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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ______________
Commission File Number 0-26710
CORE LABORATORIES N.V.
(Exact name of Registrant as specified in its charter)
THE NETHERLANDS NOT APPLICABLE
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HERENGRACHT 424
1017 BZ AMSTERDAM
THE NETHERLANDS NOT APPLICABLE
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (31-20) 420-3191
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of common shares of the Registrant, par value NLG .03
per share, outstanding at August 7, 1996 was 9,466,800.
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<PAGE>
CORE LABORATORIES N.V.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
PAGE
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995 ............................................ 1
Consolidated Income Statements for the Three Months Ended
June 30, 1996 and 1995 ........................................ 2
Consolidated Income Statements for the Six Months Ended
June 30, 1996 and 1995......................................... 3
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1995 ....................................... 4
Notes to Consolidated Financial Statements ...................... 5
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 7
Part II -- Other Information
Item 1-- Legal Proceedings............................................ 9
Item 2--Changes in Securities......................................... 9
Item 3-- Defaults Upon Senior Securities.............................. 9
Item 4-- Submission of Matters to a Vote of Security Holders ......... 9
Item 5--Other Information............................................. 9
Item 6-- Exhibits and Reports on Form 8-K ........................... 9
Signature ............................................................... 10
i
CORE LABORATORIES N.V.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
1996 1995
----------- ---------
(UNAUDITED) (AUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 3,071 $ 4,326
Accounts receivable, net ........................... 23,949 22,540
Inventories ........................................ 7,281 8,135
Prepaid expenses and other ......................... 1,014 1,039
Deferred tax assets ................................ 320 320
-------- --------
Total current assets ................................... 35,635 36,360
PROPERTY, PLANT AND EQUIPMENT .......................... 28,705 22,964
Less-- accumulated depreciation .................... (4,726) (2,926)
-------- --------
23,979 20,038
INTANGIBLES AND GOODWILL, net .......................... 8,319 8,513
DEFERRED DEBT COST, net ................................ 49 35
LONG-TERM INVESTMENT ................................... 400 400
-------- --------
Total assets ................................... $ 68,382 $ 65,346
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............... $ 3,860 $ 2,500
Short-term debt .................................... -- 190
Accounts payable ................................... 3,998 5,430
Accrued payroll and related costs .................. 2,301 2,974
Accrued income taxes payable ....................... 339 613
Other accrued expenses ............................. 2,316 2,461
-------- --------
Total current liabilities .............................. 12,814 14,168
LONG-TERM DEBT ......................................... 12,885 11,875
DEFERRED TAX LIABILITIES ............................... 611 611
OTHER LONG-TERM LIABILITIES ............................ 1,330 1,509
MINORITY INTEREST ...................................... 94 96
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preference shares, NLG .03 par value;
3,000,000 shares authorized, no shares
issued or outstanding .......................... -- --
Common shares, NLG .03 par value;
30,000,000 shares authorized,
9,466,800 issued and outstanding ............... 166 166
Additional paid-in capital ......................... 32,360 32,360
Retained earnings .................................. 8,122 4,561
-------- --------
Total shareholders' equity ..................... 40,648 37,087
-------- --------
Total liabilities and shareholders' equity .. $ 68,382 $ 65,346
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
1
CORE LABORATORIES N.V.
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED
JUNE 30,
------------------------
1996 1995
---------- -----------
(UNAUDITED) (UNAUDITED)
SERVICES ........................................... $ 16,662 $ 13,654
SALES .............................................. 6,762 4,971
---------- -----------
23,424 18,625
OPERATING EXPENSES:
Costs of services .............................. 13,081 10,865
Costs of sales ................................. 5,346 3,993
General and administrative expenses ............ 947 551
Depreciation and amortization .................. 957 686
Other expense (income), net .................... 4 (99)
---------- -----------
20,335 15,996
INCOME BEFORE INTEREST EXPENSE AND
INCOME TAX EXPENSE ............................. 3,089 2,629
INTEREST EXPENSE ................................... 292 871
---------- -----------
INCOME BEFORE INCOME TAX EXPENSE ................... 2,797 1,758
INCOME TAX EXPENSE ................................. 895 534
---------- -----------
NET INCOME ......................................... 1,902 1,224
LESS - Net income applicable to preferred loan stock -- (113)
---------- -----------
NET INCOME APPLICABLE TO COMMON SHARES ............. $ 1,902 $ 1,111
========== ===========
NET INCOME PER SHARE ............................... $ .20 $ .17
========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING ................ 9,466,800 6,666,800
========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
2
CORE LABORATORIES N.V.
