SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT TO
CURRENT REPORT
DATED MAY 12, 1997
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 12, 1997
CORE LABORATORIES N.V.
(Exact name of registrant as specified in its charter)
THE NETHERLANDS NOT APPLICABLE
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
0-26710
(Commission File Number)
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
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 12, 1997, Core Laboratories N.V. (the "Company") consummated the
acquisition of all the outstanding stock of Saybolt International B.V. ("Saybolt
Acquisition"), a privately held Netherlands company, for $67 million in cash and
the assumption of approximately $5 million of net debt. Saybolt International
B.V., and its subsidiaries ("Saybolt") provide analytical and field services to
characterize and test crude oil and petroleum products to the oil industry.
Saybolt operates in over 50 countries and has approximately 1,650 employees.
Saybolt reported revenues of $105,358,000, $97,803,000 and $90,258,000 in 1996,
1995 and 1994, respectively. The transaction was accounted for under the
purchase method which resulted in approximately $44.7 million of goodwill which
is being amortized over a 40-year period. Financing for the transaction was
provided through additional borrowings. Accordingly, due to the acquisition
exceeding 20% of the Company's assets at December 31, 1996, as required in Rule
3-05 of Regulation S-X, certain financial statements of Saybolt and proforma
information is filed herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a). FINANCIAL STATEMENTS OF ACQUIRED COMPANY.
The following Statements of Income are not necessarily indicative of the
financial results which would have occurred if the Company had owned, during the
periods presented, the net assets acquired in the Saybolt Acquisition and may be
significantly different than the actual amounts attributable to the Company upon
consummation of the Saybolt Acquisition. In addition, future results may vary
significantly from the results reflected below due to dependency on one industry
segment, oil and gas; competition in the market; future acquisitions; and other
factors. This information should be read in conjunction with the Company's
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
PAGE
SAYBOLT INTERNATIONAL B.V.:
Report of Independent Accountants................................. 3
Consolidated Balance Sheets as of December 31, 1996 and 1995...... 4
Consolidated Statements of Income and Retained Earnings
for the Years Ended December 31, 1996, 1995 and 1994........... 5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994............................... 6
Notes to Consolidated Financial Statements........................ 7
1
<PAGE>
(b). PRO FORMA FINANCIAL INFORMATION.
PAGE
CORE LABORATORIES N.V. (THE "COMPANY"):
Unaudited Pro Forma Condensed Consolidated Financial
Statements - Introduction.................................. 17
Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of March 31, 1997................................. 18
Unaudited Pro Forma Condensed Consolidated Statement
Of Operations for the Three Months Ended March 31, 1997.... 19
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended December 31, 1996........ 20
(C). EXHIBITS.
The following exhibits are filed herewith:
23.1 Consent of Price Waterhouse LLP
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Supervisory Board and Shareholders of Saybolt International B.V.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Saybolt
International B.V. and its subsidiaries at December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Morristown, New Jersey
April 1, 1997
3
<PAGE>
SAYBOLT INTERNATIONAL B.V.
CONSOLIDATED BALANCE SHEET AT DECEMBER 31,
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................................................. $ 4,380 $ 3,684
Accounts receivable, net of allowance for doubtful accounts of
$1,841 in 1996 and $992 in 1995 .......................................................... 21,284 17,482
Income taxes receivable .................................................................... 386 447
Other current assets and prepaid expenses .................................................. 3,858 4,016
------- -------
Total current assets ......................................................................... 29,908 25,629
Investments in and advances to affiliated companies at cost plus
equity in undistributed earnings ........................................................... 2,709 2,708
Property, plant and equipment, net ........................................................... 17,402 17,982
Intangible assets, net ....................................................................... 2,961 3,506
Deferred tax assets .......................................................................... 972 425
------- -------
Total assets ............................................................................. $53,952 $50,250
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts ............................................................................ $ 3,891 $ 3,808
Current portion of long-term liabilities and short-term debt ............................... 2,640 3,694
Due to affiliated companies ................................................................ 664 1,443
Employee benefits payable .................................................................. 2,567 2,364
Accounts payable ........................................................................... 3,794 2,754
Income taxes payable ....................................................................... 497 922
Other accounts payable and accrued expenses ................................................ 5,393 3,073
------- -------
Total current liabilities ................................................................ 19,446 18,058
Long-term loans .............................................................................. 2,728 4,904
Provision for claims ......................................................................... 2,564 1,412
Provision for pension backservice liabilities ................................................ 1,083 1,098
Other long-term liabilities .................................................................. 2,814 3,113
Minority interest in consolidated subsidiary companies ....................................... 580 414
