UNITED STATES | ||||
SECURITIES AND EXCHANGE COMMISSION | ||||
Washington, D.C. 20549 | ||||
FORM 10-Q | ||||
(Mark One) | ||||
Q | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the quarterly period ended March 31, 2017 | ||||
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: 001-14273 | ||||
CORE LABORATORIES N.V. | ||||
(Exact name of registrant as specified in its charter) | ||||
The Netherlands | Not Applicable | |||
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |||
incorporation or organization) | ||||
Strawinskylaan 913 | ||||
Tower A, Level 9 | ||||
1077 XX Amsterdam | ||||
The Netherlands | Not Applicable | |||
(Address of principal executive offices) | (Zip Code) | |||
(31-20) 420-3191 | ||||
(Registrant's telephone number, including area code) | ||||
None | ||||
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer Q | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
(Do not check if a smaller reporting company) |
CORE LABORATORIES N.V. | ||
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2017 | ||
INDEX | ||
PART I - FINANCIAL INFORMATION | ||
Page | ||
Item 1. | Financial Statements | |
PART II - OTHER INFORMATION | ||
March 31, 2017 | December 31, 2016 | ||||||
ASSETS | (Unaudited) | ||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 14,342 | $ | 14,764 | |||
Accounts receivable, net of allowance for doubtful accounts of $3,133 and $3,139 at 2017 and 2016, respectively | 121,810 | 114,329 | |||||
Inventories | 37,537 | 33,720 | |||||
Prepaid expenses | 12,251 | 10,711 | |||||
Income taxes receivable | 8,738 | 6,426 | |||||
Other current assets | 6,303 | 6,511 | |||||
TOTAL CURRENT ASSETS | 200,981 | 186,461 | |||||
PROPERTY, PLANT AND EQUIPMENT, net | 127,728 | 129,882 | |||||
INTANGIBLES, net | 9,813 | 9,936 | |||||
GOODWILL | 179,044 | 179,044 | |||||
DEFERRED TAX ASSETS, net | 15,194 | 20,605 | |||||
OTHER ASSETS | 47,656 | 47,124 | |||||
TOTAL ASSETS | $ | 580,416 | $ | 573,052 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 36,477 | $ | 33,720 | |||
Accrued payroll and related costs | 24,986 | 19,411 | |||||
Taxes other than payroll and income | 6,373 | 5,816 | |||||
Unearned revenue | 19,300 | 15,690 | |||||
Income taxes payable | 11,432 | 15,718 | |||||
Other current liabilities | 10,229 | 13,668 | |||||
TOTAL CURRENT LIABILITIES | 108,797 | 104,023 | |||||
LONG-TERM DEBT, net | 218,613 | 216,488 | |||||
DEFERRED COMPENSATION | 47,736 | 46,251 | |||||
DEFERRED TAX LIABILITIES, net | 7,469 | 6,277 | |||||
OTHER LONG-TERM LIABILITIES | 44,454 | 44,716 | |||||
COMMITMENTS AND CONTINGENCIES (Note 6) | |||||||
EQUITY: | |||||||
Preference shares, EUR 0.02 par value; 6,000,000 shares authorized, none issued or outstanding | — | — | |||||
Common shares, EUR 0.02 par value; 200,000,000 shares authorized, 44,796,252 issued and 44,175,731 outstanding at 2017 and 44,796,252 issued and 44,151,261 outstanding at 2016 | 1,148 | 1,148 | |||||
Additional paid-in capital | 54,440 | 52,850 | |||||
Retained earnings | 181,247 | 187,957 | |||||
Accumulated other comprehensive income (loss) | (9,599 | ) | (9,828 | ) | |||
Treasury shares (at cost), 620,521 at 2017 and 644,991 at 2016 | (77,829 | ) | (80,773 | ) | |||
Total Core Laboratories N.V. shareholders' equity | 149,407 | 151,354 | |||||
Non-controlling interest | 3,940 | 3,943 | |||||
TOTAL EQUITY | 153,347 | 155,297 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 580,416 | $ | 573,052 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
REVENUE: | |||||||
Services | $ | 120,936 | $ | 122,770 | |||
Product sales | 36,871 | 30,877 | |||||
Total revenue | 157,807 | 153,647 | |||||
OPERATING EXPENSES: | |||||||
Cost of services, exclusive of depreciation expense shown below | 83,601 | 85,294 | |||||
Cost of product sales, exclusive of depreciation expense shown below | 30,971 | 27,520 | |||||
General and administrative expense, exclusive of depreciation expense shown below | 12,756 | 11,050 | |||||
Depreciation | 6,202 | 6,627 | |||||
Amortization | 225 | 220 | |||||
Other (income) expense, net | 873 | (4 | ) | ||||
OPERATING INCOME | 23,179 | 22,940 | |||||
Interest expense | 2,618 | 3,434 | |||||
Income before income tax expense | 20,561 | 19,506 | |||||
Income tax expense | 2,879 | 4,389 | |||||
Net income | 17,682 | 15,117 | |||||
Net income (loss) attributable to non-controlling interest | 24 | 35 | |||||
Net income attributable to Core Laboratories N.V. | $ | 17,658 | $ | 15,082 | |||
EARNINGS PER SHARE INFORMATION: | |||||||
Basic earnings per share attributable to Core Laboratories N.V. | $ | 0.40 | $ | 0.36 | |||
Diluted earnings per share attributable to Core Laboratories N.V. | $ | 0.40 | $ | 0.35 | |||
Cash dividends per share | $ | 0.55 | $ | 0.55 | |||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||
Basic | 44,159 | 42,380 | |||||
Diluted | 44,347 | 42,520 |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
Net income | $ | 17,682 | $ | 15,117 | ||||
Other comprehensive income: | ||||||||
Derivatives | ||||||||
Gain (loss) in fair value of interest rate swaps | 81 | (1,620 | ) | |||||
Interest rate swap amounts reclassified to interest expense | 167 | 213 | ||||||
Income taxes on derivatives | (87 | ) | 518 | |||||
Total derivatives | 161 | (889 | ) | |||||
Pension and other postretirement benefit plans | ||||||||
Prior service cost | ||||||||
Amortization to net income of prior service cost | (19 | ) | (19 | ) | ||||
Amortization to net income of actuarial loss | 111 | 148 | ||||||
Income taxes on pension and other postretirement benefit plans | (24 | ) | (32 | ) | ||||
Total pension and other postretirement benefit plans | 68 | 97 | ||||||
Total other comprehensive income (loss) | 229 | (792 | ) | |||||
Comprehensive income | 17,911 | 14,325 | ||||||
Comprehensive income (loss) attributable to non-controlling interest | 24 | 35 | ||||||
Comprehensive income attributable to Core Laboratories N.V. | $ | 17,887 | $ | 14,290 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 17,682 | $ | 15,117 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Stock-based compensation | 5,723 | 5,462 | |||||
Depreciation and amortization | 6,427 | 6,847 | |||||
Changes to value of life insurance policies | 946 | (568 | ) | ||||
Deferred income taxes | 6,603 | (923 | ) | ||||
