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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, 1997
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 common shares of the Registrant, par value NLG .03 per share,
outstanding at August 6, 1997 was 10,610,622.
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<PAGE>
CORE LABORATORIES N.V.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
INDEX
Page
----
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 1
Consolidated Income Statements for the Three Months Ended
June 30, 1997 and 1996 ........................................ 2
Consolidated Income Statements for the Six Months Ended
June 30, 1997 and 1996 ........................................ 3
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996 ........................................ 4
Notes to Consolidated Financial Statements ....................... 5
Item 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 9
Part II -- Other Information
Item 1-- Legal Proceedings ........................................... 13
Item 2--Changes in Securities ........................................ 13
Item 3-- Defaults Upon Senior Securities ............................. 13
Item 4-- Submission of Matters to a Vote of Security Holders ......... 13
Item 5--Other Information ............................................ 13
Item 6-- Exhibits and Reports on Form 8-K ............................ 13
Signature ................................................................ 14
i
<PAGE>
CORE LABORATORIES N.V.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................................ $ 3,339 $ 2,935
Accounts receivable, net ......................................... 59,638 27,993
Inventories ...................................................... 10,100 9,472
Prepaid expenses and other ....................................... 5,989 1,223
Deferred tax assets .............................................. 2,541 927
---------- ----------
Total current assets ......................................... 81,607 42,550
PROPERTY, PLANT AND EQUIPMENT ........................................ 62,375 35,814
Less-- accumulated depreciation .................................. (10,498) (8,109)
---------- ----------
51,877 27,705
INTANGIBLES AND GOODWILL, net ........................................ 83,871 8,417
DEFERRED DEBT COSTS, net ............................................. 1,490 44
LONG-TERM INVESTMENT ................................................. 1,168 250
NON-CURRENT DEFERRED TAX ASSET ....................................... 245 245
OTHER LONG-TERM ASSETS ............................................... 813 480
---------- ----------
Total assets ................................................. $ 221,071 $ 79,691
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............................. $ 1,079 $ 4,430
Short-term debt .................................................. 387 --
Accounts payable ................................................. 12,413 5,909
Accrued payroll and related costs ................................ 5,914 3,141
Accrued income taxes payable ..................................... 2,558 1,008
Deferred tax liability ........................................... 608 604
Other accrued expenses ........................................... 25,344 2,253
---------- ----------
Total current liabilities .................................... 48,303 17,345
LONG-TERM DEBT ....................................................... 110,938 11,594
OBLIGATIONS UNDER CAPITAL LEASES ..................................... 285 --
NON-CURRENT DEFERRED TAX LIABILITY ................................... 1,104 1,970
OTHER LONG-TERM LIABILITIES .......................................... 7,066 1,159
MINORITY INTEREST .................................................... 782 212
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,
10,608,622 and 10,592,638 issued and outstanding
at June 30, 1997 and December 31, 1996, respectively ......... 186 186
Additional paid-in capital ....................................... 35,541 35,500
Retained earnings ................................................ 16,866 11,725
---------- ----------
Total shareholders' equity ................................... 52,593 47,411
---------- ----------
Total liabilities and shareholders' equity ................ $ 221,071 $ 79,691
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
1
<PAGE>
CORE LABORATORIES N.V.
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED
JUNE 30,
-----------------------------
1997 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
SERVICES .................................... $ 45,174 $ 19,182
SALES ....................................... 8,566 6,762
------------ ------------
53,740 25,944
OPERATING EXPENSES:
Costs of services ....................... 35,490 15,417
Costs of sales .......................... 8,210 5,346
General and administrative expenses ..... 1,432 947
Depreciation and amortization ........... 2,499 1,063
Other (income) expense, net ............. 7 (1)
------------ ------------
47,638 22,772
INCOME BEFORE INTEREST EXPENSE AND
INCOME TAX EXPENSE ...................... 6,102 3,172
INTEREST EXPENSE ............................ 1,450 348
------------ ------------
INCOME BEFORE INCOME TAX EXPENSE ............ 4,652 2,824
INCOME TAX EXPENSE .......................... 1,395 927
------------ ------------
NET INCOME .................................. 3,257 1,897
============ ============
NET INCOME PER SHARE ........................ $ .30 $ .18
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING ......... 10,838,202 10,674,567
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
CORE LABORATORIES N.V.
