10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019  

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 incorporation or organization)	(I.R.S. Employer Identification No.)
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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (par value EUR 0.02)	CLB	New York Stock Exchange
Common Stock (par value EUR 0.02)	CLB	Euronext Amsterdam Stock Exchange

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 ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer  ☐ Non-accelerated filer  ☐ Smaller reporting company  ☐ Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐  No ☒

The number of common shares of the registrant, par value EUR 0.02 per share, outstanding at October 23, 2019 was 44,374,852.

CORE LABORATORIES N.V.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2019

INDEX

PART I - FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited) at September 30, 2019 and December 31, 2018	3
	Consolidated Statements of Operations (Unaudited) for the Three Months Ended September 30, 2019 and 2018	4
	Consolidated Statements of Operations (Unaudited) for the Nine Months Ended September 30, 2019 and 2018	5
	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	7
	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2019 and 2018	8
	Notes to the Unaudited Consolidated Interim Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34
	Signature	35

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CORE LABORATORIES N.V.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30, 2019			December 31, 2018
ASSETS	(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	13,128		$	13,116
Accounts receivable, net of allowance for doubtful accounts of $2,858    and $2,650 at 2019 and 2018, respectively		137,355			129,157
Inventories		53,528			45,664
Prepaid expenses		12,508			15,351
Income taxes receivable		7,853			13,993
Other current assets		6,314			13,696
TOTAL CURRENT ASSETS		230,686			230,977
PROPERTY, PLANT AND EQUIPMENT, net		125,078			122,917
RIGHT OF USE ASSETS		76,238			—
INTANGIBLES, net		17,763			13,054
GOODWILL		213,425			219,412
DEFERRED TAX ASSETS, net		71,296			11,252
OTHER ASSETS		53,210			51,215
TOTAL ASSETS	$	787,696		$	648,827
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	42,191		$	41,155
Accrued payroll and related costs		27,866			22,549
Taxes other than payroll and income		7,961			7,488
Unearned revenues		12,348			17,325
Operating lease liabilities		11,869			—
Income taxes payable		4,996			2,917
Other current liabilities		12,766			11,113
TOTAL CURRENT LIABILITIES		119,997			102,547
LONG-TERM DEBT, net		297,148			289,770
LONG-TERM OPERATING LEASE LIABILITIES		63,754			—
DEFERRED COMPENSATION		49,072			49,359
DEFERRED TAX LIABILITIES, net		29,196			7,634
OTHER LONG-TERM LIABILITIES		33,968			38,617
COMMITMENTS AND CONTINGENCIES
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 44,374,852 outstanding at 2019 and 44,796,252    issued and 44,316,845 outstanding at 2018		1,148			1,148
Additional paid-in capital		64,498			57,438
Retained earnings		174,615			156,130
Accumulated other comprehensive income (loss)		(6,604	)		(5,456	)
Treasury shares (at cost), 421,400 at 2019 and 479,407 at 2018		(43,411	)		(52,501	)
Total Core Laboratories N.V. shareholders' equity		190,246			156,759
Non-controlling interest		4,315			4,141
TOTAL EQUITY		194,561			160,900
TOTAL LIABILITIES AND EQUITY	$	787,696		$	648,827

The accompanying notes are an integral part of these consolidated financial statements.

3

 CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three months ended
	September 30,
	2019			2018
	(Unaudited)
REVENUE:
Services	$	120,817		$	124,145
Product sales		52,383			58,001
Total revenue		173,200			182,146
OPERATING EXPENSES:
Cost of services, exclusive of depreciation expense shown below		86,243			88,435
Cost of product sales, exclusive of depreciation expense shown below		39,753			39,744
General and administrative expense, exclusive of depreciation    expense shown below		11,012			13,278
Depreciation		5,199			5,436
Amortization		498			244
Other (income) expense, net		(712	)		130
OPERATING INCOME		31,207			34,879
Interest expense		3,662			3,278
Income from continuing operations before income tax expense		27,545			31,601
Income tax expense		3,335			9,404
Income from continuing operations		24,210			22,197
Income (loss) from discontinued operations, net of income taxes		(397	)		208
Net income		23,813			22,405
Net income (loss) attributable to non-controlling interest		84			(7	)
Net income attributable to Core Laboratories N.V.	$	23,729		$	22,412
EARNINGS (LOSS) PER SHARE INFORMATION:
Basic earnings per share from continuing operations	$	0.55		$	0.50
Basic earnings (loss) per share from discontinued operations	$	(0.01	)	$	0.01
Basic earnings per share attributable to Core Laboratories N.V.	$	0.54		$	0.51
Diluted earnings per share from continuing operations	$	0.54		$	0.50
Diluted earnings (loss) per share from discontinued operations	$	(0.01	)	$	—
Diluted earnings per share attributable to Core Laboratories N.V.	$	0.53		$	0.50
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		44,371			44,216
Diluted		44,716			44,591

The accompanying notes are an integral part of these consolidated financial statements.

4

CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Nine months ended
	September 30,
	2019			2018
	(Unaudited)
REVENUE:
Services	$	359,029		$	366,025
Product sales		152,403			161,614
Total revenue		511,432			527,639
OPERATING EXPENSES:
Cost of services, exclusive of depreciation expense shown below		262,616			258,482
Cost of product sales, exclusive of depreciation expense shown below		115,214			112,788
General and administrative expense, exclusive of depreciation    expense shown below		38,250			38,189
Depreciation		15,631			16,646
Amortization		1,439			720
Other (income) expense, net		2,653			170
OPERATING INCOME		75,629			100,644
Interest expense		11,102			9,694
Income from continuing operations before income tax expense		64,527			90,950
Income tax expense (benefit)		(19,467	)		19,697
Income from continuing operations		83,994			71,253
Income (loss) from discontinued operations, net of income taxes		7,833			(466	)
Net income		91,827			70,787
Net income attributable to non-controlling interest		174			96
Net income attributable to Core Laboratories N.V.	$	91,653		$	70,691
EARNINGS (LOSS) PER SHARE INFORMATION:
Basic earnings per share from continuing operations	$	1.89		$	1.61
Basic earnings (loss) per share from discontinued operations	$	0.18		$	(0.01	)
Basic earnings per share attributable to Core Laboratories N.V.	$	2.07		$	1.60
Diluted earnings per share from continuing operations	$	1.87		$	1.60
Diluted earnings (loss) per share from discontinued operations	$	0.17		$	(0.01	)
Diluted earnings per share attributable to Core Laboratories N.V.	$	2.04		$	1.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		44,349			44,199
Diluted		44,854			44,613

The accompanying notes are an integral part of these consolidated financial statements.

5

CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	(Unaudited)						(Unaudited)
Net income	$	23,813		$	22,405		$	91,827		$	70,787
Other comprehensive income:
Derivatives
Gain (loss) in fair value of interest rate swaps		(293	)		205			(1,322	)		1,086
Interest rate swap amounts reclassified to interest expense		(8	)		4			(102	)		93
Income taxes on derivatives		63			(44	)		299			(248	)
Total derivatives		(238	)		165			(1,125	)		931
Pension and other postretirement benefit plans
Prior service cost
Amortization to net income of prior service cost		(25	)		(19	)		(75	)		(58	)
Amortization to net income of actuarial loss		15			84			44			252
Income taxes on pension and other postretirement benefit plans		3			(17	)		8			(49	)
Total pension and other postretirement benefit plans		(7	)		48			(23	)		145
Total other comprehensive income (loss)		(245	)		213			(1,148	)		1,076
Comprehensive income		23,568			22,618			90,679			71,863
Comprehensive income attributable to non-controlling interest		84			(7	)		174			96
Comprehensive income attributable to Core Laboratories N.V.	$	23,484		$	22,625		$	90,505		$	71,767

The accompanying notes are an integral part of these consolidated financial statements.

6

CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands)

	Three months ended						Nine months ended
	September 30,						September 30,
	2019			2018			2019			2018
	(Unaudited)						(Unaudited)
Common Shares
Balance at Beginning of Period	$	1,148		$	1,148		$	1,148		$	1,148
Balance at End of Period	$	1,148		$	1,148		$	1,148		$	1,148
Additional Paid-In Capital
Balance at Beginning of Period	$	64,064		$	58,927		$	57,438		$	54,463
Stock based-awards		434			2,722			7,060			7,186
Balance at End of Period	$	64,498		$	61,649		$	64,498		$	61,649
Retained Earnings
Balance at Beginning of Period	$	175,285		$	173,499		$	156,130		$	173,855
Dividends paid		(24,399	)		(24,294	)		(73,168	)		(72,929	)
Net income attributable to Core Laboratories N.V.		23,729			22,412			91,653			70,691
Balance at End of Period	$	174,615		$	171,617		$	174,615		$	171,617
Accumulated Other Comprehensive Income (Loss)
Balance at Beginning of Period	$	(6,359	)	$	(7,490	)	$	(5,456	)	$	(8,353	)
Amortization of deferred pension costs, net of tax		(7	)		48			(23	)		145
Interest rate swaps, net of tax		(238	)		165			(1,125	)		931
Balance at End of Period	$	(6,604	)	$	(7,277	)	$	(6,604	)	$	(7,277	)
Treasury Stock
Balance at Beginning of Period	$	(45,877	)	$	(72,301	)	$	(52,501	)	$	(76,269	)
Stock based-awards		2,877			3,419			10,592			11,347
Repurchase of common shares		(411	)		(817	)		(1,502	)		(4,777	)
Balance at End of Period	$	(43,411	)	$	(69,699	)	$	(43,411	)	$	(69,699	)
Non-Controlling Interest
Balance at Beginning of Period	$	4,231		$	3,991		$	4,141		$	3,888
Non-controlling interest additions		—			(10	)		—			(10	)
Net income (loss) attributable to non-controlling interest		84			(7	)		174			96
Balance at End of Period	$	4,315		$	3,974		$	4,315		$	3,974
Total Equity
Balance at Beginning of Period	$	192,492		$	157,774		$	160,900		$	148,732
Stock based-awards		3,311			6,141			17,652			18,533
Repurchase of common shares		(411	)		(817	)		(1,502	)		(4,777	)
Dividends paid		(24,399	)		(24,294	)		(73,168	)		(72,929	)
Non-controlling interest additions		—			(10	)		—			(10	)
Amortization of deferred pension costs, net of tax		(7	)		48			(23	)		145
Interest rate swaps, net of tax		(238	)		165			(1,125	)		931
Net income		23,813			22,405			91,827			70,787
Balance at End of Period	$	194,561		$	161,412		$	194,561		$	161,412
Cash Dividends per Share	$	0.55		$	0.55		$	1.65		$	1.65

The accompanying notes are an integral part of these consolidated financial statements.

7

CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended
	September 30,
	2019			2018
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations	$	83,994		$	71,253
Income (loss) from discontinued operations, net of tax		7,833			(466	)
Net income	$	91,827		$	70,787
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		17,652			18,533
Depreciation and amortization		17,070			17,366
Changes to value of life insurance policies		(2,110	)		(3,459	)
Deferred income taxes		(38,469	)		(311	)
Gain on sale of business		(1,154	)		—
Gain on sale of discontinued operations		(8,411	)		—
Other non-cash items		309			1,114
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable		(8,924	)		(11,972	)
Inventories		(7,202	)		(12,121	)
Prepaid expenses and other current assets		5,285			(935	)
Other assets		1,486			(451	)
Accounts payable		1,762			(2,571	)
Accrued expenses		10,900			(1,452	)
Unearned revenues		(6,545	)		742
Other long-term liabilities		(5,251	)		(1,344	)
Net cash provided by operating activities	$	68,225		$	73,926
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	$	(17,537	)	$	(16,063	)
Patents and other intangibles		(90	)		(970	)
Business acquisitions, net of cash acquired		—			(47,314	)
Proceeds from sale of assets		700			270
Proceeds from sale of business		2,980			—
Proceeds from sale of discontinued operations		14,789			—
Premiums on life insurance		(1,385	)		(788	)
Net cash used in investing activities	$	(543	)	$	(64,865	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt borrowings	$	(96,000	)	$	(80,000	)
Proceeds from debt borrowings		103,000			150,000
Debt financing costs		—			(1,645	)
Non-controlling interest-dividends		—			(10	)
Dividends paid		(73,168	)		(72,929	)
Repurchase of common shares		(1,502	)		(4,777	)
Net cash used in financing activities	$	(67,670	)	$	(9,361	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		12			(300	)
CASH AND CASH EQUIVALENTS, beginning of period		13,116			14,400
CASH AND CASH EQUIVALENTS, end of period	$	13,128		$	14,100
Supplemental disclosures of cash flow information:
Cash payments for interest	$	11,832		$	9,768
Cash payments for income taxes	$	11,081		$	21,821

The accompanying notes are an integral part of these consolidated financial statements.

8

CORE LABORATORIES N.V.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. 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, 2018 (the "2018 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 and nine months ended September 30, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019.

Core Laboratories N.V.'s balance sheet information for the year ended December 31, 2018 was derived from the 2018 audited consolidated financial statements but does not include all disclosures in accordance with U.S. GAAP.

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.

We operate our business in two reportable 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.

• 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.

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 and nine months ended September 30, 2018.

9

2. INVENTORIES

Inventories consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Finished goods	$	28,915	$	26,636
Parts and materials		22,385		13,704
Work in progress		2,228		5,324
Total inventories	$	53,528	$	45,664

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.

3. SIGNIFICANT ACCOUNTING POLICIES UPDATE

Our significant accounting policies are detailed in "Note 2: Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to our accounting policies as a result of adopting Topic 842 - Leases are discussed below:

Leases

We have operating leases primarily consisting of offices and lab space, machinery and equipment and vehicles. We determine if an arrangement is a lease at inception. Operating leases are included in right of use (“ROU”) assets, current operating lease liabilities and long-term operating lease liabilities in our Consolidated Balance Sheet. Finance leases, if any, are included in property and equipment, other current liabilities and other long term liabilities in our Consolidated Balance Sheet.

Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Where our lease does not provide an implicit rate, we estimate the discount rate used to discount the future minimum lease payments using our incremental borrowing rate and other information available at the commencement date. The ROU assets also include all initial direct costs incurred. Our lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

4. CONTRACT ASSETS AND CONTRACT LIABILITIES

Contract assets and liabilities result due to the timing of revenue recognition, billings and cash collections.

Contract assets include our right to payment for goods and services already transferred to a customer when the right to payment is conditional on something other than the passage of time, for example contracts where we recognize revenue over time but do not have a contractual right to payment until we complete the performance obligations. Contract assets are included in accounts receivable in our Consolidated Balance Sheet.

