-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LNTROq27hK1na+4eGD70DJd1SGaduImQDgXHSO4ttOA3wZdXYwvfxunzuLHC8/70 GPeN4WBYugmFnVOr918OGA== 0000890566-97-001639.txt : 19970722 0000890566-97-001639.hdr.sgml : 19970722 ACCESSION NUMBER: 0000890566-97-001639 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970512 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970721 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORE LABORATORIES N V CENTRAL INDEX KEY: 0001000229 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] STATE OF INCORPORATION: P7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26710 FILM NUMBER: 97643023 BUSINESS ADDRESS: STREET 1: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 BUSINESS PHONE: 3120420319 MAIL ADDRESS: STREET 1: HERENGRACHT 424 STREET 2: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT TO CURRENT REPORT DATED MAY 12, 1997 PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 12, 1997 CORE LABORATORIES N.V. (Exact name of registrant as specified in its charter) THE NETHERLANDS NOT APPLICABLE (State or Other Jurisdiction (I.R.S. Employer Identification No.) of Incorporation) 0-26710 (Commission File Number) HERENGRACHT 424 1017 BZ AMSTERDAM THE NETHERLANDS NOT APPLICABLE (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (31-20) 420-3191 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On May 12, 1997, Core Laboratories N.V. (the "Company") consummated the acquisition of all the outstanding stock of Saybolt International B.V. ("Saybolt Acquisition"), a privately held Netherlands company, for $67 million in cash and the assumption of approximately $5 million of net debt. Saybolt International B.V., and its subsidiaries ("Saybolt") provide analytical and field services to characterize and test crude oil and petroleum products to the oil industry. Saybolt operates in over 50 countries and has approximately 1,650 employees. Saybolt reported revenues of $105,358,000, $97,803,000 and $90,258,000 in 1996, 1995 and 1994, respectively. The transaction was accounted for under the purchase method which resulted in approximately $44.7 million of goodwill which is being amortized over a 40-year period. Financing for the transaction was provided through additional borrowings. Accordingly, due to the acquisition exceeding 20% of the Company's assets at December 31, 1996, as required in Rule 3-05 of Regulation S-X, certain financial statements of Saybolt and proforma information is filed herein. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a). FINANCIAL STATEMENTS OF ACQUIRED COMPANY. The following Statements of Income are not necessarily indicative of the financial results which would have occurred if the Company had owned, during the periods presented, the net assets acquired in the Saybolt Acquisition and may be significantly different than the actual amounts attributable to the Company upon consummation of the Saybolt Acquisition. In addition, future results may vary significantly from the results reflected below due to dependency on one industry segment, oil and gas; competition in the market; future acquisitions; and other factors. This information should be read in conjunction with the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. PAGE SAYBOLT INTERNATIONAL B.V.: Report of Independent Accountants................................. 3 Consolidated Balance Sheets as of December 31, 1996 and 1995...... 4 Consolidated Statements of Income and Retained Earnings for the Years Ended December 31, 1996, 1995 and 1994........... 5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994............................... 6 Notes to Consolidated Financial Statements........................ 7 1 (b). PRO FORMA FINANCIAL INFORMATION. PAGE CORE LABORATORIES N.V. (THE "COMPANY"): Unaudited Pro Forma Condensed Consolidated Financial Statements - Introduction.................................. 17 Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997................................. 18 Unaudited Pro Forma Condensed Consolidated Statement Of Operations for the Three Months Ended March 31, 1997.... 19 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1996........ 20 (C). EXHIBITS. The following exhibits are filed herewith: 23.1 Consent of Price Waterhouse LLP 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Supervisory Board and Shareholders of Saybolt International B.V. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and retained earnings and of cash flows present fairly, in all material respects, the financial position of Saybolt International B.V. and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Morristown, New Jersey April 1, 1997 3 SAYBOLT INTERNATIONAL B.V. CONSOLIDATED BALANCE SHEET AT DECEMBER 31, (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