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
SIX MONTHS ENDED
JUNE 30,
-----------------------------
1997 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
SERVICES .................................... $ 67,397 $ 37,782
SALES ....................................... 13,204 13,641
------------ ------------
80,601 51,423
OPERATING EXPENSES:
Costs of services ....................... 52,967 30,468
Costs of sales .......................... 12,080 11,022
General and administrative expenses ..... 2,456 1,877
Depreciation and amortization ........... 3,961 2,200
Other (income) expense, net ............. 56 (69)
------------ ------------
71,520 45,498
INCOME BEFORE INTEREST EXPENSE AND
INCOME TAX EXPENSE ...................... 9,081 5,925
INTEREST EXPENSE ............................ 1,737 753
------------ ------------
INCOME BEFORE INCOME TAX EXPENSE ............ 7,344 5,172
INCOME TAX EXPENSE .......................... 2,203 1,693
------------ ------------
NET INCOME .................................. 5,141 3,479
============ ============
NET INCOME PER SHARE ........................ $ .48 $ .33
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING ......... 10,819,273 10,648,501
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1997 1996
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .............................................. $ 5,141 $ 3,479
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ....................... 3,961 2,046
Gain on sale of fixed assets ........................ (5) --
Changes in assets and liabilities:
Increase in accounts receivable ..................... (8,615) (449)
Decrease in inventories ............................. 595 918
Decrease (increase) in prepaid expenses and other ... (746) 40
Decrease in accounts payable ........................ (5,819) (1,723)
Increase (decrease) in accrued payroll .............. 248 (801)
Increase (decrease)in accrued income taxes payable .. 458 (525)
Decrease in other accrued expenses .................. (1,964) (63)
Other ............................................... 151 (65)
---------- ----------
Net cash provided by operating activities ........ (6,595) 2,857
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .................................... (5,979) (2,135)
Proceeds from sale of fixed assets ...................... 69 --
Acquisition of Scott Pickford plc, net of cash .......... (15,023) --
Acquisition of Saybolt, net of cash ..................... (62,987) --
Acquisition of Gulf States Analytical, Inc. ............. -- (4,310)
---------- ----------
Net cash used in investing activities ............... (83,920) (6,445)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt .............................. (18,218) (7,583)
Borrowings under long-term debt ......................... 110,637 10,058
Decrease in short-term debt ............................. -- (190)
Debt acquisition costs .................................. (1,541) --
Exercise of stock options ............................... 41 --
Other ................................................... -- (26)
---------- ----------
Net cash provided by financing activities ........... 90,919 2,259
---------- ----------
NET CHANGE IN CASH .......................................... 404 (1,329)
CASH, beginning of period ................................... 2,935 4,940
---------- ----------
CASH, end of period ......................................... $ 3,339 $ 3,611
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
CORE LABORATORIES N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION AND ESTIMATES
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, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. Balance sheet information as of December 31,
1996, has been taken from the 1996 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 27, 1997.
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
On December 31, 1996, Core Laboratories N.V. completed the acquisition of
ProTechnics Company ("ProTechnics"). The acquisition was accounted for as a
pooling of interests; accordingly, the accompanying consolidated financial
statements have been restated to include the results of ProTechnics for all
periods presented.
EARNINGS PER SHARE
Net income per share is calculated by dividing net income by the weighted
average number of common shares and common share equivalents outstanding during
the periods presented. Fully diluted income per share is equal to primary income
per share in all periods presented.
In February, 1997, the Financial Accounting Standards Board issued SFAS No.
128 "Earnings Per Share", revising the methodology to be used in computing
earnings per share ("EPS") requiring that the computations required for primary
and fully diluted EPS are replaced with "basic" and "diluted" EPS. The Company
will adopt SFAS No. 128 effective December 31, 1997 and will restate EPS for all
periods presented. The Company anticipates that the amount reported for basic
EPS for the three and six month periods ending June 30, 1997 will be unchanged.
5
<PAGE>
2. ACQUISITIONS
SCOTT PICKFORD ACQUISITION
On March 1, 1997, the Company acquired the control of a majority of the
outstanding shares of Scott Pickford plc. The Company is in the process of
acquiring the remaining shares and expects that the total consideration paid for
Scott Pickford plc will total approximately $15.1 million. Scott Pickford plc
and its subsidiaries ("Scott Pickford") provide petroleum reservoir management,
geoscience services, and engineering products to its customers. Scott Pickford
reported revenues of $13,223,000, $13,319,000 and $7,545,000 for its fiscal
years ended March 31, 1996, 1995, and 1994, respectively. The acquisition was
financed through borrowings, accounted for using the purchase method of
accounting and resulted in approximately $12.2 million of goodwill which is
being amortized over a forty year period. Scott Pickford's results of operations
are included with those of the Company beginning March 1, 1997. The purchase
price allocations have been completed on a preliminary basis, thus as additional
information concerning the value of the assets acquired and liabilities assumed
becomes known additional adjustments will be made to the purchase price
allocation included in the accompanying financial statements.