Other non-cash items | 571 | (1,334 | ) | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (7,525 | ) | 23,895 | ||||
Inventories | (3,898 | ) | (916 | ) | |||
Prepaid expenses and other current assets | (1,647 | ) | (254 | ) | |||
Other assets | (1,001 | ) | 1,109 | ||||
Accounts payable | 4,576 | 1,819 | |||||
Accrued expenses | (3,590 | ) | (3,222 | ) | |||
Unearned revenue | 3,609 | 170 | |||||
Other long-term liabilities | 1,285 | (1,105 | ) | ||||
Net cash provided by operating activities | 29,761 | 46,097 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (6,449 | ) | (2,858 | ) | |||
Patents and other intangibles | (102 | ) | (36 | ) | |||
Proceeds from sale of assets | 324 | 408 | |||||
Premiums on life insurance | (399 | ) | (532 | ) | |||
Net cash used in investing activities | (6,626 | ) | (3,018 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repayment of debt borrowings | (49,000 | ) | (37,838 | ) | |||
Proceeds from debt borrowings | 51,000 | 13,000 | |||||
Excess tax benefits from stock-based compensation | — | (68 | ) | ||||
Dividends paid | (24,284 | ) | (23,306 | ) | |||
Repurchase of common shares | (1,273 | ) | (696 | ) | |||
Net cash used in financing activities | (23,557 | ) | (48,908 | ) | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (422 | ) | (5,829 | ) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 14,764 | 22,494 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 14,342 | $ | 16,665 |
March 31, 2017 | December 31, 2016 | ||||||
Finished goods | $ | 24,395 | $ | 21,635 | |||
Parts and materials | 11,759 | 11,185 | |||||
Work in progress | 1,383 | 900 | |||||
Total inventories | $ | 37,537 | $ | 33,720 |
March 31, 2017 | December 31, 2016 | ||||||
Senior notes | $ | 150,000 | $ | 150,000 | |||
Credit facility | 70,000 | 68,000 | |||||
Total debt | 220,000 | 218,000 | |||||
Less: Debt issuance costs | (1,387 | ) | (1,512 | ) | |||
Long-term debt, net | $ | 218,613 | $ | 216,488 |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Service cost | $ | 375 | $ | 358 | ||||
Interest cost | 275 | 327 | ||||||
Expected return on plan assets | (233 | ) | (275 | ) | ||||
Amortization of prior service cost | (19 | ) | (19 | ) | ||||
Amortization of actuarial loss | 111 | 148 | ||||||
Net periodic pension cost | $ | 509 | $ | 539 |
Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Non-Controlling Interest | Total Equity | |||||||||||||||||||||
December 31, 2016 | $ | 1,148 | $ | 52,850 | $ | 187,957 | $ | (9,828 | ) | $ | (80,773 | ) | $ | 3,943 | $ | 155,297 | |||||||||||
Adoption of ASU 2016-09 (see note 14) | — | 84 | (84 | ) | — | — | — | — | |||||||||||||||||||
Stock based-awards | — | 1,506 | — | — | 4,217 | — | 5,723 | ||||||||||||||||||||
Repurchase of common shares | — | — | — | — | (1,273 | ) | — | (1,273 | ) | ||||||||||||||||||
Dividends paid | — | — | (24,284 | ) | — | — | — | (24,284 | ) | ||||||||||||||||||
Non-controlling interest dividends | — | — | — | — | — | (27 | ) | (27 | ) | ||||||||||||||||||
Amortization of deferred pension costs, net of tax | — | — | — | 68 | — | — | 68 | ||||||||||||||||||||
Interest rate swaps, net of tax | — | — | — | 161 | — | — | 161 | ||||||||||||||||||||
Net income | — | — | 17,658 | — | — | 24 | 17,682 | ||||||||||||||||||||
March 31, 2017 | $ | 1,148 | $ | 54,440 | $ | 181,247 | $ | (9,599 | ) | $ | (77,829 | ) | $ | 3,940 | $ | 153,347 |
March 31, 2017 | December 31, 2016 | ||||||
Prior service cost | 586 | 600 | |||||
Unrecognized net actuarial loss | (9,687 | ) | (9,769 | ) | |||
Fair value of derivatives, net of tax | (498 | ) | (659 | ) | |||
Total accumulated other comprehensive income (loss) | $ | (9,599 | ) | $ | (9,828 | ) |
Three Months Ended | ||||||
March 31, | ||||||
2017 | 2016 | |||||
Weighted average basic common shares outstanding | 44,159 | 42,380 | ||||
Effect of dilutive securities: | ||||||
Performance shares | 138 | 83 | ||||
Restricted stock | 50 | 57 | ||||
Weighted average diluted common and potential common shares outstanding | 44,347 | 42,520 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Sale of assets | $ | (179 | ) | $ | (366 | ) | |
Results of non-consolidated subsidiaries | (79 | ) | (188 | ) | |||
Foreign exchange | 97 | 779 | |||||
Rents and royalties | (122 | ) | (101 | ) | |||
Severance, compensation and other charges | 1,145 | — | |||||
Other, net | 11 | (128 | ) | ||||
Total other (income) expense, net | $ | 873 | $ | (4 | ) |
Three Months Ended | |||||||
March 31, | |||||||
(Gains) losses by currency | 2017 | 2016 | |||||
Australian Dollar | (5 | ) | 125 | ||||
British Pound | 19 | 228 | |||||
Euro | 103 | 210 | |||||
Other currencies, net | (20 | ) | 216 | ||||
Total (gain) loss, net | $ | 97 | $ | 779 |
Fair Value of Derivatives | |||||||||
March 31, 2017 | December 31, 2016 | Balance Sheet Classification | |||||||
Derivatives designated as hedges: | |||||||||
5 year interest rate swap | $ | 106 | $ | 211 | Other long-term liabilities | ||||
10 year interest rate swap | 692 | 835 | Other long-term liabilities | ||||||
$ | 798 | $ | 1,046 |
Three Months Ended | |||||||||
March 31, 2017 | March 31, 2016 | Income Statement Classification | |||||||
Derivatives designated as hedges: | |||||||||
5 year interest rate swap | $ | 59 | $ | 82 | Increase to interest expense | ||||
10 year interest rate swap | 108 | 131 | Increase to interest expense | ||||||
$ | 167 | $ | 213 |
Fair Value Measurement at | |||||||||||||||
March 31, 2017 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Deferred compensation trust assets (1) | $ | 26,108 | $ | — | $ | 26,108 | $ | — | |||||||
Liabilities: | |||||||||||||||
Deferred compensation plan | $ | 32,724 | $ | — | $ | 32,724 | $ | — | |||||||
5 year interest rate swap | 106 | — | 106 | — | |||||||||||
10 year interest rate swap | 692 | — | 692 | — | |||||||||||
$ | 33,522 | $ | — | $ | 33,522 | $ | — |
Fair Value Measurement at | |||||||||||||||
December 31, 2016 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Deferred compensation trust assets (1) | $ | 25,530 | $ | — | $ | 25,530 | $ | — | |||||||
Liabilities: | |||||||||||||||
Deferred compensation plan | $ | 31,672 | $ | — | $ | 31,672 | $ | — | |||||||
5 year interest rate swap | 211 | — | 211 | — | |||||||||||
10 year interest rate swap | 835 | — | 835 | — | |||||||||||
