limited | 4.71 | 4.47 | 10.77 | 9.97 | 10.31 | 9.50 | — | — | ||||||||||||||||||||||||
Institut Français du Pétrole | 5.07 | 9.64 | 7.73 | 14.32 | 8.21 | 15.13 | 12.01 | 12.94 | ||||||||||||||||||||||||
Public | 90.22 | 85.89 | 81.50 | 75.71 | 81.48 | 75.37 | 68.20 | 57.71 |
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• | finance a portion of the cash component of the merger consideration; | |
• | repay certain existing debt of CGG and Veritas; and | |
• | pay the fees and expenses incurred in connection with the foregoing. |
• | finance a portion of the cash component of the merger consideration; | |
• | repay certain existing debt of CGG and Veritas; and | |
• | pay the fees and expenses incurred in connection with the foregoing. |
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• | maximum ratio of (i) total net debt to (ii) ORBDA; and | |
• | minimum ratio of (i) ORBDA less capital expenditures to (ii) total interest costs. |
French Revolving Facility |
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71/2% Senior Notes due 2015 |
Veritas Floating Rate Convertible Senior Notes due 2024 |
$70 million DnB Credit Facility |
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• | be general senior, unsecured obligations of the Company; | |
• | rank equally in right of payment to all existing and future senior, unsecured indebtedness of the Company, except for any liabilities preferred by law; | |
• | rank senior in right of payment to all existing and future subordinated indebtedness of the Company; | |
• | be guaranteed on a senior unsecured basis by certain Subsidiaries of the Company as described below; and | |
• | be effectively subordinated to all existing and future indebtedness of Subsidiaries of the Company that are not Guarantors. |
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General |
Guarantors |
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Release |
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Merger or Consolidation |
(a) | the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) shall execute a Subsidiary Guarantee and deliver an opinion of counsel in accordance with the terms of the Indenture; | |
(b) | immediately after giving effect to such transaction, no Default or Event of Default exists; | |
(c) | such Guarantor, or any Person formed by or surviving any such consolidation or merger, would have a Consolidated Net Worth (immediately after giving effect to such transaction) equal to or greater than the Consolidated Net Worth of such Guarantor immediately preceding the transaction; and | |
(d) | the Company would be permitted by virtue of the Company’s pro forma Consolidated Interest Coverage Ratio, immediately after giving effect to such transaction, to incur at least€1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”. |
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Year | Percentage | |||
2010 | 103.75% | |||
2011 | 102.50% | |||
2012 | 101.25% | |||
2013 and thereafter | 100.00% |
(a) | if the Notes are listed, in compliance with the requirements of the principal securities exchange on which the Notes are listed; or |
(b) | if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. |
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(a) | (1) any change in or amendment to the laws or treaties (or regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction (as defined under the caption “— Additional Amounts”) or (2) any change in or amendment to any official position regarding the application or interpretation of such laws, treaties, regulations or rulings, which change or amendment is announced or is effective on or after the date of the Indenture; and | |
(b) | such obligation cannot be avoided by the Company or any such Guarantor taking reasonable measures available to it. |
(a) | surrendered by the holder thereof for payment of principal more than 30 days after the later of (1) the date on which such payment first became due and (2) if the full amount payable has not been received by or on behalf of the relevant holder on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the holders by the Trustee, except to the extent that the holder would have been entitled to such Additional Amounts on surrendering such Note for payment on the last day of the applicable30-day period; | |
(b) | if any tax, assessment or other governmental charge is imposed or withheld by reason of the failure to comply by the holder or, if different, the beneficial owner (ayant-droit) of the Note with a request addressed to such holder or beneficial owner to provide information, documents or other evidence concerning the nationality, residence, identity or connection with the Relevant Taxing |
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Jurisdiction of such holder or beneficial owner which is required or imposed by a statute, treaty, regulation or administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from all or part of such tax, assessment or governmental charge; |
(c) | held by or on behalf of a holder who is liable for Taxes in respect of such Note by reason of having some connection with the Relevant Taxing Jurisdiction other than the mere purchase, holding or disposition of any Note, or the receipt of payments made by or on behalf of the Company or any Guarantor in respect thereof or any Subsidiary Guarantee, including, without limitation, such holder being or having been a citizen or resident thereof or being or having been present or engaged in a trade or business therein or having had a permanent establishment therein; |
(d) | on account of any estate, inheritance, gift, sale, transfer, personal property or other similar tax, assessment or other governmental charge; | |
(e) | except in the case of the winding up of the Company or any Guarantor, any Note surrendered for payment in the Republic of France; | |
(f) | any withholding or deduction imposed on a payment to an individual which is required to be made pursuant to any law implementing or complying with, or introduced in order to conform to European Council Directive 2003/48/ EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November, 26-27, 2000 on the taxation of savings income or any agreement between the European Community and any jurisdiction providing for equivalent measures; or | |
(g) | as a result of any combination of (a), (b), (c), (d), (e) or (f) or with respect to any payment made by or on behalf of the Company or any Guarantor in respect of any Note or Subsidiary Guarantee to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent that a beneficiary or settlor or beneficial owner would not have been entitled to any Additional Amounts had such beneficiary or settlor or beneficial owner been the holder. |
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Change of Control |
(a) | accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; | |
(b) | deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and | |
(c) | deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of the Notes or portions thereof being purchased by the Company. |
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(a) | the sale, lease, transfer, conveyance or other disposition (other than by merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries, taken as a whole; | |
(b) | the adoption, by holders of Capital Stock of the Company, of a voluntary plan relating to the liquidation or dissolution of the Company; | |
(c) | the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Section 13(d) (3) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding Voting Stock of the Company; or | |
(d) | the first day on which more than a majority of the members of the Board of Directors are not Continuing Directors; |
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Asset Sales |
(a) | the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in accordance with the definition of such term set out below under the caption “— Certain Definitions”, the results of which determination shall be set forth in an Officers’ Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and | |
(b) | at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; |
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Restricted Payments |
(a) | purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any of its Restricted Subsidiaries (other than any such Equity Interests owned by the Company or any Wholly Owned Restricted Subsidiary of the Company); | |
(b) | make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated in right of payment to the Notes or the Subsidiary Guarantees, except a payment of interest or principal at Stated Maturity; or | |
(c) | make any Restricted Investment, |
(1) | no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; | |
(2) | the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least€1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Disqualified Stock”; and | |
(3) | such Restricted Payment, together with (x) the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (b) through (e) and, to the extent deducted in computing |
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Consolidated Net Income, (f) and (g) of the next succeeding paragraph) , and (y) the aggregate amount of all dividends and other payments or distributions paid subsequent to the Issue Date on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any such payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company’s Equity Interests in their capacity as such (other than (i) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company, (ii) dividends or distributions payable to the Company or any of its Restricted Subsidiaries or (iii) if the Restricted Subsidiary making such dividend is not a Wholly Owned Restricted Subsidiary, dividends to its shareholders on a pro rata basis), is less than the sum (without duplication) of the following: |
(A) | 50% of the cumulative Consolidated Net Income of the Company for the period (taken as one accounting period) from January 1, 2005 to the end of the Company’s most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus | |
(B) | 100% of the aggregate of (1) the net cash proceeds and (2) the fair market value of Strategic Assets transferred or conveyed to the Company (as valued at the time of transfer or conveyance to the Company, and as determined in the manner contemplated by the definition of the term “fair market value”), in each case received by the Company since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issuance or sale of Disqualified Stock or debt securities of the Company that have been converted into, or exchanged or redeemed for, such Equity Interests (other than any such Equity Interests, Disqualified Stock or convertible debt securities sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or convertible debt securities that have been converted into, or exchanged or redeemed for, Disqualified Stock); plus | |
(C) | to the extent that any Restricted Investment that was made after the date of the Indenture is sold for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any); plus | |
(D) | if any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, the lesser of (1) an amount equal to the fair market value of the Investments previously made by the Company and its Restricted Subsidiaries in such Subsidiary as of the date of redesignation and (2) the amount of such Investments. |
(a) | the payment of any dividend within 60 days after the date of declaration thereof if at said date of declaration such payment would have complied with the provisions of the Indenture; | |
(b) | the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Guarantor or any Equity Interests of the Company or any of its Restricted Subsidiaries in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock),provided thatthe amount of any such net cash proceeds that are utilized for any such redemption, purchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(B) of the preceding paragraph; | |
(c) | the defeasance, redemption, purchase, retirement or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of, or in exchange for, Permitted Refinancing Indebtedness; | |
(d) | the payment of any dividend or distribution by a Restricted Subsidiary of the Company to the Company or any of its Wholly Owned Restricted Subsidiaries; |
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(e) | repurchases of Equity Interests deemed to occur upon exercise of stock options, if such Equity Interests represent a portion of the exercise price of such stock options; | |
(f) | so long as no Default has occurred and is continuing, the repurchase or other acquisition for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company for allocation (as a free allocation or otherwise) to directors, officers and employees of the Company and its Restricted Subsidiaries not in excess of€2,500,000 in any12-month period; | |
(g) | so long as no Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company’s (or any of its Restricted Subsidiaries’) management pursuant to any management equity subscription agreement or stock option agreement in effect as of the Issue Date;provided thatthe aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed€1,000,000 in any12-month period; | |
(h) | loans or advances in the ordinary course of business to Affiliates or Persons with which the Company or a Subsidiary may have contractual arrangements in any jurisdiction reasonably necessary to be made in connection with conducting the business of the Company or a Subsidiary in such jurisdiction in a form that is customary to address foreign investment regulation or practice in such jurisdiction, in an aggregate amount not to exceed€2,000,000 outstanding at any one time; | |
(i) | so long as no Default has occurred and is continuing, advances constituting Investments or loans to directors, officers and employees of the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of€1,000,000 at any one time outstanding; and | |
(j) | other Restricted Payments not to exceed€15,000,000 in the aggregate. |
Incurrence of Indebtedness and Issuance of Disqualified Stock |
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(a) | Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed the greater of (x) €125,000,000, plus any fees, premiums, expenses (including costs of collection), indemnities and similar amounts payable in connection with such Indebtedness, and less any amounts derived from Asset Sales and applied to the permanent reduction of Indebtedness under Credit Facilities in accordance with the covenant described under the caption “— Put Option of Holders — Asset Sales” and (y) 10% of the Company’s Consolidated Total Assets; | |
(b) | Existing Indebtedness; | |
(c) | Hedging Obligations; | |
(d) | Indebtedness represented by the Existing Notes or the Subsidiary Guarantees with respect thereof (but not the Additional Notes and related guarantees); | |
(e) | intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries,provided that(1) if the Company or any Guarantor is the obligor on such Indebtedness, then the Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all of the Company’s obligations with respect to the Notes or such Guarantor’s obligations under its Subsidiary Guarantee, as the case may be, and (2) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company, or any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Wholly Owned Restricted Subsidiary of the Company, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, as of the date of such issuance, sale or other transfer that is not permitted by this clause (e); | |
(f) | Indebtedness in respect of bid, performance or surety bonds issued for the account of the Company or any of its Restricted Subsidiaries in the ordinary course of business, including guarantees or obligations of the Company or any of its Restricted Subsidiaries with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed); | |
(g) | Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations (or any guarantee thereof or indemnity with respect thereto), in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (g), not to exceed€20,000,000 at any time outstanding; | |
(h) | the guarantee by the Company of Indebtedness of any of its Restricted Subsidiaries or by any Restricted Subsidiary of Indebtedness of the Company or another Restricted Subsidiary, in each case, that was permitted to be incurred by another provision of this covenant;provided thatif the Indebtedness being guaranteed is subordinated in right of payment to the Notes or a Subsidiary Guarantee then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; | |
(i) | intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries incurred in the ordinary course of business in connection with cash pooling or other cash management arrangements; | |
(j) | Permitted Refinancing Indebtedness incurred in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the first paragraph and clauses (b), (d), (g) and (j) of the second paragraph of this covenant; |
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(k) | Indebtedness of Restricted Subsidiaries of the Company (other than Guarantors) in an aggregate principal amount not to exceed 5% of the Company’s Consolidated Total Assets minus the sum of all Indebtedness of Restricted Subsidiaries of the Company (other than Guarantors) then outstanding; and | |
(l) | any additional Indebtedness of the Company or any Guarantor in an aggregate principal amount not in excess of€25,000,000 at any one time outstanding and any guarantee thereof. |
Liens |
Sale-and-Leaseback Transactions |
(a) | the Company or such Restricted Subsidiary could have (1) incurred Indebtedness in an amount equal to the Attributable Indebtedness relating to such sale-and-leaseback transaction pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Disqualified Stock” and (2) incurred a Lien to secure such Indebtedness pursuant to the covenant described under the caption “— Liens”; | |
(b) | the gross cash proceeds of such sale-and-leaseback transaction are at least equal to the fair market value (as determined in accordance with the definition of such term, the results of which |
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determination shall be set forth in an Officers’ Certificate delivered to the Trustee) of the property that is the subject of such sale-and-leaseback transaction; and | ||
(c) | the transfer of assets in such sale-and-leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Put Option of Holders — Asset Sales”, if applicable. |
Issuances and Sales of Capital Stock of Restricted Subsidiaries |
(a) | the Net Proceeds from such issuance, transfer, conveyance, sale or other disposition are applied in accordance with the covenant described above under the caption “— Put Option of Holders — Asset Sales”; and | |
(b) | immediately after giving effect to such transfer, conveyance, sale or other disposition, such Restricted Subsidiary either continues to be a Restricted Subsidiary or, if such Restricted Subsidiary would no longer constitute a Restricted Subsidiary, any remaining Investment in such Restricted Subsidiary would have been permitted to be made under the covenant described above under the caption “— Restricted Payments” if made on the date of such transfer, conveyance, sale or other disposition. |
Dividend and Other Payment Restrictions Affecting Subsidiaries |
(a) | (1) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries on its Capital Stock or (2) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; | |
(b) | make loans or advances to the Company or any of its Restricted Subsidiaries; or | |
(c) | transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, |
(1) | agreements governing Credit Facilities or Existing Indebtedness, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof,provided thatsuch agreements and amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially less favorable to the holders of the Notes, taken as a whole, with respect to such dividend and other payment restrictions, than those contained, in the case of Credit Facilities, in agreements governing Credit Facilities or, in the case of Existing Indebtedness, in agreements governing such Existing Indebtedness, in either case as in effect on the date of the Indenture; |
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(2) | the Indenture, the Notes and the Subsidiary Guarantees; | |
(3) | any agreement for the sale or other disposition of Equity Interests in a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; | |
(4) | any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired,provided that,in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred; | |
(5) | by reason of customary provisions restricting the subletting or assignment of any lease or the transfer of copyrighted or patented materials; | |
(6) | purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (c) above on the property so acquired; | |
(7) | customary provisions in agreements for the sale of property or assets; | |
(8) | customary provisions in agreements that restrict the assignment of such agreements or rights thereunder; | |
(9) | provisions with respect to the disposition or distribution of assets or property in any joint venture agreement, assets sale agreement, stock sale agreement or other similar agreement in each case entered into in the ordinary course of business, but in each case only to the extent such encumbrance or restriction relates to the transfer of the property, or encumbers or restricts the assets, subject to such agreement; | |
(10) | restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(11) | Permitted Refinancing Indebtedness,provided thatthe encumbrances and restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially less favorable to the holders of the Notes, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; | |
(12) | any Liens not prohibited by the covenant described above under the caption “— Liens” that limit the right of the debtor to dispose of the assets subject to such Liens; or | |
(13) | applicable law. |
Transactions with Affiliates |
(a) | such Affiliate Transaction is in writing and on terms that, when taken as a whole, are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person or, if there is no such comparable transaction, on terms that are fair and reasonable to the Company or such Restricted Subsidiary; and | |
(b) | the Company delivers to the Trustee (1) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of€2,000,000, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (a) above and |
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(2) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of€5,000,000, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (a) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (3) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of€15,000,000, an opinion as to the fairness to the Company or the relevant Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm that is, in the judgment of the Board of Directors, qualified to render such opinion and is independent with respect to the Company; |
(A) | any employment agreement or other employee compensation plan or arrangement (including stock option plans) entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business of the Company or such Restricted Subsidiary; | |
(B) | transactions between or among the Company and its Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of any such transaction); | |
(C) | loans or advances to officers, directors and employees of the Company or any of its Restricted Subsidiaries made in the ordinary course of business and consistent with past practices of the Company and its Restricted Subsidiaries in an aggregate amount not to exceed€1,000,000 outstanding at any one time; | |
(D) | indemnities of officers, directors and employees of the Company or any of its Restricted Subsidiaries permitted by provisions of the organizational documents of the Company or such Restricted Subsidiary or applicable law; | |
(E) | the payment of reasonable and customary regular fees to directors of the Company or any of its Restricted Subsidiaries who are not employees of the Company or any Subsidiary; | |
(F) | any agreement or arrangement in effect as of the Issue Date or any amendment thereto or replacement thereof or any transaction contemplated thereby (including pursuant to any amendment or replacement agreement) so long as any such amendment or replacement agreement, taken as a whole, is no more disadvantageous to the holders of the Notes in any material respect than the original agreement as in effect on the Issue Date; and |
(G) | Restricted Payments and Permitted Investments that are permitted by the provisions of the Indenture described above under the caption “— Restricted Payments”. |
Guarantees of Certain Indebtedness by Restricted Subsidiaries |
Conduct of Business |
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Anti Layering |
Reports |
(i) | within the time periods specified in the Commission’s rules and regulations, all annual financial and other information with respect to the Company and its Subsidiaries that would be required to be contained in a filing with the Commission on Form 20-F, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and a report thereon by the Company’s certified independent accountants; and | |
(ii) | within 60 days after the end of each of the first and third quarters of each fiscal year (and within 75 days after the end of the second quarter of each fiscal year), reports on Form 6-K, or any successor form, attaching (a) unaudited consolidated financial statements for the Company for the period then ended (and the comparable period in the prior year), in each case prepared in accordance with GAAP (as in effect on the date of such report or financial information) including either, to the extent permitted under applicable law and SEC regulations (i) a reconciliation to accounting principles generally accepted in the United States (“U.S. GAAP”) in substantially the form set out in the Form 20-F of the Company for the year ended December 31, 2004 dated on or about April 18, 2005 or (ii) a reconciliation of EBITDA to U.S. GAAP;provided that, in either case, such reconciliation shall be made to U.S. GAAP as in effect on the date of such report or financial information and (b) the information relating to the Company described in Item 5 of Form 20-F (i.e., Operating and Financial Review and Prospects). |
Future Designation of Restricted and Unrestricted Subsidiaries |
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(a) | default for 30 days in the payment when due of interest on the Notes; | |
(b) | default in payment when due of the principal of or premium, if any, on the Notes; |
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(c) | failure by the Company to comply with the provisions described under the caption “— Put Option of Holders”; | |
(d) | failure by the Company for 30 days after it receives written notice from the Trustee or at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in the Indenture or the Notes; | |
(e) | the declaration or payment of any dividend or the making of any other payment or distribution described in subclause (y) of clause (3) under the caption “— Certain Covenants — Restricted Payments”, which declaration, payment or distribution would not be permitted by the provisions described under the caption “— Certain Covenants — Restricted Payments” if it were treated as a Restricted Payment; |
(f) | the Company consolidates or merges (fusion) with or into (whether or not the Company is the surviving corporation), or sells, assigns, transfers, leases, conveys, demerges (scission) or otherwise disposes of all or substantially all of its properties or assets in one or more related transactions, to another Person unless: |
(1) | the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance, demerger or other disposition shall have been made is a corporation organized or existing under the laws of the United States (or any state thereof or the District of Columbia), the Republic of France or any other member state of the European Union (as constituted on the Issue Date); | |
(2) | the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance, demerger or other disposition shall have been made assumes all the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; | |
(3) | immediately after such transaction no Default or Event of Default exists; | |
(4) | except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance, demerger or other disposition shall have been made: |
(A) | will have a Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction; and |
(B) | will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least€1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”; and |
(5) | the Company shall deliver to the Trustee an Officers’ Certificate and an opinion of counsel stating that such consolidation, merger or disposition and any supplemental indenture in respect thereto comply with this provision and that all conditions precedent in the Indenture relating to such transaction or transactions have been complied with; |
(g) | default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee exists on the date of the Indenture |
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or is created after the date of the Indenture, which default (1) is caused by a failure to pay principal of or premium or interest on such Indebtedness prior to the expiration of any grace period provided in such Indebtedness, including any extension thereof (a “Payment Default”), or (2) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates in excess of€10,000,000 andprovided, further, that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 10 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Notes shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree; | ||
(h) | failure by the Company or any of its Restricted Subsidiaries to pay final judgments (not covered by insurance) aggregating in excess of€10,000,000, which judgments are not paid, discharged or stayed for a period of 60 days; |
(i) | failure by any Guarantor to perform any covenant set forth in its Subsidiary Guarantee, or the repudiation by any Guarantor of its obligations under its Subsidiary Guarantee or the unenforceability of any Subsidiary Guarantee for any reason other than as provided in the Indenture; and | |
(j) | certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary. |
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(a) | the rights of holders of outstanding Notes to receive payments in respect of the principal of and premium, if any, and interest on such Notes when such payments are due from the trust referred to below; | |
(b) | the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of transfer or exchange of the Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; | |
(c) | the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s and any Guarantor’s obligations in connection with them; and | |
(d) | the Legal Defeasance provisions of the Indenture. |
(1) | the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of an internationally recognized firm of independent public accountants, to pay the principal of and premium and interest on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; | |
(2) | in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service and the French tax authority a ruling or (B) since the date of the Indenture, there has been a change in the applicable income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal or French income tax purposes, respectively, as a result of such Legal Defeasance and will be subject to U.S. federal or French income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; |
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(3) | in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel reasonably acceptable to the Trustee confirming that the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal or French income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal or French income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; |
(4) | no Default or Event of Default shall have occurred and be continuing either (A) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or (B) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 550th day after the date of deposit; | |
(5) | such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; | |
(6) | the Company must have delivered to the Trustee an opinion of counsel to the effect that, after the 550th day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; | |
(7) | the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the holders of the Notes over the other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and | |
(8) | the Company must deliver to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
(a) | reduce the principal amount of the Notes whose holders must consent to an amendment, supplement or waiver; |
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(b) | reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption or purchase of the Notes by the Company; | |
(c) | reduce the rate of or change the time for payment of interest on any Note; | |
(d) | waive a Default or Event of Default in the payment of principal of or premium or interest on the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); | |
(e) | make any Note payable in money other than that stated in the Notes; |
(f) | make any change in the provisions of the Indenture relating to waivers of past defaults or the rights of holders of the Notes to receive payments of principal of or premium or interest on the Notes; |
(g) | waive a redemption or repurchase payment with respect to any Note; | |
(h) | make any change in the ranking of the Notes relative to other Indebtedness of the Company or the Subsidiary Guarantees relative to other Indebtedness of the Guarantors, in either case in a manner adverse to the holders; |
(i) | release any Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of the Indenture; |
(j) | make any change in the provisions described under the caption “— Additional Amounts” in a manner adverse to the holders; or | |
(k) | make any change in the preceding amendment, supplement and waiver provisions. |
(1) | either: |
(a) | all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or |
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(b) | all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust solely for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not previously delivered to the Trustee for cancellation, including principal, premium, if any, and accrued interest to the date of maturity or redemption; |
(2) | no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; | |
(3) | the Company and each Guarantor has paid or caused to be paid all other sums payable by it under the Indenture; and | |
(4) | the Company has delivered an Officers’ Certificate and an opinion of counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. |
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(a) | the judgment concerned is enforceable in the State of New York; | |
(b) | such judgment has been rendered by a court having jurisdiction over the parties both under its own rules of jurisdiction and in accordance with French rules of international conflicts of jurisdiction and the French courts did not have exclusive jurisdiction to hear the matter; | |
(c) | the court that rendered such judgment has applied to the merits of the case the laws of the jurisdiction which would have been considered appropriate under French rules of international conflicts of laws; | |
(d) | the judgment is not contrary to French international public policy (ordre public international), both pertaining to the merits and to the procedure of the case; | |
(e) | the judgment is not tainted with fraud; and | |
(f) | the judgment does not conflict with a French judgment or a foreign judgment which has become effective in France and there is no risk of conflict with proceedings pending before the French courts at the time enforcement of the judgment is sought. |
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Exchange of Global Notes for Definitive Notes |
(a) | DTC notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes or has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Company thereupon fails to appoint a successor depositary within 90 days after the date of such notice; or | |
(b) | the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes. |
Exchange of Definitive Notes for Global Notes |
Exchange of Definitive Notes for Definitive Notes |
Same-Day Settlement and Payment |
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(a) | 1.0% of the principal amount of the Note; and | |
(b) | the excess of (1) the present value at such redemption date of (A) the redemption price of the Note at May 15, 2010 (such redemption price being set forth in the table appearing above under the caption “— Optional Redemption”) plus (B) all required interest payments due on the Note during the period from such redemption date through May 15, 2010 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points over (2) the principal amount of the Note, if greater. |
(a) | the sale, lease, conveyance or other disposition (a “disposition”) of any properties or assets (including, without limitation, by way of a sale-and-leaseback), excluding dispositions in the ordinary course of business (provided that the disposition of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole will be subject to the provisions of the Indenture described above under the caption “— Put Option of Holders — Change of Control” and the provisions described above in clause (f) under the caption “— Events of Default and Remedies” and not to the provisions of the Asset Sales covenant); |
(b) | the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company’s Subsidiaries; and |
(c) | any Event of Loss, |
(A) | a disposition of obsolete or excess equipment or other properties or assets; | |
(B) | a disposition of properties or assets (including Equity Interests) by the Company to a Wholly Owned Restricted Subsidiary or by a Restricted Subsidiary to the Company or to a Wholly Owned Restricted Subsidiary; | |
(C) | a disposition of cash or Cash Equivalents; | |
(D) | a disposition of properties or assets (including Equity Interests) that constitutes a Restricted Payment that is permitted by the provisions of the Indenture described above under the caption “— Certain Covenants — Restricted Payments”; | |
(E) | any trade or exchange by the Company or any Restricted Subsidiary of equipment or other properties or assets for equipment or other properties or assets owned or held by another Person,provided thatthe fair market value of the properties or assets traded or exchanged by the Company or such Restricted Subsidiary (together with any cash or Cash Equivalents) is reasonably equivalent to the fair market value of the properties or assets (together with any cash or Cash Equivalents) to be received by the Company or such Restricted Subsidiary; | |
(F) | the creation or perfection of a Lien on any properties or assets (or any income or profits therefrom) of the Company or any of its Restricted Subsidiaries that is not prohibited by the covenant described under the caption “— Certain Covenants — Liens”; | |
(G) | a sale-and-leaseback of the Company’s office facilities in Massy, France replacing the sale-and-leaseback transaction relating to such facilities that is outstanding on the Issue Date; | |
(H) | the surrender or waiver of contract rights or the settlement, release or surrender of contractual, non-contractual or other claims of any kind; |
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(I) | the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise of collection thereof; | |
(J) | the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the region; and | |
(K) | the grant in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar intellectual property. |
(a) | in the case of a corporation, corporate stock; |
(b) | in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including preferred stock; |
(c) | in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and |
(d) | any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. |
(a) | securities issued or directly and fully guaranteed or insured by the government of the United States of America, the Republic of France or any other country whose sovereign debt has a rating of at least A3 from Moody’s Investors Service, Inc. and at least A- from Standard & Poor’s Ratings Services or any agency or instrumentality of any such government (provided thatthe full faith and credit of such government is pledged in support thereof), in each case having maturities of not more than 12 months from the date of acquisition; |
(b) | certificates of deposit, Eurodollar time deposits and French negotiable debt instruments (titres de créances négociables) with maturities of 12 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case with or issued by any commercial bank organized under the laws of any country that is a member of the Organization for Economic Co-operation and Development having capital and surplus in excess of€500,000,000 and whose long-term debt securities are rated at least A3 by Moody’s Investors Service, Inc. and at least A- by Standard & Poor’s Ratings Services; |
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(c) | repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above; |
(d) | commercial paper and French negotiable debt instruments (titres de créances négociables) having a rating of at least P-1 from Moody’s Investors Service, Inc. or at least A-1 from Standard & Poor’s Ratings Services and in each case maturing within 12 months after the date of acquisition; |
(e) | deposits available for withdrawal on demand with any commercial bank not meeting the qualifications specified in clause (b) above,provided thatall such deposits are made in the ordinary course of business, do not remain on deposit for more than 30 consecutive days and do not exceed€25,000,000 in the aggregate at any one time, with no more than€5,000,000 being deposited in commercial banks within a single country; and |
