-----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, GIBkLIocYxzvRoQi8XMi9obNtM5IB2Q3Tn6MvkdRBAsDsbSlhRCIQRNQGB0J0ydg cN1o2gGez5GbGwRr1NfXYQ== 0000890566-97-001907.txt : 19970815 0000890566-97-001907.hdr.sgml : 19970815 ACCESSION NUMBER: 0000890566-97-001907 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26710 FILM NUMBER: 97662477 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 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _____________ Commission File Number 0-26710 CORE LABORATORIES N.V. (Exact name of registrant as specified in its charter) THE NETHERLANDS NOT APPLICABLE (State of other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 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 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The number of common shares of the Registrant, par value NLG .03 per share, outstanding at August 6, 1997 was 10,610,622. ================================================================================ CORE LABORATORIES N.V. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 INDEX Page ---- Part I -- Financial Information Item 1 -- Financial Statements Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 1 Consolidated Income Statements for the Three Months Ended June 30, 1997 and 1996 ........................................ 2 Consolidated Income Statements for the Six Months Ended June 30, 1997 and 1996 ........................................ 3 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 ........................................ 4 Notes to Consolidated Financial Statements ....................... 5 Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations .................................. 9 Part II -- Other Information Item 1-- Legal Proceedings ........................................... 13 Item 2--Changes in Securities ........................................ 13 Item 3-- Defaults Upon Senior Securities ............................. 13 Item 4-- Submission of Matters to a Vote of Security Holders ......... 13 Item 5--Other Information ............................................ 13 Item 6-- Exhibits and Reports on Form 8-K ............................ 13 Signature ................................................................ 14 i CORE LABORATORIES N.V. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31, 1997 1996 ---------- ---------- (UNAUDITED) (AUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents ........................................ $ 3,339 $ 2,935 Accounts receivable, net ......................................... 59,638 27,993 Inventories ...................................................... 10,100 9,472 Prepaid expenses and other ....................................... 5,989 1,223 Deferred tax assets .............................................. 2,541 927 ---------- ---------- Total current assets ......................................... 81,607 42,550 PROPERTY, PLANT AND EQUIPMENT ........................................ 62,375 35,814 Less-- accumulated depreciation .................................. (10,498) (8,109) ---------- ---------- 51,877 27,705 INTANGIBLES AND GOODWILL, net ........................................ 83,871 8,417 DEFERRED DEBT COSTS, net ............................................. 1,490 44 LONG-TERM INVESTMENT ................................................. 1,168 250 NON-CURRENT DEFERRED TAX ASSET ....................................... 245 245 OTHER LONG-TERM ASSETS ............................................... 813 480 ---------- ---------- Total assets ................................................. $ 221,071 $ 79,691 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt ............................. $ 1,079 $ 4,430 Short-term debt .................................................. 387 -- Accounts payable ................................................. 12,413 5,909 Accrued payroll and related costs ................................ 5,914 3,141 Accrued income taxes payable ..................................... 2,558 1,008 Deferred tax liability ........................................... 608 604 Other accrued expenses ........................................... 25,344 2,253 ---------- ---------- Total current liabilities .................................... 48,303 17,345 LONG-TERM DEBT ....................................................... 110,938 11,594 OBLIGATIONS UNDER CAPITAL LEASES ..................................... 285 -- NON-CURRENT DEFERRED TAX LIABILITY ................................... 1,104 1,970 OTHER LONG-TERM LIABILITIES .......................................... 7,066 1,159 MINORITY INTEREST .................................................... 