------- -------
Total liabilities ........................................................................ 29,215 28,999
------- -------
Commitments and contingent liabilities (see Notes 6 and 10)
SHAREHOLDERS' EQUITY:
Common stock - class A, NLG 1 par value .................................................... 277 277
Common stock - class B, NLG 0.10 par value ................................................. 27 27
Preference A shares, NLG 1 par value ....................................................... -- --
Preference B shares, NLG 1 par value ....................................................... -- --
Capital in excess of par value ............................................................. 1,866 1,866
Cumulative translation account ............................................................. 435 1,274
Retained earnings .......................................................................... 22,132 17,807
------- -------
Total shareholders' equity ............................................................... 24,737 21,251
------- -------
Total liabilities and shareholders' equity ............................................... $53,952 $50,250
======= =======
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements
4
<PAGE>
SAYBOLT INTERNATIONAL B.V.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
NET REVENUES ................................................................ $ 105,358 $ 97,803 $ 90,258
--------- -------- --------
OPERATING EXPENSES:
Cost of services .......................................................... 94,370 89,521 80,120
Depreciation and amortization ............................................. 3,816 3,805 2,666
Interest income ........................................................... (489) (441) (180)
Foreign currency losses (profits) ......................................... (355) 250 8
Minority interest in consolidated subsidiary companies .................... 186 169 --
Equity in net (earnings) losses of affiliated companies ................... 146 (363) (475)
--------- -------- --------
97,674 92,941 82,139
--------- -------- --------
Income before interest expense and income tax ............................... 7,684 4,862 8,119
Interest expense ............................................................ 1,080 1,061 722
--------- -------- --------
Income before income taxes .................................................. 6,604 3,801 7,397
Provision for taxes on income ............................................... 2,279 1,526 2,883
--------- -------- --------
Net income ................................................................ 4,325 2,275 4,514
Retained earnings, beginning of year ........................................ 17,807 15,532 11,018
--------- -------- --------
Retained earnings, end of year .............................................. $ 22,132 $ 17,807 $ 15,532
========= ======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements
5
<PAGE>
SAYBOLT INTERNATIONAL B.V.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ................................................................. $ 4,325 $ 2,275 $ 4,514
Adjustments to reconcile income from operations
to net cash provided by operating activities:
Depreciation and amortization ............................................ 3,816 3,805 2,666
Deferred taxes ........................................................... (546) 72 414
Minority interest ........................................................ 186 169 --
Dividends received ....................................................... -- 106 139
Equity in earnings of affiliates ......................................... 146 (363) (722)
Change in assets and liabilities:
(Increase) in accounts receivable ...................................... (3,802) (1,125) (4,051)
Decrease (increase) in income taxes receivable ......................... (61) 152 245
Decrease in other current assets & prepaid expenses .................... 158 931 71
Increase (decrease) in accounts payable ................................ 1,040 (543) 607
Increase (decrease) in employee benefits payable ....................... 203 341 (1,605)
Increase (decrease) in income taxes payable ............................ (425) (1,051) 119
Increase (decrease) in other accounts payable
and accrued expenses ................................................ 3,120 (1,974) 788
------- ------- -------
Net cash provided by operating activities .................................. 8,160 2,795 3,185
------- ------- -------
CASH FLOW FROM INVESTMENT ACTIVITIES:
Additional investment in or advances to affiliates ......................... (962) (2,376) (18)
Cash from newly consolidated subsidiaries .................................. 43 301 105
Capital expenditures ....................................................... (3,713) (5,187) (6,604)
------- ------- -------
Net cash used by investment activities ................................. (4,632) (7,262) (6,517)
------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from (repayments of) borrowing .................................... (3,230) 956 2,557
Increase (decrease) in bank overdraft ...................................... 83 2,737 970
------- ------- -------
Net cash provided by financing activities .............................. (3,147) 3,693 3,527
------- ------- -------
Effect of foreign currency exchange rate changes on cash ..................... 315 780 268
------- ------- -------
Net increase in cash ......................................................... 696 6 463
Cash and cash equivalents at beginning of year ............................... 3,684 3,678 3,215
------- ------- -------
Cash and cash equivalents at end of year ..................................... $ 4,380 $ 3,684 $ 3,678
======= ======= =======
Cash paid for interest ....................................................... $ 1,086 $ 1,035 $ 722
======= ======= =======
Cash paid for income taxes ................................................... $ 3,310 $ 2,804 $ 2,576
======= ======= =======
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements
6
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPANY'S ACTIVITIES
Saybolt International B.V. (the "Company") renders services such as
performing chemical analyses of liquids, inspecting chemicals and liquids,
taking samples and advising on them. The Company operates in 53 countries on
five continents.