Contract liabilities consist of advance payments received and billings in excess of revenue recognized. We generally receive up-front payments relating to our consortia studies; we recognize revenue over the life of the study as the testing and analysis results are made available to our consortia members. We record billings in excess of revenue recognized for contracts with a duration less than twelve months as unearned revenue. We classify contract liabilities for contracts with a duration greater than twelve months as current or non-current based on the timing of when we expect to recognize revenue. The current portion of contract liabilities is included in unearned revenue and the non-current portion of contract liabilities is included in other long-term liabilities in our Consolidated Balance Sheet.

The balance of contract assets and contract liabilities consisted of the following (in thousands):

10

	September 30, 2019		December 31, 2018
Contract assets
Current	$	1,339	$	1,145
Non-Current		397		188
	$	1,736	$	1,333
Contract Liabilities
Current	$	3,929	$	5,963
Non-current		434		1,401
	$	4,363	$	7,364

	September 30, 2019
Estimate of when contract liabilities will be recognized as revenue
within 12 months	$	3,929
within 12 to 24 months		434
greater than 24 months		—

We did not recognize any impairment losses on our receivables and contract assets for the three and nine months ended September 30, 2019.

5. ACQUISITIONS

In 2018, we acquired a business providing downhole technologies associated with perforating systems for $48.9 million in cash. These downhole technologies will significantly enhance Core Lab's Production Enhancement operations and its ability to bring new and innovative product offerings to our clients. During the three months ended September 30, 2019, we finalized the fair value assessment of the assets acquired. We have determined the fair value of tangible assets acquired to be $4.1 million, and intangible assets, including patents, customer-relationship benefits, non-compete agreements and trade secrets to be $9.4 million. We have accounted for this acquisition by allocating the purchase price to the net assets acquired based on their fair values at the date of acquisition which resulted in an increase to goodwill of $35.4 million. During the three months ended September 30, 2019, we increased the fair value of intangible assets by $0.9 million. The acquisition is included in the Production Enhancement business segment.

The acquisition of this business did not have a material impact on our Consolidated Balance Sheet or Consolidated Statements of Operations.

6. DISCONTINUED OPERATIONS

In 2018, in a continuing effort to streamline our business and align our business strategy for further integration of services and products, the Company committed to divest the business of our full range of permanent downhole monitoring systems and related services, which had been part of our Production Enhancement segment.

On June 7, 2019, we entered into a definitive purchase agreement for the divestiture of our full range of permanent downhole monitoring systems and related services, which was previously part of our Production Enhancement segment for approximately $16.6 million in cash. The purchase agreement also provides for additional proceeds of up to $2.5 million based on the results of operations of the sold business in 2019 and 2020, none of which has been recognized. A pre-tax gain of $8.3 million was recognized in connection with this transaction, subject to adjustments for working capital purposes and is classified in Income from discontinued operations in the Consolidated Statements of Operations.

The associated results of operations are separately reported as Discontinued Operations for all periods presented on the Consolidated Statements of Operations. Balance sheet items for this discontinued business, including an allocation of goodwill from the Production Enhancement segment, have been reclassified to Other current assets and Other current liabilities in the Consolidated Balance Sheet as of December 31, 2018. Cash flows from this discontinued business are shown below. As such,

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the results from continuing operations for the Company and segment highlights for Production Enhancement, exclude these discontinued operations.

Selected data for this discontinued business consisted of the following (in thousands):

	Three Months Ended
	September 30, 2019			September 30, 2018
Service revenue	$	—		$	167
Product sales		—			2,058
Total revenue		—			2,225
Cost of services, exclusive of depreciation expense shown below		—			87
Cost of product sales, exclusive of depreciation expense shown below		—			1,944
Depreciation and amortization		—			14
Other expense		—			(1	)
Operating income (loss)		—			181
Adjustment to gain on sale		(485	)		—
Income (loss) from discontinued operations before income tax expense		(485	)		181
Income tax expense (benefit)		(88	)		(27	)
Income (loss) from discontinued operations, net of income taxes	$	(397	)	$	208

	Nine Months Ended
	September 30, 2019		September 30, 2018
Service revenue	$	1,165	$	1,069
Product sales		4,233		3,768
Total revenue		5,398		4,837
Cost of services, exclusive of depreciation expense shown below		690		961
Cost of product sales, exclusive of depreciation expense shown below		3,196		4,124
Depreciation and amortization		—		115
Other expense		91		22
Operating income (loss)		1,421		(385	)
Gain on sale		8,319		—
Income (loss) from discontinued operations before income tax expense		9,740		(385	)
Income tax expense		1,907		81
Income (loss) from discontinued operations, net of income taxes	$	7,833	$	(466	)

	September 30, 2019		December 31, 2018
Current assets	$	—	$	3,712
Non-current assets		—		1,848
Total assets	$	—	$	5,560
Current liabilities	$	—	$	1,633
Non-current liabilities		—		82
Total liabilities	$	—	$	1,715

Net cash provided by (used in) operating activities of discontinued operations for the nine months ended September 30, 2019 and 2018 was $0.1 million and $(0.5) million, respectively.

Net cash provided by investing activities of discontinued operations for the nine months ended September 30, 2019 and 2018 was $14.8 million and $0.0 million, respectively.

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7. LONG-TERM DEBT, NET

We have no financing lease obligations.

Long-term debt is as follows (in thousands):  

	September 30, 2019			December 31, 2018
Senior Notes	$	150,000		$	150,000
Credit Facility		149,000			142,000
Total long-term debt		299,000			292,000
Less: Debt issuance costs		(1,852	)		(2,230	)
Long-term debt, net	$	297,148		$	289,770

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.

The aggregate borrowing commitment under our revolving credit facility (the “Credit Facility”) is $300 million. The Credit Facility provides an option to increase the commitment under the Credit Facility by an additional $100 million to bring the total borrowings available to $400 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due June 19, 2023, 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 $19.1 million at September 30, 2019, resulting in an available borrowing capacity under the Credit Facility of $131.9 million. In addition to those items under the Credit Facility, we had $12.0 million of outstanding letters of credit and performance guarantees and bonds from other sources as of September 30, 2019.

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. The terms of our Credit Facility allow us to negotiate in good faith to amend any ratio or requirement to preserve the original intent of the agreement if any change in accounting principle would affect the computation of any financial ratio or requirement of the Credit Facility. The adoption on January 1, 2019 of ASU 2016-02 does not affect the calculation of consolidated EBITDA under the agreement. 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, one of which expired during the three months ended September 30, 2019. See Note 15 - Derivative Instruments and Hedging Activities.

The estimated fair value of total debt at September 30, 2019 and December 31, 2018 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.

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8. PENSION

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 2000. 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 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Service cost	$	191		$	359		$	572		$	1,100
Interest cost		259			308			778			944
Expected return on plan assets		(231	)		(266	)		(692	)		(815	)
Amortization of prior service cost		(25	)		(19	)		(75	)		(58	)
Amortization of actuarial loss		15			84			44			252
Net periodic pension cost	$	209		$	466		$	627		$	1,423

During the nine months ended September 30, 2019, we contributed $1.5 million to fund the estimated 2019 premiums on investment contracts held by the Dutch Plan.

9. 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. A liability is accrued when a loss is both probable and can be reasonably estimated.

10. EQUITY

During the three and nine months ended September 30, 2019, we repurchased 8,397 and 24,453 of our common shares for $0.4 million and $1.5 million, respectively, which 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 28,452 and 82,460 treasury shares upon vesting of stock-based awards during the three and nine months ended September 30, 2019.

In February, May and August 2019, we paid a quarterly dividend of $0.55 per share of common stock. In addition, on October 8, 2019, we declared a quarterly dividend of $0.55 per share of common stock for shareholders of record on October 18, 2019 and payable on November 19, 2019.

Accumulated other comprehensive loss consisted of the following (in thousands):

	September 30, 2019			December 31, 2018
Prior service cost	$	537		$	593
Unrecognized net actuarial loss		(6,210	)		(6,243	)
Fair value of derivatives, net of tax		(931	)		194
Total accumulated other comprehensive loss	$	(6,604	)	$	(5,456	)

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11. 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):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Weighted average basic common shares      outstanding		44,371		44,216		44,349		44,199
Effect of dilutive securities:
Performance shares		4		221		111		269
Restricted stock		341		154		394		145
Weighted average diluted common and       potential common shares outstanding		44,716		44,591		44,854		44,613

12. OTHER (INCOME) EXPENSE, NET

The components of other (income) expense, net, were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Gain on sale of assets	$	(151	)	$	(136	)	$	(458	)	$	(643	)
Results of non-consolidated subsidiaries		(96	)		(57	)		(193	)		(126	)
Foreign exchange		570			1,135			389			2,221
Rents and royalties		(134	)		(264	)		(727	)		(500	)
Employment related charges		—			—			2,866			—
Return on pension assets and other pension costs		(232	)		(201	)		(714	)		(621	)
Acquisition-related costs		—			623			—			623
Gain on sale of business		—			—			(1,154	)		—
Cost reduction and other charges		—			—			2,977			—
Other, net		(669	)		(970	)		(333	)		(784	)
Total other (income) expense, net	$	(712	)	$	130		$	2,653		$	170

Foreign exchange gains and losses are summarized in the following table (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Gains) losses by currency	2019		2018			2019			2018
British Pound	$	163	$	89		$	341		$	65
Canadian Dollar		197		(113	)		285			244
Euro		18		108			20			92
Other currencies, net		192		1,051			(257	)		1,820
Total loss, net	$	570	$	1,135		$	389		$	2,221

During the nine months ended September 30, 2019, we sold a business for a cash payment of $3.0 million. As this represented a single location within our business units, the sale did not constitute a discontinued operation and, accordingly, the effects of this transaction are included in continuing operations.

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13. INCOME TAX EXPENSE

The effective tax rates for the three months ended September 30, 2019 and 2018 were 12.1% and 29.8%, respectively. The income tax expense of $3.3 million for the three months ended September 30, 2019 decreased by $6.1 million compared to $9.4 million in the same period in 2018, due to the result of several items discrete to each quarter, along with changes in activity levels in jurisdictions with differing tax rates. The effective tax rates for the nine months ended September 30, 2019 and 2018 were (30.2)% and 21.7%, respectively. Tax expense for the nine months ended September 30, 2019 includes a net tax benefit of $58.5 million which resulted from a corporate restructuring in the first quarter and tax expense of $26.7 million related to unremitted earnings of foreign subsidiaries that we no longer consider to be indefinitely reinvested, each of which was a discrete item in the first quarter of 2019.

14. LEASES

We have operating leases primarily consisting of offices and lab space, machinery and equipment and vehicles. The components of lease expense are as follows (in thousands):

	Three months ended			Nine months ended
	September 30, 2019			September 30, 2019
Lease Cost
Operating lease cost	$	4,724		$	14,027
Short-term lease cost		402			1,024
Variable lease cost		162			521
Total lease cost	$	5,288		$	15,572
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,306		$	13,729
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	3,837		$	11,066
Weighted-average remaining lease term- operating leases	9.18 years			9.18 years
Weighted-average discount rate - operating leases		4.95	%		4.95	%

Scheduled undiscounted cash flows for non-cancellable leases at September 30, 2019 consist of the following (in thousands):

	Operating Leases
Remainder of 2019	$	4,132
2020		14,566
2021		12,130
2022		10,754
2023		9,193
Thereafter		43,842
Total undiscounted lease payments	$	94,617
Less:  Imputed Interest		(18,994	)
Total lease liabilities	$	75,623

We adopted ASU 2017-06 using the cumulative effect transition method on January 1, 2019. As required, the following disclosure is provided for periods prior to adoption. Scheduled minimum rental commitments under non-cancellable operating leases at December 31, 2018, consist of the following (in thousands):

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	Operating Leases
2019	$	16,267
2020		12,572
2021		9,774
2022		7,955
2023		4,938
Thereafter		14,815
Total commitments	$	66,321

The Company has elected to apply the short-term lease exemption to all of its classes of underlying assets. Accordingly, no ROU asset or lease liability is recognized for leases with a term of twelve months or less.

The Company has elected to apply the practical expedient for combining lease and non-lease components for vehicle leases and elected not to apply the practical expedient for combining lease and non-lease components to all other classes of underlying assets.

15. 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

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. The first swap agreement of $25 million expired on August 29, 2019, and under the second swap agreement, we have fixed the LIBOR portion of the interest rate at 2.5% through August 29, 2024. This swap is measured at fair value and recorded in our Consolidated Balance Sheet as an asset or liability. It is designated and qualifies as a cash flow hedging instrument and is highly effective. Unrealized losses are deferred to shareholders' equity as a component of accumulated other comprehensive gain (loss) and are recognized in income as an increase or decrease to interest expense in the period in which the related cash flows being hedged are recognized in expense.

Our Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. As a result of the interest rate swap agreement, we are subject to interest rate risk on debt in excess of $25 million drawn on our Credit Facility.

At September 30, 2019, we had fixed rate long-term debt aggregating $175 million and variable rate long-term debt aggregating $124 million, after taking into account the effect of the swap.

The fair values of outstanding derivative instruments are as follows (in thousands):

	Fair Value of Derivatives
	September 30, 2019			December 31, 2018			Balance Sheet Classification
Derivatives designated as hedges:
5 year interest rate swap	$	—		$	135		Other current assets
10 year interest rate swap		(1,359	)		(70	)	Other long-term (liabilities)
	$	(1,359	)	$	65

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.

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The effect of the interest rate swaps on the Consolidated Statement of Operations was as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018			Income Statement Classification
Derivatives designated as hedges:
5 year interest rate swap	$	(24	)	$	(23	)	$	(120	)	$	(27	)	(Decrease) to interest expense
10 year interest rate swap		16			27			18			120		Increase to interest expense
	$	(8	)	$	4		$	(102	)	$	93

16. 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):

			Fair Value Measurement at
			September 30, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets (1)	$	44,630	$	—	$	44,630	$	—
	$	44,630	$	—	$	44,630	$	—
Liabilities:
Deferred compensation plan	$	33,714	$	—	$	33,714	$	—
10 year interest rate swap		1,359		—		1,359		—
	$	35,073	$	—	$	35,073	$	—

			Fair Value Measurement at
			December 31, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets (1)	$	42,161	$	—	$	42,161	$	—
5 year interest rate swap		135		—		135		—
	$	42,296	$	—	$	42,296	$	—
Liabilities:
Deferred compensation plan	$	33,287	$	—	$	33,287	$	—
10 year interest rate swap		70		—		70		—
	$	33,357	$	—	$	33,357	$	—

(1) Deferred compensation assets consist of the cash surrender value of life insurance policies and are intended to assist in the funding of the deferred compensation agreements.

17. SEGMENT REPORTING

We operate our business in two reportable 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.

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• 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.