782 212 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preference shares, NLG .03 par value; 3,000,000 shares authorized, no shares issued or outstanding .............................. -- -- Common shares, NLG .03 par value; 30,000,000 shares authorized, 10,608,622 and 10,592,638 issued and outstanding at June 30, 1997 and December 31, 1996, respectively ......... 186 186 Additional paid-in capital ....................................... 35,541 35,500 Retained earnings ................................................ 16,866 11,725 ---------- ---------- Total shareholders' equity ................................... 52,593 47,411 ---------- ---------- Total liabilities and shareholders' equity ................ $ 221,071 $ 79,691 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 1 CORE LABORATORIES N.V. CONSOLIDATED INCOME STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA) THREE MONTHS ENDED JUNE 30, ----------------------------- 1997 1996 ------------ ------------ (UNAUDITED) (UNAUDITED) SERVICES .................................... $ 45,174 $ 19,182 SALES ....................................... 8,566 6,762 ------------ ------------ 53,740 25,944 OPERATING EXPENSES: Costs of services ....................... 35,490 15,417 Costs of sales .......................... 8,210 5,346 General and administrative expenses ..... 1,432 947 Depreciation and amortization ........... 2,499 1,063 Other (income) expense, net ............. 7 (1) ------------ ------------ 47,638 22,772 INCOME BEFORE INTEREST EXPENSE AND INCOME TAX EXPENSE ...................... 6,102 3,172 INTEREST EXPENSE ............................ 1,450 348 ------------ ------------ INCOME BEFORE INCOME TAX EXPENSE ............ 4,652 2,824 INCOME TAX EXPENSE .......................... 1,395 927 ------------ ------------ NET INCOME .................................. 3,257 1,897 ============ ============ NET INCOME PER SHARE ........................ $ .30 $ .18 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING ......... 10,838,202 10,674,567 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. 2 CORE LABORATORIES N.V. CONSOLIDATED INCOME STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA) SIX MONTHS ENDED JUNE 30, ----------------------------- 1997 1996 ------------ ------------ (UNAUDITED) (UNAUDITED) SERVICES .................................... $ 67,397 $ 37,782 SALES ....................................... 13,204 13,641 ------------ ------------ 80,601 51,423 OPERATING EXPENSES: Costs of services ....................... 52,967 30,468 Costs of sales .......................... 12,080 11,022 General and administrative expenses ..... 2,456 1,877 Depreciation and amortization ........... 3,961 2,200 Other (income) expense, net ............. 56 (69) ------------ ------------ 71,520 45,498 INCOME BEFORE INTEREST EXPENSE AND INCOME TAX EXPENSE ...................... 9,081 5,925 INTEREST EXPENSE ............................ 1,737 753 ------------ ------------ INCOME BEFORE INCOME TAX EXPENSE ............ 7,344 5,172 INCOME TAX EXPENSE .......................... 2,203 1,693 ------------ ------------ NET INCOME .................................. 5,141 3,479 ============ ============ NET INCOME PER SHARE ........................ $ .48 $ .33 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING ......... 10,819,273 10,648,501 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. 3 CORE LABORATORIES N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
SIX MONTHS ENDED JUNE 30, ----------------------- 1997 1996 ---------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income .............................................. $ 5,141 $ 3,479 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ....................... 3,961 2,046 Gain on sale of fixed assets ........................ (5) -- Changes in assets and liabilities: Increase in accounts receivable ..................... (8,615) (449) Decrease in inventories ............................. 595 918 Decrease (increase) in prepaid expenses and other ... (746) 40 Decrease in accounts payable ........................ (5,819) (1,723) Increase (decrease) in accrued payroll .............. 248 (801) Increase (decrease)in accrued income taxes payable .. 458 (525) Decrease in other accrued expenses .................. (1,964) (63) Other ............................................... 151 (65) ---------- ---------- Net cash provided by operating activities ........ (6,595) 2,857 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures .................................... (5,979) (2,135) Proceeds from sale of fixed assets ...................... 