PRINCIPLES OF CONSOLIDATION
All subsidiary companies in which the Company has, directly or indirectly,
an interest of more than 50% in the voting rights or where it can exercise
control are fully consolidated. Intercompany transactions and balances
pertaining to these entities have been eliminated.
The consolidated figures do not include the 100% participation in Saybolt
(Australia) Pty Ltd, EW Saybolt & Co (Cayman) Ltd, EW Saybolt & Co. (St.
Eustatius) NV and EW Saybolt Ltda (Brazil) which are dormant.
FOREIGN CURRENCY TRANSLATION
Foreign currency transactions and financial statements of non-U.S. companies
are translated into U.S. dollars at prevailing or current rates
respectively, except for sales, costs and expenses which are translated at
average current rates during each reporting period. Gains and losses
resulting from foreign currency transactions are included in income
currently. Gains and losses resulting from translation of financial
statements are excluded from the statement of income and are credited or
charged directly to a separate component of shareholders' equity.
INTANGIBLE ASSETS
Goodwill, calculated as the excess of the purchase price over the underlying
net asset value of the acquired shares based upon group accounting
principles, is capitalized and amortized over 20 years, which estimates the
expected economic life.
Capitalized expenditures include costs for obtaining long-term loans and
organization costs. These amounts are amortized to income over a period of
five to six years.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and, with the exception of
land, are depreciated over their estimated useful lives, ranging from 3 to
33 years, using the straight-line method.
Depreciation is calculated based on the following useful lives:
Buildings: 5 - 33 years
Laboratory equipment: 3 - 10 years
Other operating fixed assets: 3 - 10 years
INVESTMENTS IN AFFILIATED COMPANIES
Investments in affiliated companies are valued at their net asset value
using the equity method on a pro rata basis.
7
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
PROVISION FOR DEFERRED INVESTMENT GRANTS
Deferred investment grants are based on investment grants received and are
added to future annual profits in equal installments. The number of
installments is proportional to the relevant asset's estimated useful life
as applied in the calculation of depreciation. Deferred investment grants
relate to the Dutch operating companies. An amount of $23, $25 and $26 has
been credited to the 1996, 1995 and 1994 income statements, respectively.
PROVISION FOR PENSION BACKSERVICE LIABILITIES AND SEVERANCE INDEMNITY
Provisions for covering the backservice pension costs for employees are
provided based on the present value of future payment obligations.
Provisions for severance indemnity for employees are based on nominal
values. The calculation takes into account length of service and
remuneration at the date of termination of employment.
INCOME TAXES
The Company accounts for income taxes by recognizing deferred tax assets and
liabilities related to the expected future tax consequences of temporary
differences between the financial statement basis and the tax basis of the
Company's assets and liabilities. The enacted tax rates in effect in the
years in which the differences are expected to reverse are used to estimate
the related amounts. Valuation allowances for deferred tax assets are
recorded where it is considered more likely than not that the asset will not
be realized.
REVENUE RECOGNITION
Revenue is recognized when the service is complete.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The amounts representing cash equivalents, accounts receivable, accounts
payable and accrued expenses, amounts due under the Company's lines of
credit and notes payable approximate their market value because of the short
term nature of these instruments.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consists of accounts receivable only.
Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of customers comprising the Company's
customer base. To further reduce credit risk, it is the Company's policy to
review a customer's credit status before extending credit.
CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity date of three months or less at the time of purchase to be cash
equivalents.