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):

	Reservoir Description		Production Enhancement		Corporate & Other 1			Consolidated
Three months ended September 30, 2019
Revenue from unaffiliated clients	$	109,339	$	63,861	$	—		$	173,200
Inter-segment revenue		99		199		(298	)		—
Segment operating income		18,835		11,456		916			31,207
Total assets (at end of period)		347,475		287,431		152,790			787,696
Capital expenditures		3,260		1,982		65			5,307
Depreciation and amortization		3,684		1,650		363			5,697
Three months ended September 30, 2018
Revenue from unaffiliated clients	$	103,609	$	78,537	$	—		$	182,146
Inter-segment revenue		58		141		(199	)		—
Segment operating income		14,956		19,243		680			34,879
Total assets (at end of period)		321,025		276,345		69,227			666,597
Capital expenditures		2,437		1,680		31			4,148
Depreciation and amortization		4,138		1,037		505			5,680
Nine months ended September 30, 2019
Revenue from unaffiliated clients	$	318,280	$	193,152	$	—		$	511,432
Inter-segment revenue		346		419		(765	)		—
Segment operating income		40,892		31,792		2,945			75,629
Total assets		347,475		287,431		152,790			787,696
Capital expenditures		7,906		9,114		517			17,537
Depreciation and amortization		11,505		4,377		1,188			17,070
Nine months ended September 30, 2018
Revenue from unaffiliated clients	$	306,525	$	221,114	$	—		$	527,639
Inter-segment revenue		178		293		(471	)		—
Segment operating income		44,473		55,357		814			100,644
Total assets		321,025		276,345		69,227			666,597
Capital expenditures		10,002		5,465		596			16,063
Depreciation and amortization		12,675		3,045		1,646			17,366
(1) "Corporate & Other" represents those items that are not directly related to a particular segment, eliminations and the assets and liabilities of discontinued operations.

18. RECENT ACCOUNTING PRONOUNCEMENTS

Pronouncements Adopted in 2019

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. In July 2018, the FASB issued ASU 2018-11 ("Targeted Improvements to Leases"), which

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provides companies with an additional transition method that allows the effects of the adoption of the new standard to be recognized as a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We elected this optional transition method for adoption. The adoption of this standard on January 1, 2019 had a material impact to our Consolidated Balance Sheet; but not to our Consolidated Statement of Operations or Cash Flows. The most significant impact was the recognition of $77.5 million of ROU assets and liabilities for operating leases, while our accounting for finance leases remained substantially unchanged.

Pronouncements Not Yet Effective

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. The adoption of this standard will not have a significant impact on our consolidated financial statements or on our accounting policies and processes.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion summarizes the financial position of Core Laboratories N.V. and its subsidiaries as of September 30, 2019 and should be read in conjunction with (i) the unaudited consolidated interim financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and (ii) the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Annual Report").

General

Core Laboratories N.V. is a limited liability company incorporated and domiciled in the Netherlands. It was established in 1936 and is one of the world's leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry. These services and products can enable our clients to improve reservoir performance and increase oil and gas recovery from their producing fields. Core Laboratories N.V. has over 70 offices in more than 50 countries and employs approximately 4,400 people worldwide.

References to "Core Lab", the "Company", "we", "our" and similar phrases are used throughout this Quarterly Report and relate collectively to Core Laboratories N.V. and its consolidated affiliates.

We operate our business in two reportable segments: Reservoir Description and Production Enhancement. 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.

• 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.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations section, including those under the headings "Outlook" and "Liquidity and Capital Resources", and in other parts of this Quarterly Report, are forward-looking. In addition, from time to time, we may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. Forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "believe", "expect", "anticipate", "estimate", "continue", or other similar words, including statements as to the intent, belief, or current expectations of our directors, officers, and management with respect to our future operations, performance, or positions or which contain other forward-looking information. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, no assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While we believe that these statements are and will be accurate, our actual results and experience may differ materially from the anticipated results or other expectations expressed in our statements due to a variety of risks and uncertainties.

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We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see "Item 1A - Risk Factors" in our 2018 Annual Report and in Part II of this Quarterly Report, as well as the other reports filed by us with the Securities and Exchange Commission ("SEC").

Outlook

As part of our long-term growth strategy, we continue our efforts to expand our market presence by opening or expanding facilities in strategic areas and realizing synergies within our business lines subject to client demand and market conditions. We believe our market presence provides us a unique opportunity to service clients who have global operations whether they are international oil companies, national oil companies, or independent oil companies.

We are encouraged by the increased focus of our major clients regarding capital management, return on invested capital, free cash flow, and returning capital back to their shareholders, as opposed to a focus on production growth at any cost. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base. We expect to benefit from our clients’ shift in focus from strictly production growth to employing higher technological solutions in their efforts to maximize economic production growth and estimated ultimate recovery ("EUR").

During the third quarter of 2019, the balance of supply and demand for the global crude oil market did not materially change although there was a temporary disruption in the supply from Saudi Arabia. While market concerns exist regarding the balance of future crude oil supply and demand, expected growth in crude oil production is limited on a global basis, and the current production from mature crude oil fields outside the U.S. continues to decline. We also expect the decline in global crude oil inventory levels will also result in a reduction in days of consumption of crude oil in inventory, which should support a higher price of crude oil.  

These underlying fundamentals for the crude oil market are what continue to support the international activity levels of Core Lab’s clients. The balancing of crude oil supply and demand and associated price of crude oil, is what underpins the reinvestment and Final Investment Decisions for these emerging international crude oil field projects. These investments in international crude oil projects are critical, as the decline in production from mature fields continues and the development of new fields are required to retain current levels of supply. Consequently, we expect our client’s spending to continue on international crude oil projects.

Operators continue to focus on generating FCF, returns on investment, and operating within their capital budgets, and with the weakening of the crude oil prices, the rig count and activity levels have decreased for operators in the U.S. onshore market. We believe this trend will continue, and anticipate a decline in our client’s activity levels associated with U.S. onshore for the fourth quarter of 2019.

We continue to focus on large-scale core analyses and reservoir fluid characterization studies in the Asia-Pacific areas, offshore Europe and Africa, offshore South America, North America and the Middle East. We also focus on complex completions in unconventional tight-oil reservoirs, technological solutions and services for increasing daily productions and EURs.

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Results of Operations

Our results of operations as a percentage of applicable revenue were as follows (in thousands):

	Three months ended September 30,								Change
	2019				2018				$			%
REVENUE:
Services	$	120,817		70%	$	124,145		68%	$	(3,328	)	(3)%
Product sales		52,383		30%		58,001		32%		(5,618	)	(10)%
Total revenue		173,200		100%		182,146		100%		(8,946	)	(5)%
OPERATING EXPENSES:
Cost of services, exclusive of depreciation    expense shown below*		86,243		71%		88,435		71%		(2,192	)	(2)%
Cost of product sales, exclusive of depreciation    expense shown below*		39,753		76%		39,744		69%		9		0%
Total cost of services and product sales		125,996		73%		128,179		70%		(2,183	)	(2)%
General and administrative expense		11,012		6%		13,278		7%		(2,266	)	(17)%
Depreciation and amortization		5,697		3%		5,680		3%		17		0%
Other (income) expense, net		(712	)	—%		130		—%		(842	)	NM
Operating income		31,207		18%		34,879		19%		(3,672	)	(11)%
Interest expense		3,662		2%		3,278		2%		384		12%
Income before income tax expense		27,545		16%		31,601		17%		(4,056	)	(13)%
Income tax expense		3,335		2%		9,404		5%		(6,069	)	(65)%
Income from continuing operations		24,210		14%		22,197		12%		2,013		9%
Income (loss) from discontinued operations, net of tax		(397	)	—%		208		—%		(605	)	NM
Net Income		23,813		14%		22,405		12%		1,408		6%
Net income (loss) attributable to non-controlling    interest		84		—%		(7	)	—%		91		NM
Net income attributable to Core Laboratories N.V.	$	23,729		14%	$	22,412		12%	$	1,317		6%
"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue

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	Three months ended							Change
	September 30, 2019				June 30, 2019			$			%
REVENUE:
Services	$	120,817		70%	$	117,874	70%	$	2,943		2%
Product sales		52,383		30%		51,164	30%		1,219		2%
Total revenue		173,200		100%		169,038	100%		4,162		2%
OPERATING EXPENSES:
Cost of services, exclusive of depreciation    expense shown below*		86,243		71%		86,007	73%		236		0%
Cost of product sales, exclusive of depreciation    expense shown below*		39,753		76%		38,444	75%		1,309		3%
Total cost of services and product sales		125,996		73%		124,451	74%		1,545		1%
General and administrative expense		11,012		6%		9,801	6%		1,211		12%
Depreciation and amortization		5,697		3%		5,786	3%		(89	)	(2)%
Other (income) expense, net		(712	)	—%		992	1%		(1,704	)	NM
Operating income		31,207		18%		28,008	17%		3,199		11%
Interest expense		3,662		2%		3,714	2%		(52	)	(1)%
Income before income tax expense		27,545		16%		24,294	14%		3,251		13%
Income tax expense		3,335		2%		4,808	3%		(1,473	)	NM
Income from continuing operations		24,210		14%		19,486	12%		4,724		24%
Income (loss) from discontinued operations, net of tax		(397	)	—%		7,971	5%		(8,368	)	NM
Net income		23,813		14%		27,457	16%		(3,644	)	(13)%
Net income attributable to non-controlling    interest		84		—%		43	—%		41		95%
Net income attributable to Core Laboratories N.V.	$	23,729		14%	$	27,414	16%	$	(3,685	)	(13)%
"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue

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	Nine months ended September 30,								Change
	2019				2018				$			%
REVENUE:
Services	$	359,029		70%	$	366,025		69%	$	(6,996	)	(2)%
Product sales		152,403		30%		161,614		31%		(9,211	)	(6)%
Total revenue		511,432		100%		527,639		100%		(16,207	)	(3)%
OPERATING EXPENSES:
Cost of services, exclusive of depreciation    expense shown below*		262,616		73%		258,482		71%		4,134		2%
Cost of product sales, exclusive of depreciation    expense shown below*		115,214		76%		112,788		70%		2,426		2%
Total cost of services and product sales		377,830		74%		371,270		70%		6,560		2%
General and administrative expense		38,250		7%		38,189		7%		61		0%
Depreciation and amortization		17,070		3%		17,366		3%		(296	)	(2)%
Other (income) expense, net		2,653		1%		170		—%		2,483		NM
Operating income		75,629		15%		100,644		19%		(25,015	)	(25)%
Interest expense		11,102		2%		9,694		2%		1,408		15%
Income before income tax expense		64,527		13%		90,950		17%		(26,423	)	(29)%
Income tax expense (benefit)		(19,467	)	(4)%		19,697		4%		(39,164	)	NM
Income from continuing operations		83,994		16%		71,253		14%		12,741		18%
Income (loss) from discontinued operations, net of tax		7,833		2%		(466	)	—%		8,299		NM
Net income		91,827		18%		70,787		13%		21,040		30%
Net income attributable to non-controlling    interest		174		—%		96		—%		78		81%
Net income attributable to Core Laboratories N.V.	$	91,653		18%	$	70,691		13%	$	20,962		30%
"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue

Operating Results for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018 and June 30, 2019 and for the Nine Months Ended September 30, 2019 compared to the Nine Months Ended September 30, 2018

Services Revenue

Services revenue, which is tied more to activities associated with the exploration and production of oil and gas outside the U.S., of $120.8 million in the third quarter of 2019 decreased year-over-year from $124.1 million in the third quarter of 2018 and increased sequentially from $117.9 million in the second quarter of 2019. Services revenue of $359.0 million in the nine months ended September 30, 2019 decreased from $366.0 million in the nine months ended September 30, 2018. Crude oil prices strengthened throughout 2018 until the fourth quarter, when they dropped some 40% by year-end. Although, the crude oil prices partially rebounded, the average price has been lower for the first three quarters of 2019, which has resulted in decreased activity by our clients leading to lower service revenue in the North America on-shore market during the first three quarters of 2019 compared to the same period in 2018. However, improvement in the level of work performed for offshore and international exploration and production projects has partially offset some of the decline in the U.S. market, which provides a more positive outlook and support for larger and longer-term projects.

International activity remained effectively flat through 2018 as most international development projects continued to be funded largely from operating budgets, however capital spending directed towards international projects has expanded during 2019. We continue to focus on large-scale core analyses and reservoir fluids characterization studies in the Eagle Ford, the Permian Basin and the Gulf of Mexico, along with Guyana, Malaysia and other international locations such as offshore South America, Australia, and the Middle East, including Kuwait and the United Arab Emirates. Analysis of crude oil derived products also occurs in every major producing region of the world.

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Product Sales Revenue

Product sales revenue, which is tied more to the completion of wells in North America, of $52.4 million in the third quarter of 2019, decreased 10% year-over-year from $58.0 million in the third quarter of 2018 but increased 2% from $51.2 million for the second quarter of 2019. Product sales revenue of $152.4 million in the nine months ended September 30, 2019, decreased 6% from $161.6 million in the nine months ended September 30, 2018. Our product sales revenue is primarily driven by completions of wells in the North American market and, more specifically, the activity associated with the completion of each stage in a wellbore. The sharp decrease of crude oil prices during the fourth quarter of 2018 combined with the supply chain logistics and take-away restrictions associated with the Permian Basin resulted in decreased activity for the U.S. onshore market at the end of the fourth quarter of 2018 and into 2019. This resulting decrease in the U.S. onshore activity has continued into the first three quarters of 2019. However, we continue to benefit from our clients' acceptance of new products which were led by our newly introduced technologies, including our HERO^® PerFRAC and GoGun^TM perforating systems.

Cost of Services, excluding depreciation

Cost of services was $86.2 million for the three months ended September 30, 2019, a 3% decrease compared to $88.4 million in the three months ended September 30, 2018 and relatively flat compared to $86.0 million for the three months ended June 30, 2019. Cost of services expressed as a percentage of services revenue was flat at 71% for the three months ended September 30, 2019, compared to the three months ended September 30, 2018, but a decrease from 73% for the three months ended June 30, 2019. Cost of services increased to $262.6 million for the nine months ended September 30, 2019 compared to $258.5 million in the nine months ended September 30, 2018. Cost of services expressed as a percentage of services revenue increased to 73% for the nine months ended September 30, 2019, compared to 71% in the nine months ended September 30, 2018. The increase in cost of services during the three and nine months ended September 30, 2019 was primarily due to compensation and related charges.