69 -- Acquisition of Scott Pickford plc, net of cash .......... (15,023) -- Acquisition of Saybolt, net of cash ..................... (62,987) -- Acquisition of Gulf States Analytical, Inc. ............. -- (4,310) ---------- ---------- Net cash used in investing activities ............... (83,920) (6,445) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt .............................. (18,218) (7,583) Borrowings under long-term debt ......................... 110,637 10,058 Decrease in short-term debt ............................. -- (190) Debt acquisition costs .................................. (1,541) -- Exercise of stock options ............................... 41 -- Other ................................................... -- (26) ---------- ---------- Net cash provided by financing activities ........... 90,919 2,259 ---------- ---------- NET CHANGE IN CASH .......................................... 404 (1,329) CASH, beginning of period ................................... 2,935 4,940 ---------- ---------- CASH, end of period ......................................... $ 3,339 $ 3,611 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 CORE LABORATORIES N.V. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION AND ESTIMATES The accompanying unaudited consolidated financial statements include the accounts of Core Laboratories N.V. and its subsidiaries (the "Company"), and have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. Balance sheet information as of December 31, 1996, has been taken from the 1996 annual audited financial statements. For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 27, 1997. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS On December 31, 1996, Core Laboratories N.V. completed the acquisition of ProTechnics Company ("ProTechnics"). The acquisition was accounted for as a pooling of interests; accordingly, the accompanying consolidated financial statements have been restated to include the results of ProTechnics for all periods presented. EARNINGS PER SHARE Net income per share is calculated by dividing net income by the weighted average number of common shares and common share equivalents outstanding during the periods presented. Fully diluted income per share is equal to primary income per share in all periods presented. In February, 1997, the Financial Accounting Standards Board issued SFAS No. 128 "Earnings Per Share", revising the methodology to be used in computing earnings per share ("EPS") requiring that the computations required for primary and fully diluted EPS are replaced with "basic" and "diluted" EPS. The Company will adopt SFAS No. 128 effective December 31, 1997 and will restate EPS for all periods presented. The Company anticipates that the amount reported for basic EPS for the three and six month periods ending June 30, 1997 will be unchanged. 5 2. ACQUISITIONS SCOTT PICKFORD ACQUISITION On March 1, 1997, the Company acquired the control of a majority of the outstanding shares of Scott Pickford plc. The Company is in the process of acquiring the remaining shares and expects that the total consideration paid for Scott Pickford plc will total approximately $15.1 million. Scott Pickford plc and its subsidiaries ("Scott Pickford") provide petroleum reservoir management, geoscience services, and engineering products to its customers. Scott Pickford reported revenues of $13,223,000, $13,319,000 and $7,545,000 for its fiscal years ended March 31, 1996, 1995, and 1994, respectively. The acquisition was financed through borrowings, accounted for using the purchase method of accounting and resulted in approximately $12.2 million of goodwill which is being amortized over a forty year period. Scott Pickford's results of operations are included with those of the Company beginning March 1, 1997. The purchase price allocations have been completed on a preliminary basis, thus as additional information concerning the value of the assets acquired and liabilities assumed becomes known additional adjustments will be made to the purchase price allocation included in the accompanying financial statements. SAYBOLT INTERNATIONAL B.V. ACQUISITION 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. 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 $60.6 million of goodwill which is being amortized over a 40-year period. Financing for the transaction was provided through the New Credit Agreement (see Note 5). Saybolt's results of operations are included with those of the Company beginning in May. The purchase price allocations have been completed on a preliminary basis, thus as additional information concerning the value of the assets acquired and liabilities assumed becomes known additional adjustments will be made to the purchase price allocation included in the accompanying financial statements. 