1996 1995 ------- ------- ASSETS Current assets: Cash and cash equivalents .................................................................. $ 4,380 $ 3,684 Accounts receivable, net of allowance for doubtful accounts of $1,841 in 1996 and $992 in 1995 .......................................................... 21,284 17,482 Income taxes receivable .................................................................... 386 447 Other current assets and prepaid expenses .................................................. 3,858 4,016 ------- ------- Total current assets ......................................................................... 29,908 25,629 Investments in and advances to affiliated companies at cost plus equity in undistributed earnings ........................................................... 2,709 2,708 Property, plant and equipment, net ........................................................... 17,402 17,982 Intangible assets, net ....................................................................... 2,961 3,506 Deferred tax assets .......................................................................... 972 425 ------- ------- Total assets ............................................................................. $53,952 $50,250 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank overdrafts ............................................................................ $ 3,891 $ 3,808 Current portion of long-term liabilities and short-term debt ............................... 2,640 3,694 Due to affiliated companies ................................................................ 664 1,443 Employee benefits payable .................................................................. 2,567 2,364 Accounts payable ........................................................................... 3,794 2,754 Income taxes payable ....................................................................... 497 922 Other accounts payable and accrued expenses ................................................ 5,393 3,073 ------- ------- Total current liabilities ................................................................ 19,446 18,058 Long-term loans .............................................................................. 2,728 4,904 Provision for claims ......................................................................... 2,564 1,412 Provision for pension backservice liabilities ................................................ 1,083 1,098 Other long-term liabilities .................................................................. 2,814 3,113 Minority interest in consolidated subsidiary companies ....................................... 580 414 ------- ------- Total liabilities ........................................................................ 29,215 28,999 ------- ------- Commitments and contingent liabilities (see Notes 6 and 10) SHAREHOLDERS' EQUITY: Common stock - class A, NLG 1 par value .................................................... 277 277 Common stock - class B, NLG 0.10 par value ................................................. 27 27 Preference A shares, NLG 1 par value ....................................................... -- -- Preference B shares, NLG 1 par value ....................................................... -- -- Capital in excess of par value ............................................................. 1,866 1,866 Cumulative translation account ............................................................. 435 1,274 Retained earnings .......................................................................... 22,132 17,807 ------- ------- Total shareholders' equity ............................................................... 24,737 21,251 ------- ------- Total liabilities and shareholders' equity ............................................... $53,952 $50,250 ======= =======
The accompanying notes are an integral part of these consolidated financial statements 4 SAYBOLT INTERNATIONAL B.V. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
1996 1995 1994 --------- -------- -------- NET REVENUES ................................................................ $ 105,358 $ 97,803 $ 90,258 --------- -------- -------- OPERATING EXPENSES: Cost of services .......................................................... 94,370 89,521 80,120 Depreciation and amortization ............................................. 3,816 3,805 2,666 Interest income ........................................................... (489) (441) (180) Foreign currency losses (profits) ......................................... (355) 250 8 Minority interest in consolidated subsidiary companies .................... 186 169 -- Equity in net (earnings) losses of affiliated companies ................... 146 (363) (475) --------- -------- -------- 97,674 92,941 82,139 --------- -------- -------- Income before interest expense and income tax ............................... 7,684 4,862 8,119 Interest expense ............................................................ 1,080 1,061 722 --------- -------- -------- Income before income taxes .................................................. 6,604 3,801 7,397 Provision for taxes on income ............................................... 2,279 1,526 2,883 --------- -------- -------- Net income ................................................................ 4,325 2,275 4,514 Retained earnings, beginning of year ........................................ 17,807 15,532 11,018 --------- -------- -------- Retained earnings, end of year .............................................. $ 22,132 $ 17,807 $ 15,532 ========= ======== ========
The accompanying notes are an integral part of these consolidated financial statements 5 SAYBOLT INTERNATIONAL B.V. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