(f) | money market mutual funds substantially all of the assets of which are of the type described in any of the foregoing clauses (a) to (d). |
(a) | provision for taxes based on income or profits of such Person and its Restricted Subsidiaries; |
(b) | Consolidated Interest Expense of such Person and its Restricted Subsidiaries; |
(c) | depreciation and amortization (including amortization or impairment, if any, of goodwill and of other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such Person and its Restricted Subsidiaries; |
(d) | other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries less any non-cash items increasing Consolidated Net Income of such Person and its Restricted Subsidiaries (other than items that will result in cash receipt); |
(e) | any expenses, fees, charges or other costs related to any equity offering (other than of Disqualified Stock) permitted by the indenture (whether or not successful); and |
(f) | without duplication, an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, |
(a) | any incurrence, assumption, guarantee, repayment, purchase or redemption by such Person or any of its Restricted Subsidiaries of any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Consolidated Interest Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Interest Coverage Ratio is made (the “Calculation Date”); |
(b) | any acquisition that has been made by such Person or any of its Restricted Subsidiaries, or approved and expected to be consummated within 30 days of the Calculation Date, including, in |
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each case, through a merger or consolidation, and including any related financing transactions, during the reference period or subsequent to such reference period and on or prior to the Calculation Date; and |
(c) | any other transaction that may be given pro forma effect in accordance with Article 11 of Regulation S-X under the Securities Act as in effect from time to time; |
(a) | the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of all payments made or received (if any) pursuant to Hedging Obligations in respect of interest rates but excluding amortization of debt issuance costs and non-cash charges other than non-cash interest expenses related to convertible bonds); and |
(b) | the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period. |
(a) | the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof; |
(b) | the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders; and |
(c) | the cumulative effect of a change in accounting principles shall be excluded. |
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(a) | Sercel Inc., Sercel Canada Ltd., Sercel Australia Pty Ltd, CGG Americas, Inc., CGG Canada Services Ltd., CGG Marine Resources Norge A/ S, CGGVeritas Services Inc., Veritas DGC Land Inc., Veritas Geophysical Corporation, Veritas Investments Inc., Viking Maritime Inc., Veritas Geophysical (Mexico) LLC, Veritas DGC Asia Pacific Ltd. and Alitheia Resources Inc.; and |
(b) | any other Subsidiary of the Company that executes a supplemental indenture providing for a Subsidiary Guarantee in accordance with the provisions of Indenture, |
(a) | interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; |
(b) | other agreements or arrangements designed to protect such Person against fluctuations in interest rates; and |
(c) | any foreign currency futures contract, option or similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates or commodity prices, |
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(a) | any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (1) any Asset Sale (including, without limitation, dispositions pursuant to sale-and-leaseback transactions) or (2) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and |
(b) | any extraordinary or non-recurring gain (but not loss), together with any related provision for taxes on such extraordinary or non-recurring gain (but not loss). |
(a) | the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, title insurance premiums, appraiser fees, otherout-of-pocket expenses and costs incurred in connection with preparing such asset for sale) and any relocation expenses incurred as a result thereof; |
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(b) | taxes paid or estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements that will result in a reduction in consolidated tax liability); |
(c) | amounts required to be applied to the repayment of Indebtedness (other than under a revolving credit facility) secured by a Lien on the asset or assets that were the subject of such Asset Sale; and |
(d) | any reserve (including any reserve against any liabilities associated with such Asset Sale and retained by the Company or the relevant Restricted Subsidiary) established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price of such asset or assets, until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to the Company or its Restricted Subsidiaries from such escrow arrangement, as the case may be. |
(a) | as to which neither the Company nor any of its Restricted Subsidiaries (1) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or is otherwise directly or indirectly liable (as a guarantor or otherwise) or (2) constitutes the lender; |
(b) | no default with respect to which (including any rights the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) the holders of Indebtedness of the Company or any of its Restricted Subsidiaries (other than the Notes) to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and |
(c) | as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. |
(a) | guaranteeing or securing the Notes or any Guarantee; |
(b) | in favor of the Company or a Guarantor; |
(c) | guaranteeing Indebtedness incurred pursuant to clause (a) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”; or |
(d) | in existence on the date of the Indenture to the extent guaranteeing Existing Indebtedness and Permitted Refinancing Indebtedness in respect thereof incurred in compliance with clause (j) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”. |
(a) | any Investment in the Company (including, without limitation, any acquisition of the Notes) or in a Wholly Owned Restricted Subsidiary of the Company, other than any Investment described in clause (a) of the definition of “Restricted Payments”; |
(b) | any Investment in Cash Equivalents; |
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(c) | any Investment by the Company or any Restricted Subsidiary of the Company in a Person if as a result of such Investment (1) such Person becomes a Restricted Subsidiary of the Company or (2) such Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its properties or assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; |
(d) | any Investment made as a result of the receipt of non-cash consideration from (1) an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Put Option of Holders — Asset Sales” or (2) a disposition of assets that does not constitute an Asset Sale; |
(e) | Investments in stock, obligations or securities received in settlement of any claim or debts owing to the Company or any Restricted Subsidiary as a result of bankruptcy or insolvency proceedings or received in satisfaction of any judgment or in settlement of any claim in circumstances where the Company does not expect it would receive cash payment in a timely manner, or upon the foreclosure, perfection or enforcement of any Lien in favor of the Company or any Restricted Subsidiary, in each case as to any claim or debts owing to the Company or any Restricted Subsidiary that arose in the ordinary course of business of the Company or any such Restricted Subsidiary,provided that any stocks, obligations or securities received in settlement of any claim or debts that arose in the ordinary course of business (and received other than as a result of bankruptcy or insolvency proceedings or received in satisfaction of any judgment or in settlement of any claim in circumstances where the Company does not expect it would receive cash payment in a timely manner, or upon foreclosure, perfection or enforcement of any Lien) that are, within 180 days of receipt, converted into cash or Cash Equivalents shall be treated as having been cash or Cash Equivalents at the time received; |
(f) | Investments in Argas Ltd. consisting of guarantees of its obligations incurred in the ordinary course of its business,provided thatsuch Investments, when taken together with all other Investments made pursuant to this clause (f) that are at the time outstanding, do not exceed€50,000,000; |
(g) | Investments in Argas Ltd. (other than those described in clause (f) above) and any other Affiliate organized in a foreign jurisdiction that is required by the applicable laws and regulations of such foreign jurisdiction or its governmental agencies, authorities or state-owned businesses to be majority owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction or another foreign jurisdiction in order for such Affiliate to transact business in such foreign jurisdiction,provided thatsuch Investments, when taken together with all other Investments made pursuant to this clause (g) that are at the time outstanding, do not exceed 20% of Consolidated Tangible Net Worth; | |
(h) | Investments in any Person in exchange for, or out of the net cash proceeds of, an issue or sale by the Company of Equity Interests (other than Disqualified Stock); and |
(i) | other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (i) that are at the time outstanding, do not exceed€25,000,000. |
(a) | Liens securing Indebtedness incurred pursuant to clause (a) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”, and Liens securing any other Indebtedness under Credit Facilities incurred pursuant to the first paragraph of such covenant; |
(b) | Liens in favor of the Company and its Restricted Subsidiaries; |
(c) | Liens on any property or asset of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company,provided thatsuch |
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Liens were in existence prior to such merger or consolidation, were not created in contemplation of it and do not extend to any property or asset of the Company or any of its Restricted Subsidiaries other than those of the Person merged into or consolidated with the Company or any of its Restricted Subsidiaries; | ||
(d) | Liens on any property or asset existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company,provided thatsuch Liens were in existence prior to such acquisition, were not created in contemplation of it and do not extend to any other property or asset of the Company or any of its Restricted Subsidiaries; | |
(e) | Liens securing the performance of statutory obligations, surety or appeal bonds, bid or performance bonds, insurance obligations or other obligations of a like nature incurred in the ordinary course of business; |
(f) Liens securing Hedging Obligations; |
(g) | Liens existing on the date of the Indenture; | |
(h) | Liens securing Indebtedness (including Capital Lease Obligations) permitted by clause (g) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”,provided thatsuch Liens extend only to the property, plant or equipment financed by such Indebtedness; | |
(i) | any interest or title of a lessor under an operating lease; | |
(j) | Liens arising by reason of deposits necessary to obtain standby letters of credit in the ordinary course of business; | |
(k) | Liens on real or personal property or assets of the Company or a Restricted Subsidiary thereof to secure Indebtedness incurred for the purpose of (1) financing all or any part of the purchase price of such property or assets incurred prior to, at the time of, or within 90 days after, the acquisition of such property or assets or (2) financing all or any part of the cost of construction or improvement of any such property or assets,provided thatthe amount of any such financing shall not exceed the amount expended in the acquisition of, or the construction of, such property or assets and such Liens shall not extend to any other property or assets of the Company or a Restricted Subsidiary (other than any associated accounts, contracts and insurance proceeds); | |
(l) | judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceeding which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired; | |
(m) | Liens securing Indebtedness of the Company or any Restricted Subsidiary of the Company that does not exceed€10,000,000 at any one time outstanding; | |
(n) | Liens securing Acquired Indebtedness incurred pursuant to the first paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”, provided that such Liens (1) secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, such incurrence, and (2) do not extend to any property or asset of the Company or any of its Restricted Subsidiaries other than the property or asset that secured the Acquired Indebtedness prior to the time that it became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company; and | |
(o) | Liens securing Permitted Refinancing Indebtedness with respect to any Indebtedness secured by Liens referred to in clauses (c), (d), (g), (h), (k) and (n) above and in this clause (o). |
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(a) | the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus premium, if any, and accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of expenses incurred in connection therewith); | |
(b) | such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; | |
(c) | if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable, taken as a whole, to the holders of the Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and | |
(d) | if the Company is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, then such Permitted Refinancing Indebtedness is solely Indebtedness of the Company, |
(a) | any issuance and sale of Equity Interests (other than Disqualified Stock) of the Company pursuant to an underwritten offering registered under the Securities Act; or | |
(b) | any other issuance and sale of Equity Interests (other than Disqualified Stock) of the Company so long as, at the time of consummation of such sale, the Company has a class of common equity securities (including American depositary shares) registered pursuant to Section 12(b) or Section 12(g) under the Exchange Act. |
(a) | Sercel S.A., a French limited liability corporation with its head office in Carquefou, France, and a Restricted Subsidiary of the Company as of the Issue Date; and/or | |
(b) | any company (including Sercel Holding S.A.) that holds all of the outstanding Capital Stock of either or both of Sercel S.A. and Sercel Inc. (other than directors’ qualifying shares and Capital Stock held by other statutorily required minority shareholders). |
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(a) | any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); |
(b) | any partnership (1) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (2) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof); and |
(c) | any other Person whose results for financial reporting purposes are consolidated with those of such Person in accordance with GAAP. |
(a) | has no Indebtedness other than Non-Recourse Debt; |
(b) | is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless such agreement, contract, arrangement or understanding does not violate the terms of the Indenture described under the caption “— Certain Covenants — Transactions with Affiliates”; and |
(c) | is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Equity Interests or (2) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results. |
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(1) | such Indebtedness is permitted under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”; calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and | |
(2) | no Default or Event of Default would be in existence following such designation. |
(a) | all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares and Capital Stock held by other statutorily required minority shareholders) shall at the time be owned directly or indirectly by such Person; or | |
(b) | such Restricted Subsidiary is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction or its governmental agencies, authorities or state-owned businesses to be partially owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction or another foreign jurisdiction in order for such Restricted Subsidiary to transact business in such foreign jurisdiction,provided thatsuch Person, by contract or otherwise, controls the business and management of such Restricted Subsidiary. |
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• | be general senior, unsecured obligations of the Company; | |
• | rank equally in right of payment to all existing and future senior, unsecured indebtedness of the Company, except for any liabilities preferred by law; | |
• | rank senior in right of payment to all existing and future subordinated indebtedness of the Company; | |
• | be guaranteed on a senior, unsecured basis by certain Subsidiaries of the Company as described below; and | |
• | be effectively subordinated to all existing and future indebtedness of Subsidiaries of the Company that are not Guarantors. |
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General |
Guarantors |
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Release |
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Merger or Consolidation |
(a) | the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) shall execute a Subsidiary Guarantee and deliver an opinion of counsel in accordance with the terms of the Indenture; | |
(b) | immediately after giving effect to such transaction, no Default or Event of Default exists; | |
(c) | such Guarantor, or any Person formed by or surviving any such consolidation or merger, would have a Consolidated Net Worth (immediately after giving effect to such transaction) equal to or greater than the Consolidated Net Worth of such Guarantor immediately preceding the transaction; and | |
(d) | the Company would be permitted by virtue of the Company’spro forma Consolidated Interest Coverage Ratio, immediately after giving effect to such transaction, to incur at least€1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”. |
Optional Redemption |
Year | Percentage | |||
2012 | 103.875 | % | ||
2013 | 102.583 | % | ||
2014 | 101.292 | % | ||
2015 and thereafter | 100.000 | % |
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(a) | if the Notes are listed, in compliance with the requirements of the principal securities exchange on which the Notes are listed; or |
(b) | if the Notes are not so listed, on apro ratabasis, by lot or by such method as the Trustee shall deem fair and appropriate. |
(a) | (1) any change in or amendment to the laws or treaties (or regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction (as defined under the caption “— Additional Amounts”) or (2) any change in or amendment to any official position regarding the application or interpretation of such laws, treaties, regulations or rulings, which change or amendment is announced or is effective on or after the date of the Indenture; and | |
(b) | such obligation cannot be avoided by the Company or any such Guarantor taking reasonable measures available to it. |
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(a) | surrendered by the holder thereof for payment of principal more than 30 days after the later of (1) the date on which such payment first became due and (2) if the full amount payable has not been received by or on behalf of the relevant holder on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the holders by the Trustee, except to the extent that the holder would have been entitled to such Additional Amounts on surrendering such Note for payment on the last day of the applicable30-day period; | |
(b) | if any tax, assessment or other governmental charge is imposed or withheld by reason of the failure to comply by the holder or, if different, the beneficial owner (ayant-droit) of the Note with a request addressed to such holder or beneficial owner to provide information, documents or other evidence concerning the nationality, residence, identity or connection with the Relevant Taxing Jurisdiction of such holder or beneficial owner which is required or imposed by a statute, treaty, regulation or administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from all or part of such tax, assessment or governmental charge; | |
(c) | held by or on behalf of a holder who is liable for Taxes in respect of such Note by reason of having some connection with the Relevant Taxing Jurisdiction other than the mere purchase, holding or disposition of any Note, or the receipt of payments made by or on behalf of the Company or any Guarantor in respect thereof or any Subsidiary Guarantee, including, without limitation, such holder being or having been a citizen or resident thereof or being or having been present or engaged in a trade or business therein or having had a permanent establishment therein; | |
(d) | on account of any estate, inheritance, gift, sale, transfer, personal property or other similar tax, assessment or other governmental charge; | |
(e) | except in the case of the winding up of the Company or any Guarantor, any Note surrendered for payment in the Republic of France; | |
(f) | any withholding or deduction imposed on a payment to an individual which is required to be made pursuant to any law implementing or complying with, or introduced in order to conform to European Council Directive 2003/48/ EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the taxation of savings income or any agreement between the European Community and any jurisdiction providing for equivalent measures; | |
(g) | as a result of any combination of (a), (b), (c), (d), (e) or (f) or with respect to any payment made by or on behalf of the Company or any Guarantor in respect of any Note or Subsidiary Guarantee |
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to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent that a beneficiary or settlor or beneficial owner would not have been entitled to any Additional Amounts had such beneficiary or settlor or beneficial owner been the holder; or | ||
(h) | if any withholding or deduction imposed or levied on a payment to a Luxembourg resident individual is required to be made pursuant to the Luxembourg law of 23 December 2005. |
Change of Control |
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(a) | accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; | |
(b) | deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and | |
(c) | deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of the Notes or portions thereof being purchased by the Company. |
(a) | the sale, lease, transfer, conveyance or other disposition (other than by merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries, taken as a whole; | |
(b) | the adoption, by holders of Capital Stock of the Company, of a voluntary plan relating to the liquidation or dissolution of the Company; |
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(c) | the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Section 13(d) (3) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding Voting Stock of the Company; or | |
(d) | the first day on which more than a majority of the members of the Board of Directors are not Continuing Directors; |
Asset Sales |
(a) | the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in accordance with the definition of such term set out below under the caption “— Certain Definitions”, the results of which determination shall be set forth in an Officers’ Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and | |
(b) | at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; |
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Restricted Payments |
(a) | purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any of its Restricted Subsidiaries (other than any such Equity Interests owned by the Company or any Wholly Owned Restricted Subsidiary of the Company); | |
(b) | make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated in right of payment to the Notes or the Subsidiary Guarantees, except a payment of interest or principal at Stated Maturity; or | |
(c) | make any Restricted Investment, |
(1) | no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; | |
(2) | the Company would, at the time of such Restricted Payment and after givingpro formaeffect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least€1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Disqualified Stock”; and |
(3) | such Restricted Payment, together with (x) the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Reference Date (excluding Restricted Payments permitted by clauses (b) through (e) and, to the extent deducted in computing Consolidated Net Income, (f) and (g) of the next succeeding paragraph), and (y) the aggregate amount of all dividends and other payments or distributions paid subsequent to the Reference Date on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any such payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company’s Equity Interests in their capacity as such (other than (i) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company, (ii) dividends or distributions payable to the Company or any of its Restricted Subsidiaries or (iii) if the Restricted Subsidiary making such dividend is not a Wholly Owned Restricted Subsidiary, dividends to its shareholders on a pro rata basis), is less than the sum (without duplication) of the following: |
(A) | 50% of the cumulative Consolidated Net Income of the Company for the period (taken as one accounting period) from January 1, 2005 to the end of the Company’s most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus | |
(B) | 100% of the aggregate of (1) the net cash proceeds and (2) the fair market value of Strategic Assets transferred or conveyed to the Company (as valued at the time of transfer or conveyance to the Company, and as determined in the manner contemplated by the definition of the term “fair market value”), in each case received by the Company since the Reference |
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Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issuance or sale of Disqualified Stock or debt securities of the Company that have been converted into, or exchanged or redeemed for, such Equity Interests (other than any such Equity Interests, Disqualified Stock or convertible debt securities sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or convertible debt securities that have been converted into, or exchanged or redeemed for, Disqualified Stock); plus | ||
(C) | to the extent that any Restricted Investment that was made after the Reference Date is sold for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any); plus | |
(D) | if any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, the lesser of (1) an amount equal to the fair market value of the Investments previously made by the Company and its Restricted Subsidiaries in such Subsidiary as of the date of redesignation and (2) the amount of such Investments. |
(a) | the payment of any dividend within 60 days after the date of declaration thereof if at said date of declaration such payment would have complied with the provisions of the Indenture; | |
(b) | the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Guarantor or any Equity Interests of the Company or any of its Restricted Subsidiaries in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock),provided thatthe amount of any such net cash proceeds that are utilized for any such redemption, purchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(B) of the preceding paragraph; | |
(c) | the defeasance, redemption, purchase, retirement or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of, or in exchange for, Permitted Refinancing Indebtedness; | |
(d) | the payment of any dividend or distribution by a Restricted Subsidiary of the Company to the Company or any of its Wholly Owned Restricted Subsidiaries; | |
(e) | repurchases of Equity Interests deemed to occur upon exercise of stock options, if such Equity Interests represent a portion of the exercise price of such stock options; | |
(f) | so long as no Default has occurred and is continuing, the repurchase or other acquisition for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company for allocation (as a free allocation or otherwise) to directors, officers and employees of the Company and its Restricted Subsidiaries not in excess of€2,500,000 in any12-month period; | |
(g) | so long as no Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company’s (or any of its Restricted Subsidiaries’) management pursuant to any management equity subscription agreement or stock option agreement in effect as of the Issue Date;provided thatthe aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed€1,000,000 in any12-month period; | |
(h) | loans or advances in the ordinary course of business to Affiliates or Persons with which the Company or a Subsidiary may have contractual arrangements in any jurisdiction reasonably necessary to be made in connection with conducting the business of the Company or a Subsidiary in such jurisdiction in a form that is customary to address foreign investment regulation or practice in such jurisdiction, in an aggregate amount not to exceed€2,000,000 outstanding at any one time; |
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(i) | so long as no Default has occurred and is continuing, advances constituting Investments or loans to directors, officers and employees of the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of€1,000,000 at any one time outstanding; and | |
(j) | other Restricted Payments not to exceed€15,000,000 in the aggregate. |
Incurrence of Indebtedness and Issuance of Disqualified Stock |
(a) | Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed the greater of (x) €125,000,000, plus any fees, premiums, expenses (including costs of collection), indemnities and similar amounts payable in connection with such Indebtedness, and less any amounts derived from Asset Sales and applied to the permanent reduction of Indebtedness under Credit Facilities in accordance with the covenant described under the caption “— Put Option of Holders — Asset Sales” and (y) 10% of the Company’s Consolidated Total Assets; | |
(b) | Existing Indebtedness; | |
(c) | Hedging Obligations; | |
(d) | Indebtedness represented by the New Notes or the Subsidiary Guarantees; | |
(e) | intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries,provided that(1) if the Company or any Guarantor is the obligor on such Indebtedness, then the Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all of the Company’s obligations with respect to the Notes or such Guarantor’s obligations under its Subsidiary Guarantee, as the case may be, and (2) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company, |
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or any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Wholly Owned Restricted Subsidiary of the Company, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, as of the date of such issuance, sale or other transfer that is not permitted by this clause (e); | ||
(f) | Indebtedness in respect of bid, performance or surety bonds issued for the account of the Company or any of its Restricted Subsidiaries in the ordinary course of business, including guarantees or obligations of the Company or any of its Restricted Subsidiaries with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed); | |
(g) | Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations (or any guarantee thereof or indemnity with respect thereto), in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (g), not to exceed€20,000,000 at any time outstanding; | |
(h) | the guarantee by the Company of Indebtedness of any of its Restricted Subsidiaries or by any Restricted Subsidiary of Indebtedness of the Company or another Restricted Subsidiary, in each case, that was permitted to be incurred by another provision of this covenant;provided thatif the Indebtedness being guaranteed is subordinated in right of payment to the Notes or a Subsidiary Guarantee then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; | |
(i) | intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries incurred in the ordinary course of business in connection with cash pooling or other cash management arrangements; | |
(j) | Permitted Refinancing Indebtedness incurred in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund Indebtedness incurred pursuant to the first paragraph and clauses (b), (d), (g) and (j) of the second paragraph of this covenant; | |
(k) | Indebtedness of Restricted Subsidiaries of the Company (other than Guarantors) in an aggregate principal amount not to exceed 5% of the Company’s Consolidated Total Assets minus the sum of all Indebtedness of Restricted Subsidiaries of the Company (other than Guarantors) then outstanding; and | |
(l) | any additional Indebtedness of the Company or any Guarantor in an aggregate principal amount not in excess of€25,000,000 at any one time outstanding and any guarantee thereof. |
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Liens |
Sale-and-Leaseback Transactions |
(a) | the Company or such Restricted Subsidiary could have (1) incurred Indebtedness in an amount equal to the Attributable Indebtedness relating to such sale-and-leaseback transaction pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Disqualified Stock” and (2) incurred a Lien to secure such Indebtedness pursuant to the covenant described under the caption “— Liens”; | |
(b) | the gross cash proceeds of such sale-and-leaseback transaction are at least equal to the fair market value (as determined in accordance with the definition of such term, the results of which determination shall be set forth in an Officers’ Certificate delivered to the Trustee) of the property that is the subject of such sale-and- leaseback transaction; and | |
(c) | the transfer of assets in such sale-and-leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Put Option of Holders — Asset Sales”, if applicable. |
Issuances and Sales of Capital Stock of Restricted Subsidiaries |
(a) | the Net Proceeds from such issuance, transfer, conveyance, sale or other disposition are applied in accordance with the covenant described above under the caption “— Put Option of Holders — Asset Sales” and |
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(b) | immediately after giving effect to such transfer, conveyance, sale or other disposition, such Restricted Subsidiary either continues to be a Restricted Subsidiary or, if such Restricted Subsidiary would no longer constitute a Restricted Subsidiary, any remaining Investment in such Restricted Subsidiary would have been permitted to be made under the covenant described above under the caption “— Restricted Payments” if made on the date of such transfer, conveyance, sale or other disposition. |
Dividend and Other Payment Restrictions Affecting Subsidiaries |
(a) | (1) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries on its Capital Stock or (2) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; |
(b) | make loans or advances to the Company or any of its Restricted Subsidiaries; or | |
(c) | transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, |
(1) | agreements governing Credit Facilities or Existing Indebtedness, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof,provided thatsuch agreements and amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially less favorable to the holders of the Notes, taken as a whole, with respect to such dividend and other payment restrictions, than those contained, in the case of Credit Facilities, in agreements governing Credit Facilities or, in the case of Existing Indebtedness, in agreements governing such Existing Indebtedness, in either case as in effect on the date of the Indenture; | |
(2) | the Indenture, the Notes and the Subsidiary Guarantees; | |
(3) | any agreement for the sale or other disposition of Equity Interests in a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; | |
(4) | any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired,provided that,in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred; | |
(5) | by reason of customary provisions restricting the subletting or assignment of any lease or the transfer of copyrighted or patented materials; | |
(6) | purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (c) above on the property so acquired; | |
(7) | customary provisions in agreements for the sale of property or assets; | |
(8) | customary provisions in agreements that restrict the assignment of such agreements or rights thereunder; |
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(9) | provisions with respect to the disposition or distribution of assets or property in any joint venture agreement, assets sale agreement, stock sale agreement or other similar agreement in each case entered into in the ordinary course of business, but in each case only to the extent such encumbrance or restriction relates to the transfer of the property, or encumbers or restricts the assets, subject to such agreement; | |
(10) | restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(11) | Permitted Refinancing Indebtedness,provided thatthe encumbrances and restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially less favorable to the holders of the Notes, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; | |
(12) | any Liens not prohibited by the covenant described above under the caption “— Liens” that limit the right of the debtor to dispose of the assets subject to such Liens; or | |
(13) | applicable law. |
Transactions with Affiliates |
(a) | such Affiliate Transaction is in writing and on terms that, when taken as a whole, are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person or, if there is no such comparable transaction, on terms that are fair and reasonable to the Company or such Restricted Subsidiary; and | |
(b) | the Company delivers to the Trustee (1) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of€2,000,000, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (a) above and (2) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of€5,000,000, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (a) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (3) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of€15,000,000, an opinion as to the fairness to the Company or the relevant Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm that is, in the judgment of the Board of Directors, qualified to render such opinion and is independent with respect to the Company; |
(A) | any employment agreement or other employee compensation plan or arrangement (including stock option plans) entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business of the Company or such Restricted Subsidiary; | |
(B) | transactions between or among the Company and its Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of any such transaction); | |
(C) | loans or advances to officers, directors and employees of the Company or any of its Restricted Subsidiaries made in the ordinary course of business and consistent with past practices of the |
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Company and its Restricted Subsidiaries in an aggregate amount not to exceed€1,000,000 outstanding at any one time; | ||
(D) | indemnities of officers, directors and employees of the Company or any of its Restricted Subsidiaries permitted by provisions of the organizational documents of the Company or such Restricted Subsidiary or applicable law; | |
(E) | the payment of reasonable and customary regular fees to directors of the Company or any of its Restricted Subsidiaries who are not employees of the Company or any Subsidiary; | |
(F) | any agreement or arrangement in effect as of the Issue Date or any amendment thereto or replacement thereof or any transaction contemplated thereby (including pursuant to any amendment or replacement agreement) so long as any such amendment or replacement agreement, taken as a whole, is no more disadvantageous to the holders of the Notes in any material respect than the original agreement as in effect on the Issue Date; and | |
(G) | Restricted Payments and Permitted Investments that are permitted by the provisions of the Indenture described above under the caption “— Restricted Payments.” |
Guarantees of Certain Indebtedness by Restricted Subsidiaries |
Conduct of Business |
Anti Layering |
Reports |
(i) | within the time periods specified in the Commission’s rules and regulations, all annual financial and other information with respect to the Company and its Subsidiaries that would be required to be contained in a filing with the Commission on Form 20-F, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and a report thereon by the Company’s certified independent accountants; and |
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(ii) | within 60 days after the end of each of the first and third quarters of each fiscal year (and within 75 days after the end of the second quarter of each fiscal year), reports on Form 6-K, or any successor form, attaching (a) unaudited consolidated financial statements for the Company for the period then ended (and the comparable period in the prior year), in each case prepared in accordance with GAAP (as in effect on the date of such report or financial information) including either, to the extent permitted under applicable law and SEC regulations (i) a reconciliation to accounting principles generally accepted in the United States (“U.S. GAAP”) in substantially the form set out in the Form 20-F of the Company for the year ended December 31, 2005 dated on or about May 9, 2006 or (ii) a reconciliation of EBITDA to U.S. GAAP;provided that, in either case, such reconciliation shall be made to U.S. GAAP as in effect on the date of such report or financial information and (b) the information relating to the Company described in Item 5 of Form 20-F (i.e., Operating and Financial Review and Prospects). |