SAYBOLT INTERNATIONAL B.V. ACQUISITION
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.
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 $60.6 million of
goodwill which is being amortized over a 40-year period. Financing for the
transaction was provided through the New Credit Agreement (see Note 5).
Saybolt's results of operations are included with those of the Company beginning
in May. The purchase price allocations have been completed on a preliminary
basis, thus as additional information concerning the value of the assets
acquired and liabilities assumed becomes known additional adjustments will be
made to the purchase price allocation included in the accompanying financial
statements.
3. PRO FORMA INFORMATION
Unaudited pro forma revenues, income before extraordinary item and income per
share before extraordinary item, assuming that the acquisition of Saybolt and
Scott Pickford discussed in Note 2 had been consummated at January 1, 1996, are
summarized as follows (in thousands, except per share data):
6
<PAGE>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
Revenues....................................... $ 115,878 $ 227,016
Income before extraordinary item............... $ 3,741 $ 6,656
Income per share before extraordinary item..... $ .35 $ .62
4. 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,
1997 1996
--------- --------
(UNAUDITED) (AUDITED)
Parts and materials............ $ 5,907 $ 4,011
Work in process................ 4,193 5,461
--------- --------
Total .................. $ 10,100 $ 9,472
========= ========
5. LONG-TERM DEBT
Long-term debt at June 30, 1997 and December 31, 1996 is summarized in the
following table (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
--------- --------
(UNAUDITED) (AUDITED)
<S> <C> <C>
New Credit Agreement with a bank group:
$70,000 term loan facility........................... $ 70,000 $ --
$55,000 revolving credit facility.................... 37,000 --
Consideration payable for Scott Pickford plc 1,051 --
Long-term loan bearing interest at 9.2% per annum. 1,198 --
Long-term loan bearing interest at 6.2% per annum. 785 --
Mortgage notes........................................... 1,740 --
Amended Unsecured Credit Agreement with a bank group:
$14,000 term loan facility........................... -- 9,375
$15,000 guidance facility............................ -- 5,440
$1,250 revolving credit facility......................... -- 400
$850 term loan facility.................................. -- 722
Other indebtedness....................................... 243 87
--------- ---------
Total debt ....................................... 112,017 16,024
Less-- current maturities............................ 1,079 4,430
--------- ---------
Total long-term debt.......................... $ 110,938 $ 11,594
========= =========
</TABLE>
On May 12, 1997 the Company entered into a New Credit Agreement which was
used to finance the acquisitions of Saybolt and Scott Pickford, as well as
refinance the Unsecured Credit Agreement. The New Credit Agreement provides for
(i) a term loan of $55 million, (ii) a term loan denominated in
7
<PAGE>
British pounds having a US dollar equivalency of $15 million, (iii) a committed
revolving debt facility of $50 million, and (iv) a Netherlands guilder
denominated revolving facility with US dollar equivalency of $5 million. Loans
under the new credit facility will generally bear interest from LIBOR plus .75
to a maximum of LIBOR plus 1.75. The term loans require quarterly principal
payments in amounts set forth in the agreement, beginning March 31, 1999 with
the final principal payment due June 30, 2002. The revolving credit facilities
require interest payments only, until maturity on June 30, 2002. The terms of
the New Credit Agreement will require the Company to meet certain financial
covenants, including certain minimum equity and cash flow tests.
The Company expects to fund any future acquisitions primarily through a
combination of working capital, cash flow from operations and bank borrowings,
including the credit facility and issuance of additional equity.
8
<PAGE>
CORE LABORATORIES N.V.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is one of the leading providers of petroleum reservoir
description data and production management services for maximizing hydrocarbon
recovery from new and existing fields. The company is the world's largest
provider of petroleum reservoir rock and fluids analyses and multidisciplinary
reservoir description studies. Core is also a leading provider of field services
evaluating the efficiencies of well completions and stimulations and the
effectiveness of enhanced oil recovery projects. In addition, the Company
manufactures and sells petroleum reservoir rock and fluid analysis
instrumentation and other integrated systems. Currently, Core Laboratories
operates 70 facilities in over 50 countries and has approximately 3,000
employees.
