SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

Compagnie Générale de Géophysique-Veritas

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.) Yes o No þ

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 -                     .)

 

 

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS			3
Item 1 FINANCIAL STATEMENTS			4
Unaudited Interim Consolidated Balance Sheet at June 30, 2008 and Consolidated Balance Sheet at December 31, 2007			4
Unaudited Interim Consolidated Statements of Operations for the three months ended June 30, 2008 and 2007, and for the six months ended June 30, 2008 and 2007			5
Unaudited Interim Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007			7
Unaudited Interim Statement of Income and Expenses Attributable to Shareholders for the six months ended June 30, 2008 and 2007			8
Notes to Unaudited Interim Consolidated Financial Statements			9
Item 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			22
Item 3 CONTROLS AND PROCEDURES			35

Compagnie générale de géophysique veritas, S.A.

FORWARD-LOOKING STATEMENTS

          This document includes forward-looking statements. We have based these forward-looking statements on our current views and assumptions about future events.

          These forward-looking statements involve certain risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others, the following factors:

–		developments affecting our international operations;
–		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 credit risk of customers;
–		exposure to the interest rate risk;
–		exposure to the foreign exchange rate risk;
–		exposure to credit risk and counter-party risk;
–		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 benefits 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;
–		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.

     We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document might not occur.

     Certain of these risks can be found in our annual report on Form 20-F for the year ended December 31, 2007 that we filed with the SEC on April 23, 2008. Our annual report on Form 20-F is available on our website at www.cggveritas.com or on the website maintained by the SEC at www.sec.gov. You may request a copy of our annual report on Form 20-F, which includes our complete audited financial statements, at no charge, by calling our investor relations department at + 33 1 6447 3831, sending an electronic message to

Compagnie générale de géophysique veritas, S.A.

invrelparis@cggveritas.com or invrelhouston@cggveritas.com or writing to CGG Veritas – Investor Relations Department, Tour Maine Montparnasse – 33, avenue du Maine – 75015 Paris, France.

Item 1: FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

		June 30,				June 30,
		2008				2008				December 31,				December 31,
		(unaudited)				(unaudited)				2007				2007
amounts in millions of		€				U.S.$ (1)				€				U.S.$ (2)
ASSETS
Cash and cash equivalents			209.9				330.9				254.3				374.4
Trade accounts and notes receivable, net			588.3				927.2				601.9				886.1
Inventories and work-in-progress, net			263.4				415.0				240.2				353.6
Income tax assets			51.7				81.4				34.6				50.9
Other current assets, net			104.4				164.6				89.6				131.9
Assets held for sale			11.1				17.5				—				—
Total current assets			1,228.8				1,936.6				1,220.6				1,796.9
Deferred tax assets			85.7				135.1				81.4				119.8
Investments and other financial assets, net			28.1				44.3				32.0				47.1
Investments in companies under equity method			44.4				70.0				44.5				65.5
Property, plant and equipment, net			604.2				952.4				660.0				971.6
Intangible assets, net			709.5				1,118.4				680.5				1,001.8
Goodwill			1,822.8				2,873.5				1,928.0				2,838.2
Total non-current assets			3,294.7				5,193.7				3,426.4				5,044.0
TOTAL ASSETS			4,523.5				7,130.3				4,647.0				6,840.9
LIABILITIES AND SHAREHOLDERS’ EQUITY
Bank overdrafts			8.3				13.1				17.5				25.8
Current portion of financial debt			37.6				59.2				44.7				65.8
Trade accounts and notes payable			278.8				439.4				256.4				377.4
Accrued payroll costs			109.0				171.8				113.2				166.4
Income taxes liability			60.2				94.8				59.1				87.1
Advance billings to customers			44.4				70.0				51.9				76.4
Provisions – current portion			9.4				14.8				9.6				14.2
Other current liabilities			108.5				171.0				109.0				160.5
Total current liabilities			656.2				1,034.1				661.4				973.6
Deferred tax liabilities			165.7				261.2				157.7				232.2
Provisions – non-current portion			77.5				122.2				76.5				112.7
Financial debt			1,202.1				1,895.0				1,298.8				1,912.0
Other non-current liabilities			25.7				40.5				27.0				39.7
Total non-current liabilities			1,471.0				2,318.9				1,560.0				2,296.6
Common stock: 275,558,130 shares authorized
137,685,250 shares with a €0.40 nominal value issued and outstanding at June 30, 2008; 137,253,790 at December 31, 2007 (3)			55.1				86.8				54.9				80.8
Additional paid-in capital			1,822.3				2,872.6				1,820.0				2,679.2
Retained earnings			796.4				1,255.5				538.6				792.9
Treasury shares			(10.8	)			(17.0	)			(3.9	)			(5.7	)
Net income (loss) for the period – Attributable to the Group			111.5				175.6				245.5				360.8
Income and expense recognized directly in equity			(15.5	)			(24.4	)			(5.1	)			(7.5	)
Cumulative translation adjustment			(393.5	)			(620.3	)			(248.4	)			(365.1	)
Total shareholders’ equity			2,365.5				3,728.8				2,401.6				3,535.4
Minority interests			30.8				48.5				24.0				35.3
Total shareholders’ equity and minority interests			2,396.3				3,777.3				2,425.6				3,570.7
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			4,523.5				7,130.3				4,647.0				6,840.9