3. PRO FORMA INFORMATION Unaudited pro forma revenues, income before extraordinary item and income per share before extraordinary item, assuming that the acquisition of Saybolt and Scott Pickford discussed in Note 2 had been consummated at January 1, 1996, are summarized as follows (in thousands, except per share data): 6 SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, 1997 1996 ----------- ----------- (UNAUDITED) (UNAUDITED) Revenues....................................... $ 115,878 $ 227,016 Income before extraordinary item............... $ 3,741 $ 6,656 Income per share before extraordinary item..... $ .35 $ .62 4. INVENTORIES Inventories are primarily items held for sales or services provided to customers. Inventories are stated at the lower of average cost (includes direct material, labor and overhead) or estimated realizable value. A summary of inventories is as follows (in thousands): JUNE 30, DECEMBER 31, 1997 1996 --------- -------- (UNAUDITED) (AUDITED) Parts and materials............ $ 5,907 $ 4,011 Work in process................ 4,193 5,461 --------- -------- Total .................. $ 10,100 $ 9,472 ========= ======== 5. LONG-TERM DEBT Long-term debt at June 30, 1997 and December 31, 1996 is summarized in the following table (in thousands):
JUNE 30, DECEMBER 31, 1997 1996 --------- -------- (UNAUDITED) (AUDITED) New Credit Agreement with a bank group: $70,000 term loan facility........................... $ 70,000 $ -- $55,000 revolving credit facility.................... 37,000 -- Consideration payable for Scott Pickford plc 1,051 -- Long-term loan bearing interest at 9.2% per annum. 1,198 -- Long-term loan bearing interest at 6.2% per annum. 785 -- Mortgage notes........................................... 1,740 -- Amended Unsecured Credit Agreement with a bank group: $14,000 term loan facility........................... -- 9,375 $15,000 guidance facility............................ -- 5,440 $1,250 revolving credit facility......................... -- 400 $850 term loan facility.................................. -- 722 Other indebtedness....................................... 243 87 --------- --------- Total debt ....................................... 112,017 16,024 Less-- current maturities............................ 1,079 4,430 --------- --------- Total long-term debt.......................... $ 110,938 $ 11,594 ========= =========
On May 12, 1997 the Company entered into a New Credit Agreement which was used to finance the acquisitions of Saybolt and Scott Pickford, as well as refinance the Unsecured Credit Agreement. The New Credit Agreement provides for (i) a term loan of $55 million, (ii) a term loan denominated in 7 British pounds having a US dollar equivalency of $15 million, (iii) a committed revolving debt facility of $50 million, and (iv) a Netherlands guilder denominated revolving facility with US dollar equivalency of $5 million. Loans under the new credit facility will generally bear interest from LIBOR plus .75 to a maximum of LIBOR plus 1.75. The term loans require quarterly principal payments in amounts set forth in the agreement, beginning March 31, 1999 with the final principal payment due June 30, 2002. The revolving credit facilities require interest payments only, until maturity on June 30, 2002. The terms of the New Credit Agreement will require the Company to meet certain financial covenants, including certain minimum equity and cash flow tests. The Company expects to fund any future acquisitions primarily through a combination of working capital, cash flow from operations and bank borrowings, including the credit facility and issuance of additional equity. 8 CORE LABORATORIES N.V. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company is one of the leading providers of petroleum reservoir description data and production management services for maximizing hydrocarbon recovery from new and existing fields. The company is the world's largest provider of petroleum reservoir rock and fluids analyses and multidisciplinary reservoir description studies. Core is also a leading provider of field services evaluating the efficiencies of well completions and stimulations and the effectiveness of enhanced oil recovery projects. In addition, the Company manufactures and sells petroleum reservoir rock and fluid analysis instrumentation and other integrated systems. Currently, Core Laboratories operates 70 facilities in over 50 countries and has approximately 3,000 employees. Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following: the continued expansion of Technology Services is dependent upon the Company's ability to continue to develop new and useful technology; the improvement of margins is subject to the risk that anticipated synergies of existing and recently acquired businesses and future acquisitions will not be realized; the Company's dependence on one industry segment, oil and gas; the risks and uncertainties attendant to adverse economic and financial market conditions, including stock prices, interest rates and credit availability; and competition in the Company's markets. Should one or more of these risks or uncertainties materialize and should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated. RECENT DEVELOPMENTS SCOTT PICKFORD ACQUISITION On March 1, 1997, the Company acquired the control of a majority of the outstanding shares of Scott Pickford plc. The Company is in the process of acquiring the remaining shares and expects that the total consideration paid for Scott Pickford plc will total approximately $15.1 million. Scott Pickford plc and its subsidiaries ("Scott Pickford") provide petroleum reservoir management, geoscience services, and engineering products to its customers. Scott Pickford reported revenues of $13,223,000, $13,319,000 and $7,545,000 for its fiscal years ended March 31, 1996, 1995, and 1994, respectively. The acquisition was financed through borrowings, accounted for using the purchase method of accounting and resulted in approximately $12.2 million of goodwill which is being amortized over a forty year period. Scott Pickford's results of operations are included with those of the Company beginning March 1, 1997. The purchase price allocations have been completed on a preliminary basis, thus as additional information concerning the value of the assets acquired and liabilities assumed becomes known additional adjustments will be made to the purchase price allocation included in the accompanying financial statements. 9 SAYBOLT INTERNATIONAL B.V. ACQUISITION 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. 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 $60.6 million of goodwill which is being amortized over a 40-year period. Financing for the transaction was provided through the New Credit Agreement (see Liquidity and Capital Resources). Saybolt's results of operations are included with those of the Company beginning in May. The purchase price allocations have been completed on a preliminary basis, thus as additional information concerning the value of the assets acquired and liabilities assumed becomes known additional adjustments will be made to the purchase price allocation included in the accompanying financial statements. RESULTS OF OPERATIONS The following table sets forth certain percentage relationships based on the Company's income statements for the periods indicated:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------------ ------------------------------------- PERCENTAGE OF PERCENTAGE OF TOTAL REVENUE TOTAL REVENUE ----------------------- % INCREASE ----------------------- % INCREASE 1997 1996 (DECREASE) 1997 1996 (DECREASE) ---------- ---------- ---------- ---------- ---------- ---------- Services .............................. 84.1 73.9 135.5 83.6 73.5 78.4 Sales ................................. 15.9 26.1 26.7 16.4 26.5 (3.2) ---------- ---------- ---------- ---------- 100.0 100.0 107.1 100.0 100.0 56.7 Operating expenses: Cost of services .................. 66.0 59.4 130.2 65.7 59.2 73.8 Cost of sales ..................... 15.3 20.6 53.6 15.0 21.4 9.6 General and administrative expenses 2.7 3.7 51.2 3.0 3.7 30.8 Depreciation and amortization ..... 4.6 4.1 135.1 4.9 4.3 80.0 Other income, net ................. -- -- * 0.1 (0.1) * ---------- ---------- ---------- ---------- 88.6 87.8 109.2 88.7 88.5 57.2 Income before interest expense and income tax expense ................ 11.4 12.2 92.4 11.3 11.5 53.3 Interest expense ...................... 2.7 1.3 316.7 2.2 1.4 130.7 ---------- ---------- ---------- ---------- Income before income tax expense ...... 8.7 10.9 64.7 9.1 10.1 42.0 Income tax expense .................... 2.6 3.6 50.5 2.7 3.3 30.1 ---------- ---------- ---------- ---------- Net income ............................ 6.1 7.3 71.7 6.4 6.8 47.8 ========== ========== ========== ==========
* Percentage not meaningful. 10 Services revenue for quarter ended June 30, 1997 increased 135.5% to $45.2 million. Services revenue for the six month period ended June 30, 1997 was up 78.4% to $67.4 million. The increases were primarily due to (i) increased worldwide demand for reservoir core and fluids analysis, and (ii) additional revenue from the March 1, 1997 acquisition of Scott Pickford and May 12, 1997 acquisition of Saybolt. Sales revenue for the three month period ended June 30, 1997 increased 26.7% or $1.8 million over the same period of the prior year. The increase was primarily attributed to the acquisition of Scott Pickford's manufacturing division and slightly off-set by decreased sales of integrated octane-measuring and