EX-99.1 2 a05-11115_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

VERITAS DGC INC.  ANNOUNCES
THIRD FISCAL QUARTER RESULTS

 

Houston, June 20, 2005 – Veritas (NYSE & TSX: VTS) today announced financial results for its third fiscal quarter ended April 30, 2005. Revenue, net income and earnings per share for the third fiscal quarter ended April 30, 2005 with the comparative amounts for the corresponding periods of the prior fiscal year, were as follows:

  

 

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

 

 

2005

 

Restated
2004(1)

 

2005

 

Restated
2004(1)

 

 

 

(millions, except per share amounts)

 

Revenues

 

$

175.5

 

$

180.7

 

$

497.3

 

$

428.2

 

Net income (loss)

 

18.4

 

10.1

 

36.8

 

(3.3

)

Earnings (loss) per common share – diluted

 

0.52

 

0.29

 

1.05

 

(0.10

)

 

(1) Results for the prior year quarter and nine month period include a pretax charge totaling $6.4 million related to the retirement of $154 million of bank debt. In addition, the results for the prior year nine month period include a non-cash charge in the first quarter of $22.1 million related to our change in accounting for multi-client library amortization.

 

Veritas Chairman and CEO Thierry Pilenko commented, “Sustained strong demand combined with relativity low reserve replacement continues to support increased geophysical activity and pricing worldwide. This is particularly evident in contract marine acquisition, which drove our solid performance for the third fiscal quarter.  We currently expect our pre-tax financial results for the fourth fiscal quarter of this fiscal year to be similar to last year’s fourth fiscal quarter, primarily as a result of usual seasonal slow downs.  Looking ahead to fiscal 2006, we believe that the market conditions will remain buoyant and are feeling good as we enter our planning process for our next fiscal year.”

 

Mr. Pilenko went on to say, “I am very pleased that our financial restatements are now complete and as of June 17, all of our annual and quarterly filings are up to date.  I believe we are emerging from these problems a better company, with stronger financial controls and the same commitment to excellence in the financial area as we have in our operations.”

 


 

Revenue for the third fiscal quarter was $175.5 million, a decrease of 3% from the third quarter of fiscal 2004. Revenue for the third quarter and nine months ended April 30 was comprised of the following:

 

 

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

 

 

2005

 

Restated
2004

 

2005

 

Restated
2004

 

 

 

(millions)

 

Multi-client:

 

 

 

 

 

 

 

 

 

Land

 

$

10.3

 

$

24.3

 

$

36.3

 

$

53.3

 

Marine

 

37.3

 

58.1

 

144.1

 

150.5

 

Subtotal

 

47.6

 

82.4

 

180.4

 

203.8

 

Contract:

 

 

 

 

 

 

 

 

 

Land

 

57.0

 

60.5

 

134.0

 

126.6

 

Marine

 

70.9

 

37.8

 

182.9

 

97.8

 

Subtotal

 

127.9

 

98.3

 

316.9

 

224.4

 

Total Revenues

 

$

175.5

 

$

180.7

 

$

497.3

 

$

428.2

 

 

Multi-client

 

Multi-client revenue in the third quarter of fiscal 2005 decreased 42% compared to the prior year’s third quarter. This decrease came from reduced sales of licenses to completed surveys and reduced work on pre-funded surveys resulting from a higher than normal shift of assets to contract work.

 

Contract

 

Contract revenue in the third quarter of fiscal 2005 increased 30% from the prior year’s third quarter.  Much of the increase was due to increased marine acquisition work in the Gulf of Mexico and Asia Pacific.  In the Gulf of Mexico, the use of additional vessels on short-term charters to perform a wide-azimuth survey contributed significantly to the revenue growth.

 

Operating Income

 

Operating income as a percentage of revenue in the third quarter of fiscal 2005 was 17%, compared to 12% in the previous year’s third quarter.  The mix of our multi-client revenue in this year’s third quarter was favorable and resulted in improved margins as a percentage of revenue compared to our prior comparable period results.  Additionally, contract acquisition pricing has improved during recent quarters and has been further enhanced by favorable contract terms, such as reduced weather risk.

 

Interest Expense

 

Interest expense in the third quarter of fiscal 2005 was $7.7 million lower than in the third quarter of the previous year.  Interest expense in the prior period included $6.4 million of charges related to a debt refinancing, including the retirement of $154 million of bank debt, the expensing of debt issuance costs, cancellation of interest rate swaps and prepayment penalties.  The bank debt was replaced by Convertible Senior Notes with an interest rate of LIBOR less 0.75%, a rate significantly lower than that of the retired debt.