See notes to Consolidated Financial Statements

Compagnie générale de géophysique veritas, S.A.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		Three months ended June 30,
		2008				2008				2007				2007
except per share data, amounts in millions of		€				U.S.$ (1)				€				U.S.$ (1)
Operating revenues			559.0				874.1				571.1				768.7
Other income from ordinary activities			0.1				0.2				0.2				0.3
Total income from ordinary activities			559.1				874.3				571.3				769.0
Cost of operations			(403.3	)			(629.3	)			(396.3	)			(533.1	)
Gross profit			155.8				245.0				174.9				235.9
Research and development expenses, net			(7.7	)			(12.4	)			(15.9	)			(21.4	)
Selling, general and administrative expenses			(60.2	)			(94.1	)			(64.3	)			(86.3	)
Other revenues (expenses), net			8.2				12.6				5.8				7.7
Operating income			96.1				151.1				100.5				135.9
Expenses related to financial debt			(20.4	)			(32.0	)			(29.9	)			(40.3	)
Income provided by cash and cash equivalents			2.0				3.2				3.7				5.0
Cost of financial debt, net			(18.4	)			(28.8	)			(26.2	)			(35.3	)
Other financial income (loss)			0.1				0.2				0.6				0.7
Income of consolidated companies before income taxes			77.8				122.5				74.9				101.3
Deferred taxes on currency translation			(1.6	)			(2.4	)			2.2				2.9
Other income taxes			(24.6	)			(39.0	)			(33.2	)			(44.8	)
Total income taxes			(26.2	)			(41.4	)			(31.0	)			(41.9	)
Net income from consolidated companies			51.6				81.1				43.9				59.4
Equity in income of investees			0.2				0.4				0.7				1.0
Net income			51.8				81.5				44.6				60.4
Attributable to :
Shareholders			48.8				76.8				42.5				57.6
Minority interests			3.0				4.7				2.1				2.8
Weighted average number of shares outstanding			137,511,725				137,511,725				136,608,920				136,608,920
Dilutive potential shares from stock-options			607,380				607,380				1,074,884				1,074,884
Dilutive potential shares from performance shares			619,188				619,188				554,063				554,063
Adjusted weighted average number of shares and assumed option exercises when dilutive			138,738,293				138,738,293				138,237,867				138,237,867
Net earning per share attributable to shareholders			0.35				0.56				0.31				0.42
Basic
Diluted			0.34				0.55				0.30				0.41

See notes to Consolidated Financial Statements

Compagnie générale de géophysique veritas, S.A.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Financial data for the six months ended June 30, 2007 include Veritas results beginning January 12, 2007, the date of the merger between CGG and Veritas.

		Six months ended June 30,
		2008				2008				2007				2007
except per share data, amounts in millions of		€				U.S.$ (1)				€				U.S.$ (2)
Operating revenues			1,144.0				1,746.9				1,163.3				1,546.0
Other income from ordinary activities			0.4				0.7				0.4				0.6
Total income from ordinary activities			1,144.4				1,747.6				1,163.7				1,546.6
Cost of operations			(788.2	)			(1,203.6	)			(782.4	)			(1 039.8	)
Gross profit			356.2				544.0				381.3				506.8
Research and development expenses, net			(24.2	)			(36.9	)			(30.7	)			(40.8	)
Selling, general and administrative expenses			(123.0	)			(187.9	)			(116.1	)			(154.3	)
Other revenues (expenses), net			10.5				16.0				9.4				12.5
Operating income			219.5				335.2				244.0				324.3
Expenses related to financial debt			(45.3	)			(69.2	)			(68.1	)			(90.5	)
Income provided by cash and cash equivalents			4.1				6.2				8.1				10.8
Cost of financial debt, net			(41.2	)			(63.0	)			(60.0	)			(79.7	)
Other financial income (loss)			(1.1	)			(1.7	)			0.3				0.4
Income of consolidated companies before income taxes			177.2				270.5				184.3				245.0
Deferred taxes on currency translation			—				—				2.8				3.8
Other income taxes			(64.3	)			(98.2	)			(74.8	)			(99.5	)
Total income taxes			(64.3	)			(98.2	)			(72.0	)			(95.7	)
Net income from consolidated companies			112.9				172.3				112.4				149.3
Equity in income of investees			3.0				4.6				1.2				1.7
Net income			115.9				176.9				113.6				151.0
Attributable to :
Shareholders			111.5				170.2				110.0				146.2
Minority interests			4.4				6.7				3.6				4.8
Weighted average number of shares outstanding			137,490,623				137,490,623				132,041,260				132,041,260
Dilutive potential shares from stock-options			777,378				777,378				1,036,827				1,036,827
Dilutive potential shares from performance shares			619,188				619,188				554,063				554,063
Adjusted weighted average number of shares and assumed option exercises when dilutive			138,887,189				138,887,189				133,632,150				133,632,150
Net earning per share attributable to shareholders			0.81				1.24				0,83				1,11
Basic
Diluted			0.80				1.22				0,82				1,09

See notes to Consolidated Financial Statements

Compagnie générale de géophysique veritas, S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Financial data for the six months ended June 30, 2007 include Veritas results beginning January 12, 2007, the date of the merger between CGG and Veritas.