1996 1995 1994 ------- ------- ------- CASH FLOW FROM OPERATING ACTIVITIES: Net income ................................................................. $ 4,325 $ 2,275 $ 4,514 Adjustments to reconcile income from operations to net cash provided by operating activities: Depreciation and amortization ............................................ 3,816 3,805 2,666 Deferred taxes ........................................................... (546) 72 414 Minority interest ........................................................ 186 169 -- Dividends received ....................................................... -- 106 139 Equity in earnings of affiliates ......................................... 146 (363) (722) Change in assets and liabilities: (Increase) in accounts receivable ...................................... (3,802) (1,125) (4,051) Decrease (increase) in income taxes receivable ......................... (61) 152 245 Decrease in other current assets & prepaid expenses .................... 158 931 71 Increase (decrease) in accounts payable ................................ 1,040 (543) 607 Increase (decrease) in employee benefits payable ....................... 203 341 (1,605) Increase (decrease) in income taxes payable ............................ (425) (1,051) 119 Increase (decrease) in other accounts payable and accrued expenses ................................................ 3,120 (1,974) 788 ------- ------- ------- Net cash provided by operating activities .................................. 8,160 2,795 3,185 ------- ------- ------- CASH FLOW FROM INVESTMENT ACTIVITIES: Additional investment in or advances to affiliates ......................... (962) (2,376) (18) Cash from newly consolidated subsidiaries .................................. 43 301 105 Capital expenditures ....................................................... (3,713) (5,187) (6,604) ------- ------- ------- Net cash used by investment activities ................................. (4,632) (7,262) (6,517) ------- ------- ------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from (repayments of) borrowing .................................... (3,230) 956 2,557 Increase (decrease) in bank overdraft ...................................... 83 2,737 970 ------- ------- ------- Net cash provided by financing activities .............................. (3,147) 3,693 3,527 ------- ------- ------- Effect of foreign currency exchange rate changes on cash ..................... 315 780 268 ------- ------- ------- Net increase in cash ......................................................... 696 6 463 Cash and cash equivalents at beginning of year ............................... 3,684 3,678 3,215 ------- ------- ------- Cash and cash equivalents at end of year ..................................... $ 4,380 $ 3,684 $ 3,678 ======= ======= ======= Cash paid for interest ....................................................... $ 1,086 $ 1,035 $ 722 ======= ======= ======= Cash paid for income taxes ................................................... $ 3,310 $ 2,804 $ 2,576 ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements 6 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPANY'S ACTIVITIES Saybolt International B.V. (the "Company") renders services such as performing chemical analyses of liquids, inspecting chemicals and liquids, taking samples and advising on them. The Company operates in 53 countries on five continents. PRINCIPLES OF CONSOLIDATION All subsidiary companies in which the Company has, directly or indirectly, an interest of more than 50% in the voting rights or where it can exercise control are fully consolidated. Intercompany transactions and balances pertaining to these entities have been eliminated. The consolidated figures do not include the 100% participation in Saybolt (Australia) Pty Ltd, EW Saybolt & Co (Cayman) Ltd, EW Saybolt & Co. (St. Eustatius) NV and EW Saybolt Ltda (Brazil) which are dormant. FOREIGN CURRENCY TRANSLATION Foreign currency transactions and financial statements of non-U.S. companies are translated into U.S. dollars at prevailing or current rates respectively, except for sales, costs and expenses which are translated at average current rates during each reporting period. Gains and losses resulting from foreign currency transactions are included in income currently. Gains and losses resulting from translation of financial statements are excluded from the statement of income and are credited or charged directly to a separate component of shareholders' equity. INTANGIBLE ASSETS Goodwill, calculated as the excess of the purchase price over the underlying net asset value of the acquired shares based upon group accounting principles, is capitalized and amortized over 20 years, which estimates the expected economic life. Capitalized expenditures include costs for obtaining long-term loans and organization costs. These amounts are amortized to income over a period of five to six years. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost and, with the exception of land, are depreciated over their estimated useful lives, ranging from 3 to 33 years, using the straight-line method. Depreciation is calculated based on the following useful lives: Buildings: 5 - 33 years Laboratory equipment: 3 - 10 years Other operating fixed assets: 3 - 10 years INVESTMENTS IN AFFILIATED COMPANIES Investments in affiliated companies are valued at their net asset value using the equity method on a pro rata basis. 