$ | 32,718 | $ | — | $ | 32,718 | $ | — | ||||||||
(1) Trust assets consist of the cash surrender value of life insurance policies and are intended to assist in the funding of the deferred compensation agreements. |
• | Reservoir Description: Encompasses the characterization of petroleum reservoir rock, fluid and gas samples to increase production and improve recovery of oil and gas from our clients' reservoirs. We provide laboratory based analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry. We also provide proprietary and joint industry studies based on these types of analysis. |
• | Production Enhancement: Includes services and products relating to reservoir well completions, perforations, stimulations and production. We provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects. |
Reservoir Description | Production Enhancement | Corporate & Other 1 | Consolidated | ||||||||||||
Three Months Ended March 31, 2017 | |||||||||||||||
Revenue from unaffiliated clients | $ | 104,895 | $ | 52,912 | $ | — | $ | 157,807 | |||||||
Inter-segment revenue | 174 | 201 | (375 | ) | — | ||||||||||
Segment operating income (loss) | 15,940 | 7,395 | (156 | ) | 23,179 | ||||||||||
Total assets (at end of period) | 320,543 | 199,541 | 60,332 | 580,416 | |||||||||||
Capital expenditures | 2,577 | 3,020 | 852 | 6,449 | |||||||||||
Depreciation and amortization | 4,620 | 1,287 | 520 | 6,427 | |||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||
Revenue from unaffiliated clients | $ | 107,425 | $ | 46,222 | $ | — | $ | 153,647 | |||||||
Inter-segment revenue | 742 | 220 | (962 | ) | — | ||||||||||
Segment operating income (loss) | 18,598 | 4,250 | 92 | 22,940 | |||||||||||
Total assets (at end of period) | 331,889 | 206,566 | 48,795 | 587,250 | |||||||||||
Capital expenditures | 2,082 | 378 | 398 | 2,858 | |||||||||||
Depreciation and amortization | 4,636 | 1,587 | 624 | 6,847 |
• | Reservoir Description: Encompasses the characterization of petroleum reservoir rock, fluid and gas samples to increase production and improve recovery of oil and gas from our clients' reservoirs. We provide laboratory based analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry. We also provide proprietary and joint industry studies based on these types of analysis. |
• | Production Enhancement: Includes services and products relating to reservoir well completions, perforations, stimulations and production. We provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects. |
Three Months Ended March 31, | $ Change | % Change | |||||||||||||||||
2017 | 2016 | 2017/2016 | 2017/2016 | ||||||||||||||||
REVENUE: | |||||||||||||||||||
Services | $ | 120,936 | 77 | % | $ | 122,770 | 80 | % | $ | (1,834 | ) | (1 | )% | ||||||
Product sales | 36,871 | 23 | % | 30,877 | 20 | % | 5,994 | 19 | % | ||||||||||
Total revenue | 157,807 | 100 | % | 153,647 | 100 | % | 4,160 | 3 | % | ||||||||||
OPERATING EXPENSES: | |||||||||||||||||||
Cost of services, exclusive of depreciation expense shown below* | 83,601 | 69 | % | 85,294 | 69 | % | (1,693 | ) | (2 | )% | |||||||||
Cost of product sales, exclusive of depreciation expense shown below* | 30,971 | 84 | % | 27,520 | 89 | % | 3,451 | 13 | % | ||||||||||
Total cost of services and product sales | 114,572 | 73 | % | 112,814 | 73 | % | 1,758 | 2 | % | ||||||||||
General and administrative expense | 12,756 | 8 | % | 11,050 | 7 | % | 1,706 | 15 | % | ||||||||||
Depreciation and amortization | 6,427 | 4 | % | 6,847 | 4 | % | (420 | ) | (6 | )% | |||||||||
Other (income) expense, net | 873 | 1 | % | (4 | ) | — | % | 877 | NM | ||||||||||
Operating income | 23,179 | 15 | % | 22,940 | 15 | % | 239 | 1 | % | ||||||||||
Interest expense | 2,618 | 2 | % | 3,434 | 2 | % | (816 | ) | (24 | )% | |||||||||
Income before income tax expense | 20,561 | 13 | % | 19,506 | 13 | % | 1,055 | 5 | % | ||||||||||
Income tax expense | 2,879 | 2 | % | 4,389 | 3 | % | (1,510 | ) | (34 | )% | |||||||||
Net income | 17,682 | 11 | % | 15,117 | 10 | % | 2,565 | 17 | % | ||||||||||
Net income (loss) attributable to non-controlling interest | 24 | — | % | 35 | — | % | (11 | ) | NM | ||||||||||
Net income attributable to Core Laboratories N.V. | $ | 17,658 | 11 | % | $ | 15,082 | 10 | % | $ | 2,576 | 17 | % | |||||||
"NM" means not meaningful | |||||||||||||||||||
* Percentage based on applicable revenue rather than total revenue. |
Three Months Ended | $ Change | % Change | |||||||||||||||||
Mar 31, 2017 | Dec 31, 2016 | 2017/2016 | 2017/2016 | ||||||||||||||||
REVENUE: | |||||||||||||||||||
Services | $ | 120,936 | 77 | % | $ | 115,180 | 77 | % | $ | 5,756 | 5 | % | |||||||
Product sales | 36,871 | 23 | % | 34,362 | 23 | % | 2,509 | 7 | % | ||||||||||
Total revenue | 157,807 | 100 | % | 149,542 | 100 | % | 8,265 | 6 | % | ||||||||||
OPERATING EXPENSES: | |||||||||||||||||||
Cost of services, exclusive of depreciation expense shown below* | 83,601 | 69 | % | 82,626 | 72 | % | 975 | 1 | % | ||||||||||
Cost of product sales, exclusive of depreciation expense shown below* | 30,971 | 84 | % | 30,052 | 87 | % | 919 | 3 | % | ||||||||||
Total cost of services and product sales | 114,572 | 73 | % | 112,678 | 75 | % | 1,894 | 2 | % | ||||||||||
General and administrative expense | 12,756 | 8 | % | 8,795 | 6 | % | 3,961 | 45 | % | ||||||||||
Depreciation and amortization | 6,427 | 4 | % | 6,550 | 4 | % | (123 | ) | (2 | )% | |||||||||
Other (income) expense, net | 873 | 1 | % | (5 | ) | — | % | 878 | NM | ||||||||||
Operating income | 23,179 | 15 | % | 21,524 | 14 | % | 1,655 | 8 | % | ||||||||||
Interest expense | 2,618 | 2 | % | 2,548 | 2 | % | 70 | 3 | % | ||||||||||
Income before income tax expense | 20,561 | 13 | % | 18,976 | 13 | % | 1,585 | 8 | % | ||||||||||
Income tax expense | 2,879 | 2 | % | 3,607 | 2 | % | (728 | ) | (20 | )% | |||||||||
Net income | 17,682 | 11 | % | 15,369 | 10 | % | 2,313 | 15 | % | ||||||||||
Net income (loss) attributable to non-controlling interest | 24 | — | % | (90 | ) | — | % | 114 | NM | ||||||||||
Net income attributable to Core Laboratories N.V. | $ | 17,658 | 11 | % | $ | 15,459 | 10 | % | $ | 2,199 | 14 | % | |||||||
"NM" means not meaningful | |||||||||||||||||||
* Percentage based on applicable revenue rather than total revenue. |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Sale of assets | $ | (179 | ) | $ | (366 | ) | ||
