PGS is in compliance with applicable Norwegian requirements with respect to its reported audited Norwegian GAAP Financial Statements for 2002.
Completion of the audit and re-audit under U.S. GAAS has been made more difficult by a combination of factors, including the demands of the recently completed Chapter 11 process and the organizational changes which accompanied that process, the need to implement "fresh start" accounting following emergence from Chapter 11 and preparation for the audit of the financial statements for 2003. In addition, in connection with the audit and re-audit process under U.S. GAAS for the 2001 and 2002 financial statements, the Company's independent auditor, Ernst & Young, has issued to the Company a material weakness letter that identifies the following material weaknesses: (1) insufficient documentation of or adherence to policies and procedures; (2) inadequate U.S. GAAP expertise in the Company; (3) insufficient support for accounting books and records; and (4) insufficient supervision and review control activities. These material weaknesses may also contribute to a delay in and make more difficult completion of the audit and re-audit discussed above.
In response to the material weakness letter, PGS has developed and is actively implementing a plan and timetable to address the matters identified by Ernst & Young, including hiring new personnel with U.S. GAAP expertise, improving overall U.S. GAAP expertise throughout the accounting organization and upgrading the corporate business controller function within PGS.
There can be no assurance as to whether or when the audit and re-audit described above can be completed. In addition, as previously disclosed, if and when completed the audit and re-audit could result in restatements of the Company's previously filed U.S. GAAP audited financial statements and restatements of or other adjustments to its 2003 U.S. GAAP financial statements. Those restatements and adjustments could be material; however, whether positive or negative, they are expected to be of a non-cash nature and only have an impact on historical financial statements. Financial statements post "fresh start" accounting are not expected to be impacted. Furthermore, there can be no assurance that the audit and re-audit, although being conducted for U.S. GAAP purposes, will not have an impact on Norwegian GAAP financial statements.
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Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSO's). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit www.pgs.com.
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The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on various assumptions made by the Company, which are beyond its control and certain additional risks, and uncertainties as disclosed by the Company in its filings with the Securities and Exchange Commission. As a result of these factors, actual events may differ materially from those indicated in or implied by such forward-looking statements.
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