		Six months ended June 30,
		2008				2008				2007				2007
amounts in millions of		€				U.S.$ (1)				€				U.S.$ (2)
OPERATING
Net income (loss)			115.9				176.9				113.6				151.0
Depreciation and amortization			103.1				157.5				86.7				115.2
Multi-client surveys amortization			112.3				171.5				128.6				170.9
Variance on provisions			1.1				1.7				(0.6	)			(0.8	)
Expense & income calculated on stock-option			11.9				18.2				8.9				11.8
Net gain on disposal of fixed assets			(1.6	)			(2.4	)			0.1				0.1
Equity in income of affiliates			(3.0	)			(4.6	)			(1.2	)			(1.6	)
Dividends received from affiliates			1.1				1.7				5.2				6.9
Other non-cash items			3.0				4.5				(4.3	)			(5.7	)
Net cash including net cost of financial debt and income taxes			343.8				525.0				336.9				447.7
Less net cost of financial debt			41.2				62.9				60.0				79.7
Less income taxes expenses			64.3				98.2				72.0				95.7
Net cash excluding net cost of financial debt and income taxes			449.3				686.1				468.9				623.2
Income taxes paid			(73.3	)			(111.9	)			(82.1	)			(109.1	)
Net cash before changes in working capital			376.0				574.2				386.8				514.1
- change in trade accounts and notes receivables			(10.0	)			(15.3	)			(84.7	)			(112.6	)
- change in inventories and work-in-progress			(27.6	)			(42.1	)			(20.5	)			(27.2	)
- change in other currents assets			(1.8	)			(2.7	)			(3.4	)			(4.5	)
- change in trade accounts and notes payable			12.8				19.5				(28.8	)			(38.3	)
- change in other current liabilities			(4.2	)			(6.4	)			(1.6	)			(2.1	)
Impact of changes in exchange rate			(10.6	)			(16.2	)			0.2				0.3
Net cash provided by operating activity			334.6				511.0				247.6				329.1
INVESTING
Total purchases of tangible and intangible assets (included variation of fixed assets suppliers)			(85.1	)			(129.9	)			(119.2	)			(158.4	)
Increase in multi-client surveys			(188.5	)			(287.8	)			(144.4	)			(191.9	)
Proceeds from disposals tangible and intangible			0.6				0.9				25.0				33.2
Proceeds from disposals of investments			8.8				13.4				—				—
Acquisition of investments, net of cash & cash equivalents acquired (3)			(21.4	)			(32.7	)			(1,049.0	)			(1,394.1	)
Variation in loans granted			(5.5	)			(8.4	)			(0.6	)			(0.8	)
Variation in subsidies for capital expenditures			(0.1	)			(0.2	)			(0.2	)			(0.3	)
Variation in other financial assets			(2.9	)			(4.4	)			5.3				7.0
Net cash from investing activities			(294.1	)			(449.1	)			(1,283.1	)			(1,705.3	)
FINANCING
Repayment of long-term debts			(13.6	)			(20.8	)			(641.8	)			(852.9	)
Total issuance of long-term debts			—				—				1,760.5				2,339.7
Reimbursement on leasing			(3.8	)			(5.8	)			(5.8	)			(7.7	)
Change in short-term loans			(8.6	)			(13.1	)			24.3				32.3
Financial interest paid			(40.9	)			(62.5	)			(79.0	)			(105.0	)
Net proceeds from capital increase
- from shareholders (3)			2.3				3.5				6,1				8,1
- from minority interest of integrated companies			—				—
Dividends paid and share capital reimbursements
- from shareholders			—				—
- from minority interest of integrated companies			(1.4	)			(2.1	)			(0.8	)			(1.1	)
Buying & sales of own shares			(6.9	)			(10.5	)			0.6				0.8
Net cash provided by financial activities			(72.9	)			(111.3	)			1,064.1				1,414.2
Effects of exchange rate changes on cash			(12.0	)			5.9				(6.6	)			0.1
Net increase (decrease) in cash and cash equivalents			(44.4	)			(43.5	)			22.0				38.1
Cash and cash equivalents at beginning of year			254.3				374.4				251.8				331.6
Cash and cash equivalents at end of period			209.9				330.9				273.8				369.8

Compagnie générale de géophysique veritas, S.A.

Compagnie générale de géophysique veritas, S.A.