Future Designation of Restricted and Unrestricted Subsidiaries |
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(a) | default for 30 days in the payment when due of interest, on the Notes; | |
(b) | default in payment when due of the principal of or premium, if any, on the Notes; | |
(c) | failure by the Company to comply with the provisions described under the caption “— Put Option of Holders”; | |
(d) | failure by the Company for 30 days after it receives written notice from the Trustee or at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in the Indenture or the Notes; | |
(e) | the declaration or payment of any dividend or the making of any other payment or distribution described in subclause (y) of clause (3) under the caption “— Certain Covenants — Restricted Payments”, which declaration, payment or distribution would not be permitted by the provisions described under the caption “— Certain Covenants — Restricted Payments” if it were treated as a Restricted Payment; | |
(f) | the Company consolidates or merges (fusion) with or into (whether or not the Company is the surviving corporation), or sells, assigns, transfers, leases, conveys, demerges (scission) or otherwise disposes of all or substantially all of its properties or assets in one or more related transactions, to another Person unless: |
(1) | the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance, demerger or other disposition shall have been made is a corporation organized or existing under the laws of the United States (or any state thereof or the District of Columbia), the Republic of France or any other member state of the European Union (as constituted on the Issue Date); | |
(2) | the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, lease, conveyance, |
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demerger or other disposition shall have been made assumes all the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; | ||
(3) | immediately after such transaction no Default or Event of Default exists; | |
(4) | except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance, demerger or other disposition shall have been made: |
(A) | will have a Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction; and | |
(B) | will, at the time of such transaction and after givingpro formaeffect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least€1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”; and |
(5) | the Company shall deliver to the Trustee an Officers’ Certificate and an opinion of counsel stating that such consolidation, merger or disposition and any supplemental indenture in respect thereto comply with this provision and that all conditions precedent in the Indenture relating to such transaction or transactions have been complied with; |
(g) | default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee exists on the date of the Indenture or is created after the date of the Indenture, which default (1) is caused by a failure to pay principal of or premium or interest on such Indebtedness prior to the expiration of any grace period provided in such Indebtedness, including any extension thereof (a “Payment Default”), or (2) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates in excess of€10,000,000 andprovided, further, that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 10 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Notes shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree; | |
(h) | failure by the Company or any of its Restricted Subsidiaries to pay final judgments (not covered by insurance) aggregating in excess of€10,000,000, which judgments are not paid, discharged or stayed for a period of 60 days; | |
(i) | failure by any Guarantor to perform any covenant set forth in its Subsidiary Guarantee, or the repudiation by any Guarantor of its obligations under its Subsidiary Guarantee or the unenforceability of any Subsidiary Guarantee for any reason other than as provided in the Indenture; and | |
(j) | certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary. |
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(a) | the rights of holders of outstanding Notes to receive payments in respect of the principal of and premium, if any, and interest on such Notes when such payments are due from the trust referred to below; | |
(b) | the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of transfer or exchange of the Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; | |
(c) | the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s and any Guarantor’s obligations in connection with them; and | |
(d) | the Legal Defeasance provisions of the Indenture. |
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(1) | the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of an internationally recognized firm of independent public accountants, to pay the principal of and premium and interest on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; | |
(2) | in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service and the French tax authority a ruling or (B) since the date of the Indenture, there has been a change in the applicable income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal or French income tax purposes, respectively, as a result of such Legal Defeasance and will be subject to U.S. federal or French income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; | |
(3) | in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel reasonably acceptable to the Trustee confirming that the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal or French income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal or French income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; | |
(4) | no Default or Event of Default shall have occurred and be continuing either (A) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or (B) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 550th day after the date of deposit; | |
(5) | such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; | |
(6) | the Company must have delivered to the Trustee an opinion of counsel to the effect that, after the 550th day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; | |
(7) | the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the holders of the Notes over the other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and | |
(8) | the Company must deliver to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
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(a) | reduce the principal amount of the Notes whose holders must consent to an amendment, supplement or waiver; | |
(b) | reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption or purchase of the Notes by the Company; | |
(c) | reduce the rate of or change the time for payment of interest on any Note; | |
(d) | waive a Default or Event of Default in the payment of principal of or premium or interest on the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); | |
(e) | make any Note payable in money other than that stated in the Notes; | |
(f) | make any change in the provisions of the Indenture relating to waivers of past defaults or the rights of holders of the Notes to receive payments of principal of or premium or interest on the Notes; | |
(g) | waive a redemption or repurchase payment with respect to any Note; | |
(h) | make any change in the ranking of the Notes relative to other Indebtedness of the Company or the Subsidiary Guarantees relative to other Indebtedness of the Guarantors, in either case in a manner adverse to the holders; | |
(i) | release any Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of the Indenture; | |
(j) | make any change in the provisions described under the caption “— Additional Amounts” in a manner adverse to the holders; or | |
(k) | make any change in the preceding amendment, supplement and waiver provisions. |
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(1) | either: |
(a) | all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or | |
(b) | all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust solely for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not previously delivered to the Trustee for cancellation, including principal, premium, if any, and accrued interest to the date of maturity or redemption; |
(2) | no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; | |
(3) | the Company and each Guarantor has paid or caused to be paid all other sums payable by it under the Indenture; and | |
(4) | the Company has delivered an Officers’ Certificate and an opinion of counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. |
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(a) | the judgment concerned is enforceable in the State of New York; | |
(b) | such judgment has been rendered by a court having jurisdiction over the parties both under its own rules of jurisdiction and in accordance with French rules of international conflicts of jurisdiction and the French courts did not have exclusive jurisdiction to hear the matter; | |
(c) | the court that rendered such judgment has applied to the merits of the case the laws of the jurisdiction which would have been considered appropriate under French rules of international conflicts of laws; | |
(d) | the judgment is not contrary to French international public policy (ordre public international), both pertaining to the merits and to the procedure of the case; | |
(e) | the judgment is not tainted with fraud; and | |
(f) | the judgment does not conflict with a French judgment or a foreign judgment which has become effective in France and there is no risk of conflict with proceedings pending before the French courts at the time enforcement of the judgment is sought. |
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Exchange of Global Notes for Definitive Notes |
(a) | DTC notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes or has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Company thereupon fails to appoint a successor depositary within 90 days after the date of such notice; | |
(b) | the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; or | |
(c) | there has occurred and is continuing an Event of Default with respect to the Notes. |
Exchange of Definitive Notes for Global Notes |
Exchange of Definitive Notes for Definitive Notes |
Same-Day Settlement and Payment |
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(a) | 1.0% of the principal amount of the Note; and | |
(b) | the excess of (1) the present value at such redemption date of (A) the redemption price of the Note at May 15, 2012 (such redemption price being set forth in the table appearing above under the caption “— Optional Redemption”) plus (B) all required interest payments due on the Note during the period from such redemption date through May 15, 2012 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points over (2) the principal amount of the Note, if greater. |
(a) | the sale, lease, conveyance or other disposition (a“disposition”) of any properties or assets (including, without limitation, by way of a sale-and-leaseback), excluding dispositions in the ordinary course of business (provided thatthe disposition of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole will be subject to the provisions of the Indenture described above under the caption “— Put Option of Holders — Change of Control” and the provisions described above in clause (f) under the caption “— Events of Default and Remedies” and not to the provisions of the Asset Sales covenant); | |
(b) | the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company’s Subsidiaries; and | |
(c) | any Event of Loss, |
(A) | a disposition of obsolete or excess equipment or other properties or assets; | |
(B) | a disposition of properties or assets (including Equity Interests) by the Company to a Wholly Owned Restricted Subsidiary or by a Restricted Subsidiary to the Company or to a Wholly Owned Restricted Subsidiary; | |
(C) | a disposition of cash or Cash Equivalents; |
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(D) | a disposition of properties or assets (including Equity Interests) that constitutes a Restricted Payment that is permitted by the provisions of the Indenture described above under the caption “— Certain Covenants — Restricted Payments”; | |
(E) | any trade or exchange by the Company or any Restricted Subsidiary of equipment or other properties or assets for equipment or other properties or assets owned or held by another Person,provided thatthe fair market value of the properties or assets traded or exchanged by the Company or such Restricted Subsidiary (together with any cash or Cash Equivalents) is reasonably equivalent to the fair market value of the properties or assets (together with any cash or Cash Equivalents) to be received by the Company or such Restricted Subsidiary; | |
(F) | the creation or perfection of a Lien on any properties or assets (or any income or profits therefrom) of the Company or any of its Restricted Subsidiaries that is not prohibited by the covenant described under the caption “— Certain Covenants — Liens”; | |
(G) | a sale-and-leaseback of the Company’s office facilities in Massy, France replacing the sale-and-leaseback transaction relating to such facilities that is outstanding on the Issue Date; | |
(H) | the surrender or waiver of contract rights or the settlement, release or surrender of contractual, non-contractual or other claims of any kind; | |
(I) | the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise of collection thereof; | |
(J) | the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the region; and | |
(K) | the grant in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar intellectual property. |
(a) | in the case of a corporation, corporate stock; | |
(b) | in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including preferred stock; | |
(c) | in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and |
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(d) | any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. |
(a) | securities issued or directly and fully guaranteed or insured by the government of the United States of America, the Republic of France or any other country whose sovereign debt has a rating of at least A3 from Moody’s Investors Service, Inc. and at least A- from Standard & Poor’s Ratings Services or any agency or instrumentality of any such government (provided thatthe full faith and credit of such government is pledged in support thereof), in each case having maturities of not more than 12 months from the date of acquisition; | |
(b) | certificates of deposit, Eurodollar time deposits and French negotiable debt instruments (titres de créances négociables) with maturities of 12 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case with or issued by any commercial bank organized under the laws of any country that is a member of the Organization for Economic Co-operation and Development having capital and surplus in excess of€500,000,000 and whose long-term debt securities are rated at least A3 by Moody’s Investors Service, Inc. and at least A- by Standard & Poor’s Ratings Services; | |
(c) | repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above; | |
(d) | commercial paper and French negotiable debt instruments (titres de créances négociables) having a rating of at least P-1 from Moody’s Investors Service, Inc. or at least A-1 from Standard & Poor’s Ratings Services and in each case maturing within 12 months after the date of acquisition; | |
(e) | deposits available for withdrawal on demand with any commercial bank not meeting the qualifications specified in clause (b) above,provided thatall such deposits are made in the ordinary course of business, do not remain on deposit for more than 30 consecutive days and do not exceed€25,000,000 in the aggregate at any one time, with no more than€5,000,000 being deposited in commercial banks within a single country; and | |
(f) | money market mutual funds substantially all of the assets of which are of the type described in any of the foregoing clauses (a) to (d). |
(a) | provision for taxes based on income or profits of such Person and its Restricted Subsidiaries; | |
(b) | Consolidated Interest Expense of such Person and its Restricted Subsidiaries; | |
(c) | depreciation and amortization (including amortization or impairment, if any, of goodwill and of other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such Person and its Restricted Subsidiaries; | |
(d) | other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries less any non-cash items increasing Consolidated Net Income of such Person and its Restricted Subsidiaries (other than items that will result in cash receipt); | |
(e) | any expenses, fees, charges or other costs related to any equity offering (other than of Disqualified Stock) permitted by the indenture (whether or not successful); and |
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(f) | without duplication, an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, in each case, on a consolidated basis and determined in accordance with GAAP. |
(a) | any incurrence, assumption, guarantee, repayment, purchase or redemption by such Person or any of its Restricted Subsidiaries of any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Consolidated Interest Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Interest Coverage Ratio is made (the“Calculation Date”); | |
(b) | any acquisition that has been made by such Person or any of its Restricted Subsidiaries, or approved and expected to be consummated within 30 days of the Calculation Date, including, in each case, through a merger or consolidation, and including any related financing transactions, during the reference period or subsequent to such reference period and on or prior to the Calculation Date; and | |
(c) | any other transaction that may be givenpro formaeffect in accordance with Article 11 of Regulation S-X under the Securities Act as in effect from time to time; |
(a) | the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of all payments made or received (if any) pursuant to Hedging Obligations in respect of interest rates but excluding amortization of debt issuance costs and non-cash charges other than non-cash interest expenses related to convertible bonds); and | |
(b) | the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period. |
(a) | the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof; |
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(b) | the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders; and | |
(c) | the cumulative effect of a change in accounting principles shall be excluded. |
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(1) | Sercel Inc., Sercel Canada Ltd., Sercel Australia Pty Ltd, CGG Americas, Inc., CGG Canada Services Ltd., CGG Marine Resources Norge A/ S, CGGVeritas Services Inc., Veritas DGC Land Inc., Veritas Geophysical Corporation, Veritas Investments Inc., Viking Maritime Inc., Veritas Geophysical (Mexico) LLC, Veritas DGC Asia Pacific Ltd. and Alitheia Resources Inc.; and | |
(2) | any other Subsidiary of the Company that executes a supplemental indenture providing for a Subsidiary Guarantee in accordance with the provisions of Indenture, |
(a) | interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; | |
(b) | other agreements or arrangements designed to protect such Person against fluctuations in interest rates; and | |
(c) | any foreign currency futures contract, option or similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates or commodity prices, |
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(a) | any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (1) any Asset Sale (including, without limitation, dispositions pursuant to sale-and-leaseback transactions) or (2) the disposition of any securities by such Person or any of |
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its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and | ||
(b) | any extraordinary or non-recurring gain (but not loss), together with any related provision for taxes on such extraordinary or non-recurring gain (but not loss). |
(a) | the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, title insurance premiums, appraiser fees, otherout-of-pocket expenses and costs incurred in connection with preparing such asset for sale) and any relocation expenses incurred as a result thereof; | |
(b) | taxes paid or estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements that will result in a reduction in consolidated tax liability); | |
(c) | amounts required to be applied to the repayment of Indebtedness (other than under a revolving credit facility) secured by a Lien on the asset or assets that were the subject of such Asset Sale; and | |
(d) | any reserve (including any reserve against any liabilities associated with such Asset Sale and retained by the Company or the relevant Restricted Subsidiary) established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price of such asset or assets, until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to the Company or its Restricted Subsidiaries from such escrow arrangement, as the case may be. |
(a) | as to which neither the Company nor any of its Restricted Subsidiaries (1) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or is otherwise directly or indirectly liable (as a guarantor or otherwise) or (2) constitutes the lender; | |
(b) | no default with respect to which (including any rights the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) the holders of Indebtedness of the Company or any of its Restricted Subsidiaries (other than the Notes) to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and | |
(c) | as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. |
(1) | guaranteeing or securing the Notes or any Guarantee; | |
(2) | in favor of the Company or a Guarantor; |
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(3) | guaranteeing Indebtedness incurred pursuant to clause (a) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”; or | |
(4) | in existence on the date of the Indenture to the extent guaranteeing Existing Indebtedness and Permitted Refinancing Indebtedness in respect thereof incurred in compliance with clause (j) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”. |
(a) | any Investment in the Company (including, without limitation, any acquisition of the Notes) or in a Wholly Owned Restricted Subsidiary of the Company, other than any Investment described in clause (a) of the definition of “Restricted Payments”; | |
(b) | any Investment in Cash Equivalents; | |
(c) | any Investment by the Company or any Restricted Subsidiary of the Company in a Person if as a result of such Investment (1) such Person becomes a Restricted Subsidiary of the Company or (2) such Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its properties or assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; | |
(d) | any Investment made as a result of the receipt of non-cash consideration from (1) an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Put Option of Holders — Asset Sales” or (2) a disposition of assets that does not constitute an Asset Sale; | |
(e) | Investments in stock, obligations or securities received in settlement of any claim or debts owing to the Company or any Restricted Subsidiary as a result of bankruptcy or insolvency proceedings or received in satisfaction of any judgment or in settlement of any claim in circumstances where the Company does not expect it would receive cash payment in a timely manner, or upon the foreclosure, perfection or enforcement of any Lien in favor of the Company or any Restricted Subsidiary, in each case as to any claim or debts owing to the Company or any Restricted Subsidiary that arose in the ordinary course of business of the Company or any such Restricted Subsidiary,provided that any stocks, obligations or securities received in settlement of any claim or debts that arose in the ordinary course of business (and received other than as a result of bankruptcy or insolvency proceedings or received in satisfaction of any judgment or in settlement of any claim in circumstances where the Company does not expect it would receive cash payment in a timely manner, or upon foreclosure, perfection or enforcement of any Lien) that are, within 180 days of receipt, converted into cash or Cash Equivalents shall be treated as having been cash or Cash Equivalents at the time received; | |
(f) | Investments in Argas Ltd. consisting of guarantees of its obligations incurred in the ordinary course of its business,provided thatsuch Investments, when taken together with all other Investments made pursuant to this clause (f) that are at the time outstanding, do not exceed€50,000,000; | |
(g) | Investments in Argas Ltd. (other than those described in clause (f) above) and any other Affiliate organized in a foreign jurisdiction that is required by the applicable laws and regulations of such foreign jurisdiction or its governmental agencies, authorities or state-owned businesses to be majority owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction or another foreign jurisdiction in order for such Affiliate to transact business in such foreign jurisdiction,provided thatsuch Investments, when taken together with all other Investments made pursuant to this clause (g) that are at the time outstanding, do not exceed 20% of Consolidated Tangible Net Worth; |
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(h) | Investments in any Person in exchange for, or out of the net cash proceeds of, an issue or sale by the Company of Equity Interests (other than Disqualified Stock); and | |
(i) | other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (i) that are at the time outstanding, do not exceed€25,000,000. |
(a) | Liens securing Indebtedness incurred pursuant to clause (a) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”, and Liens securing any other Indebtedness under Credit Facilities incurred pursuant to the first paragraph of such covenant; | |
(b) | Liens in favor of the Company and its Restricted Subsidiaries; | |
(c) | Liens on any property or asset of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company,provided thatsuch Liens were in existence prior to such merger or consolidation, were not created in contemplation of it and do not extend to any property or asset of the Company or any of its Restricted Subsidiaries other than those of the Person merged into or consolidated with the Company or any of its Restricted Subsidiaries; | |
(d) | Liens on any property or asset existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company,provided thatsuch Liens were in existence prior to such acquisition, were not created in contemplation of it and do not extend to any other property or asset of the Company or any of its Restricted Subsidiaries; |
(e) | Liens securing the performance of statutory obligations, surety or appeal bonds, bid or performance bonds, insurance obligations or other obligations of a like nature incurred in the ordinary course of business; |
(f) | Liens securing Hedging Obligations; | |
(g) | Liens existing on the date of the Indenture; | |
(h) | Liens securing Indebtedness (including Capital Lease Obligations) permitted by clause (g) of the second paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”,provided thatsuch Liens extend only to the property, plant or equipment financed by such Indebtedness; | |
(i) | any interest or title of a lessor under an operating lease; | |
(j) | Liens arising by reason of deposits necessary to obtain standby letters of credit in the ordinary course of business; | |
(k) | Liens on real or personal property or assets of the Company or a Restricted Subsidiary thereof to secure Indebtedness incurred for the purpose of (1) financing all or any part of the purchase price of such property or assets incurred prior to, at the time of, or within 90 days after, the acquisition of such property or assets or (2) financing all or any part of the cost of construction or improvement of any such property or assets,provided thatthe amount of any such financing shall not exceed the amount expended in the acquisition of, or the construction of, such property or assets and such Liens shall not extend to any other property or assets of the Company or a Restricted Subsidiary (other than any associated accounts, contracts and insurance proceeds); | |
(l) | judgment Liens not giving rise to an Event of Default so long as any appropriate legal proceeding which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired; |
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(m) | Liens securing Indebtedness of the Company or any Restricted Subsidiary of the Company that does not exceed€10,000,000 at any one time outstanding; | |
(n) | Liens securing Acquired Indebtedness incurred pursuant to the first paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”, provided that such Liens (1) secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, such incurrence, and (2) do not extend to any property or asset of the Company or any of its Restricted Subsidiaries other than the property or asset that secured the Acquired Indebtedness prior to the time that it became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company; and | |
(o) | Liens securing Permitted Refinancing Indebtedness with respect to any Indebtedness secured by Liens referred to in clauses (c), (d), (g), (h), (k) and (n) above and in this clause (o). |
(a) | the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus premium, if any, and accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of expenses incurred in connection therewith); | |
(b) | such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; | |
(c) | if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable, taken as a whole, to the holders of the Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and | |
(d) | if the Company is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, then such Permitted Refinancing Indebtedness is solely Indebtedness of the Company, |
(a) | any issuance and sale of Equity Interests (other than Disqualified Stock) of the Company pursuant to an underwritten offering registered under the Securities Act; or | |
(b) | any other issuance and sale of Equity Interests (other than Disqualified Stock) of the Company so long as, at the time of consummation of such sale, the Company has a class of common equity |
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securities (including American depositary shares) registered pursuant to Section 12(b) or Section 12(g) under the Exchange Act. |
(a) | Sercel S.A., a French limited liability corporation with its head office in Carquefou, France, and a Restricted Subsidiary of the Company as of the Issue Date; and/or | |
(b) | any company (including Sercel Holding S.A.) that holds all of the outstanding Capital Stock of either or both of Sercel S.A. and Sercel Inc. (other than directors’ qualifying shares and Capital Stock held by other statutorily required minority shareholders). |
(a) | any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); | |
(b) | any partnership (1) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (2) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof); and | |
(c) | any other Person whose results for financial reporting purposes are consolidated with those of such Person in accordance with GAAP. |
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(a) | has no Indebtedness other than Non-Recourse Debt; | |
(b) | is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless such agreement, contract, arrangement or understanding does not violate the terms of the Indenture described under the caption “— Certain Covenants — Transactions with Affiliates”; and | |
(c) | is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Equity Interests or (2) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results. |
(1) | such Indebtedness is permitted under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”; calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and | |
(2) | no Default or Event of Default would be in existence following such designation. |
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(a) | all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares and Capital Stock held by other statutorily required minority shareholders) shall at the time be owned directly or indirectly by such Person; or | |
(b) | such Restricted Subsidiary is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction or its governmental agencies, authorities or state-owned businesses to be partially owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction or another foreign jurisdiction in order for such Restricted Subsidiary to transact business in such foreign jurisdiction,provided thatsuch Person, by contract or otherwise, controls the business and management of such Restricted Subsidiary. |
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Withholding Tax |
Luxembourg non-residents individuals |
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Luxembourg residents individuals |
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Principal | Principal | |||||||
Amount of | Amount of | |||||||
Underwriter | Additional Notes | New Notes | ||||||
Credit Suisse Securities (Europe) Limited | $ | 130,000,000 | $ | 260,000,000 | ||||
BNP Paribas Securities Corp. | 23,700,000 | 47,400,000 | ||||||
Natexis Bleichroeder Inc. | 23,700,000 | 47,400,000 | ||||||
SG Americas Securities, LLC | 17,600,000 | 35,200,000 | ||||||
Calyon Securities (USA), Inc. | 5,000,000 | 10,000,000 | ||||||
Total | $ | 200,000,000 | $ | 400,000,000 | ||||
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in |
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connection with the issue or sale of any notes in circumstances in which section 21(1) of the FSMA does not apply to CGG or the guarantors; and | ||
• | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom. |
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• | Over-allotment involves sales in excess of the offering size, which creates a short position for the underwriters. | |
• | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
• | Covering transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover short positions. | |
• | Penalty bids permit the underwriters to reclaim a selling concession from a broker/ dealer when the notes originally sold by such broker/ dealer are purchased in a stabilizing or covering transaction to cover short positions. |
• | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; | |
• | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than€43,000,000 and (3) an annual net turnover of more than€50,000,000, as shown in its last annual or consolidated accounts; | |
• | to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the underwriters for any such offer; or | |
• | in any other circumstances which do not require the publication by CGGVeritas of a prospectus pursuant to Article 3 of the Prospectus Directive. |
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France |
Germany |
Italy |
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United Kingdom |
Denmark |
Norway |
Finland |
Sweden |
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The Netherlands |
Belgium |
(a) | investors required to invest a minimum of€250,000 (per investor and per transaction); or |
(b) | institutional investors as defined in Article 3, 27, of the Belgian Royal Decree of July 7, 1999 on the public character of financial transactions, acting for their own account. |
Austria |
Switzerland |
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Ireland |
Spain |
Portugal |
Greece |
Canada |
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• | such purchaser is entitled under applicable provincial securities laws to purchase such Notes without the benefit of a prospectus qualified under such securities laws; | |
• | where required by law, that such purchaser is purchasing as principal and not as agent; and | |
• | such purchaser has reviewed the text in the preceding paragraph. |
Hong Kong |
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Singapore |
Malaysia |
249
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250
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251
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Initial Guarantors |
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Documents Available |
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Page | ||||
Unaudited Interim Consolidated IFRS Financial Statements of CGG | ||||
Unaudited Interim Consolidated Balance Sheets as at September 30, 2006 and December 31, 2005 | F-3 | |||
Unaudited Interim Consolidated Statements of Operations for the nine months and the three months ended September 30, 2006 and 2005 | F-4 | |||
Unaudited Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2005 | F-5 | |||
Unaudited Interim Consolidated Statements of Changes in Shareholders’ Equity during the nine months ended September 30, 2006 and 2005 | F-6 | |||
Notes to Unaudited Interim Consolidated Financial Statements | F-8 | |||
Annual Consolidated IFRS Financial Statements of CGG | ||||
Reports of Independent Registered Public Accounting Firms | F-20 | |||
Consolidated Balance Sheets as at December 31, 2005 and 2004 | F-21 | |||
Consolidated Statements of Operations for the years ended December 31, 2005 and 2004 | F-22 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2005 and 2004 | F-23 | |||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2005 and 2004 | F-24 | |||
Notes to Consolidated Financial Statements | F-26 | |||
Annual Financial Statements of Exploration Resources ASA | ||||
Report of Independent Registered Public Accounting Firm | F-88 | |||
Combined Balance Sheet as at December 31, 2004 | F-89 | |||
Combined Statement of Operations for the year ended December 31, 2004 | F-90 | |||
Combined Statement of Cash Flows for the year ended December 31, 2004 | F-91 | |||
Combined Statement of Owners’ Net Investment for the year ended December 31, 2004 | F-92 | |||
Notes to the Combined Financial Statements | F-93 | |||
Annual Financial Statements of Argas | ||||
Report of Independent Registered Public Accounting Firm | F-114 | |||
Balance Sheet as at December 31, 2005, 2004 and 2003 | F-115 | |||
Income Statement for the years ended December 31, 2005, 2004 and 2003 | F-116 | |||
Statement of Cash Flows for the years ended December 31, 2005, 2004 and 2003 | F-117 | |||
Statement of Changes in Partners’ Equity for the year ended December 31, 2005, 2004 and 2003 | F-118 | |||
Notes to the Financial Statements | F-119 | |||
Unaudited Interim Consolidated U.S. GAAP Financial Statements of Veritas | ||||
Unaudited Interim Consolidated Statements of Operations for the three months ended October 31, 2006 and 2005 | F-128 | |||
Unaudited Interim Consolidated Balance Sheets as at October 31, 2006 and July 31, 2006 | F-129 | |||
Unaudited Interim Consolidated Statements of Cash Flows Information for the three months ended October 31, 2006 and 2005 | F-130 | |||
Notes to Unaudited Interim Consolidated Financial Statements | F-131 | |||
Annual Consolidated U.S. GAAP Financial Statements of Veritas | ||||
Report of Independent Registered Public Accounting Firm | F-147 | |||
Consolidated Statements of Operations for the years ended July 31, 2006, 2005 and 2004 | F-148 | |||
Consolidated Balance Sheets as at July 31, 2006 and 2005 | F-149 | |||
Consolidated Statements of Cash Flows for the years ended July 31, 2006, 2005 and 2004 | F-150 | |||
Consolidated Statement of Changes in Stockholders’ Equity for the years ended July 31, 2006, 2005 and 2004 | F-152 | |||
Notes to Consolidated Financial Statements | F-153 |
F-1
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F-2
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September 30, | December 31, | |||||||
2006 | 2005 | |||||||
(unaudited) | (audited) | |||||||
(in millions of euros) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | 168.7 | 112.4 | ||||||
Trade accounts and notes receivable, net | 331.4 | 297.5 | ||||||
Inventories and work-in-progress, net | 171.9 | 139.5 | ||||||
Income tax assets | 19.6 | 10.1 | ||||||
Other current assets, net | 53.5 | 41.5 | ||||||
Assets held for sale | — | 3.5 | ||||||
Total current assets | 745.1 | 604.5 | ||||||
Deferred tax assets | 47.5 | 31.6 | ||||||
Investments and other financial assets, net | 18.9 | 15.3 | ||||||
Investments in companies under equity method | 46.8 | 44.4 | ||||||
Property, plant and equipment, net | 485.0 | 480.1 | ||||||
Goodwill and intangible assets, net | 408.4 | 389.2 | ||||||
Total non-current assets | 1,006.6 | 960.6 | ||||||
TOTAL ASSETS | 1,751.7 | 1,565.1 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Bank overdrafts | 10.9 | 9.3 | ||||||
Current portion of financial debt | 44.0 | 157.9 | ||||||
Trade accounts and notes payable | 137.1 | 178.5 | ||||||
Accrued payroll costs | 66.9 | 57.8 | ||||||
Income taxes payable | 35.1 | 29.3 | ||||||
Advance billings to customers | 37.9 | 19.5 | ||||||
Provisions — current portion | 16.2 | 17.7 | ||||||
Other current liabilities | 29.2 | 35.2 | ||||||
Total current liabilities | 377.3 | 505.2 | ||||||
Deferred tax liabilities | 70.9 | 56.9 | ||||||
Provisions — non-current portion | 19.8 | 18.4 | ||||||
Financial debt | 386.8 | 242.4 | ||||||
Derivative on convertible bonds | — | 11.3 | ||||||
Other non-current liabilities | 22.9 | 20.7 | ||||||
Total non-current liabilities | 500.4 | 349.7 | ||||||
Common stock, 34,762,762 shares authorized 17,507,110 shares with a €2 nominal value issued and outstanding at September 30, 2006; 17,081,680 at December 31, 2005 | 35.0 | 34.2 | ||||||