7 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) PROVISION FOR DEFERRED INVESTMENT GRANTS Deferred investment grants are based on investment grants received and are added to future annual profits in equal installments. The number of installments is proportional to the relevant asset's estimated useful life as applied in the calculation of depreciation. Deferred investment grants relate to the Dutch operating companies. An amount of $23, $25 and $26 has been credited to the 1996, 1995 and 1994 income statements, respectively. PROVISION FOR PENSION BACKSERVICE LIABILITIES AND SEVERANCE INDEMNITY Provisions for covering the backservice pension costs for employees are provided based on the present value of future payment obligations. Provisions for severance indemnity for employees are based on nominal values. The calculation takes into account length of service and remuneration at the date of termination of employment. INCOME TAXES The Company accounts for income taxes by recognizing deferred tax assets and liabilities related to the expected future tax consequences of temporary differences between the financial statement basis and the tax basis of the Company's assets and liabilities. The enacted tax rates in effect in the years in which the differences are expected to reverse are used to estimate the related amounts. Valuation allowances for deferred tax assets are recorded where it is considered more likely than not that the asset will not be realized. REVENUE RECOGNITION Revenue is recognized when the service is complete. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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. FAIR VALUE OF FINANCIAL INSTRUMENTS The amounts representing cash equivalents, accounts receivable, accounts payable and accrued expenses, amounts due under the Company's lines of credit and notes payable approximate their market value because of the short term nature of these instruments. CONCENTRATIONS OF CREDIT RISK Financial instruments which potentially subject the Company to concentrations of credit risk consists of accounts receivable only. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company's customer base. To further reduce credit risk, it is the Company's policy to review a customer's credit status before extending credit. CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity date of three months or less at the time of purchase to be cash equivalents. 8 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 2. INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES Investments in affiliated companies include the company's share in equity of the following companies at December 31, 1996: NET % TOTAL INCOME COMPANY OWNED ASSETS EQUITY (LOSS) ---- ----- ------ ------- Saybolt Tunisie SARL ............. 49 $712 $ 494 $ 18 Saybolt Afrique SA ............... 49 668 593 183 Saybolt Saudi Arabia ............. 45 531 (140) (45) Saybolt Malaysia Sdn Bkd ......... 40 476 (727) (226) Saybolt Azerbaidjan BV ........... 50 1 1 (46) Saybolt-SIC ...................... 50 164 164 (37) Checkmark Management BV .......... 50 126 10 (12) The affiliated companies, which are directly or indirectly owned, are valued at their proportional net asset value using the equity method, but no less than zero. Movements in investments in and advances to affiliated companies are summarized as follows: 1996 1995 ------- ------- Balance at January 1 ........................... $ 1,211 $ 1,839 Acquisitions and payment to share capital ...... 320 24 Results for the year ........................... (146) 363 Dividends received ............................. -- (106) Exchange differences ........................... (109) 113 Transfer to consolidated companies ............. (567) (1,022) ------- ------- Balance at December 31 ....................... 709 1,211 Advances to affiliated companies ............... 2,000 1,497 ------- ------- $ 2,709 $ 2,708 ======= ======= 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31, comprise the following: 1996 1995 ------- ------- Land and buildings ........................... $11,758 $12,277 Laboratory equipment ......................... 20,509 19,455 Other operating fixed assets ................. 11,664 10,372 ------- ------- 43,931 42,104 Less: accumulated depreciation .............. 26,529 24,122 ------- ------- $17,402 $17,982 ======= ======= The buildings owned by Saybolt-van Duyn Holding BV, Saybolt United Kingdom Ltd, Saybolt Finland Oy, Saybolt France S.A. and Saybolt-Heinrici Inc. are mortgaged as security for the long-term bank loan facilities. 9 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 4. INTANGIBLE ASSETS Intangible assets at December 31, consist of the following: 1996 1995 ------ ------ Capitalized expenditures ..................... $ 549 $ 597 Goodwill ..................................... 3,497 3,803 ------ ------ 4,046 4,400 Less: accumulated amortization .............. 1,085 894 ------ ------ $2,961 $3,506 ====== ====== 5. LINES OF CREDIT AND NOTES PAYABLE Lines of credit and notes payable consist of the following at December 31: 1996 1995 ------ ------ $6,900 line of credit. Borrowings against the line bear interest at variable rates based on Dutch interest rates. The Company's borrowings under the line of credit are secured by the accounts receivable and other assets of the Company. Amounts drawn under the credit facility: Amount payable upon demand if credit is withdrawn, bearing interest at 6% per annum ........................................ $1,293 $2,465 Long-term loan bearing interest at 9.2% per annum. Payable in annual installments of $382, balance due at maturity in 2002 ............................. 1,513 2,062 Long-term loan bearing interest at 6.2% per annum. Payable in annual installments of $500, balance due at maturity in 1998 ............................. 1,125 1,500 Mortgage loan payable to bank, accruing interest at 8% per annum, payable in yearly installments of $63, final installment due in 2011. The loan is secured by the Company's real estate in France ....................................... 