Statement of income and expenses attributable to shareholders

		June 30,
		2008				2007
		(amounts in
		millions of euros)
Net income (loss) attributable to shareholders			111.5				110.0
— Change in actuarial gains and losses on pension plan			0.4				(0.4	)
— Change in fair value of available-for-sale investments			(11.3	)			—
— Change in fair value of hedging instruments			0.9				(3.5	)
— Change in foreign currency translation adjustment			(145.1	)			(37.8	)
Income and expenses recognized directly in equity for the period			(43.6	)			68.3

Compagnie générale de géophysique veritas, S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1—Summary of significant accounting policies

     Compagnie Générale de Géophysique Veritas, S.A. (“the Company”) and its subsidiaries (together, the “Group”) is a global participant in the geophysical seismic industry, as a manufacturer of geophysical equipment and providing a wide range of services (seismic data acquisition and related processing and interpretation software) principally to clients in the oil and gas exploration and production business.

     Given that the Company is listed on the Eurolist of Euronext Paris and pursuant to European regulation n°1606/2002 dated July 19, 2002, the accompanying interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and its interpretations as issued by the International Accounting Standards Board (“IASB”). These interim consolidated financial statements are also in accordance with IFRS adopted by the European Union at June 30, 2008 and are available on the following web site http://ec.europa.eu/internal_market/accounting/ias_en.htm#adopted-commission.

     The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

     The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities that have been measured at fair value.

Critical accounting policies

     The interim condensed consolidated financial statements for the six months ended June 30, 2008 have been prepared in accordance with IAS 34 — Interim Financial Reporting.

     The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at and for the year ended December 31, 2007 included in its report on Form 20-F for the year 2007 filed with the SEC on April 23, 2008.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended December 31, 2007, except for the following adoption of new Standards and Interpretations: IFRIC11.

These principles do not differ from IFRS issued by the IASB as long as the adoption of the interpretations listed below,  effective since January 1, 2008 but not yet adopted by the European Union,  has no significant impact on the Group interim condensed consolidated financial statements:

	–		IFRIC 12 — Service concession arrangements
	–		IFRIC 14 — The limit on a defined benefit asset, minimum funding requirements and their interaction

At the date of issuance of these financial statements, the following Standards and Interpretations were issued but not yet effective:

	–		IAS 1 revised — Presentation of Financial Statements
	–		IAS 23 revised — Borrowing costs
	–		IFRS 8 — Operating segments
	–		IFRIC 13 — Customer Loyalty Programs
	–		IFRS 3 revised — Business Combinations
	–		IAS 27 amended — Cost of an investment in a subsidiary, jointly controlled entity or associate
	–		IFRS 2 amended — Vesting conditions and cancellations
	–		IAS 32 amended — Puttable Financial Instruments and Obligations arising on liquidation

We have not opted for the early adoption of these Standards, Amendments and Interpretations and we are currently reviewing them to measure the potential impact on our interim condensed consolidated financial statements. At this stage, we do not anticipate any significant impact.

Compagnie générale de géophysique veritas, S.A.

Operating revenues

          Operating revenues are recognized when they can be measured reliably, and when it is likely that the economic benefits associated with the transaction will flow to the entity, which is at the point that such revenues have been realized or are considered realizable. For contracts where the percentage of completion method of accounting is being applied, revenues are only recognized when the costs incurred for the transaction and the cost to complete the transaction can be measured reliably and such revenues are considered earned and realizable.

•

Multi-client surveys

          Multi-client surveys consist of seismic surveys to be licensed to customers on a non-exclusive basis. All costs directly incurred in acquiring, processing and otherwise completing seismic surveys are capitalized into the multiclient surveys. The value of our multi-client library is stated on our balance sheet at the aggregate of those costs less accumulated amortization or at fair value if lower. We review the library for potential impairment of our independent surveys on an ongoing basis.

          Revenues related to multi-client surveys result from (i) pre-commitments and (ii) licenses after completion of the surveys (“after-sales”).

          Pre-commitments — Generally, we obtain commitments from a limited number of customers before a seismic project is completed. These pre-commitments cover part or all of the survey area blocks. In return for the commitment, the customer typically gains the right to direct or influence the project specifications, advance access to data as it is being acquired, and favorable pricing. The Company records payments that it receives during periods of mobilization as advance billing in the balance sheet in the line item “Advance billings to customers”.

               The Company recognizes pre-commitments as revenue when production is begun based on the physical progress of the project.

               After sales — Generally, we grant a license entitling non-exclusive access to a complete and ready-for-use, specifically defined portion of our multi-client data library in exchange for a fixed and determinable payment. We recognize after sales revenue upon the client executing a valid license agreement and having been granted access to the data. Within thirty days of execution and access, the client may exercise our warranty that the medium on which the data is transmitted (a magnetic cartridge) is free from technical defects. If the warranty is exercised, the Company will provide the same data on a new magnetic cartridge. The cost of providing new magnetic cartridges is negligible.