8
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
2. INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES
Investments in affiliated companies include the company's share in equity of
the following companies at December 31, 1996:
NET
% TOTAL INCOME
COMPANY OWNED ASSETS EQUITY (LOSS)
---- ----- ------ -------
Saybolt Tunisie SARL ............. 49 $712 $ 494 $ 18
Saybolt Afrique SA ............... 49 668 593 183
Saybolt Saudi Arabia ............. 45 531 (140) (45)
Saybolt Malaysia Sdn Bkd ......... 40 476 (727) (226)
Saybolt Azerbaidjan BV ........... 50 1 1 (46)
Saybolt-SIC ...................... 50 164 164 (37)
Checkmark Management BV .......... 50 126 10 (12)
The affiliated companies, which are directly or indirectly owned, are valued
at their proportional net asset value using the equity method, but no less
than zero.
Movements in investments in and advances to affiliated companies are
summarized as follows:
1996 1995
------- -------
Balance at January 1 ........................... $ 1,211 $ 1,839
Acquisitions and payment to share capital ...... 320 24
Results for the year ........................... (146) 363
Dividends received ............................. -- (106)
Exchange differences ........................... (109) 113
Transfer to consolidated companies ............. (567) (1,022)
------- -------
Balance at December 31 ....................... 709 1,211
Advances to affiliated companies ............... 2,000 1,497
------- -------
$ 2,709 $ 2,708
======= =======
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, comprise the following:
1996 1995
------- -------
Land and buildings ........................... $11,758 $12,277
Laboratory equipment ......................... 20,509 19,455
Other operating fixed assets ................. 11,664 10,372
------- -------
43,931 42,104
Less: accumulated depreciation .............. 26,529 24,122
------- -------
$17,402 $17,982
======= =======
The buildings owned by Saybolt-van Duyn Holding BV, Saybolt United Kingdom
Ltd, Saybolt Finland Oy, Saybolt France S.A. and Saybolt-Heinrici Inc. are
mortgaged as security for the long-term bank loan facilities.
9
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
4. INTANGIBLE ASSETS
Intangible assets at December 31, consist of the following:
1996 1995
------ ------
Capitalized expenditures ..................... $ 549 $ 597
Goodwill ..................................... 3,497 3,803
------ ------
4,046 4,400
Less: accumulated amortization .............. 1,085 894
------ ------
$2,961 $3,506
====== ======
5. LINES OF CREDIT AND NOTES PAYABLE
Lines of credit and notes payable consist of the following at December 31:
1996 1995
------ ------
$6,900 line of credit. Borrowings
against the line bear interest at
variable rates based on Dutch interest
rates. The Company's borrowings under
the line of credit are secured by the
accounts receivable and other assets of
the Company. Amounts drawn under the
credit facility:
Amount payable upon demand if credit is
withdrawn, bearing interest at 6% per
annum ........................................ $1,293 $2,465
Long-term loan bearing interest at 9.2%
per annum. Payable in annual
installments of $382, balance due at
maturity in 2002 ............................. 1,513 2,062
Long-term loan bearing interest at 6.2%
per annum. Payable in annual
installments of $500, balance due at
maturity in 1998 ............................. 1,125 1,500
Mortgage loan payable to bank, accruing
interest at 8% per annum, payable in
yearly installments of $63, final
installment due in 2011. The loan is
secured by the Company's real estate in
France ....................................... 855 975
Note payable to bank, accruing interest
at 9.25% per annum, payable in monthly
installments of $4 with balance due at
maturity in November 1997. The note is
collateralized by a first lien on real
estate ....................................... 370 382
10
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
1996 1995
------- -------
Mortgage loan payable to bank accruing
interest at 7% per annum, payable in
yearly installments of $32, final
installment due in 2003. The loan is
secured by the Company's real estate in
the United Kingdom ............................. 212 313
Note payable to bank, accruing interest
at 8.75% per annum, payable in monthly
installments of $5. Remaining principal
and interest are due at maturity
(December 1997). The note is secured by
equipment and cross-collateralized by a
first lien deed of trust on real estate ........ -- 111
Note payable to financing company,
accruing interest at 5.2% per annum,
payable in nine monthly installments of
$29, maturing in May 1996 ..................... -- 141
Other .......................................... -- 649
------- -------
5,368 8,598
Less current maturities ........................ (2,640) (3,694)
------- -------
Non-current portion ............................ $ 2,728 $ 4,904
======= =======
Annual maturities of lines of credit and
notes payable are as follows:
1997 ............................................. $2,640
1998 ............................................. 977
1999 ............................................. 602
2000 ............................................. 462
2001 ............................................. 95
2002 and thereafter .............................. 592
------
$5,368
======
11
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
6. LEASE COMMITMENTS
The Company leases certain facilities under noncancelable operating leases
expiring in various years through 2005. Several of the leases are subject to
renewal options under various terms and certain agreements contain a
provision for periodic rate adjustments to reflect consumer price index
changes.
