8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date Of Report (Date Of Earliest Event Reported): May 28, 2003

Veritas DGC Inc.

(Exact Name of Registrant As Specified In Its Charter)

Delaware
(State or Other Jurisdiction
of Incorporation) 001-7427
(Commission File No.) 76-0343152
(I.R.S. Employer
Identification No.)

10300 Town Park
Houston, Texas 77072
(Address of Principal Executive Offices) (Zip Code)

832-351-8300
(Registrant’s Telephone Number, Including Area Code)

TABLE OF CONTENTS

	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
	ITEM 9. REGULATION FD DISCLOSURE
SIGNATURE
EXHIBIT INDEX
Press Release dated May 28, 2003
PowerPoint Presentation on May 29, 2003

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(c) EXHIBITS

Exhibit No.	Description
99.1	Press release of Veritas DGC Inc. dated May 28, 2003.
99.2	PowerPoint presentation provided by Veritas DGC Inc. in connection with its Fiscal Year 2003 Third Quarter Earnings Conference Call and Webcast held on May 29, 2003.

ITEM 9. REGULATION FD DISCLOSURE

                   The information contained in this Item 9 is being published pursuant to Item 12 (Results of Operations and Financial Condition) of Form 8-K in accordance with SEC Release Nos. 33-8216 and 34-7583.

                   In accordance with General Instruction B.2 of Form 8-K, the information contained in this current report, including the exhibits attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any registration statement or other filing pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

                   On May 28, 2003, Registrant issued a press release reporting earnings and other financial results for its third fiscal quarter ended April 30, 2003. A copy of the press release is attached as Exhibit 99.1.

                   Management of Registrant made the following comments during the question and answer segment following the Registrant’s May 29, 2003 earnings release conference call and webcast:

     Management reiterated previous fiscal year 2003 earnings guidance of $0.70 to $0.90 per share absent charges such as those related to mergers, refinancing, severance and doubtful accounts. This range was equated to a range of $0.50 to $0.70 per share on an “as reported” basis.

     Management reported that the pre-funding level for its current multi-client library program is approximately 40-45% and added that required pre-funding levels for U.S. land multi-client projects remain at 60% to 70%, depending upon risk. It was explained that pre-funding levels are down from those of the prior year as the large, approximately 80% pre-funded Brazil offshore program was completed earlier in the fiscal year.

     Management confirmed its commitment to positive cash flow for the current fiscal year and said that cash flow would continue to be a major focal point for the company.

                   Registrant cautions that statements in this Form 8-K may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements as to expectations, beliefs and future financial performance, such as statements regarding our business prospects. All of these are subject to certain risks, uncertainties and assumptions. These risks and assumptions are more fully described in reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material respect from those currently anticipated. Such factors include but are not limited to:

• Expectations for commodity prices and their influence on levels of capital spending by oil and gas companies;

• The impact of weak demand and/or technological obsolescence on our multi-client data library and other aspects of our business;

• Intense competition;

• High fixed cost structure;

• Seasonal weather and other quarterly result fluctuations;

• The ability to attract and retain key personnel;

• Currency fluctuations and other risks of operating in foreign venues; and

• The hazardous conditions inherent with many of our operations.

SIGNATURE

     Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VERITAS DGC INC.
(Registrant)

/s/ Matthew D. Fitzgerald
Matthew D. Fitzgerald
Executive Vice President, Chief Financial Officer
and Treasurer

Date: May 30, 2003

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release of Veritas DGC Inc. dated May 28, 2003.
99.2	PowerPoint presentation provided by Veritas DGC Inc. in connection with its Fiscal Year 2003 Third Quarter Earnings Conference Call and Webcast held on May 29, 2003.

EX-99.1 3 h06413exv99w1.htm PRESS RELEASE DATED MAY 28, 2003

Exhibit 99.1

VERITAS DGC INC. ANNOUNCES THIRD FISCAL QUARTER RESULTS

Houston, Texas – May 28, 2003 – Veritas DGC Inc. (NYSE & TSE: VTS) announced results for its third fiscal quarter ended April 30, 2003. Revenue and earnings with the comparative amounts for the corresponding periods of the prior fiscal year, were as follows:

	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2003		2002		2003		2002
	(In millions, except per share amounts)
Revenue	$	120.6	$	109.3	$	383.5	$	350.3
Net income		4.7		8.0		10.8		23.4
Earnings per common share – basic		0.14		0.25		0.32		0.72
Earnings per common share – diluted		0.14		0.25		0.32		0.72

     Results for the current quarter included pre-tax charges totaling $4.8 million ($0.09 per share, after tax) related to a provision for a potentially uncollectable receivable and costs related to the refinancing of the Company’s credit facilities.