          After sales volume agreements—We enter into a customer arrangement in which we agree to grant licenses to the customer for access to a specified number of blocks of the multi-client library. These arrangements typically enable the customer to select and access the specific blocks for a limited period of time. We recognize revenue when the blocks are selected and the client has been granted access to the data and if the corresponding revenue can be reliably estimated. Within thirty days of execution and access, the client may exercise our warranty that the medium on which the data is transmitted (a magnetic cartridge) is free from technical defects. If the warranty is exercised, the Company will provide the same data on a new magnetic cartridge. The cost of providing new magnetic cartridges is negligible.

•

Exclusive surveys

          In exclusive surveys, we perform seismic services (acquisition and processing) for a specific customer. We recognize proprietary/contract revenues as the services are rendered. We evaluate the progress to date, in a manner generally consistent with the physical progress of the project, and recognize revenues based on the ratio of the project cost incurred during that period to the total estimated project cost. We believe this ratio to be generally consistent with the physical progress of the project.

          The billings and the costs related to the transit of seismic vessels at the beginning of the survey are deferred and recognized over the duration of the contract by reference to the technical stage of completion.

          In some exclusive survey contracts and a limited number of multi-client survey contracts, the Company is required to meet certain milestones. The Company defers recognition of revenue on such contracts until all milestones that provide the customer a right of cancellation or refund of amounts paid have been met.

•

Other geophysical services

          Revenues from our other geophysical services are recognized as the services are performed and, when related to long-term contracts, using the proportional performance method of recognizing revenues.

Compagnie générale de géophysique veritas, S.A.

•

Equipment sales

          We recognize revenues on equipment sales upon delivery to the customer. Any advance billings to customers are recorded in current liabilities.

•

Software and hardware sales

          We recognize revenues from the sale of software and hardware products following acceptance of the product by the customer at which time we have no further significant vendor obligations remaining. Any advance billings to customers are recorded in current liabilities.

          If an arrangement to deliver software, either alone or together with other products or services, requires significant production, modification, or customization of software, the entire arrangement is accounted for as a production-type contract, i.e. using the percentage of completion method.

          If the software arrangement provides for multiple deliverables (e.g. upgrades or enhancements, post-contract customer support such as maintenance, or services), the revenue is allocated to the various elements based on specific objective evidence of fair value, regardless of any separate allocations stated within the contract for each element. Each element is appropriately accounted for under the applicable accounting standard.

          Maintenance revenues consist primarily of post contract customer support agreements and are recorded as advance billings to customers and recognized as revenue on a straight-line basis over the contract period.

Multi-client surveys

     Multi-client surveys consist of seismic surveys to be licensed to customers on a non-exclusive basis. All costs directly incurred in acquiring, processing and otherwise completing seismic surveys are capitalized into the multi-client surveys (including transit costs when applicable). The value of our multi-client library is stated on our balance sheet at the aggregate of those costs less accumulated amortization or at fair value if lower. We review the library for potential impairment of our independent surveys on an ongoing basis.

     We amortize the multi-client surveys over the period during which the data is expected to be marketed using a pro-rata method based on recognized revenues as a percentage of total estimated sales.

     In this respect, we use four amortization rates: 50%, 75%, 80% or 83.3% of revenues depending on the category of the surveys.

Multi-client surveys are classified into a same category when they are located in the same area with the same estimated sales ratio, such estimates generally relying on the historical pattern.

For all categories of surveys and starting from data delivery, a minimum straight-line depreciation scheme is applied over a five-year period, if total accumulated depreciation from the applicable amortization rate is below this minimum level.

     Multi-client surveys acquired as part of the business combination with Veritas and which have been valued for purchase price allocation purposes are amortized based on 65% of revenues and an impairment loss is recognized on a survey-by-survey basis in case of any indication of impairment.

     From January 12, 2007 to October 1, 2007, we applied an amortization rate of 66.6% of revenues instead of 50% for a certain category of surveys. The impact of this change of estimates applied from October 1, 2007 was a reduction in depreciation expenses of €3.1 million for the year ended December 31, 2007.

Development costs

               Expenditures on research activities undertaken with the prospect of gaining new scientific or technological knowledge and understanding are recognized in the income statement as expenses as incurred and are presented as “Research and development expenses, net”.

               Expenditures on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, are capitalized if:

          — 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

Compagnie générale de géophysique veritas, S.A.

— 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.

          The expenditures capitalized include the cost of materials, direct labor and an appropriate proportion of overhead. Other development expenditures are recognized in the income statement as expenses as incurred and are presented as “Research and development expenses, net”.

          Capitalized development expenditures are stated at cost less accumulated amortization and impairment losses. We amortize capitalized developments costs over 5 years.

          Research & development expenses in our income statement represent the net cost of development costs that are not capitalized, of research costs, offset by government grants acquired for research and development.