Additional paid-in capital | 390.7 | 372.3 | ||||||
Retained earnings | 317.3 | 291.0 | ||||||
Treasury shares | 2.6 | (1.1 | ) | |||||
Net income (loss) for the period — Attributable to the Group | 119.8 | (7.8 | ) | |||||
Income and expense recognized directly in equity | 3.6 | (1.4 | ) | |||||
Cumulative translation adjustment | (18.5 | ) | 11.3 | |||||
Total shareholders’ equity | 850.5 | 698.5 | ||||||
Minority interests | 23.5 | 11.7 | ||||||
Total shareholders’ equity and minority interests | 874.0 | 710.2 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,751.7 | 1,565.1 | ||||||
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Nine Months Ended | Three Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
Notes | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||
restated(1) | restated(1) | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||
(in millions of euros, except per share data) | ||||||||||||||||||||
Operating revenues | 955.6 | 607.5 | 321.1 | 220.5 | ||||||||||||||||
Other income from ordinary activities | 1.4 | 1.2 | 0.5 | 0.4 | ||||||||||||||||
Total income from ordinary activities | 957.0 | 608.7 | 321.6 | 220.9 | ||||||||||||||||
Cost of operations | (636.7 | ) | (473.2 | ) | (216.3 | ) | (175.0 | ) | ||||||||||||
Gross profit | 320.3 | 135.5 | 105.3 | 45.9 | ||||||||||||||||
Research and development expenses — net | (27.8 | ) | (23.6 | ) | (9.4 | ) | (8.8 | ) | ||||||||||||
Selling, general and administrative expenses | (86.9 | ) | (64.2 | ) | (26.6 | ) | (22.3 | ) | ||||||||||||
Other revenues (expenses) — net | 12.0 | (2.7 | ) | 2.2 | (1.9 | ) | ||||||||||||||
Operating income | 217.6 | 45.0 | 71.5 | 12.9 | ||||||||||||||||
Expenses related to financial debt | (24.0 | ) | (29.4 | ) | (7.9 | ) | (8.2 | ) | ||||||||||||
Income provided by cash and cash equivalents | 4.8 | 2.7 | 1.8 | 1.1 | ||||||||||||||||
Cost of financial debt, net | (19.2 | ) | (26.7 | ) | (6.1 | ) | (7.1 | ) | ||||||||||||
Derivative and other expenses on convertible bonds | (23.0 | ) | (38.0 | ) | — | (23.3 | ) | |||||||||||||
Other financial income (loss) | (8.4 | ) | 1.3 | (1.8 | ) | 0.6 | ||||||||||||||
Income (loss) from consolidated companies before income taxes | 167.0 | (18.4 | ) | 63.6 | (16.9 | ) | ||||||||||||||
Income taxes | (54.9 | ) | (18.5 | ) | (21.9 | ) | (3.7 | ) | ||||||||||||
Net income (loss) from consolidated companies | 112.1 | (36.9 | ) | 41.7 | (20.6 | ) | ||||||||||||||
Equity in income (losses) of affiliates | 8.9 | 9.6 | 3.1 | 2.9 | ||||||||||||||||
Net income (loss) | 121.0 | (27.3 | ) | 44.8 | (17.7 | ) | ||||||||||||||
Attributable to: | ||||||||||||||||||||
Shareholders | 119.8 | (27.9 | ) | 44.5 | (18.3 | ) | ||||||||||||||
Minority interest | 1.2 | 0.6 | 0.3 | 0.6 | ||||||||||||||||
Weighted average number of shares outstanding | 17,318,957 | 11,765,118 | 17,496,278 | 11,698,623 | ||||||||||||||||
Dilutive potential shares from stock options | 356,659 | 285,979 | 364,187 | 285,979 | ||||||||||||||||
Dilutive potential shares from convertible bonds | — | 1,400,000 | — | 1,400,000 | ||||||||||||||||
Dilutive weighted average number of shares outstanding | 17,675,616 | 13,451,097 | 17,860,465 | 13,384,602 | ||||||||||||||||
Net income (loss) per share | ||||||||||||||||||||
Basic | 6.92 | (2.37 | ) | 2.55 | (1.57 | ) | ||||||||||||||
Diluted(2) | 6.78 | (2.37 | ) | 2.49 | (1.57 | ) |
(1) | Restatement of IFRS financial statements in accordance with the standards used to prepare the IFRS financial statements contained in our annual report on Form 20-F for the year ended December 31, 2005 filed with the SEC on May 9, 2006. |
(2) | Stock options and convertible bonds had an anti-dilutive effect for the three months and the nine months periods ended September 30, 2005; as a consequence, potential shares linked to those instruments are not taken into account in the adjusted dilutive weighted average number of shares, nor in the calculation of diluted loss per share. |
F-4
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Nine Months Ended | ||||||||
September 30, | ||||||||
2006 | 2005 | |||||||
restated(1) | ||||||||
(unaudited) | ||||||||
(in millions of euros) | ||||||||
OPERATING | ||||||||
Net income (loss) | 121.0 | (27.3 | ) | |||||
Depreciation and amortization | 76.0 | 51.0 | ||||||
Multi-client surveys amortization | 60.7 | 48.3 | ||||||
Variance on provisions | 3.3 | 0.3 | ||||||
Expense & income calculated on stock-option | 4.0 | 0.3 | ||||||
Net gain on disposal of fixed assets | (6.0 | ) | 0.1 | |||||
Equity in income of affiliates | (8.9 | ) | (9.6 | ) | ||||
Dividends received from affiliates | 4.3 | 4.2 | ||||||
Other non-cash items | 28.1 | 36.8 | ||||||
Net cash including net cost of financial debt and income taxes | 282.5 | 104.1 | ||||||
Less net cost of financial debt | 19.2 | 26.7 | ||||||
Less income taxes expenses | 54.9 | 18.5 | ||||||
Net cash excluding net cost of financial debt and income taxes | 356.6 | 149.3 | ||||||
Income taxes paid | (60.6 | ) | (28.1 | ) | ||||
Net cash before changes in working capital | 296.0 | 121.2 | ||||||
INVESTING | ||||||||
— change in trade accounts and notes receivable | (52.2 | ) | (25.4 | ) | ||||
— change in inventories and work in progress | (28.3 | ) | (17.1 | ) | ||||
— change in other current assets | (5.0 | ) | (5.5 | ) | ||||
— change in trade accounts and notes payable | (12.5 | ) | 13.1 | |||||
— change in other current liabilities | 8.4 | 9.9 | ||||||
Impact of changes in exchange rate | (12.1 | ) | 13.1 | |||||
Net cash provided by operating activities | 194.3 | 109.3 | ||||||
Total purchases of tangible & intangible assets (included variation of fixed assets suppliers) | (131.3 | ) | (67.7 | ) | ||||
Investments in multi-client surveys | (38.9 | ) | (19.2 | ) | ||||
Proceeds from disposals tangible & intangible | 5.7 | 1.6 | ||||||
Total net proceeds from financial assets | 16.6 | — | ||||||
Acquisition in investments, net of cash and cash equivalents acquired | (47.7 | ) | (262.2 | ) | ||||
Variation in loans granted | (0.2 | ) | 0.2 | |||||
Variation in subsidies for Capital Expenditures | 0.3 | 0.5 | ||||||
Variation in other non-current financial assets | (6.7 | ) | (0.4 | ) | ||||
Net cash from investing activities | (202.2 | ) | (347.2 | ) | ||||
FINANCING | ||||||||
Repayment of long-term debt | (129.7 | ) | (178.1 | ) | ||||
Total issuance of long-term debt | 215.9 | 442.6 | ||||||
Reimbursement on leasing | (17.6 | ) | (9.0 | ) | ||||
Change in short-term loans | 1.9 | 2.0 | ||||||
Financial interest paid | (12.5 | ) | (32.2 | ) | ||||
Net proceeds from capital increase: | ||||||||
— from shareholders | 8.0 | 7.6 | ||||||
— from minority interest of integrated companies | — | — | ||||||
Dividends paid and share capital reimbursements | ||||||||
— to shareholders | — | — | ||||||
— to minority interest of integrated companies | (0.4 | ) | (0.2 | ) | ||||
Buying & sales from treasury shares | 3.7 | 0.1 | ||||||
Net cash provided by financing activities | 69.3 | 232.8 | ||||||
Effects of exchange rate changes on cash | (5.1 | ) | 12.6 | |||||
Net increase (decrease) in cash and cash equivalents | 56.3 | 7.5 | ||||||
Cash and cash equivalents at beginning of year | 112.4 | 130.6 | ||||||
Cash and cash equivalents at end of period | 168.7 | 138.1 | ||||||
(1) | Restatement of IFRS financial statements in accordance with the standards used to prepare the IFRS financial statements contained in our annual report on Form 20-F for the year ended December 31, 2005 filed with the SEC on May 9, 2006. |
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Income and | Total | |||||||||||||||||||||||||||||||||||||||
expense | shareholders’ | |||||||||||||||||||||||||||||||||||||||
Number of | Additional | recognized | Cumulative | Total | equity and | |||||||||||||||||||||||||||||||||||
shares | Share | paid-in | Retained | Treasury | directly in | translation | shareholders’ | Minority | minority | |||||||||||||||||||||||||||||||
issued | capital | capital | earnings | shares | equity | adjustment | equity | interests | interest | |||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||||||||||||||||||
Balance at January 01, 2005 | 11,682,218 | 23.4 | 173.4 | 208.1 | 1.8 | 3.7 | (17.2 | ) | 393.3 | 9.1 | 402.3 | |||||||||||||||||||||||||||||
Capital increase | 147,432 | 0.3 | 7.6 | 7.9 | 7.9 | |||||||||||||||||||||||||||||||||||
Net income | (27.9 | ) | (27.9 | ) | 0.6 | (27.3 | ) | |||||||||||||||||||||||||||||||||
Cost of share-based payment | 0.3 | 0.3 | 0.3 | |||||||||||||||||||||||||||||||||||||
Transactions with treasury shares | 0.1 | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||||||
Financial instruments: variance and transfer to income statement(1) | (6.4 | ) | (6.4 | ) | (6.4 | ) | ||||||||||||||||||||||||||||||||||
Foreign currency translation: variance and transfer to income statement(2) | 23.6 | 23.6 | 1.3 | 24.9 | ||||||||||||||||||||||||||||||||||||
Income and expense recognized directly in equity(1) + (2) | — | 0.1 | (6.4 | ) | 23.6 | 17.2 | 1.3 | 18.5 | ||||||||||||||||||||||||||||||||
Others(a) | (54.2 | ) | 53.6 | 0.6 | — | — | ||||||||||||||||||||||||||||||||||
Balance at September 30, 2005 restated(b) | 11,829,650 | 23.7 | 126.8 | 234.1 | 2.0 | (2.1 | ) | 6.4 | 390.9 | 11.0 | 401.9 |
(a) | Deduction from issuance premium for allocation to the carry forward | |
(b) | Restatement of IFRS financial statements in accordance with the standards used to prepare the IFRS financial statements contained in our annual report on Form 20-F for the year ended December 31, 2005 filed with the SEC on May 9, 2006. |
Income and | Total | |||||||||||||||||||||||||||||||||||||||
expense | shareholders’ | |||||||||||||||||||||||||||||||||||||||
Number of | Additional | recognized | Cumulative | Total | equity and | |||||||||||||||||||||||||||||||||||
shares | Share | paid-in | Retained | Treasury | directly in | translation | shareholders’ | Minority | minority | |||||||||||||||||||||||||||||||
issued | capital | capital | earnings | shares | equity | adjustment | equity | interests | interest | |||||||||||||||||||||||||||||||
(amounts in millions of euros) | ||||||||||||||||||||||||||||||||||||||||
Balance at January 01, 2006 | 17,081,680 | 34.2 | 372.3 | 283.2 | (1.1 | ) | (1.4 | ) | 11.3 | 698.5 | 11.7 | 710.2 | ||||||||||||||||||||||||||||
Capital increase | 128,852 | 0.3 | 7.8 | 8.1 | 8.1 | |||||||||||||||||||||||||||||||||||
Conversion of convertible bonds | 274,914 | 0.5 | 10.6 | 31.1 | 42.2 | 42.2 | ||||||||||||||||||||||||||||||||||
Net income | 119.8 | 119.8 | 1.2 | 121.0 | ||||||||||||||||||||||||||||||||||||
Cost of share-based payments | 4.0 | 4.0 | (0.3 | ) | 3.7 | |||||||||||||||||||||||||||||||||||
Transactions with treasury shares | 3.7 | 3.7 | 3.7 | |||||||||||||||||||||||||||||||||||||
Actuarial gains/losses on pension plans(1) | (1.0 | ) | (1.0 | ) | (1.0 | ) | ||||||||||||||||||||||||||||||||||
Financial instruments: variance and transfer to income statement(2) | 5.0 | 5.0 | 5.0 | |||||||||||||||||||||||||||||||||||||
Foreign currency translation: variance and transfer to income statement(3) | (29.8 | ) | (29.8 | ) | (0.6 | ) | (30.4 | ) | ||||||||||||||||||||||||||||||||
Income and expense recognized directly in equity(1) + (2) + (3) | (1.0 | ) | 5.0 | (29.8 | ) | (25.8 | ) | (0.6 | ) | (26.4 | ) | |||||||||||||||||||||||||||||
Others(a) | 11.5 | 11.5 | ||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2006 | 17,507,110 | 35.0 | 390.7 | 437.1 | 2.6 | 3.6 | (18.5 | ) | 850.5 | 23.5 | 874.0 |
(a) | Sale of 49% of CGG Ardiseis to minority shareholders. |
F-6
Table of Contents
September, 30 | ||||||||
September, 30 | ||||||||
2006 | 2005 | |||||||
restated(1) | ||||||||
(in millions of euros) | ||||||||
Net income | 119.8 | (27.9 | ) | |||||
— Actuarial gains and losses on pension plans | (1.0 | ) | — | |||||
— Variance in fair value of hedging instruments | 5.0 | (6.4 | ) | |||||
— Variance in fair value of available-for-sale financial assets | — | — | ||||||
— Variance in foreign currency translation adjustment | (29.8 | ) | 23.6 | |||||
Incomes and expenses recognized directly in equity for the period | 94.0 | (10.7 | ) |
(1) | Restatement of IFRS financial statements in accordance with the standards used to prepare the IFRS financial statements contained in our annual report on Form 20-F for the year ended December 31, 2005 filed with the SEC on May 9, 2006. |
F-7
Table of Contents
IFRS 6 — Exploration for and evaluation of mineral resources | |
Amendment to IAS 19 — Employee benefits — Actuarial gains and losses, Group Plans and Disclosures | |
Amendment to IAS 21 — Net investment in a foreign operation | |
Amendment to IAS 39 — Financial Instruments: Recognition and Measurement — The Fair Value Option | |
Amendment to IAS 39 — Cash-flow Hedge Accounting of Forecast Intragroup Transactions | |
Amendment to IAS 39 and to IFRS 4 — Financial Guarantees Contracts | |
Amendment to IFRS 1 and to IFRS 6 — First time adoption of IFRS 6 | |
IFRIC 4 — Determining whether an arrangement contains a lease | |
IFRIC 5 — Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds | |
IFRIC 6 — Liabilities arising from Participating in a Specific Market — Waste electrical and Electronic equipment | |
These Standards and Interpretations had no significant impact on our consolidated financial statements. |
F-8
Table of Contents
IFRS 7 — Financial instruments — Disclosures | |
Amendment to IAS 1 — Presentation of financial statements: Capital disclosures | |
IFRIC 7 — Applying the restatement approach under IAS 29 Financial reporting in hyperinflationary economies | |
IFRIC 8 — Scope of IFRS 2 | |
IFRIC 9 — Reassessment of embedded derivatives | |
IFRIC 10 — Interim Financial Reporting and Impairment |
• | Geophysical services, which consist of (i) land seismic data acquisition, (ii) marine seismic data acquisition, (iii) other geophysical data acquisition, including activities not exclusively linked to oilfield services, and (iv) data processing, and data management; | |
• | Products, which consist of the manufacture and sale of equipment involved in seismic data acquisition, such as recording and transmission equipment and vibrators for use in land seismic acquisition. |
F-9
Table of Contents
Nine Months Ended September 30, 2006 | Nine Months Ended September 30, 2005 | ||||||||||||||||||||||||||||||||
Eliminations | Eliminations | ||||||||||||||||||||||||||||||||
and | Consolidated | and | Consolidated | ||||||||||||||||||||||||||||||
Services | Products | Adjustments | Total | Services | Products | Adjustments | Total | ||||||||||||||||||||||||||
(in millions of euros) | |||||||||||||||||||||||||||||||||
Revenues from unaffiliated customers | 603.3 | 352.3 | — | 955.6 | 391.6 | 215.9 | — | 607.5 | |||||||||||||||||||||||||
Inter-segment revenues | 0.6 | 69.2 | (69.8 | ) | — | 0.5 | 40.1 | (40.6 | ) | — | |||||||||||||||||||||||
Operating revenues | 603.9 | 421.5 | (69.8 | ) | 955.6 | 392.1 | 256.0 | (40.6 | ) | 607.5 | |||||||||||||||||||||||
Other income from ordinary activities | 1.4 | — | — | 1.4 | 1.2 | — | — | 1.2 | |||||||||||||||||||||||||
Total income from ordinary activities | 605.3 | 421.5 | (69.8 | ) | 957.0 | 393.3 | 256.0 | (40.6 | ) | 608.7 | |||||||||||||||||||||||
Operating income (loss) | 129.7 | 113.5 | (25.6 | )(a) | 217.6 | 14.0 | 49.3 | (18.3 | )(a) | 45.0 | |||||||||||||||||||||||
Equity income (loss) of investees | 9.0 | (0.1 | ) | — | 8.9 | 9.8 | (0.2 | ) | — | 9.6 | |||||||||||||||||||||||
Capital expenditures(b) | 162.8 | 22.5 | (16.3 | ) | 169.0 | 100.0 | 14.0 | (12.4 | ) | 101.6 | |||||||||||||||||||||||
Depreciation and amortization(c) | 130.9 | 12.7 | (6.9 | ) | 136.7 | 90.0 | 12.9 | (3.6 | ) | 99.3 | |||||||||||||||||||||||
Investments in companies under equity method | 1.0 | — | — | 1.0 | — | — | — | — | |||||||||||||||||||||||||
Identifiable assets | 1,154.5 | 476.7 | (103.7 | ) | 1,527.5 | 1,072.1 | 358.2 | (82.8 | ) | 1,347.5 | |||||||||||||||||||||||
Unallocated and corporate assets | 224.2 | 183.6 | |||||||||||||||||||||||||||||||
Total assets | 1,751.7 | 1,531.1 | |||||||||||||||||||||||||||||||
(a) | Includes general corporate expenses of €19.2 million for the nine months ended September 30, 2006 and of €8.9 million for the nine months ended September 30, 2005 | |
(b) | Includes (i) investments in multi-client surveys of €38.9 million for the nine months ended September 30, 2006 and €19.2 million for the nine months ended September 30, 2005, (ii) equipment acquired under capital leases of€0.2 million for nine months ended September 30, 2006 and €13.6 million for the nine months ended September 30, 2005, (iii) capitalized development costs in the Services segment for €7.0 million for the nine months ended September 30, 2006 and €3.1 million for the nine months ended September 30, 2005, and (iv) capitalized development costs in the Products segment for €2.9 million for the nine months ended September 30, 2006 and €2.4 million for the nine months ended September 30, 2005 | |
(c) | Includes multi-client amortization of €60.7 million for the nine months ended September 30, 2006 and €48.3 million for nine months ended September 30, 2005. |
F-10
Table of Contents
Three Months Ended September 30, 2006 | Three Months Ended September 30, 2005 | ||||||||||||||||||||||||||||||||
Eliminations | Eliminations | ||||||||||||||||||||||||||||||||
and | Consolidated | and | Consolidated | ||||||||||||||||||||||||||||||
Services | Products | Adjustments | Total | Services | Products | Adjustments | Total | ||||||||||||||||||||||||||
(in millions of euros) | |||||||||||||||||||||||||||||||||
Revenues from unaffiliated customers | 201.0 | 120.1 | — | 321.1 | 143.2 | 77.3 | — | 220.5 | |||||||||||||||||||||||||
Inter-segment revenues | — | 14.2 | (14.2 | ) | — | 0.2 | 19.8 | (20.0 | ) | — | |||||||||||||||||||||||
Operating revenues | 201.0 | 134.3 | (14.2 | ) | 321.1 | 143.4 | 97.1 | (20.0 | ) | 220.5 | |||||||||||||||||||||||
Other income from ordinary activities | 0.5 | — | — | 0.5 | 0.4 | — | — | 0.4 | |||||||||||||||||||||||||
Total income from ordinary activities | 201.5 | 134.3 | (14.2 | ) | 321.6 | 143.8 | 97.1 | (20.0 | ) | 220.9 | |||||||||||||||||||||||
Operating income (loss) | 40.0 | 38.6 | (7.1 | )(a) | 71.5 | 2.4 | 19.2 | (8.7 | )(a) | 12.9 | |||||||||||||||||||||||
Equity income (loss) of investees | 3.1 | — | — | 3.1 | 2.9 | — | — | 2.9 | |||||||||||||||||||||||||
Capital expenditures(b) | 38.8 | 14.0 | (4.1 | ) | 48.7 | 38.1 | 5.5 | (7.3 | ) | 36.3 | |||||||||||||||||||||||
Depreciation and amortization(c) | 48.1 | 4.7 | (2.8 | ) | 50.0 | 32.9 | 4.4 | (1.3 | ) | 36.0 | |||||||||||||||||||||||
Investments in companies under equity method | — | — | — | — | — | — | — | — |
(a) | Includes general corporate expenses of €6.4 million for the three months ended September 30, 2006 and of €2.5 million for the three months ended September 30, 2005. | |
(b) | Includes (i) investments in multi-client surveys of €12.4 million for the three months ended September 30, 2006 and €4.2 million for the three months ended September 30, 2005, (ii) no equipment acquired under capital leases for the three months ended September 30, 2006 and€0.4 million for the three months ended September 30, 2005, (iii) and development costs capitalized in the Services segment of €3.6 million for the three months ended September 30, 2006 and€0.9 million for the three months ended September 30, 2005, and (iv) development costs capitalized in the Products segment of €1.0 million for the three months ended September 30, 2006 and€0.6 million for the three months ended September 30, 2005. | |
(c) | Includes multi-client amortization of €22.1 million for the three months ended September 30, 2006 and of €17.0 million for the three months ended September 30, 2005. |
Analysis of operating revenues by location of customers |
Nine Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||||||
(in millions of euros, except percentages) | ||||||||||||||||||||||||||||||||
France | 14.4 | 1.5 | % | 5.4 | 0.9 | % | 10.1 | 3.1 | % | 1.3 | 0.6 | % | ||||||||||||||||||||
Rest of Europe | 215.0 | 22.5 | % | 133.2 | 21.9 | % | 88.0 | 27.4 | % | 67.2 | 30.5 | % | ||||||||||||||||||||
Asia-Pacific/ Middle East | 313.2 | 32.8 | % | 217.1 | 35.7 | % | 90.5 | 28.2 | % | 69.3 | 31.4 | % | ||||||||||||||||||||
Africa | 99.0 | 10.4 | % | 73.1 | 12.0 | % | 39.2 | 12.2 | % | 26.0 | 11.8 | % | ||||||||||||||||||||
Americas | 314.0 | 32.8 | % | 178.7 | 29.4 | % | 93.3 | 29.1 | % | 56.7 | 25.7 | % | ||||||||||||||||||||
Consolidated Total | 955.6 | 100 | % | 607.5 | 100 | % | 321.1 | 100 | % | 220.5 | 100 | % | ||||||||||||||||||||
F-11
Table of Contents
Analysis of operating revenues by location of origin |
Nine Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||||||
(in millions of euros, except percentages) | ||||||||||||||||||||||||||||||||
France | 211.3 | 22.1 | % | 137.6 | 22.6 | % | 74.4 | 23.2 | % | 30.3 | 13.7 | % | ||||||||||||||||||||
Rest of Europe | 81.6 | 8.5 | % | 90.8 | 14.9 | % | 39.3 | 12.3 | % | 49.4 | 22.4 | % | ||||||||||||||||||||
Asia-Pacific/ Middle East | 216.2 | 22.6 | % | 145.4 | 23.9 | % | 60.5 | 18.8 | % | 39.3 | 17.9 | % | ||||||||||||||||||||
Africa | 79.1 | 8.3 | % | 36.9 | 6.1 | % | 32.3 | 10.0 | % | 14.4 | 6.5 | % | ||||||||||||||||||||
Americas | 367.4 | 38.5 | % | 196.8 | 32.4 | % | 114.6 | 35.7 | % | 87.1 | 39.5 | % | ||||||||||||||||||||
Consolidated Total | 955.6 | 100 | % | 607.5 | 100 | % | 321.1 | 100 | % | 220.5 | 100 | % | ||||||||||||||||||||
F-12
Table of Contents
• | the project is clearly defined, and costs are separately identified and reliably measured, | |
• | the product or process is technically and commercially feasible and, | |
• | the Group has sufficient resources to complete development. |
F-13
Table of Contents
• | changes in the cumulative translation adjustment related to consolidated foreign subsidiaries, | |
• | changes in the fair value of derivative instruments designed as cash flow hedges meeting the criteria established by SFAS 133; and | |
• | changes in the amount of the additional minimum pension liability due to actuarial losses. |
F-14
Table of Contents
September 30, | September 30, | |||||||
2006 | 2005 | |||||||
(unaudited) | restated | |||||||
(unaudited) | ||||||||
(in millions of euros, | ||||||||
except per share data) | ||||||||
Net income (loss) attributable to shareholders as reported in Consolidated Statements of operations | 119.8 | (27.9 | ) | |||||
Deferred tax (FAS 109) | (1.6 | ) | 1.8 | |||||
Loss on extinguishment of debt (APB 26) | — | (2.8 | ) | |||||
Stock options | (0.5 | ) | 0.1 | |||||
Actuarial gain/(loss) on pension plan | (1.0 | ) | — | |||||
Cancellation of IFRS long-term contracts adjustment | — | (2.2 | ) | |||||
Cancellation of IFRS currency translation adjustment | — | 3.6 | ||||||
Cancellation of IFRS tangible assets adjustment | 0.2 | 0.2 | ||||||
Cancellation of IFRS capitalization of development costs (before tax) | (7.7 | ) | (4.0 | ) | ||||
Deferred tax on cancellation of IFRS capitalization of development costs (2) | 7.7 | — | ||||||
Derivative instruments (FAS 133) | (22.9 | ) | 15.9 | |||||
Net income according to U.S. GAAP | 94.0 | (15.3 | ) | |||||
Weighted average number of shares outstanding | 17,318,957 | 11,765,118 | ||||||
Dilutive potential shares from stock-options | 356,659 | 285,979 | ||||||
Dilutive potential shares from convertible bonds | — | 1,400,000 | ||||||
Adjusted weighted average shares and assumed option exercises | 17,675,616 | 13,451,097 | ||||||
Net income (loss) per share | ||||||||
Basic for shareholder | 5.43 | (1.30 | ) | |||||
Diluted for shareholder | 5.32 | (1.30 | ) | |||||
(1) | Restatement of IFRS financial statements in accordance with the standards used to prepare the IFRS financial statements contained in our annual report on Form 20-F for the year ended December 31, 2005 filed with the SEC on May 9, 2006. |
(2) | Tax effect is linked to the first-time recognition of all the deferred tax liability position on capitalized development costs under IFRS of French tax Group, which is cancelled under U.S. GAAP. |
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
(unaudited) | ||||||||
(in millions of euros) | ||||||||
Shareholders’ equity as reported in the Consolidated Balance Sheets | 850.5 | 698.5 | ||||||
Goodwill amortization (FAS 142) (a) | 12.5 | 13.4 | ||||||
Deferred tax (FAS 109) (a) | (10.2 | ) | (8.3 | ) | ||||
Stock options | (7.0 | ) | (2.5 | ) | ||||
Cancellation of IFRS tangible assets adjustment | (6.7 | ) | (6.9 | ) | ||||
Cancellation of IFRS capitalization of development costs (a) | (13.4 | ) | (13.6 | ) | ||||
Derivative instruments | (14.0 | ) | 8.9 | |||||
Shareholders’ equity according to U.S. GAAP | 811.7 | 689.5 | ||||||
(a) | Net of currency translation adjustment effect and of deferred tax |
F-15
Table of Contents
September 30, | |||||||||
(unaudited) | |||||||||
2006 | 2005 | ||||||||
restated (1) | |||||||||
(amounts in millions of euros | |||||||||
except per share data) | |||||||||
Operating revenues | 967.7 | 601.6 | |||||||
Cost of operations | (636.4 | ) | (469.2 | ) | |||||
Gross profit | 331.3 | 132.4 | |||||||
Research and development expenses — net | (37.7 | ) | (29.1 | ) | |||||
Selling, general and administrative expenses | (87.4 | ) | (64.1 | ) | |||||
Other revenues (expenses) — net | 8.8 | (1.0 | ) | ||||||
Operating income | 215.0 | 38.2 | |||||||
Cost of financial debt, net | (19.2 | ) | (29.5 | ) | |||||
Derivative and other expenses on convertible bonds | (23.0 | ) | (38.0 | ) | |||||
Other financial income (loss) | (45.1 | ) | 21.4 | ||||||
Equity in income of affiliates | 8.9 | 9.6 | |||||||
Income of consolidated companies before income taxes and minority interests | 136.6 | 1.7 | |||||||
Income taxes | (41.4 | ) | (16.4 | ) | |||||
Minority interests | (1.2 | ) | (0.6 | ) | |||||
Net income | 94.0 | (15.3 | ) | ||||||
Dilutive weighted average number of shares outstanding | 17,318,957 | 11,765,118 | |||||||
Dilutive potential shares from stock-options | 356,659 | 285,979 | |||||||
Dilutive potential shares from convertible bonds | — | 1,400,000 | |||||||
Adjusted weighted average shares and assumed option exercises when dilutive | 17,675,616 | 13,451,097 | |||||||
Net income per share | |||||||||
Basic for shareholder | 5.43 | (1.30 | ) | ||||||
Diluted for shareholder | 5.32 | (1.30 | ) |
(1) | Restatement of IFRS financial statements in accordance with the standards used to prepare the IFRS financial statements contained in our annual report on Form 20-F for the year ended December 31, 2005 filed with the SEC on May 9, 2006. |
F-16
Table of Contents
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
(amounts in millions of euros) | ||||||||
ASSETS | ||||||||
Current assets | 750.2 | 608.5 | ||||||
Long-term assets | 1,001.0 | 965.4 | ||||||
Total Assets | 1,751.2 | 1,573.8 | ||||||
LIABILITIES | ||||||||
Current liabilities | 407.5 | 509.9 | ||||||
Long term liabilities | 508.5 | 362.7 | ||||||
Minority interests | 23.5 | 11.7 | ||||||
Shareholders equity | 811.7 | 689.5 | ||||||
Total Liabilities | 1,751.2 | 1,573.8 | ||||||
September 30, | ||||||||
2006 | 2005 | |||||||
(in millions of euros) | ||||||||
Net income (loss) under US GAAP | 94.0 | (15.3 | ) | |||||
Other comprehensive income (loss) | ||||||||
— Changes in the cumulative translation adjustment | (30.8 | ) | 18.2 | |||||
— Changes in the fair value of available-for-sale securities | — | |||||||
— Changes in the fair value of derivative instruments | 5.0 | (5.9 | ) | |||||
Comprehensive income (loss) under U.S. GAAP | 68.2 | (3.0 | ) |
September 30, | ||||||||
2006 | 2005 | |||||||
(in millions of euros) | ||||||||
— Cumulative Translation adjustment | (72.7 | ) | (47.0 | ) | ||||
— Fair value of available-for-sale securities | — | |||||||
— Fair value of derivative instruments | 3.6 | (3.2 | ) | |||||
Accumulated Other Comprehensive loss under U.S. GAAP | (69.1 | ) | (50.2 | ) |
F-17
Table of Contents
Sercel | ||||||||||||||||||||||||
Subsidiary | Consolidating | Subsidiary | ||||||||||||||||||||||
IFRS | CGG | Group | Others | adjustments | Consolidated | Group | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||
Total assets | 952.9 | 610.8 | 1,359.7 | (1,171.7 | ) | 1,751.7 | 208.7 | |||||||||||||||||
Operating revenues | 210.8 | 423.5 | 791.2 | (469.9 | ) | 955.6 | 229.2 | |||||||||||||||||
Operating income (loss) | 9.4 | 126.4 | 135.8 | (54.0 | ) | 217.6 | 33.6 | |||||||||||||||||
Net income (loss) | 47.5 | 77.0 | 126.6 | (131.3 | ) | 119.8 | 22.3 | |||||||||||||||||
2005 | ||||||||||||||||||||||||
Total assets | 895.5 | 542.9 | 955.3 | (863.3 | ) | 1,530.4 | 190.3 | |||||||||||||||||
Operating revenues | 155.9 | 193.4 | 474.9 | (216.8 | ) | 607.4 | 93.8 | |||||||||||||||||
Operating income (loss) | (24.1 | ) | 26.3 | 64.6 | (21.8 | ) | 45.0 | 0.7 | ||||||||||||||||
Net income (loss) | (5.8 | ) | 14.8 | 72.4 | (108.7 | ) | (27.3 | ) | (0.5 | ) |
F-18
Table of Contents
F-19
Table of Contents
BARBIER FRINAULT & AUTRES ERNST & YOUNG 41, rue Ybry 92576 Neuilly-sur-Seine cedex | MAZARS & GUERARD MAZARS Le Vinci – 4, allée de l’Arche 92075 La Defense cedex |
BARBIER FRINAULT & AUTRES ERNST & YOUNG /s/ Pascal MACIOCE | MAZARS & GUERARD /s/ Philippe CASTAGNAC |
F-20
Table of Contents
December 31, | ||||||||||||
Notes | 2005 | 2004 | ||||||||||
(amounts in | ||||||||||||
millions of euros) | ||||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | 12 | 112.4 | 130.6 | |||||||||
Trade accounts and notes receivable, net | 3 | 297.5 | 196.8 | |||||||||
Inventories and work-in-progress, net | 4 | 139.5 | 86.8 | |||||||||
Income tax assets | 10.1 | 4.2 | ||||||||||
Other current assets, net | 5 | 41.5 | 48.7 | |||||||||
Assets held for sale | 3.5 | |||||||||||
Total current assets | 604.5 | 467.1 | ||||||||||
Deferred tax assets | 23 | 31.6 | 31.5 | |||||||||
Investments and other financial assets, net | 7 | 15.3 | 12.5 | |||||||||
Investments in companies under equity method | 8 | 44.4 | 30.8 | |||||||||
Property, plant and equipment, net | 9 | 480.1 | 204.1 | |||||||||
Goodwill and intangible assets, net | 10 | 389.2 | 225.2 | |||||||||
Total non-current assets | 960.6 | 504.1 | ||||||||||
TOTAL ASSETS | 1,565.1 | 971.2 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Bank overdrafts | 12 | 9.3 | 2.8 | |||||||||
Current portion of financial debt | 12 | 157.9 | 73.1 | |||||||||
Trade accounts and notes payables | 178.5 | 98.3 | ||||||||||
Accrued payroll costs | 57.8 | 47.6 | ||||||||||
Income taxes payable | 29.3 | 24.0 | ||||||||||
Advance billings to customers | 19.5 | 13.2 | ||||||||||
Provisions — current portion | 15 | 17.7 | 14.2 | |||||||||
Other current liabilities | 11 | 35.2 | 22.8 | |||||||||
Total current liabilities | 505.2 | 296.0 | ||||||||||
Deferred tax liabilities | 23 | 56.9 | 26.7 | |||||||||
Provisions — non-current portion | 15 | 18.4 | 16.0 | |||||||||
Financial debt | 12 | 242.4 | 176.5 | |||||||||
Derivative on convertible bonds | 12 | 11.3 | 33.9 | |||||||||
Other non-current liabilities | 16 | 20.7 | 19.8 | |||||||||
Total non-current liabilities | 349.7 | 272.9 | ||||||||||
Common stock: 28,938,836 shares authorized and 17,081,680 shares with a€2 nominal value issued and outstanding at December 31, 2005; 11,682,218 at December 31, 2004 | 14 | 34.2 | 23.4 | |||||||||
Additional paid-in capital | 372.3 | 173.4 | ||||||||||
Retained earnings | 291.0 | 214.5 | ||||||||||
Treasury shares | (1.1 | ) | 1.8 | |||||||||
Net loss for the period — Attributable to the Group | (7.8 | ) | (6.4 | ) | ||||||||
Income and expense recognized directly in equity | (1.4 | ) | 3.7 | |||||||||
Cumulative translation adjustment | 11.3 | (17.2 | ) | |||||||||
Total shareholders’ equity | 698.5 | 393.2 | ||||||||||
Minority interests | 11.7 | 9.1 | ||||||||||
Total shareholders’ equity and minority interests | 710.2 | 402.3 | ||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,565.1 | 971.2 | ||||||||||
F-21
Table of Contents
December 31, | |||||||||||||
Notes | 2005 | 2004 | |||||||||||
(in millions of euros, | |||||||||||||
except per share data) | |||||||||||||
Operating revenues | 18 | 869.9 | 687.4 | ||||||||||
Other income from ordinary activities | 18 | 1.9 | 0.4 | ||||||||||
Total income from ordinary activities | 871.8 | 687.8 | |||||||||||
Cost of operations | (670.0 | ) | (554.0 | ) | |||||||||
Gross profit | 18 | 201.8 | 133.8 | ||||||||||
Research and development expenses — net | 19 | (31.1 | ) | (28.8 | ) | ||||||||
Selling, general and administrative expenses | (91.2 | ) | (78.6 | ) | |||||||||
Other revenues (expenses) — net | 20 | (4.4 | ) | 19.3 | |||||||||
Operating income | 18 | 75.1 | 45.7 | ||||||||||
Expenses related to financial debt | (45.8 | ) | (30.0 | ) | |||||||||
Income provided by cash and cash equivalents | 3.5 | 2.2 | |||||||||||
Cost of financial debt, net | 21 | (42.3 | ) | (27.8 | ) | ||||||||
Variance on derivative on convertible bonds | (11.5 | ) | (23.5 | ) | |||||||||
Other financial income (loss) | 22 | (14.5 | ) | 0.8 | |||||||||
Income (loss) of consolidated companies before income taxes | 6.8 | (4.8 | ) | ||||||||||
Income taxes | 23 | (26.6 | ) | (10.9 | ) | ||||||||
Net loss from consolidated companies | (19.8 | ) | (15.7 | ) | |||||||||
Equity in income of affiliates | 13.0 | 10.3 | |||||||||||
Net loss | (6.8 | ) | (5.4 | ) | |||||||||
Attributable to: | |||||||||||||
Shareholders | (7.8 | ) | (6.4 | ) | |||||||||
Minority interests | 1.0 | 1.0 | |||||||||||
Weighted average number of shares outstanding | 12,095,925 | 11,681,406 | |||||||||||
Dilutive potential shares from stock-options(1) | 270,789 | 108,631 | |||||||||||
Dilutive potential shares from convertible bonds(1) | 252,500 | 233,333 | |||||||||||
Dilutive weighted average number of shares outstanding adjusted when dilutive | 12,095,925 | 11,681,406 | |||||||||||
Net loss per share | |||||||||||||
— Basic | (0.64 | ) | (0.55 | ) | |||||||||
— Diluted(1) | (0.64 | ) | (0.55 | ) |
(1) | Stock-options and convertible bonds have an anti-dilutive effect at December 31, 2005 and at December 31, 2004; as a consequence, potential shares linked to those instruments are not taken into account in the adjusted dilutive weighted average number of shares, nor in the calculation of diluted loss per share. |
F-22
Table of Contents
Year | ||||||||||||
Notes | 2005 | 2004 | ||||||||||
(amounts in | ||||||||||||
millions of euros) | ||||||||||||
OPERATING | ||||||||||||
Net loss | (6.8 | ) | (5.4 | ) | ||||||||
Depreciation and amortization | 76.3 | 65.5 | ||||||||||
Multi-client surveys amortization | 10 | 69.6 | 66.5 | |||||||||
Variance on provisions | 6.7 | (3.5 | ) | |||||||||
Cancellation of expense & income calculated on stock-option | 0.4 | 0.5 | ||||||||||
Cancellation of net gain (loss) on disposal of fixed assets | 1.6 | (11.5 | ) | |||||||||
Equity in income of affiliates, | (13.0 | ) | (10.3 | ) | ||||||||
Dividends received from affiliates | 4.5 | 4.8 | ||||||||||
Other non-cash items | 27 | 27.5 | 21.4 | |||||||||
Net cash including net cost of financial debt and income taxes | 166.8 | 128.0 | ||||||||||
Less net cost of financial debt | 42.3 | 27.8 | ||||||||||
Less income taxes expenses | 26.6 | 10.9 | ||||||||||
Net cash excluding net cost of financial debt and income taxes | 235.7 | 166.7 | ||||||||||
Income taxes paid | 27 | (31.7 | ) | (17.0 | ) | |||||||
Net cash before changes in working capital | 204.0 | 149.7 | ||||||||||
— change in trade accounts and notes receivables | (24.3 | ) | (26.8 | ) | ||||||||
— change in inventories and work-in-progress | (45.2 | ) | (16.4 | ) | ||||||||
— change in other current assets | (3.1 | ) | 17.4 | |||||||||
— change in trade accounts and notes payable | 38.8 | 9.0 | ||||||||||
— change in other current liabilities | 1.0 | (5.5 | ) | |||||||||
Impact of changes in exchange rate on financial items | 11.2 | (0.5 | ) | |||||||||
Net cash provided by operating activities | 182.4 | 126.9 | ||||||||||
INVESTING | ||||||||||||
Total capital expenditures (including variation of fixed assets suppliers, excluding multi-client surveys) | 9 et 10 | (117.1 | ) | (44.4 | ) | |||||||
Investments in multi-client surveys | 10 | (32.0 | ) | (51.1 | ) | |||||||
Proceeds from disposals tangible & intangible | 3.6 | 6.9 | ||||||||||
Total net proceeds from financial assets | 0.9 | 17.2 | ||||||||||
Acquisition of investments, net of cash & cash equivalents acquired | 2 | (265.8 | ) | (27.9 | ) | |||||||
Variation in loans granted | 0.8 | 0.1 | ||||||||||
Variation in subsidies for capital expenditures | (1.3 | ) | (0.4 | ) | ||||||||
Variation in other non-current financial assets | (0.2 | ) | (1.2 | ) | ||||||||
Net cash from investing activities | (411.1 | ) | (100.8 | ) | ||||||||
FINANCING | ||||||||||||
Repayement of long-term debt | (391.7 | ) | (16.5 | ) | ||||||||
Total issuance of long-term debt | 461.1 | 73.7 | ||||||||||
Reimbursement on leasing | (13.5 | ) | (11.9 | ) | ||||||||
Change in short-term loans | (4.1 | ) | (0.6 | ) | ||||||||
Financial expenses paid | 27 | �� | (62.6 | ) | (29.1 | ) | ||||||
Net proceeds from capital increase: | ||||||||||||
— from shareholders | 207.3 | — | ||||||||||
— from minority interest of integrated companies | — | — | ||||||||||
Dividends paid and share capital reimbursements: | ||||||||||||
— to shareholders | — | — | ||||||||||
— to minority interest of integrated companies | (0.2 | ) | — | |||||||||
Acquisition/disposal of from treasury shares | (2.9 | ) | 2.0 | |||||||||
Net cash provided by financing activities | 193.4 | 17.6 | ||||||||||
Effect of exchange rates on cash | 17.1 | (9.5 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (18.2 | ) | 34.2 | |||||||||
Cash and cash equivalents at beginning of year | 130.6 | 96.4 | ||||||||||
Cash and cash equivalents at end of period | 12 | 112.4 | 130.6 | |||||||||
F-23
Table of Contents
Income and | Total | |||||||||||||||||||||||||||||||||||||||
expense | shareholders’ | |||||||||||||||||||||||||||||||||||||||
Number of | Additional | recognized | Cumulative | Total | equity and | |||||||||||||||||||||||||||||||||||
shares | Share | paid-in | Retained | Treasury | directly in | translation | shareholders’ | Minority | minority | |||||||||||||||||||||||||||||||
issued | capital | capital | earnings | shares | equity | adjustment | equity | interest | interest | |||||||||||||||||||||||||||||||
(amounts in millions of euros) | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2004 | 11,680,718 | 23.4 | 292.7 | 94.7 | (0.8 | ) | 9.2 | — | 419.2 | 8.8 | 428.0 | |||||||||||||||||||||||||||||
Capital increase | 1,500 | — | — | |||||||||||||||||||||||||||||||||||||
Net income | (6.4 | ) | (6.4 | ) | 1.0 | (5.4 | ) | |||||||||||||||||||||||||||||||||
Cost of share-based payment | 0.5 | 0.5 | 0.5 | |||||||||||||||||||||||||||||||||||||
Operations on treasury shares | 2.6 | 2.6 | 2.6 | |||||||||||||||||||||||||||||||||||||
Financial instruments: variance and transfer to income statement(1) | (1.2 | ) | (1.2 | ) | (1.2 | ) | ||||||||||||||||||||||||||||||||||
Financial assets: variance and transfer to income statement(2) | (4.3 | ) | (4.3 | ) | (4.3 | ) | ||||||||||||||||||||||||||||||||||
Foreign currency translation: variance and transfer to income statement(3) | (17.2 | ) | (17.2 | ) | (0.7 | ) | (17.9 | ) | ||||||||||||||||||||||||||||||||
Income and expense recognized directly in equity(1)+(2)+(3) | (5.5 | ) | (17.2 | ) | (22.7 | ) | (0.7 | ) | (23.4 | ) | ||||||||||||||||||||||||||||||
Others(a) | (119.3 | ) | 119.3 | — | — | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2004 | 11,682,218 | 23.4 | 173.4 | 208.1 | 1.8 | 3.7 | (17.2 | ) | 393.2 | 9.1 | 402.3 | |||||||||||||||||||||||||||||
Capital increase | 4,251,962 | 8.5 | 199.1 | 207.6 | 207.6 | |||||||||||||||||||||||||||||||||||
Conversion of convertible bonds | 1,147,500 | 2.3 | 54.0 | 28.9 | 85.2 | 85.2 | ||||||||||||||||||||||||||||||||||
Net income | (7.8 | ) | (7.8 | ) | 1.0 | (6.8 | ) | |||||||||||||||||||||||||||||||||
Cost of share-based payment | 0.4 | 0.4 | (0.2 | ) | 0.2 | |||||||||||||||||||||||||||||||||||
Operations on treasury shares | (2.9 | ) | (2.9 | ) | (2.9 | ) | ||||||||||||||||||||||||||||||||||
Financial instruments: variance and transfer to income statement(1) | (5.7 | ) | (5.7 | ) | (5.7 | ) | ||||||||||||||||||||||||||||||||||
Foreign currency translation: variance and transfer to income statement(2) | 28.5 | 28.5 | 1.8 | 30.3 | ||||||||||||||||||||||||||||||||||||
Income and expense recognized directly in equity(1)+(2) | (5.7 | ) | 28.5 | 22.8 | 1.8 | 24.6 | ||||||||||||||||||||||||||||||||||
Others(a) | (54.2 | ) | 53.6 | 0.6 | — | — | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2005 | 17,081,680 | 34.2 | 372.3 | 283.2 | (1.1 | )(b) | (1.4 | ) | 11.3 | 698.5 | 11.7 | 710.2 |
(a) | Transfer of additional paid-in-capital to retained earnings. |
(b) | Includes 42,500 treasury shares acquired in the frame of a liquidity contract. |
F-24
Table of Contents
December 31, | ||||||||
2005 | 2004 | |||||||
(amounts | ||||||||
in millions | ||||||||
of euros) | ||||||||
Net income | (7.8 | ) | (6.4 | ) | ||||
— Variance in fair value of available-for-sale investments | — | (4.3 | ) | |||||
— Variance in fair value of hedging instruments | (5.7 | ) | (1.2 | ) | ||||
— Variance in foreign currency translation adjustment | 28.5 | (17.2 | ) | |||||
Incomes and expenses recognized directly in equity for the period | 15.0 | (29.1 | ) | |||||
F-25
Table of Contents
— | Business combinations (IFRS 3): the Group has opted not to restate business combinations that occurred before January 1, 2004, | |
— | Measurement of certain items of property, plant and equipment at fair value (IAS 16): the Group has opted not to reassess property, plant and equipment and intangible assets at fair value. Property, plant and equipment are maintained at historical cost, | |
— | Actuarial gains and losses on pension and other post-employment benefit plans (IAS 19): cumulative unrecognized actuarial gains and losses on pension and other post-employment benefits plans at January 1, 2004 have been recognized in shareholders’ equity in the opening balance sheet, | |
— | Cumulative translation adjustments: the accumulated total of translation adjustments at January 1, 2004 has been reversed against consolidated reserves, | |