Cost of Product Sales, excluding depreciation

Cost of product sales of $39.8 million for the three months ended September 30, 2019 was flat compared to $39.7 million for the three months ended September 30, 2018 and a 3% increase from $38.4 million for the three months ended June 30, 2019. Cost of product sales expressed as a percentage of product sales revenue was 76% for the three months ended September 30, 2019, compared to 69% and 75% for the three months ended September 30, 2018 and June 30, 2019, respectively. Cost of product sales of $115.2 million for the nine months ended September 30, 2019 increased 2% compared to $112.8 million in the nine months ended September 30, 2018. Cost of product sales expressed as a percentage of product sales revenue was 76% for the nine months ended September 30, 2019, compared to 70% for the nine months ended September 30, 2018. Higher cost of product sales as a percentage of product sales revenue is primarily due to absorbing fixed costs against a lower revenue base.

General and Administrative Expense

General and administrative ("G&A") expense includes corporate management and centralized administrative services that benefit our operations. G&A expense for the three months ended September 30, 2019 was $11.0 million compared to $13.3 million and $9.8 million for the three months ended September 30, 2018 and June 30, 2019, respectively. G&A expense for the nine months ended September 30, 2019 was $38.3 million compared to $38.2 million for the nine months ended September 30, 2018. The variances are primarily due to changes in compensation expense during those periods.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended September 30, 2019 was $5.7 million compared to $5.7 million and $5.8 million for the three months ended September 30, 2018 and June 30, 2019, respectively. Depreciation and amortization expense for the nine months ended September 30, 2019 was $17.1 million compared to $17.4 million for the nine months ended September 30, 2018.

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Other (Income) Expense, Net

The components of other (income) expense, net, were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Gain on sale of assets	$	(151	)	$	(136	)	$	(458	)	$	(643	)
Results of non-consolidated subsidiaries		(96	)		(57	)		(193	)		(126	)
Foreign exchange		570			1,135			389			2,221
Rents and royalties		(134	)		(264	)		(727	)		(500	)
Employment related charges		—			—			2,866			—
Return on pension assets and other pension costs		(232	)		(201	)		(714	)		(621	)
Acquisition-related costs		—			623			—			623
Gain on sale of business		—			—			(1,154	)		—
Cost reduction and other charges		—			—			2,977			—
Other, net		(669	)		(970	)		(333	)		(784	)
Total other (income) expense, net	$	(712	)	$	130		$	2,653		$	170

Foreign exchange (gain) loss, net by currency is summarized in the following table (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Gains) losses by currency	2019		2018			2019			2018
British Pound	$	163	$	89		$	341		$	65
Canadian Dollar		197		(113	)		285			244
Euro		18		108			20			92
Other currencies, net		192		1,051			(257	)		1,820
Total loss, net	$	570	$	1,135		$	389		$	2,221

Interest Expense

Interest expense for the three months ended September 30, 2019 was $3.7 million compared to $3.3 million and $3.7 million for the three months ended September 30, 2018 and June 30, 2019, respectively. Interest expense for the nine months ended September 30, 2019 was $11.1 million compared to $9.7 million for the nine months ended September 30, 2018. The variances between 2019 and 2018 are primarily due to the $47 million increase in variable rate debt drawn against the Credit Facility in September 2018 to fund the acquisition of Guardian Global Technologies Ltd.

Income Tax Expense

The effective tax rate for the three months ended September 30, 2019 and 2018 was 12.1% and 29.8%, respectively. In the third quarter of 2019, we recorded net income tax expense of $3.3 million compared to income tax expense of $9.4 million in the same period in 2018, due to the result of several items discrete to each quarter, along with changes in activity levels in jurisdictions with differing tax rates. The effective tax rate for the nine months ended September 30, 2019 and 2018 was (30.2)% and 21.7%, respectively. Resulting from a corporate restructuring in the first quarter of 2019 there is a net tax benefit of $58.5 million, and tax expense of $26.7 million related to unremitted earnings of foreign subsidiaries that we no longer consider to be indefinitely reinvested, each of which was a discrete item in the first quarter of 2019.

The tax benefit of the corporate restructuring is reflected as a deferred tax asset on the Consolidated Balance Sheet which will be realized over the years 2019 until 2033.

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Discontinued Operations

In 2018, in a continuing effort to streamline our business and align our business strategy for further integration of services and products, the Company committed to divest our full range of permanent downhole monitoring systems and related services, which have been part of our Production Enhancement segment. We entered into the definitive purchase agreement on June 7, 2019 for the divestiture of this business during the second quarter of 2019.

See Note 6, Discontinued Operations for additional information.

Segment Analysis

We operate our business in two reportable 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. The following tables summarize our results by segment (in thousands):

	Three months ended September 30,				2019/2018				Three months ended June 30,		Q2 / Q1
	2019		2018		$ Change			% Change	2019		$ Change			% Change
Revenue:
Reservoir Description	$	109,339	$	103,609	$	5,730		6%	$	105,649	$	3,690		4%
Production Enhancement		63,861		78,537		(14,676	)	(19)%		63,389		472		1%
Consolidated	$	173,200	$	182,146	$	(8,946	)	(5)%	$	169,038	$	4,162		3%
Operating income:
Reservoir Description	$	18,835	$	14,956	$	3,879		26%	$	15,878	$	2,957		19%
Production Enhancement		11,456		19,243		(7,787	)	(41)%		10,424		1,032		10%
Corporate and Other1		916		680		236		NM		1,706		(790	)	NM
Consolidated	$	31,207	$	34,879	$	(3,672	)	(11)%	$	28,008	$	3,199		11%
(1) "Corporate and Other" represents those items that are not directly related to a particular segment.       "NM" means not meaningful

	Nine months ended September 30,
	2019		2018		$ Change			% Change
Revenue:
Reservoir Description	$	318,280	$	306,525	$	11,755		4%
Production Enhancement		193,152		221,114		(27,962	)	(13)%
Consolidated	$	511,432	$	527,639	$	(16,207	)	(3)%
Operating income:
Reservoir Description	$	40,892	$	44,473	$	(3,581	)	(8)%
Production Enhancement		31,792		55,357		(23,565	)	(43)%
Corporate and Other1		2,945		814		2,131		NM
Consolidated	$	75,629	$	100,644	$	(25,015	)	(25)%
(1) "Corporate and Other" represents those items that are not directly related to a particular segment.       "NM" means not meaningful

Reservoir Description

Revenue from the Reservoir Description segment of $109.3 million for the third quarter of 2019 increased 6% from $103.6 million for the third quarter of 2018, and increased 4% from $105.6 million in the second quarter of 2019. Revenue from the Reservoir Description segment of $318.3 million for the nine months ended September 30, 2019 increased 4% from $306.5 million for the nine months ended September 30, 2018. Reservoir Description operations are heavily exposed to international and offshore activity levels, with approximately 80% of its revenue sourced outside the U.S. Improvement in year-over-year and sequential financial performance in this segment is a result of increased international and offshore client activity which was partially offset by the sale of a business, located in the Asia-Pacific region, during the second quarter of 2019. We continue to focus on large-scale core analyses and reservoir fluids characterization studies in the Asia-Pacific areas, offshore Europe and

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Africa, offshore South America, North America, and the Middle East as well as both newly developed fields and brownfield extensions in offshore areas such as Australia, Brazil, Guyana, the Gulf of Mexico, the Middle East and the North Sea. Analysis of crude oil derived products also occurs in every major producing region of the world.

Operating income of $18.8 million in the third quarter of 2019 increased 26% year-over-year compared to $15.0 million in the third quarter of 2018 and increased 19% sequentially from $15.9 million in the second quarter of 2019. Operating income of $40.9 million for the nine months ended September 30, 2019 decreased 8% compared to $44.5 million for the nine months ended September 30, 2018. The year-over-year decrease was due to additional expense recorded for stock compensation related to retirement eligible employees and employment-related charges of $7.9 million in the first quarter of 2019 and severance and related charges of $1.7 million in the second quarter of 2019.

Operating margins were 17% in the third quarter of 2019, up from 14% during the third quarter of 2018 and up from 15% during the second quarter of 2019.

Production Enhancement

Revenue from the Production Enhancement segment, largely focused on complex completions in unconventional tight-oil reservoirs in the U.S. and conventional offshore development projects, was $63.9 million in the third quarter of 2019, a decrease of 19% year-over-year from $78.5 million in the third quarter of 2018 and flat sequentially compared to $63.4 million in the second quarter of 2019. Revenue from the Production Enhancement segment was $193.2 million for the nine months ended September 30, 2019, a decrease of 13% from $221.1 million for the nine months ended September 30, 2018. The significant decrease in the crude oil commodity price in the fourth quarter of 2018, resulted in a decrease of drilling and well completion activities in the U.S. onshore market at the end of the fourth quarter 2018. The lower level of drilling and well completion activity continued into the first three quarters of 2019. However, our clients continue to seek technological solutions for increasing daily production and estimated ultimate recoveries from their reservoirs and we continue to benefit from our clients' acceptance of new services and products which were led by the HERO^® PerFRAC, GoGun^TM, FLOWPROFILER EDS^TM and ReFRAC technologies.

Operating income in the third quarter of 2019 was $11.5 million, a decrease from $19.2 million, or 41%, in the third quarter of 2018 and an increase from $10.4 million, or 10%, in the second quarter of 2019. Operating income for the nine months ended September 30, 2019 was $31.8 million, a decrease from $55.4 million, or 43%, for the nine months ended September 30, 2018. The increased profitability sequentially is due to increased demand for our higher margin services and products. The first quarter of 2019 includes accelerated stock compensation expense of $2.5 million, for retirement eligible employees, and cost reduction and other related charges of $1.3 million in the second quarter of 2019.

Operating margins were 18% in the third quarter of 2019, down from 25% in the third quarter of 2018 but up from 16% for the second quarter of 2019. Operating margins were 17% for the nine months ended September 30, 2019, down from 25% for the nine months ended September 30, 2018. The decrease in operating margin in the nine months ended September 30, 2019 compared to the same period in 2018 is primarily due to absorbing fixed costs against a lower revenue base, acceleration of stock compensation expense and cost reduction related expense in 2019.

Liquidity and Capital Resources

General

We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provides the primary source of funds to finance operating needs, capital expenditures, our dividend and share repurchase program. As we are a Netherlands holding company, we conduct substantially all of our operations through subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us. There are no restrictions preventing any of our subsidiaries from repatriating earnings, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of September 30, 2019, $10.4 million of our $13.1 million of cash was held by our foreign subsidiaries.

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Cash Flows

The following table summarizes cash flows (in thousands):

	Nine months ended September 30,						2019/2018
	2019			2018			% Change
Cash flows provided by/(used in):
Operating activities	$	68,225		$	73,926			(8	)%
Investing activities		(543	)		(64,865	)	NM
Financing activities		(67,670	)		(9,361	)		(623	)%
Net change in cash and cash equivalents	$	12		$	(300	)		104	%

Cash flows provided by operating activities for the nine months ended September 30, 2019 compared to the same period in 2018 decreased primarily due to increased net income offset by changes in working capital.

The decrease in cash flows used in investing activities during the nine months ended September 30, 2019 compared to the same period in 2018 was primarily attributable to the $17.8 million proceeds from the sale of two businesses in the second quarter of 2019 and the acquisition of a business in 2018 for $47.3 million.

Cash flows used in financing activities for the nine months ended September 30, 2019 increased compared to the same period in 2018. Debt increased $7 million during the nine months ended September 30, 2019, as compared to debt increasing by $70 million during the same period in 2018. In the nine months ended September 30, 2019, we repurchased 24,453 shares of our common stock for an aggregate purchase price of $15 million compared to the repurchase of 42,994 shares for an aggregate purchase price of $4.8 million during the same period in 2018. During the nine months ended September 30, 2019, we used $73.2 million to pay dividends, which is consistent with the amount paid for the same period in 2018.

We utilize the non-GAAP financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under GAAP, and should not be considered in isolation nor construed as an alternative to operating profit, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with GAAP and thus is susceptible to varying interpretations and calculations, free cash flow as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with GAAP (in thousands):

	Nine months ended September 30,						2019/2018
	2019			2018			% Change
Free cash flow calculation:
Net cash provided by operating activities	$	68,225		$	73,926			(8	)%
Less: cash paid for capital expenditures		(17,537	)		(16,063	)		(9	)%
Free cash flow	$	50,688		$	57,863			(12	)%

The decrease in free cash flow for the nine months ended September 30, 2019 compared to the same period in 2018 was primarily due to increased net income offset by changes in working capital.

Notes, Credit Facilities and Available Future Liquidity

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

30

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.

The aggregate borrowing commitment under our Credit Facility is $300 million. The Credit Facility provides an option to increase the commitment under the Credit Facility by an additional $100 million to bring the total borrowings available to $400 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due June 19, 2023, 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 $19.1 million at September 30, 2019, resulting in an available borrowing capacity under the Credit Facility of $131.9 million. In addition to those items under the Credit Facility, we had $12.0 million of outstanding letters of credit and performance guarantees and bonds from other sources as of September 30, 2019.

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. The terms of our Credit Facility allow us to negotiate in good faith to amend any ratio or requirement to preserve the original intent of the agreement if any change in accounting principle would affect the computation of any financial ratio or requirement of the Credit Facility. The adoption on January 1, 2019 of ASU 2016-02 does not affect the calculation of consolidated EBITDA under the agreement. 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, one of which expired during the three months ended September 30, 2019. See Note 15 - Derivative Instruments and Hedging Activities.

Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity, should be sufficient to fund our debt requirements, capital expenditures, working capital, dividend payments and future acquisitions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our 2018 Annual Report.

Item 4. Controls and Procedures

A complete discussion of our controls and procedures is included in our 2018 Annual Report.

Disclosure Controls and Procedures

Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2019 at the reasonable assurance level.

31

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. Further, the design of disclosure controls and internal control over financial reporting must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in our system of internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

32

CORE LABORATORIES N.V.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

See Note 9 to our Consolidated Interim Financial Statements in Part I, Item 1 of this Quarterly Report.

Item 1A.  Risk Factors

Our business faces many risks. Any of the risks discussed in this Quarterly Report or our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our securities, please refer to "Item 1A - Risk Factors" in our 2018 Annual Report.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Issuer Repurchases of Equity Securities

The following table provides information about purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

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)
July 1 - 31, 2019 (1)		3,351	$	52.88		—		4,046,268
August 1 - 31, 2019 (1)		5,046	$	46.35		—		4,058,225
September 1 - 30, 2019		—		—		—		4,058,225
Total		8,397	$	48.96		—

(1) During the quarter 8,397 shares were surrendered to us by participants in a stock-based compensation plan to settle any personal tax liabilities which may result from the award.

(2) In connection with our initial public offering in September 1995, our shareholders authorized our Management Board to repurchase up to 10% of our issued share capital for a period of 18 months. This authorization was renewed at subsequent annual or special shareholder meetings. The repurchase of shares in the open market is at the discretion of management pursuant to this shareholder authorization.