Note 2—Acquisitions and divestitures

     On May 26, 2008, Sercel acquired Metrolog, a privately held company, for €25.7 million paid in cash (including advisory and legal fees). Metrolog is a leading provider of high pressure, high temperature gauges and other downhole instruments to the oil and gas industry. The acquisition is expected to be accretive to Sercel and to CGGVeritas earnings per share (EPS) in 2008. The purchase price allocation resulted in a preliminary goodwill of €14.3 million.

     On June 25, 2008, in conjunction with the Oman business transfer to Ardiseis FZCO from Veritas DGC Ltd, CGG Veritas SA subscribed to the increase of 805 shares in the capital of its subsidiary Ardiseis FZCO, and sold 407 Ardiseis FZCO shares to Industrialization & Energy Services Company (TAQA) for a total consideration of U.S.$11.8 million. At the end of this transaction the Group’s percentage interest in Ardiseis remains unchanged at 51%.

     On June 16, 2008, a new subsidiary, CGGVeritas Technology Services (Beijing) Co. Ltd., fully owned by the Group, was created in China. This high profile technology centre will encompass the following activities: research & development and relationships with Chinese scientific organizations, high end processing services, “Geopromote” and GSS / Hardware and Software Support Services.

Note 3— Financial debt

There has been no significant movement in our net financial debt during the six months ended June 30, 2008. Our net financial debt amounted to €1,038.1 million at June 30, 2008 compared to €1,106.7 at December 31, 2007.

At June 30, 2008 the Group had €11.0 million available in unused short-term credit lines and overdraft facilities and €210.0 million in unused long-term credit lines with a maturity date less than one year away.

Note 4— Common stock and stock option plans

As of June 30, 2008, the Company’s share capital consisted of 137,685,250 shares, each with a nominal value of €0.40.

Five-for-one stock split

On June 3, 2008 at the opening of the Paris stock exchange, CGGVeritas implemented a five-for-one stock split. As a consequence:

	–		the market price of CGGVeritas shares listed on Euronext Paris was divided by 5;
	–		the number of outstanding shares was multiplied by 5;
	–		the par value of each share decreased from €2.00 to €0.40; and
	–		an ADS listed on the NYSE has one-to-one parity with an ordinary share listed on Euronext Paris.

This transaction did not require any specific formalities from CGGVeritas shareholders and did not induce additional costs.

Compagnie générale de géophysique veritas, S.A.

Statement of changes in equity

																						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
(Unaudited)		issued (b)				capital				capital				earnings				shares				equity				adjustment				equity				interest				interest
		(amounts in million of euros, except share data)
Balance at January 1, 2007			87,989,440				35.2				394.9				477.7				3.0				4.8				(38.6	)			877.0				22.9				899.9
Capital increase			49,264,350				19.7				1,425.1				44.1																1,488.9								1,488.9
Net income															245.5																245.5				4.1				249.6
Cost of share-based payment															20.6																20.6								20.6
Operations on treasury shares																			(6.9	)											(6.9	)							(6.9	)
Actuarial gains and losses of pension plans (1) (a)															(3.8	)															(3.8	)							(3.8	)
Financial instruments: change in fair value and transfer to income statement(2) (a)																							(9.9	)							(9.9	)							(9.9	)
Foreign currency translation: change in fair value and transfer to income statement(3)																											(209.8	)			(209.8	)			(2.5	)			(212.3	)
Income and expense recognized directly in equity (1) + (2) + (3)															(3.8	)							(9.9	)			(209.8	)			(223.5	)			(2.5	)			(226.0	)
Changes in consolidation scope																																			(0.5	)			(0.5	)
Balance at December 31, 2007			137,253,790				54.9				1,820.0				784.1				(3.9	)			(5.1	)			(248.4	)			2,401.6				24.0				2,425.6
Capital increase			431,460				0.2				2.3																				2.5								2.5
Net income															111.5																111.5				4.4				115.9
Cost of share-based payment															11.9																11.9				(1.4	)			10.5
Operations on treasury shares																			(6.9	)											(6.9	)							(6.9	)
Actuarial gains and losses of pension plans (1) (a)															0.4																0.4								0.4
Financial instruments: change in fair value and transfer to income statement(2) (a)																							(10.4	)							(10.4	)							(10.4	)
Foreign currency translation: change in fair value and transfer to income statement(3) (a)																											(145.1	)			(145.1	)			(1.4	)			(146.5	)
Income and expense recognized directly in equity (1) + (2) + (3)															0.4				—				(10.4	)			(145.1	)			(155.1	)			(1.4	)			(156.5	)
Others																																			5.2				5.2
Balance at June 30, 2008			137,685,250				55.1				1,822.3				907.9				(10.8	)			(15.5	)			(393.5	)			2,365.5				30.8				2,396.3

Compagnie générale de géophysique veritas, S.A.