Results of non-consolidated subsidiaries | (79 | ) | (188 | ) | ||||
Foreign exchange | 97 | 779 | ||||||
Rents and royalties | (122 | ) | (101 | ) | ||||
Severance, compensation and other charges | 1,145 | — | ||||||
Other, net | 11 | (128 | ) | |||||
Total other (income) expense, net | $ | 873 | $ | (4 | ) |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Australian Dollar | (5 | ) | 125 | |||||
British Pound | 19 | 228 | ||||||
Euro | 103 | 210 | ||||||
Other currencies, net | (20 | ) | 216 | |||||
Total (gain) loss, net | $ | 97 | $ | 779 |
Three Months Ended March 31, | $ Change | % Change | Three Months Ended Dec 31, | $ Change | % Change | ||||||||||||||||||||
2017 | 2016 | 2017/2016 | 2017/2016 | 2016 | Q1/Q4 | Q1/Q4 | |||||||||||||||||||
Revenue: | |||||||||||||||||||||||||
Reservoir Description | $ | 104,895 | $ | 107,425 | $ | (2,530 | ) | (2.4 | )% | $ | 105,076 | $ | (181 | ) | (0.2 | )% | |||||||||
Production Enhancement | 52,912 | 46,222 | 6,690 | 14.5 | % | 44,466 | 8,446 | 19.0 | % | ||||||||||||||||
Consolidated | $ | 157,807 | $ | 153,647 | $ | 4,160 | 2.7 | % | $ | 149,542 | $ | 8,265 | 5.5 | % | |||||||||||
Operating income (loss): | |||||||||||||||||||||||||
Reservoir Description | $ | 15,940 | $ | 18,598 | $ | (2,658 | ) | (14.3 | )% | $ | 18,871 | $ | (2,931 | ) | (15.5 | )% | |||||||||
Production Enhancement | 7,395 | 4,250 | 3,145 | 74.0 | % | 2,583 | 4,812 | (186.3 | )% | ||||||||||||||||
Corporate and Other1 | (156 | ) | 92 | (248 | ) | NM | 70 | (226 | ) | NM | |||||||||||||||
Consolidated | $ | 23,179 | $ | 22,940 | $ | 239 | 1.0 | % | $ | 21,524 | $ | 1,655 | 7.7 | % | |||||||||||
(1) "Corporate and Other" represents those items that are not directly related to a particular segment | |||||||||||||||||||||||||
"NM" means not meaningful |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | 2017/2016 | ||||||||
Free cash flow calculation: | ||||||||||
Net cash provided by operating activities | $ | 29,761 | $ | 46,097 | (35 | )% | ||||
Less: cash paid for capital expenditures | 6,449 | 2,858 | 126 | % | ||||||
Free cash flow | $ | 23,312 | $ | 43,239 | (46 | )% |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | 2017/2016 | ||||||||
Cash provided by/(used in): | ||||||||||
Operating activities | $ | 29,761 | $ | 46,097 | (35 | )% | ||||
Investing activities | (6,626 | ) | (3,018 | ) | 120 | % | ||||
Financing activities | (23,557 | ) | (48,908 | ) | (52 | )% | ||||
Net change in cash and cash equivalents | $ | (422 | ) | $ | (5,829 | ) | (93 | )% |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | Maximum Number of Shares That May Yet be Purchased Under the Program (2)(3) | |||||||
January 31, 2017 (1) | 189 | $ | 120.72 | — | 3,835,511 | ||||||
February 28, 2017 (1) | 43 | 117.77 | — | 3,835,648 | |||||||
March 31, 2017 (1) | 10,520 | 118.37 | — | 3,859,104 | |||||||
Total | 10,752 | $ | 118.41 | — |
Exhibit No. | Exhibit Title | Incorporated by reference from the following documents | |
3.1 | - | Articles of Association of Core Laboratories N.V., as amended in 2012 (including English translation) | Exhibit 3.1 filed on February 19, 2013 with 2012 10-K (File No. 001-14273) |
31.1 | - | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
31.2 | - | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
32.1 | - | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished herewith |
32.2 | - | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished herewith |
101.INS | - | XBRL Instance Document | Filed herewith |
101.SCH | - | XBRL Schema Document | Filed herewith |
101.CAL | - | XBRL Calculation Linkbase Document | Filed herewith |
101.LAB | - | XBRL Label Linkbase Document | Filed herewith |
101.PRE | - | XBRL Presentation Linkbase Document | Filed herewith |
101.DEF | - | XBRL Definition Linkbase Document | Filed herewith |
CORE LABORATORIES N.V. | |||
Date: | April 21, 2017 | By: | /s/ Richard L. Bergmark |
Richard L. Bergmark | |||
Chief Financial Officer | |||
(Duly Authorized Officer and | |||
Principal Financial Officer) |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: | April 21, 2017 | By: | /s/ David M. Demshur |
David M. Demshur | |||
Chief Executive Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: | April 21, 2017 | By: | /s/ Richard L. Bergmark |
Richard L. Bergmark | |||
Chief Financial Officer |
Date: | April 21, 2017 | /s/ David M. Demshur |
Name: David M. Demshur | ||
Title: Chief Executive Officer |
Date: | April 21, 2017 | /s/ Richard L. Bergmark |
Name: Richard L. Bergmark | ||
Title: Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2017 |
Apr. 20, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CORE LABORATORIES N V | |
Entity Central Index Key | 0001000229 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 44,182,826 |
Consolidated Balance Sheets Balance Sheet Parenthetical $ in Thousands |
Mar. 31, 2017
USD ($)
shares
|
Mar. 31, 2017
€ / shares
|
Dec. 31, 2016
USD ($)
shares
|
Dec. 31, 2016
€ / shares
|
---|---|---|---|---|
Allowance for Doubtful Accounts Receivable, Current | $ | $ 3,133 | $ 3,139 | ||
Common Stock, Par or Stated Value Per Share | € / shares | € 0.02 | € 0.02 | ||
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 | ||
Common Stock, Shares, Issued | 44,796,252 | 44,796,252 | ||
Common Stock, Shares, Outstanding | 44,175,731 | 44,151,261 | ||
Treasury Stock, Shares | 620,521 | 644,991 | ||
Preferred Stock, Par or Stated Value Per Share | € / shares | € 0.02 | € 0.02 | ||
Preferred Stock, Shares Authorized | 6,000,000 | 6,000,000 | ||
Preferred Stock, Shares Issued | 0 | 0 | ||