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
----------- -----------
(UNAUDITED) (UNAUDITED)
SERVICES ......................................... $ 33,158 $ 27,491
SALES ............................................ 13,641 8,938
----------- -----------
46,799 36,429
OPERATING EXPENSES:
Costs of services ............................ 26,080 21,823
Costs of sales ............................... 11,022 7,267
General and administrative expenses .......... 1,877 1,277
Depreciation and amortization ................ 1,996 1,375
Other income, net ............................ (47) (86)
----------- -----------
40,928 31,656
INCOME BEFORE INTEREST EXPENSE AND
INCOME TAX EXPENSE ........................... 5,871 4,773
INTEREST EXPENSE ................................. 634 1,673
----------- -----------
INCOME BEFORE INCOME TAX EXPENSE ................. 5,237 3,100
INCOME TAX EXPENSE ............................... 1,676 943
----------- -----------
NET INCOME ....................................... 3,561 2,157
LESS - Net income applicable to
preferred loan stock ......................... -- (225)
----------- -----------
NET INCOME APPLICABLE TO COMMON SHARES ........... $ 3,561 $ 1,932
=========== ===========
NET INCOME PER SHARE ............................. $ .38 $ .29
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING .............. 9,466,800 6,666,800
=========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
3
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
SIX MONTHS ENDED
JUNE 30,
------------------
1996 1995
------- -------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................ $ 3,561 $ 2,157
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation .................................. 1,800 1,254
Amortization .................................. 201 237
Gain on sale .................................. -- (26)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable .... 47 (796)
Decrease in inventories ............................... 854 194
Decrease in prepaid expenses and other ........ 36 109
Increase (decrease) in accounts payable ....... (1,753) 1,641
Increase (decrease) in accrued payroll ........ (793) 365
Decrease in accrued income taxes payable ...... (273) (204)
Decrease in other accrued expenses ............ (522) (1,449)
Other ......................................... (240) 23
------- -------
Net cash provided by operating activities .. 2,918 3,505
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets ................ -- 856
Capital expenditures .............................. (2,023) (1,189)
Acquisition of Gulf States Analytical, Inc. ....... (4,310) --
Final payment for business acquired from
Western Atlas International, Inc. ............... -- (1,778)
------- -------
Net cash used in investing activities ......... (6,333) (2,111)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt ........................ (7,530) (1,310)
Borrowings under long-term debt ................... 9,900 --
Decrease in short-term debt ....................... (190) --
Other ............................................. (20) --
------- -------
Net cash provided by financing activities ..... 2,160 (1,310)
------- -------
NET CHANGE IN CASH .................................... (1,255) 84
CASH, beginning of period ............................. 4,326 2,698
------- -------
CASH, end of period ................................... $ 3,071 $ 2,782
======= =======
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
4
CORE LABORATORIES N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements include the
accounts of Core Laboratories N.V. and its subsidiaries (the "Company"), and
have been prepared in accordance with United States generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. Balance sheet information as of December 31,
1995, has been taken from the 1995 annual audited financial statements. For
further information, reference is made to the consolidated financial statements
and footnotes thereto included in the Company's Form 10-K filed with the
Securities and Exchange Commission on March 20, 1996.
Net income per share is calculated by dividing net income available to
common shareholders by the weighted average number of common and common
equivalent shares outstanding during the applicable periods presented.