process analyzer systems due to a weaker US refining market. Sales revenue for the six month period ended June 30, 1997 remained constant compared to the prior year. Costs of services as a percentage of services revenue for the three and six months ended June 30, 1997 improved slightly compared to a year ago, due to improved cost savings and efficiencies. Cost of sales as a percentage of sales revenue for three and six months ended June 30, 1997 weakened compared to a year ago due to sales of lower margin products. General and administrative expenses for the three and six months ended June 30, 1997 increased $0.5 million and $0.6 million respectively, as compared to the corresponding period in 1996. The increase was primarily due to increased personnel costs and administrative expenses due to the Company's growth. The Company's ongoing program to maintain tight controls over expenses has resulted in maintaining general and administrative expenses as a percentage of sales under 4%. Depreciation and amortization expense for the three and six month period ended June 30, 1997 increased for both periods, as compared to a year ago, due primarily to the acquisitions of Scott Pickford and Saybolt. Interest expense for the three and six months ended June 30, 1997 increased $1.1 and $0.9 million as compared to 1996. The increase was primarily due to the additional borrowings used to finance the Saybolt and Scott Pickford acquisitions. The Company's effective income tax rate was approximately 30.0% for the three and six months ended June 30, 1997 as compared to 32.8% for three and six months ended June 30, 1996. LIQUIDITY AND CAPITAL RESOURCES The Company's primary capital requirements are for working capital, capital expenditures and acquisitions. For the six month period ended June 30, 1997 the Company had operating cash flow of ($6.6) million as compared to $2.9 million for the corresponding period in 1996. Management believes the Company's internal and external sources of cash will provide the necessary funds with which to meet its expected obligations. 11 On May 12, 1997 the Company entered into a New Credit Agreement which was used to finance the acquisitions of Saybolt and Scott Pickford, as well as refinance the Unsecured Credit Agreement. The New Credit Agreement provides for (i) a term loan of $55 million, (ii) a term loan denominated in British pounds having a US dollar equivalency of $15 million, (iii) a committed revolving debt facility of $50 million, and (iv) a Netherlands guilder denominated revolving facility with US dollar equivalency of $5 million. Loans under the new credit facility will generally bear interest from LIBOR plus .75 to a maximum of LIBOR plus 1.75. The term loans require quarterly principal payments in amounts set forth in the agreement, beginning March 31, 1999 with the final principal payment due June 30, 2002. The revolving credit facilities require interest payments only, until maturity on June 30, 2002. The terms of the New Credit Agreement will require the Company to meet certain financial covenants, including certain minimum equity and cash flow tests. The Company expects to fund any future acquisitions primarily through a combination of working capital, cash flow from operations and bank borrowings, including the credit facility and issuance of additional equity. 12 CORE LABORATORIES N.V. PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company may from time to time be subject to legal proceedings and claims which arise in the ordinary course of its business. Management believes that the outcome of these legal actions will not have a material adverse effect upon the consolidated financial position or future results of operations of the Company. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. Incorporated by Reference from the Exhibit No. Exhibit Title Following Documents ----------- ------------- ------------------- 27.1 Financial Data Schedule Filed Herewith (b) On July 21, 1997 Core Laboratories Inc. filed a Report on Form 8-K/A relating the acquisition of Saybolt International B.V. by Core Laboratories N.V. 13 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant, Core Laboratories N.V., has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CORE LABORATORIES N.V. by: Core Laboratories International B.V. Dated: August 14, 1997 By: /S/ RICHARD L. BERGMARK Richard L. Bergmark Chief Financial Officer and Treasurer (Principal Financial Officer and Chief Accounting Officer) 14 EX-27 2
5 6-MOS DEC-31-1997 JUN-30-1997 3,339 0 62,295 2,657 10,100 81,607 62,375 10,498 221,071 48,303 0 0 0 186 0 221,071 53,740 53,740 43,700 47,638 0 0 1,450 4,652 1,395 3,257 0 0 0 3,257 0.30 0.30
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