Veritas DGC Inc. Announces Its Fiscal Year 1999 Third Quarter Earnings.

HOUSTON--(BUSINESS WIRE)--May 26, 1999--

Veritas DGC Inc. (NYSE:VTS)(TSE:VTS)(the "Company") today announced revenues and earnings for its fiscal year 1999 third quarter ended April 30, 1999 as presented below with the comparative amounts for the corresponding periods of fiscal year 1998. -0-

      (In US$ millions, except earnings per share)
     Three Months Ended April 30,  Nine Months Ended April 30,
               1999       1998      1999      1998
-------------------------------------------------------------
Revenues       $ 74.6   $122.8    $323.1    $388.6
Net income        0.5     16.1      19.6      55.1
Earnings per
 common share     0.02     0.71      0.86      2.44
Earnings per
 common share -
 assuming
 dilution         0.02     0.69      0.85      2.37

-0-

"Our third quarter financial results reflect the depressed levels of capital spending by our customers as a result of low commodity prices. With the positive turnaround in commodity prices that has occurred in the last two months, the outlook for our business towards the end of calendar 1999 and into early 2000 is substantially improved," said Dave Robson, Chairman and CEO of the Company. "We are well positioned in many of the major exploration markets worldwide and enjoy the operating depth and capabilities that the oil and gas industry increasingly relies on to meet the growing demand for energy."

The Company's third quarter revenues decreased 39% to $74.6 million with net income decreasing to $0.5 million compared to $16.1 million for the same period of the previous year. Cash flow (net income plus depreciation) was $17.9 million compared to $30.4 million for the comparable period last year.

The gross margin for the third quarter of fiscal 1999 decreased to 34% from 39% for the prior year period. This decrease was mainly influenced by pricing pressures in land acquisition and land processing, and in the lower pre-funding levels for new multi-client surveys. The utilization of land acquisition assets was reduced to less than fifty percent of the prior year's level. The combined operating backlog for the Company was $152 million compared to $149 million at the end of the second quarter.

Revenues by service group for the fiscal years' 1999 and 1998 third quarters and nine months year-to-date are as follows: -0-

                (In US$ millions)
     Three Months Ended April 30,  Nine Months Ended April 30,
               1999       1998          1999       1998
--------------------------------------------------------------
Land & Transition
 Zone Acquisition  $ 28.1 $ 54.1        $149.5     $164.8
Marine Acquisition   17.6   15.6          63.0       59.1
Data Processing      19.2   23.4          64.6       68.5
Data Library          9.7   29.7          46.0       96.2
               -------------------------------------------
     Total         $ 74.6 $122.8        $323.1     $388.6
               ===========================================

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Land & Transition Zone Acquisition

Revenues for land and transition zone data acquisition were $28.1 million, a 48% decrease from the third quarter of last year. The reduction reflects the substantial decline in the demand for onshore services in most markets as a result of low commodity pricing that started last year and bottomed out in early 1999. Total channel capacity for the service group remains at about 30,000, consistent with the previous year; however, only seven crews were working at the end of the third quarter compared to 15 crews in the comparable quarter last year.

In the Middle East, a second crew was awarded a two-year contract to commence work in August 1999.

Marine Acquisition

Marine acquisition revenues for the third quarter increased 13%, to $17.6 million, compared to last year's third quarter, reflecting the contribution of the Veritas Viking. During the quarter, the Company's multi-boat operation in the Gulf of Mexico was demobilized and the vessels returned to their owners. The Polar Princess, Polar Search and the Veritas Viking recorded multi-client data in the Gulf of Mexico. The Polar Search mobilized to Brazil in early May 1999 to conduct a 2D multi-client data library program. Although interest by the industry is strong, there is no initial pre-funding in place for this survey. Management believes that the emerging market in Brazil is significant and therefore the Company must be positioned in this market to best exploit future opportunities. In the Asia Pacific region, the Ross Seal and the Acadian Searcher continue to record proprietary and multi-client 2-D programs. The Professor Kurentsov completed a project offshore Morocco and has mobilized to Egypt to conduct further proprietary work.