Future minimum lease commitments at December 31, 1996 can be summarized as
follows:
1997 .............................................. $2,486
1998 .............................................. 1,604
1999 .............................................. 909
2000 .............................................. 549
2001 .............................................. 252
2002 and thereafter ............................... 149
------
$5,949
======
7. INCOME TAXES
The provision for income taxes consists of:
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
------- ------ ------
CURRENT:
Netherlands ............... $ 445 $ 270 $1,218
Foreign ................... 2,380 1,184 1,269
------- ------ ------
2,825 1,454 2,487
------- ------ ------
DEFERRED:
Netherlands ............... -- -- --
Foreign ................... (546) 72 396
------- ------ ------
(546) 72 396
------- ------ ------
Total ................... $ 2,279 $1,526 $2,883
======= ====== ======
12
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
Significant components of the Company's deferred tax liabilities and assets
at December 31, are as follows:
1996 1995
------- -------
LIABILITIES:
Prepaid pension costs .......................... $ 114 $ 213
Other .......................................... 249 208
------- -------
Total deferred tax liabilities ............... 363 421
------- -------
ASSETS:
Net operating losses ........................... 911 1,365
Reserves for uninsured risks ................... 900 510
Accrued vacation ............................... 181 140
Bad debt expense ............................... 106 49
------- -------
Total deferred tax asset ..................... 2,098 2,064
Valuation allowance ............................ (911) (1,365)
------- -------
1,187 699
------- -------
Net deferred tax asset ..................... $ 824 $ 278
======= =======
Certain of the Company's non-US subsidiaries have available net operating
loss carryforwards which may be used to offset future taxable income, if
any, in the respective countries. Due to the uncertainty of generating
taxable income in these countries, the Company has recorded a 100% valuation
allowance with respect to the net operating loss carryforwards.
The provision for income taxes at the Company's effective tax rate differed
from the provision for income taxes at the Dutch statutory rate of 35% as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Expected tax expense at the expected statutory rate $ 2,423 $ 1,262 $ 2,422
Effect of foreign operations ...................... (516) (851) (166)
Operating losses with no current tax benefit ...... 504 731 232
Benefit from use of operating loss carryforwards .. (551) (35) (62)
State and local taxes ............................. 136 148 233
Other ............................................. 283 271 224
------- ------- -------
Total ........................................... $ 2,279 $ 1,526 $ 2,883
======= ======= =======
</TABLE>
The Company has not recorded deferred income taxes applicable to withholding
taxes on future dividends paid to The Netherlands. In most cases, a foreign
dividend withholding tax will be due upon actual distribution of such
dividend and, in that case, would be subject to the 5% withholding tax rate
under the respective tax treaty with The Netherlands.
13
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
8. RELATED PARTY TRANSACTIONS
The Company's principal lender is also a shareholder of the Company.
9. BENEFIT PLANS
The Company provides a retirement benefit to substantially all of its Dutch
employees equal to 1.75% of each employee's final pay for each year of
service, subject to a maximum of 70%. Funding for this benefit is in the
form of premiums paid to an insurance company based upon each employee's age
and current salary. Salary increases require higher premiums which are paid
over future years and are reflected, at their net present value, as a
provision for pension backservice liabilities. Employees are 100% vested at
all times. In the event an employee leaves the company, the Company is
required to immediately pay the backservice pension liability to the
insurance company. The insurance company has assumed substantially all risk
associated with the plan.
YEAR ENDED DECEMBER 31
------------------------
1996 1995 1994
---- ---- ------
Premiums ...................................... $648 $595 $ 684
Increase to pension backservice liabilities ... 76 328 328
---- ---- ------
Net cost .................................... $724 $923 $1,012
==== ==== ======
Discount rate ................................. 5% 5% 6%
The company has a defined benefit plan which covers substantially all
full-time employees at Saybolt Inc., a wholly owned subsidiary of the
Company, in the United States. The benefits are based on years of service
and the employee's final average earnings (as defined). The Company's
funding policy is to contribute annually the maximum amount that can be
deducted for U.S. income tax purposes. Contributions are intended to provide
not only benefits attributed to service to date but also for those expected
to be earned in the future.