— | Only stock option plans issued after November 7, 2002 and not fully vested as of January 1, 2005 are accounted for in accordance with IFRS2. |
— | Financial instruments: the Group elect the option to apply standards IAS 32 and 39 from January 1, 2004; |
F-26
Table of Contents
F-27
Table of Contents
• | Multi-client surveys |
• | Exclusive surveys |
F-28
Table of Contents
• | Other geophysical services |
• | Equipment sales |
• | Software and hardware sales |
F-29
Table of Contents
• | Property, plant and equipment |
— equipments and tools: | 3 to 10 years | |||
— vehicles: | 3 to 5 years | |||
— seismic vessels: | 12 to 30 years | |||
— buildings for industrial use: | 20 years | |||
— buildings for administrative and commercial use: | 20 to 40 years |
• | Lease agreements |
• | Goodwill |
• | Multi-client surveys |
F-30
Table of Contents
— | Gulf of Mexico surveys are amortized on the basis of 66.6% of revenues. Starting at time of data delivery, a minimum straight-line depreciation scheme is applied on a three-year period, should total accumulated depreciation from the 66.6% of revenues amortization method be below this minimum level; | |
— | Rest of the world surveys: same as above except depreciation is 83.3% of revenues and straight-line depreciation is over a five-year period from data delivery; and | |
— | Long term strategic 2D surveys are amortized on the basis of revenues according to the above area split and straight-line depreciation on a seven-year period from data delivery. |
• | Development costs |
— | the project is clearly defined, and costs are separately identified and reliably measured, | |
— | the product or process is technically and commercially feasible, | |
— | we have sufficient resources to complete development, and | |
— | the intangible asset is likely to generate future economic benefits, either because it is useful to us or through an existing market for the intangible asset itself or for its products. |
• | Impairment |
— | significant underperformance relative to expected operating results based upon historical and/or projected data, | |
— | significant changes in the manner of our use of the acquired assets or the strategy for our overall business, and | |
— | significant negative industry or economic trends. |
F-31
Table of Contents
• | Assets held for sale |
• | Investments in non-consolidated entities |
• | Loans and non-current receivables |
• | Impairment |
F-32
Table of Contents
• | Onerous contracts |
• | Pension, post-employment benefits and other post-employment benefits |
• | Defined contribution plans |
• | Defined benefit plans |
— | As at the date of issuance, at the fair value of the consideration received, less issuance fees and/or issuance premium; | |
— | subsequently, at amortized cost, corresponding to the amount at which is assessed the financial debt at its initial accounting, less repayments in nominal and increased or decreased of the accumulated amortization of all differences between this original amount and the amount at maturity; differences between initial amount and the amount at maturity are amortized according to the method of effective interest rate. |
F-33
Table of Contents
• | Convertible bonds |
• | Operating activities |
• | Investing activities |
F-34
Table of Contents
• | Financing activities |
• | Cash and cash equivalents |
F-35
Table of Contents
(in million of euros) | |||||
Total acquisition of Exploration Resources shares | 294.7 | ||||
Acquisition fees | 8.6 | ||||
Total acquisition price | 303.3 | ||||
Cash and cash equivalents acquired | 37.5 | ||||
Fair value of fixed assets acquired | 195.1 | ||||
Deferred tax liabilities net assumed | (32.9 | ) | |||
Other assets and liabilities acquired | (73.5 | ) | |||
Preliminary fair value of net assets acquired | 126.2 | ||||
Preliminary goodwill | 177.1 |
September 1, 2005.
F-36
Table of Contents
December 31 | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Trade accounts and notes receivable gross — current portion | 240.0 | 159.4 | ||||||
Less: allowance for doubtful accounts | (6.2 | ) | (4.4 | ) | ||||
Trade accounts and notes receivables net — current portion | 233.8 | 155.0 | ||||||
Trade accounts and notes receivable gross — long term portion | 12.0 | 13.1 | ||||||
Less: allowance for doubtful accounts | — | — | ||||||
Trade accounts and notes receivables net — long term portion | 12.0 | 13.1 | ||||||
Recoverable costs and accrued profit on billed | 51.7 | 28.7 | ||||||
Total accounts and notes receivables | 297.5 | 196.8 | ||||||
F-37
Table of Contents
December 31, 2005 | December 31, 2004 | |||||||||||||||||||||||
Valuation | Valuation | |||||||||||||||||||||||
Cost | Allowance | Net | Cost | Allowance | Net | |||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Geophysical services | ||||||||||||||||||||||||
— Consumables and spares parts | 23.1 | (1.1 | ) | 22.0 | 18.6 | (1.0 | ) | 17.6 | ||||||||||||||||
— Work in progress | 7.6 | — | 7.6 | 5.4 | — | 5.4 | ||||||||||||||||||
Geophysical products | ||||||||||||||||||||||||
— Raw materials and spare parts | 45.4 | (6.9 | ) | 38.5 | 27.4 | (6.1 | ) | 21.3 | ||||||||||||||||
— Work in progress | 51.0 | (5.7 | ) | 45.3 | 34.9 | (4.6 | ) | 30.3 | ||||||||||||||||
— Finished goods | 30.1 | (4.0 | ) | 26.1 | 16.0 | (3.8 | ) | 12.2 | ||||||||||||||||
Inventories and work in progress | 157.2 | (17.7 | ) | 139.5 | 102.3 | (15.5 | ) | 86.8 | ||||||||||||||||
December 31, | December 31, | |||||||
Variation of the period | 2005 | 2004 | ||||||
(in millions of euros) | ||||||||
Balance at beginning of period | 86.8 | 62.4 | ||||||
Variations | 46.6 | 9.5 | ||||||
Movements in valuation allowance | (1.3 | ) | 6.9 | |||||
Change in consolidation scope | 1.1 | 7.5 | ||||||
Change in exchange rates | 4.3 | (1.5 | ) | |||||
Others | 2.0 | 2.0 | ||||||
Balance at end of period | 139.5 | 86.8 | ||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Social and tax assets | 16.0 | 5.5 | ||||||
Fair value of financial instruments | — | 8.9 | ||||||
Other miscellaneous receivables | 11.6 | 18.9 | ||||||
Supplier prepayments | 3.7 | 8.2 | ||||||
Assets of retirement indemnity plans | 1.8 | — | ||||||
Prepaid expenses(a) | 8.4 | 7.2 | ||||||
Other current assets | 41.5 | 48.7 | ||||||
(a) | includes principally prepaid rent, vessels charters. |
F-38
Table of Contents
December 31, 2005 | ||||||||||||||||
Additions/ | ||||||||||||||||
Balance at | Deductions | Balance | ||||||||||||||
beginning | charged in | at end | ||||||||||||||
of year | income | Others(a) | of period | |||||||||||||
(in millions of euros) | ||||||||||||||||
Trade accounts and notes receivables | 4.4 | 2.3 | (0.5 | ) | 6.2 | |||||||||||
Inventories and work-in-progress | 15.4 | 1.3 | 1.0 | 17.7 | ||||||||||||
Tax assets | — | — | 0.3 | 0.3 | ||||||||||||
Other current assets | 0.7 | 0.7 | — | 1.4 | ||||||||||||
Loans receivables and other investments | 2.0 | (0.7 | ) | — | 1.3 | |||||||||||
Total assets valuation allowance | 22.5 | 3.6 | 0.8 | 26.9 | ||||||||||||
(a) | includes the effects of exchange rates changes and changes in the scope of consolidation. |
December 31, 2004 | ||||||||||||||||
Additions/ | ||||||||||||||||
Balance at | Deductions | Balance | ||||||||||||||
beginning | charged | at end | ||||||||||||||
of year | in income | Others(a) | of period | |||||||||||||
(in millions of euros) | ||||||||||||||||
Trade accounts and notes receivables | 3.9 | (0.1 | ) | 0.6 | 4.4 | |||||||||||
Inventories and work-in-progress | 22.7 | (6.9 | ) | (0.4 | ) | 15.4 | ||||||||||
Other current assets | 0.6 | 0.1 | — | 0.7 | ||||||||||||
Loans receivables and other investments | 2.0 | 0.2 | (0.2 | ) | 2.0 | |||||||||||
Total assets valuation allowance | 29.2 | (6.7 | ) | (0.0 | ) | 22.5 | ||||||||||
(a) | includes the effects of exchange rates changes and changes in the scope of consolidation. |
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Other financial investments: | ||||||||
Unconsolidated investments | 3.7 | 2.8 | ||||||
Loans and advances(a) | 7.3 | 6.3 | ||||||
Other | 4.3 | 3.4 | ||||||
Total | 15.3 | 12.5 | ||||||
(a) | includes loans and advances to companies accounted for under the equity method at December 31, 2005 for€6.6 million, and at December 31, 2004 for€5.8 million. |
F-39
Table of Contents
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Tronic’s Microsystems SA | 3.5 | 2.6 | ||||||
Other investments in unconsolidated companies | 0.2 | 0.2 | ||||||
Total investments in unconsolidated companies | 3.7 | 2.8 | ||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Balance at beginning of period | 30.8 | 27.0 | ||||||
Equity in income | 13.0 | 10.3 | ||||||
Dividends received during the period, reduction in share capital | (4.5 | ) | (4.8 | ) | ||||
Changes in exchange rates | 4.6 | (1.7 | ) | |||||
Balance at end of period | 43.9 | 30.8 | ||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Argas | 36.5 | 23.7 | ||||||
Geomar | 5.5 | 5.6 | ||||||
JV Xian Peic/ Sercel Limited | 2.4 | 2.2 | ||||||
VS Fusion LLC | (0.5 | ) | (0.7 | ) | ||||
Investments in companies under the equity method | 43.9 | 30.8 | ||||||
F-40
Table of Contents
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Argas | 32.2 | 19.4 | ||||||
Geomar | (0.2 | ) | — | |||||
JV Xian Peic/ Sercel Limited | 0.8 | 0.6 | ||||||
VS Fusion LLC | (0.5 | ) | (0.7 | ) | ||||
Total | 32.3 | 19.3 | ||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Current assets | 57.5 | 41.9 | ||||||
Fixed assets | 33.5 | 23.7 | ||||||
Current liabilities | 3.5 | 5.7 | ||||||
Non current liabilities | 8.7 | 2.6 | ||||||
Gross revenue | 76.3 | 70.0 | ||||||
Operating profit | 19.6 | 21.6 | ||||||
Income from continuing operations before extraordinary items and cumulative effect of change in accounting principle | 20.4 | 21.3 | ||||||
Net income | 20.4 | 21.3 | ||||||
December 31, 2005 | December 31, 2004 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
Gross | depreciation | Net | Gross | depreciation | Net | |||||||||||||||||||
(amounts in millions of euros) | ||||||||||||||||||||||||
Land | 4.7 | (0.2 | ) | 4.5 | 4.4 | (0.2 | ) | 4.2 | ||||||||||||||||
Buildings | 60.3 | (29.6 | ) | 30.7 | 53.1 | (25.4 | ) | 27.7 | ||||||||||||||||
Machinery & equipment | 457.0 | (295.9 | ) | 161.1 | 339.7 | (259.3 | ) | 80.4 | ||||||||||||||||
Vehicles & vessels | 373.1 | (104.3 | ) | 268.8 | 159.2 | (79.0 | ) | 80.2 | ||||||||||||||||
Other tangible assets | 35.8 | (25.9 | ) | 9.9 | 33.1 | (23.6 | ) | 9.5 | ||||||||||||||||
Assets under constructions | 5.1 | — | 5.1 | 2.1 | — | 2.1 | ||||||||||||||||||
Total Property, plant and equipment | 936.0 | (455.9 | ) | 480.1 | 591.6 | (387.5 | ) | 204.1 | ||||||||||||||||
F-41
Table of Contents
December 31, 2005 | December 31, 2004 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
Gross | depreciation | Net | Gross | depreciation | Net | |||||||||||||||||||
(amounts in millions of euros) | ||||||||||||||||||||||||
Land and buildings under capital leases | 5.9 | (0.2 | ) | 5.7 | 5.9 | (0.1 | ) | 5.8 | ||||||||||||||||
Geophysical equipment and vessels under capital leases | 101.7 | (25.5 | ) | 76.2 | 30.7 | (22.1 | ) | 8.6 | ||||||||||||||||
Other tangible assets under capital leases | 0.5 | (0.5 | ) | — | 0.2 | (0.1 | ) | 0.1 | ||||||||||||||||
Total Property, plant and equipment under capital lease | 108.1 | (26.2 | ) | 81.9 | 36.9 | (22.4 | ) | 14.5 | ||||||||||||||||
December 31, | ||||||||
Variation of the period | 2005 | 2004 | ||||||
(in millions | ||||||||
of euros) | ||||||||
Balance at beginning of period | 204.1 | 215.8 | ||||||
Acquisitions | 107.7 | 41.1 | ||||||
Acquisitions through capital lease | 17.4 | 8.7 | ||||||
Depreciation | (67.9 | ) | (58.0 | ) | ||||
Disposals | (6.0 | ) | (1.9 | ) | ||||
Changes in exchange rates | 35.2 | (8.9 | ) | |||||
Change in consolidation scope | 195.1 | 8.8 | ||||||
Other | (5.5 | ) | (1.5 | ) | ||||
Balance at end of period | 480.1 | 204.1 | ||||||
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December 31, 2005 | ||||
(in millions of euros) | ||||
Acquisitions of tangible assets (excluding capital lease) — see above | 107.7 | |||
Development costs capitalized — see note 19 | 8.1 | |||
Additions in other tangible assets (excluding non-exclusive surveys) — see note 10 | 2.3 | |||
Variance of fixed assets suppliers | (1.0 | ) | ||
Total purchases of tangible and intangible assets according to cash-flow statement | 117.1 | |||
Acquisitions through capital lease — see above | 17.4 | |||
Increase in multi-clients surveys — see note 10 | 32.0 | |||
Less variance of fixed assets | 1.0 | |||
Capital expenditures according to note 18 | 167.5 | |||
December 31, 2005 | December 31, 2004 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
Gross | depreciation | Net | Gross | depreciation | Net | |||||||||||||||||||
(amounts in millions of euros) | ||||||||||||||||||||||||
Goodwill of consolidated subsidiaries | 252.9 | — | 252.9 | 62.5 | — | 62.5 | ||||||||||||||||||
Multi-clients surveys | 568.4 | (474.8 | ) | 93.6 | 510.8 | (386.3 | ) | 124.5 | ||||||||||||||||
Development costs capitalized | 29.2 | (3.9 | ) | 25.3 | 19.9 | (1.6 | ) | 18.3 | ||||||||||||||||
Software | 25.9 | (19.5 | ) | 6.4 | 24.8 | (17.4 | ) | 7.4 | ||||||||||||||||
Other intangible assets | 19.6 | (8.6 | ) | 11.0 | 17.7 | (5.2 | ) | 12.5 | ||||||||||||||||
Total Goodwill and Intangible assets | 896.0 | (506.8 | ) | 389.2 | 635.7 | (410.5 | ) | 225.2 | ||||||||||||||||
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December 31, | ||||||||
Variation of the period | 2005 | 2004 | ||||||
(in millions | ||||||||
of euros) | ||||||||
Balance at beginning of period | 225.2 | 217.3 | ||||||
Additions in goodwill | 177.1 | 0.2 | ||||||
Increase in multi-clients surveys | 32.0 | 51.1 | ||||||
Development costs capitalized | 8.2 | 4.6 | ||||||
Others acquisitions | 2.3 | 1.7 | ||||||
Depreciation on multi-client surveys | (69.6 | ) | (66.5 | ) | ||||
Other depreciation | (8.4 | ) | (7.8 | ) | ||||
Disposals | — | (0.9 | ) | |||||
Changes in exchange rates | 22.4 | (8.4 | ) | |||||
Change in consolidation scope | — | 33.1 | ||||||
Other | 0.1 | 0.8 | ||||||
Balance at end of period | 389.2 | 225.2 | ||||||
— | the Product segment level: test of the net book value of the goodwill | |
— | the Offshore SBU: test of the historical multi-client library net book value and of the tangible assets net book value, which results notably from the 2001 Aker purchase accounting, from the assets acquired in 2005 Exploration Resources purchase accounting and of the goodwill, corresponding mainly to the goodwill booked from Exploration Resources purchase accounting in 2005 | |
— | the Processing SBU: test of the goodwill, corresponding mainly to the goodwill booked from Exploration Resources purchase accounting in 2005 | |
— | the Land SBU level: test of the net book value of assets. |
• | forecasted cash-flows estimated in 5-years business plans deemed on the basis of the average medium term exchange rate€1 equals U.S.$1.25; and | |
• | discount ratios corresponding to the respective sector weighted average cost of capital (WACC): |
— | 8.83% for the Product segment (corresponding to a pre-tax rate of 13.62%); | |
— | 8.29% for the multi-client library (corresponding to a pre-tax rate of 12.09%); | |
— | 8.44% for the whole Offshore SBU (corresponding to a pre-tax rate of 19.82%); and | |
— | 8.67% for the Processing SBU (corresponding to a pre-tax rate of 14.45%). |
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December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Deferred income | 10.6 | 3.9 | ||||||
Value added tax and other taxes payable | 12.9 | 7.7 | ||||||
Fair value of financial instruments | 4.7 | — | ||||||
Other liabilities | 7.0 | 11.2 | ||||||
Other current liabilities | 35.2 | 22.8 | ||||||
December 31, 2005 | December 31, 2004 | |||||||||||||||||||||||
Non- | Non- | |||||||||||||||||||||||
Current | current | Total | Current | current | Total | |||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Outstanding bonds | — | 146.3 | 146.3 | 55.1 | 154.9 | 210.0 | ||||||||||||||||||
Bank loans | 135.9 | 28.8 | 164.7 | 5.3 | 6.6 | 11.9 | ||||||||||||||||||
Capital lease obligations | 20.1 | 67.3 | 87.4 | 9.8 | 15.0 | 24.8 | ||||||||||||||||||
Sub-total | 156.0 | 242.4 | 398.4 | 70.2 | 176.5 | 246.7 | ||||||||||||||||||
Accrued interest | 1.9 | 2.9 | ||||||||||||||||||||||
Total | 157.9 | 73.1 | ||||||||||||||||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Euro | 11.8 | 18.7 | ||||||
U.S. dollar | 385.6 | 226.0 | ||||||
Other currencies | 1.0 | 2.0 | ||||||
Total | 398.4 | 246.7 | ||||||
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December 31, | ||||||||
2005 | 2004 | |||||||
(in millions of | ||||||||
euros) | ||||||||
Variable rates (effective rate December 31, 2005: 7.60%, 2004: 2.76%) | 156.6 | 15.4 | ||||||
Fixed rates (effective rate December 31, 2005: 7.06%, 2004: 11.07%) | 241.8 | 231.3 | ||||||
Total | 398.4 | 246.7 | ||||||
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F-47
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(a) | the ratio of net debt over equity should not exceed 2.50; | |
(b) | the ratio of net debt over Adjusted EBITDA (ORBDA) should not exceed (i) 2.00 on the 12 months periods ending December 31, 2003, June 30, 2004 and December 31, 2004, (ii) 1.75 on the 12 months periods ending June 30, 2005, (iii) 2.50 on the 12 months period preceding December 31, 2005 and (iv) 2.00 on the following 12 months periods; and | |
(c) | the ratio of net debt (in USD at closing rate) over cash-flow from operations on a rolling 12 months period calculated at average rate of the period should not exceed (i) 4.00 on the 12 months periods ending December 31, 2003 and June 30, 2004, (ii) 3.75 on the 12 months periods ending December 31, 2004, (iii) 3.50 on the 12 months period ending June 30, 2005, (iv) 3.00 on the following 12 months periods. |
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December 31, | |||||||||
2005 | 2004 | ||||||||
Forward sales of U.S. dollars against euros | |||||||||
Notional amount (in millions of US$) | 183.6 | 127.0 | |||||||
—of which forward sales qualifying as cash-flow hedges | 183.6 | 108.4 | |||||||
—of which forward sales not qualifying as cash-flow hedges | — | 18.6 | |||||||
Weighted average maturity | 91 days | 96 days | |||||||
Weighted average forward U.S.$/ Euro exchange rate | 1.2048 | 1.2453 | |||||||
Forward sales of U.S. dollars against British pounds | |||||||||
Notional amount (in millions of US$) | 6.5 | — | |||||||
—of which forward sales qualifying as cash-flow hedges | 6.5 | — | |||||||
—of which forward sales not qualifying as cash-flow hedges | — | — | |||||||
Weighted average maturity | 90 days | — | |||||||
Weighted average forward U.S.$/£ exchange rate | 1.8871 | — |
December 31, | December 31, | |||||||
2005 | 2004 | |||||||
(in millions of euros) | ||||||||
Carrying value of forward exchange contracts | (4.7 | ) | 8.9 | |||||
Fair value of forward exchange contracts | (4.7 | ) | 8.9 | |||||
Gains recognized in profit and loss | — | 4.5 | ||||||
Losses recognized in profit and loss | (2.9 | ) | — | |||||
Gains recognized directly in equity | — | 3.7 | ||||||
Losses recognized directly in equity | (5.6 | ) | — |
December 31, 2005 | December 31, 2004 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
amount | value | amount | value | ||||||||||||||
(in millions of euros) | |||||||||||||||||
Cash and cash equivalents | 112.4 | 112.4 | 130.6 | 130.6 | |||||||||||||
Bank overdraft facilities | 9.3 | 9.3 | 2.8 | 2.8 | |||||||||||||
Bank loans, vendor equipment | |||||||||||||||||
financing and shareholder loans: | |||||||||||||||||
— Variable rate | 156.6 | 156.6 | 15.4 | 15.4 | |||||||||||||
— Fixed rate | 241.8 | 244.0 | 231.7 | 254.8 | |||||||||||||
Forward currency exchange contracts | (4.1 | ) | (4.1 | ) | 8.7 | 8.7 |
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— | 152.834 fully paid shares related to stock options exercised for which the company received net proceeds of€8.2 million; | |
— | 1.147.500 fully paid ordinary shares issued on the conversion of 11,475 convertibles bonds out of the convertible bonds issued on November 4, 2004 with maturity date 2012 and; | |
— | 4.099.128 fully paid ordinary shares issued on the capital increase completed between November 21, 2005 and December 2, 2005 at a share price of€51 for which the company received gross proceeds of€209.1 million. The fees and costs related to this transaction amounted to€9.4 million. |
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Adjustment of | Exercise price | Adjusted | ||||||||||
Date of stock options | number of options | before adjustment (€) | exercise price (€) | |||||||||
January 18, 2000 | 9.387 | 49.90 | 45.83 | |||||||||
March 14, 2001 | 21.376 | 71.20 | 65.39 | |||||||||
May 15, 2002 | 11.466 | 43.47 | 39.92 | |||||||||
May 15, 2003 | 15.583 | 15.82 | 14.53 | |||||||||
Total | 57.812 | |||||||||||
Options | ||||||||||||||||||||
Date of Board of | outstanding at | Exercise price | Remaining | |||||||||||||||||
Directors’ Resolution | Options granted | Dec. 31. 2005 | per share (€) | Expiration date | duration | |||||||||||||||
January 18. 2000 | 231.000 | 124.736 | 45.83 | January 17, 2008 | 24.5 months | |||||||||||||||
March 14. 2001 | 256.000 | 251.463 | 65.39 | March 13, 2009 | 38.5 months | |||||||||||||||
May 15. 2002 | 138.100 | 135.400 | 39.92 | May 14, 2010 | 52.5 months | |||||||||||||||
May 15. 2003 | 169.900 | 180.235 | 14.53 | May 14, 2011 | 64.5 months | |||||||||||||||
Total | 795.000 | 691.834 | ||||||||||||||||||
December 31, | ||||||||||||||||
2005 | 2004 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
average | average | |||||||||||||||
Number of | exercise | Number of | exercise | |||||||||||||
options | price | options | price | |||||||||||||
(weighted average exercise price in euro) | ||||||||||||||||
Outstanding-beginning of year | 809.050 | 48.95 | € | 815.673 | 48.86 | € | ||||||||||
Granted | — | — | — | — | ||||||||||||
Adjustments followings the capital increase | 57.812 | 43.45 | € | — | — | |||||||||||
Exercised | (152.834 | ) | 53.86 | € | (1.500 | ) | 15.82 | € | ||||||||
Forfeited | (22.194 | ) | 55.61 | € | (5.123 | ) | 44.39 | € | ||||||||
Outstanding-end of year | 691.834 | 43.63 | € | 809.050 | 48.95 | € | ||||||||||
Exercisable-end of year | 376.199 | 58.90 | € | 56.662 | 61.03 | € |
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Balance at | Balance at | |||||||||||||||||||||||
31 December, | Deductions | Deductions | 31 December, | |||||||||||||||||||||
2004 | Additions | (used) | (non used) | Others(a) | 2005 | |||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Provisions for contacts losses | 4.7 | 2.8 | (3.8 | ) | — | 0.4 | 4.1 | |||||||||||||||||
Provisions for restructuring costs | 1.0 | 0.3 | (0.5 | ) | — | — | 0.8 | |||||||||||||||||
Provisions for litigations | 5.4 | 5.0 | (1.8 | ) | — | (0.3 | ) | 8.3 | ||||||||||||||||
Provisions for exchange losses | — | — | — | — | — | — | ||||||||||||||||||
Others provisions | 3.1 | 3.8 | (2.1 | ) | (0.2 | ) | (0.1 | ) | 4.5 | |||||||||||||||
Total short-term provisions | 14.2 | 11.9 | (8.2 | ) | (0.2 | ) | — | 17.7 | ||||||||||||||||
Customers Guarantee provisions | 3.4 | 3.8 | (2.3 | ) | — | 0.1 | 5.0 | |||||||||||||||||
Retirement indemnity provisions | 11.0 | 1.3 | (0.6 | ) | — | 0.1 | 11.8 | |||||||||||||||||
Others provisions | 1.6 | 0.4 | (1.1 | ) | — | 0.2 | 1.1 | |||||||||||||||||
Negative value of investments in companies under the equity method | — | — | — | — | 0.5 | 0.5 | ||||||||||||||||||
Total long-term provisions | 16.0 | 5.5 | (4.0 | ) | — | 0.9 | 18.4 | |||||||||||||||||
Total provisions | 30.2 | 17.4 | (12.2 | ) | (0.2 | ) | 0.9 | 36.1 |
(a) | includes the effects of exchange rates changes and acquisitions and divestitures |
• | historical staff turnover and standard mortality schedule; | |
• | age of retirement between 60 and 65 years old; and | |
• | actuarial rate and average rate of increase in future compensation. |
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December 31, | |||||||||
2005 | 2004 | ||||||||
(in millions | |||||||||
of euros) | |||||||||
Accumulated benefit obligation (unvested) | 11.4 | 8.7 | |||||||
Projected benefit obligation | 14.5 | 13.2 | |||||||
Effect of changes in discount rates | — | — | |||||||
15.0 | 13.2 | ||||||||
Service cost | 1.6 | 0.6 | |||||||
Interest expense | 0.7 | 0.5 | |||||||
Amortization of loss arising from change in discount rate | (0.2 | ) | (0.3 | ) | |||||
Net expense of the year | 2.1 | 0.8 | |||||||
Benefit payments | (0.4 | ) | (0.2 | ) | |||||
Consolidation scope entries & currency translation | 0.1 | 0.3 | |||||||
Net changes | 1.8 | 0.9 | |||||||
Fair value of plan assets | 5.0 | 2.2 | |||||||
Contributions paid | 2.6 | 0.4 | |||||||
Expected return on plan assets | 0.2 | 0.1 | |||||||
Consolidation scope entries & currency translation | — | — | |||||||
Net changes | 2.8 | 0.5 | |||||||
Net liability at end of the year | 11.8 | 11.0 | |||||||
Net asset at end of the year | 1.8 | — | |||||||
Key assumptions used in estimating the Group’s retirement | |||||||||
obligations are: | |||||||||
Discount rate | 4.25 | % | 4.00 | % | |||||
Average rate of increase in future compensation | 3.00 | % | 3.00 | % | |||||
Average expected return on assets | 4.00 | % | 5.50 | % |
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Research and development subsidies | 5.5 | 6.8 | ||||||
Profit sharing scheme | 15.2 | 13.0 | ||||||
Other non-current liabilities | 20.7 | 19.8 | ||||||
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Payments due by period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
1 year | 1-3 years | 4-5 years | 5 years | Total | ||||||||||||||||
(in million of euros) | ||||||||||||||||||||
Long-term debt (Note 12) | 135.7 | 17.7 | 10.1 | 147.3 | 310.8 | |||||||||||||||
Capital Lease Obligations | 23.8 | 32.2 | 14.5 | 30.1 | 100.6 | |||||||||||||||
Operating Leases | 51.6 | 43.2 | 10.3 | 0.8 | 105.9 | |||||||||||||||
Other Long-term Obligations (bond interest) | 11.5 | 23.0 | 23.0 | 47.2 | 104.7 | |||||||||||||||
Total Contractual Obligations | 222.6 | 116.1 | 57.9 | 225.4 | 622.0 | |||||||||||||||
Less than | After | |||||||||||||||
1 year | 1-5 years | 5 years | Total | |||||||||||||
(in millions of euros) | ||||||||||||||||
Capital Lease Obligations | 23.8 | 46.7 | 30.1 | 100.6 | ||||||||||||
Discounting | (3.7 | ) | (9.4 | ) | (0.1 | ) | (13.2 | ) | ||||||||
Capital lease debt (see note 12) | 20.1 | 37.3 | 30.0 | 87.4 |
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2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Guarantees issued in favor of clients | 82.4 | 83.0 | ||||||
Guarantees issued in favor of banks | 26.3 | 13.7 | ||||||
Notes receivable discounted | — | — | ||||||
Other guarantees(a) | 14.2 | 13.3 | ||||||
Total | 122.9 | 110.0 | ||||||
(a) | Other guarantees relate primarily to guarantees issued by the Company on behalf of subsidiaries and affiliated companies in favor of customs or other governmental administrations. |
Due date | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
1 year | 1-3 years | 4-5 years | 5 years | Total | ||||||||||||||||
(in millions of euros) | ||||||||||||||||||||
Guarantees issued in favor of clients | 69.0 | 4.5 | 8.9 | — | 82.4 | |||||||||||||||
Guarantees issued in favor of banks | 20.0 | 4.5 | 1.8 | — | 26.3 | |||||||||||||||
Other guarantees | 14.2 | — | — | — | 14.2 | |||||||||||||||
Total | 103.2 | 9.0 | 10.7 | — | 122.9 | |||||||||||||||
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• | Geophysical services, which consist of (i) land seismic acquisition, (ii) marine seismic acquisition, (iii) other geophysical acquisition, including activities not exclusively linked to oilfield services, and (iv) data processing, and data management; | |
• | Geophysical products, which consist of the manufacture and sale of equipment involved in seismic data acquisition, such as recording and transmission equipment and vibrators for use in land seismic acquisition. and software development and sales. |
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Geophysical | Geophysical | Eliminations and | Consolidated | |||||||||||||
2005 | services | products | Adjustments | Total | ||||||||||||
(in millions of euros) | ||||||||||||||||
Revenues from unaffiliated customers | 552.3 | 317.6 | — | 869.9 | ||||||||||||
Inter-segment revenues | 0.6 | 61.2 | (61.8 | ) | — | |||||||||||
Operating revenues | 552.9 | 378.8 | (61.8 | ) | 869.9 | |||||||||||
Other income from ordinary activities | 1.9 | — | — | 1.9 | ||||||||||||
Total income from ordinary activities | 554.8 | 378.8 | (61.8 | ) | 871.8 | |||||||||||
Operating income (loss) | 25.2 | 79.8 | (29.9 | )(a) | 75.1 | |||||||||||
Equity income (loss) of investees | 12.9 | 0.1 | — | 13.0 | ||||||||||||
Capital expenditures(b) | 165.5 | 21.6 | (19.6 | ) | 167.5 | |||||||||||
Depreciation and amortization(c) | 132.9 | 18.2 | (5.2 | ) | 145.9 | |||||||||||
Corporate assets amortization | — | — | — | — | ||||||||||||
Investments in companies under equity method | — | — | — | — | ||||||||||||
Identifiable assets | 1,105.4 | 412.7 | (113.4 | ) | 1,404.7 | |||||||||||
Unallocated and corporate assets | 160.4 | |||||||||||||||
Total assets | 1,565.1 | |||||||||||||||
of which equity method companies | 42.0 | 2.4 | 44.4 | |||||||||||||
Identifiable liabilities | 575.5 | 179.8 | (59.5 | ) | 695.8 | |||||||||||
Unallocated and corporate liabilities | 159.1 | |||||||||||||||
Total liabilities | 854.9 | |||||||||||||||
(a) | Includes general corporate expenses of€15.8 million. |
(b) | Includes (i) investments in multi-clients surveys of€31.9 million, (ii) equipment acquired under capital lease of€17.4 million, (iii) capitalized development costs in the Services segment of€3.5 million, and (iv) capitalized development costs in the Products segment of€4.6 million. |
(c) | Includes multi-clients surveys amortization of€69.6 million. |
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Geophysical | Geophysical | Eliminations and | Consolidated | |||||||||||||
2004 | services | products | Adjustments | Total | ||||||||||||
(in millions of euros) | ||||||||||||||||
Revenues from unaffiliated customers | 388.0 | 299.4 | — | 687.4 | ||||||||||||
Inter-segment revenues | 1.3 | 14.2 | (15.5 | ) | — | |||||||||||
Operating revenues | 389.3 | 313.6 | (15.5 | ) | 687.4 | |||||||||||
Other income from ordinary activities | 0.4 | — | — | 0.4 | ||||||||||||
Total income from ordinary activities | 389.7 | 313.6 | (15.5 | ) | 687.8 | |||||||||||
Operating income (loss) | (19.8 | ) | 64.5 | 1.0 | (a) | 45.7 | ||||||||||
Equity income (loss) of investees | 10.0 | 0.3 | — | 10.3 | ||||||||||||
Capital expenditures(b) | 94.0 | 14.2 | (0.9 | ) | 107.3 | |||||||||||
Depreciation and amortization(c) | 121.8 | 15.5 | (5.0 | ) | 132.3 | |||||||||||
Corporate assets amortization | — | — | — | — | ||||||||||||
Investments in companies under equity method | — | |||||||||||||||
Identifiable assets | 540.8 | 311.9 | (44.9 | ) | 807.8 | |||||||||||
Unallocated and corporate assets | 163.4 | |||||||||||||||
Total assets | 971.2 | |||||||||||||||
of which equity method companies | 28.6 | 2.2 | 30.8 | |||||||||||||
Identifiable liabilities | 230.7 | 129.6 | (38.4 | ) | 321.9 | |||||||||||
Unallocated and corporate liabilities | 247.0 | |||||||||||||||
Total liabilities | 568.9 | |||||||||||||||
(a) | Includes general corporate expenses of€13.0 million. |
(b) | Includes (i) investments in multi-clients surveys of€51.1 million, (ii) equipment acquired under capital lease of€8.7 million, (iii) capitalized development costs in the Services segment of€1.9 million, and (iv) capitalized development costs in the Products segment of€2.7 million. |
(c) | Includes multi-clients surveys amortization of€66.5 million. |
2005 | 2004 | |||||||||||||||
(in millions of euros) | ||||||||||||||||
France | 7.8 | 1% | 14.1 | 2% | ||||||||||||
Rest of Europe | 182.5 | 21% | 124.1 | 18% | ||||||||||||
Asia-Pacific/Middle East | 297.3 | 34% | 274.5 | 40% | ||||||||||||
Africa | 90.6 | 10% | 67.0 | 10% | ||||||||||||
Americas | 291.7 | 34% | 207.7 | 30% | ||||||||||||
Consolidated total | 869.9 | 100% | 687.4 | 100% | ||||||||||||
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2005 | 2004 | |||||||||||||||
(in millions of euros) | ||||||||||||||||
France | 227.4 | 26% | 244.5 | 36% | ||||||||||||
Rest of Europe | 133.2 | 15% | 64.8 | 9% | ||||||||||||
Asia-Pacific/Middle East | 185.1 | 21% | 131.7 | 19% | ||||||||||||
Africa | 50.2 | 6% | 50.7 | 7% | ||||||||||||
Americas | 274.0 | 32% | 195.7 | 29% | ||||||||||||
Consolidated total | 869.9 | 100% | 687.4 | 100% | ||||||||||||
2005 | 2004 | |||||||||||||||
(in millions of euros) | ||||||||||||||||
Sales of goods | 296.6 | 34 % | 281.3 | 41% | ||||||||||||
Services rendered | 468.6 | 54% | 339.9 | 49% | ||||||||||||
Royalties (after-sales) | 97.4 | 11% | 60.9 | 9% | ||||||||||||
Leases | 7.3 | 1% | 5.3 | 1% | ||||||||||||
Consolidated total | 869.9 | 100% | 687.4 | 100% | ||||||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Research and development costs — gross, incurred | (43.5 | ) | (35.5 | ) | ||||
Development costs capitalized | 8.2 | 4.6 | ||||||
Research and development expensed | (35.3 | ) | (30.9 | ) | ||||
Government grants recognized in income | 4.2 | 2.1 | ||||||
Research and development costs — net | (31.1 | ) | (28.8 | ) | ||||
• | for the geophysical services segment, projects concerning data processing services; and | |
• | for the products segment, projects concerning seismic data recording equipment. |
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December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Assets depreciation | — | 0.3 | ||||||
Restructuring costs | (0.2 | ) | (11.0 | ) | ||||
Variation of reserves for restructuring | 0.1 | 11.1 | ||||||
Other non-recurring revenues | — | 3.5 | ||||||
Other non-recurring expenses | (0.4 | ) | (0.6 | ) | ||||
Non-recurring revenues (expenses) — net | (0.5 | ) | 3.3 | |||||
Exchange gains (losses) on hedging contracts | (2.9 | ) | 4.5 | |||||
Gains (losses) on sales of assets | (1.0 | ) | 11.5 | |||||
Other revenues (expenses) — net | (4.4 | ) | 19.3 | |||||
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December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Current interest expenses related to financial debt | (22.2 | ) | (25.7 | ) | ||||
Financial cost on early redemption of bonds | (9.4 | ) | (4.3 | ) | ||||
Interest expenses and financial expenses related to the Bridge loan put in place for the acquisition of Exploration Resources | (14.2 | ) | — | |||||
Income provided by cash and cash equivalents | 3.5 | 2.2 | ||||||
Cost of financial debt, net | (42.3 | ) | (27.8 | ) | ||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Exchange gains and losses, net | (1.8 | ) | 3.9 | |||||
Other financial income | 1.6 | 0.5 | ||||||
Premium paid for the nearly conversion of the convertible bonds | (8.9 | ) | — | |||||
Write-off of issuance costs on convertible bonds recognized as | ||||||||
expense at the time of the early conversion | (3.7 | ) | — | |||||
Other financial expenses | (1.7 | ) | (3.6 | ) | ||||
Other financial income (loss) | (14.5 | ) | 0.8 | |||||
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December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
France | ||||||||
• current income taxes | (0.4 | ) | (0.3 | ) | ||||
• deferred taxes and other(b) | 0.1 | |||||||
(0.4 | ) | (0.2 | ) | |||||
Foreign countries | ||||||||
• current income taxes(a) | (30.9 | ) | (21.9 | ) | ||||
• deferred taxes and other(b) | 4.7 | 11.2 | ||||||
(26.2 | ) | (10.7 | ) | |||||
Total income tax expense | (26.6 | ) | (10.9 | ) | ||||
(a) | includes withholding taxes |
(b) | includes principally deferred income and expense taxes |
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Net income attributable to shareholders | (7.8 | ) | ||
Income tax expense | (26.6 | ) | ||
Income before tax | 18.8 | |||
Differences on taxable basis: | ||||
Equity in income (loss) of affiliates | (13.0 | ) | ||
Net loss of the French tax group(a) | 74.8 | |||
Theoretical taxable base excluding French tax group | 80.6 | |||
Income tax rate enacted in France | 34.93% | |||
Theoretical tax | (28.2 | ) | ||
Differences on income taxes: | ||||
Income tax on Argas’s income paid by CGG(b) | (1.9 | ) | ||
Deferred tax income on carry-forward losses at CMG | 2.4 | |||
Differences on income tax rate | 1.1 | |||
Income tax | (26.6 | ) |
(a) | the theoretical deferred tax income related to the loss of the French tax group in 2005, estimated to€26,1 million, was not booked in the Group income statement in 2005. |
(b) | CGG, as shareholder of Argas, is directly required to pay income tax for Argas in Saudi Arabia for its share in Argas. |
Foreign | ||||||||
France | countries | |||||||
(in millions of euros) | ||||||||
2006 | 98.0 | (a) | — | |||||
2007 | — | — | ||||||
2008 | — | — | ||||||
2009 | — | — | ||||||
2010 | — | 3.3 | ||||||
2011 and thereafter | — | 37.9 | ||||||
Available indefinitely | 107.1 | 70.9 | ||||||
Total | 205.1 | 112.1 |
(a) | Capital losses |
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December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Deferred tax assets — temporary differences | 17.0 | 23.8 | ||||||
Deferred tax assets — tax losses carried forward(a) | 14.6 | 7.7 | ||||||
Total Deferred tax assets | 31.6 | 31.5 | ||||||
Total Deferred tax liabilities | 56.9 | 26.7 | ||||||
Total deferred tax. net | (25.3 | ) | 4.8 | |||||
(a) | relating to loss carry forwards in United Kingdom, Mexico, Norway and United States. |
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Year ended | |||||||||
December 31, | |||||||||
2005 | 2004 | ||||||||
Personnel employed under French contracts | |||||||||
Geophysical services | 821 | 797 | |||||||
Products | 654 | 622 | |||||||
Personnel employed under local contracts | 2.477 | 2.250 | |||||||
Total | 3.952 | 3.669 | |||||||
Including field staff of: | 579 | 475 |
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December 31, | ||||||||
2005 | 2004 | |||||||
(in euros) | ||||||||
Short-term employee benefit excluding tax on salary(1) | 3,026,474 | 2,939,051 | ||||||
Long-term employee benefit — pension(2) | 26,331 | 19,576 | ||||||
Long-term employee benefit — supplemental pension(3) | 2,050,972 | — | ||||||
Share-based payments(4) | 170,676 | 240,724 |
(1) | Includes gross remunerations and attendance fees paid during the year but excludes attendance fees paid to the President of the Board of Directors, respectively€37,873 in 2005 and€39,886 in 2004. |
(2) | Cost of services rendered |
(3) | Corresponding to a supplemental pension implemented by the end of 2004 and transferred to an insurance company; the amount above mentioned is the contribution paid in 2005 to this company. |
(4) | Expense in the income statement related to the stock-options plan. No stock-options was attributed in 2005 to directors. |
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Year ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Financial expenses paid | 62.6 | 29.1 | ||||||
Income taxes paid | 31.7 | 17.0 |
Year ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in millions | ||||||||
of euros) | ||||||||
Equipment acquired under capital leases | 17.4 | 8.7 |
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NOTE 29 — | LIST OF PRINCIPAL CONSOLIDATED SUBSIDIARIES AND COMPANIES ACCOUNTED FOR USING THE EQUITY METHOD AS OF DECEMBER 31, 2005 |
% of | ||||||||
Siren Number(a) | Consolidated companies | Head Office | interest | |||||
403 256 944 | CGG Marine SAS | Massy, France | 100.0 | |||||
351 834 288 | Geocal SARL | Massy, France | 100.0 | |||||
966 228 363 | Geoco SAS | Paris, France | 100.0 | |||||
378 040 497 | Sercel SA | Carquefou, France | 100.0 | |||||
410 072 110 | CGG Explo SARL | Massy, France | 100.0 | |||||
866 800 154 | Sercel Holding SA | Carquefou, France | 100.0 | |||||
CGG Americas. Inc. | Houston, United States | 100.0 | ||||||
CGG do Brasil Participaçoes Ltda | Rio do Janeiro, Brazil | 100.0 | ||||||
CGG Canada Services Ltd. | Calgary, Canada | 100.0 | ||||||
CGG International SA | Geneva, Switzerland | 100.0 | ||||||
CGG (Nigeria) Ltd. | Lagos, Nigeria | 100.0 | ||||||
CGG Marine Resources Norge A/S | Hovik, Norway, | 100.0 | ||||||
CGG Offshore UK Ltd. | United Kingdom | 100.0 | ||||||
CGG India Private Ltd. | New Delhi, India | 40.0 | ||||||
Exploration Resources ASA | Bergen, Norway | 100.0 | ||||||
Exploration Investment Resources AS | Bergen, Norway | 100.0 | ||||||
Exploration Investment Resources II AS | Bergen, Norway | 100.0 | ||||||
Exploration Vessel Resources AS | Bergen, Norway | 100.0 | ||||||
Exploration Vessel Resources II AS | Bergen, Norway | 100.0 | ||||||
Multiwave Geophysical Company ASA and its subsidiaries | Bergen, Norway | 100.0 | ||||||
Companía Mexicana de Geofisica | Mexico City, Mexico, | 100.0 | ||||||
Companhia de Geologia e Geofisica Portuguesa | Lisbon, Portugal | 100.0 | ||||||
Exgeo CA | Caracas, Venezuela | 100.0 | ||||||
Geoexplo | Almaty, Kazakhstan | 100.0 | ||||||
Geophysics Overseas Corporation Ltd. | Nassau, Bahamas | 100.0 | ||||||
CGG Australia Services Pty Ltd. | Sydney, Australia | 100.0 | ||||||
CGG Asia Pacific(b) | Kuala Lumpur, Malaisia | 33.2 | ||||||
Petroleum Exploration Computer Consultants Ltd. | Forest Row, United Kingdom | 100.0 | ||||||
CGG Vostok | Moscow, Russia | 100.0 | ||||||
PT CGG Indonesia | Jakarta, Indonesia | 100.0 | ||||||
Sercel Australia | Sydney, Australia | 100.0 | ||||||
Hebei Sercel JunFeng(c) | Hebei, China | 51.0 | ||||||
Sercel Inc. | Tulsa, United States | 100.0 | ||||||
Sercel Singapore Pte Ltd. | Singapore, Singapore | 100.0 | ||||||
Sercel England Ltd. | Somercotes, United Kingdom | 100.0 | ||||||
Sercel Canada Ltd. | Calgary, Canada | 100.0 |
(a) | Siren number is an individual identification number for company registration purposes under French law. |
(b) | the consolidation of CGG Asia Pacific, in which CGG owns 33.2% of the ordinary shares and 30% of the total shares is compliant with IFRS. |