David B. Robson, Chairman and CEO of Veritas commented, “Considering current market conditions, we are generally pleased with our operating results this quarter. Revenue was up year-over-year with higher contract margins. The quarter ended with a backlog of $172 million and with increased customer interest in our multi-client library. We also completed a financing package that improved our liquidity, lowered our effective interest rate and gives us a pre-payment option in the future.”

Revenue for the third quarter was $120.6 million, an increase of 10% from the third quarter of fiscal 2002.

Revenue for the third quarter and nine months ended April 30^th was comprised as follows:

			Three Months Ended				Nine Months Ended
			April 30,				April 30,
			2003		2002		2003		2002
					(millions)
Multi-client:
	Land		$	18.9	$	8.6	$	48.9	$	42.1
	Marine			32.7		44.4		124.6		130.0
		Subtotal		51.6		53.0		173.5		172.1
Contract:
	Land			44.5		36.5		124.9		112.5
	Marine			24.5		19.8		85.1		65.7
		Subtotal		69.0		56.3		210.0		178.2
Total Revenue			$	120.6	$	109.3	$	383.5	$	350.3

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Multi-client

Land multi-client revenue more than doubled compared to the prior year’s third quarter. A large sale of Canadian foothills data contributed significantly to the quarterly results.

Marine multi-client revenue decreased 26% compared to the prior year’s quarter primarily due to lower sales of completed surveys in West Africa and offshore Canada. Additionally, in the prior year the Company had two vessels working on a highly funded survey in Brazil.

Cash spending on multi-client data library was $47.1 million during the quarter and the multi-client library balance at the end of the quarter was $376.3 million, up $23.6 million from the prior quarter. Major projects included Alaminos Canyon in the deepwater Gulf of Mexico, offshore Nigeria, the North Sea and the Canadian Rockies.

Contract

Contract land revenue increased by 22% from the prior year’s third quarter. The increase is due to increased activity in the U.S., a new contract in Bolivia and re-entry into the Argentine market.

Contract marine revenue for the third quarter increased by 24% from the prior year’s third quarter due to a project in Trinidad. Changes from quarter to quarter are greatly influenced by the scheduling of vessels between contract and multi-client work, however, backlog for contract marine acquisition work has increased by $17 million since last year.

Operating Income

Operating income as a percentage of revenue decreased to 11.5% compared to 12.7% in the previous year’s third quarter. The main cause for the reduction was a $2.9 million provision related to a disputed receivable from a customer. The Company has reserved a portion of the receivable in response to a “going concern” qualification in the customer’s recent public filing. Absent this charge, operating income as a percentage of revenue would have been slightly higher when compared to the prior year’s third quarter. Contract margins increased but were partially offset by lower multi-client margins due to the mix of survey licenses.

Interest Expense

Interest expense was $3.2 million higher than in the third quarter of the previous year due to the Company’s recently completed refinancing. The Company’s previous outstanding debt (Senior Notes and revolving credit facility) and the new bank debt were concurrently outstanding for one month, resulting in additional interest costs of $1.2 million. In addition, the Company expensed the $0.7 million of unamortized debt issuance costs related to the refinanced facilities. Finally, outstanding borrowings were $195 million under the new facility compared with $135 million outstanding in prior year’s third quarter. These factors were partially offset by the new credit facility’s weighted-average borrowing cost of approximately 8%, compared with 9.75% under the Senior Notes. Management expects quarterly interest expense to be slightly more than $4 million on a go-forward basis.

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Income Taxes

The Company’s effective tax rate for the quarter was 39%, compared to the 36% rate last year, due to unbenefitted net operating losses and foreign tax credits generated in certain jurisdictions.

Backlog

At April 30, 2003, the Company’s combined operating backlog was $172.3 million compared to $169.6 million at the end of the second quarter, with a slightly higher percentage of the backlog now coming from contract work.