855 975 Note payable to bank, accruing interest at 9.25% per annum, payable in monthly installments of $4 with balance due at maturity in November 1997. The note is collateralized by a first lien on real estate ....................................... 370 382 10 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 1996 1995 ------- ------- Mortgage loan payable to bank accruing interest at 7% per annum, payable in yearly installments of $32, final installment due in 2003. The loan is secured by the Company's real estate in the United Kingdom ............................. 212 313 Note payable to bank, accruing interest at 8.75% per annum, payable in monthly installments of $5. Remaining principal and interest are due at maturity (December 1997). The note is secured by equipment and cross-collateralized by a first lien deed of trust on real estate ........ -- 111 Note payable to financing company, accruing interest at 5.2% per annum, payable in nine monthly installments of $29, maturing in May 1996 ..................... -- 141 Other .......................................... -- 649 ------- ------- 5,368 8,598 Less current maturities ........................ (2,640) (3,694) ------- ------- Non-current portion ............................ $ 2,728 $ 4,904 ======= ======= Annual maturities of lines of credit and notes payable are as follows: 1997 ............................................. $2,640 1998 ............................................. 977 1999 ............................................. 602 2000 ............................................. 462 2001 ............................................. 95 2002 and thereafter .............................. 592 ------ $5,368 ====== 11 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 6. LEASE COMMITMENTS The Company leases certain facilities under noncancelable operating leases expiring in various years through 2005. Several of the leases are subject to renewal options under various terms and certain agreements contain a provision for periodic rate adjustments to reflect consumer price index changes. Future minimum lease commitments at December 31, 1996 can be summarized as follows: 1997 .............................................. $2,486 1998 .............................................. 1,604 1999 .............................................. 909 2000 .............................................. 549 2001 .............................................. 252 2002 and thereafter ............................... 149 ------ $5,949 ====== 7. INCOME TAXES The provision for income taxes consists of: YEAR ENDED DECEMBER 31, -------------------------------------- 1996 1995 1994 ------- ------ ------ CURRENT: Netherlands ............... $ 445 $ 270 $1,218 Foreign ................... 2,380 1,184 1,269 ------- ------ ------ 2,825 1,454 2,487 ------- ------ ------ DEFERRED: Netherlands ............... -- -- -- Foreign ................... (546) 72 396 ------- ------ ------ (546) 72 396 ------- ------ ------ Total ................... $ 2,279 $1,526 $2,883 ======= ====== ====== 12 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) Significant components of the Company's deferred tax liabilities and assets at December 31, are as follows: 1996 1995 ------- ------- LIABILITIES: Prepaid pension costs .......................... $ 114 $ 213 Other .......................................... 249 208 ------- ------- Total deferred tax liabilities ............... 363 421 ------- ------- ASSETS: Net operating losses ........................... 911 1,365 Reserves for uninsured risks ................... 900 510 Accrued vacation ............................... 181 140 Bad debt expense ............................... 106 49 ------- ------- Total deferred tax asset ..................... 2,098 2,064 Valuation allowance ............................ (911) (1,365) ------- ------- 1,187 699 ------- ------- Net deferred tax asset ..................... $ 824 $ 278 ======= ======= Certain of the Company's non-US subsidiaries have available net operating loss carryforwards which may be used to offset future taxable income, if any, in the respective countries. Due to the uncertainty of generating taxable income in these countries, the Company has recorded a 100% valuation allowance with respect to the net operating loss carryforwards. The provision for income taxes at the Company's effective tax rate differed from the provision for income taxes at the Dutch statutory rate of 35% as follows:
YEAR ENDED DECEMBER 31 --------------------------- 1996 1995 1994 ------- ------- ------- Expected tax expense at the expected statutory rate $ 2,423 $ 1,262 $ 2,422 Effect of foreign operations ...................... (516) (851) (166) Operating losses with no current tax benefit ...... 504 731 232 Benefit from use of operating loss carryforwards .. (551) (35) (62) State and local taxes ............................. 136 148 233 Other ............................................. 283 271 224 ------- ------- ------- Total ........................................... $ 2,279 $ 1,526 $ 2,883 ======= ======= =======