(3) We distributed 28,452 treasury shares upon vesting of stock-based awards during the three months ended September 30, 2019.

33

Item 6.  Exhibits

Exhibit No.		Exhibit Title	Incorporated by reference from the following documents
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	-	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith
101.SCH	-	Inline XBRL Schema Document	Filed herewith
101.CAL	-	Inline XBRL Calculation Linkbase Document	Filed herewith
101.LAB	-	Inline XBRL Label Linkbase Document	Filed herewith
101.PRE	-	Inline XBRL Presentation Linkbase Document	Filed herewith
101.DEF	-	Inline XBRL Definition Linkbase Document	Filed herewith
104	-	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)	Filed herewith

34

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.
Date:	October, 24 2019	By:	/s/ Christopher S. Hill
			Christopher S. Hill
			Chief Financial Officer
			(Duly Authorized Officer and
			Principal Financial Officer)

35

EX-31.1

Exhibit 31.1

Certification

I, David M. Demshur, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Core Laboratories N.V. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(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

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(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:	October, 24 2019	By:	/s/ David M. Demshur
			David M. Demshur
			Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Christopher S. Hill, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Core Laboratories N.V. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(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

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(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:	October, 24 2019	By:	/s/ Christopher S. Hill
			Christopher S. Hill
			Chief Financial Officer

EX-32.1

Exhibit 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

I, David M. Demshur, Chief Executive Officer of Core Laboratories N.V. (the "Company"), hereby certify that the accompanying report on Form 10-Q for the quarter ended September 30, 2019, filed by the Company with the Securities and Exchange Commission on the date hereof fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, (the "Report").

I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	October, 24 2019	/s/ David M. Demshur
		Name:	David M. Demshur
		Title:	Chief Executive Officer

EX-32.2

Exhibit 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

I, Christopher S. Hill, Chief Financial Officer of Core Laboratories N.V. (the "Company"), hereby certify that the accompanying report on Form 10-Q for the quarter ended September 30, 2019, filed by the Company with the Securities and Exchange Commission on the date hereof fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, (the "Report").

I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	October, 24 2019	/s/ Christopher S. Hill
		Name:	Christopher S. Hill
		Title:	Chief Financial Officer

XML

Other (Income) Expense, Net - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Other Income And Expenses [Abstract]
Proceeds from sale of business	$ 2,980

XML

Equity Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Equity [Abstract]
Prior service cost	$ 537	$ 593
Unrecognized net actuarial loss	(6,210)	(6,243)
Fair value of derivatives, net of tax	(931)	194
Total accumulated other comprehensive loss	$ (6,604)	$ (5,456)

XML

Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2019

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):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Weighted average basic common shares      outstanding		44,371		44,216		44,349		44,199
Effect of dilutive securities:
Performance shares		4		221		111		269
Restricted stock		341		154		394		145
Weighted average diluted common and       potential common shares outstanding		44,716		44,591		44,854		44,613

XML

Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The following table summarizes the fair value balances (in thousands):

			Fair Value Measurement at
			September 30, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets (1)	$	44,630	$	—	$	44,630	$	—
	$	44,630	$	—	$	44,630	$	—
Liabilities:
Deferred compensation plan	$	33,714	$	—	$	33,714	$	—
10 year interest rate swap		1,359		—		1,359		—
	$	35,073	$	—	$	35,073	$	—

			Fair Value Measurement at
			December 31, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets (1)	$	42,161	$	—	$	42,161	$	—
5 year interest rate swap		135		—		135		—
	$	42,296	$	—	$	42,296	$	—
Liabilities:
Deferred compensation plan	$	33,287	$	—	$	33,287	$	—
10 year interest rate swap		70		—		70		—
	$	33,357	$	—	$	33,357	$	—

(1) Deferred compensation assets consist of the cash surrender value of life insurance policies and are intended to assist in the funding of the deferred compensation agreements.

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Consolidated Balance Sheets Parenthetical $ in Thousands	Sep. 30, 2019 USD ($) shares	Sep. 30, 2019 € / shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2018 € / shares
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts | $	$ 2,858		$ 2,650
Preferred stock, par 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
Common stock, par 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 shares, outstanding	44,374,852		44,316,845
Treasury stock, shares	421,400		479,407

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations	$ 83,994	$ 71,253
Income (loss) from discontinued operations, net of tax	7,833	(466)
Net income	91,827	70,787
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	17,652	18,533
Depreciation and amortization	17,070	17,366
Changes to value of life insurance policies	(2,110)	(3,459)
Deferred income taxes	(38,469)	(311)
Gain on sale of business	(1,154)
Gain on sale of discontinued operations	(8,411)
Other non-cash items	309	1,114
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable	(8,924)	(11,972)
Inventories	(7,202)	(12,121)
Prepaid expenses and other current assets	5,285	(935)
Other assets	1,486	(451)
Accounts payable	1,762	(2,571)
Accrued expenses	10,900	(1,452)
Unearned revenues	(6,545)	742
Other long-term liabilities	(5,251)	(1,344)
Net cash provided by operating activities	68,225	73,926
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(17,537)	(16,063)
Patents and other intangibles	(90)	(970)
Business acquisitions, net of cash acquired		(47,314)
Proceeds from sale of assets	700	270
Proceeds from sale of business	2,980
Proceeds from sale of discontinued operations	14,789
Premiums on life insurance	(1,385)	(788)
Net cash used in investing activities	(543)	(64,865)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt borrowings	(96,000)	(80,000)
Proceeds from debt borrowings	103,000	150,000
Debt financing costs		(1,645)
Non-controlling interest-dividends		(10)
Dividends paid	(73,168)	(72,929)
Repurchase of common shares	(1,502)	(4,777)
Net cash used in financing activities	(67,670)	(9,361)
NET CHANGE IN CASH AND CASH EQUIVALENTS	12	(300)
CASH AND CASH EQUIVALENTS, beginning of period	13,116	14,400
CASH AND CASH EQUIVALENTS, end of period	13,128	14,100
Supplemental disclosures of cash flow information:
Cash payments for interest	11,832	9,768
Cash payments for income taxes	$ 11,081	$ 21,821

XML

Long-Term Debt, Net

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt, Net

7. LONG-TERM DEBT, NET

We have no financing lease obligations.

Long-term debt is as follows (in thousands):  

	September 30, 2019			December 31, 2018
Senior Notes	$	150,000		$	150,000
Credit Facility		149,000			142,000
Total long-term debt		299,000			292,000
Less: Debt issuance costs		(1,852	)		(2,230	)
Long-term debt, net	$	297,148		$	289,770

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.

The aggregate borrowing commitment under our revolving credit facility (the “Credit Facility”) is $300 million. The Credit Facility provides an option to increase the commitment under the Credit Facility by an additional $100 million to bring the total borrowings available to $400 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due June 19, 2023, 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 $19.1 million at September 30, 2019, resulting in an available borrowing capacity under the Credit Facility of $131.9 million. In addition to those items under the Credit Facility, we had $12.0 million of outstanding letters of credit and performance guarantees and bonds from other sources as of September 30, 2019.

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. The terms of our Credit Facility allow us to negotiate in good faith to amend any ratio or requirement to preserve the original intent of the agreement if any change in accounting principle would affect the computation of any financial ratio or requirement of the Credit Facility. The adoption on January 1, 2019 of ASU 2016-02 does not affect the calculation of consolidated EBITDA under the agreement. 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, one of which expired during the three months ended September 30, 2019. See Note 15 - Derivative Instruments and Hedging Activities.

The estimated fair value of total debt at September 30, 2019 and December 31, 2018 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.

XML

Significant Accounting Policies Update

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Significant Accounting Policies Update

3. SIGNIFICANT ACCOUNTING POLICIES UPDATE

Our significant accounting policies are detailed in "Note 2: Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to our accounting policies as a result of adopting Topic 842 - Leases are discussed below:

Leases

We have operating leases primarily consisting of offices and lab space, machinery and equipment and vehicles. We determine if an arrangement is a lease at inception. Operating leases are included in right of use (“ROU”) assets, current operating lease liabilities and long-term operating lease liabilities in our Consolidated Balance Sheet. Finance leases, if any, are included in property and equipment, other current liabilities and other long term liabilities in our Consolidated Balance Sheet.

Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Where our lease does not provide an implicit rate, we estimate the discount rate used to discount the future minimum lease payments using our incremental borrowing rate and other information available at the commencement date. The ROU assets also include all initial direct costs incurred. Our lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

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Earnings per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share

11. 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):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Weighted average basic common shares      outstanding		44,371		44,216		44,349		44,199
Effect of dilutive securities:
Performance shares		4		221		111		269
Restricted stock		341		154		394		145
Weighted average diluted common and       potential common shares outstanding		44,716		44,591		44,854		44,613

XML

Significant Accounting Policies Update (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Leases

Leases

We have operating leases primarily consisting of offices and lab space, machinery and equipment and vehicles. We determine if an arrangement is a lease at inception. Operating leases are included in right of use (“ROU”) assets, current operating lease liabilities and long-term operating lease liabilities in our Consolidated Balance Sheet. Finance leases, if any, are included in property and equipment, other current liabilities and other long term liabilities in our Consolidated Balance Sheet.

Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Where our lease does not provide an implicit rate, we estimate the discount rate used to discount the future minimum lease payments using our incremental borrowing rate and other information available at the commencement date. The ROU assets also include all initial direct costs incurred. Our lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

XML

Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

15. 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

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. The first swap agreement of $25 million expired on August 29, 2019, and under the second swap agreement, we have fixed the LIBOR portion of the interest rate at 2.5% through August 29, 2024. This swap is measured at fair value and recorded in our Consolidated Balance Sheet as an asset or liability. It is designated and qualifies as a cash flow hedging instrument and is highly effective. Unrealized losses are deferred to shareholders' equity as a component of accumulated other comprehensive gain (loss) and are recognized in income as an increase or decrease to interest expense in the period in which the related cash flows being hedged are recognized in expense.

Our Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. As a result of the interest rate swap agreement, we are subject to interest rate risk on debt in excess of $25 million drawn on our Credit Facility.

At September 30, 2019, we had fixed rate long-term debt aggregating $175 million and variable rate long-term debt aggregating $124 million, after taking into account the effect of the swap.

The fair values of outstanding derivative instruments are as follows (in thousands):

	Fair Value of Derivatives
	September 30, 2019			December 31, 2018			Balance Sheet Classification
Derivatives designated as hedges:
5 year interest rate swap	$	—		$	135		Other current assets
10 year interest rate swap		(1,359	)		(70	)	Other long-term (liabilities)
	$	(1,359	)	$	65

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 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018			Income Statement Classification
Derivatives designated as hedges:
5 year interest rate swap	$	(24	)	$	(23	)	$	(120	)	$	(27	)	(Decrease) to interest expense
10 year interest rate swap		16			27			18			120		Increase to interest expense
	$	(8	)	$	4		$	(102	)	$	93

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Financial Instruments (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred compensation trust assets	$ 44,630	$ 42,161
Deferred compensation plan, asset	44,630	42,296
Deferred compensation liability	33,714	33,287
Deferred compensation plan, liability	35,073	33,357
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred compensation trust assets	0	0
Deferred compensation plan, asset	0	0
Deferred compensation liability	0	0
Deferred compensation plan, liability	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred compensation trust assets	44,630	42,161
Deferred compensation plan, asset	44,630	42,296
Deferred compensation liability	33,714	33,287
Deferred compensation plan, liability	35,073	33,357
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred compensation trust assets	0	0
Deferred compensation plan, asset	0	0
Deferred compensation liability	0	0
Deferred compensation plan, liability	$ 0	$ 0
Interest Rate Swap No. 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative, term of contract	5 years	5 years
Fair value of interest rate derivatives		$ 135
Interest Rate Swap No. 2 [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate derivatives		$ 0
Interest Rate Swap No. 2 [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative, term of contract		5 years
Fair value of interest rate derivatives		$ 135
Interest Rate Swap No. 2 [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate derivatives		$ 0
Interest Rate Swap No. 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative, term of contract	10 years	10 years
Fair value of interest rate derivatives	$ (1,359)	$ (70)
Fair value of interest rate derivatives	1,359	70
Interest Rate Swap No. 1 [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate derivatives	$ 0	$ 0
Interest Rate Swap No. 1 [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative, term of contract	10 years	10 years
Fair value of interest rate derivatives	$ 1,359	$ 70
Interest Rate Swap No. 1 [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate derivatives	$ 0	$ 0

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Leases - Schedule of Minimum Rental Commitments Under Non-Cancellable Operating Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Operating Leases, Future Minimum Payments Due [Abstract]
2019	$ 16,267
2020	12,572
2021	9,774
2022	7,955
2023	4,938
Thereafter	14,815
Total commitments	$ 66,321

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Contract Assets and Contract Liabilities - Additional Information (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Revenue From Contract With Customer [Abstract]
Impairment losses on receivables	$ 0	$ 0
Impairment losses on contract assets	$ 0	$ 0

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Long-Term Debt, Net - Additional Information (Details)	9 Months Ended
	Sep. 30, 2019 USD ($) SeriesNote	Dec. 31, 2014 USD ($) instrument
Debt Instrument [Line Items]
Financing lease obligations	$ 0
Number of series of debt issued | SeriesNote	2
Maturity date	Jun. 19, 2023
Current borrowing capacity	$ 300,000,000
Uncommitted borrowings available	100,000,000
Maximum borrowing capacity	$ 400,000,000
Basis spread on variable rate	1.375%
Performance bonds under credit facility	$ 19,100,000
Remaining borrowing capacity	131,900,000
Performance bonds	$ 12,000,000.0
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Derivative, number of instruments held | instrument		2
Derivative, notional amount		$ 50,000,000
Credit Facility [Member]
Debt Instrument [Line Items]
Interest coverage ratio, minimum	3.00%
Covenant leverage ratio, minimum	2.50%
Senior Notes [Member]
Debt Instrument [Line Items]
Face amount	$ 150,000,000
Senior Notes Series A [Member]
Debt Instrument [Line Items]
Face amount	$ 75,000,000
Interest rate, effective percentage	4.01%
Maturity date	Sep. 30, 2021
Senior Notes Series B [Member]
Debt Instrument [Line Items]
Face amount	$ 75,000,000
Interest rate, effective percentage	4.11%
Maturity date	Sep. 30, 2023
Maximum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	2.00%

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Inventories (Tables)

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Finished goods	$	28,915	$	26,636
Parts and materials		22,385		13,704
Work in progress		2,228		5,324
Total inventories	$	53,528	$	45,664

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Financial Instruments

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Financial Instruments

16. 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):

			Fair Value Measurement at
			September 30, 2019
	Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets (1)	$	44,630	$	—	$	44,630	$	—
	$	44,630	$	—	$	44,630	$	—
Liabilities:
Deferred compensation plan	$	33,714	$	—	$	33,714	$	—
10 year interest rate swap		1,359		—		1,359		—
	$	35,073	$	—	$	35,073	$	—

			Fair Value Measurement at
			December 31, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets (1)	$	42,161	$	—	$	42,161	$	—
5 year interest rate swap		135		—		135		—
	$	42,296	$	—	$	42,296	$	—
Liabilities:
Deferred compensation plan	$	33,287	$	—	$	33,287	$	—
10 year interest rate swap		70		—		70		—
	$	33,357	$	—	$	33,357	$	—

(1) Deferred compensation assets consist of the cash surrender value of life insurance policies and are intended to assist in the funding of the deferred compensation agreements.