(c) | Sercel JunFeng is fully consolidated since, according to the management agreement, the Group has operating control of the company. |
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% of | ||||||||
Siren number(a) | Accounted for using the equity method | Head Office | interest | |||||
413 926 320 | Geomar SAS | Paris. France | 49.0 | |||||
Argas Ltd. | Al-Khobar. Saudi Arabia | 49.0 | ||||||
JV Xian Peic/ Sercel Limited | Xian. China | 40.0 | ||||||
VS Fusion | Houston. United States | 49.0 |
Shareholders’ equity | ||||||||||||||||||||||||||||||||||||
Income and | Total | |||||||||||||||||||||||||||||||||||
expense | shareholders’ | |||||||||||||||||||||||||||||||||||
Balance at | Movements | Movements | recognized | Cumulative | Balance at | equity and | ||||||||||||||||||||||||||||||
January 1, | Net | in stock- | in treasury | directly in | translation | December 31, | Minority | minority | ||||||||||||||||||||||||||||
2004 | income | options | shares | equity | adjustment | 2004 | interest | interest | ||||||||||||||||||||||||||||
(in million of euros) | ||||||||||||||||||||||||||||||||||||
Total under French accounting principles | 396.6 | 11.1 | 0.6 | (12.6 | ) | 395.7 | 9.1 | 404.8 | ||||||||||||||||||||||||||||
(a) Tangible assets (IAS 16) | 7.2 | (0.1 | ) | 7.1 | 7.1 | |||||||||||||||||||||||||||||||
(b) Employee benefits (IAS 19) | 0.7 | (0.4 | ) | (0.1 | ) | 0.2 | 0.2 | |||||||||||||||||||||||||||||
(c) Currency translation (IAS 21) | — | 4.0 | (4.0 | ) | — | — | ||||||||||||||||||||||||||||||
(d) Treasury shares (IAS 32) | (0.8 | ) | (1.4 | ) | 2.0 | (0.2 | ) | (0.2 | ) | |||||||||||||||||||||||||||
(e) Goodwill amortization (IAS 36) | — | 6.2 | (0.4 | ) | 5.8 | 5.8 | ||||||||||||||||||||||||||||||
(f) Development costs (IAS 38) | 3.2 | 4.4 | (0.1 | ) | 7.5 | 7.5 | ||||||||||||||||||||||||||||||
(g) Financial instruments (IAS 39) | 12.8 | (2.0 | ) | (5.5 | ) | 5.3 | 5.3 | |||||||||||||||||||||||||||||
(h) Financial debt (IAS 39) | 0.3 | (0.4 | ) | (0.1 | ) | (0.1 | ) | |||||||||||||||||||||||||||||
(h) Convertible bonds derivative (IAS 39) | — | (23.5 | ) | (23.5 | ) | (23.5 | ) | |||||||||||||||||||||||||||||
(i) Stock-options (IFRS 2) | — | (0.5 | ) | 0.5 | — | — | ||||||||||||||||||||||||||||||
(j) Revenue recognition (IAS 11) | — | (2.4 | ) | (2.4 | ) | (2.4 | ) | |||||||||||||||||||||||||||||
Impact of IFRS restatements before deferred tax and minority interests | 420.0 | (5.0 | ) | 0.5 | 2.6 | (5.5 | ) | (17.2 | ) | 395.4 | 9.1 | 404.5 | ||||||||||||||||||||||||
Impact of deferred tax | (0.8 | ) | (1.4 | ) | (2.2 | ) | (2.2 | ) | ||||||||||||||||||||||||||||
Total under IFRS | 419.2 | (6.4 | ) | 0.5 | 2.6 | (5.5 | ) | (17.2 | ) | 393.2 | 9.1 | 402.3 | ||||||||||||||||||||||||
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French | ||||||||||||||||||||||||
Accounting | ||||||||||||||||||||||||
ASSETS | Principles | Ref. | Reclassifications | Ref. | Restatements | IFRS | ||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Cash and cash equivalents | 96.4 | 96.4 | ||||||||||||||||||||||
Trade accounts and notes receivable | 165.5 | (k) | 4.6 | 170.1 | ||||||||||||||||||||
Inventories and work-in-progress | 64.0 | (1.6 | ) | 62.4 | ||||||||||||||||||||
Income tax assets | — | (l) | 3.6 | 3.6 | ||||||||||||||||||||
Other current assets | 57.9 | (h)(l) | (12.2 | ) | (g) | 7.7 | 53.4 | |||||||||||||||||
Total current assets | 383.8 | (5.6 | ) | 7.7 | 385.9 | |||||||||||||||||||
Deferred tax assets | — | (l) | 20.0 | 20.0 | ||||||||||||||||||||
Investments and other financial assets | 41.5 | (k)(l)(m) | (2.5 | ) | (g) | 4.3 | 43.3 | |||||||||||||||||
Investments in companies under equity method | 33.0 | (m) | (6.1 | ) | 26.9 | |||||||||||||||||||
Property, plant and equipment, net | 216.0 | (n) | (7.3 | ) | (a) | 7.2 | 215.9 | |||||||||||||||||
Goodwill and intangible assets, net | 205.1 | (n) | 8.9 | (f) | 3.2 | 217.2 | ||||||||||||||||||
Total non-current assets | 495.6 | 13.0 | 14.7 | 523.3 | ||||||||||||||||||||
TOTAL ASSETS | 879.4 | 7.4 | 22.4 | 909.2 | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||
Bank overdrafts | 3.2 | — | 3.2 | |||||||||||||||||||||
Current portion of financial debt | 24.6 | — | 24.6 | |||||||||||||||||||||
Trade accounts and notes payable | 78.6 | 0.2 | 78.8 | |||||||||||||||||||||
Accrued payroll costs | 47.7 | (0.4 | ) | (b) | 0.2 | 47.5 | ||||||||||||||||||
Income tax payable | 18.3 | (1.4 | ) | 16.9 | ||||||||||||||||||||
Advance billings to customers | 16.9 | — | 16.9 | |||||||||||||||||||||
Provisions — current portion | — | (o) | 20.1 | 20.1 | ||||||||||||||||||||
Other current liabilities | 44.8 | (o) | (23.5 | ) | 21.3 | |||||||||||||||||||
Total current liabilities | 234.1 | (5.0 | ) | 0.2 | 229.3 | |||||||||||||||||||
Deferred tax liabilities | — | (l) | 18.0 | 0.8 | 18.8 | |||||||||||||||||||
Provisions — non-current portion | — | (o) | 13.6 | (b) | (0.9 | ) | 12.7 | |||||||||||||||||
Financial debt | 207.8 | (h) | (5.4 | ) | (h) | (0.3 | ) | 202.1 | ||||||||||||||||
Other non-current liabilities | 32.1 | (l)(o) | (13.8 | ) | 18.3 | |||||||||||||||||||
Total non-current liabilities | 239.9 | 12.4 | (0.4 | ) | 251.9 | |||||||||||||||||||
Common stock | 23.4 | — | 23.4 | |||||||||||||||||||||
Additional paid-in-capital | 292.7 | — | 292.7 | |||||||||||||||||||||
Retained earnings | 132.1 | (c) | (51.6 | ) | 14.2 | 94.7 | ||||||||||||||||||
Treasury shares | — | — | (d) | (0.8 | ) | (0.8 | ) | |||||||||||||||||
Income and expenses recognized directly in equity | — | — | (g) | 9.2 | 9.2 | |||||||||||||||||||
Cumulative translation adjustment | (51.6 | ) | (c) | 51.6 | — | |||||||||||||||||||
Total shareholders’ equity | 396.6 | — | 22.6 | 419.2 | ||||||||||||||||||||
Minority interests | 8.8 | — | — | 8.8 | ||||||||||||||||||||
Total shareholders’ equity and minority interests | 405.4 | — | 22.6 | 428.0 | ||||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 879.4 | 7.4 | 22.4 | 909.2 | ||||||||||||||||||||
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French | |||||||||||||||||||||||||
Accounting | |||||||||||||||||||||||||
Principles | Ref. | Reclassifications | Ref. | Restatements | IFRS | ||||||||||||||||||||
(in million of euros) | |||||||||||||||||||||||||
Operating revenues | 692.7 | (5.3 | ) | 687.4 | |||||||||||||||||||||
Other revenues of ordinary activities | (q) | 0.4 | — | 0.4 | |||||||||||||||||||||
Total revenues of ordinary activities | 692.7 | 0.4 | (5.3 | ) | 687.8 | ||||||||||||||||||||
Cost of operations | (556.0 | ) | (b)(f) | 2.0 | (554.0 | ) | |||||||||||||||||||
Gross profit | 136.7 | 0.4 | (3.3 | ) | 133.8 | ||||||||||||||||||||
Research and development expenses, net | (33.5 | ) | (f) | 4.7 | (28.8 | ) | |||||||||||||||||||
Selling, general and administrative expenses, net | (79.5 | ) | (h) | 1.5 | (a)(i) | (0.6 | ) | (78.6 | ) | ||||||||||||||||
Other revenues (expenses), net | 12.0 | (h) | 4.3 | (d)(g) | 3.0 | 19.3 | |||||||||||||||||||
Operating income | 35.7 | 6.2 | 3.8 | 45.7 | |||||||||||||||||||||
Expenses related to financial debt | (h) | (29.6 | ) | (h) | (0.4 | ) | (30.0 | ) | |||||||||||||||||
Income provided by cash and cash equivalents | (h) | 2.2 | 2.2 | ||||||||||||||||||||||
Cost of net financial debt | (h) | (27.4 | ) | (h) | (0.4 | ) | (27.8 | ) | |||||||||||||||||
Variance on derivative on convertible bonds | (h) | (23.5 | ) | (23.5 | ) | ||||||||||||||||||||
Other financial incomes (expenses), net | (p) | 3.2 | (c)(g) | (2.4 | ) | 0.8 | |||||||||||||||||||
Financial incomes (expenses), net | (22.4 | ) | (q) | 22.4 | — | ||||||||||||||||||||
Exchange gains (losses), net | 4.4 | (p) | (4.4 | ) | — | ||||||||||||||||||||
Income before income taxes | 17.7 | — | (22.5 | ) | (4.8 | ) | |||||||||||||||||||
Income taxes | (9.7 | ) | (1.2 | ) | (10.9 | ) | |||||||||||||||||||
Income (loss) from consolidated companies | 8.0 | — | (e)(f)(j) | (23.7 | ) | (15.7 | ) | ||||||||||||||||||
Equity in income of affiliates | 10.3 | 10.3 | |||||||||||||||||||||||
Goodwill amortization | (6.2 | ) | (e) | 6.2 | — | ||||||||||||||||||||
Net income | 12.1 | — | (17.5 | ) | (5.4 | ) | |||||||||||||||||||
Attributable to: | |||||||||||||||||||||||||
— Shareholders | 11.1 | — | (17.5 | ) | (6.4 | ) | |||||||||||||||||||
— Minority interests | 1.0 | — | — | 1.0 |
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French | ||||||||||||||||||||||||
Accounting | ||||||||||||||||||||||||
ASSETS | Principles | Ref. | Reclassifications | Ref. | Restatements | IFRS | ||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Cash and cash equivalents | 130.8 | (d) | (0.2 | ) | 130.6 | |||||||||||||||||||
Trade accounts and notes receivable | 191.7 | (k) | 13.1 | (j) | (8.0 | ) | 196.8 | |||||||||||||||||
Inventories and work-in-progress | 81.4 | — | (j) | 5.4 | 86.8 | |||||||||||||||||||
Income tax assets | — | (l) | 4.0 | (j) | 0.2 | 4.2 | ||||||||||||||||||
Other current assets | 58.3 | (l)(h) | (14.9 | ) | (g) | 5.3 | 48.7 | |||||||||||||||||
Total current assets | 462.2 | 2.2 | 2.7 | 467.1 | ||||||||||||||||||||
Deferred tax assets | — | (l) | 31.5 | 31.5 | ||||||||||||||||||||
Investments and other financial assets | 31.9 | (k)(l)(m) | (19.4 | ) | 12.5 | |||||||||||||||||||
Investments in companies under equity method | 36.6 | (m) | (5.8 | ) | 30.8 | |||||||||||||||||||
Property, plant and equipment, net | 204.5 | (n) | (7.5 | ) | (a) | 7.1 | 204.1 | |||||||||||||||||
Goodwill and intangible assets, net | 204.4 | (n) | 7.5 | (e)(f) | 13.3 | 225.2 | ||||||||||||||||||
Total non-current assets | 477.4 | 6.3 | 20.4 | 504.1 | ||||||||||||||||||||
TOTAL ASSETS | 939.6 | 8.5 | 23.1 | 971.2 | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||
Bank overdrafts | 2.8 | — | 2.8 | |||||||||||||||||||||
Current portion of financial debt | 73.1 | — | 73.1 | |||||||||||||||||||||
Trade accounts and notes payable | 97.8 | 0.5 | 98.3 | |||||||||||||||||||||
Accrued payroll costs | 47.8 | (0.2 | ) | 47.6 | ||||||||||||||||||||
Income tax payable | 24.9 | (0.9 | ) | 24.0 | ||||||||||||||||||||
Advance billings to customers | 13.2 | — | 13.2 | |||||||||||||||||||||
Provisions — current portion | — | (o) | 14.2 | 14.2 | ||||||||||||||||||||
Other current liabilities | 41.0 | (o) | (18.2 | ) | 22.8 | |||||||||||||||||||
Total current liabilities | 300.6 | (4.6 | ) | 296.0 | ||||||||||||||||||||
Deferred tax liabilities | — | (l) | 24.5 | 2.2 | 26.7 | |||||||||||||||||||
Provisions — non-current portion | — | (o) | 16.2 | (b) | (0.2 | ) | 16.0 | |||||||||||||||||
Financial debt | 194.1 | (h) | (7.3 | ) | (h) | (10.3 | ) | 176.5 | ||||||||||||||||
Derivative on convertible bonds | (h) | 33.9 | 33.9 | |||||||||||||||||||||
Other non-current liabilities | 40.1 | (l)(o) | (20.3 | ) | 19.8 | |||||||||||||||||||
Total non-current liabilities | 234.2 | 13.1 | 25.6 | 272.9 | ||||||||||||||||||||
Common stock | 23.4 | — | 23.4 | |||||||||||||||||||||
Additional paid-in-capital | 173.4 | — | 173.4 | |||||||||||||||||||||
Retained earnings | 252.0 | (c) | (52.2 | ) | 14.7 | 214.5 | ||||||||||||||||||
Treasury shares | — | 0.6 | (d) | 1.2 | 1.8 | |||||||||||||||||||
Net income — attributable to shareholders | 11.1 | — | (17.5 | ) | (6.4 | ) | ||||||||||||||||||
Income and expenses recognized directly in equity | — | — | (g) | 3.7 | 3.7 | |||||||||||||||||||
Cumulative translation adjustment | (64.2 | ) | (c) | 51.6 | (c) | (4.6 | ) | (17.2 | ) | |||||||||||||||
Total shareholders’ equity | 395.7 | — | (2.5 | ) | 393.2 | |||||||||||||||||||
Minority interests | 9.1 | — | — | 9.1 | ||||||||||||||||||||
Total shareholders’ equity and minority interests | 404.8 | — | (2.5 | ) | 402.3 | |||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 939.6 | 8.5 | 23.1 | 971.2 | ||||||||||||||||||||
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French | ||||||||||||||||||||||||
gaaps | Reclassification(a) | Reclassification(b) | Reclassification(c) | Others | IFRS | |||||||||||||||||||
(amounts in millions of euros) | ||||||||||||||||||||||||
Net cash provided by operating activities | 91.9 | 29.1 | (2.2 | ) | 7.9 | 0.2 | 126.9 | |||||||||||||||||
Net cash from investing activities | (100.1 | ) | (0.7 | ) | (100.8 | ) | ||||||||||||||||||
Net cash provided by financing activities | 44.2 | (29.1 | ) | 2.0 | 0.5 | 17.6 | ||||||||||||||||||
Effect of exchange rates on cash | (1.6 | ) | (7.9 | ) | (9.5 | ) | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 34.4 | (0.2 | ) | 34.2 | ||||||||||||||||||||
Cash and cash equivalents at beginning of year | 96.4 | 96.4 | ||||||||||||||||||||||
Cash and cash equivalents at end of year | 130.8 | (0.2 | ) | 130.6 | ||||||||||||||||||||
(a) | Financial expenses paid |
(b) | Treasury shares |
(c) | Foreign exchange effect on cash and cash equivalents in USD |
A — | SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE GROUP AND U.S. GAAP |
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• | the project is clearly defined, and costs are separately identified and reliably measured, | |
• | the product or process is technically and commercially feasible, | |
• | the Group has sufficient resources to complete development. |
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• | changes in the cumulative translation adjustment related to consolidated foreign subsidiaries, | |
• | changes in the fair value of derivative instruments designed as cash flow hedges meeting the criteria established by SFAS 133; and | |
• | changes in the amount of the additional minimum pension liability due to actuarial losses. |
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B — | RECONCILIATION OF NET INCOME AND SHAREHOLDERS’ EQUITY TO U.S. GAAP |
December 31, | ||||||||
2005 | 2004 | |||||||
(restated) | ||||||||
(in millions | ||||||||
of euros) | ||||||||
Net loss) as reported in Consolidated Statements of operations | (7.8 | ) | (6.4 | ) | ||||
Deferred tax (FAS 109) | 2.7 | (3.4 | ) | |||||
Loss on extinguishment of debt (APB 26) | (2.8 | ) | 2.8 | |||||
Stock options | (1.5 | ) | 0.3 | |||||
Cancellation of IFRS long-term contracts adjustment | (2.4 | ) | 2.4 | |||||
Cancellation of IFRS tangible assets adjustment | 0.2 | 0.1 | ||||||
Cancellation of IFRS currency translation adjustment | 3.6 | (4.0 | ) | |||||
Cancellation of IFRS capitalization of development costs | (6.1 | ) | (4.2 | ) | ||||
Available for sale security (FAS 115) | — | 1.3 | ||||||
Derivative instruments (FAS 133) | 22.4 | (9.1 | ) | |||||
Net income (loss) under U.S. GAAP | 8.3 | (20.2 | ) | |||||
(a) | Restatements are presented net of tax.. |
December 31, | ||||||||
2005 | 2004 | |||||||
(restated) | ||||||||
(in millions | ||||||||
of euros) | ||||||||
Shareholders’ equity as reported in the Consolidated Balance Sheets | 698.5 | 393.2 | ||||||
Goodwill amortization (FAS 142) | 13.4 | (b) | 12.6 | (b) | ||||
Deferred tax (FAS 109) | (8.3 | )(b) | (9.6 | )(b) | ||||
Loss on extinguishment of debt (APB 26) | — | 2.8 | ||||||
Stock options | (2.5 | ) | (0.6 | ) | ||||
Cancellation of IFRS long-term contracts adjustment | — | 2.4 | ||||||
Cancellation of IFRS tangible assets adjustment | (6.9 | ) | (7.1 | ) | ||||
Cancellation of IFRS capitalization of development costs | (13.6 | ) | (6.5 | ) | ||||
Derivative instruments (FAS 133) | 8.9 | (15.0 | ) | |||||
Shareholders’ equity under U.S. GAAP | 689.5 | 372.2 | ||||||
(a) | All adjustments disclosed above are net of tax effects, if applicable. |
(b) | This amount is net of currency translation adjustment effect. |
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December 31, | |||||||||
2005 | 2004 | ||||||||
(amounts in millions of euros | |||||||||
except per share data) | |||||||||
Operating revenues | 860.8 | 709.5 | |||||||
Cost of operations | (665.4 | ) | (559.5 | ) | |||||
Gross profit | 195.4 | 150.0 | |||||||
Research and development expenses — net | (39.3 | ) | (33.5 | ) | |||||
Selling, general and administrative expenses | (92.7 | ) | (79.7 | ) | |||||
Other revenues (expenses) — net | (1.5 | ) | 18.2 | ||||||
Operating income (loss) | 61.9 | 55.0 | |||||||
Cost of financial debt, net | (46.6 | ) | (22.4 | ) | |||||
Variance on derivative on convertible bonds | (11.5 | ) | (23.5 | ) | |||||
Other financial income (loss) | 14.7 | (23.6 | ) | ||||||
Equity in income (losses) of affiliates | 13.0 | 10.3 | |||||||
Income (loss) of consolidated companies before income taxes and minority interests | 31.5 | (4.2 | ) | ||||||
Income taxes | (22.2 | ) | (15.0 | ) | |||||
Minority interests | (1.0 | ) | (1.0 | ) | |||||
Net income (loss) | 8.3 | (20.2 | ) | ||||||
Dilutive weighted average number of shares outstanding | 12,095,925 | 11,681,406 | |||||||
Dilutive potential shares from stock-options(1) | 261,855 | 83,211 | |||||||
Dilutive potential shares from convertible bonds(2) | 252,500 | 233,333 | |||||||
Adjusted weighted average shares and assumed option exercises when dilutive | 12,357,779 | 11,681,406 | |||||||
Net income (loss) per share | |||||||||
Basic for shareholder | 0.69 | (1.73 | ) | ||||||
Diluted for shareholder | 0.67 | (1.73 | ) |
(1) | anti-dilutive for year ended at December 31, 2004. |
(2) | anti-dilutive for years ended at December 31, 2004 and December 31, 2005. |
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December 31, | ||||||||
2005 | 2004 | |||||||
(amounts in | ||||||||
millions of euros) | ||||||||
ASSETS | ||||||||
Current assets | 608.5 | 480.2 | ||||||
Long-term assets | 965.4 | 495.6 | ||||||
Total Assets | 1,573.8 | 975.8 | ||||||
LIABILITIES | ||||||||
Current liabilities | 509.9 | 325.8 | ||||||
Long term liabilities | 362.7 | 268.6 | ||||||
Minority interests | 11.7 | 9.1 | ||||||
Shareholders equity | 689.5 | 372.2 | ||||||
Total Liabilities | 1,573.8 | 975.8 | ||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(in million | ||||||||
of euros) | ||||||||
Net income (loss) under US GAAP | 8.3 | (20.2 | ) | |||||
Other comprehensive income (loss) | ||||||||
— Changes in the cumulative translation adjustment | 23.3 | (13.6 | ) | |||||
— Changes in the fair value of available-for-sale securities | — | (7.8 | ) | |||||
— Changes in the fair value of derivative instruments | (4.1 | ) | (2.8 | ) | ||||
Comprehensive income (loss) under U.S. GAAP | 27.5 | (43.1 | ) | |||||
(a) | All adjustments disclosed above are net of tax effects, if applicable. |
December 31, | ||||||||
2005 | 2004 | |||||||
(in million | ||||||||
of euros) | ||||||||
— Cumulative Translation adjustment | (41.9 | ) | (65.2 | ) | ||||
— Fair value of derivative instruments | (1.4 | ) | 2.7 | |||||
Accumulated Other Comprehensive loss under U.S. GAAP | (43.3 | ) | (62.5 | ) | ||||
(a) | All adjustments disclosed above are net of tax effects, if applicable. |
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December 31, 2004 | |||||
(in millions of | |||||
euros except for | |||||
income (loss) per | |||||
share information) | |||||
Net loss, as reported | € | (20.2 | ) | ||
Add: total stock-based employee compensation expense included in reported net income, net of related tax effect | 0.2 | ||||
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | (3.8 | ) | |||
Pro forma U.S. GAAP net loss | (23.8 | ) | |||
Earnings per share: | |||||
Basic for common stock holder — as reported | (1.73 | ) | |||
Basic for common stock holder — pro forma | (2.03 | ) | |||
Diluted for common stock holder — as reported | (1.73 | ) | |||
Diluted for common stock holder — pro forma | (2.03 | ) |
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Year ended December 31, 2005 | ||||||||||||||||||||||||
Balance at | Balance at | |||||||||||||||||||||||
beginning of | Deductions | Deductions | end of | |||||||||||||||||||||
year | Additions | (used) | (unused) | Other(a) | year | |||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Termination benefits | 0.4 | 0.2 | — | — | — | 0.6 | ||||||||||||||||||
Other associated costs | 0.5 | 0.1 | — | (0.4 | ) | — | 0.2 | |||||||||||||||||
Total | 0.9 | 0.3 | — | (0.4 | ) | — | 0.8 | |||||||||||||||||
(a) | Includes the effects of exchange rate changes |
Year ended December 31, 2004 | ||||||||||||||||||||||||
Balance at | Balance at | |||||||||||||||||||||||
beginning of | Deductions | Deductions | end of | |||||||||||||||||||||
year | Additions | (used) | (unused) | Other(a) | year | |||||||||||||||||||
(in millions of euros) | ||||||||||||||||||||||||
Termination benefits | 10.8 | — | (10.4 | ) | — | 0.4 | ||||||||||||||||||
Contract termination costs | 0.6 | — | (0.4 | ) | (0.2 | ) | — | 0.0 | ||||||||||||||||
Other associated costs | 0.7 | — | (0.2 | ) | — | — | 0.5 | |||||||||||||||||
Total | 12.1 | — | (11.0 | ) | — | — | 0.9 | |||||||||||||||||
(a) | Includes the effects of exchange rate changes |
Total | Cumulative | |||||||||||
amount | Amount incurred | amount incurred | ||||||||||
expected | as of Dec. 31, 2005 | as of Dec. 31, 2005 | ||||||||||
(in millions of euros) | ||||||||||||
Termination benefits | 10.8 | — | 10.4 | |||||||||
Contract termination costs | 0.4 | — | 0.4 | |||||||||
Other associated costs | 1.6 | — | 1.1 | |||||||||
Total | 12.8 | — | 11.8 | |||||||||
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Sercel | ||||||||||||||||||||||||
Subsidiary | Consolidating | Subsidiary | ||||||||||||||||||||||
IFRS | CGG | Group | Others | adjustments | Consolidated | Group | ||||||||||||||||||
(in€ millions) | ||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||
Total assets | 799.8 | 600.3 | 1,082.5 | (917.5 | ) | 1,565.1 | 205.9 | |||||||||||||||||
Operating revenues | 221.3 | 307.5 | 668.9 | (327.8 | ) | 869.9 | 146.5 | |||||||||||||||||
Operating income (loss) | (26.4 | ) | 60.7 | 76.6 | (35.8 | ) | 75.1 | 10.9 | ||||||||||||||||
Net income (loss) | (29.5 | ) | 37.0 | 108.3 | (122.6 | ) | (6.8 | ) | 6.3 | |||||||||||||||
2004 | ||||||||||||||||||||||||
Total assets | 623.6 | 341.7 | 718.3 | (712.4 | ) | 971.2 | 150.8 | |||||||||||||||||
Operating revenues | 190.7 | 227.8 | 589.6 | (320.7 | ) | 687.4 | 104.8 | |||||||||||||||||
Operating income (loss) | (45.2 | ) | 36.2 | 64.5 | (9.8 | ) | 45.7 | 6.8 | ||||||||||||||||
Net income (loss) | (38.2 | ) | 31.7 | 78.7 | (77.6 | ) | (5.4 | ) | 14.2 |
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December 31, | ||||||||
Notes | 2004 | |||||||
(in millions of NOK) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | 14.4 | |||||||
Restricted cash | 2.1 | |||||||
Trade accounts and notes receivable | 3 | 92.0 | ||||||
Inventories | 4 | 5.9 | ||||||
Other current assets | 5 | 84.5 | ||||||
Total current assets | 198.9 | |||||||
Investment in associated companies | 6 | — | ||||||
Property, plant and equipment, net | 7 | 200.6 | ||||||
Intangible assets, net | 8 | 9.5 | ||||||
Total assets | 409.0 | |||||||
LIABILITIES AND OWNERS’ NET INVESTMENT | ||||||||
Bank overdrafts | 38.2 | |||||||
Current portion of long-term debt | 10 | 54.6 | ||||||
Trade accounts and notes payable | 73.0 | |||||||
Income taxes payable | — | |||||||
Other current liabilities | 9 | 39.1 | ||||||
Total current liabilities | 204.9 | |||||||
Long-term debt — less current portion | 10 | 83.8 | ||||||
Other long-term liabilities | 11 | 39.1 | ||||||
Total long-term liabilities | 122.9 | |||||||
Minority interest | 4.4 | |||||||
Owner’s net investment | 12 | 76.8 | ||||||
Total liabilities and owner’s net investment | 409.0 | |||||||
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Year ended | ||||||||
Notes | December 31, 2004 | |||||||
(amounts in millions | ||||||||
of NOK) | ||||||||
Operating revenues | 15 | 497.3 | ||||||
Cost of operations | (504.2 | ) | ||||||
Gross profit | (6.9 | ) | ||||||
Selling, general & administrative expenses | (15.6 | ) | ||||||
Other revenues — net | 16 | 20.0 | ||||||
Operating income | 15 | (2.5 | ) | |||||
Interest and other financial income & expense — net | 17 | 10.5 | ||||||
Exchange gain (loss) — net | (3.4 | ) | ||||||
Equity in income of affiliates | 5.9 | |||||||
Income before income taxes and Minority interest | 10.5 | |||||||
Income taxes | 18 | (5.3 | ) | |||||
Minority interest | 11.3 | |||||||
Net income | 16.5 | |||||||
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December 31, 2004 | |||||
(in millions of NOK) | |||||
Cash flows from operating activities: | |||||
Net income | 16.5 | ||||
Adjustments to reconcile Net income to Net cash provided by operating activities: | |||||
Depreciation and amortization | 75.2 | ||||
Net gain on sale of assets | (20.0 | ) | |||
Deferred income taxes | 5.3 | ||||
Minority interest | (11.4 | ) | |||
Equity in income of investees, net of dividends | 5.2 | ||||
Non-cash items | 2.0 | ||||
Increase/decrease in operating assets and liabilities: | |||||
Increase in trade accounts and notes receivable | 8.1 | ||||
Increase in inventories | (4.2 | ) | |||
Decrease in other current assets | 4.1 | ||||
Increase in trade accounts and notes payable | 0.3 | ||||
Decrease in other current liabilities | (9.4 | ) | |||
Net cash provided by operating activities | 71.7 | ||||
Cash flows from investing activities: | |||||
Purchases of property, plant and equipment | (96.3 | ) | |||
Investments in multi-client surveys | (6.3 | ) | |||
Investments in equity-method companies | (1.8 | ) | |||
Proceeds from sale of assets | 61.2 | ||||
Cash paid for acquired businesses, net of cash acquired | (4.9 | ) | |||
Net cash used in investing activities | (48.1 | ) | |||
Cash flows from financing activities: | |||||
Repayment of long-term debt | (21.0 | ) | |||
Issuance of long-term debt | 33.4 | ||||
Repayment of capital lease obligations | (28.0 | ) | |||
Increase in bank overdrafts | 7.8 | ||||
Increase in restricted cash | (0.3 | ) | |||
Dividends paid | (7.8 | ) | |||
Net cash provided by financing activities | (15.9 | ) | |||
Effects of exchange rate changes on cash | 6.7 | ||||
Net increase in cash and cash equivalents | 14.4 | ||||
Cash and cash equivalents at beginning of year | 0 | ||||
Cash and cash equivalents at end of year | 14.4 | ||||
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Owner’s | Accumulated | Total | |||||||||||||||||||
initial | Comprehensive | Retained | Comprehensive | Owner’s | |||||||||||||||||
investment | income | earnings | income | Investment | |||||||||||||||||
(in millions NOK) | |||||||||||||||||||||
As of December 31, 2003 | 135.2 | (75.5 | ) | — | 59.7 | ||||||||||||||||
Net income | 16.5 | 16.5 | — | 16.5 | |||||||||||||||||
Dividends | (7.8 | ) | — | (7.8 | ) | ||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||
Foreign currency translation | 8.4 | — | 8.4 | 8.4 | |||||||||||||||||
Comprehensive income | 24.9 | — | — | — | |||||||||||||||||
As of December 31, 2004 | 135.2 | (66.8 | ) | 8.4 | 76.8 | ||||||||||||||||
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• | In 2000, Rieber Shipping became a 49.5 per cent shareholder in Multiwave, a seismic company focusing on seabed seismic operations with high-tech project-based assignments. | |
• | In 2001, Rieber Shipping started to invest in towed streamer equipment on its seismic vessels.Polar Dukeand Polar Princess were upgraded with state of the art equipment. | |
• | In 2002, the seismic vesselPolar Searchwas upgraded with a new generation of seismic streamer technology and fully rigged with all new seismic equipment. The vessel commenced a charter to TGS Nopec in the US Gulf of Mexico, and its seismic operation was handled by Multiwave. | |
• | In 2003, Rieber Shipping entered into time charter party agreements with Fugro Geoteam for two of its seismic vesselsPolar PrincessandPolar Duke. Under the terms of the agreements were that Fugro Geoteam would be responsible for the exclusive marketing of the vessels and that profits earned or losses incurred on their utilization, would be split between the two parties. Towards the end of the year, Rieber Shipping acquired the seismic vessel Polar Venturer, which was chartered to Fugro under a similar arrangement. | |
• | In 2004 the charter party agreement with Fugro were transferred from Rieber to the Exploration Resources Group and extended for a period of 3 years starting from 1 January 2005, being a fixed contract for 2005, subject to that the aggregate result for the vessels is showing a profit. For the years 2006 and 2007 both parties can terminate the agreements providing 100 days written notice. | |
• | In 2004, the Group increased its holding in Multiwave to 52.7 per cent. Furthermore, in December the Boards of Rieber Shipping and the Group signed the Demerger Plan for the proposed Demerger of Rieber Shipping, after having considered Rieber Shipping’s changing business portfolio, where marine seismic gradually had become a larger and more important part. Moreover, the Boards considered the fact that the risk profile of the marine seismic business was different from the remaining business portfolio, due to shorter contract duration and more volatile earnings. It was thus expected that the seismic business would be better positioned relative to future development opportunities as a separate entity, rather than as part of a joint shipping and offshore company. It was also expected that the seismic business could be developed as an attractive investment object on Oslo Børs. On January 6, 2005 shareholders of the two companies approved the Demerger Plan for the Demerger. Polar Seismikk ASA was incorporated 17 August 2004 for the purpose of participating in the Demerger. On February 3, 2005 its name was changed to Exploration Resources ASA. |
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% of | ||||||
Entities | Head Office | interest | ||||
Exploration Resources ASA | Bergen, Norway | 100.0 | ||||
Exploration Vessel Resources AS | Bergen, Norway | 100.0 | ||||
Exploration Vessel Resources II AS | Bergen, Norway | 100.0 | ||||
Exploration Investment Resources II AS | Bergen, Norway | 100.0 | ||||
Multiwave Geophysical Company AS | Bergen, Norway | 52.8 | ||||
Multiwave Geophysical Company ApS | Denmark | 52.8 | ||||
Multiwave Exploration Ltd. | London, UK | 51.7 | ||||
Multiwave Geophysical Company Asia Pacific Pte. Ltd | Singapore | 52.8 |
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• | Multi-client surveys |
• | Exclusive surveys |
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• equipment | 3 to 5 years | |||
• seismic vessels | 25 years |
• | Defined contribution plans |
• | Defined benefit plans |
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• | the“Towed seismic”segment performs seismic services for a specific customer; | |
• | the“Multi-client segment”sells seismic surveys to be licensed to customers on a non-exclusive basis; and, | |
• | the“4C/4D/ OBS segment”performs seabed seismic operations with high-tech project-based assignments. |
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December 31, | ||||
2004 | ||||
(in millions | ||||
of Nok) | ||||
Trade accounts and notes receivable | 101.2 | |||
Less: allowance for doubtful accounts | (9.2 | ) | ||
Trade accounts and notes receivable net | 92.0 | |||
December 31, | ||||
2004 | ||||
Cost | ||||
(in millions | ||||
of Nok) | ||||
Bunkers oil | 4.7 | |||
Supplies | 1.2 | |||
Inventories | 5.9 | |||
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December 31, | ||||
2004 | ||||
(in millions | ||||
of Nok) | ||||
Prepaid tax | 3.1 | |||
Prepaid expenses | 4.0 | |||
Derivative on sales contract | 7.7 | |||
Other receivable — Rieber Shipping(a) | 60.0 | |||
Other(b) | 9.7 | |||
Other current assets | 84.5 | |||
(a) | Other receivables include receivables from Rieber Shipping and cash held by Rieber Shipping companies for NOK 37.4 million and NOK 22.6 million respectively, which at the year-end had not been paid to the Group as part of the demerger process. These amounts were paid in full to the Group in February 2005. | |
(b) | includes mainly short-term deposits and advances to suppliers. |
Roll-forward | 2004 | |||
(in millions | ||||
of Nok) | ||||
Balance at beginning of year | 10.9 | |||
Investments made during the year | 1.7 | |||
Equity in income | 5.8 | |||
Dividends received during the year, reduction in share capital | (0.7 | ) | ||
Changes in exchange rates | 0.1 | |||
Impact of change in consolidation method on Multiwave | (17.8 | ) | ||
Balance at end of year | — | |||
December 31, | ||||
2004 | ||||
(in millions | ||||
of Nok) | ||||
Current assets | 72.8 | |||
Fixed assets | 59.6 | |||
Current liabilities | 84.7 | |||
Non current liabilities | 35.9 | |||
Gross revenues | 290.4 | |||
Operating profit | (7.5 | ) | ||
Income before income taxes and minority interest | (8.6 | ) | ||
Net income | (7.2 | ) | ||
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December 31, | ||||
2004 | ||||
(in millions | ||||
of Nok) | ||||
Machinery and equipment | 64.8 | |||
Less: accumulated depreciation | (12.4 | ) | ||
Machinery and equipment — net | 52.4 | |||
Vessels | 409.7 | |||
Less: accumulated depreciation | (261.5 | ) | ||
Vessels — net | 148.2 | |||
Total property, plant and equipment — net | 200.6 | |||
Roll-forward | 2004 | |||
(in millions | ||||
of Nok) | ||||
Balance at beginning of year | 186.4 | |||
Additions | 62.9 | |||
Additions through capital lease | 33.4 | |||
Depreciation | (66.1 | ) | ||
Disposals | (41.2 | ) | ||
Changes in exchange rates | 5.8 | |||
Impact of change in consolidation method on Multiwave | 19.4 | |||
Balance at end of year | 200.6 | |||
December 31, 2004 | ||||||||||||
Cost | Acc. Dep. | Net | ||||||||||
(in millions of Nok) | ||||||||||||
Geophysical equipment | 64.8 | (12.4 | ) | 52.4 | ||||||||
Vessels | 104.1 | (60.4 | ) | 43.7 | ||||||||
Total | 168.9 | (72.8 | ) | 96.1 | ||||||||
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December 31, 2004 | ||||
(in millions of Nok) | ||||
Multi-client surveys | 73.2 | |||
Less: accumulated amortization | (63.7 | ) | ||
Multi-client surveys — net | 9.5 | |||
Total Intangible assets — net | 9.5 | |||
Roll-forward | Year 2004 | |||
(in millions of Nok) | ||||
Balance at beginning of period | 12.2 | |||
Additions | 6.3 | |||
Depreciation and amortization | (9.0 | ) | ||
Balance at end of period | 9.5 | |||
December 31, 2004 | ||||
(in millions of Nok) | ||||
Debt to Rieber Shipping | 21.1 | |||
Value added tax and other taxes payable | 4.9 | |||
Unrealized exchange losses on forward contracts | 1.9 | |||
Other liabilities | 11.2 | |||
Other current liabilities | 39.1 | |||
December 31, 2004 | ||||||||||||
Current | Long-term | Total | ||||||||||
(in millions of Nok) | ||||||||||||
Bank loans | 25.1 | 37.0 | 62.1 | |||||||||
Capital lease obligations | 29.3 | 46.8 | 76.1 | |||||||||
Sub-total | 54.4 | 83.8 | 138.2 | |||||||||
Accrued interest | 0.2 | — | 0.2 | |||||||||
Total | 54.6 | 83.8 | 138.4 | |||||||||
December 31, 2004 | |||||
(in millions of Nok) | |||||
U.S. dollar | 138.4 | ||||
Total | 138.4 | ||||
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December 31, 2004 | ||||
(in millions of Nok) | ||||
Variable rates bank loans (effective rate December 31, 2004: LIBOR + 0.9% | 62.3 | |||
Variable rate on lease Polar Search: (effective rate December 31, 2004: LIBOR + 1.25%) | 40.7 | |||
Variable rate on leases in MGC: (effective rate December 31, 2004: 3.455% — 4.310%) | 35.4 | |||
Fixed rates | — | |||
Total | 138.4 | |||
• | the guarantor’s working capital on a consolidated basis should not be less than the higher of the sum of one years ordinary installments and NOK 25 million. | |
• | the guarantor’s reported (book) equity on consolidated basis should not fall below 30% of the book value of the total assets in the group. |
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December 31, 2004 | |||||
(in millions of Nok) | |||||
Retirement indemnity provisions | 0.4 | ||||
Deferred income tax | 38.7 | ||||
Other long-term liabilities | 39.1 | ||||
• | historical staff turnover and standard mortality schedule; | |
• | age of retirement: 60 years old; and | |
• | actuarial rate: 5.00% and average rate of increase in future compensation: 3.50%. |
December 31, 2004 | |||||
(in millions of Nok) | |||||
Accumulated benefit obligation (unvested) | |||||
Projected benefit obligation | 2.4 | ||||
Fair value of plan assets | 2.0 | ||||
Unrecognized loss arising from change in assumed discount rate | 0.0 | ||||
Accrued provision | 0.4 | ||||
Service cost | 0.9 | ||||
Interest expense | 0.1 | ||||
Amortization of transition amount | 0.1 | ||||
Expected return on plan assets | (0.1 | ) | |||
Net pension cost (net of administration charge) | 1.0 | ||||
Administration charge | 0.1 | ||||
Benefit payments | 0.0 | ||||
Curtailment | 0.0 | ||||
Contribution to plan net of administration charge | (0.7 | ) | |||
Net changes | 0.3 | ||||
Key assumptions used in estimating the Group’s retirement obligations are: | |||||
Discount rate | 5.00 | % | |||
Average rate of increase in future compensation | 3.50 | % |
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December 31, 2004 | ||||
Notional amount (in millions of U.S.$) | 2.1 | |||
— of which forward sales qualifying as cash-flow hedges | — | |||
— of which forward sales not qualifying as cash-flow hedges | 2.1 | |||
Weighted average maturity | 106 days | |||
Weighted average forward NOK/U.S.$ exchange rate | 6.4043 | |||
Unrealized exchange gains (in millions of NOK) | 0.8 |
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December 31, 2004 | |||||||||
Carrying | Fair | ||||||||
Amount | Value | ||||||||
(in millions of Nok) | |||||||||
Cash and cash equivalents | 14.4 | 14.4 | |||||||
Restricted cash | 2.1 | 2.1 | |||||||
Bank overdraft facilities | (38.2 | ) | (38.2 | ) | |||||
Bank loans, vendor equipment financing and shareholder loans: | |||||||||
• Variable rate | (138.4 | ) | (138.4 | ) | |||||
• Fixed rate | — | — | |||||||
Foreign currency exchange contracts | 0.8 | 0.8 | |||||||
Interest rate swaps | (2.2 | ) | (2.2 | ) | |||||
Commodity swap Brent Blend | (0.5 | ) | (0.5 | ) |
Payments due by period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
1 year | 1-3 years | 4-5 years | 5 years | Total | ||||||||||||||||
(in million of Nok) | ||||||||||||||||||||
Long-term debt | 25.3 | 37.0 | — | — | 62.3 | |||||||||||||||
Capital Lease Obligations | 29.3 | 32.9 | 13.9 | — | 76.1 | |||||||||||||||
Operating Leases | 88.3 | 17.1 | — | — | 105.4 | |||||||||||||||
�� | ||||||||||||||||||||
Total Contractual Obligations | 142.9 | 87.0 | 13.9 | 243.8 | ||||||||||||||||
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2004 | ||||
(in millions of Nok) | ||||
Guarantees issued in favor of clients(a) | 0.9 | |||
Guarantees issued in favor of banks | — | |||
Other guarantees(b) | 1.5 | |||
Total | 2.4 | |||
(a) | Guarantees issued in favor of clients relate primarily to performance bonds, direct guarantees given for bids at the bidder level. | |
(b) | Other guarantees relate primarily to guarantees given to third parties for payment of rents. |
Due date | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
1 year | 1-3 years | 4-5 years | 5 years | Total | ||||||||||||||||
(in million of Nok) | ||||||||||||||||||||
Guarantees issued in favor of clients | 0.9 | — | — | — | 0.9 | |||||||||||||||
Guarantees issued in favor of banks | — | — | — | — | — | |||||||||||||||
Other guarantees | 1.5 | — | — | — | 1.5 | |||||||||||||||
Total | 2.4 | — | — | — | 2.4 | |||||||||||||||
• | Towed seismic, which consist of marine seismic acquisition; | |
• | Multi-client, which consist of acquiring and selling seismic library; | |
• | 4C/4D/OBS, which consist of seabed marine seismic acquisition. |
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2004 | ||||
(in millions of Nok) | ||||
Towed seismic | 378.8 | |||
Multi-client | 15.8 | |||
4C/4D/OBS | 102.7 | |||
Operating revenues | 497.3 | |||
Towed seismic | 2.2 | |||
Multi-client | 6.8 | |||
4C/4D/OBS | (11.5 | ) | ||
Operating income (loss) | (2.5 | ) | ||
Towed seismic | 52.7 | |||
Multi-client | 9.0 | |||
4C/4D/OBS | 13.5 | |||
Depreciation and amortization | 75.2 | |||
Towed seismic | 49.1 | |||
Multi-client | 6.3 | |||
4C/4D/OBS | 40.0 | |||
Unallocated | 0.9 | |||
Capital expenditures | 96.3 | |||
Towed seismic | 290.9 | |||
Multi-client | 9.5 | |||
4C/4D/OBS | 107.7 | |||
Unallocated | 0.9 | |||
Total Assets | 409.0 | |||
2004 | ||||||||
(in millions | ||||||||
of Nok) | ||||||||
Europe | 410.5 | 83 | % | |||||
Asia-Pacific/Middle East | 60.8 | 12 | % | |||||
Africa | — | 0 | % | |||||
Americas | 26.0 | 5 | % | |||||
Combined total | 497.3 | 100 | % | |||||
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2004 | ||||||||
(in millions of Nok) | ||||||||
Europe | 497.3 | 100 | % | |||||
Asia-Pacific/Middle East | — | — | % | |||||
Africa | — | — | % | |||||
Americas | — | — | % | |||||
Combined total | 497.3 | 100 | % | |||||
Year 2004 | ||||
(in millions of Nok) | ||||
Other revenues (expenses) | — | |||
Non-recurring revenues (expenses) — net | — | |||
Gains (losses) on sale of assets | 20.0 | |||
Other revenues (expenses) — net | 20.0 | |||
Year 2004 | ||||
(in millions of Nok) | ||||
Financial income on derivatives | 16.0 | |||
Financial expense | (7.4 | ) | ||
Financial income | 1.9 | |||
Financial expense — net | 10.5 | |||
Year 2004 | ||||
(in millions of Nok) | ||||
Current income taxes | (0.9 | ) | ||
Deferred taxes and other | (4.4 | ) | ||
Total income tax expense | (5.3 | ) | ||
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December 31, 2004 | ||||
(in millions of Nok) | ||||
Deferred tax assets — temporary differences | — | |||
Deferred tax assets — tax losses carried forward | 0.5 | |||
Total Deferred tax assets | — | |||
Total Deferred tax liabilities | (39.2 | ) | ||
Total deferred tax, net | (38.7 | ) | ||
December 31, 2004 | ||||
(in millions of Nok) | ||||
Personnel employed under Norwegian contracts 4C/4D/ OBC | 67 | |||
Towed seismic | — | |||
Total | 67 | |||
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December 31, 2004 | ||||
(in millions of Nok) | ||||
Interest | 5.2 | |||
Income taxes | 0.3 | |||
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As at 31 December 2005 | ||||||||||||||||
Note | 2005 | 2004 | 2003 | |||||||||||||
SR | SR | SR | ||||||||||||||
ASSETS EMPLOYED | ||||||||||||||||
PROPERTY AND EQUIPMENT | 3 | 148,187,403 | 121,111,759 | 174,344,719 | ||||||||||||