The Company will launch the second Viking class vessel, the Veritas Viking II, in early June 1999. The Veritas Viking II will undergo sea trials and enter production during June 1999, completing both proprietary and 3D data library programs in the North Sea during the summer months. The Viking class vessels' power and equipment handling profile make them among the most capable seismic vessels in the industry.

Data Processing

Revenues decreased 18% to $19.2 million compared to $23.4 million in the third quarter of last year. In general, proprietary processing decreased worldwide. The Company continues to enjoy a strong backlog from multi-client surveys, which have moved from the acquisition phase to the processing phase. The industry is showing strong interest in large depth migration programs and the interpretation capabilities offered through the Company's visualization center.

Data Library

Data library revenues decreased by 67% to $9.7 million compared to the previous third quarter.

As mentioned above, the Company is continuing to add significant marine data library programs to its inventory in all its marine markets. In land data library, Veritas has added programs in Canada and in the U.S. Gulf Coast region. Subsequent to the successful acquisition of Time Seismic in Canada, a 225 km 2D survey has been completed and a 520 sq km 3D joint venture survey with Western Geophysical is scheduled for this summer. Although data library sales have been affected significantly by the reduction in capital spending, there is increasing interest in this area and management is optimistic that data library sales may see some of the first signs of an improvement in activity levels.

Should you have any questions regarding this earnings release or require additional information, the Company has scheduled a telephone conference call for Thursday, May 27, 1999 at 11:00 a.m. EST. After a Company presentation, callers will have the opportunity to ask questions. If you wish to participate, please call 800/683-1535. Should you have difficulty with the aforementioned "800" number, please phone [phone] to be connected toll free.

If you are unable to take part in the conference call, there will be a digital replay available immediately at its conclusion until close of business Thursday, June 3, 1999. The telephone number for the digital replay is 888/306-8761 or 402/220-2856.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, the Company's prospects and development for its operations and the finalizations of contractual agreements, all of which are subject to certain risks, uncertainties and assumptions. These risks and assumptions, which are more fully described in reports filed with the Securities and Exchange Commission, include changes in market conditions in the oil and gas industry as well as declines in prices of oil and gas. Should one or more of these risks or uncertainties materialize or should the assumptions prove incorrect, actual results may vary in material respect from those currently anticipated.

The Company (NYSE:VTS)(TSE:VTS), headquartered in Houston, is a leading provider of land, transition zone and marine-based seismic data acquisition, seismic data processing, and multi-client data sales to the petroleum industry. It operates eight divisions in selected markets worldwide and, based on revenue, is the fifth largest geophysical services provider. -0-

VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(In US$ thousands, except earnings per share)

                    Three Months Ended  Nine Months Ended
                    April 30,           April 30,
                        1999       1998      1999      1998
                    -----------------------------------------

Revenue             $ 74,610  $ 122,810  $ 323,061 $ 388,565
Costs and expenses:
 Cost of services     49,630     75,381    223,156   249,438
 Depreciation
  and amortization    17,415     14,385     51,999    39,849
 Selling, general
  and
  administrative       4,525      5,405     13,582    14,198
 Other (income) expense:
 Interest              3,553      2,009      9,156     6,061
 Other                (1,496)    (1,009)    (3,899)   (2,047)
                     ----------------------------------------

 Total costs and
  expenses            73,627     96,171    293,994   307,499
                     ----------------------------------------

Income before
 provision for
 income taxes and
 equity
 in (earnings)
 loss of joint
 venture                 983     26,639     29,067    81,066
Provision for income
 taxes                   292     11,055      9,231    27,209
Equity in (earnings)
 loss of joint
 venture                 186       (478)       273    (1,201)
                    -----------------------------------------

Net income             $ 505   $ 16,062   $ 19,563  $ 55,058
                    -----------------------------------------

Per share:
 Earnings per common
  share                $0.02    $  0.71   $   0.86   $  2.44
                    -----------------------------------------
 Weighted average
  common shares
  (in thousands)      22,756     22,645     22,721    22,535
                    -----------------------------------------

 Earnings per common
  share - assuming
  dilution          $   0.02    $  0.69  $    0.85 $    2.37
                    -----------------------------------------
 Weighted average
  common shares -
  assuming dilution
  (in thousands)      22,982     23,347     22,923    23,273
                    -----------------------------------------

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