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Segment Reporting (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			2
Revenue	$ 173,200	$ 182,146	$ 511,432	$ 527,639
Segment operating income	31,207	34,879	75,629	100,644
Total assets (at end of period)	787,696	666,597	787,696	666,597	$ 648,827
Capital expenditures	5,307	4,148	17,537	16,063
Depreciation and amortization	5,697	5,680	17,070	17,366
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Reservoir Description [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	109,339	103,609	318,280	306,525
Segment operating income	18,835	14,956	40,892	44,473
Total assets (at end of period)	347,475	321,025	347,475	321,025
Capital expenditures	3,260	2,437	7,906	10,002
Depreciation and amortization	3,684	4,138	11,505	12,675
Reservoir Description [Member] | Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	99	58	346	178
Production Enhancement [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue	63,861	78,537	193,152	221,114
Segment operating income	11,456	19,243	31,792	55,357
Total assets (at end of period)	287,431	276,345	287,431	276,345
Capital expenditures	1,982	1,680	9,114	5,465
Depreciation and amortization	1,650	1,037	4,377	3,045
Production Enhancement [Member] | Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	199	141	419	293
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenue	0	0
Segment operating income	916	680	2,945	814
Total assets (at end of period)	152,790	69,227	152,790	69,227
Capital expenditures	65	31	517	596
Depreciation and amortization	363	505	1,188	1,646
Corporate and Other [Member] | Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	$ (298)	$ (199)	$ (765)	$ (471)

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Leases (Details)	Sep. 30, 2019 USD ($)
Leases [Abstract]
ROU asset	$ 0
ROU Lease liability	$ 0

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Contract Assets and Liabilities Current and Long-term Contract Liabilities (Details 1) $ in Thousands	Sep. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract liability	$ 3,929
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract liability	$ 434
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract liability	$ 0
Revenue, remaining performance obligation, expected timing of satisfaction, period

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Discontinued Operations - Disposal Groups, Including Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Discontinued Operations And Disposal Groups [Abstract]
Service revenue		$ 167	$ 1,165	$ 1,069
Product sales		2,058	4,233	3,768
Total revenue		2,225	5,398	4,837
Cost of services, exclusive of depreciation expense shown below		87	690	961
Cost of product sales, exclusive of depreciation expense shown below		1,944	3,196	4,124
Depreciation and amortization		14		115
Other Expense (income)		(1)	91	22
Operating income (loss)		181	1,421	(385)
Adjustment to gain on sale	$ (485)
Gain on sale	8,300		8,319
Income (loss) from discontinued operations before income tax expense	(485)	181	9,740	(385)
Income tax expense (benefit)	(88)	(27)	1,907	81
Income (loss) from discontinued operations, net of income taxes	$ (397)	$ 208	$ 7,833	$ (466)
Current assets					$ 3,712
Non-current assets					1,848
Total assets					5,560
Current liabilities					1,633
Non-current liabilities					82
Total liabilities					$ 1,715

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Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Expense [Line Items]
Effective income tax rate	12.10%		29.80%	(30.20%)	21.70%
Income tax expense (benefit)	$ 3,335		$ 9,404	$ (19,467)	$ 19,697
Increase (decrease) in income tax expense compared to the same period in 2018	$ (6,100)
Income tax expense (benefit) related to unremitted earnings of foreign subsidiaries		$ 26,700
Corporate Restructuring [Member]
Income Tax Expense [Line Items]
Income tax expense (benefit)		$ (58,500)

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Earnings per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Weighted average basic common shares outstanding	44,371	44,216	44,349	44,199
Performance shares	4	221	111	269
Restricted stock	341	154	394	145
Weighted average diluted common and potential common shares outstanding	44,716	44,591	44,854	44,613

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 13,128	$ 13,116
Accounts receivable, net of allowance for doubtful accounts of $2,858 and $2,650 at 2019 and 2018, respectively	137,355	129,157
Inventories	53,528	45,664
Prepaid expenses	12,508	15,351
Income taxes receivable	7,853	13,993
Other current assets	6,314	13,696
TOTAL CURRENT ASSETS	230,686	230,977
PROPERTY, PLANT AND EQUIPMENT, net	125,078	122,917
RIGHT OF USE ASSETS	76,238
INTANGIBLES, net	17,763	13,054
GOODWILL	213,425	219,412
DEFERRED TAX ASSETS, net	71,296	11,252
OTHER ASSETS	53,210	51,215
TOTAL ASSETS	787,696	648,827
CURRENT LIABILITIES:
Accounts payable	42,191	41,155
Accrued payroll and related costs	27,866	22,549
Taxes other than payroll and income	7,961	7,488
Unearned revenues	12,348	17,325
Operating lease liabilities	11,869
Income taxes payable	4,996	2,917
Other current liabilities	12,766	11,113
TOTAL CURRENT LIABILITIES	119,997	102,547
LONG-TERM DEBT, net	297,148	289,770
LONG-TERM OPERATING LEASE LIABILITIES	63,754
DEFERRED COMPENSATION	49,072	49,359
DEFERRED TAX LIABILITIES, net	29,196	7,634
OTHER LONG-TERM LIABILITIES	33,968	38,617
COMMITMENTS AND CONTINGENCIES
EQUITY:
Preference shares, EUR 0.02 par value; 6,000,000 shares authorized, none issued or outstanding	0	0
Common shares, EUR 0.02 par value; 200,000,000 shares authorized, 44,796,252 issued and 44,374,852 outstanding at 2019 and 44,796,252 issued and 44,316,845 outstanding at 2018	1,148	1,148
Additional paid-in capital	64,498	57,438
Retained earnings	174,615	156,130
Accumulated other comprehensive income (loss)	(6,604)	(5,456)
Treasury shares (at cost), 421,400 at 2019 and 479,407 at 2018	(43,411)	(52,501)
Total Core Laboratories N.V. shareholders' equity	190,246	156,759
Non-controlling interest	4,315	4,141
TOTAL EQUITY	194,561	160,900
TOTAL LIABILITIES AND EQUITY	$ 787,696	$ 648,827

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Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	AOCI Attributable to Parent	Treasury Stock	Noncontrolling Interest
Balance at Beginning of Period at Dec. 31, 2017	$ 148,732	$ 1,148	$ 54,463	$ 173,855	$ (8,353)	$ (76,269)	$ 3,888
Stock based-awards	18,533		7,186			11,347
Repurchase of common shares	(4,777)					(4,777)
Dividends paid	(72,929)			(72,929)
Non-controlling interest additions	(10)						(10)
Amortization of deferred pension costs, net of tax	145				145
Interest rate swaps, net of tax	931				931
Net income	70,787			70,691			96
Balance at End of Period at Sep. 30, 2018	$ 161,412	1,148	61,649	171,617	(7,277)	(69,699)	3,974
Cash Dividends per Share	$ 1.65
Balance at Beginning of Period at Jun. 30, 2018	$ 157,774	1,148	58,927	173,499	(7,490)	(72,301)	3,991
Stock based-awards	6,141		2,722			3,419
Repurchase of common shares	(817)					(817)
Dividends paid	(24,294)			(24,294)
Non-controlling interest additions	(10)						(10)
Amortization of deferred pension costs, net of tax	48				48
Interest rate swaps, net of tax	165				165
Net income	22,405			22,412			(7)
Balance at End of Period at Sep. 30, 2018	$ 161,412	1,148	61,649	171,617	(7,277)	(69,699)	3,974
Cash Dividends per Share	$ 0.55
Balance at Beginning of Period at Dec. 31, 2018	$ 160,900	1,148	57,438	156,130	(5,456)	(52,501)	4,141
Stock based-awards	17,652		7,060			10,592
Repurchase of common shares	(1,502)					(1,502)
Dividends paid	(73,168)			(73,168)
Amortization of deferred pension costs, net of tax	(23)				(23)
Interest rate swaps, net of tax	(1,125)				(1,125)
Net income	91,827			91,653			174
Balance at End of Period at Sep. 30, 2019	$ 194,561	1,148	64,498	174,615	(6,604)	(43,411)	4,315
Cash Dividends per Share	$ 1.65
Balance at Beginning of Period at Jun. 30, 2019	$ 192,492	1,148	64,064	175,285	(6,359)	(45,877)	4,231
Stock based-awards	3,311		434			2,877
Repurchase of common shares	(411)					(411)
Dividends paid	(24,399)			(24,399)
Amortization of deferred pension costs, net of tax	(7)				(7)
Interest rate swaps, net of tax	(238)				(238)
Net income	23,813			23,729			84
Balance at End of Period at Sep. 30, 2019	$ 194,561	$ 1,148	$ 64,498	$ 174,615	$ (6,604)	$ (43,411)	$ 4,315
Cash Dividends per Share	$ 0.55

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Equity (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consisted of the following (in thousands):

	September 30, 2019			December 31, 2018
Prior service cost	$	537		$	593
Unrecognized net actuarial loss		(6,210	)		(6,243	)
Fair value of derivatives, net of tax		(931	)		194
Total accumulated other comprehensive loss	$	(6,604	)	$	(5,456	)

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Derivative Liabilities at Fair Value

The fair values of outstanding derivative instruments are as follows (in thousands):

	Fair Value of Derivatives
	September 30, 2019			December 31, 2018			Balance Sheet Classification
Derivatives designated as hedges:
5 year interest rate swap	$	—		$	135		Other current assets
10 year interest rate swap		(1,359	)		(70	)	Other long-term (liabilities)
	$	(1,359	)	$	65

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The effect of the interest rate swaps on the Consolidated Statement of Operations was as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018			Income Statement Classification
Derivatives designated as hedges:
5 year interest rate swap	$	(24	)	$	(23	)	$	(120	)	$	(27	)	(Decrease) to interest expense
10 year interest rate swap		16			27			18			120		Increase to interest expense
	$	(8	)	$	4		$	(102	)	$	93

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Other (Income) Expense, Net

9 Months Ended

Sep. 30, 2019

Other Income And Expenses [Abstract]

Other (Income) Expense, Net

12. OTHER (INCOME) EXPENSE, NET

The components of other (income) expense, net, were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Gain on sale of assets	$	(151	)	$	(136	)	$	(458	)	$	(643	)
Results of non-consolidated subsidiaries		(96	)		(57	)		(193	)		(126	)
Foreign exchange		570			1,135			389			2,221
Rents and royalties		(134	)		(264	)		(727	)		(500	)
Employment related charges		—			—			2,866			—
Return on pension assets and other pension costs		(232	)		(201	)		(714	)		(621	)
Acquisition-related costs		—			623			—			623
Gain on sale of business		—			—			(1,154	)		—
Cost reduction and other charges		—			—			2,977			—
Other, net		(669	)		(970	)		(333	)		(784	)
Total other (income) expense, net	$	(712	)	$	130		$	2,653		$	170

Foreign exchange gains and losses are summarized in the following table (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Gains) losses by currency	2019		2018			2019			2018
British Pound	$	163	$	89		$	341		$	65
Canadian Dollar		197		(113	)		285			244
Euro		18		108			20			92
Other currencies, net		192		1,051			(257	)		1,820
Total loss, net	$	570	$	1,135		$	389		$	2,221

During the nine months ended September 30, 2019, we sold a business for a cash payment of $3.0 million. As this represented a single location within our business units, the sale did not constitute a discontinued operation and, accordingly, the effects of this transaction are included in continuing operations.

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Pension

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Pension

8. PENSION

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 2000. 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 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Service cost	$	191		$	359		$	572		$	1,100
Interest cost		259			308			778			944
Expected return on plan assets		(231	)		(266	)		(692	)		(815	)
Amortization of prior service cost		(25	)		(19	)		(75	)		(58	)
Amortization of actuarial loss		15			84			44			252
Net periodic pension cost	$	209		$	466		$	627		$	1,423

During the nine months ended September 30, 2019, we contributed $1.5 million to fund the estimated 2019 premiums on investment contracts held by the Dutch Plan.

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Contract Assets and Liabilities

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Contract Assets and Liabilities

4. CONTRACT ASSETS AND CONTRACT LIABILITIES

Contract assets and liabilities result due to the timing of revenue recognition, billings and cash collections.

Contract assets include our right to payment for goods and services already transferred to a customer when the right to payment is conditional on something other than the passage of time, for example contracts where we recognize revenue over time but do not have a contractual right to payment until we complete the performance obligations. Contract assets are included in accounts receivable in our Consolidated Balance Sheet.

Contract liabilities consist of advance payments received and billings in excess of revenue recognized. We generally receive up-front payments relating to our consortia studies; we recognize revenue over the life of the study as the testing and analysis results are made available to our consortia members. We record billings in excess of revenue recognized for contracts with a duration less than twelve months as unearned revenue. We classify contract liabilities for contracts with a duration greater than twelve months as current or non-current based on the timing of when we expect to recognize revenue. The current portion of contract liabilities is included in unearned revenue and the non-current portion of contract liabilities is included in other long-term liabilities in our Consolidated Balance Sheet.

The balance of contract assets and contract liabilities consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Contract assets
Current	$	1,339	$	1,145
Non-Current		397		188
	$	1,736	$	1,333
Contract Liabilities
Current	$	3,929	$	5,963
Non-current		434		1,401
	$	4,363	$	7,364

	September 30, 2019
Estimate of when contract liabilities will be recognized as revenue
within 12 months	$	3,929
within 12 to 24 months		434
greater than 24 months		—

We did not recognize any impairment losses on our receivables and contract assets for the three and nine months ended September 30, 2019.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

18. RECENT ACCOUNTING PRONOUNCEMENTS

Pronouncements Adopted in 2019

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. In July 2018, the FASB issued ASU 2018-11 ("Targeted Improvements to Leases"), which

provides companies with an additional transition method that allows the effects of the adoption of the new standard to be recognized as a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We elected this optional transition method for adoption. The adoption of this standard on January 1, 2019 had a material impact to our Consolidated Balance Sheet; but not to our Consolidated Statement of Operations or Cash Flows. The most significant impact was the recognition of $77.5 million of ROU assets and liabilities for operating leases, while our accounting for finance leases remained substantially unchanged.