The Company has not recorded deferred income taxes applicable to withholding taxes on future dividends paid to The Netherlands. In most cases, a foreign dividend withholding tax will be due upon actual distribution of such dividend and, in that case, would be subject to the 5% withholding tax rate under the respective tax treaty with The Netherlands. 13 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 8. RELATED PARTY TRANSACTIONS The Company's principal lender is also a shareholder of the Company. 9. BENEFIT PLANS The Company provides a retirement benefit to substantially all of its Dutch employees equal to 1.75% of each employee's final pay for each year of service, subject to a maximum of 70%. Funding for this benefit is in the form of premiums paid to an insurance company based upon each employee's age and current salary. Salary increases require higher premiums which are paid over future years and are reflected, at their net present value, as a provision for pension backservice liabilities. Employees are 100% vested at all times. In the event an employee leaves the company, the Company is required to immediately pay the backservice pension liability to the insurance company. The insurance company has assumed substantially all risk associated with the plan. YEAR ENDED DECEMBER 31 ------------------------ 1996 1995 1994 ---- ---- ------ Premiums ...................................... $648 $595 $ 684 Increase to pension backservice liabilities ... 76 328 328 ---- ---- ------ Net cost .................................... $724 $923 $1,012 ==== ==== ====== Discount rate ................................. 5% 5% 6% The company has a defined benefit plan which covers substantially all full-time employees at Saybolt Inc., a wholly owned subsidiary of the Company, in the United States. The benefits are based on years of service and the employee's final average earnings (as defined). The Company's funding policy is to contribute annually the maximum amount that can be deducted for U.S. income tax purposes. Contributions are intended to provide not only benefits attributed to service to date but also for those expected to be earned in the future. The following table sets forth the plan's funded status of amounts recognized in the Company's financial statements at December 31:
1996 1995 ------- ------- Actuarial present value of accumulated benefit obligations, including vested benefits of $7,492 and $7,341 in 1996 and 1995, respectively.............. $(7,524) $(7,348) ------- ------- Projected benefit obligation for services rendered to date ...................................... (8,250) (7,843) Plan assets at fair value .............................. 8,928 8,664 ------- ------- Plan assets in excess of projected benefit obligation ............................................ 678 821 Unrecognized net (gain) or loss from past experience different from assumptions ................. 800 986 Unrecognized net asset being recognized over approximately 15 years ................................ (96) (118) Unrecognized prior service cost being recognized over approximately 15 years ........................... (1,062) (1,158) ------- ------- Prepaid pension cost included in prepaid expenses ............................................. $ 320 $ 531 ======= =======
14 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 1996 1995 ------- ------- NET PERIODIC PENSION COST INCLUDES THE FOLLOWING: Service cost - benefits earned during the period . $ 433 $ 320 Interest cost on projected benefits obligation ... 542 531 Actual return on plan assets ..................... (1,045) (1,547) Net amortization and deferral .................... 282 859 ------- ------- Net period pension costs ....................... $ 212 $ 163 ======= ======= The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation was 7% for both 1996 and 1995. The expected long-term rate of return on assets was 8% in 1996 and 1995. Two of the Company's U.S. subsidiaries sponsor a 401(k) profit-sharing plan and trust for their employees that includes an employer's matching contribution equal to 50% of qualified employee contributions. Employees vest in employer's contributions over two to five years of service. The Company's contributions were $199 for 1996, $190 for 1995 and $32 for 1994. The Company also provides retirement benefits to its employees in other countries under various plans. Total pension expense related to these plans aggregated $970, $572 and $732 for 1996, 1995 and 1994, respectively. 10. COMMITMENTS AND CONTINGENT LIABILITIES a. The Company has given a guarantee of FRF 5,000,000 (approximately $1,042) to Banque National de Paris ("BNP") for the mortgage of Saybolt France SA. b. The Company is party in various claims, legal actions and complaints arising in the ordinary course of business. The company maintains insurance coverage for such risks and accrues amounts it is likely to pay in relation to such issues. Insurance coverage for claims made related to its services is on a per claims basis with a deductible per claim. While the resolution of any matter may have an impact on the financial results of the period in which the matter is settled, management believes that that the ultimate disposition of each of these matters will not have a materially adverse effect upon the Company's results of operations or financial position. c. The Company's operations are subject to environmental and other government regulation in the countries in which it operates. In the latter part of 1996, the Company was informed that the Environmental Protection Agency ("EPA") and the U.S. Department of Justice ("DOJ") had commenced a criminal investigation into certain practices at several of the Company's U.S. laboratories. The Company is cooperating with this investigation and, in addition, has begun its own internal review of the matter. If the EPA and/or DOJ conclude that the Company was in noncompliance with any of the applicable rules and regulations, the Company may be subjected to fines, civil or criminal proceedings, sanctions and/or the revocation of its licenses and/or authorization to perform certain services governed by the EPA or to continue to conduct business in certain areas. While it is not presently possible to predict the outcome of this matter, the ultimate disposition of this matter could have a material adverse effect on the consolidated results of operations and financial position of the Company. 