Preferred Stock, Shares Outstanding | 0 | 0 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements include the accounts of Core Laboratories N.V. and its subsidiaries for which we have a controlling voting interest and/or a controlling financial interest. These financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information using the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnote disclosures required by U.S. GAAP and should be read in conjunction with the audited financial statements and the summary of significant accounting policies and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Annual Report"). Core Laboratories N.V. uses the equity method of accounting for investments in which it has less than a majority interest and over which it does not exercise control but does exert significant influence. We use the cost method to record certain other investments in which we own less than 20% of the outstanding equity and do not exercise control or exert significant influence. Non-controlling interests have been recorded to reflect outside ownership attributable to consolidated subsidiaries that are less than 100% owned. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included in these financial statements. Furthermore, the operating results presented for the three months ended March 31, 2017 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2017. Core Laboratories N.V.'s balance sheet information for the year ended December 31, 2016 was derived from the 2016 audited consolidated financial statements but does not include all disclosures in accordance with U.S. GAAP. Core Lab's continuing efforts to streamline its business has led to a simplification of its reporting structure and as of January 1, 2017, the Company will present its operating results in two reporting segments: Reservoir Description and Production Enhancement. For more detail about our segments, see Note 13 - Segment Reporting. Certain reclassifications were made to prior period amounts in order to conform to the current period presentation. These reclassifications had no impact on the reported net income or cash flows for the three months ended March 31, 2016. References to "Core Lab", the "Company", "we", "our" and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Core Laboratories N.V. and its consolidated subsidiaries. |
Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consisted of the following (in thousands):
We include freight costs incurred for shipping inventory to our clients in the Cost of product sales caption in the accompanying Consolidated Statements of Operations. |
Acquisitions (Notes) |
3 Months Ended |
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Mar. 31, 2017 | |
Acquisitions [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | We had no significant acquisitions during the three months ended March 31, 2017. |
Debt and Capital Lease Obligations |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Capital Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Capital Lease Obligations | We have no capital lease obligations. Debt at March 31, 2017 and December 31, 2016 were as follows (in thousands):
We have two series of senior notes outstanding with an aggregate principal amount of $150 million ("Senior Notes") issued in a private placement transaction. Series A consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.01% and are due in full on September 30, 2021. Series B consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.11% and are due in full on September 30, 2023. Interest on each series of the Senior Notes is payable semi-annually on March 30 and September 30. We maintain a revolving credit facility ("Credit Facility") that allows for an aggregate borrowing capacity of $400 million. The Credit Facility also provides an option to increase the commitment under the Credit Facility by an additional $50 million to bring the total borrowings available to $450 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.25% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due August 29, 2019, when the Credit Facility matures. Our available capacity at any point in time is reduced by borrowings outstanding at the time and outstanding letters of credit which totaled $21.6 million at March 31, 2017, resulting in an available borrowing capacity under the Credit Facility of $308.4 million. In addition to those items under the Credit Facility, we had $14.3 million of outstanding letters of credit and performance guarantees and bonds from other sources as of March 31, 2017. The terms of the Credit Facility and Senior Notes require us to meet certain covenants, including, but not limited to, an interest coverage ratio (consolidated EBITDA divided by interest expense) and a leverage ratio (consolidated net indebtedness divided by consolidated EBITDA), where consolidated EBITDA (as defined in each agreement) and interest expense are calculated using the most recent four fiscal quarters. The Credit Facility has the more restrictive covenants with a minimum interest coverage ratio of 3.0 to 1.0 and a maximum leverage ratio of 2.5 to 1.0. We believe that we are in compliance with all such covenants contained in our credit agreements. Certain of our material, wholly-owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes. In 2014, we entered into two interest rate swap agreements for a total notional amount of $50 million. See Note 11 - Derivative Instruments and Hedging Activities. The estimated fair value of total debt at March 31, 2017 and December 31, 2016 approximated the book value of total debt. The fair value was estimated using Level 2 inputs by calculating the sum of the discounted future interest and principal payments through the date of maturity. |
Pensions and Other Postretirement Benefits |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pensions and Other Postretirement Benefits | Defined Benefit Plan We provide a noncontributory defined benefit pension plan covering substantially all of our Dutch employees ("Dutch Plan") who were hired prior to 2007. The pension benefit is based on years of service and final pay or career average pay, depending on when the employee began participating. The benefits earned by the employees are immediately vested. The following table summarizes the components of net periodic pension cost under the Dutch Plan for the three months ended March 31, 2017 and 2016 (in thousands):
During the three months ended March 31, 2017, we contributed $1.1 million to fund the estimated 2017 premiums on investment contracts held by the Dutch Plan. |
Commitments and Contingencies |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | We have been and may from time to time be named as a defendant in legal actions that arise in the ordinary course of business. These include, but are not limited to, employment-related claims and contractual disputes or claims for personal injury or property damage which occur in connection with the provision of our services and products. Management does not currently believe that any of our pending contractual, employment-related, personal injury or property damage claims and disputes will have a material effect on our future results of operations, financial position or cash flow. |
Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | During the three months ended March 31, 2017, we repurchased 10,752 of our common shares for $1.3 million. These consisted of rights to shares that were surrendered to us pursuant to the terms of a stock-based compensation plan in consideration of the participants' tax burdens that may result from the issuance of common shares under that plan. Such common shares, unless canceled, may be reissued for a variety of purposes such as future acquisitions, non-employee director stock awards or employee stock awards. We distributed 35,222 treasury shares upon vesting of stock-based awards during the three months ended March 31, 2017. In February 2017, we paid a quarterly dividend of $0.55 per share of common stock. In addition, on April 18, 2017, we declared a quarterly dividend of $0.55 per share of common stock for shareholders of record on April 28, 2017 and payable on May 23, 2017. The following table summarizes our changes in equity for the three months ended March 31, 2017 (in thousands):
Accumulated other comprehensive income (loss) consisted of the following (in thousands):
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Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | We compute basic earnings per common share by dividing net income attributable to Core Laboratories N.V. by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common shares include additional shares in the weighted average share calculations associated with the incremental effect of dilutive restricted stock awards and contingently issuable shares, as determined using the treasury stock method. The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted earnings per share (in thousands):
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Other (Income) Expense, Net |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (Income) Expense, Net | The components of Other (income) expense, net, were as follows (in thousands):
Foreign exchange gains and losses are summarized in the following table (in thousands):
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Income Tax Expense |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | The effective tax rates for the three months ended March 31, 2017 and 2016 were 14.0% and 22.5%, respectively. Income tax expense of $2.9 million in the first quarter of 2017 decreased by $1.5 million compared to $4.4 million in the same period in 2016, due to, among other things, the utilization of research tax credits and the carry back of net operating losses. On March 29, 2017, the Prime Minister of the United Kingdom ("UK") formally notified the European Council of the UK's intention to withdraw from the European Union (EU) under Article 50 of the Treaty of Lisbon. The UK's formal withdrawal will impact tax exemptions and reliefs on intra-European transactions between our UK affiliates and EU companies. In addition, it may impact transactions between our UK affiliates and non-EU based companies as EU tax treaties may no longer apply to these transactions. Due to the uncertainty involved in evaluating the effect of the loss of tax exemptions and reliefs, we are unable to estimate the impact of these changes at this time. We will continue to monitor developments in this area. |
Derivative Instruments (Notes) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to market risks related to fluctuations in interest rates. To mitigate these risks, we utilize derivative instruments in the form of interest rate swaps. We do not enter into derivative transactions for speculative purposes. Interest Rate Risk Our Credit Facility bears interest at variable rates from LIBOR plus 1.25% to a maximum of LIBOR plus 2.00%. As a result of two interest rate swap agreements, we are subject to interest rate risk on debt in excess of $50 million drawn on our Credit Facility. In 2014, we entered into two interest rate swap agreements for a total notional amount of $50 million to hedge changes in the variable rate interest expense on $50 million of our existing or replacement LIBOR-priced debt. Under the first swap agreement of $25 million, we have fixed the LIBOR portion of the interest rate at 1.73% through August 29, 2019, and under the second swap agreement of $25 million, we have fixed the LIBOR portion of the interest rate at 2.5% through August 29, 2024. Each swap is measured at fair value and recorded in our Consolidated Balance Sheet as a liability. They are designated and qualify as cash flow hedging instruments and are highly effective. Unrealized losses are deferred to shareholders' equity as a component of accumulated other comprehensive loss and are recognized in income as an increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. At March 31, 2017, we had fixed rate long-term debt aggregating $200 million and variable rate long-term debt aggregating $20 million, after taking into account the effect of the swaps. The fair values of outstanding derivative instruments are as follows:
The fair value of all outstanding derivatives was determined using a model with inputs that are observable in the market (Level 2) or can be derived from or corroborated by observable data. The effect of the interest rate swaps on the Consolidated Statement of Operations was as follows:
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Financial Instruments (Notes) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | 12. FINANCIAL INSTRUMENTS The Company's only financial assets and liabilities which are measured at fair value on a recurring basis relate to certain aspects of the Company's benefit plans and our derivative instruments. We use the market approach to value certain assets and liabilities at fair value using significant other observable inputs (Level 2) with the assistance of a third-party specialist. We do not have any assets or liabilities measured at fair value on a recurring basis using quoted prices in an active market (Level 1) or significant unobservable inputs (Level 3). Gains and losses related to the fair value changes in the deferred compensation assets and liabilities are recorded in General and administrative expense in the Consolidated Statements of Operations. Gains and losses related to the fair value of the interest rate swaps are recorded in Other comprehensive income. The following table summarizes the fair value balances (in thousands):