Pronouncements Not Yet Effective

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. The adoption of this standard will not have a significant impact on our consolidated financial statements or on our accounting policies and processes.

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

14. LEASES

We have operating leases primarily consisting of offices and lab space, machinery and equipment and vehicles. The components of lease expense are as follows (in thousands):

	Three months ended			Nine months ended
	September 30, 2019			September 30, 2019
Lease Cost
Operating lease cost	$	4,724		$	14,027
Short-term lease cost		402			1,024
Variable lease cost		162			521
Total lease cost	$	5,288		$	15,572
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,306		$	13,729
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	3,837		$	11,066
Weighted-average remaining lease term- operating leases	9.18 years			9.18 years
Weighted-average discount rate - operating leases		4.95	%		4.95	%

Scheduled undiscounted cash flows for non-cancellable leases at September 30, 2019 consist of the following (in thousands):

	Operating Leases
Remainder of 2019	$	4,132
2020		14,566
2021		12,130
2022		10,754
2023		9,193
Thereafter		43,842
Total undiscounted lease payments	$	94,617
Less:  Imputed Interest		(18,994	)
Total lease liabilities	$	75,623

We adopted ASU 2017-06 using the cumulative effect transition method on January 1, 2019. As required, the following disclosure is provided for periods prior to adoption. Scheduled minimum rental commitments under non-cancellable operating leases at December 31, 2018, consist of the following (in thousands):

	Operating Leases
2019	$	16,267
2020		12,572
2021		9,774
2022		7,955
2023		4,938
Thereafter		14,815
Total commitments	$	66,321

The Company has elected to apply the short-term lease exemption to all of its classes of underlying assets. Accordingly, no ROU asset or lease liability is recognized for leases with a term of twelve months or less.

The Company has elected to apply the practical expedient for combining lease and non-lease components for vehicle leases and elected not to apply the practical expedient for combining lease and non-lease components to all other classes of underlying assets.

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2019

Discontinued Operations And Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

Selected data for this discontinued business consisted of the following (in thousands):

	Three Months Ended
	September 30, 2019			September 30, 2018
Service revenue	$	—		$	167
Product sales		—			2,058
Total revenue		—			2,225
Cost of services, exclusive of depreciation expense shown below		—			87
Cost of product sales, exclusive of depreciation expense shown below		—			1,944
Depreciation and amortization		—			14
Other expense		—			(1	)
Operating income (loss)		—			181
Adjustment to gain on sale		(485	)		—
Income (loss) from discontinued operations before income tax expense		(485	)		181
Income tax expense (benefit)		(88	)		(27	)
Income (loss) from discontinued operations, net of income taxes	$	(397	)	$	208

	Nine Months Ended
	September 30, 2019		September 30, 2018
Service revenue	$	1,165	$	1,069
Product sales		4,233		3,768
Total revenue		5,398		4,837
Cost of services, exclusive of depreciation expense shown below		690		961
Cost of product sales, exclusive of depreciation expense shown below		3,196		4,124
Depreciation and amortization		—		115
Other expense		91		22
Operating income (loss)		1,421		(385	)
Gain on sale		8,319		—
Income (loss) from discontinued operations before income tax expense		9,740		(385	)
Income tax expense		1,907		81
Income (loss) from discontinued operations, net of income taxes	$	7,833	$	(466	)

	September 30, 2019		December 31, 2018
Current assets	$	—	$	3,712
Non-current assets		—		1,848
Total assets	$	—	$	5,560
Current liabilities	$	—	$	1,633
Non-current liabilities		—		82
Total liabilities	$	—	$	1,715

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Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Long-term Debt	$ 299,000	$ 292,000
Debt Issuance Costs, Net	(1,852)	(2,230)
Long-term debt, net	297,148	289,770
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt	150,000	150,000
Credit Facility [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 149,000	$ 142,000

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Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Finished goods	$ 28,915	$ 26,636
Parts and materials	22,385	13,704
Work in progress	2,228	5,324
Total inventories	$ 53,528	$ 45,664

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Acquisitions (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Business Combinations [Abstract]
Consideration transferred		$ 48.9
Tangible assets acquired	$ 4.1
Intangible assets acquired	9.4
Goodwill, acquired during period	35.4
Increase in fair value of intangible assets	$ 0.9

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Derivative Instruments and Hedging Activities Derivative Gain (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Interest Rate Swap No. 2 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, term of contract			5 years		5 years
Fair value of interest rate derivatives					$ 135
Unrealized gain (loss) on interest rate cash flow hedges	$ (24)	$ (23)	$ (120)	$ (27)
Interest Rate Swap No. 1 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, term of contract			10 years		10 years
Fair value of interest rate derivatives	(1,359)		$ (1,359)		$ (70)
Unrealized gain (loss) on interest rate cash flow hedges	16	27	18	120
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Fair value of interest rate derivatives	(1,359)		(1,359)		$ 65
Unrealized gain (loss) on interest rate cash flow hedges	$ (8)	$ 4	$ (102)	$ 93

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Other (Income) Expense Foreign Currency Gain Loss by Currency (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Other (Income) Expense [Line Items]
Gain (loss) by currency	$ 570	$ 1,135	$ 389	$ 2,221
British Pound [Member]
Other (Income) Expense [Line Items]
Gain (loss) by currency	163	89	341	65
Canadian Dollar [Member]
Other (Income) Expense [Line Items]
Gain (loss) by currency	197	(113)	285	244
Euro [Member]
Other (Income) Expense [Line Items]
Gain (loss) by currency	18	108	20	92
Other Currencies Net [Member]
Other (Income) Expense [Line Items]
Gain (loss) by currency	$ 192	$ 1,051	$ (257)	$ 1,820

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Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended			3 Months Ended		9 Months Ended
	Oct. 08, 2019	Aug. 31, 2019	May 31, 2019	Feb. 28, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Equity [Abstract]
Treasury stock, shares, acquired					8,397		24,453
Treasury stock, value					$ 411	$ 817	$ 1,502	$ 4,777
Treasury stock reissued					28,452		82,460
Cash Dividends per Share		$ 0.55	$ 0.55	$ 0.55	$ 0.55	$ 0.55	$ 1.65	$ 1.65
Dividends payable, date declared	Oct. 08, 2019
Dividends declared (in dollars per share)	$ 0.55
Dividends payable, date of record	Oct. 18, 2019
Dividends payable, date to be paid	Nov. 19, 2019

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Leases - Schedule of Undiscounted Cash Flows for Non-cancellable Leases (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating Leases, Remainder of 2019	$ 4,132
Operating Leases, 2020	14,566
Operating Leases, 2021	12,130
Operating Leases, 2022	10,754
Operating Leases, 2023	9,193
Operating Leases, Thereafter	43,842
Operating Leases, Total undiscounted lease payments	94,617
Operating Leases, Less: Imputed Interest	(18,994)
Operating Leases, Lease Liabilities	$ 75,623

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Equity

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Equity

10. EQUITY

During the three and nine months ended September 30, 2019, we repurchased 8,397 and 24,453 of our common shares for $0.4 million and $1.5 million, respectively, which 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 28,452 and 82,460 treasury shares upon vesting of stock-based awards during the three and nine months ended September 30, 2019.

In February, May and August 2019, we paid a quarterly dividend of $0.55 per share of common stock. In addition, on October 8, 2019, we declared a quarterly dividend of $0.55 per share of common stock for shareholders of record on October 18, 2019 and payable on November 19, 2019.

Accumulated other comprehensive loss consisted of the following (in thousands):

	September 30, 2019			December 31, 2018
Prior service cost	$	537		$	593
Unrecognized net actuarial loss		(6,210	)		(6,243	)
Fair value of derivatives, net of tax		(931	)		194
Total accumulated other comprehensive loss	$	(6,604	)	$	(5,456	)

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Discontinued Operations

9 Months Ended

Sep. 30, 2019

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

6. DISCONTINUED OPERATIONS

In 2018, in a continuing effort to streamline our business and align our business strategy for further integration of services and products, the Company committed to divest the business of our full range of permanent downhole monitoring systems and related services, which had been part of our Production Enhancement segment.

On June 7, 2019, we entered into a definitive purchase agreement for the divestiture of our full range of permanent downhole monitoring systems and related services, which was previously part of our Production Enhancement segment for approximately $16.6 million in cash. The purchase agreement also provides for additional proceeds of up to $2.5 million based on the results of operations of the sold business in 2019 and 2020, none of which has been recognized. A pre-tax gain of $8.3 million was recognized in connection with this transaction, subject to adjustments for working capital purposes and is classified in Income from discontinued operations in the Consolidated Statements of Operations.

The associated results of operations are separately reported as Discontinued Operations for all periods presented on the Consolidated Statements of Operations. Balance sheet items for this discontinued business, including an allocation of goodwill from the Production Enhancement segment, have been reclassified to Other current assets and Other current liabilities in the Consolidated Balance Sheet as of December 31, 2018. Cash flows from this discontinued business are shown below. As such,

the results from continuing operations for the Company and segment highlights for Production Enhancement, exclude these discontinued operations.

Selected data for this discontinued business consisted of the following (in thousands):

	Three Months Ended
	September 30, 2019			September 30, 2018
Service revenue	$	—		$	167
Product sales		—			2,058
Total revenue		—			2,225
Cost of services, exclusive of depreciation expense shown below		—			87
Cost of product sales, exclusive of depreciation expense shown below		—			1,944
Depreciation and amortization		—			14
Other expense		—			(1	)
Operating income (loss)		—			181
Adjustment to gain on sale		(485	)		—
Income (loss) from discontinued operations before income tax expense		(485	)		181
Income tax expense (benefit)		(88	)		(27	)
Income (loss) from discontinued operations, net of income taxes	$	(397	)	$	208

	Nine Months Ended
	September 30, 2019		September 30, 2018
Service revenue	$	1,165	$	1,069
Product sales		4,233		3,768
Total revenue		5,398		4,837
Cost of services, exclusive of depreciation expense shown below		690		961
Cost of product sales, exclusive of depreciation expense shown below		3,196		4,124
Depreciation and amortization		—		115
Other expense		91		22
Operating income (loss)		1,421		(385	)
Gain on sale		8,319		—
Income (loss) from discontinued operations before income tax expense		9,740		(385	)
Income tax expense		1,907		81
Income (loss) from discontinued operations, net of income taxes	$	7,833	$	(466	)

	September 30, 2019		December 31, 2018
Current assets	$	—	$	3,712
Non-current assets		—		1,848
Total assets	$	—	$	5,560
Current liabilities	$	—	$	1,633
Non-current liabilities		—		82
Total liabilities	$	—	$	1,715

Net cash provided by (used in) operating activities of discontinued operations for the nine months ended September 30, 2019 and 2018 was $0.1 million and $(0.5) million, respectively.

Net cash provided by investing activities of discontinued operations for the nine months ended September 30, 2019 and 2018 was $14.8 million and $0.0 million, respectively.

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Consolidated Statement of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
REVENUES:
Revenue	$ 173,200	$ 182,146	$ 511,432	$ 527,639
OPERATING EXPENSES:
General and administrative expense, exclusive of depreciation expense shown below	11,012	13,278	38,250	38,189
Depreciation	5,199	5,436	15,631	16,646
Amortization	498	244	1,439	720
Other (income) expense, net	(712)	130	2,653	170
OPERATING INCOME	31,207	34,879	75,629	100,644
Interest expense	3,662	3,278	11,102	9,694
Income from continuing operations before income tax expense	27,545	31,601	64,527	90,950
Income tax expense (benefit)	3,335	9,404	(19,467)	19,697
Income from continuing operations	24,210	22,197	83,994	71,253
Income (loss) from discontinued operations, net of income taxes	(397)	208	7,833	(466)
Net income	23,813	22,405	91,827	70,787
Net income (loss) attributable to non-controlling interest	84	(7)	174	96
Net income attributable to Core Laboratories N.V.	$ 23,729	$ 22,412	$ 91,653	$ 70,691
EARNINGS (LOSS) PER SHARE INFORMATION:
Basic earnings per share from continuing operations (in dollar per share)	$ 0.55	$ 0.50	$ 1.89	$ 1.61
Basic earnings (loss) per share from discontinued operations	(0.01)	0.01	0.18	(0.01)
Basic earnings per share attributable to Core Laboratories N.V. (in dollar per share)	0.54	0.51	2.07	1.60
Diluted earnings per share from continuing operations (in dollar per share)	0.54	0.50	1.87	1.60
Diluted earnings (loss) per share from discontinued operations	(0.01)		0.17	(0.01)
Diluted earnings per share attributable to Core Laboratories N.V. (in dollar per share)	$ 0.53	$ 0.50	$ 2.04	$ 1.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic (in shares)	44,371	44,216	44,349	44,199
Diluted (in shares)	44,716	44,591	44,854	44,613
Service [Member]
REVENUES:
Revenue	$ 120,817	$ 124,145	$ 359,029	$ 366,025
OPERATING EXPENSES:
Cost of services and product sales exclusive of depreciation expense shown below	86,243	88,435	262,616	258,482
Product [Member]
REVENUES:
Revenue	52,383	58,001	152,403	161,614
OPERATING EXPENSES:
Cost of services and product sales exclusive of depreciation expense shown below	$ 39,753	$ 39,744	$ 115,214	$ 112,788

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

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):

	Reservoir Description		Production Enhancement		Corporate & Other 1			Consolidated
Three months ended September 30, 2019
Revenue from unaffiliated clients	$	109,339	$	63,861	$	—		$	173,200
Inter-segment revenue		99		199		(298	)		—
Segment operating income		18,835		11,456		916			31,207
Total assets (at end of period)		347,475		287,431		152,790			787,696
Capital expenditures		3,260		1,982		65			5,307
Depreciation and amortization		3,684		1,650		363			5,697
Three months ended September 30, 2018
Revenue from unaffiliated clients	$	103,609	$	78,537	$	—		$	182,146
Inter-segment revenue		58		141		(199	)		—
Segment operating income		14,956		19,243		680			34,879
Total assets (at end of period)		321,025		276,345		69,227			666,597
Capital expenditures		2,437		1,680		31			4,148
Depreciation and amortization		4,138		1,037		505			5,680
Nine months ended September 30, 2019
Revenue from unaffiliated clients	$	318,280	$	193,152	$	—		$	511,432
Inter-segment revenue		346		419		(765	)		—
Segment operating income		40,892		31,792		2,945			75,629
Total assets		347,475		287,431		152,790			787,696
Capital expenditures		7,906		9,114		517			17,537
Depreciation and amortization		11,505		4,377		1,188			17,070
Nine months ended September 30, 2018
Revenue from unaffiliated clients	$	306,525	$	221,114	$	—		$	527,639
Inter-segment revenue		178		293		(471	)		—
Segment operating income		44,473		55,357		814			100,644
Total assets		321,025		276,345		69,227			666,597
Capital expenditures		10,002		5,465		596			16,063
Depreciation and amortization		12,675		3,045		1,646			17,366
(1) "Corporate & Other" represents those items that are not directly related to a particular segment, eliminations and the assets and liabilities of discontinued operations.