The following table sets forth the plan's funded status of amounts
recognized in the Company's financial statements at December 31:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Actuarial present value of accumulated benefit
obligations, including vested benefits of $7,492
and $7,341 in 1996 and 1995, respectively.............. $(7,524) $(7,348)
------- -------
Projected benefit obligation for services
rendered to date ...................................... (8,250) (7,843)
Plan assets at fair value .............................. 8,928 8,664
------- -------
Plan assets in excess of projected benefit
obligation ............................................ 678 821
Unrecognized net (gain) or loss from past
experience different from assumptions ................. 800 986
Unrecognized net asset being recognized over
approximately 15 years ................................ (96) (118)
Unrecognized prior service cost being recognized
over approximately 15 years ........................... (1,062) (1,158)
------- -------
Prepaid pension cost included in prepaid
expenses ............................................. $ 320 $ 531
======= =======
</TABLE>
14
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
1996 1995
------- -------
NET PERIODIC PENSION COST INCLUDES THE FOLLOWING:
Service cost - benefits earned during the period . $ 433 $ 320
Interest cost on projected benefits obligation ... 542 531
Actual return on plan assets ..................... (1,045) (1,547)
Net amortization and deferral .................... 282 859
------- -------
Net period pension costs ....................... $ 212 $ 163
======= =======
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 7% for both 1996 and 1995. The expected
long-term rate of return on assets was 8% in 1996 and 1995.
Two of the Company's U.S. subsidiaries sponsor a 401(k) profit-sharing plan
and trust for their employees that includes an employer's matching
contribution equal to 50% of qualified employee contributions. Employees
vest in employer's contributions over two to five years of service. The
Company's contributions were $199 for 1996, $190 for 1995 and $32 for 1994.
The Company also provides retirement benefits to its employees in other
countries under various plans. Total pension expense related to these plans
aggregated $970, $572 and $732 for 1996, 1995 and 1994, respectively.
10. COMMITMENTS AND CONTINGENT LIABILITIES
a. The Company has given a guarantee of FRF 5,000,000 (approximately
$1,042) to Banque National de Paris ("BNP") for the mortgage of Saybolt
France SA.
b. The Company is party in various claims, legal actions and complaints
arising in the ordinary course of business. The company maintains
insurance coverage for such risks and accrues amounts it is likely to
pay in relation to such issues. Insurance coverage for claims made
related to its services is on a per claims basis with a deductible per
claim. While the resolution of any matter may have an impact on the
financial results of the period in which the matter is settled,
management believes that that the ultimate disposition of each of these
matters will not have a materially adverse effect upon the Company's
results of operations or financial position.
c. The Company's operations are subject to environmental and other
government regulation in the countries in which it operates. In the
latter part of 1996, the Company was informed that the Environmental
Protection Agency ("EPA") and the U.S. Department of Justice ("DOJ") had
commenced a criminal investigation into certain practices at several of
the Company's U.S. laboratories. The Company is cooperating with this
investigation and, in addition, has begun its own internal review of the
matter. If the EPA and/or DOJ conclude that the Company was in
noncompliance with any of the applicable rules and regulations, the
Company may be subjected to fines, civil or criminal proceedings,
sanctions and/or the revocation of its licenses and/or authorization to
perform certain services governed by the EPA or to continue to conduct
business in certain areas. While it is not presently possible to predict
the outcome of this matter, the ultimate disposition of this matter
could have a material adverse effect on the consolidated results of
operations and financial position of the Company.
15
<PAGE>
SAYBOLT INTERNATIONAL B.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(AMOUNTS EXPRESSED IN THOUSANDS OF US DOLLARS)
11. SHAREHOLDERS' EQUITY
The capitalization of the Company is as follows:
SHARES SHARES SHARES
AUTHORIZED ISSUED OUTSTANDING
--------- ------- -------
Common stock - class A ......... 1,000,000 504,639 504,639
Common stock - class B ......... 9,990,000 495,361 495,361
Preference A shares 500 ........ 5 -- --
Preference B shares 500 ........ 100 -- --
12. NET REVENUES
Net revenues by geographical region can be summarized as follows:
YEAR ENDED DECEMBER 31
--------------------------------
1996 1995 1994
-------- ------- -------
The Netherlands ....................... $ 13,384 $14,310 $12,944
Rest of Europe, CIS and Africa ........ 35,518 31,163 24,775
Middle West and Far East .............. 11,035 10,071 8,296
Americas .............................. 45,128 42,259 44,243
-------- ------- -------
$105,065 $97,803 $90,258
======== ======= =======
13. SUBSEQUENT EVENTS (UNAUDITED)
The Company is in negotiations to be acquired by Core Laboratories N.V.