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Core Laboratories has taken steps to streamline its business by realigning its reporting structure into two reporting segments. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields. In connection with the realignment of our reporting structure, amounts previously reported in our Reservoir Management segment are now presented within our Reservoir Description and Production Enhancement segments, and prior periods have been revised to conform to the current presentation.
Results for these segments are presented below. We use the same accounting policies to prepare our segment results as are used to prepare our Consolidated Financial Statements. All interest and other non-operating income (expense) is attributable to Corporate & Other and is not allocated to specific segments. Summarized financial information concerning our segments is shown in the following table (in thousands):
(1) "Corporate & Other" represents those items that are not directly related to a particular segment and eliminations. |
Recent Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Pronouncements Adopted in 2017 In July 2015, the FASB issued ASU 2015-11 ("Simplifying the Measurement of Inventory") to require the measurement of inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted this standard on January 1, 2017. The adoption of this standard had no effect on our Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows. In March 2016, the FASB issued ASU 2016-09 ("Improvements to Employee Share-Based Payment Accounting") to simplify the accounting for share-based payment transactions, including accounting for forfeitures, excess tax benefit/expense, and tax withholding requirements. Under this new guidance, (1) companies will have the option to estimate how many shares in a grant will be forfeited or to elect to recognize forfeitures as they occur; (2) all excess tax benefit and expense will be recognized as income tax benefit or expense in the income statement as a discrete item to the quarter, and the accumulated benefits in additional paid-in capital ("APIC") are eliminated; and (3) companies will be able to withhold share amounts up to the statutory maximum and the award will still be classified as equity. We adopted this standard on January 1, 2017 and have elected to recognize forfeitures as they occur. This resulted in a reclassification between retained earnings and additional paid-in-capital of $84 thousand for the estimated forfeitures on unvested shares as of January 1, 2017. The adoption of this standard will result in periodic adjustments in the recognition of stock compensation expense associated with forfeitures in the period in which they occur. In addition to the income statement treatment of including the excess tax benefit/expense as a discrete income tax item each quarter, this will be removed from the Cash from financing activities section of the Statement of Cash Flows. Pronouncements Not Yet Effective In May 2014, the FASB issued ASU 2014-09 ("Revenue from Contracts with Customers"), which provides guidance on revenue recognition. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance requires entities to apply a five-step method to (1) identify the contract(s) with customers; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation(s) in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (on July 9, 2015, the FASB deferred the implementation date for one year). We are currently analyzing the standard's impact on our revenues by looking at all of our revenue streams to determine the impact on our Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows. At this point, we do not anticipate any material changes to our revenue recognition policies and procedures nor to our financial statements, but extensive additional disclosures will be required. In February 2016, the FASB issued ASU 2016-02 ("Leases"), which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. We do not anticipate the adoption of this standard to have a material impact on how we currently record lease transactions; however, it may have a significant impact on our Consolidated Balance Sheets, increasing both asset balances and liability balances. In June 2016, the FASB issued ASU 2016-13 ("Measurement of Credit Losses on Financial Instruments") which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are evaluating the impact that the adoption of this standard will have on our consolidated financial statements. |
Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current [Table Text Block] |
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Debt and Capital Lease Obligations (Tables) |
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Debt and Capital Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | (in thousands):
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Pensions and Other Postretirement Benefits (Tables) |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following table summarizes the components of net periodic pension cost under the Dutch Plan for the three months ended March 31, 2017 and 2016 (in thousands):
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Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | The following table summarizes our changes in equity for the three months ended March 31, 2017 (in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) consisted of the following (in thousands):
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Earnings per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted earnings per share (in thousands):
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Other (Income) Expense, Net (Tables) |
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Foreign Currency Gains Losses By Currency | Foreign exchange gains and losses are summarized in the following table (in thousands):
