(Former name, former address and former fiscal year, if changed since last report)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The number of common shares of the registrant, par value EUR 0.02 per share, outstanding at ~~October 23, 2019~~April 22, 2020 was ~~44,374,852.~~

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS	(Unaudited)						(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	13,128		$	13,116		$	13,890		$	11,092
Accounts receivable, net of allowance for doubtful accounts of $2,858 and $2,650 at 2019 and 2018, respectively		137,355			129,157
Accounts receivable, net of allowance for doubtful accounts of $2,436 and $2,730 at 2020 and 2019, respectively								126,872			131,579
Inventories		53,528			45,664			52,263			50,163
Prepaid expenses		12,508			15,351			14,328			15,951
Income taxes receivable		7,853			13,993			5,899			6,527
Other current assets		6,314			13,696			6,455			5,925
TOTAL CURRENT ASSETS		230,686			230,977			219,707			221,237
PROPERTY, PLANT AND EQUIPMENT, net		125,078			122,917			123,112			123,506
RIGHT OF USE ASSETS		76,238			—			74,943			75,697
INTANGIBLES, net		17,763			13,054			8,973			17,450
GOODWILL		213,425			219,412			99,376			213,425
DEFERRED TAX ASSETS, net		71,296			11,252			71,219			67,312
OTHER ASSETS		53,210			51,215			49,279			56,046
TOTAL ASSETS	$	787,696		$	648,827		$	646,609		$	774,673
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	42,191		$	41,155		$	37,054		$	35,611
Accrued payroll and related costs		27,866			22,549			28,563			26,689
Taxes other than payroll and income		7,961			7,488			5,869			8,366
Unearned revenues		12,348			17,325			11,210			13,381
Operating lease liabilities		11,869			—			12,583			11,841
Income taxes payable		4,996			2,917			5,056			6,324
Other current liabilities		12,766			11,113			8,112			9,382
TOTAL CURRENT LIABILITIES		119,997			102,547			108,447			111,594
LONG-TERM DEBT, net		297,148			289,770			302,420			305,283
LONG-TERM OPERATING LEASE LIABILITIES		63,754			—			60,162			64,660
DEFERRED COMPENSATION		49,072			49,359			46,358			50,485
DEFERRED TAX LIABILITIES, net		29,196			7,634			23,871			27,338
OTHER LONG-TERM LIABILITIES		33,968			38,617			35,277			33,173
COMMITMENTS AND CONTINGENCIES
EQUITY:
Preference shares, EUR 0.02 par value; 6,000,000 shares authorized, NaN issued or outstanding		—			—			—			—
Common shares, EUR 0.02 par value; 200,000,000 shares authorized, 44,796,252 issued and 44,374,852 outstanding at 2019 and 44,796,252 issued and 44,316,845 outstanding at 2018		1,148			1,148
Common shares, EUR 0.02 par value; 200,000,000 shares authorized, 44,796,252 issued and 44,444,177 outstanding at 2020 and 44,796,252 issued and 44,465,562 outstanding at 2019								1,148			1,148
Additional paid-in capital		64,498			57,438			60,982			51,872
Retained earnings		174,615			156,130			41,007			160,539
Accumulated other comprehensive income (loss)		(6,604	)		(5,456	)		(8,239	)		(6,330	)
Treasury shares (at cost), 421,400 at 2019 and 479,407 at 2018		(43,411	)		(52,501	)
Treasury shares (at cost), 352,075 at 2020 and 330,690 at 2019								(29,182	)		(29,364	)
Total Core Laboratories N.V. shareholders' equity		190,246			156,759			65,716			177,865
Non-controlling interest		4,315			4,141			4,358			4,275
TOTAL EQUITY		194,561			160,900			70,074			182,140
TOTAL LIABILITIES AND EQUITY	$	787,696		$	648,827		$	646,609		$	774,673

The accompanying notes are an integral part of these consolidated financial statements.