Certain matters discussed herein may contain forward-looking statements that
are subject to risks and uncertainties. Such risks and uncertainties include,
but are not limited to, the following: the continued expansion of Technology
Services is dependent upon the Company's ability to continue to develop new and
useful technology; the improvement of margins is subject to the risk that
anticipated synergies of existing and recently acquired businesses and future
acquisitions will not be realized; the Company's dependence on one industry
segment, oil and gas; the risks and uncertainties attendant to adverse economic
and financial market conditions, including stock prices, interest rates and
credit availability; and competition in the Company's markets. Should one or
more of these risks or uncertainties materialize and should any of the
underlying assumptions prove incorrect, actual results of current and future
operations may vary materially from those anticipated.
RECENT DEVELOPMENTS
SCOTT PICKFORD ACQUISITION
On March 1, 1997, the Company acquired the control of a majority of the
outstanding shares of Scott Pickford plc. The Company is in the process of
acquiring the remaining shares and expects that the total consideration paid for
Scott Pickford plc will total approximately $15.1 million. Scott Pickford plc
and its subsidiaries ("Scott Pickford") provide petroleum reservoir management,
geoscience services, and engineering products to its customers. Scott Pickford
reported revenues of $13,223,000, $13,319,000 and $7,545,000 for its fiscal
years ended March 31, 1996, 1995, and 1994, respectively. The acquisition was
financed through borrowings, accounted for using the purchase method of
accounting and resulted in approximately $12.2 million of goodwill which is
being amortized over a forty year period. Scott Pickford's results of operations
are included with those of the Company beginning March 1, 1997. The purchase
price allocations have been completed on a preliminary basis, thus as additional
information concerning the value of the assets acquired and liabilities assumed
becomes known additional adjustments will be made to the purchase price
allocation included in the accompanying financial statements.
9
<PAGE>
SAYBOLT INTERNATIONAL B.V. ACQUISITION
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.
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 $60.6 million of
goodwill which is being amortized over a 40-year period. Financing for the
transaction was provided through the New Credit Agreement (see Liquidity and
Capital Resources). Saybolt's results of operations are included with those of
the Company beginning in May. The purchase price allocations have been completed
on a preliminary basis, thus as additional information concerning the value of
the assets acquired and liabilities assumed becomes known additional adjustments
will be made to the purchase price allocation included in the accompanying
financial statements.
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 JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------ -------------------------------------
PERCENTAGE OF PERCENTAGE OF
TOTAL REVENUE TOTAL REVENUE
----------------------- % INCREASE ----------------------- % INCREASE
1997 1996 (DECREASE) 1997 1996 (DECREASE)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Services .............................. 84.1 73.9 135.5 83.6 73.5 78.4
Sales ................................. 15.9 26.1 26.7 16.4 26.5 (3.2)
---------- ---------- ---------- ----------
100.0 100.0 107.1 100.0 100.0 56.7
Operating expenses:
Cost of services .................. 66.0 59.4 130.2 65.7 59.2 73.8
Cost of sales ..................... 15.3 20.6 53.6 15.0 21.4 9.6
General and administrative expenses 2.7 3.7 51.2 3.0 3.7 30.8
Depreciation and amortization ..... 4.6 4.1 135.1 4.9 4.3 80.0
Other income, net ................. -- -- * 0.1 (0.1) *
---------- ---------- ---------- ----------
88.6 87.8 109.2 88.7 88.5 57.2
Income before interest expense and
income tax expense ................ 11.4 12.2 92.4 11.3 11.5 53.3
Interest expense ...................... 2.7 1.3 316.7 2.2 1.4 130.7
---------- ---------- ---------- ----------
Income before income tax expense ...... 8.7 10.9 64.7 9.1 10.1 42.0
Income tax expense .................... 2.6 3.6 50.5 2.7 3.3 30.1
---------- ---------- ---------- ----------
Net income ............................ 6.1 7.3 71.7 6.4 6.8 47.8
========== ========== ========== ==========
</TABLE>
* Percentage not meaningful.
10
<PAGE>
Services revenue for quarter ended June 30, 1997 increased 135.5% to $45.2
million. Services revenue for the six month period ended June 30, 1997 was up
78.4% to $67.4 million. The increases were primarily due to (i) increased
worldwide demand for reservoir core and fluids analysis, and (ii) additional
revenue from the March 1, 1997 acquisition of Scott Pickford and May 12, 1997
acquisition of Saybolt.