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Long-Term Debt, Net (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt is as follows (in thousands):  

	September 30, 2019			December 31, 2018
Senior Notes	$	150,000		$	150,000
Credit Facility		149,000			142,000
Total long-term debt		299,000			292,000
Less: Debt issuance costs		(1,852	)		(2,230	)
Long-term debt, net	$	297,148		$	289,770

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. 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, 2018 (the "2018 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 and nine months ended September 30, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019.

Core Laboratories N.V.'s balance sheet information for the year ended December 31, 2018 was derived from the 2018 audited consolidated financial statements but does not include all disclosures in accordance with U.S. GAAP.

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.

We operate our business in two reportable 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.

• 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.

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 and nine months ended September 30, 2018.

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Other (Income) Expense, Net (Tables)

9 Months Ended

Sep. 30, 2019

Other Income And Expenses [Abstract]

Schedule of Other Operating Cost and Expense, by Component

The components of other (income) expense, net, were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Gain on sale of assets	$	(151	)	$	(136	)	$	(458	)	$	(643	)
Results of non-consolidated subsidiaries		(96	)		(57	)		(193	)		(126	)
Foreign exchange		570			1,135			389			2,221
Rents and royalties		(134	)		(264	)		(727	)		(500	)
Employment related charges		—			—			2,866			—
Return on pension assets and other pension costs		(232	)		(201	)		(714	)		(621	)
Acquisition-related costs		—			623			—			623
Gain on sale of business		—			—			(1,154	)		—
Cost reduction and other charges		—			—			2,977			—
Other, net		(669	)		(970	)		(333	)		(784	)
Total other (income) expense, net	$	(712	)	$	130		$	2,653		$	170

Foreign Currency Gains Losses By Currency

Foreign exchange gains and losses are summarized in the following table (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Gains) losses by currency	2019		2018			2019			2018
British Pound	$	163	$	89		$	341		$	65
Canadian Dollar		197		(113	)		285			244
Euro		18		108			20			92
Other currencies, net		192		1,051			(257	)		1,820
Total loss, net	$	570	$	1,135		$	389		$	2,221

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Leases - Schedule of Components of Lease Expense (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Lease Cost
Operating lease cost	$ 4,724	$ 14,027
Short-term lease cost	402	1,024
Variable lease cost	162	521
Total lease cost	5,288	15,572
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	4,306	13,729
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$ 3,837	$ 11,066
Weighted-average remaining lease term- operating leases	9 years 2 months 4 days	9 years 2 months 4 days
Weighted-average discount rate - operating leases	4.95%	4.95%

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Other (Income) Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Other (Income) Expense [Line Items]
Other (Income) expense, net	$ (712)	$ 130	$ 2,653	$ 170
Gain on sale of assets [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net	(151)	(136)	(458)	(643)
Results of non-consolidated subsidiaries [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net	(96)	(57)	(193)	(126)
Foreign exchange [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net	570	1,135	389	2,221
Rents and royalties [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net	(134)	(264)	(727)	(500)
Employment-related charges [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net			2,866
Return on pension assets and other pension costs [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net	(232)	(201)	(714)	(621)
Acquisition-related costs [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net		623		623
Gain on sale of business [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net			(1,154)
Cost reduction and other charges [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net			2,977
Other, net [Member]
Other (Income) Expense [Line Items]
Other (Income) expense, net	$ (669)	$ (970)	$ (333)	$ (784)

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Pension (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Compensation And Retirement Disclosure [Abstract]
Contributions by employer	$ 1.5

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. 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. A liability is accrued when a loss is both probable and can be reasonably estimated.

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Acquisitions

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Acquisitions

5. ACQUISITIONS

In 2018, we acquired a business providing downhole technologies associated with perforating systems for $48.9 million in cash. These downhole technologies will significantly enhance Core Lab's Production Enhancement operations and its ability to bring new and innovative product offerings to our clients. During the three months ended September 30, 2019, we finalized the fair value assessment of the assets acquired. We have determined the fair value of tangible assets acquired to be $4.1 million, and intangible assets, including patents, customer-relationship benefits, non-compete agreements and trade secrets to be $9.4 million. We have accounted for this acquisition by allocating the purchase price to the net assets acquired based on their fair values at the date of acquisition which resulted in an increase to goodwill of $35.4 million. During the three months ended September 30, 2019, we increased the fair value of intangible assets by $0.9 million. The acquisition is included in the Production Enhancement business segment.

The acquisition of this business did not have a material impact on our Consolidated Balance Sheet or Consolidated Statements of Operations.

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Pension (Tables)

9 Months Ended

Sep. 30, 2019

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 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Service cost	$	191		$	359		$	572		$	1,100
Interest cost		259			308			778			944
Expected return on plan assets		(231	)		(266	)		(692	)		(815	)
Amortization of prior service cost		(25	)		(19	)		(75	)		(58	)
Amortization of actuarial loss		15			84			44			252
Net periodic pension cost	$	209		$	466		$	627		$	1,423

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Schedule of Components of Lease Expense

The components of lease expense are as follows (in thousands):

	Three months ended			Nine months ended
	September 30, 2019			September 30, 2019
Lease Cost
Operating lease cost	$	4,724		$	14,027
Short-term lease cost		402			1,024
Variable lease cost		162			521
Total lease cost	$	5,288		$	15,572
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,306		$	13,729
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	3,837		$	11,066
Weighted-average remaining lease term- operating leases	9.18 years			9.18 years
Weighted-average discount rate - operating leases		4.95	%		4.95	%

Schedule of Undiscounted Cash Flows for Non-cancellable Leases

Scheduled undiscounted cash flows for non-cancellable leases at September 30, 2019 consist of the following (in thousands):

	Operating Leases
Remainder of 2019	$	4,132
2020		14,566
2021		12,130
2022		10,754
2023		9,193
Thereafter		43,842
Total undiscounted lease payments	$	94,617
Less:  Imputed Interest		(18,994	)
Total lease liabilities	$	75,623

Schedule of Minimum Rental Commitments Under Non-Cancellable Operating Leases

We adopted ASU 2017-06 using the cumulative effect transition method on January 1, 2019. As required, the following disclosure is provided for periods prior to adoption. Scheduled minimum rental commitments under non-cancellable operating leases at December 31, 2018, consist of the following (in thousands):

	Operating Leases
2019	$	16,267
2020		12,572
2021		9,774
2022		7,955
2023		4,938
Thereafter		14,815
Total commitments	$	66,321

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Inventories

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventories

2. INVENTORIES

Inventories consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Finished goods	$	28,915	$	26,636
Parts and materials		22,385		13,704
Work in progress		2,228		5,324
Total inventories	$	53,528	$	45,664

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.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 23, 2019
Cover [Abstract]
Entity Registrant Name	CORE LABORATORIES N.V.
Entity Central Index Key	0001000229
Trading Symbol	CLB
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		44,374,852
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity File Number	001-14273
Entity Incorporation, State or Country Code	P7
Entity Address, Address Line One	Strawinskylaan 913
Entity Address, Address Line Two	Tower A, Level 9
Entity Address, City or Town	Amsterdam
Entity Address, Country	NL
Entity Address, Postal Zip Code	1077 XX
City Area Code	31-20
Local Phone Number	420-3191
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock (par value EUR 0.02)
Security Exchange Name	NYSE

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Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2019 segment
Basis Of Presentation [Line Items]
Number of reportable segments	2
Maximum [Member]
Basis Of Presentation [Line Items]
Percentage of cost method investments	20.00%
Percentage of non controlling interest	100.00%

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 23,813	$ 22,405	$ 91,827	$ 70,787
Changes in fair value of interest rate swaps	(293)	205	(1,322)	1,086
Interest rate swap amounts reclassified to interest expense	(8)	4	(102)	93
Income taxes on derivatives	63	(44)	299	(248)
Total derivatives	(238)	165	(1,125)	931
Prior service cost	(25)	(19)	(75)	(58)
Unrecognized net actuarial loss	15	84	44	252
Income taxes on pension and other postretirement benefit plans	3	(17)	8	(49)
Total pension and other postretirement benefit plans	(7)	48	(23)	145
Total other comprehensive income (loss)	(245)	213	(1,148)	1,076
Comprehensive income	23,568	22,618	90,679	71,863
Net income (loss) attributable to non-controlling interest	84	(7)	174	96
Comprehensive income attributable to Core Laboratories N.V.	$ 23,484	$ 22,625	$ 90,505	$ 71,767

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Contract Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Schedule of Contract Assets and Liabilities

The balance of contract assets and contract liabilities consisted of the following (in thousands):

	September 30, 2019		December 31, 2018
Contract assets
Current	$	1,339	$	1,145
Non-Current		397		188
	$	1,736	$	1,333
Contract Liabilities
Current	$	3,929	$	5,963
Non-current		434		1,401
	$	4,363	$	7,364

	September 30, 2019
Estimate of when contract liabilities will be recognized as revenue
within 12 months	$	3,929
within 12 to 24 months		434
greater than 24 months		—

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Segment Reporting

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

17. SEGMENT REPORTING

We operate our business in two reportable 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.

• 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.

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):

	Reservoir Description		Production Enhancement		Corporate & Other 1			Consolidated
Three months ended September 30, 2019
Revenue from unaffiliated clients	$	109,339	$	63,861	$	—		$	173,200
Inter-segment revenue		99		199		(298	)		—
Segment operating income		18,835		11,456		916			31,207
Total assets (at end of period)		347,475		287,431		152,790			787,696
Capital expenditures		3,260		1,982		65			5,307
Depreciation and amortization		3,684		1,650		363			5,697
Three months ended September 30, 2018
Revenue from unaffiliated clients	$	103,609	$	78,537	$	—		$	182,146
Inter-segment revenue		58		141		(199	)		—
Segment operating income		14,956		19,243		680			34,879
Total assets (at end of period)		321,025		276,345		69,227			666,597
Capital expenditures		2,437		1,680		31			4,148
Depreciation and amortization		4,138		1,037		505			5,680
Nine months ended September 30, 2019
Revenue from unaffiliated clients	$	318,280	$	193,152	$	—		$	511,432
Inter-segment revenue		346		419		(765	)		—
Segment operating income		40,892		31,792		2,945			75,629
Total assets		347,475		287,431		152,790			787,696
Capital expenditures		7,906		9,114		517			17,537
Depreciation and amortization		11,505		4,377		1,188			17,070
Nine months ended September 30, 2018
Revenue from unaffiliated clients	$	306,525	$	221,114	$	—		$	527,639
Inter-segment revenue		178		293		(471	)		—
Segment operating income		44,473		55,357		814			100,644
Total assets		321,025		276,345		69,227			666,597
Capital expenditures		10,002		5,465		596			16,063
Depreciation and amortization		12,675		3,045		1,646			17,366
(1) "Corporate & Other" represents those items that are not directly related to a particular segment, eliminations and the assets and liabilities of discontinued operations.

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Income Tax Expense

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Tax Expense

13. INCOME TAX EXPENSE

The effective tax rates for the three months ended September 30, 2019 and 2018 were 12.1% and 29.8%, respectively. The income tax expense of $3.3 million for the three months ended September 30, 2019 decreased by $6.1 million compared to $9.4 million in the same period in 2018, due to the result of several items discrete to each quarter, along with changes in activity levels in jurisdictions with differing tax rates. The effective tax rates for the nine months ended September 30, 2019 and 2018 were (30.2)% and 21.7%, respectively. Tax expense for the nine months ended September 30, 2019 includes a net tax benefit of $58.5 million which resulted from a corporate restructuring in the first quarter and tax expense of $26.7 million related to unremitted earnings of foreign subsidiaries that we no longer consider to be indefinitely reinvested, each of which was a discrete item in the first quarter of 2019.

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Contract Assets and Liabilities Changes in Net Contract Assets (Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Contract assets
Contract asset, current	$ 1,339	$ 1,145
Contract asset, non-current	397	188
Contract asset	1,736	1,333
Contract Liabilities
Contract liability, current	3,929	5,963
Contract liability, non-current	434	1,401
Contract liabilities	$ 4,363	$ 7,364

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Discontinued Operations - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Divestiture of business	$ 16,600
Gain on divestiture, net of tax	8,300	$ 8,319
Cash provided by (used in) operating activities, discontinued operations		100	$ (500)
Cash provided by (used in) investing activities, discontinued operations		$ 14,800	$ 0
Maximum [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Additional proceeds from divestiture of business based on result of operations	$ 2,500

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Pension - Components of Net Periodic Pension Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Compensation And Retirement Disclosure [Abstract]
Service cost	$ 191	$ 359	$ 572	$ 1,100
Interest cost	259	308	778	944
Expected return on plan assets	(231)	(266)	(692)	(815)
Amortization of prior service cost	(25)	(19)	(75)	(58)
Amortization of actuarial loss	15	84	44	252
Net periodic pension cost	$ 209	$ 466	$ 627	$ 1,423

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Recent Accounting Pronouncements - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Operating Leases, Lease Liabilities	$ 75,623
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Operating lease right-of-use assets		$ 77,500
Operating Leases, Lease Liabilities		$ 77,500
Minimum [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Term of lease	12 months

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Derivative Instruments and Hedging Activities - Additional Information (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($)	Dec. 31, 2014 USD ($) instrument
Derivatives, Fair Value [Line Items]
Basis spread on variable rate	1.375%
Excess line of credit facility subject to interest rate risk	$ 25,000,000
Long-term debt, percentage bearing fixed interest, amount	175,000,000
Long-term debt, percentage bearing variable interest, amount	$ 124,000,000
Maximum [Member]
Derivatives, Fair Value [Line Items]
Basis spread on variable rate	2.00%
Interest Rate Swap [Member]
Derivatives, Fair Value [Line Items]
Derivative, number of instruments held | instrument		2
Derivative, notional amount		$ 50,000,000
Derivative, amount of hedged item		$ 50,000,000
Interest Rate Swap No. 2 [Member]
Derivatives, Fair Value [Line Items]
Derivative, fixed interest rate		2.50%
Derivative, maturity date		Aug. 29, 2024
Interest Rate Swap No. 1 [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 25,000,000
Derivative, maturity date		Aug. 29, 2019