	Three months ended						Three months ended
	September 30,						March 31,
	2019			2018			2020			2019
	(Unaudited)						(Unaudited)
REVENUE:
Services	$	120,817		$	124,145		$	109,967		$	120,338
Product sales		52,383			58,001			42,433			48,856
Total revenue		173,200			182,146			152,400			169,194
OPERATING EXPENSES:
Cost of services, exclusive of depreciation expense shown below		86,243			88,435			80,941			92,359
Cost of product sales, exclusive of depreciation expense shown below		39,753			39,744			34,190			35,024
General and administrative expense, exclusive of depreciation expense shown below		11,012			13,278			19,567			17,437
Depreciation		5,199			5,436			5,042			5,239
Amortization		498			244			399			348
Impairments								122,204			—
Other (income) expense, net		(712	)		130			(970	)		2,373
OPERATING INCOME		31,207			34,879
OPERATING INCOME (LOSS)								(108,973	)		16,414
Interest expense		3,662			3,278			3,411			3,726
Income from continuing operations before income tax expense		27,545			31,601
Income tax expense		3,335			9,404
Income from continuing operations		24,210			22,197
Income (loss) from continuing operations before income tax expense								(112,384	)		12,688
Income tax expense (benefit)								(4,046	)		(27,610	)
Income (loss) from continuing operations								(108,338	)		40,298
Income (loss) from discontinued operations, net of income taxes		(397	)		208			—			259
Net income		23,813			22,405
Net income (loss)								(108,338	)		40,557
Net income (loss) attributable to non-controlling interest		84			(7	)		83			47
Net income attributable to Core Laboratories N.V.	$	23,729		$	22,412
Net income (loss) attributable to Core Laboratories N.V.							$	(108,421	)	$	40,510

EARNINGS (LOSS) PER SHARE INFORMATION:
Basic earnings per share from continuing operations	$	0.55		$	0.50
Basic earnings (loss) per share from continuing operations							$	(2.44	)	$	0.91
Basic earnings (loss) per share from discontinued operations	$	(0.01	)	$	0.01		$	—		$	—
Basic earnings per share attributable to Core Laboratories N.V.	$	0.54		$	0.51
Basic earnings (loss) per share attributable to Core Laboratories N.V.							$	(2.44	)	$	0.91

Diluted earnings per share from continuing operations	$	0.54		$	0.50
Diluted earnings (loss) per share from continuing operations							$	(2.44	)	$	0.90
Diluted earnings (loss) per share from discontinued operations	$	(0.01	)	$	—		$	—		$	0.01
Diluted earnings per share attributable to Core Laboratories N.V.	$	0.53		$	0.50
Diluted earnings (loss) per share attributable to Core Laboratories N.V.							$	(2.44	)	$	0.91

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		44,371			44,216			44,447			44,323
Diluted		44,716			44,591
Assuming Dilution								44,447			44,734

The accompanying notes are an integral part of these consolidated financial statements.

Nine months ended

September 30,

2019

2018

(Unaudited)

REVENUE:

Services

$
359,029

$
366,025

Product sales

152,403

161,614

Total revenue

511,432

527,639

OPERATING EXPENSES:

Cost of services, exclusive of depreciation expense shown below

262,616

258,482

Cost of product sales, exclusive of depreciation expense shown below

115,214

112,788

General and administrative expense, exclusive of depreciation
expense shown below

38,250

38,189

Depreciation

15,631

16,646

Amortization

1,439

720

Other (income) expense, net

2,653

170

OPERATING INCOME

75,629

100,644

Interest expense

11,102

9,694

Income from continuing operations before income tax expense

64,527

90,950

Income tax expense (benefit)

(19,467
)

19,697

Income from continuing operations

83,994

71,253

Income (loss) from discontinued operations, net of income taxes

7,833

(466
)
Net income

91,827

70,787

Net income attributable to non-controlling interest

174

96

Net income attributable to Core Laboratories N.V.

$
91,653

$
70,691

EARNINGS (LOSS) PER SHARE INFORMATION:

Basic earnings per share from continuing operations

$
1.89

$
1.61

Basic earnings (loss) per share from discontinued operations

$
0.18

$
(0.01
)
Basic earnings per share attributable to Core Laboratories N.V.

$
2.07

$
1.60

Diluted earnings per share from continuing operations

$
1.87

$
1.60

Diluted earnings (loss) per share from discontinued operations

$
0.17

$
(0.01
)
Diluted earnings per share attributable to Core Laboratories N.V.