Free Cash Flow

The Company generated free cash flow for the quarter of $8.5 million versus a negative $3.4 million for the prior year’s third quarter. Free cash flow for the year-to-date was $12.7 million versus a negative $50.7 million for the comparable period of the prior year. The positive change in free cash flow for these periods is primarily due to reduced capital spending. The Company plans to spend approximately $31 million on capital equipment this year versus $87.1 million last year.

The Company defines free cash flow as cash from operating activities less cash multi-client spending and capital expenditures. This non-GAAP liquidity measure is useful as an addition to the most directly comparable GAAP measure of “cash provided by operating activities” because free cash flow includes investments in operational assets and therefore presents a full picture of cash flow from ongoing operations. This measure excludes items such as proceeds from the disposal of assets, cash paid for acquisitions and all financing activities. A reconciliation of free cash flow to cash provided by operating activities is attached, after the financial summary.

The Company’s customary conference call will be tomorrow, May 29th, at 9:00 a.m. EST. Following a brief presentation, participants will have the opportunity to ask questions. The dial-in number to participate is 800-218-0204. Should you have difficulty with the aforementioned “800” number, phone 303-262-2141 to be connected toll free.

There will also be a live audio and PowerPoint webcast of the conference call at the Company’s website, www.veritasdgc.com. Windows Media Player software is required and is available, free of charge, for download through the website. Individuals accessing the webcast will be “listen only” and will be unable to take part in the Q&A session.

A digital replay will be available at the conclusion of the call until the close of business Thursday, June 12, 2003. Interested persons can phone 800-405-2236 or 303-590-3000 (pin code 494831) or access the webcast replay at www.veritasdgc.com.

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The Company cautions that statements in this earnings release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements as to expectations, beliefs and future financial performance, such as statements regarding our business prospects. All of these are subject to certain risks, uncertainties and assumptions. These risks and assumptions are more fully described in reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material respect from those currently anticipated. Such factors include, but are not limited to:

• Expectations for commodity prices and their influence on levels of capital spending by oil and gas companies;

• The impact of weak demand and/or technological obsolescence on our multi-client data library and other aspects of our business;

• Intense competition;

• High fixed cost structure;

• Seasonal weather and other quarterly result fluctuations;

• The ability to attract and retain key personnel;

• Currency fluctuations and other risks of operating in foreign venues; and

• The hazardous conditions inherent with many of our operations.

Veritas DGC Inc., headquartered in Houston, Texas, is a leading provider of integrated geological and reservoir technologies to the petroleum industry worldwide.

For additional information, please contact:

Mindy Ingle, Investor Relations                                                                                                                                                       (832) 351-8821
Matt Fitzgerald, Executive Vice President, Chief Financial Officer and Treasurer

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Veritas DGC Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)

		Three Months Ended					Nine Months Ended
		April 30,					April 30,
		2003		2002			2003		2002
Revenue		$	120,636	$	109,267		$	383,464	$	350,268
Cost of services			97,287		85,082			318,671		274,415
Research and development			3,274		2,846			9,327		8,381
General and administrative			6,261		5,854			21,744		17,886
Merger costs					1,658					4,416
Operating income			13,814		13,827			33,722		45,170
Interest expense			5,992		2,771			14,359		9,850
Other expense (income), net			17		(1,427	)		1,229		(2,219	)
Income before provision for income taxes			7,805		12,483			18,134		37,539
Provision for income taxes			3,077		4,438			7,353		14,172
Net income		$	4,728	$	8,045		$	10,781	$	23,367
Weighted average common shares:
	Basic		33,348		32,446			33,243		32,381
	Diluted		33,355		32,639			33,280		32,561
Earnings per share:
	Basic and diluted	$	.14	$	.25		$	.32	$	.72

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Veritas DGC, Inc. and Subsidiaries

Supplemental Information (Unaudited)
(In thousands)