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Schedule of Other Operating Cost and Expense, by Component | The components of Other (income) expense, net, were as follows (in thousands):
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Derivative Instruments (Tables) |
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Derivatives, Fair Value [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Liabilities at Fair Value [Table Text Block] | The fair values of outstanding derivative instruments are as follows:
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Derivative Instruments Derivative Instruments Gain Loss Table (Tables) |
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Derivative Instruments, Gain (Loss) [Table Text Block] | The effect of the interest rate swaps on the Consolidated Statement of Operations was as follows:
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Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Table Text Block] |
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Segment Reporting (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Summarized financial information concerning our segments is shown in the following table (in thousands):
|
Basis of Presentation Basis of Presentation (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt issuance costs [Domain] | ||
Debt Instrument [Line Items] | ||
Debt acquisition costs | $ (1,387) | $ (1,512) |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 24,395 | $ 21,635 |
Parts and materials | 11,759 | 11,185 |
Work in progress | 1,383 | 900 |
Total inventories | $ 37,537 | $ 33,720 |
Pensions and Other Postretirement Benefits (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Compensation and Retirement Disclosure [Abstract] | ||
Service cost | $ 375 | $ 358 |
Interest cost | 275 | 327 |
Expected return on plan assets | (233) | (275) |
Amortization of prior service cost | 19 | 19 |
Amortization of actuarial loss | 111 | 148 |
Net periodic pension cost | 509 | $ 539 |
Contributions by employer | $ 1,100 |
Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Equity [Abstract] | ||
Treasury shares, acquired, tax burden | 10,752 | |
Treasury shares, acquired, value, tax burden | $ 1.3 | |
Stock Issued During Period, Shares, Treasury Stock Reissued | 35,222 | |
Cash dividends per share (in dollars per share) | $ 0.55 | $ 0.55 |
Dividends declared (in dollars per share) | $ 0.55 |
Equity (Comprehensive Income) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Equity [Abstract] | ||
Prior service cost | $ 586 | $ 600 |
Unrecognized net actuarial loss | (9,687) | (9,769) |
Derivative, Fair Value, Net | (498) | (659) |
Total accumulated other comprehensive income (loss) | $ (9,599) | $ (9,828) |
Earnings per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Weighted average basic common shares outstanding | 44,159 | 42,380 |
Performance shares (in shares) | 138 | 83 |
Restricted stock (in shares) | 50 | 57 |
Weighted average diluted common and potential common shares outstanding | 44,347 | 42,520 |
Other (Income) Expense, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement Location [Line Items] | ||
Total other (income) expense, net | $ 873 | $ (4) |
Other Income [Member] | ||
Income Statement Location [Line Items] | ||
Other Nonoperating Income (Expense) | (11) | 128 |
Rents and Royalties Income (Loss) [Member] | ||
Income Statement Location [Line Items] | ||
Other Nonoperating Income (Expense) | 122 | 101 |
Severance and other charges [Member] | ||
Income Statement Location [Line Items] | ||
Other Nonoperating Income (Expense) | 1,145 | 0 |
Investment Income [Member] | ||
Income Statement Location [Line Items] | ||
Other Nonoperating Income (Expense) | (79) | (188) |
gain loss on sale of asset [Member] | ||
Income Statement Location [Line Items] | ||
Other Nonoperating Income (Expense) | (179) | (366) |
Foreign Currency Gain (Loss) [Member] | ||
Income Statement Location [Line Items] | ||
Other Nonoperating Income (Expense) | $ 97 | $ 779 |
Other (Income) Expense, Net (Foreign Currency (Gain ) Loss by Currency) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Foreign exchange | $ 97 | $ 779 |
AustralianDollar [Member] | ||
Foreign exchange | (5) | 125 |
British Pound [Member] | ||
Foreign exchange | 19 | 228 |
Euro [Member] | ||
Foreign exchange | 103 | 210 |
Other Currencies Net [Member] | ||
Foreign exchange | $ (20) | $ 216 |
Income Tax Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Tax Contingency [Line Items] | ||
Change in income tax expense | $ (1.5) | |
Effective income tax rate | 14.00% | 22.50% |
Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Interest Rate Swap [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Interest Rate Derivative Liabilities, at Fair Value | $ 798 | $ 1,046 |
Derivative, Notional Amount | 50,000 | |
Interest Rate Swap No. 1 [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Interest Rate Derivative Liabilities, at Fair Value | 692 | 835 |
Derivative, Notional Amount | $ 25,000 | |
Derivative, Fixed Interest Rate | 2.50% | |
Derivative, Maturity Date | Aug. 29, 2024 | |
Interest Rate Swap No. 2 [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Interest Rate Derivative Liabilities, at Fair Value | $ 106 | $ 211 |
Derivative, Notional Amount | $ 25,000 | |
Derivative, Fixed Interest Rate | 1.73% | |
Derivative, Maturity Date | Aug. 29, 2019 | |
Minimum [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Basis Spread on Variable Rate | 1.25% | |
Maximum [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Basis Spread on Variable Rate | 2.00% |
Derivative Instruments Long-term debt (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Debt Disclosure in Derivatives Footnote [Abstract] | |
Long-term Debt, Percentage Bearing Variable Interest, Amount | $ 20 |
Long-term Debt, Percentage Bearing Fixed Interest, Amount | $ 200 |
Derivative Instruments Derivative gain loss table (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Interest Rate Swap [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | $ 167 | $ 213 |
Interest Rate Swap No. 1 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | 108 | 131 |
Interest Rate Swap No. 2 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | $ 59 | $ 82 |
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