2. INVENTORIES
Inventories are primarily items held for sales or services provided to
customers. Inventories are stated at the lower of average cost (includes direct
material, labor and overhead) or estimated realizable value. A summary of
inventories is as follows (in thousands):
JUNE 30, DECEMBER 31,
1996 1995
------ ------
(UNAUDITED) (AUDITED)
Parts and materials ........................ $1,511 $3,468
Work in process ............................ 5,770 4,667
------ ------
Total ............................... $7,281 $8,135
====== ======
5
CORE LABORATORIES N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. LONG-TERM DEBT
Long-term debt at June 30, 1996 and December 31, 1995 is summarized in the
following table (in thousands):
JUNE 30, DECEMBER 31,
1996 1995
------- -------
(UNAUDITED) (AUDITED)
Unsecured Credit Agreement with a bank group:
$14,000 term loan facility ..................... $10,625 $11,875
$7,500 revolving credit facility ............... -- 2,500
$15,000 uncommitted guidance facility .......... 6,120 --
------- -------
Total debt .................................. 16,745 14,375
Less-- current maturities ...................... 3,860 2,500
------- -------
Total long-term debt .................... $12,885 $11,875
======= =======
6
CORE LABORATORIES N.V.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with the Company's Form 10-K
filed with the Securities and Exchange Commission on March 20, 1996.
GENERAL
The Company is engaged in the business of (i) high-technology laboratory
services and (ii) the manufacture and sale of integrated octane measurement
equipment, process analyzer systems, and petroleum reservoir rock and fluids
analysis instrumentation. The Company is the worldwide leader (based on revenues
and laboratory procedures performed) in analyzing core samples from petroleum
reservoirs and in providing reservoir fluids analyses. The Company is also the
leading supplier of octane measurement systems for on-line process streams. Core
Laboratories currently operates 46 facilities in 16 countries and has
approximately 1,200 employees.
RESULTS OF OPERATIONS
The following table sets forth certain percentage relationships based on
the Company's income statements for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- ------------------------
PERCENTAGE OF PERCENTAGE OF
TOTAL REVENUE TOTAL REVENUE
------------------------- ------------------------
% INCREASE % INCREASE
1996 1995 (DECREASE) 1996 1995 (DECREASE)
------ ------ ---------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Services .................................... 71.1 73.3 22.0 70.9 75.5 20.6
Sales ....................................... 28.9 26.7 36.0 29.1 24.5 52.6
----- ----- ----- ----
100.0 100.0 25.8 100.0 100.0 28.5
Operating expenses:
Cost of services ........................ 55.9 58.3 20.4 55.7 59.9 19.5
Cost of sales ........................... 22.8 21.4 33.9 23.6 19.9 51.7
General and administrative expenses ..... 4.0 3.0 71.9 4.0 3.5 47.0
Depreciation and amortization ........... 4.1 3.7 39.5 4.3 3.8 45.2
Other expense (income), net ............. -- (.5) * (.1) (.2) (45.3)
----- ----- ----- ----
86.8 85.9 27.1 87.5 86.9 29.3
Income before interest expense and income tax
expense ................................. 13.2 14.1 17.5 12.5 13.1 23.0
Interest expense ............................ 1.3 4.7 (66.5) 1.3 4.6 (62.1)
----- ----- ----- ----
Income before income tax expense ............ 11.9 9.4 59.1 11.2 8.5 68.9
Income tax expense .......................... 3.8 2.8 67.6 3.6 2.6 77.7
----- ----- ----- ----
Net income .................................. 8.1 6.6 55.4 7.6 5.9 65.1
===== ===== ===== ====
</TABLE>
- ------------
* Percentage not meaningful.