Sales revenue for the three month period ended June 30, 1997 increased 26.7%
or $1.8 million over the same period of the prior year. The increase was
primarily attributed to the acquisition of Scott Pickford's manufacturing
division and slightly off-set by decreased sales of integrated octane-measuring
and process analyzer systems due to a weaker US refining market.
Sales revenue for the six month period ended June 30, 1997 remained constant
compared to the prior year.
Costs of services as a percentage of services revenue for the three and six
months ended June 30, 1997 improved slightly compared to a year ago, due to
improved cost savings and efficiencies.
Cost of sales as a percentage of sales revenue for three and six months
ended June 30, 1997 weakened compared to a year ago due to sales of lower margin
products.
General and administrative expenses for the three and six months ended June
30, 1997 increased $0.5 million and $0.6 million respectively, as compared to
the corresponding period in 1996. The increase was primarily due to increased
personnel costs and administrative expenses due to the Company's growth. The
Company's ongoing program to maintain tight controls over expenses has resulted
in maintaining general and administrative expenses as a percentage of sales
under 4%.
Depreciation and amortization expense for the three and six month period
ended June 30, 1997 increased for both periods, as compared to a year ago, due
primarily to the acquisitions of Scott Pickford and Saybolt.
Interest expense for the three and six months ended June 30, 1997 increased
$1.1 and $0.9 million as compared to 1996. The increase was primarily due to the
additional borrowings used to finance the Saybolt and Scott Pickford
acquisitions.
The Company's effective income tax rate was approximately 30.0% for the
three and six months ended June 30, 1997 as compared to 32.8% for three and six
months ended June 30, 1996.
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, 1997 the
Company had operating cash flow of ($6.6) million as compared to $2.9 million
for the corresponding period in 1996. Management believes the Company's internal
and external sources of cash will provide the necessary funds with which to meet
its expected obligations.
11
<PAGE>
On May 12, 1997 the Company entered into a New Credit Agreement which was
used to finance the acquisitions of Saybolt and Scott Pickford, as well as
refinance the Unsecured Credit Agreement. The New Credit Agreement provides for
(i) a term loan of $55 million, (ii) a term loan denominated in British pounds
having a US dollar equivalency of $15 million, (iii) a committed revolving debt
facility of $50 million, and (iv) a Netherlands guilder denominated revolving
facility with US dollar equivalency of $5 million. Loans under the new credit
facility will generally bear interest from LIBOR plus .75 to a maximum of LIBOR
plus 1.75. The term loans require quarterly principal payments in amounts set
forth in the agreement, beginning March 31, 1999 with the final principal
payment due June 30, 2002. The revolving credit facilities require interest
payments only, until maturity on June 30, 2002. The terms of the New Credit
Agreement will require the Company to meet certain financial covenants,
including certain minimum equity and cash flow tests.
The Company expects to fund any future acquisitions primarily through a
combination of working capital, cash flow from operations and bank borrowings,
including the credit facility and issuance of additional equity.
12
<PAGE>
CORE LABORATORIES N.V.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company may from time to time be subject to legal proceedings and claims
which arise in the ordinary course of its business. Management believes that the
outcome of these legal actions will not have a material adverse effect upon the
consolidated financial position or future 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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Incorporated by
Reference from the
Exhibit No. Exhibit Title Following Documents
----------- ------------- -------------------
27.1 Financial Data Schedule Filed Herewith
(b) On July 21, 1997 Core Laboratories Inc. filed a Report on Form 8-K/A
relating the acquisition of Saybolt International B.V. by Core
Laboratories N.V.
13
<PAGE>
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 14, 1997 By: /S/ RICHARD L. BERGMARK
Richard L. Bergmark
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Chief Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,339
<SECURITIES> 0
<RECEIVABLES> 62,295
<ALLOWANCES> 2,657
<INVENTORY> 10,100
<CURRENT-ASSETS> 81,607
<PP&E> 62,375
<DEPRECIATION> 10,498
<TOTAL-ASSETS> 221,071
<CURRENT-LIABILITIES> 48,303
<BONDS> 0
0
0
<COMMON> 186
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 221,071
<SALES> 53,740
<TOTAL-REVENUES> 53,740
<CGS> 43,700
<TOTAL-COSTS> 47,638
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,450
<INCOME-PRETAX> 4,652
<INCOME-TAX> 1,395
<INCOME-CONTINUING> 3,257
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,257
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