("Core"), a Dutch company based in Amsterdam, The Netherlands whose stock
trades on the U.S. Nasdaq Stock Market. The transaction is subject to, among
other things, due diligence to be performed by Core, approval by regulators
and approval by the respective shareholders. There can be no assurance that
the transaction will be consummated.
16
<PAGE>
CORE LABORATORIES N.V. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following statements provide summary unaudited pro forma condensed
income statement data for the three months ended March 31, 1997 and for the year
ended December 31, 1996, and summary unaudited pro forma condensed consolidated
balance sheet data as of March 31, 1997. This pro forma financial data gives
effect to the acquisition of all the outstanding stock of Saybolt International
B.V. (the "Saybolt Acquisition"), by Core Laboratories N.V. (the "Company") as
if it had occurred, in the case of the income statement data, on January 1,
1996, and, in the case of the balance sheet data, on March 31, 1997. Such pro
forma financial data may not be indicative of what the financial condition or
results of operations of the Company would have been had the transaction to
which it gives effect been completed on such earlier date, nor is it necessarily
indicative of the financial condition or results of operations that may exist in
the future. The following pro forma information should be read in conjunction
with the Company's Annual Report on Form 10-K and Quarterly Reports on Form
10-Q, and the historical financial statements and notes of Saybolt International
B.V. appearing elsewhere in this Form 8-K/A.
17
<PAGE>
CORE LABORATORIES N.V.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
THE SAYBOLT AS
ASSETS COMPANY ACQUISITION ADJUSTED
--------- ------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................................ $ 1,884 $ 4,051(a) $ 5,935
Accounts receivable, net ................................................. 32,724 18,095(a) 50,819
Inventories .............................................................. 10,739 -- 10,739
Other current assets ..................................................... 2,503 5,054(a) 7,557
--------- ------- ---------
Total current assets ................................................... 47,850 27,200 75,050
PROPERTY, PLANT AND EQUIPMENT, at cost ....................................... 42,746 16,685(a) 59,431
Less - accumulated depreciation .......................................... (9,732) -- (9,732)
--------- ------- ---------
33,014 16,685 49,699
INTANGIBLES AND GOODWILL, net ................................................ 19,262 47,650(a) 66,912
OTHER LONG-TERM ASSETS ....................................................... 2,761 3,947(a) 6,708
--------- ------- ---------
Total assets ........................................................... $ 102,887 $95,482 $ 198,369
========= ======= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ..................................... $ 4,346 $ -- $ 4,346
Accounts payable ......................................................... 7,620 7,352(a) 14,972
Other current liabilities ................................................ 9,322 8,971(a) 18,293
--------- ------- ---------
Total current liabilities .............................................. 21,288 16,323 37,611
LONG-TERM DEBT ............................................................... 28,873 72,368(b) 101,241
OTHER LONG-TERM LIABILITIES .................................................. 3,396 6,791(a) 10,187
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preference shares, NLG .03 par value; 3,000,000 shares
authorized, none issued or outstanding ................................. -- -- --
Common stock, NLG .03 par value; 30,000,000 shares
authorized, 10,595,638 issued and outstanding
at March 31, 1997 ...................................................... 186 -- 186
Additional paid-in capital ............................................... 35,535 -- 35,535
Retained earnings ........................................................ 13,609 -- 13,609
--------- ------- ---------
Total shareholders' equity ............................................. 49,330 -- 49,330
--------- ------- ---------
Total liabilities and shareholders' equity ........................... $ 102,887 $95,482 $ 198,369
========= ======= =========
</TABLE>
(a) Represents the estimated allocation of the assets acquired and liabilities
assumed in connection with the Saybolt Acquisition including $44.7 million
of estimated goodwill. The purchase price allocation is preliminary, thus as
additional information concerning the value of the assets acquired and
liabilities assumed becomes known, adjustments will be made to the purchase
price allocation.
(b) Represents additional borrowings to finance the Saybolt Acquisition and
refinance debt assumed in the Saybolt Acquisition.