7
Services revenue for three months ended June 30, 1996 increased 22.0% to
$16.7 million. Services revenue for the six month period ended June 30, 1996 was
up 20.6% or $5.7 million. The increases were primarily due to (i) increased
worldwide demand for reservoir core and fluids analysis, and (ii) additional
revenue from the December 22, 1995 acquisition of four laboratories from PACE
Incorporated ("PACE Labs") and the January 5, 1996 acquisition of Gulf States
Analytical, Inc. ("GSAI"). These increases were slightly off-set by increased
price competition in certain laboratory testing markets.
Sales revenue for the three month period ended June 30, 1996 increased
36.0% or $1.8 million over the same period of the prior year. Sales revenue for
six months ended June 30, 1996 increased 52.6% or $4.7 million compared to a
year ago. The increases were primarily due to (i) additional revenue from the
July 19, 1995 acquisition of Pastech, Inc. ("Pastech"), and (ii) increased
demand for the Company's proprietary reservoir core and fluids analysis
equipment and systems. These increases were partially off-set by decreased sales
of integrated octane-measuring and process analyzer systems due to a weaker US
refining market.
Costs of services and sales as a percentage of services and sales revenue
for the three and six months ended June 30, 1996 improved slightly compared to a
year ago, due to improved cost savings and efficiencies.
General and administrative expenses for the three and six month periods
ended June 30, 1996 increased $0.4 million and $0.6 million respectively
compared to the corresponding periods in 1995. The increases were primarily due
to costs associated with being a publicly traded company and increased personnel
costs due to growth.
Depreciation and amortization expense for the three and six month periods
ended June 30, 1996 increased $0.3 million and $0.6 million respectively
compared to a year ago primarily due to capital expenditures for new equipment
and the acquisitions of Pastech, PACE Labs, and GSAI.
Interest expense for the three and six months ended June 30, 1996 decreased
66.5% and 62.1% respectively compared to 1995. The decreases were primarily due
to a reduction in debt after the initial public offering of 2.8 million common
shares in September 1995.
The Company's effective income tax rate was approximately 32.0% for the
three and six months ended June 30, 1996 compared to 30.5% for three and six
months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for working capital, capital
expenditures and acquisitions. For the six month period ended June 30, 1996 the
Company had operating cash flow of $2.9 million compared to $3.5 million for the
corresponding period in 1995. Management believes the Company's internal and
external sources of cash will provide the necessary funds with which to meet its
expected obligations.
8
CORE LABORATORIES N.V.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is (or may from time to time be) a named defendant in lawsuits
and is (or may from time to time be) a party in governmental proceedings from
time to time arising in the ordinary course of business. While the outcome of
such lawsuits or other proceedings against the Company cannot be predicted with
certainty, management does not at this time expect these matters to have a
material adverse effect on the financial condition or results of operations of
the Company.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
INCORPORATED BY
EXHIBIT REFERENCE FROM THE
NO. EXHIBIT TITLE FOLLOWING DOCUMENTS
- ------- ------------- -------------------
27.1 Financial Data Schedule Filed Herewith
(b) Reports on Form 8-K.
None
9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Core Laboratories N.V., has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CORE LABORATORIES N.V.
by: Core Laboratories International B.V.
Dated: August 12, 1996 By: /s/ RICHARD L. BERGMARK
Richard L. Bergmark
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,071
<SECURITIES> 0
<RECEIVABLES> 24,731
<ALLOWANCES> 782
<INVENTORY> 7,281
<CURRENT-ASSETS> 35,635
<PP&E> 28,705
<DEPRECIATION> 4,726
<TOTAL-ASSETS> 68,382
<CURRENT-LIABILITIES> 12,814
<BONDS> 12,885
0
0
<COMMON> 166
<OTHER-SE> 40,482
<TOTAL-LIABILITY-AND-EQUITY> 68,382
<SALES> 46,799
<TOTAL-REVENUES> 46,799
<CGS> 37,102
<TOTAL-COSTS> 37,102
<OTHER-EXPENSES> 3,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 634
<INCOME-PRETAX> 5,237
<INCOME-TAX> 1,676
<INCOME-CONTINUING> 3,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,561
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