		Three Months Ended						Nine Months Ended
		April 30,						April 30,
		2003			2002			2003			2002
Cash Flow Data:
	Depreciation and amortization, net	$	10,853		$	9,912		$	36,202		$	30,191
	Multi-client amortization		33,251			30,196			106,809			89,567
	Multi-client expenditures, cash		(47,065	)		(38,674	)		(122,652	)		(127,054	)
	Capital expenditures		(6,563	)		(20,455	)		(19,530	)		(72,060	)
	Total cash provided by operating activities		62,139			55,773			154,878			148,388
	Total cash used in investing activities		(53,724	)		(57,944	)		(149,293	)		(194,625	)
	Total cash provided by (used in) financing activities		(15,058	)		796			56,678			2,055
Balance Sheet Data:
	Cash	$	73,520		$	24,852		$	73,520		$	24,852
	Debt		194,613			135,000			194,613			135,000
	Multi-client data library		376,318			368,169			376,318			368,169
Reconciliation of Free Cash Flow to Cash Provided by Operating Activities
	Free cash flow	$	8,511		$	(3,356	)	$	12,696		$	(50,726	)
	Add back:
	Multi-client expenditures, net cash		47,065			38,674			122,652			127,054
	Capital expenditures		6,563			20,455			19,530			72,060
	Total cash provided by operating activities	$	62,139		$	55,773		$	154,878		$	148,388

- more - EX-99.2 4 h06413exv99w2.htm POWERPOINT PRESENTATION ON MAY 29, 2003

Veritas DGC Inc. FY 2003 - 3rd Quarter Earnings Conference Call May 29th 2003

Presentation Outline Questions and Answers Wrap Up Matt Fitzgerald Operations Review Tim Wells, President and COO Financial Results Matt Fitzgerald, Executive VP, CFO and Treasurer Introduction Dave Robson, Chairman and CEO

The Company cautions that statements in this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements as to expectations, beliefs and future financial performance, such as statements regarding our business prospects. All of these are subject to certain risks, uncertainties and assumptions. These risks and assumptions are more fully described in reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material respects from those currently anticipated. Forward-Looking Information

Income Statement FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions) Revenue $120,636 $109,267 Operating expenses: Cost of services 97,287 85,082 Research & development 3,274 2,846 General and administrative 6,261 5,854 Other - 1,658 Operating income 13,814 13,827 Interest expense 5,992 2,771 Other expense 17 (1,427) Profit before tax 7,805 12,483 Provision for income taxes 3,077 4,438 Net income $ 4,728 $ 8,045 Diluted EPS $ 0.14 $ 0.25

Revenue Mix FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions) MC Land Contract Marine Contract Land MC Marine 19 25 45 33 MC Land Contract Marine Contract Land MC Marine 8.6 19.8 36.5 44.4 Contract Marine Contract Land MC Land MC Marine

Multi-Client Revenue Brazil Gulf of Mexico US Land Canada Land West Africa Other 6.6 16.9 4 14.9 6.7 2.5 Brazil Gulf of Mexico US Land Canada Land West Africa Other 14.2 19.1 4.3 4.3 6.7 4.4 Gulf of Mexico US Land Canada Land West Africa Brazil Other FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions)

Multi-Client Revenue Prefunding Shelf 22.7 28.9 Prefunding Shelf 22.4 30.6 Prefunding Shelf FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions)

Multi-Client Cash Flow ($ millions) Q3 2003 Q3 2002 MC Revenue 52 53 Cash Investment 47 39 MC Cash Flow 5 14

Contract Revenue Processing Marine Acquistion Land Acquisition Other 18.6 7.9 39.2 3.3 Processing Marine Acquistion Land Acquisition Other 17.4 4.6 30.9 3.4 Marine Acquisition Land Acquisition Processing Reservoir FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions)

Profit Margins Q3 2003 Q3 2002 Multi-Client 14.5 18.9 Contract 5.5 2.5 ($ millions)

Income Statement FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions) Revenue $120,636 $109,267 Operating expenses: Cost of services 97,287 85,082 Research & development 3,274 2,846 General and administrative 6,261 5,854 Other - 1,658 Operating income 13,814 13,827 Interest expense 5,992 2,771 Other expense 17 (1,427) Profit before tax 7,805 12,483 Provision for income taxes 3,077 4,438 Net income $ 4,728 $ 8,045 Diluted EPS $ 0.14 $ 0.25