Stock options

In addition to the existing stock-options plans, on March 14, 2008, the Board of directors decided to allocate 1,188,500 stock-options to senior executives and other employees of the Group. The subscription price was set at €32.57. These options have an eight-year duration. They are vested by one-third each year over a three-year period and can be exercised at any time. However, French tax residents must keep the shares they receive as a result of the options exercised in registered form from the exercise date until March 14, 2012. Except in limited circumstances set forth in the plan regulations, employees leaving the Group will lose their vested unexercised options if they are not exercised before the end of the notice period.

Information relating to options outstanding at June 30, 2008 is summarized below:

						Options								Fair value
						outstanding				Exercise				per share
Date of Board of		Options				at June 30,				price				at the grant
Directors’ Resolution		granted				2008				per share				date				Expiration date
March 14, 2001			1,280,000				268,450			€	13.08					(a)		March 13, 2009
May 15, 2002			690,500				251,085			€	7.99					(a)		May 14, 2010
May 15, 2003			849,500				355,615			€	2.91			€	2.23	(b)		May 14, 2011
May 11, 2006			1,012,500				955,835			€	26.26			€	14.97	(c)		May 10, 2014
March 23, 2007			1,308,750				1,239,750			€	30.40			€	12.65	(d)		March 22, 2015
March 14, 2008			1,188,500				1,183,500			€	32.57			€	12.06	(e)		March 14, 2016
Total			6,329,750				4,254,235

The exercise price for each option is the average fair market value of the common stock during the 20 trading days ending on the trading day next preceding the date the option is granted.

According to IFRS 2, fair value of stock-options plans granted since November 7, 2002 (in the May 2003, May 2006, March 2007 and March 2008 plans) was recognized as an expense over the life of the plan, which represented a €5.8 million expense for the six month period ended June 30, 2007 (of which €3.0 million was for the executive managers of the Group), and a €6.9 million expense for the six months ended June 30, 2008 (of which €3.8 million was for the executive managers of the Group).

A summary of the Company’s stock option transactions and related information follows:

		June 30, 2008								June 30, 2007
						Weighted								Weighted
						average								average
		Number of				exercise				Number of				exercise
		options				price in €				options				price in €
Outstanding-beginning of period			3,306,000				21.84				3,253,985				16.59
Granted			1,188,500				32.57				1,308,750				30.40
Exercised			(193,960	)			11.93				(834,305	)			7.32
Forfeited			(46,305	)			15.60				(13,405	)			15.43
Outstanding-end of period			4,254,235				25.36				3,715,025				20.91

Compagnie générale de géophysique veritas, S.A.

Performance shares

In addition to our 2006 and 2007 performance share allocation plans, on March 14, 2008, the Board of Directors decided to allocate a maximum amount of 459,250 performance shares to senior executives and certain other employees of the Group. These shares will be allocated at the end of a two-year allocation period expiring on the later of March 14, 2010 or the date of the shareholders’ meeting convened to approve the 2009 financial statements. Such allocation will be final provided (i) the Board resolves that the performance conditions provided for by the plan regulations, i.e. the achievement in fiscal years 2008 and 2009 of a minimum average consolidated net earning per share and an average operating income of either the Group, the Services segment or the Equipment segment, depending upon the segment to which each beneficiary belongs, and (ii) the beneficiary is still an employee or officer of the Group upon final allocation of the shares. The allocated shares will have to be kept in registered form for a two-period as from the allocation date before they can be sold.

The Board of Directors meeting held on April 29, 2008 resolved that the performance conditions set forth by the general regulations of the plan dated May 11, 2006 had been fulfilled and, as a result, finally allocated the performance shares to those beneficiaries that were employees or officers of the company or one of its subsidiaries at the time of the final allocation, i.e. May 12, 2008. 45,700 shares were thus allocated.

According to IFRS 2, the fair value of the performance share allocation plan (in the May 2006, March 2007 and March 2008 plans) was recognized as an expense over the life of the plan, which represented a €3.1 million expense for the six months ended June 30, 2007 (of which €0.7 million was for the executive managers of the Group) and a €5.0 million expense for the six months ended June 30, 2008 (of which €0.8 million was for the executive managers of the Group).

Note 5— Analysis by operating segment and geographic area

          Financial information by operating segment is reported in accordance with the internal reporting system and shows internal segment information that is used to manage and measure the performance of CGG Veritas. We divide our business into two operating segments, geophysical services and geophysical equipment.

          Our geophysical services segment comprises:

	-		Land contract: seismic data acquisition for land, transition zones and shallow water undertaken by us on behalf of a specific client;
	-		Marine contract: seismic data acquisition offshore undertaken by us on behalf of a specific client;
	-		Multi-client land and marine: seismic data acquisition undertaken by us and licensed to a number of clients on a non-exclusive basis; and
	-		Processing & Imaging: processing and imaging and interpretation of geophysical data, data management and reservoir studies for clients.

          Our geophysical equipment segment, which we conduct through Sercel Holding S.A. and its subsidiaries, is our manufacturing and sales activities for seismic equipment used for data acquisition, both on land and offshore.