$
2.04

$
1.59

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

44,349

44,199

Diluted

44,854

44,613

	Three Months Ended
	March 31,
	2020			2019
	(Unaudited)
Net income (loss)	$	(108,338	)	$	40,557
Other comprehensive income:
Derivatives
Gain (loss) in fair value of interest rate swaps		(2,329	)		(372	)
Interest rate swap amounts reclassified to interest expense		47			(49	)
Income taxes on derivatives		373			89
Total derivatives		(1,909	)		(332	)
Pension and other postretirement benefit plans
Prior service cost
Amortization to net income of prior service cost		—			(25	)
Amortization to net income of actuarial loss		—			15
Income taxes on pension and other postretirement benefit plans		—			3
Total pension and other postretirement benefit plans		—			(7	)
Total other comprehensive income (loss)		(1,909	)		(339	)
Comprehensive income (loss)		(110,247	)		40,218
Comprehensive income attributable to non-controlling interest		83			47
Comprehensive income (loss) attributable to Core Laboratories N.V.	$	(110,330	)	$	40,171

The accompanying notes are an integral part of these consolidated financial statements.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

(Unaudited)

(Unaudited)

Net income

$
23,813

$
22,405

$
91,827

$
70,787

Other comprehensive income:

Derivatives

Gain (loss) in fair value of interest rate swaps

(293
)

205

(1,322
)

1,086

Interest rate swap amounts reclassified to interest expense

(8
)

4

(102
)

93

Income taxes on derivatives

63

(44
)

299

(248
)
Total derivatives

(238
)

165

(1,125
)

931

Pension and other postretirement benefit plans

Prior service cost

Amortization to net income of prior service cost

(25
)

(19
)

(75
)

(58
)
Amortization to net income of actuarial loss

15

84

44

252

Income taxes on pension and other postretirement benefit plans

3

(17
)

8

(49
)
Total pension and other postretirement benefit plans

(7
)

48

(23
)

145

Total other comprehensive income (loss)

(245
)

213

(1,148
)

1,076

Comprehensive income

23,568

22,618

90,679

71,863

Comprehensive income attributable to non-controlling interest

84

(7
)

174

96

Comprehensive income attributable to Core Laboratories N.V.

$
23,484

$
22,625

$
90,505

$
71,767

	Three months ended
	March 31,
	2020			2019
	(Unaudited)
Common Shares
Balance at Beginning of Period	$	1,148		$	1,148
Balance at End of Period	$	1,148		$	1,148

Additional Paid-In Capital
Balance at Beginning of Period	$	51,872		$	57,438
Stock based-awards		9,110			7,646
Balance at End of Period	$	60,982		$	65,084

Retained Earnings
Balance at Beginning of Period	$	160,539		$	156,130
Dividends paid		(11,111	)		(24,374	)
Net income (loss) attributable to Core Laboratories N.V.		(108,421	)		40,510
Balance at End of Period	$	41,007		$	172,266

Accumulated Other Comprehensive Income (Loss)
Balance at Beginning of Period	$	(6,330	)	$	(5,456	)
Amortization of deferred pension costs, net of tax		—			(7	)
Interest rate swaps, net of tax		(1,909	)		(332	)
Balance at End of Period	$	(8,239	)	$	(5,795	)

Treasury Stock
Balance at Beginning of Period	$	(29,364	)	$	(52,501	)
Stock based-awards		1,420			3,450
Repurchase of common shares		(1,238	)		(487	)
Balance at End of Period	$	(29,182	)	$	(49,538	)

Non-Controlling Interest
Balance at Beginning of Period	$	4,275		$	4,141
Net income (loss) attributable to non-controlling interest		83			47
Balance at End of Period	$	4,358		$	4,188

Total Equity
Balance at Beginning of Period	$	182,140		$	160,900
Stock based-awards		10,530			11,096
Repurchase of common shares		(1,238	)		(487	)
Dividends paid		(11,111	)		(24,374	)
Amortization of deferred pension costs, net of tax		—			(7	)
Interest rate swaps, net of tax		(1,909	)		(332	)
Net income (loss)		(108,338	)		40,557
Balance at End of Period	$	70,074		$	187,353

Cash Dividends per Share	$	0.25		$	0.55

The accompanying notes are an integral part of these consolidated financial statements.

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

(Unaudited)

(Unaudited)

Common Shares

Balance at Beginning of Period

$
1,148

$
1,148

$
1,148

$
1,148

Balance at End of Period

$
1,148

$
1,148

$
1,148

$
1,148

Additional Paid-In Capital

Balance at Beginning of Period

$
64,064

$
58,927

$
57,438

$
54,463

Stock based-awards

434

2,722

7,060

7,186

Balance at End of Period

$
64,498

$
61,649

$
64,498

$
61,649

Retained Earnings

Balance at Beginning of Period

$
175,285

$
173,499

$
156,130

$
173,855

Dividends paid

(24,399
)

(24,294
)

(73,168
)

(72,929
)
Net income attributable to Core Laboratories N.V.

