Annual Report 2011 - PGS

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Notes to the financial Statements of PGS ASA NOTES TO THE FINANCIAL STATEMENTS OF PGS ASA Interest rate hedge accounting As of December 31, 2011 and 2010, all of the interest rate swaps, notional amount of NOK 3.0 billion ($500.0 million) and NOK 1.8 billion ($300.0 million) were accounted for as cash flow hedges, respectively. In the years ended December 31, 2011 and 2010, the value of these instruments were recorded as a reduction in other equity as the effective portion of the designated and qualifying hedging instrument (see Note 11). Foreign exchange rate exposure PGS ASA is exposed to currency fluctuation due to a predominantly USD-based revenue stream, while the expenses are incurred in various currencies. The larger expense currencies other than the USD are GBP, NOK and EUR. PGS ASA maintain a foreign-currency risk management strategy that uses foreign currency exchange contracts to protect against fluctuations in cash flow caused by volatility in currency exchange rates. In 2011, PGS ASA continued a foreign currency hedging program by entering into NOK, GBP, SGD, EUR and BRL on forward contracts. As of December 31, 2011, PGS ASA has open forward contracts to buy and sell GBP, NOK, SGD, BRL and EUR with a notional amount of NOK 0.8 billion ($139.5 million) and a negative fair value of NOK 27.4 million ($4.6 million). As of December 31, 2010, PGS ASA had open forward contracts to buy GBP, NOK, SGD, BRL and EUR with a notional amount of NOK 1.4 billion ($241 million) and a negative fair value of NOK 0.2 million ($0.1 million). Foreign exchange rate hedge accounting As of December 31, 2011 and 2010 none of the total notional amount of foreign exchange contracts in PGS ASA was accounted for as fair value hedges. Note 14 - Other Long-Term Liabilities Other long-term liabilities consist of: December 31, (In thousands of NOK) 2011 2010 Unrealized loss hedge contracts (Note 13) 120,599 166,518 Pension liability (Note 15) 23,657 23,147 Other long-term liabilities 1,149 2,048 Total 145,405 191,713 Note 15 - Pension Obligations Defined benefit plan PGS ASA sponsors a defined benefit pension plan for its Norwegian employees, comprising 6 persons. This plan is funded through contributions to an insurance company, after which the insurance company undertake the responsibility to pay out the pensions. It is PGS ASA’s general practice to fund amounts to this defined benefit plan, which is sufficient to meet the applicable statutory requirements. As of January 1, 2005, the defined benefit plan was closed for further entrants and a new defined contribution plan was established for new employees (see separate section below). PGS ASA is required to maintain a pension plan in accordance with the Norwegian Pension Benefit Act. The pension plans of PGS ASA comply with the requirements set forth in the Norwegian Pension Benefit Act. Net periodic pension costs for PGS ASA’s defined benefit pension plan are summarized as follows: Years ended December 31, (In thousands of NOK) 2011 2010 2009 Service costs 2,514 2,857 3,052 Interest cost 608 833 658 Expected return on plan assets (659) (763) (668) Amortization of actuarial gain (1,441) (1,254) (1,010) Adjustment prior service cost --- --- 710 Administrative costs 73 41 39 Payroll tax 370 419 434 Net periodic pension costs 1,465 2,133 3,215 PGS ANNUAL REPORT 2011 64 132 PGS Annual Report 2011
Notes to the financial Statements of PGS ASA NOTES TO THE FINANCIAL STATEMENTS OF PGS ASA The pension liability has been calculated based on the underlying economic realities. The aggregate funded status on the plan and amounts recognized in PGS ASA’s balance sheet is as follows: December 31, (In thousands of NOK) 2011 2010 Funded status 10,493 3,642 Unrecognized actuarial gain 11,684 18,862 Accrued payroll tax 1,480 643 Net pension liability 23,657 23,147 Net amount recognized as accrued pension liability is presented as other long-term liabilities (see Note 14). Assumptions used to determine benefit obligations: December 31, 2011 2010 Discount rate 2.6% 4.0% Return on plan assets 4.1% 5.4% Compensation increase 4.0% 4.0% Annual adjustment to pensions 0.1% 1.3% Defined contribution plan As described above under “Defined Benefit Plan”, as of January 1, 2005, PGS ASA closed the defined benefit plan for further entrants and a new defined contribution plan was established for new employees. PGS ASA’s contributions to this plan for the years ended December 31, 2011 and 2010 was NOK 1.3 million and NOK 1.1 million, respectively. Note 16 - Commitments PGS ASA’s operating lease commitments relates to corporate administration and expires on various dates through 2024. Future minimum payments related to non-cancelable operating leases existing at December 31, 2011 are as follows: (In thousands of NOK) December 31, 2011 (a) 2012 4,885 2013 5,173 2014 2,647 2015 2,282 2016 2,282 Thereafter 16,553 Total 33,822 (a) Includes estimated office lease for the periods displayed. Total rental expense for operating leases, including leases with terms of less than one year, was NOK 8.3 million, NOK 11.2 million and NOK 11.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. Note 17 - Accrued Expenses and Other Short Term Liabilities Accrued expenses consist of the following: December 31, (In thousands of NOK) 2011 2010 Dividend to shareholders 239,580 --- Accrued unrealized loss hedging (Note 13) 61,564 23,836 Foreign taxes 29,614 46,401 Accrued interest expense 18,932 4,906 Accrued salary (including bonus) 15,668 23,362 Other 18,031 8,987 Total 383,389 107,492 65 PGS ANNUAL REPORT 2011 PGS Annual Report 2011 133
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Operations Annual Report 2011 www.p
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Key Financial Figures Key Financial
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MultiClient revenues of USD 502 mil
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Operations Main Offices oSlo Petrol
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To optimize profitability and cash
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PGS Annual Report 2011 15
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Marine Contract provides more detai
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Marine Contract OptoSeis: Enhancing
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Operations in 2011. The performance
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Operations Data Processing and Tech
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