CURRENT ASSETS | ||||||||||||||||
Inventories | 4 | 11,181,732 | 7,961,714 | 4,890,999 | ||||||||||||
Accounts receivable and prepayments | 5 | 127,578,318 | 101,800,723 | 85,954,484 | ||||||||||||
Bank balances and cash | 115,622,483 | 104,151,363 | 85,090,860 | |||||||||||||
254,382,533 | 213,913,800 | 175,936,343 | ||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Accounts payable and accruals | 6 | 22,433,138 | 12,078,475 | 29,952,747 | ||||||||||||
Current portion of term loans | 7 | — | — | 30,900,000 | ||||||||||||
Zakat and income tax payable | 8 | 15,908,684 | 17,166,077 | 12,390,391 | ||||||||||||
38,341,822 | 29,244,552 | 73,243,138 | ||||||||||||||
NET CURRENT ASSETS | 216,040,711 | 184,669,248 | 102,693,205 | |||||||||||||
364,228,114 | 305,781,007 | 277,037,924 | ||||||||||||||
FUNDS EMPLOYED | ||||||||||||||||
PARTNERS’ EQUITY | ||||||||||||||||
Capital | 9 | 36,000,000 | 36,000,000 | 36,000,000 | ||||||||||||
Statutory reserve | 10 | 18,000,000 | 18,000,000 | 18,000,000 | ||||||||||||
General reserve | 11 | 4,646,910 | 4,646,910 | 4,646,910 | ||||||||||||
Capital reserve | 12 | 13,999,304 | 13,392,139 | 6,961,297 | ||||||||||||
Reserve for employees’ training | 13 | 3,000,000 | 3,000,000 | 3,000,000 | ||||||||||||
Retained earnings | 272,939,576 | 217,433,007 | 162,775,989 | |||||||||||||
348,585,790 | 292,472,056 | 231,384,196 | ||||||||||||||
NON CURRENT LIABILITIES | ||||||||||||||||
Term loans | 7 | — | — | 34,866,667 | ||||||||||||
Employees’ terminal benefits | 15,642,324 | 13,308,951 | 10,787,061 | |||||||||||||
15,642,324 | 13,308,951 | 45,653,728 | ||||||||||||||
364,228,114 | 305,781,007 | 277,037,924 | ||||||||||||||
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Year ended 31 December 2005 | ||||||||||||||||
Note | 2005 | 2004 | 2003 | |||||||||||||
SR | SR | SR | ||||||||||||||
Contracts revenue | 359,398,833 | 324,889,670 | 306,295,873 | |||||||||||||
Operating costs | (262,462,397 | ) | (227,316,493 | ) | (223,800,880 | ) | ||||||||||
GROSS PROFIT | 96.936,436 | 97,573,177 | 82,494,993 | |||||||||||||
General and administration expenses | 14 | (5,253,509 | ) | (4,870,222 | ) | (5,038,543 | ) | |||||||||
INCOME FROM MAIN OPERATIONS | 91,682,927 | 92,702,955 | 77,456,450 | |||||||||||||
Other income | 15 | 4,439,959 | 7,778,330 | 812,163 | ||||||||||||
Other expenses | 16 | — | (40,740 | ) | (1,150,521 | ) | ||||||||||
Financial charges | (9,152 | ) | (1,352,685 | ) | (3,633,632 | ) | ||||||||||
NET INCOME FOR THE YEAR | 96,113,734 | 99,087,860 | 73,484,460 | |||||||||||||
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Year ended 31 December 2005 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
SR | SR | SR | |||||||||||
OPERATING ACTIVITIES | |||||||||||||
Net income for the year | 96,113,734 | 99,087,860 | 73,484,460 | ||||||||||
Adjustments for: | |||||||||||||
Depreciation | 76,023,171 | 62,855,322 | 64,333,171 | ||||||||||
(Profit)/loss on sale of property and equipment | (607,165 | ) | (6,430,842 | ) | 858,820 | ||||||||
171,529,740 | 155,512,340 | 138,676,451 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Inventories | (3,220,018 | ) | (3,070,715 | ) | 1,418,358 | ||||||||
Receivables | (25,777,595 | ) | (15,846,239 | ) | 31,543,715 | ||||||||
Payables | 26,270,446 | 18,880,156 | 10,241,576 | ||||||||||
Cash from operations | 168,802,573 | 155,475,542 | 181,880,100 | ||||||||||
Employees’ terminal benefits, net | 2,333,373 | 2,521,890 | 2,350,914 | ||||||||||
Zakat and income tax paid | (17,173,176 | ) | (12,598,742 | ) | (11,424,355 | ) | |||||||
Net cash from operating activities | 153,962,770 | 145,398,690 | 172,806,659 | ||||||||||
INVESTING ACTIVITIES | |||||||||||||
Purchase of property and equipment | (103,265,814 | ) | (10,789,409 | ) | (13,436,425 | ) | |||||||
Proceeds from sale of property and equipment | 774,164 | 7,597,889 | 6,365,240 | ||||||||||
Net cash used in investing activities | (102,491,650 | ) | (3,191,520 | ) | (7,071,185 | ) | |||||||
FINANCING ACTIVITIES | |||||||||||||
Term loans, net | — | (65,766,667 | ) | (111,650,000 | ) | ||||||||
Dividends paid | (40,000,000 | ) | (57,380,000 | ) | (18,620,000 | ) | |||||||
Net cash used in financing activities | (40,000,000 | ) | (123,146,667 | ) | (130,270,000 | ) | |||||||
INCREASE IN BANK BALANCES AND CASH | 11,471,120 | 19,060,503 | 35,465,474 | ||||||||||
Bank balances and cash at the beginning of the year | 104,151,363 | 85,090,860 | 49,625,386 | ||||||||||
BANK BALANCES AND CASH AT THE END OF THE YEAR | 115,622,483 | 104,151,363 | 85,090,860 | ||||||||||
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Year ended 31 December 2005 | ||||||||||||||||||||||||||||
Reserve for | ||||||||||||||||||||||||||||
Statutory | General | Capital | employees’ | Retained | ||||||||||||||||||||||||
Capital | reserve | reserve | reserve | training | earnings | Total | ||||||||||||||||||||||
SR | SR | SR | SR | SR | SR | SR | ||||||||||||||||||||||
Balance at 31 December 2002 | 36,000,000 | 18,000,000 | 4,646,910 | 7,820,117 | 3,000,000 | 126,432,709 | 195,899,736 | |||||||||||||||||||||
Net income for the year | — | — | — | — | — | 73,484,460 | 73,484,460 | |||||||||||||||||||||
Provision for zakat and income tax (note 8) | — | — | — | — | — | (12.390,391 | ) | (12,390,391 | ) | |||||||||||||||||||
Zakat and income tax reimburseable by the partners | — | — | — | — | — | 12,390,391 | 12,390,391 | |||||||||||||||||||||
Transfer from capital reserve (note 12) | — | — | — | (858,820 | ) | — | 858,820 | — | ||||||||||||||||||||
Transfer to retained earnings | — | — | — | — | (2,134,170 | ) | 2.134,170 | — | ||||||||||||||||||||
Transfer to reserve for employees’ training (note 13) | — | — | — | — | 2,134,170 | (2,134,170 | ) | — | ||||||||||||||||||||
Dividends relating to 2002 | — | — | — | — | — | (38,000,000 | ) | (38,000,000 | ) | |||||||||||||||||||
Balance at 31 December 2003 | 36,000,000 | 18,000,000 | 4,646,910 | 6,961,297 | 3,000,000 | 162,775,989 | 231,384,196 | |||||||||||||||||||||
Net income for the year | — | — | — | — | — | 99,087,860 | 99,087,860 | |||||||||||||||||||||
Provision for zakat and income tax (note 8) | — | — | — | — | — | (17,374,428 | ) | (17,374,428 | ) | |||||||||||||||||||
Zakat and income tax reimburseable by the partners | — | — | — | — | — | 17,374,428 | 17,374,428 | |||||||||||||||||||||
Transfer to capital reserve (note 12) | — | — | — | 6,430,842 | — | (6,430,842 | ) | — | ||||||||||||||||||||
Transfer to retained earnings | — | — | — | — | (2,077,836 | ) | 2,077,836 | — | ||||||||||||||||||||
Transfer to reserve for employees’ training (note 13) | — | — | — | — | 2,077,836 | (2,077,836 | ) | — | ||||||||||||||||||||
Dividends relating to 2003 | — | — | — | — | — | (38,000,000 | ) | (38,000,000 | ) | |||||||||||||||||||
Balance at 31 December 2004 | 36,000,000 | 18,000,000 | 4,646,910 | 13,392,139 | 3,000,000 | 217,433,007 | 292,472,056 | |||||||||||||||||||||
Net income for the year | — | — | — | — | — | 96,113,734 | 96,113,734 | |||||||||||||||||||||
Provision for zakat and income tax (note 8) | — | — | — | — | — | (15,915,783 | ) | (15,915,783 | ) | |||||||||||||||||||
Zakat and income tax reimburseable by the partners | — | — | — | — | — | 15,915,783 | 15,915,783 | |||||||||||||||||||||
Transfer to capital reserve (note 12) | — | — | — | 607,165 | — | (607,165 | ) | — | ||||||||||||||||||||
Transfer to retained earnings | — | — | — | — | (1,730,387 | ) | 1,730,387 | — | ||||||||||||||||||||
Transfer to reserve for employees’ training (note 13) | — | — | — | — | 1,730,387 | (1,730,387 | ) | — | ||||||||||||||||||||
Dividends relating to 2004 | — | — | — | — | — | (40,000,000 | ) | (40,000,000 | ) | |||||||||||||||||||
Balance at 31 December 2005 | 36,000,000 | 18,000,000 | 4,646,910 | 13,999,304 | 3,000,000 | 272,939,576 | 348,585,790 | |||||||||||||||||||||
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Camp and Geophysical equipment | 3 to 5 years (2004: 51/3 years) | |
Vehicles | 4 to 5 years (2004: 4 to 51/3 years) | |
Others | 4 to 5 years (2004: 51/3 years) |
Camp and | |||||||||||||||||||||||||||||
Freehold | Geophysical | Total | Total | Total | |||||||||||||||||||||||||
land | equipment | Vehicles | Others | 2005 | 2004 | 2003 | |||||||||||||||||||||||
SR | SR | SR | SR | SR | SR | SR | |||||||||||||||||||||||
Cost: | |||||||||||||||||||||||||||||
At the beginning of the year | 1,382,000 | 366,802,316 | 58,922,918 | 4,215,639 | 431,322,873 | 457,716,818 | 521,502,125 | ||||||||||||||||||||||
Additions | 9,512,745 | 76,520,246 | 17,077,632 | 155,191 | 103,265,814 | 10,789,409 | 13,436,425 | ||||||||||||||||||||||
Disposals | — | (14,816,565 | ) | (1,064,266 | ) | (60,620 | ) | (15,941,451 | ) | (37,183,354 | ) | (77,221,732 | ) | ||||||||||||||||
At the end of the year | 10,894,745 | 428,505,997 | 74,936,284 | 4,310,210 | 518,647,236 | 431,322,873 | 457,716,818 | ||||||||||||||||||||||
Accumulated depreciation: | |||||||||||||||||||||||||||||
At the beginning of the year | — | 256,770,716 | 50,125,766 | 3,314,632 | 310,211,114 | 283,372,099 | 289,036,600 | ||||||||||||||||||||||
Charge for the year | — | 70,992,252 | 4,691,143 | 339,776 | 76,023,171 | 62,855,322 | 64,333,171 | ||||||||||||||||||||||
Disposals | — | (14,649,584 | ) | (1,064,251 | ) | (60,617 | ) | (15,774,452 | ) | (36,016,307 | ) | (69,997,672 | ) | ||||||||||||||||
At the end of the year | — | 313,113,384 | 53,752,658 | 3,593,791 | 370,459,833 | 310,211,114 | 283,372,009 | ||||||||||||||||||||||
Net book amounts: | |||||||||||||||||||||||||||||
At 31 December 2005 | 10,894,745 | 115,392,613 | 21,183,626 | 716,419 | 148,187,403 | ||||||||||||||||||||||||
At 31 December 2004 | 1,382,000 | 110,031,600 | 8,797,152 | 901,007 | 121,111,759 | ||||||||||||||||||||||||
At 31 December 2003 | 1,382,000 | 163,572,447 | 8,508,014 | 882,258 | 174,344,719 | ||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Equipment spares and others | 8,535,353 | 6,697,432 | 4,813,651 | |||||||||
Goods in transit | 2,646,379 | 1,264,282 | 77,348 | |||||||||
11,181,732 | 7,961,714 | 4,890,999 | ||||||||||
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2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Trade accounts receivable | 57,120,568 | 48,034,478 | 24,033,667 | |||||||||
Retentions receivable | 41,892,370 | 35,159,374 | 51,263,358 | |||||||||
Amounts due from partners (note 17) | 14,996,318 | 16,856,091 | 7,617,984 | |||||||||
Unbilled receivables | 7,596,342 | — | — | |||||||||
Advances to suppliers | 1,661,670 | 208,164 | 723,577 | |||||||||
Other receivables | 1,843,450 | 307,976 | 996,515 | |||||||||
Prepaid expenses | 2,467,600 | 1,234,640 | 1,319,383 | |||||||||
127,578,318 | �� | 101,800,723 | 85,954,484 | |||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Trade accounts payable | 10,943,801 | 6,718,682 | 6,583,563 | |||||||||
Amount due to a partner | — | — | 17,051,226 | |||||||||
Amounts due to affiliates (note 17) | 1,268,815 | 293,909 | 826,766 | |||||||||
Accrued expenses | 8,083,410 | 3,967,197 | 4,209,785 | |||||||||
Other payables | 2,137,112 | 1,098,687 | 1,281,407 | |||||||||
22,433,138 | 12,078,475 | 29,952,747 | ||||||||||
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2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Bank loans | — | — | 65,766,667 | |||||||||
Less: Non current portion | — | — | 34,866,667 | |||||||||
Current portion | — | — | 30,900,000 | |||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Provision for the year | 2,652,142 | 2,271,559 | 1,289,884 | |||||||||
Prior years | 567 | 207,308 | 143 | |||||||||
Charge for the year | 2,652,709 | 2,478,867 | 1,290,027 | |||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Equity | 127,230,749 | 98,625,940 | 99,908,866 | |||||||||
Opening provisions and other adjustments | 8,317,565 | 5,501,401 | 4,302,435 | |||||||||
Book value of long term assets | (98,450,756 | ) | (65,182,687 | ) | (91,370,769 | ) | ||||||
37,097,558 | 38,944,654 | 12,840,532 | ||||||||||
Zakatable income for the year | 68,988,128 | 51,917,716 | 38,754,818 | |||||||||
Zakat base | 106,085,686 | 90,862,370 | 51,595,350 | |||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Provision for the year | 13,256,542 | 14,894,518 | 11,100,507 | |||||||||
Prior year | 6,532 | 1,043 | 1,646 | |||||||||
Charge for the year | 13,263,074 | 14,895,561 | 11,102,153 | |||||||||
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2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
At the beginning of the year | 17,166,077 | 12,390,391 | 11,422,566 | |||||||||
Provided during the year | 15,915,783 | 17,374,428 | 12,392,180 | |||||||||
Payments during the year | (17,173,176 | ) | (12,598,742 | ) | (11,424,355 | ) | ||||||
At the end of the year | 15,908,684 | 17,166,077 | 12,390,391 | |||||||||
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2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
At the beginning of the year | 3,000,000 | 3,000,000 | 3,000,000 | |||||||||
Transfer to retained earnings | (1,730,387 | ) | (2,077,836 | ) | (2,134,170 | ) | ||||||
Transfer from retained earnings | 1,730,387 | 2,077,836 | 2,134,170 | |||||||||
At the end of the year | 3,000,000 | 3,000,000 | 3,000,000 | |||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Rent | 1,082,246 | 1,178,503 | 1,271,583 | |||||||||
Printing and stationery | 1,014,003 | 872,659 | 886,376 | |||||||||
Postage, fax and telephone | 570,271 | 587,883 | 642,201 | |||||||||
Other | 2,586,989 | 2,231,177 | 2,238,383 | |||||||||
5,253,509 | 4,870,222 | 5,038,543 | ||||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Profit on sale of plant and equipment | 607,165 | 6,430,842 | — | |||||||||
Income from bank deposits | 3,748,749 | 1,347,488 | 812,163 | |||||||||
Other | 84,045 | — | — | |||||||||
4,439,959 | 7,778,330 | 812,163 | ||||||||||
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Loss on sale of plant and equipment | — | — | 858,820 | |||||||||
Exchange loss | — | 40,740 | 291,701 | |||||||||
— | 40,740 | 1,150,521 | ||||||||||
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20 | SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE COMPANY AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES |
a. | Following is a reconciliation of net income to US GAAP: |
2005 | 2004 | 2003 | |||||||||||
SR | SR | SR | |||||||||||
Net income under Saudi accounting standards | 96,113,734 | 99,087,860 | 73,484,460 | ||||||||||
US GAAP adjustments: | |||||||||||||
Provision for zakat and income tax (note 8(c)) | (15,915,783 | ) | (17,374,428 | ) | (12,390,391 | ) | |||||||
Net over payment of zakat and income tax (refer below) | 904,631 | — | — | ||||||||||
Deferred tax adjustment for the year | 3,787,829 | 43,367 | 84,968 | ||||||||||
Net income under US GAAP | 84,890,411 | 81,756,799 | 61,179,037 | ||||||||||
Difference in net income between Saudi Standards and US GAAP | 11,223,323 | 17,331,061 | 12,305,423 | ||||||||||
Difference in partners’ equity between Saudi Accounting Standards and US GAAP (due to cumulative effect of current and prior years’ adjustments) | 13,680,456 | 20,735,296 | 15,794,626 | ||||||||||
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b. | Following is a reconciliation of partners’ equity for differences with US GAAP: |
2005 | 2004 | 2003 | ||||||||||
SR | SR | SR | ||||||||||
Partners’ equity under Saudi accounting standards | 348,585,790 | 292,472,056 | 231,384,196 | |||||||||
Cumulative effect of current and prior year adjustments (note 20(a)) | (13,680,456 | ) | (20,735,296 | ) | (15,794,626 | ) | ||||||
Partners’ equity under US GAAP | 334,905,334 | 271,736,760 | 215,589,570 | |||||||||
c. | Dividends paid |
d. | Fair values |
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Three Months Ended | |||||||||
October 31, | |||||||||
2006 | 2005 | ||||||||
(In thousands, except per | |||||||||
share amounts) | |||||||||
Revenue | $ | 230,831 | $ | 168,678 | |||||
Cost of services | 165,792 | 136,666 | |||||||
Research and development | 5,404 | 4,902 | |||||||
Merger and related costs | 10,259 | — | |||||||
General and administrative | 11,432 | 8,855 | |||||||
Operating income | 37,944 | 18,255 | |||||||
Interest expense | 2,188 | 1,476 | |||||||
Interest income | (4,983 | ) | (1,901 | ) | |||||
Gain on involuntary conversion of assets | — | (2,000 | ) | ||||||
Other (income) expense, net | 29 | (126 | ) | ||||||
Income before provision for income taxes | 40,710 | 20,806 | |||||||
Provision for income tax expense | 13,182 | 9,019 | |||||||
Net income | $ | 27,528 | $ | 11,787 | |||||
Net income per share: | |||||||||
Basic: | |||||||||
Weighted average common shares | 35,973 | 34,689 | |||||||
Net income per common share | $ | .77 | $ | .34 | |||||
Diluted: | |||||||||
Weighted average common shares | 40,748 | 36,838 | |||||||
Net income per common share | $ | .68 | $ | .32 | |||||
Comprehensive income: | |||||||||
Net income | $ | 27,528 | $ | 11,787 | |||||
Other comprehensive income (net of tax, $0 in all periods, except as specified): | |||||||||
Minimum pension liability adjustment (net of tax provision of $155) | 363 | — | |||||||
Foreign currency translation adjustments | 862 | 4,905 | |||||||
Total other comprehensive income | 1,225 | 4,905 | |||||||
Comprehensive income | $ | 28,753 | $ | 16,692 | |||||
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October 31, | July 31, | |||||||||
2006 | 2006 | |||||||||
(Dollars in thousands, | ||||||||||
except par value) | ||||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 353,819 | $ | 401,955 | ||||||
Restricted cash investments | 303 | 302 | ||||||||
Accounts receivable (net of allowance for doubtful accounts: $1,915 in October and $1,895 in July) | 238,430 | 215,244 | ||||||||
Materials and supplies inventory | 7,451 | 6,366 | ||||||||
Prepayments and other | 37,386 | 18,917 | ||||||||
Deferred tax asset | 8,225 | 8,225 | ||||||||
Current assets held for sale | — | 5,148 | ||||||||
Total current assets | 645,614 | 656,157 | ||||||||
Property and equipment | 546,225 | 359,683 | ||||||||
Less accumulated depreciation | 404,342 | 249,079 | ||||||||
Property and equipment, net | 141,883 | 110,604 | ||||||||
Multi-client data library | 324,069 | 296,603 | ||||||||
Deferred tax asset, net | 41,392 | 41,511 | ||||||||
Other assets | 22,656 | 22,699 | ||||||||
Noncurrent assets held for sale | — | 30,456 | ||||||||
Total | $ | 1,175,614 | $ | 1,158,030 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Notes payable | $ | 155,000 | $ | 155,000 | ||||||
Accounts payable, trade | 95,545 | 107,863 | ||||||||
Accrued and deferred income taxes | 35,131 | 29,224 | ||||||||
Deferred revenue | 47,581 | 29,280 | ||||||||
Other accrued liabilities | 58,256 | 70,313 | ||||||||
Current liabilities held for sale | — | 21,245 | ||||||||
Total current liabilities | 391,513 | 412,925 | ||||||||
Non-current liabilities: | ||||||||||
Other non-current liabilities | 34,268 | 34,561 | ||||||||
Total non-current liabilities | 34,268 | 34,561 | ||||||||
Stockholders’ equity: | ||||||||||
Common stock, $.01 par value; issued: 37,376,318 and 37,220,959 shares, respectively | 374 | 372 | ||||||||
Additional paid-in capital | 503,455 | 492,387 | ||||||||
Accumulated earnings | 255,904 | 228,376 | ||||||||
Accumulated other comprehensive income: | ||||||||||
Cumulative foreign currency translation adjustment | 22,645 | 21,783 | ||||||||
Minimum pension liability | (9,004 | ) | (9,367 | ) | ||||||
Treasury stock, at cost; 1,357,643 and 1,349,592 shares, respectively | (23,541 | ) | (23,007 | ) | ||||||
Total stockholders’ equity | 749,833 | 710,544 | ||||||||
Total | $ | 1,175,614 | $ | 1,158,030 | ||||||
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Three Months Ended | ||||||||||
October 31, | ||||||||||
2006 | 2005 | |||||||||
(In thousands) | ||||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 27,528 | $ | 11,787 | ||||||
Non-cash items included in net income: | ||||||||||
Depreciation and amortization, net (other than multi-client) | 14,619 | 9,045 | ||||||||
Amortization of multi-client data library | 57,925 | 52,840 | ||||||||
Share based compensation | 1,323 | 1,447 | ||||||||
Deferred income taxes | 467 | 364 | ||||||||
(Gain) / loss on disposition of property | (478 | ) | 43 | |||||||
Change in operating assets and liabilities: | ||||||||||
Accounts receivable | (23,023 | ) | (5,336 | ) | ||||||
Materials and supplies inventory | (645 | ) | (1,298 | ) | ||||||
Prepayments and other | (13,749 | ) | 574 | |||||||
Accrued income tax | 6,817 | 2,933 | ||||||||
Accounts payable, deferred revenue and other accrued liabilities | (27,808 | ) | (44,504 | ) | ||||||
Other | (300 | ) | 1,502 | |||||||
Net cash provided by operating activities | 42,676 | 29,397 | ||||||||
Cash flows from investing activities: | ||||||||||
Investment in multi-client data library, net cash | (80,901 | ) | (61,622 | ) | ||||||
Purchase of property and equipment | (19,221 | ) | (11,451 | ) | ||||||
Proceeds from involuntary conversion of assets | — | 13,600 | ||||||||
Proceeds from sales of property and equipment | 1,078 | 38 | ||||||||
Net cash used by investing activities | (99,044 | ) | (59,435 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from the sale of common stock | 2,734 | 6,560 | ||||||||
Excess tax benefit from stock based compensation | 5,588 | 732 | ||||||||
Principal payments on capital lease obligations | (444 | ) | (370 | ) | ||||||
Net cash provided by financing activities | 7,878 | 6,922 | ||||||||
Currency gain on foreign cash | 354 | 1,694 | ||||||||
Decrease in cash and cash equivalents | (48,136 | ) | (21,422 | ) | ||||||
Beginning cash and cash equivalents balance | 401,955 | 249,393 | ||||||||
Ending cash and cash equivalents balance | $ | 353,819 | $ | 227,971 | ||||||
Schedule of non-cash transactions: | ||||||||||
Capitalization of depreciation and amortization resulting in an increase in multi-client data library | $ | 3,612 | $ | 5,609 | ||||||
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F-132
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• | All of our outstanding stock options would fully vest and restrictions on most outstanding restricted shares would vest. | |
• | CGG will assume our convertible debt, which would continue to be fully convertible, and the holders of the debt would have the option of exercising their put right to CGG. | |
• | Any outstanding borrowings and letters of credit under the credit facility would be due immediately upon closing of the transaction. | |
• | A significant amount of severance compensation may be paid to executives of the company, including the named executive officers. | |
• | Other material effects of the merger will be more fully discussed in the proxy statement/prospectus on Form F-4 which CGG has filed with the SEC and in the proxy statement/prospectus relating to the proposed transaction, which will be sent to each Veritas stockholder in connection with the meeting of Veritas stockholders that we intend to call to vote to adopt the merger agreement. |
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Three Months Ended | ||||||||||
October 31, | ||||||||||
2006 | 2005 | |||||||||
(In thousands, except | ||||||||||
per share amounts) | ||||||||||
Net income | $ | 27,528 | $ | 11,787 | ||||||
Basic: | ||||||||||
Weighted average common shares (including exchangeable shares) | 35,973 | 34,689 | ||||||||
Net income per share | $ | .77 | $ | .34 | ||||||
Diluted: | ||||||||||
Weighted average common shares (including exchangeable shares) | 35,973 | 34,689 | ||||||||
Shares issuable from assumed conversion of notes | 4,298 | 1,638 | ||||||||
Shares issuable from assumed exercise of options | 389 | 469 | ||||||||
Shares issuable from the assumed vesting of restricted stock | 88 | 42 | ||||||||
Total | 40,748 | 36,838 | ||||||||
Net income per share | $ | .68 | $ | .32 | ||||||
Three Months Ended October 31, | ||||||||
2006 | 2005 | |||||||
Number of options | — | 385,271 | ||||||
Exercise price range | — | $33.94 - $55.13 | ||||||
Expiring through | — | March 2012 |
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For the three months | ||||||||||
ending October 31, | ||||||||||
2006 | 2005 | |||||||||
(amounts in | ||||||||||
thousands) | ||||||||||
Income tax provision computed at the U.S. statutory rate | $ | 14,249 | $ | 7,282 | ||||||
Increase (decrease) in taxes resulting from: | ||||||||||
Non-U.S. activities | (993 | ) | 1,153 | |||||||
Foreign tax refund | (5,047 | ) | — | |||||||
Non-deductible merger and related costs | 3,590 | — | ||||||||
Other | 1,383 | 584 | ||||||||
Total | $ | 13,182 | $ | 9,019 | ||||||
1. | the closing sale price of our common stock is over 120% of the conversion price, which is currently $24.03 (with 120% being $28.84) for 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the fiscal quarter preceding the quarter in which the conversion occurs; | |
2. | if we called the notes for redemption and the redemption has not occurred; | |
3. | the occurrence of a five consecutive trading day period in which the trading price of the notes was less than 95% of the closing sale price of our common stock on such day multiplied by the conversion ratio; or | |
4. | the occurrence of specified corporate transactions. |
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Three Months | |||||||||
Ended October 31, | |||||||||
2006 | 2005 | ||||||||
(In thousands) | |||||||||
Service cost (benefits earned during the period) | $ | 398 | $ | 331 | |||||
Interest cost on projected benefit obligation | 630 | 480 | |||||||
Expected return on plan assets | (391 | ) | (324 | ) | |||||
Amortization of transition obligation | 2 | 2 | |||||||
Amortization of prior service cost | (38 | ) | (36 | ) | |||||
Amortization of net (gain)/loss | 327 | 261 | |||||||
Net periodic benefit costs | $ | 928 | $ | 714 | |||||
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As of July 31, 2006 | ||||||||||||||
Land | Searcher | |||||||||||||
acquisition | vessel | Total | ||||||||||||
(amounts in thousands) | ||||||||||||||
Materials and inventory | $ | 440 | $ | — | $ | 440 | ||||||||
Prepayments and other | 4,708 | — | 4,708 | |||||||||||
Current assets | 5,148 | — | 5,148 | |||||||||||
Geophysical vessel | — | 8,331 | 8,331 | |||||||||||
Geophysical equipment | 144,096 | 2,206 | 146,302 | |||||||||||
Leasehold improvements and other | 23,863 | — | 23,863 | |||||||||||
Total | 167,959 | 10,537 | 178,496 | |||||||||||
Accumulated depreciation | (138,003 | ) | (10,037 | ) | (148,040 | ) | ||||||||
Property and equipment, net | 29,956 | 500 | 30,456 | |||||||||||
Total assets | $ | 35,104 | 500 | $ | 35,604 | |||||||||
Deferred revenue | $ | 21,245 | — | $ | 21,245 | |||||||||
Total current liabilities | $ | 21,245 | — | $ | 21,245 | |||||||||
For the Three Months Ended October 31, 2006 | ||||||||||||||||||||||||
NASA | EAME | APAC | VHR | Corporate | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Revenue | $ | 139,294 | $ | 54,248 | $ | 32,202 | $ | 5,087 | $ | — | $ | 230,831 | ||||||||||||
Depreciation and amortization, net (other than multi-client) | 9,450 | 2,291 | 1,575 | 1,025 | 278 | 14,619 | ||||||||||||||||||
Amortization of multi-client library | 37,082 | 20,749 | 94 | — | — | 57,925 | ||||||||||||||||||
Operating income (loss) | 41,634 | 10,571 | 6,825 | 663 | (21,749 | ) | 37,944 | |||||||||||||||||
Assets | 556,877 | 197,009 | 92,453 | 11,457 | 317,818 | 1,175,614 |
For the Three Months Ended October 31, 2005 | ||||||||||||||||||||||||
NASA | EAME | APAC | VHR | Corporate | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Revenue | $ | 102,842 | $ | 34,769 | $ | 26,783 | $ | 4,284 | $ | — | $ | 168,678 | ||||||||||||
Depreciation and amortization, net (other than multi-client) | 4,839 | 1,208 | 1,819 | 961 | 218 | 9,045 | ||||||||||||||||||
Amortization of multi-client library | 36,745 | 16,095 | — | — | — | 52,840 | ||||||||||||||||||
Operating income (loss) | 19,035 | 3,528 | 5,804 | (662 | ) | (9,450 | ) | 18,255 | ||||||||||||||||
Assets | 491,099 | 140,136 | 54,077 | 14,637 | 254,517 | 954,466 |
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Three Months Ended | Three Months Ended | |||||||
October 31, 2006 | October 31, 2005 | |||||||
(In millions of dollars) | ||||||||
Compensation costs recorded for all plans | $ | 1.3 | $ | 1.5 | ||||
Tax benefit recognized in income statement for share-based compensation arrangements | 0.4 | 0.4 |
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2006 | 2005 | |||||||
Expected volatility | Not applicable | 50.8% | ||||||
Expected dividends | Not applicable | 0% | ||||||
Expected term (in years) | Not applicable | 4.0 | ||||||
Risk free rate | Not applicable | 4.0% |
For the Three Months Ended October 31, 2006 | |||||||||||||||||||||
Weighted | |||||||||||||||||||||
Weighted | Weighted | Average | Aggregate | ||||||||||||||||||
Average | Average | Contractual | Intrinsic | ||||||||||||||||||
Number of | Exercise | Grant Date | Life | Value | |||||||||||||||||
Shares | Price | Fair Value | In Years | (000’s) | |||||||||||||||||
Beginning balance | 1,178,473 | $ | 19.70 | ||||||||||||||||||
Options granted | — | ||||||||||||||||||||
Options exercised | 106,956 | 17.82 | |||||||||||||||||||
Options forfeited | — | ||||||||||||||||||||
Total outstanding | 1,071,517 | 19.77 | 2.6 | $ | 55,977 | ||||||||||||||||
Options exercisable and vested | 818,384 | 19.35 | 2.4 | $ | 43,100 | ||||||||||||||||
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Number of | |||||
Shares | |||||
Nonvested at July 31, 2006 | 124,969 | ||||
Granted | 70,113 | ||||
Less: Vested | 34,782 | ||||
Less: Forfeited | 1,250 | ||||
Nonvested at October 31, 2006 | 159,050 | ||||
Assumptions used in valuation model | ||||||||||||||||
Risk free | Expected | Expected | ||||||||||||||
For the quarter ended | rate | Volatility | life | dividends | ||||||||||||
October 31, 2005 | 3.5 | % | 47 | % | 90 days | — | ||||||||||
October 31, 2006 | 4.9 | % | 44 | % | 90 days | — |
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Parent | ||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Revenue | $ | — | $ | 112,516 | $ | 119,926 | $ | (1,611 | ) | $ | 230,831 | |||||||||
Cost of services | — | 76,881 | 95,736 | (1,421 | ) | 171,196 | ||||||||||||||
General and administrative | 894 | 20,455 | 342 | — | 21,691 | |||||||||||||||
Operating income | (894 | ) | 15,180 | 23,848 | (190 | ) | 37,944 | |||||||||||||
Interest (income) expense | (6,808 | ) | 5,213 | (1,200 | ) | — | (2,795 | ) | ||||||||||||
Gain on involuntary conversion of assets | — | — | — | — | — | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (23,529 | ) | (13,752 | ) | — | 37,281 | — | |||||||||||||
Other (income) expense, net | — | 142 | (166 | ) | 53 | 29 | ||||||||||||||
Income before provision (benefit) for income taxes | 29,443 | 23,577 | 25,214 | (37,524 | ) | 40,710 | ||||||||||||||
Provision (benefit) for income taxes | 1,915 | 3,181 | 8,086 | — | 13,182 | |||||||||||||||
Net income | $ | 27,528 | $ | 20,396 | $ | 17,128 | $ | (37,524 | ) | $ | 27,528 | |||||||||
Parent | ||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Revenue | $ | — | $ | 82,918 | $ | 86,931 | $ | (1,171 | ) | $ | 168,678 | |||||||||
Cost of services | — | 68,336 | 74,403 | (1,171 | ) | 141,568 | ||||||||||||||
General and administrative | 493 | 7,876 | 486 | — | 8,855 | |||||||||||||||
Operating income | (493 | ) | 6,706 | 12,042 | — | 18,255 | ||||||||||||||
Interest (income) expense | 1,474 | (1,533 | ) | (366 | ) | — | (425 | ) | ||||||||||||
Gain on involuntary conversion of assets | — | (2,000 | ) | — | — | (2,000 | ) | |||||||||||||
Equity in (earnings) losses of subsidiaries | (12,901 | ) | (4,699 | ) | — | 17,600 | — | |||||||||||||
Other (income) expense, net | — | (558 | ) | 315 | 117 | (126 | ) | |||||||||||||
Income before provision (benefit) for income taxes | 10,934 | 15,496 | 12,093 | (17,717 | ) | 20,806 | ||||||||||||||
Provision (benefit) for income taxes | (853 | ) | 4,680 | 5,192 | — | 9,019 | ||||||||||||||
Net income | $ | 11,787 | $ | 10,816 | $ | 6,901 | $ | (17,717 | ) | $ | 11,787 | |||||||||
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Parent | ||||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 2,981 | $ | 228,931 | $ | 121,907 | $ | — | $ | 353,819 | ||||||||||||
Restricted cash investments | — | — | 303 | — | 303 | |||||||||||||||||
Accounts receivable | 16,581 | 126,265 | 95,584 | — | 238,430 | |||||||||||||||||
Materials and supplies inventory | — | 6,313 | 1,138 | — | 7,451 | |||||||||||||||||
Prepayments and other | 1,228 | 21,550 | 14,608 | — | 37,386 | |||||||||||||||||
Deferred tax asset | 6,802 | 82 | 1,341 | — | 8,225 | |||||||||||||||||
Total current assets | 27,592 | 383,141 | 234,881 | — | 645,614 | |||||||||||||||||
Property and equipment | — | 358,829 | 187,396 | — | 546,225 | |||||||||||||||||
Less accumulated depreciation | — | (255,863 | ) | (148,479 | ) | — | 404,342 | |||||||||||||||
Property and equipment, net | — | 102,966 | 38,917 | — | 141,883 | |||||||||||||||||
Multi-client data library | — | 129,883 | 194,186 | — | 324,069 | |||||||||||||||||
Intercompany receivable | 617,935 | — | — | (617,935 | ) | — | ||||||||||||||||
Investment in subsidiaries | 227,385 | 149,394 | 76,962 | (453,741 | ) | — | ||||||||||||||||
Other assets | 35,552 | 15,939 | 12,557 | — | 64,048 | |||||||||||||||||
Total | $ | 908,464 | $ | 781,323 | $ | 557,503 | $ | (1,071,676 | ) | $ | 1,175,614 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Notes payable | $ | 155,000 | $ | — | $ | — | $ | — | $ | 155,000 | ||||||||||||
Accounts payable, trade | — | 40,909 | 54,636 | — | 95,545 | |||||||||||||||||
Accrued and deferred income taxes | (2,200 | ) | 4,488 | 32,843 | — | 35,131 | ||||||||||||||||
Deferred revenue | — | 26,773 | 20,808 | — | 47,581 | |||||||||||||||||
Other accrued liabilities | 1,825 | 31,834 | 24,597 | — | 58,256 | |||||||||||||||||
Total current liabilities | 154,625 | 104,004 | 132,884 | — | 391,513 | |||||||||||||||||
Non-current liabilities: | ||||||||||||||||||||||
Intercompany payable | — | 470,483 | 147,452 | (617,935 | ) | — | ||||||||||||||||
Other non-current liabilities | 4,006 | 8,100 | 22,162 | — | 34,268 | |||||||||||||||||
Total non-current liabilities | 4,006 | 478,583 | 169,614 | (617,935 | ) | 34,268 | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||
Common stock | 374 | 3,132 | 26,937 | (30,069 | ) | 374 | ||||||||||||||||
Other stockholders’ equity | 749,459 | 195,604 | 228,068 | (423,672 | ) | 749,459 | ||||||||||||||||
Total stockholders’ equity | 749,833 | 198,736 | 255,005 | (453,741 | ) | 749,833 | ||||||||||||||||
Total | $ | 908,464 | $ | 781,323 | $ | 557,503 | $ | (1,071,676 | ) | $ | 1,175,614 | |||||||||||
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Parent | ||||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 5,418 | $ | 295,634 | $ | 100,903 | $ | — | $ | 401,955 | ||||||||||||
Restricted cash investments | — | — | 302 | — | 302 | |||||||||||||||||
Accounts receivable | 9,873 | 97,292 | 108,079 | — | 215,244 | |||||||||||||||||
Materials and supplies inventory | — | 4,899 | 1,467 | — | 6,366 | |||||||||||||||||
Prepayments and other | 1,445 | 14,342 | 3,130 | — | 18,917 | |||||||||||||||||
Deferred tax asset | 14,616 | 1,819 | (8,210 | ) | — | 8,225 | ||||||||||||||||
Current assets held for sale | — | 1,791 | 3,357 | — | 5,148 | |||||||||||||||||
Total current assets | 31,352 | 415,777 | 209,028 | — | 656,157 | |||||||||||||||||
Property and equipment | — | 290,866 | 68,817 | — | 359,683 | |||||||||||||||||
Less accumulated depreciation | — | (201,357 | ) | (47,722 | ) | — | 249,079 | |||||||||||||||
Property and equipment, net | — | 89,509 | 21,095 | — | 110,604 | |||||||||||||||||
Multi-client library | — | 129,876 | 166,727 | — | 296,603 | |||||||||||||||||
Intercompany receivable | 616,026 | — | — | (616,026 | ) | — | ||||||||||||||||
Investment in subsidiaries | 190,083 | 149,394 | 76,443 | (415,920 | ) | — | ||||||||||||||||
Other assets | 34,433 | 14,762 | 15,015 | — | 64,210 | |||||||||||||||||
Noncurrent assets held for sale | — | 8,598 | 21,858 | — | 30,456 | |||||||||||||||||
Total | $ | 871,894 | $ | 807,916 | $ | 510,166 | $ | (1,031,946 | ) | $ | 1,158,030 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Notes payable | $ | 155,000 | $ | — | $ | — | $ | — | $ | 155,000 | ||||||||||||
Accounts payable, trade | — | 54,508 | 53,355 | — | 107,863 | |||||||||||||||||
Accrued and deferred income taxes | 1,245 | 3,177 | 24,802 | — | 29,224 | |||||||||||||||||
Deferred revenue | — | 4,616 | 24,664 | — | 29,280 | |||||||||||||||||
Other accrued liabilities | 1,554 | 41,711 | 27,048 | — | 70,313 | |||||||||||||||||
Current liabilities held for sale | — | 20,124 | 1,121 | — | 21,245 | |||||||||||||||||
Total current liabilities | 157,799 | 124,136 | 130,990 | — | 412,925 | |||||||||||||||||
Non-current liabilities: | ||||||||||||||||||||||
Intercompany payable | — | 497,913 | 118,113 | (616,026 | ) | — | ||||||||||||||||
Other non-current liabilities | 3,551 | 9,386 | 21,624 | — | 34,561 | |||||||||||||||||
Total non-current liabilities | 3,551 | 507,299 | 139,737 | (616,026 | ) | 34,561 | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||
Common stock | 372 | 3,132 | 26,936 | (30,068 | ) | 372 | ||||||||||||||||
Other stockholders’ equity | 710,172 | 173,349 | 212,503 | (385,852 | ) | 710,172 | ||||||||||||||||
Total stockholders’ equity | 710,544 | 176,481 | 239,439 | (415,920 | ) | 710,544 | ||||||||||||||||
Total | $ | 871,894 | $ | 807,916 | $ | 510,166 | $ | (1,031,946 | ) | $ | 1,158,030 | |||||||||||
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Parent Company | Subsidiary | Combined | Consolidated | ||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cash flows from (used in): | |||||||||||||||||||||
Operating activities | $ | (10,759 | ) | $ | (46,059 | ) | $ | 99,494 | $ | — | $ | 42,676 | |||||||||
Investing activities | — | (20,644 | ) | (78,400 | ) | — | (99,044 | ) | |||||||||||||
Financing activities | 8,322 | — | (444 | ) | — | 7,878 | |||||||||||||||
Subtotal | (2,437 | ) | (66,703 | ) | 20,650 | — | (48,490 | ) | |||||||||||||
Currency gain on foreign cash | — | — | 354 | — | 354 | ||||||||||||||||
Increase (decrease) in cash | (2,437 | ) | (66,703 | ) | 21,004 | — | (48,136 | ) | |||||||||||||
Beginning cash balance | 5,418 | 295,634 | 100,903 | — | 401,955 | ||||||||||||||||
Ending cash balance | $ | 2,981 | $ | 228,931 | $ | 121,907 | $ | — | $ | 353,819 | |||||||||||
Parent Company | Subsidiary | Combined | Consolidated | ||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cash flows from (used in): | |||||||||||||||||||||
Operating activities | $ | 48,168 | $ | (54,999 | ) | $ | 36,228 | $ | — | $ | 29,397 | ||||||||||
Investing activities | — | (5,479 | ) | (53,956 | ) | — | (59,435 | ) | |||||||||||||
Financing activities | 7,293 | — | (371 | ) | — | 6,922 | |||||||||||||||
Subtotal | 55,461 | (60,478 | ) | (18,099 | ) | — | (23,116 | ) | |||||||||||||
Currency gain on foreign cash | — | — | 1,694 | — | 1,694 | ||||||||||||||||
Increase (decrease) in cash | 55,461 | (60,478 | ) | (16,405 | ) | — | (21,422 | ) | |||||||||||||
Beginning cash balance | 2,977 | 177,824 | 68,592 | — | 249,393 | ||||||||||||||||
Ending cash balance | $ | 58,438 | $ | 117,346 | $ | 52,187 | $ | — | $ | 227,971 | |||||||||||
F-145
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F-146
Table of Contents
F-147
Table of Contents
For the Years Ended July 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands, except per share | |||||||||||||
amounts) | |||||||||||||
Revenue | $ | 822,188 | $ | 634,026 | $ | 564,469 | |||||||
Cost of services | 623,159 | 519,008 | 495,709 | ||||||||||
Research and development | 22,910 | 18,882 | 15,536 | ||||||||||
General and administrative | 43,240 | 31,895 | 25,454 | ||||||||||
Operating income | 132,879 | 64,241 | 27,770 | ||||||||||
Interest expense | 7,319 | 3,996 | 18,851 | ||||||||||
Interest income | (11,989 | ) | (5,262 | ) | (1,602 | ) | |||||||
Gain on involuntary conversion of assets | (2,000 | ) | (9,861 | ) | — | ||||||||
Other (income) expense, net | 123 | (875 | ) | 1,585 | |||||||||
Income before provision (benefit) for income taxes | 139,426 | 76,243 | 8,936 | ||||||||||
Provision (benefit) for income taxes | 57,195 | (6,758 | ) | 3,715 | |||||||||
Net income | $ | 82,231 | $ | 83,001 | $ | 5,221 | |||||||
Net income per share: | |||||||||||||
Basic: | |||||||||||||
Weighted average common shares | 35,260 | 33,843 | 33,572 | ||||||||||
Income per common share | $ | 2.33 | $ | 2.45 | $ | .16 | |||||||
Diluted: | |||||||||||||
Weighted average common shares | 39,623 | 35,054 | 34,260 | ||||||||||
Income per common share | $ | 2.08 | $ | 2.37 | $ | .15 | |||||||
Comprehensive income | |||||||||||||
Net income | $ | 82,231 | $ | 83,001 | $ | 5,221 | |||||||
Other comprehensive income (loss) (net of tax, $0 in all periods except as specified): | |||||||||||||
Foreign currency translation adjustments | 7,538 | 6,914 | 3,835 | ||||||||||
Unrealized gain (loss) on investments-available for sale | — | (159 | ) | (588 | ) | ||||||||
Reclassification of unrealized gain on investments recognized in income | (197 | ) | — | — | |||||||||
Unrealized gain on hedge transactions | — | — | 145 | ||||||||||
Minimum pension liability adjustment (net of tax benefit of $409, $3,074 and $0 in 2006, 2005 and 2004, respectively) | (956 | ) | (7,171 | ) | 338 | ||||||||
Total other comprehensive income (loss) | 6,385 | (416 | ) | 3,730 | |||||||||
Comprehensive income | $ | 88,616 | $ | 82,585 | $ | 8,951 | |||||||
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July 31, | ||||||||||
2006 | 2005 | |||||||||
(Dollars in thousands, | ||||||||||
except par value) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 401,955 | $ | 249,393 | ||||||
Restricted cash investments | 302 | 237 | ||||||||
Accounts receivable (net of allowance for doubtful accounts: $1,895 in 2006 and $1,322 in 2005) | 215,244 | 165,989 | ||||||||
Materials and supplies inventory | 6,366 | 5,381 | ||||||||
Prepayments and other | 18,917 | 18,900 | ||||||||
Deferred tax asset | 8,225 | 12,486 | ||||||||
Current assets held for sale | 5,148 | — | ||||||||