Condensed Balance Sheet FY 2003 FY 2002 3rd Quarter Year End ($ millions) Cash $ 73,520 $ 10,752 Current assets 150,967 172,274 PP&E 155,803 191,081 Multi-client data library 376,318 336,475 Other long-term assets 91,455 70,199 Total assets $ 848,063 $780,781 Current liabilities 87,648 104,605 Long-term debt 194,613 140,000 Other non-current liabilities 12,025 11,964 Stockholder's equity 553,777 524,212 Total liabilities and equity $848,063 $780,781

Cash Flow Summary - Quarter FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions) Net income $ 4,728 $ 8,045 Depreciation and amortization 10,853 9,912 Multi-client amortization 33,251 30,196 Working capital changes and other 13,307 7,620 Cash provided by operating activities 62,139 55,773 Multi-client investment, cash 47,065 38,674 Capital expenditures 6,563 20,455 Other 96 (1,185) Cash used in investing activities (53,724) (57,944) Cash provided by (used in) financing activities (15,058) 796 Currency gain on foreign cash 416 113 Change in cash ($ 6,227) ($ 1,262)

Free Cash Flow - Fiscal Year to Date FY 2003 FY 2002 9 months 9 months ($ millions) Net income $ 10,781 $ 23,367 Depreciation and amortization 36,202 30,191 Multi-client amortization 106,809 89,567 Working capital and other 1,086 5,263 Cash provided by operating activities 154,878 148,388 Multi-client investment, cash (122,652) (127,054) Capital expenditures (19,530) (72,060) Free cash flow $ 12,696 $ (50,726)

New Bank Facility Amount $250 million ($195m term $55m un-drawn revolver) Term 3 to 5 years Interest Rate Average 7.25% (7.75% on outstanding) Rated: Term B BB+ (S&P) and Ba2 (Moody's) Term C BB (S&P) and Ba3 (Moody's) Pro Forma Debt to Cap 28% Pro Forma Liquidity $110M +

Operations Report FY 2003 - 3rd Quarter

MC Land Contract Land 18.9 44.5 MC Land Contract Land 8.6 36.5 Multi-Client Contract Land Revenue FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions)

Land Acquisition 3rd Qtr Activity Canada 7 Crews US 2 Crews - lower 48 2 Crews - Alaska South America 1 Crew - Bolivia 1 Crew - Argentina Europe Africa Middle East 2 Crews - Oman

Land Acquisition Maximum of 15 crews operated during the quarter - 11 as of April 30th with 4 multi-client and 7 contract Successful Alaskan and Canadian season after weather- related slow start Continued to develop and deploy multi component recording and processing capabilities Maintained a high volume of alliance and relationship work based on consistent execution

Marine Revenue FY 2003 FY 2002 3rd Quarter 3rd Quarter ($ millions) Contract Marine MC Marine 24.5 32.7 Contract Marine MC Marine 19.8 44.4 Contract Multi-Client

Marine Acquisition - 3rd qtr Activity US Vantage Gulf of Mexico 3D S. America Viking I Trinidad 3D Europe Seisquest UKCS 3D Africa Viking II Nigeria 3D Asia Pacific Pacific Sword Veritas Searcher Australia As of April 30th 2003

Marine Acquisition Solid streamer successfully deployed on Veritas Vantage and Viking I Six vessels working during 3rd qtr four - multi-client, two - contract Focus has shifted to acquiring more proprietary work Proprietary pricing still impacted by over-capacity - seen to be firming slightly Demand for solid streamer equipped vessels strong

Our Data Processing Business Cluster deployment and efficiency gains continue to positively impact this business 10,000 nodes today with over 100X the compute power of two years ago PSDM market continues to be robust especially in the GOM Successful release to market of new WEM algorithms for even more accurate PSDM images during the quarter

Backlog as of April 30th 2003 Land Marine Processing Multi Client Reservoir 62.6 25 28.9 48.3 7.2 Land Marine Processing Multi Client Reservoir 66.7 24.5 23.3 50.3 4.7 FY 2003 FY 2003 3rd Quarter 2nd Quarter ($ millions) Marine Processing Multi Client Reservoir Land

Free Cash Flow 2000 | 2001 | 2002 | 2003 estimate ($ millions)

Veritas DGC Inc. FY 2003 - 3rd Quarter Earnings Conference Call Question & Answer Segment

EX-99.1

exv99w1

EX-99.2

exv99w2