Inter-company sales between the two segments are made at prices approximating market prices and relate primarily to equipment sales made by the equipment segment to the services segment. These inter-segment sales, the related operating income recognized by the equipment segment, and the related impact on capital expenditures and depreciation expense of the services segment are eliminated in consolidation and presented in the column “Eliminations and Adjustments” in the tables that follow.

          Operating income represents operating revenues and other operating income less expenses of the operating segment. It includes non-recurring and unusual items, which are disclosed in the operating segment if material. General corporate expenses, which include Group management, financing, and legal activities, have been included in the column “Eliminations and Adjustments” in the tables that follow. The Group does not disclose financial expenses or revenues by operating segment because these items are not monitored by the operating management, financing and investing being mainly managed at the corporate level.

          Identifiable assets are those used in the operations of each industry segment. Unallocated and corporate assets consist primarily of financial assets, including cash and cash equivalents.

Compagnie générale de géophysique veritas, S.A.

          Due to the constant changes in work locations, the Group does not track its assets based on country of origin or ownership.

Compagnie générale de géophysique veritas, S.A.

Analysis by operating segment

		Three months ended June 30, 2008																	Three months ended June 30, 2007
										Eliminations																	Eliminations
										and				Consolidated													and				Consolidated
(in millions of euros)		Services				Equipment				Adjustments				Total					Services				Equipment				Adjustments				Total
Revenues from unaffiliated customers			391.6				167.4				—				559.0					389.9				181.2				—				571.1
Inter-segment revenues			—				12.5				(12.5	)			—					0.2				15.0				(15.2	)			—
Operating revenues			391.6				179.9				(12.5	)			559.0					390.1				196.2				(15.2	)			571.1
Other income from ordinary activities			(0.1	)			0.2				—				0.1					0.2				—				—				0.2
Total income from ordinary activities			391.5				180.1				(12.5	)			559.1					390.3				196.2				(15.2	)			571.3
Operating income (loss)			52.7				53.9				(10.5)	(a)			96.1					45.5				67.3				(12.3)	(a)			100.5
Equity income (loss) of investees			(0.1	)			0.3								0.2					0.7				—				—				0.7
Capital expenditures (b)			128.9				5.5				(4.6	)			129.8					135.6				3.3				(8.2	)			130.7
Depreciation and amortization (c)			116.8				5.5				(7.6	)			114.7					101.6				4.8				(2.7	)			103.7
Investments in companies under equity method			—				—				—				—					1.0				—				—				1.0

		Three months ended June 30, 2008																	Three months ended June 30, 2007
										Eliminations																	Eliminations
										and				Consolidated													and				Consolidated
(in millions of U.S.$)		Services				Equipment				Adjustments				Total					Services				Equipment				Adjustments				Total
Revenues from unaffiliated customers			613.2				260.9				—				874.1					525.1				243.6				—				768.7
Inter-segment revenues			(0.1	)			20.4				(20.3	)			—					0.3				20.4				(20.7	)			—
Operating revenues			613.1				281.3				(20.3	)			874.1					525.4				263.5				(20.7	)			768.7
Other income from ordinary activities			(0.2	)			0.4								0.2					0.3				—				—				0.3
Total income from ordinary activities			612.9				281.7				(20.3	)			874.3					525.7				263.5				(20.2	)			769.0
Operating income (loss)			83.6				84.5				(17.0	)			151.1					62.0				90.5				(16.6	)			135.9

Compagnie générale de géophysique veritas, S.A.

		Six months ended June 30, 2008																	Six months ended June 30, 2007
										Eliminations																	Eliminations
										and				Consolidated													and				Consolidated
(in millions of euros)		Services				Equipment				Adjustments				Total					Services				Equipment				Adjustments				Total
Revenues from unaffiliated customers			824.9				319.1				—				1,144.0					815.5				347.8				—				1,163.3
Inter-segment revenues			—				49.6				(49.6	)			—					0.2				52.8				(53.0	)			—
Operating revenues			824.9				368.7				(49.6	)			1,144.0					815.7				400.6				(53.0	)			1,163.3
Other income from ordinary activities			(0.2	)			0.6				—				0.4					0.4				—				—				0.4
Total income from ordinary activities			824.7				369.3				(49.6	)			1,144.4					816.1				400.6				(53.0	)			1,163.7
Operating income (loss)			141.8				114.0				(36.3)	(a)			219.5					146.7				136.3				(39.0)	(a)			244.0
Equity income (loss) of investees			2.7				0.3				—				3.0					1.2				—				—				1.2
Capital expenditures (b)			291.6				8.7				(22.0	)			278.3					281.4				6.6				(22.2	)			265.8
Depreciation and amortization (c)			215.6				10.9				(11.1	)			215.4					(210.7	)			(9.6	)			4.9				(215.2	)
Investments in companies under equity method			—								—				—					1.0				—				—				1.0
Identifiable assets			3,804.2				635.0				(180.0	)			4,259.2					4,075.8				597.9				(177.5	)			4,496.2
Unallocated and corporate assets															264.3																	315.9
Total assets															4,523.5																	4,812.1