15 SAYBOLT INTERNATIONAL B.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS) 11. SHAREHOLDERS' EQUITY The capitalization of the Company is as follows: SHARES SHARES SHARES AUTHORIZED ISSUED OUTSTANDING --------- ------- ------- Common stock - class A ......... 1,000,000 504,639 504,639 Common stock - class B ......... 9,990,000 495,361 495,361 Preference A shares 500 ........ 5 -- -- Preference B shares 500 ........ 100 -- -- 12. NET REVENUES Net revenues by geographical region can be summarized as follows: YEAR ENDED DECEMBER 31 -------------------------------- 1996 1995 1994 -------- ------- ------- The Netherlands ....................... $ 13,384 $14,310 $12,944 Rest of Europe, CIS and Africa ........ 35,518 31,163 24,775 Middle West and Far East .............. 11,035 10,071 8,296 Americas .............................. 45,128 42,259 44,243 -------- ------- ------- $105,065 $97,803 $90,258 ======== ======= ======= 13. SUBSEQUENT EVENTS (UNAUDITED) The Company is in negotiations to be acquired by Core Laboratories N.V. ("Core"), a Dutch company based in Amsterdam, The Netherlands whose stock trades on the U.S. Nasdaq Stock Market. The transaction is subject to, among other things, due diligence to be performed by Core, approval by regulators and approval by the respective shareholders. There can be no assurance that the transaction will be consummated. 16 CORE LABORATORIES N.V. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following statements provide summary unaudited pro forma condensed income statement data for the three months ended March 31, 1997 and for the year ended December 31, 1996, and summary unaudited pro forma condensed consolidated balance sheet data as of March 31, 1997. This pro forma financial data gives effect to the acquisition of all the outstanding stock of Saybolt International B.V. (the "Saybolt Acquisition"), by Core Laboratories N.V. (the "Company") as if it had occurred, in the case of the income statement data, on January 1, 1996, and, in the case of the balance sheet data, on March 31, 1997. Such pro forma financial data may not be indicative of what the financial condition or results of operations of the Company would have been had the transaction to which it gives effect been completed on such earlier date, nor is it necessarily indicative of the financial condition or results of operations that may exist in the future. The following pro forma information should be read in conjunction with the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, and the historical financial statements and notes of Saybolt International B.V. appearing elsewhere in this Form 8-K/A. 17 CORE LABORATORIES N.V. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 1997 (THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
ADJUSTMENTS PRO FORMA THE SAYBOLT AS ASSETS COMPANY ACQUISITION ADJUSTED --------- ------- --------- CURRENT ASSETS: Cash and cash equivalents ................................................ $ 1,884 $ 4,051(a) $ 5,935 Accounts receivable, net ................................................. 32,724 18,095(a) 50,819 Inventories .............................................................. 10,739 -- 10,739 Other current assets ..................................................... 2,503 5,054(a) 7,557 --------- ------- --------- Total current assets ................................................... 47,850 27,200 75,050 PROPERTY, PLANT AND EQUIPMENT, at cost ....................................... 42,746 16,685(a) 59,431 Less - accumulated depreciation .......................................... (9,732) -- (9,732) --------- ------- --------- 33,014 16,685 49,699 INTANGIBLES AND GOODWILL, net ................................................ 19,262 47,650(a) 66,912 OTHER LONG-TERM ASSETS ....................................................... 2,761 3,947(a) 6,708 --------- ------- --------- Total assets ........................................................... $ 102,887 $95,482 $ 198,369 ========= ======= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt ..................................... $ 4,346 $ -- $ 4,346 Accounts payable ......................................................... 7,620 7,352(a) 14,972 Other current liabilities ................................................ 9,322 8,971(a) 18,293 --------- ------- --------- Total current liabilities .............................................. 21,288 16,323 37,611 LONG-TERM DEBT ............................................................... 28,873 72,368(b) 101,241 OTHER LONG-TERM LIABILITIES .................................................. 3,396 6,791(a) 10,187 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preference shares, NLG .03 par value; 3,000,000 shares authorized, none issued or outstanding ................................. -- -- -- Common stock, NLG .03 par value; 30,000,000 shares authorized, 10,595,638 issued and outstanding at March 31, 1997 ...................................................... 186 -- 186 Additional paid-in capital ............................................... 35,535 -- 35,535 Retained earnings ........................................................ 13,609 -- 13,609 --------- ------- --------- Total shareholders' equity ............................................. 49,330 -- 49,330 --------- ------- --------- Total liabilities and shareholders' equity ........................... $ 102,887 $95,482 $ 198,369 ========= ======= =========