Total current assets | 656,157 | 452,386 | ||||||||
Property and equipment: | ||||||||||
Land | 2,855 | 7,005 | ||||||||
Geophysical equipment | 200,297 | 329,436 | ||||||||
Data processing equipment | 79,590 | 75,337 | ||||||||
Geophysical vessel | — | 8,331 | ||||||||
Leasehold improvements and other | 76,941 | 74,981 | ||||||||
Total | 359,683 | 495,090 | ||||||||
Less accumulated depreciation | 249,079 | 367,173 | ||||||||
Property and equipment, net | 110,604 | 127,917 | ||||||||
Multi-client data library | 296,603 | 316,793 | ||||||||
Deferred tax asset, net | 41,511 | 45,963 | ||||||||
Other assets | 22,699 | 23,539 | ||||||||
Noncurrent assets held for sale | 30,456 | — | ||||||||
Total | $ | 1,158,030 | $ | 966,598 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Notes payable | $ | 155,000 | $ | — | ||||||
Accounts payable, trade | 107,863 | 75,810 | ||||||||
Accrued and deferred income taxes | 29,224 | 9,402 | ||||||||
Deferred revenue | 29,280 | 42,043 | ||||||||
Other accrued liabilities | 70,313 | 65,193 | ||||||||
Current liabilities held for sale | 21,245 | — | ||||||||
Total current liabilities | 412,925 | 192,448 | ||||||||
Non-current liabilities: | ||||||||||
Long-term debt | — | 155,000 | ||||||||
Other non-current liabilities | 34,561 | 36,602 | ||||||||
Total non-current liabilities | 34,561 | 191,602 | ||||||||
Commitments and Contingent Liabilities (Note 6) | ||||||||||
Stockholders’ equity: | ||||||||||
Common stock, $.01 par value; authorized: 78,500,000 shares; issued: 37,220,959 shares in 2006 and 35,580,032 shares in 2005 (excluding Exchangeable Shares of 156,428 in 2005) | 372 | 355 | ||||||||
Additional paid-in capital | 492,387 | 452,299 | ||||||||
Accumulated earnings | 228,376 | 146,145 | ||||||||
Accumulated other comprehensive income: | ||||||||||
Cumulative foreign currency translation adjustment | 21,783 | 14,245 | ||||||||
Unrealized gain on investments-available for sale | — | 197 | ||||||||
Minimum pension liability | (9,367 | ) | (8,410 | ) | ||||||
Unearned compensation | — | (595 | ) | |||||||
Treasury stock, at cost; 1,349,592 shares in 2006 and 1,320,106 shares in 2005 | (23,007 | ) | (21,688 | ) | ||||||
Total stockholders’ equity | 710,544 | 582,548 | ||||||||
Total | $ | 1,158,030 | $ | 966,598 | ||||||
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For the Years Ended July 31, | |||||||||||||||
2006 | 2005 | 2004 | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 82,231 | $ | 83,001 | $ | 5,221 | |||||||||
Non-cash items included in net income: | |||||||||||||||
Depreciation and amortization, net (other than multi-client) | 43,920 | 41,583 | 40,300 | ||||||||||||
Amortization of multi-client library | 200,975 | 159,725 | 209,840 | ||||||||||||
Share based compensation | 5,957 | 350 | 385 | ||||||||||||
Loss (gain) on disposition of property and equipment | 302 | (445 | ) | (310 | ) | ||||||||||
Equity in loss of joint venture | — | — | 958 | ||||||||||||
Deferred income taxes | 3,545 | (39,280 | ) | (9,678 | ) | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (62,288 | ) | 3,128 | (34,452 | ) | ||||||||||
Materials and supplies inventory | (1,422 | ) | (1,177 | ) | 819 | ||||||||||
Prepayments and other | (4,884 | ) | (3,270 | ) | (1,836 | ) | |||||||||
Accrued income taxes | 23,037 | 12,136 | 2,649 | ||||||||||||
Accounts payable, deferred revenue and other accrued liabilities | 40,602 | 69,003 | 32,951 | ||||||||||||
Other non-current liabilities | 4,010 | 5,098 | (1,844 | ) | |||||||||||
Other | 630 | 1,443 | (1,969 | ) | |||||||||||
Net cash provided by operating activities | 336,615 | 331,295 | 243,034 | ||||||||||||
Cash flows used by investing activities: | |||||||||||||||
Investment in multi-client library, net cash | (165,634 | ) | (148,373 | ) | (126,250 | ) | |||||||||
Purchase of property and equipment | (67,903 | ) | (62,375 | ) | (30,543 | ) | |||||||||
Sale of (RC)2 | — | — | 2,000 | ||||||||||||
Proceeds from involuntary conversion of assets | 15,600 | 2,817 | — | ||||||||||||
Proceeds from sales of property and equipment | 1,158 | 1,342 | 2,307 | ||||||||||||
Decrease (increase) in restricted cash investments | (63 | ) | (126 | ) | 94 | ||||||||||
Net cash used by investing activities | (216,842 | ) | (206,715 | ) | (152,392 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Borrowings of long-term debt | — | — | 155,000 | ||||||||||||
Payments of long-term debt | — | — | (194,225 | ) | |||||||||||
Proceeds from the sale of common stock | 27,744 | 7,652 | 12,543 | ||||||||||||
Purchase of treasury stock | — | — | (20,000 | ) | |||||||||||
Excess tax benefit from share based compensation | 4,277 | — | — | ||||||||||||
Principal payments on capital lease obligations | (2,023 | ) | — | — | |||||||||||
Net cash provided by (used by) financing activities | 29,998 | 7,652 | (46,682 | ) | |||||||||||
Currency gain on foreign cash | 2,791 | 862 | 242 | ||||||||||||
Increase in cash and cash equivalents | 152,562 | 133,094 | 44,202 | ||||||||||||
Beginning cash and cash equivalents balance | 249,393 | 116,299 | 72,097 | ||||||||||||
Ending cash and cash equivalents balance | $ | 401,955 | $ | 249,393 | $ | 116,299 | |||||||||
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Table of Contents
For the Years Ended July 31, | |||||||||||||||
2006 | 2005 | 2004 | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Schedule of significant non-cash transactions: | |||||||||||||||
Capitalization of depreciation and amortization resulting in an increase in multi-client data library | 13,275 | 11,365 | 18,648 | ||||||||||||
Capital lease obligations incurred for the purchase of equipment | 3,742 | — | — | ||||||||||||
Common stock issued for purchase of Fairweather Geophysical LLC | — | — | 500 | ||||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||
Cash paid for: | |||||||||||||||
Interest: | |||||||||||||||
Convertible notes | $ | 5,301 | $ | 2,286 | $ | 160 | |||||||||
Term notes | — | — | 11,830 | ||||||||||||
Other | 276 | 163 | 114 | ||||||||||||
Income taxes, net | 34,840 | 21,809 | 3,216 |
F-151
Table of Contents
Common Stock | Accumulated | |||||||||||||||||||||||||||||||
Treasury Stock | Earnings from | |||||||||||||||||||||||||||||||
At Cost | Additional | August 1, 1991 | Accumulated | |||||||||||||||||||||||||||||
Par | Paid-In- | with respect to | Unearned | Comprehensive | ||||||||||||||||||||||||||||
Shares | Value | Shares | Cost | Capital | Digicon Inc. | Compensation | Income (Loss) | |||||||||||||||||||||||||
(In thousands, except share amounts) | ||||||||||||||||||||||||||||||||
Balance, July 31, 2003 | 32,156,781 | $ | 322 | (84,143 | ) | $ | (1,508 | ) | $ | 428,402 | $ | 57,923 | $ | (340 | ) | $ | 2,718 | |||||||||||||||
Common stock issued for exchangeable stock | 1,257,490 | 12 | — | — | (12 | ) | — | — | — | |||||||||||||||||||||||
Common stock issued to employees | 56,353 | — | — | — | 468 | — | (649 | ) | — | |||||||||||||||||||||||
Common stock issued for cash | 1,289,098 | 13 | — | — | 12,530 | — | — | — | ||||||||||||||||||||||||
Stock returned to treasury | — | — | (10,895 | ) | (120 | ) | — | — | — | — | ||||||||||||||||||||||
Treasury stock buy back | — | — | (1,222,494 | ) | (20,000 | ) | — | — | — | — | ||||||||||||||||||||||
Tax benefit for share based compensation | — | — | — | — | 95 | — | — | — | ||||||||||||||||||||||||
Common stock exchanged for purchase of Fairweather | 61,576 | 1 | — | — | 499 | — | — | — | ||||||||||||||||||||||||
Cumulative foreign currency translation adjustment | — | — | — | — | — | — | — | 3,835 | ||||||||||||||||||||||||
Amortization of unearned compensation | — | — | — | — | — | — | 385 | — | ||||||||||||||||||||||||
Unrealized gain on investments — available for sale | — | — | — | — | — | — | — | (588 | ) | |||||||||||||||||||||||
Unrealized loss on foreign currency hedge | — | — | — | — | — | — | — | (632 | ) | |||||||||||||||||||||||
Unrealized gain on interest rate swap | — | — | — | — | — | — | — | 777 | ||||||||||||||||||||||||
Unrealized minimum pension liability | — | — | — | — | — | — | — | 338 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 5,221 | — | — | ||||||||||||||||||||||||
Balance, July 31, 2004 | 34,821,298 | $ | 348 | (1,317,532 | ) | $ | (21,628 | ) | $ | 441,982 | $ | 63,144 | $ | (604 | ) | $ | 6,448 | |||||||||||||||
Common stock issued for exchangeable stock | 25,484 | — | — | — | (280 | ) | — | — | — | |||||||||||||||||||||||
Common stock issued to employees | 733,250 | 7 | — | — | 8,326 | — | (341 | ) | — | |||||||||||||||||||||||
Stock returned to treasury | — | — | (2,574 | ) | (60 | ) | — | — | — | — | ||||||||||||||||||||||
Tax benefit for share based compensation | — | — | — | — | 2,271 | — | — | — | ||||||||||||||||||||||||
Cumulative foreign currency translation adjustment | — | — | — | — | — | — | — | 6,914 | ||||||||||||||||||||||||
Amortization of unearned compensation | — | — | — | — | — | — | 350 | — | ||||||||||||||||||||||||
Unrealized gain on investments — available for sale | — | — | — | — | — | — | — | (159 | ) | |||||||||||||||||||||||
Unrealized minimum pension liability | — | — | — | — | — | — | — | (7,171 | ) | |||||||||||||||||||||||
Net income | — | — | — | — | — | 83,001 | — | — | ||||||||||||||||||||||||
Balance, July 31, 2005 | 35,580,032 | $ | 355 | (1,320,106 | ) | $ | (21,688 | ) | $ | 452,299 | $ | 146,145 | $ | (595 | ) | $ | 6,032 | |||||||||||||||
Common stock issued for exchangeable stock | 156,428 | 2 | — | — | 1,048 | — | — | — | ||||||||||||||||||||||||
Common stock issued to employees | 1,484,499 | 15 | — | — | 28,072 | — | — | — | ||||||||||||||||||||||||
Reclassification of unearned compensation | — | — | — | — | (595 | ) | — | 595 | — | |||||||||||||||||||||||
Stock returned to treasury | — | — | (29,486 | ) | (1,319 | ) | — | — | — | — | ||||||||||||||||||||||
Tax benefit for share based compensation | — | — | — | — | 6,870 | — | — | — | ||||||||||||||||||||||||
Cumulative foreign currency translation adjustment | — | — | — | — | — | — | — | 7,538 | ||||||||||||||||||||||||
Share based compensation expense | — | — | — | — | 4,693 | — | — | — | ||||||||||||||||||||||||
Reclassification of unrealized gain on investments | — | — | — | — | — | — | — | (197 | ) | |||||||||||||||||||||||
Unrealized minimum pension liability | — | — | — | — | — | — | — | (956 | ) | |||||||||||||||||||||||
Net income | — | — | — | — | — | 82,231 | — | — | ||||||||||||||||||||||||
Balance, July 31, 2006 | 37,220,959 | $ | 372 | (1,349,592 | ) | $ | (23,007 | ) | $ | 492,387 | $ | 228,376 | $ | — | $ | 12,417 | ||||||||||||||||
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F-153
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Estimated | ||||
Useful Life | ||||
In Years | ||||
Geophysical equipment | 3-5 | |||
Data processing equipment | 3 | |||
Leasehold improvements and other | 3-15 |
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F-155
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F-156
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Year Ended | ||||||||||
July 31, | ||||||||||
2005 | 2004 | |||||||||
Net income as reported | $ | 83,001 | $ | 5,221 | ||||||
Add: Compensation expense, net of related tax effects | 228 | 250 | ||||||||
Less: Total share based compensation expense determined under fair value based method for all awards, net of related tax effects | (2,541 | ) | (4,859 | ) | ||||||
Pro forma net income | $ | 80,688 | $ | 612 | ||||||
Earnings per share: | ||||||||||
Basic: | ||||||||||
As reported | $ | 2.45 | $ | .16 | ||||||
Pro-forma | 2.38 | .02 | ||||||||
Diluted: | ||||||||||
As reported | $ | 2.37 | $ | .15 | ||||||
Pro-forma | 2.30 | .02 |
Year Ended | ||||||||
July 31, | ||||||||
2005 | 2004 | |||||||
Risk-free interest rate | 3.7% | 3.7% | ||||||
Expected volatility | 46.8% | 64.9% | ||||||
Expected life in years | 4.0 | 4.0 |
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July 31, 2006 | July 31, 2005 | |||||||||||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||||||||||||
Amount | Amortization | Net | Amount | Amortization | Net | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Software | $ | 16,861 | $ | 13,200 | $ | 3,661 | $ | 16,396 | $ | 9,610 | $ | 6,786 | ||||||||||||
Debt Issuance Costs | 6,759 | 2,876 | 3,883 | 5,821 | 1,597 | 4,224 |
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1. | the closing sale price of our common stock is over 120% of the conversion price, which is currently $24.03 (with 120% being $28.84) for 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the fiscal quarter preceding the quarter in which the conversion occurs; | |
2. | if we called the notes for redemption and the redemption has not occurred; | |
3. | the occurrence of a five consecutive trading day period in which the trading price of the notes was less than 95% of the closing sale price of our common stock on such day multiplied by the conversion ratio; or | |
4. | the occurrence of specified corporate transactions. |
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July 31, | |||||||||
2006 | 2005 | ||||||||
(In thousands) | |||||||||
Accrued payroll and benefits | $ | 42,565 | $ | 35,679 | |||||
Accrued taxes other than income taxes | 5,071 | 5,985 | |||||||
Accrued insurance | 5,676 | 9,105 | |||||||
Accrued dry dock | 6,043 | 3,181 | |||||||
Current capital lease obligation | 1,455 | — | |||||||
Other | 9,503 | 11,243 | |||||||
Total | $ | 70,313 | $ | 65,193 | |||||
For the Years Ended July 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands) | |||||||||||||
U.S. | $ | 55,028 | $ | 46,224 | $ | 4,192 | |||||||
Non-U.S. | 84,398 | 30,019 | 4,744 | ||||||||||
Total | $ | 139,426 | $ | 76,243 | $ | 8,936 | |||||||
For the Years Ended July 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands) | |||||||||||||
Current — U.S. | $ | 27,805 | $ | 23,444 | $ | (3,293 | ) | ||||||
Deferred — U.S. | (538 | ) | (38,380 | ) | — | ||||||||
Current — Non-U.S. | 25,845 | 9,078 | 6,052 | ||||||||||
Deferred — Non-U.S. | 4,083 | (900 | ) | 956 | |||||||||
Total | $ | 57,195 | $ | (6,758 | ) | $ | 3,715 | ||||||
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For the Years Ended July 31, | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(In thousands) | ||||||||||||||
Income tax provision (benefit) computed at the U.S. statutory rate | $ | 48,799 | $ | 26,685 | $ | 3,128 | ||||||||
Increase (decrease) in taxes resulting from: | ||||||||||||||
Non-U.S. activities | 7,173 | 3,029 | 8,662 | |||||||||||
Adjustments to tax contingencies and resolution of certain tax matters | 1,011 | 776 | (5,173 | ) | ||||||||||
Deduction of worthless stock of a subsidiary | — | — | (3,446 | ) | ||||||||||
Tax credits | (330 | ) | (3,369 | ) | (1,671 | ) | ||||||||
Valuation allowances on deferred income tax assets | — | (34,417 | ) | 1,408 | ||||||||||
Non-deductibles | 372 | 892 | 521 | |||||||||||
Software amortization | — | — | 411 | |||||||||||
Other | 170 | (354 | ) | (125 | ) | |||||||||
Total | $ | 57,195 | $ | (6,758 | ) | $ | 3,715 | |||||||
July 31, | ||||||||||
2006 | 2005 | |||||||||
(In thousands) | ||||||||||
Deferred income tax assets: | ||||||||||
Net operating loss carryforwards | $ | 13,423 | $ | 24,156 | ||||||
Multi-client data library | 22,150 | 13,801 | ||||||||
Property and equipment | 7,073 | 8,711 | ||||||||
Tax credit carryforwards | 8,175 | 540 | ||||||||
Accrued liabilities | 8,012 | 5,424 | ||||||||
Pension liabilities | 4,345 | 3,106 | ||||||||
Capitalized costs | 2,452 | 2,703 | ||||||||
Equity based compensation | 1,696 | — | ||||||||
Deferred revenue | 2,561 | 6,255 | ||||||||
Other | 1,430 | 2,093 | ||||||||
Valuation allowances | (19,255 | ) | (17,772 | ) | ||||||
Deferred income tax assets — net | 52,062 | 49,017 | ||||||||
Deferred income tax liabilities: | ||||||||||
Partnerships | (8,936 | ) | (5,157 | ) | ||||||
Deferred charges | (2,691 | ) | (441 | ) | ||||||
Deferred mobilization | (1,069 | ) | (1,278 | ) | ||||||
Other | (360 | ) | — | |||||||
Deferred income tax liabilities | (13,056 | ) | (6,876 | ) | ||||||
Net deferred income tax assets (liabilities) | $ | 39,006 | $ | 42,141 | ||||||
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Non-U.S. | |||||
Net | |||||
Operating | |||||
Fiscal Year | Losses | ||||
2007 | $ | 853 | |||
2008 | 1,019 | ||||
2009 | 2,394 | ||||
2010 | 411 | ||||
2011 | 989 | ||||
2012 | 906 | ||||
2013 | 929 | ||||
2014 | 378 | ||||
2015 | 1,631 | ||||
2016 | 1,392 | ||||
Indefinite | 33,995 | ||||
Total | $ | 44,897 | |||
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Minimum | ||||
Fiscal Year | Rentals | |||
(In thousands) | ||||
2007 | $ | 49,099 | ||
2008 | 34,349 | |||
2009 | 30,595 | |||
2010 | 27,468 | |||
2011 | 22,212 | |||
2012 and thereafter | 59,032 | |||
Total | $ | 222,755 | ||
Minimum | ||||||
Rentals | ||||||
(In thousands) | ||||||
2007 | $ | 1,502 | ||||
2008 | 265 | |||||
Total minimum lease payments | $ | 1,767 | ||||
Less: imputed interest costs | (48 | ) | ||||
Present value of net | ||||||
minimum lease payments | $ | 1,719 | ||||
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Year Ended | |||||
July 31, 2006 | |||||
(In millions of dollars, | |||||
except per share data) | |||||
Compensation costs recorded for all plans | $ | 6.0 | |||
Tax benefit recognized in income statement for share based compensation arrangements | 1.7 | ||||
Impact of adopting SFAS 123R to: | |||||
Net income | 4.3 | ||||
Basic earnings per share | 0.12 | ||||
Diluted earnings per share | 0.11 |
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Year Ended | ||||
July 31, 2006 | ||||
Expected volatility | 50.8% | |||
Expected dividends | 0% | |||
Expected term (in years) | 4.0 | |||
Risk free rate | 4.0% |
For the Year Ended July 31, 2006 | |||||||||||||||||||||
Weighted | |||||||||||||||||||||
Weighted | Weighted | Average | Aggregate | ||||||||||||||||||
Average | Average | Contractual | Intrinsic | ||||||||||||||||||
Number of | Exercise | Grant Date | Life In | Value | |||||||||||||||||
Shares | Price | Fair Value | Years | (000’s) | |||||||||||||||||
Beginning balance | 2,422,790 | $ | 17.52 | ||||||||||||||||||
Options granted | 209,750 | 31.94 | $ | 13.29 | 4.2 | ||||||||||||||||
Options exercised | (1,414,462 | ) | 17.69 | ||||||||||||||||||
Options forfeited | (39,605 | ) | 23.27 | ||||||||||||||||||
Total outstanding | 1,178,473 | 19.70 | 2.8 | $ | 44,280 | ||||||||||||||||
Options exercisable and vested | 873,348 | 18.55 | 2.6 | $ | 33,817 | ||||||||||||||||
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Number of | |||||
Shares | |||||
Nonvested at July 31, 2005 | 54,134 | ||||
Activity for the quarter ended October 31, 2005: | |||||
Granted | 97,500 | ||||
Less: Vested | 7,167 | ||||
Less: Forfeited | 1,888 | ||||
Nonvested at October 31, 2005 | 142,579 | ||||
Activity for the quarter ended January 31, 2006: | |||||
Granted | 3,100 | ||||
Less: Vested | 14,540 | ||||
Less: Forfeited | — | ||||
Nonvested at January 31, 2006 | 131,139 | ||||
Activity for the quarter ended April 30, 2006: | |||||
Granted | 2,000 | ||||
Less: Vested | 3,033 | ||||
Less: Forfeited | 4,388 | ||||
Nonvested at April 30, 2006 | 125,718 | ||||
Activity for the quarter ended July 31, 2006: | |||||
Granted | 750 | ||||
Less: Vested | 1,499 | ||||
Less: Forfeited | — | ||||
Nonvested at July 31, 2006 | 124,969 | ||||
Year Ended | ||||||||||||
July 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Fair value of shares vested | $ | 1,026 | $ | 583 | $ | 155 |
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Assumptions used in valuation model | ||||||||||||||||||||||||||||
Shares | Quarter when | Grant date | Risk free | Expected | Expected | |||||||||||||||||||||||
For the quarter ended | granted | to be issued | fair value | rate | Volatility | life | dividends | |||||||||||||||||||||
October 31, 2005 | 23,144 | Second FY06 | $ | 7.52 | 3.5% | 47% | 90 days | — | ||||||||||||||||||||
January 31, 2006 | 21,878 | Third FY06 | $ | 7.50 | 3.9% | 40% | 90 days | — | ||||||||||||||||||||
April 30, 2006 | 19,543 | Fourth FY06 | $ | 10.67 | 4.7% | 39% | 90 days | — | ||||||||||||||||||||
July 31, 2006 | 17,807 | First FY07 | $ | 12.07 | 4.9% | 44% | 90 days | — |
July 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Benefit obligation at beginning of year | $ | 36,447 | $ | 19,882 | ||||
Service cost | 1,154 | 754 | ||||||
Interest cost | 1,905 | 1,235 | ||||||
Contributions by plan participants | 418 | 431 | ||||||
Actuarial loss | 5,915 | 16,295 | ||||||
Benefits paid | (52 | ) | (186 | ) | ||||
Foreign currency exchange rate changes | 2,518 | (1,964 | ) | |||||
Benefit obligation at end of year | $ | 48,305 | $ | 36,447 | ||||
Fair value of plan assets at beginning of year | $ | 18,001 | $ | 14,088 | ||||
Actual gain on plan assets | 2,236 | 3,616 | ||||||
Employer contributions | 994 | 972 | ||||||
Plan participants’ contributions | 418 | 431 | ||||||
Benefits paid | (45 | ) | (46 | ) | ||||
Foreign currency exchange rate changes and other | 1,202 | (1,060 | ) | |||||
Fair value of plan assets at end of year | $ | 22,806 | $ | 18,001 | ||||
July 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Projected benefit obligation in excess of plan assets | $ | 25,499 | $ | 18,446 | ||||
Unrecognized prior service costs | (1,322 | ) | (1,386 | ) | ||||
Unrecognized actuarial loss | (9,017 | ) | (5,003 | ) | ||||
Net pension liability | $ | 15,160 | $ | 12,057 | ||||
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July 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Accrued benefit obligation | $ | 16,482 | $ | 13,443 | ||||
Intangible asset | (1,322 | ) | (1,386 | ) | ||||
Net pension liability | $ | 15,160 | $ | 12,057 | ||||
Net amount recognized | (2,310 | ) | (572 | ) | ||||
Minimum pension liability in accumulated comprehensive income | $ | 12,850 | $ | 11,485 | ||||
For the Years Ended July 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Service costs (benefits earned during the period) | $ | 1,154 | $ | 754 | $ | 542 | ||||||
Interest cost on projected benefit obligation | 1,905 | 1,235 | 1,061 | |||||||||
Expected return on plan assets | (1,296 | ) | (968 | ) | (787 | ) | ||||||
Net amortization and deferral | 899 | 164 | 194 | |||||||||
Net periodic pension costs | $ | 2,662 | $ | 1,185 | $ | 1,010 | ||||||
For the Years Ended | ||||||||||||
July 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Discount rate | 5.0% | 5.0% | 6.0% | |||||||||
Rates of increase in compensation levels | 5.0% | 4.3% | 4.0% | |||||||||
Expected long-term rate of return on assets | 6.5% | 6.8% | 6.5% |
For the Years | ||||||||
Asset Category | Ended July 31, | |||||||
2006 | 2005 | |||||||
Equity securities and property | 74.1 | % | 98.0 | % | ||||
Cash and bonds | 25.9 | % | 2.0 | % | ||||
Total | 100.0 | % | 100.0 | % | ||||
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Year | Amount | |||
(In thousands) | ||||
2007 | $ | 61 | ||
2008 | 85 | |||
2009 | 94 | |||
2010 | 107 | |||
2011 | 138 | |||
Years 2012 to 2015 | 2,433 |
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For the Years Ended July 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands) | |||||||||||||
Net foreign currency exchange loss (gain) | $ | 1,341 | $ | (110 | ) | $ | 1,248 | ||||||
Loss from unconsolidated subsidiary1 | — | — | 958 | ||||||||||
Other | (1,218 | ) | (765 | ) | (621 | ) | |||||||
Total | $ | 123 | $ | (875 | ) | $ | 1,585 | ||||||
For the Years Ended July 31, | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(In thousands) | ||||||||||||||
Net income | $ | 82,231 | $ | 83,001 | $ | 5,221 | ||||||||
Basic: | ||||||||||||||
Weighted average common shares (including exchangeable shares) | 35,260 | 33,843 | 33,572 | |||||||||||
Income per share | $ | 2.33 | $ | 2.45 | $ | .16 | ||||||||
Diluted: | ||||||||||||||
Weighted average common shares (including exchangeable shares) | 35,260 | 33,843 | 33,572 | |||||||||||
Shares issuable from assumed conversion of notes | 3,744 | — | — | |||||||||||
Shares issuable from assumed exercise of options | 463 | 1,166 | 660 | |||||||||||
Shares issuable due to performance shares agreement | 82 | — | — | |||||||||||
Shares issuable from assumed vesting of restricted stock | 74 | 45 | 28 | |||||||||||
Total | 39,623 | 35,054 | 34,260 | |||||||||||
Income per share | $ | 2.08 | $ | 2.37 | $ | .15 | ||||||||
For the Years Ended July 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of options | 13,705 | 681,650 | 1,079,591 | |||||||||
Exercise price range | $43.56 — $55.13 | $26.00 — $55.13 | $14.56 — $55.13 | |||||||||
Expiring through | May 2008 | March 2012 | March 2012 |
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As of July 31, 2006 | |||||||||||||
Land | Searcher | ||||||||||||
acquisition | vessel | Total | |||||||||||
(amounts in thousands) | |||||||||||||
Materials and inventory | $ | 440 | $ | — | $ | 440 | |||||||
Prepayments and other | 4,708 | — | 4,708 | ||||||||||
Current assets | 5,148 | — | 5,148 | ||||||||||
Geophysical vessel | — | 8,331 | 8,331 | ||||||||||
Geophysical equipment | 144,096 | 2,206 | 146,302 | ||||||||||
Leasehold improvements and other | 23,863 | — | 23,863 | ||||||||||
Total | 167,959 | 10,537 | 178,496 | ||||||||||
Accumulated depreciation | (138,003 | ) | (10,037 | ) | (148,040 | ) | |||||||
Property and equipment, net | 29,956 | 500 | 30,456 | ||||||||||
Total assets | $ | 35,104 | 500 | $ | 35,604 | ||||||||
Deferred revenue | $ | 21,245 | — | $ | 21,245 | ||||||||
Total current liabilities | $ | 21,245 | — | $ | 21,245 | ||||||||
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For the Year Ended July 31, 2006 | ||||||||||||||||||||||||
NASA | EAME | APAC | VHR | Corporate | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Revenue | $ | 541,396 | $ | 148,739 | $ | 112,466 | $ | 19,587 | $ | — | $ | 822,188 | ||||||||||||
Depreciation and amortization, net (other than multi-client) | 28,778 | 5,518 | 4,637 | 4,004 | 983 | 43,920 | ||||||||||||||||||
Amortization of multi-client library | 164,940 | 36,035 | — | — | — | 200,975 | ||||||||||||||||||
Operating income (loss) | 137,194 | 23,533 | 18,142 | (2,782 | ) | (43,208 | ) | 132,879 | ||||||||||||||||
Net income (loss) before income tax | 141,417 | 24,298 | 18,604 | (3,106 | ) | (41,787 | ) | 139,426 | ||||||||||||||||
Total assets | 485,989 | 191,077 | 86,810 | 12,436 | 381,718 | 1,158,030 |
For the Year Ended July 31, 2005 | ||||||||||||||||||||||||
NASA | EAME | APAC | VHR | Corporate | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Revenue | $ | 388,632 | $ | 130,989 | $ | 98,171 | $ | 16,234 | $ | — | $ | 634,026 | ||||||||||||
Depreciation and amortization, net (other than multi-client) | 27,033 | 4,898 | 4,519 | 3,764 | 1,369 | 41,583 | ||||||||||||||||||
Amortization of multi-client library | 112,019 | 43,420 | 4,286 | — | — | 159,725 | ||||||||||||||||||
Operating income (loss) | 73,429 | 18,176 | 9,118 | (4,811 | ) | (31,671 | ) | 64,241 | ||||||||||||||||
Net income (loss) before income tax | 83,660 | 19,161 | 9,677 | (4,853 | ) | (31,402 | ) | 76,243 | ||||||||||||||||
Total assets | 501,995 | 119,632 | 51,915 | 14,680 | 278,376 | 966,598 |
For the Year Ended July 31, 2004 | ||||||||||||||||||||||||
NASA | EAME | APAC | VHR | Corporate | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Revenue | $ | 370,916 | $ | 118,448 | $ | 60,125 | $ | 14,980 | $ | — | $ | 564,469 | ||||||||||||
Depreciation and amortization, net (other than multi-client) | 29,095 | 2,583 | 4,438 | 3,762 | 422 | 40,300 | ||||||||||||||||||
Amortization of multi-client library | 148,218 | 56,818 | 4,804 | — | — | 209,840 | ||||||||||||||||||
Operating income (loss) | 57,510 | 6,026 | 1,851 | (3,183 | ) | (34,434 | ) | 27,770 | ||||||||||||||||
Net income (loss) before income tax | 58,772 | 5,918 | 142 | (3,298 | ) | (52,598 | ) | 8,936 | ||||||||||||||||
Total assets | 479,140 | 116,158 | 38,014 | 15,845 | 127,089 | 776,246 |
For the Years Ended July 31, | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(In thousands) | ||||||||||||||
Geographic areas: | ||||||||||||||
United States | $ | 343,299 | $ | 287,993 | $ | 245,144 | ||||||||
Canada | 141,667 | 92,639 | 88,283 | |||||||||||
Latin America | 67,401 | 17,178 | 57,210 | |||||||||||
Europe | 93,589 | 71,852 | 79,182 | |||||||||||
Middle East/ Africa | 60,771 | 62,515 | 32,513 | |||||||||||
Asia Pacific | 115,461 | 101,849 | 62,137 | |||||||||||
Total | $ | 822,188 | $ | 634,026 | $ | 564,469 | ||||||||
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For the Years Ended July 31, | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(In thousands) | ||||||||||||||
Geographic areas: | ||||||||||||||
United States | $ | 81,773 | $ | 93,194 | $ | 83,181 | ||||||||
Canada | 2,962 | 14,808 | 17,317 | |||||||||||
Latin America | 1,183 | 1,176 | 1,958 | |||||||||||
Europe | 7,772 | 8,212 | 8,213 | |||||||||||
Middle East/ Africa | 2,515 | 2,406 | 3,491 | |||||||||||
Asia Pacific | 14,399 | 8,121 | 7,503 | |||||||||||
Total | $ | 110,604 | $ | 127,917 | $ | 121,663 | ||||||||
For the Year Ended July 31, 2006 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenue | $ | 168,678 | $ | 238,860 | $ | 236,219 | $ | 178,431 | ||||||||
Net income | 11,787 | 31,082 | 32,876 | 6,487 | ||||||||||||
Net income per common share — basic | .34 | .89 | .92 | .18 | ||||||||||||
Net income per common share — diluted | .32 | .81 | .84 | .16 |
For the Year Ended July 31, 2005 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenue | $ | 129,581 | $ | 192,228 | $ | 175,510 | $ | 136,707 | ||||||||
Net income | 978 | 17,368 | 18,407 | 46,248 | ||||||||||||
Net income per common share — basic | .03 | .51 | .54 | 1.36 | ||||||||||||
Net income per common share — diluted | .03 | .51 | .52 | 1.31 |
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• | All of our outstanding stock options would fully vest and restrictions on most outstanding restricted shares would vest. | |
• | CGG will assume our convertible debt, which would continue to be fully convertible, and the holders of the debt would have the option of exercising their put right to CGG. | |
• | Any outstanding borrowings and letters of credit under the credit facility would be due immediately upon closing of the transaction. | |
• | A significant amount of severance compensation may be paid to executives of the company, including the named executive officers. | |
• | Other material effects of the merger will be more fully discussed in the proxy statement/prospectus on Form F-4 which CGG plans to file with the SEC and in the proxy statement/prospectus relating to the proposed transaction, which will be sent to each Veritas stockholder in connection with the meeting of Veritas stockholders that we intend to call to vote to adopt the merger agreement. |
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Parent | ||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Revenue | $ | — | $ | 384,078 | $ | 447,846 | $ | (9,736 | ) | $ | 822,188 | |||||||||
Cost of services | — | 280,788 | 374,428 | (9,147 | ) | 646,069 | ||||||||||||||
General and administrative | 2,809 | 37,755 | 2,676 | — | 43,240 | |||||||||||||||
Operating income | (2,809 | ) | 65,535 | 70,742 | (589 | ) | 132,879 | |||||||||||||
Interest (income) expense | (23,360 | ) | 21,931 | (3,241 | ) | — | (4,670 | ) | ||||||||||||
Gain on involuntary conversion of assets | — | (2,000 | ) | — | — | (2,000 | ) | |||||||||||||
Equity in (earnings) losses of subsidiaries | (71,601 | ) | (21,504 | ) | — | 93,105 | — | |||||||||||||
Other (income) expense, net | — | 35 | (217 | ) | 305 | 123 | ||||||||||||||
Income before provision (benefit) for income taxes | 92,152 | 67,073 | 74,200 | (93,999 | ) | 139,426 | ||||||||||||||
Provision (benefit) for income taxes | 9,921 | 17,621 | 29,653 | — | 57,195 | |||||||||||||||
Net income | $ | 82,231 | $ | 49,452 | $ | 44,547 | $ | (93,999 | ) | $ | 82,231 | |||||||||
Parent | ||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Revenue | $ | — | $ | 338,261 | $ | 300,630 | $ | (4,865 | ) | $ | 634,026 | |||||||||
Cost of services | — | 262,116 | 280,275 | (4,501 | ) | 537,890 | ||||||||||||||
General and administrative | 1,890 | 28,411 | 1,594 | — | 31,895 | |||||||||||||||
Operating income | (1,890 | ) | 47,734 | 18,761 | (364 | ) | 64,241 | |||||||||||||
Interest (income) expense | (26,458 | ) | 26,235 | (1,043 | ) | — | (1,266 | ) | ||||||||||||
Gain on involuntary conversion of assets | — | (9,861 | ) | — | — | (9,861 | ) | |||||||||||||
Equity in (earnings) losses of subsidiaries | (51,820 | ) | (2,219 | ) | — | 54,039 | — | |||||||||||||
Other (income) expense, net | — | 96 | (1,186 | ) | 215 | (875 | ) | |||||||||||||
Income before provision (benefit) for income taxes | 76,388 | 33,483 | 20,990 | (54,618 | ) | 76,243 | ||||||||||||||
Provision (benefit) for income taxes | (6,613 | ) | (8,230 | ) | 8,085 | — | (6,758 | ) | ||||||||||||
Net income | $ | 83,001 | $ | 41,713 | $ | 12,905 | $ | (54,618 | ) | $ | 83,001 | |||||||||
F-177
Table of Contents
Parent | ||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Revenue | $ | — | $ | 294,776 | $ | 274,565 | $ | (4,872 | ) | $ | 564,469 | |||||||||
Cost of services | — | 240,896 | 272,995 | (2,646 | ) | 511,245 | ||||||||||||||
General and administrative | 1,864 | 24,190 | — | (600 | ) | 25,454 | ||||||||||||||
Operating income | (1,864 | ) | 29,690 | 1,570 | (1,626 | ) | 27,770 | |||||||||||||
Interest (income) expense | (4,118 | ) | 20,283 | 1,084 | — | 17,249 | ||||||||||||||
Gain on involuntary conversion of assets | — | — | — | — | — | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (2,253 | ) | 34,151 | — | (31,898 | ) | — | |||||||||||||
Other (income) expense, net | — | (638 | ) | 2,003 | 220 | 1,585 | ||||||||||||||
Income before provision (benefit) for income taxes | 4,507 | (24,106 | ) | (1,517 | ) | 30,052 | 8,936 | |||||||||||||
Provision (benefit) for income taxes | (714 | ) | (2,778 | ) | 7,207 | — | 3,715 | |||||||||||||
Net income | $ | 5,221 | $ | (21,328 | ) | $ | (8,724 | ) | $ | 30,052 | $ | 5,221 | ||||||||
F-178
Table of Contents
Parent | ||||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 5,418 | $ | 295,634 | $ | 100,903 | $ | — | $ | 401,955 | ||||||||||||
Restricted cash investments | — | — | 302 | — | 302 | |||||||||||||||||
Accounts receivable | 9,873 | 97,292 | 108,079 | — | 215,244 | |||||||||||||||||
Materials and supplies inventory | — | 4,899 | 1,467 | — | 6,366 | |||||||||||||||||
Prepayments and other | 1,445 | 14,342 | 3,130 | — | 18,917 | |||||||||||||||||
Deferred tax asset | 14,616 | 1,819 | (8,210 | ) | — | 8,225 | ||||||||||||||||
Current assets held for sale | — | 1,791 | 3,357 | — | 5,148 | |||||||||||||||||
Total current assets | 31,352 | 415,777 | 209,028 | — | 656,157 | |||||||||||||||||
Property and equipment | — | 290,866 | 68,817 | — | 359,683 | |||||||||||||||||
Less accumulated depreciation | — | (201,357 | ) | (47,722 | ) | — | 249,079 | |||||||||||||||
Property and equipment, net | — | 89,509 | 21,095 | — | 110,604 | |||||||||||||||||
Multi-client data library | — | 129,876 | 166,727 | — | 296,603 | |||||||||||||||||
Intercompany receivable | 616,026 | — | — | (616,026 | ) | — | ||||||||||||||||
Investment in subsidiaries | 190,083 | 149,394 | 76,443 | (415,920 | ) | — | ||||||||||||||||
Other assets | 34,433 | 14,762 | 15,015 | — | 64,210 | |||||||||||||||||
Noncurrent assets held for sale | — | 8,598 | 21,858 | — | 30,456 | |||||||||||||||||
Total | $ | 871,894 | $ | 807,916 | $ | 510,166 | $ | (1,031,946 | ) | $ | 1,158,030 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Notes payable | $ | 155,000 | $ | — | $ | — | $ | — | $ | 155,000 | ||||||||||||
Accounts payable, trade | — | 54,508 | 53,355 | — | 107,863 | |||||||||||||||||
Accrued and deferred income taxes | 1,245 | 3,177 | 24,802 | — | 29,224 | |||||||||||||||||
Deferred revenue | — | 4,616 | 24,664 | — | 29,280 | |||||||||||||||||
Other accrued liabilities | 1,554 | 41,711 | 27,048 | — | 70,313 | |||||||||||||||||
Current liabilities held for sale | — | 20,124 | 1,121 | — | 21,245 | |||||||||||||||||
Total current liabilities | 157,799 | 124,136 | 130,990 | — | 412,925 | |||||||||||||||||
Non-current liabilities: | ||||||||||||||||||||||
Intercompany payable | — | 497,913 | 118,113 | (616,026 | ) | — | ||||||||||||||||
Other non-current liabilities | 3,551 | 9,386 | 21,624 | — | 34,561 | |||||||||||||||||
Total non-current liabilities | 3,551 | 507,299 | 139,737 | (616,026 | ) | 34,561 | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||
Common stock | 372 | 3,132 | 26,936 | (30,068 | ) | 372 | ||||||||||||||||
Other stockholders’ equity | 710,172 | 173,349 | 212,503 | (385,852 | ) | 710,172 | ||||||||||||||||
Total stockholders’ equity | 710,544 | 176,481 | 239,439 | (415,920 | ) | 710,544 | ||||||||||||||||
Total | $ | 871,894 | $ | 807,916 | $ | 510,166 | $ | (1,031,946 | ) | $ | 1,158,030 | |||||||||||
F-179
Table of Contents
Parent | ||||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | |||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 2,977 | $ | 177,824 | $ | 68,592 | $ | — | $ | 249,393 | ||||||||||||
Restricted cash investments | — | — | 237 | — | 237 | |||||||||||||||||
Accounts receivable | 224 | 91,675 | 74,090 | — | 165,989 | |||||||||||||||||
Materials and supplies inventory | — | 3,359 | 2,022 | — | 5,381 | |||||||||||||||||
Prepayments and other | 1,175 | 13,482 | 4,243 | — | 18,900 | |||||||||||||||||
Deferred tax asset | 9,627 | 12,819 | (9,960 | ) | — | 12,486 | ||||||||||||||||
Total current assets | 14,003 | 299,159 | 139,224 | — | 452,386 | |||||||||||||||||
Property and equipment | — | 346,354 | 148,736 | — | 495,090 | |||||||||||||||||
Less accumulated depreciation | — | (246,191 | ) | (120,982 | ) | — | 367,173 | |||||||||||||||
Property and equipment, net | — | 100,163 | 27,754 | — | 127,917 | |||||||||||||||||
Multi-client data library | — | 141,206 | 175,587 | — | 316,793 | |||||||||||||||||
Intercompany receivable | 559,618 | — | — | (559,618 | ) | — | ||||||||||||||||
Investment in subsidiaries | 138,816 | 157,114 | 87,311 | (383,241 | ) | — | ||||||||||||||||
Other assets | 43,221 | 10,199 | 16,082 | — | 69,502 | |||||||||||||||||
Total | $ | 755,658 | $ | 707,841 | $ | 445,958 | $ | (942,859 | ) | $ | 966,598 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Accounts payable, trade | $ | 61 | $ | 37,569 | $ | 38,180 | $ | — | $ | 75,810 | ||||||||||||
Accrued and deferred income taxes | 9,402 | — | — | — | 9,402 | |||||||||||||||||
Deferred revenue | — | 24,020 | 18,023 | — | 42,043 | |||||||||||||||||
Other accrued liabilities | 521 | 44,765 | 19,907 | — | 65,193 | |||||||||||||||||
Total current liabilities | 9,984 | 106,354 | 76,110 | — | 192,448 | |||||||||||||||||
Non-current liabilities: | ||||||||||||||||||||||
Long-term debt | 155,000 | — | — | — | 155,000 | |||||||||||||||||
Intercompany payable | — | 458,121 | 101,497 | (559,618 | ) | — | ||||||||||||||||
Other non-current liabilities | 8,126 | 10,342 | 18,134 | — | 36,602 | |||||||||||||||||
Total non-current liabilities | 163,126 | 468,463 | 119,631 | (559,618 | ) | 191,602 | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||
Common stock | 355 | 3,132 | 26,985 | (30,117 | ) | 355 | ||||||||||||||||
Other stockholders’ equity | 582,193 | 129,892 | 223,232 | (353,124 | ) | 582,193 | ||||||||||||||||
Total stockholders’ equity | 582,548 | 133,024 | 250,217 | (383,241 | ) | 582,548 | ||||||||||||||||
Total | $ | 755,658 | $ | 707,841 | $ | 445,958 | $ | (942,859 | ) | $ | 966,598 | |||||||||||
F-180
Table of Contents
Parent | |||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | ||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cash flows from (used in): | |||||||||||||||||||||
Operating activities | $ | (29,580 | ) | $ | 174,295 | $ | 191,900 | $ | — | $ | 336,615 | ||||||||||
Investing activities | — | (56,485 | ) | (160,357 | ) | — | (216,842 | ) | |||||||||||||
Financing activities | 32,021 | — | (2,023 | ) | — | 29,998 | |||||||||||||||
Subtotal | 2,441 | 117,810 | 29,520 | — | 149,771 | ||||||||||||||||
Currency gain on foreign cash | — | — | 2,791 | — | 2,791 | ||||||||||||||||
Increase (decrease) in cash | 2,441 | 117,810 | 32,311 | — | 152,562 | ||||||||||||||||
Beginning cash balance | 2,977 | 177,824 | 68,592 | — | 249,393 | ||||||||||||||||
Ending cash balance | $ | 5,418 | $ | 295,634 | $ | 100,903 | $ | — | $ | 401,955 | |||||||||||
Parent | |||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | ||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cash flows from (used in): | |||||||||||||||||||||
Operating activities | $ | (8,133 | ) | $ | 171,513 | $ | 167,915 | $ | — | $ | 331,295 | ||||||||||
Investing activities | — | (77,492 | ) | (129,223 | ) | — | (206,715 | ) | |||||||||||||
Financing activities | 7,652 | — | — | — | 7,652 | ||||||||||||||||
Subtotal | (481 | ) | 94,021 | 38,692 | — | 132,232 | |||||||||||||||
Currency gain on foreign cash | — | — | 862 | — | 862 | ||||||||||||||||
Increase (decrease) in cash | (481 | ) | 94,021 | 39,554 | — | 133,094 | |||||||||||||||
Beginning cash balance | 3,458 | 83,803 | 29,038 | — | 116,299 | ||||||||||||||||
Ending cash balance | $ | 2,977 | $ | 177,824 | $ | 68,592 | $ | — | $ | 249,393 | |||||||||||
Parent | |||||||||||||||||||||
Company | Subsidiary | Combined | Consolidated | ||||||||||||||||||
Guarantor | Guarantors | Non-Guarantors | Eliminations | Totals | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cash flows from (used in): | |||||||||||||||||||||
Operating activities | $ | 45,737 | $ | 91,248 | $ | 106,049 | $ | — | $ | 243,034 | |||||||||||
Investing activities | — | (59,257 | ) | (93,135 | ) | — | (152,392 | ) | |||||||||||||
Financing activities | (46,682 | ) | — | — | — | (46,682 | ) | ||||||||||||||
Subtotal | (945 | ) | 31,991 | 12,914 | — | 43,960 | |||||||||||||||
Currency gain on foreign cash | — | — | 242 | — | 242 | ||||||||||||||||
Increase (decrease) in cash | (945 | ) | 31,991 | 13,156 | — | 44,202 | |||||||||||||||
Beginning cash balance | 4,403 | 51,812 | 15,882 | — | 72,097 | ||||||||||||||||
Ending cash balance | $ | 3,458 | $ | 83,803 | $ | 29,038 | $ | — | $ | 116,299 | |||||||||||
F-181
Table of Contents
F-182