18
<PAGE>
CORE LABORATORIES N.V. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS
----------------------------- -----------
SAYBOLT SAYBOLT PRO FORMA
THE COMPANY ACQUISITION ACQUISITION AS ADJUSTED
----------- -------- ------- ------------
<S> <C> <C> <C> <C>
SALES AND SERVICES ..................................... $ 26,861 $ 25,402 $ -- $ 52,263
----------- -------- ------- ------------
OPERATING EXPENSES:
Costs of sales and services ........................ 21,347 22,928 -- 44,275
General and administrative expenses ................ 1,024 -- -- 1,024
Depreciation and amortization ...................... 1,462 1,000 279 (a) 2,741
Other (income) expense, net ........................ 49 (63) -- (14)
----------- -------- ------- ------------
Income (loss) before interest expense
and income tax expense ............................. 2,979 1,537 (279) 4,237
INTEREST EXPENSE ....................................... 287 250 1,256 (b) 1,793
----------- -------- ------- ------------
Income (loss) before income
tax expense (benefit) ........................... 2,692 1,287 (1,535) 2,444
INCOME TAX EXPENSE (BENEFIT) ........................... 808 444 (537)(c) 715
----------- -------- ------- ------------
Net income (loss) ............................... $ 1,884 $ 843 $ (998) $ 1,729
=========== ======== ======= ============
NET INCOME PER SHARE ................................... $ .18 $ .16
=========== ============
WEIGHTED AVERAGE
SHARES OUTSTANDING ................................. 10,760,684 10,760,684
=========== ============
</TABLE>
(a) Represents amortization expense for the estimated amount of goodwill to be
acquired in the Saybolt Acquisition which will be amortized over an
estimated 40-year life.
(b) Represents interest expense on the additional borrowings of $67 million to
finance the Saybolt Acquisition at an interest rate of 7.5%.
(c) Represents the tax effect of the aforementioned pro forma adjustments based
on the Dutch statutory rate of 35%.
19
<PAGE>
CORE LABORATORIES N.V. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS
----------------------------- -----------
SAYBOLT SAYBOLT PRO FORMA
THE COMPANY ACQUISITION ACQUISITION AS ADJUSTED
------------ --------- ------- ------------
<S> <C> <C> <C> <C>
SALES AND SERVICES ...................................... $ 105,368 $ 105,358 $ -- $ 210,726
------------ --------- ------- ------------
OPERATING EXPENSES:
Costs of sales and services ......................... 84,643 94,370 -- 179,013
General and administrative expenses ................. 3,559 -- -- 3,559
Depreciation and amortization ....................... 4,600 3,816 1,117 (a) 9,533
Other income, net ................................... (248) (512) -- (760)
------------ --------- ------- ------------
Income (loss) before interest expense
and income tax expense .............................. 12,814 7,684 (1,117) 19,381
INTEREST EXPENSE ........................................ 1,418 1,080 5,025 (b) 7,523
------------ --------- ------- ------------
Income (loss) before income
tax expense (benefit) ............................... 11,396 6,604 (6,142) 11,858
INCOME TAX EXPENSE (BENEFIT) ............................ 3,719 2,279 (2,150)(c) 3,848
------------ --------- ------- ------------
Net income (loss) ................................... $ 7,677 $ 4,325 $(3,992) $ 8,010
------------ ========= ======= ============
NET INCOME PER SHARE .................................... $ .72 $ .75
============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING .................................. 10,690,902 10,690,902
============ ============
</TABLE>
(a) Represents amortization expense for the estimated amount of goodwill to be
acquired in the Saybolt Acquisition which will be amortized over an
estimated 40-year life.
(b) Represents interest expense on the additional borrowings of $67 million to
finance the Saybolt Acquisition at an interest rate of 7.5%.
(c) Represents the tax effect of the aforementioned pro forma adjustments based
on the Dutch statutory rate of 35%.
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORE LABORATORIES N.V.
by: Core Laboratories International B.V.
Dated: July 21, 1997 By: /s/RICHARD L. BERGMARK
Richard L. Bergmark
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Chief Accounting Officer)
21
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-98590) of Core Laboratories N.V. our report dated
April 1, 1997 relating to the consolidated financial statements of Saybolt
International B.V., which appears in the Current Report on Form 8-K/A of Core
Laboratories N.V. dated July 21, 1997.
PRICE WATERHOUSE LLP
Houston, Texas
July 21, 1997