(a) Represents the estimated allocation of the assets acquired and liabilities assumed in connection with the Saybolt Acquisition including $44.7 million of estimated goodwill. The purchase price allocation is preliminary, thus as additional information concerning the value of the assets acquired and liabilities assumed becomes known, adjustments will be made to the purchase price allocation. (b) Represents additional borrowings to finance the Saybolt Acquisition and refinance debt assumed in the Saybolt Acquisition. 18 CORE LABORATORIES N.V. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL ADJUSTMENTS ----------------------------- ----------- SAYBOLT SAYBOLT PRO FORMA THE COMPANY ACQUISITION ACQUISITION AS ADJUSTED ----------- -------- ------- ------------ SALES AND SERVICES ..................................... $ 26,861 $ 25,402 $ -- $ 52,263 ----------- -------- ------- ------------ OPERATING EXPENSES: Costs of sales and services ........................ 21,347 22,928 -- 44,275 General and administrative expenses ................ 1,024 -- -- 1,024 Depreciation and amortization ...................... 1,462 1,000 279 (a) 2,741 Other (income) expense, net ........................ 49 (63) -- (14) ----------- -------- ------- ------------ Income (loss) before interest expense and income tax expense ............................. 2,979 1,537 (279) 4,237 INTEREST EXPENSE ....................................... 287 250 1,256 (b) 1,793 ----------- -------- ------- ------------ Income (loss) before income tax expense (benefit) ........................... 2,692 1,287 (1,535) 2,444 INCOME TAX EXPENSE (BENEFIT) ........................... 808 444 (537)(c) 715 ----------- -------- ------- ------------ Net income (loss) ............................... $ 1,884 $ 843 $ (998) $ 1,729 =========== ======== ======= ============ NET INCOME PER SHARE ................................... $ .18 $ .16 =========== ============ WEIGHTED AVERAGE SHARES OUTSTANDING ................................. 10,760,684 10,760,684 =========== ============
(a) Represents amortization expense for the estimated amount of goodwill to be acquired in the Saybolt Acquisition which will be amortized over an estimated 40-year life. (b) Represents interest expense on the additional borrowings of $67 million to finance the Saybolt Acquisition at an interest rate of 7.5%. (c) Represents the tax effect of the aforementioned pro forma adjustments based on the Dutch statutory rate of 35%. 19 CORE LABORATORIES N.V. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL ADJUSTMENTS ----------------------------- ----------- SAYBOLT SAYBOLT PRO FORMA THE COMPANY ACQUISITION ACQUISITION AS ADJUSTED ------------ --------- ------- ------------ SALES AND SERVICES ...................................... $ 105,368 $ 105,358 $ -- $ 210,726 ------------ --------- ------- ------------ OPERATING EXPENSES: Costs of sales and services ......................... 84,643 94,370 -- 179,013 General and administrative expenses ................. 3,559 -- -- 3,559 Depreciation and amortization ....................... 4,600 3,816 1,117 (a) 9,533 Other income, net ................................... (248) (512) -- (760) ------------ --------- ------- ------------ Income (loss) before interest expense and income tax expense .............................. 12,814 7,684 (1,117) 19,381 INTEREST EXPENSE ........................................ 1,418 1,080 5,025 (b) 7,523 ------------ --------- ------- ------------ Income (loss) before income tax expense (benefit) ............................... 11,396 6,604 (6,142) 11,858 INCOME TAX EXPENSE (BENEFIT) ............................ 3,719 2,279 (2,150)(c) 3,848 ------------ --------- ------- ------------ Net income (loss) ................................... $ 7,677 $ 4,325 $(3,992) $ 8,010 ------------ ========= ======= ============ NET INCOME PER SHARE .................................... $ .72 $ .75 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING .................................. 10,690,902 10,690,902 ============ ============
(a) Represents amortization expense for the estimated amount of goodwill to be acquired in the Saybolt Acquisition which will be amortized over an estimated 40-year life. (b) Represents interest expense on the additional borrowings of $67 million to finance the Saybolt Acquisition at an interest rate of 7.5%. (c) Represents the tax effect of the aforementioned pro forma adjustments based on the Dutch statutory rate of 35%. 20 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CORE LABORATORIES N.V. by: Core Laboratories International B.V. Dated: July 21, 1997 By: /s/RICHARD L. BERGMARK Richard L. Bergmark Chief Financial Officer and Treasurer (Principal Financial Officer and Chief Accounting Officer) 21 EX-23.1 2 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-98590) of Core Laboratories N.V. our report dated April 1, 1997 relating to the consolidated financial statements of Saybolt International B.V., which appears in the Current Report on Form 8-K/A of Core Laboratories N.V. dated July 21, 1997. PRICE WATERHOUSE LLP Houston, Texas July 21, 1997 -----END PRIVACY-ENHANCED MESSAGE-----