CGG : Accounting Treatment of Convertible Bonds and Notice of an Extraordinary General Meeting Nov 16th 2005

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Comp Gen Geophys	NYSE:GGY	NYSE	Ordinary Share

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PARIS, October 17 /PRNewswire-FirstCall/ -- - Implementation of the IASB Policy Related to the IFRS Accounting Treatment of Convertible Bonds Denominated in a Foreign Currency - Notice of an Extraordinary General Meeting on November 16th 2005 Following the confirmation of the IASB (International Accounting Standards Board) policy published on 30 September 2005 in relation to the accounting treatment under the IFRS regime for convertible bonds denominated in a foreign currency, the CGG Group is required to change the accounting treatment of its 7.75% USD 85 million convertible bonds due 2012, issued on 4 November 2004. This change in accounting treatment has an impact on the Group consolidated accounts dated 31/12/04 and 30/06/05 published under IFRS. It had been presented by the Group both in principle and in terms of the estimated potential consequences on the accounts, in the notes to the IFRS consolidated accounts on 30/06/05 published on 8 September 2005 (note 1: Accounting Principles, Rules, et Method - Point 11). The effects of this new accounting treatment are: - in relation to the balance sheet, the reclassification under > of the component of the convertible bonds originally recorded in shareholders' equity for an amount of 10 MEUR, and the classification in each reporting period under > of the present value of the share option contained in the convertible bonds, - in relation to the profit and loss account, from one statement to the next, the recording of the variation of the present value of the share option contained in the convertible bonds. Taking into account at the same time the increase in the CGG share price over this period and the strengthening of the US dollar against the euro, the value of the share option contained in the convertible bonds has increased very substantially over the period to approximately 34MEUR on 31/12/04, approximately 49MEUR on 31/03/05, approximately 49MEUR on 30/06/05 and approximately 72MEUR on 30/09/05. The accounting of these amounts as liabilities under > requires the Group from that time to recognize in its profit and loss accounts additional financial expenses of approximately 24MEUR for fiscal year 2004, of approximately 15MEUR for the period of three months ending 31/03/05, of approximately 15MEUR for the period of six months ending 30/06/05, and of approximately 38MEUR for the period of nine months ending 30/09/05. These accounting adjustments, due solely to the application of the IASB policy as confirmed on September 30th 2005, have no effect on the Group operating income, or on cash flows. The Board of Directors of CGG has decided to call an Extraordinary General Meeting of its shareholders on 16 November 2005 for the purposes of approving a change to the terms and conditions of its 7.75% USD 85 million convertible bonds due 2012, issued on 4 November 2004. The proposed change consists of granting to the bondholders the right to a cash payment upon immediate conversion of the bonds. This right shall be exercisable during a period of two calendar days following notification thereof from the Group. The proposed change will have been submitted for prior approval at a general meeting of the bondholders held on 2 November 2005. The early conversion of all or part of these convertible bonds would permit the CGG Group to immediately strengthen its equity position and reduce its future financial charges. If 100% of the convertible bonds were converted, the cash payment should amount to USD 13 million, corresponding to less than twice the total amount of annual interest payments in respect of the bonds. The Securities will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties as disclosed by CGG from time to time in its filings with the Securities and Exchange Commission. Actual results may vary materially from those disclosed in forward-looking statements. Contacts : Michel PONTHUS +(33)-1-64-47-37-38 Christophe BARNINI +(33)-1-64-47-38-11 Email: Internet: http://www.cgg.com/ DATASOURCE: Compagnie Generale de Geophysique (CGG) CONTACT: Contacts : Michel PONTHUS, +(33)-1-64-47-37-38 Christophe BARNINI, +(33)-1-64-47-38-11 Email:

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