 

Income Taxes

 

The Company’s effective tax rate for the quarter was 40%, slightly higher than the 35% U.S. statutory rate. A substantial portion of this difference in tax rate is due to the Company’s recording of valuation allowances on most of its deferred tax assets, a result of losses the Company incurred in prior years.  The Company’s effective tax rate for the first nine months of this fiscal year was 45%, a reduction from the effective tax rate of 50% for the

 


 

first six months of this year. This reduction is principally the result of a change in mix of our multi-client revenues.

 

Backlog

 

At April 30, 2005, the Company’s combined backlog was $234 million compared to $300 million at the end of the second quarter with contract backlog down $76 million and multi-client backlog up $10 million.  The decline in contract backlog is due to the completion of seasonal land acquisition work in Alaska and Canada and the completion of several marine acquisition contracts in Asia Pacific and the Gulf of Mexico.

 

Other

 

The Company had a cash balance of $238 million at April 30, 2005, an increase of $122 million from the July 31, 2004 balance of $116 million. Total debt remained unchanged from the beginning of the year at $155 million.

 

Conference Call

 

The Company’s conference call will be Tuesday, June 21, 2005, at 8:00 a.m. central.  Following a brief presentation, participants will have the opportunity to ask questions.  The dial in number to participate is 800-374-1498 or 706-643-0395.

 

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

 

The audio replay will be available at the conclusion of the call until the close of business Tuesday, July 5, 2005.  Interested persons can phone 800-642-1687 or 706-645-9291, passcode 4028520, or access the webcast replay at www.veritasdgc.com.

 

The Company cautions that statements in this 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 based on current information and expectations that are subject to a number of risks, uncertainties and assumptions.  These risks and uncertainties are more fully described in our 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.

 

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

 

For additional information, please contact:

 

Mindy Ingle, Investor Relations

 

(832) 351-8821

Stephen J. Ludlow, Vice Chairman

 

 

Mark E. Baldwin, Executive Vice President, Chief Financial Officer and Treasurer

 

 

 


 

Veritas DGC Inc. and Subsidiaries

 

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

 

 

 

Three Months Ended
April 30,

 

Nine Months Ended
April 30,

 

 

 

2005

 

Restated
2004

 

2005

 

Restated
2004

 

Revenues

 

$

175,510

 

$

180,714

 

$

497,319

 

$

428,177

 

Cost of services

 

132,957

 

147,911

 

393,898

 

376,625

 

Research and development

 

4,676

 

4,118

 

13,790

 

11,258

 

General and administrative

 

8,632

 

7,240

 

23,597

 

19,823

 

Operating income

 

29,245

 

21,445

 

66,034

 

20,471

 

Interest expense

 

1,140

 

8,874

 

2,803

 

17,350

 

Other income, net

 

(2,454

)

(562

)

(4,043

)

(1,067

)

Income before provision for income taxes

 

30,559

 

13,133

 

67,274

 

4,188

 

Provision for income taxes

 

12,152

 

3,069

 

30,521

 

7,515

 

Net income (loss)

 

$

18,407

 

$

10,064

 

$

36,753

 

$

(3,327

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

$

.54

 

$

.30

 

$

1.09

 

$

(.10

)

Weighted average common shares

 

33,792

 

33,455

 

33,775

 

33,598

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

$

.52

 

$

.29

 

$

1.05

 

$

(.10

)

Weighted average common shares

 

35,131

 

34,601

 

34,970

 

33,598

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data:

 

 

 

 

 

 

 

 

 

Cash Flow Data:

 

 

 

 

 

 

 

 

 

Depreciation and non-multi-client amortization, net

 

$

10,969

 

$

11,812

 

$

33,164

 

$

31,871

 

Multi-client amortization

 

19,156

 

58,391

 

103,559

 

163,837

 

Multi-client expenditures, net cash

 

18,662

 

27,029

 

77,558

 

97,366

 

Capital expenditures

 

26,381

 

7,095

 

43,533

 

20,652

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

Cash

 

$

238,453

 

$

86,518

 

$

238,453

 

$

86,518

 

Debt

 

155,000

 

181,987

 

155,000

 

181,987

 

Multi-client data library

 

293,228

 

325,521

 

293,228

 

325,521

 

Total shareholders equity

 

535,483

 

475,610

 

535,483

 

475,610