23,729

22,412

91,653

70,691

Balance at End of Period

$
174,615

$
171,617

$
174,615

$
171,617

Accumulated Other Comprehensive Income (Loss)

Balance at Beginning of Period

$
(6,359
)

$
(7,490
)

$
(5,456
)

$
(8,353
)
Amortization of deferred pension costs, net of tax

(7
)

48

(23
)

145

Interest rate swaps, net of tax

(238
)

165

(1,125
)

931

Balance at End of Period

$
(6,604
)

$
(7,277
)

$
(6,604
)

$
(7,277
)

Treasury Stock

Balance at Beginning of Period

$
(45,877
)

$
(72,301
)

$
(52,501
)

$
(76,269
)
Stock based-awards

2,877

3,419

10,592

11,347

Repurchase of common shares

(411
)

(817
)

(1,502
)

(4,777
)
Balance at End of Period

$
(43,411
)

$
(69,699
)

$
(43,411
)

$
(69,699
)

Non-Controlling Interest

Balance at Beginning of Period

$
4,231

$
3,991

$
4,141

$
3,888

Non-controlling interest additions

—

(10
)

—

(10
)
Net income (loss) attributable to non-controlling interest

84

(7
)

174

96

Balance at End of Period

$
4,315

$
3,974

$
4,315

$
3,974

Total Equity

Balance at Beginning of Period

$
192,492

$
157,774

$
160,900

$
148,732

Stock based-awards

3,311

6,141

17,652

18,533

Repurchase of common shares

(411
)

(817
)

(1,502
)

(4,777
)
Dividends paid

(24,399
)

(24,294
)

(73,168
)

(72,929
)
Non-controlling interest additions

—

(10
)

—

(10
)
Amortization of deferred pension costs, net of tax

(7
)

48

(23
)

145

Interest rate swaps, net of tax

(238
)

165

(1,125
)

931

Net income

23,813

22,405

91,827

70,787

Balance at End of Period

$
194,561

$
161,412

$
194,561

$
161,412

Cash Dividends per Share

$
0.55

$
0.55

$
1.65

$
1.65

~~The accompanying notes are an integral part of these consolidated financial statements.~~

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2019			2018			2020			2019
	(Unaudited)						(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations	$	83,994		$	71,253
Income (loss) from continuing operations							$	(108,338	)	$	40,298
Income (loss) from discontinued operations, net of tax		7,833			(466	)		—			259
Net income	$	91,827		$	70,787		$	(108,338	)	$	40,557
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		17,652			18,533			10,530			11,096
Depreciation and amortization		17,070			17,366			5,441			5,587
Changes to value of life insurance policies		(2,110	)		(3,459	)		2,328			(1,771	)
Deferred income taxes		(38,469	)		(311	)		(7,374	)		(31,760	)
Gain on sale of business		(1,154	)		—
Gain on sale of discontinued operations		(8,411	)		—
Impairments								122,204			—
Other non-cash items		309			1,114			201			(74	)
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable		(8,924	)		(11,972	)		4,784			(3,936	)
Inventories		(7,202	)		(12,121	)		(2,285	)		(4,407	)
Prepaid expenses and other current assets		5,285			(935	)		1,724			3,443
Other assets		1,486			(451	)		4,931			(2,882	)
Accounts payable		1,762			(2,571	)		132			1,346
Accrued expenses		10,900			(1,452	)		(3,163	)		8,531
Unearned revenues		(6,545	)		742			(2,171	)		825
Other long-term liabilities		(5,251	)		(1,344	)		(6,919	)		(1,399	)
Net cash provided by operating activities	$	68,225		$	73,926		$	22,025		$	25,156
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	$	(17,537	)	$	(16,063	)	$	(3,340	)	$	(5,183	)
Patents and other intangibles		(90	)		(970	)		(77	)		86
Business acquisitions, net of cash acquired		—			(47,314	)		—			311
Proceeds from sale of assets		700			270
Proceeds from sale of business		2,980			—
Proceeds from sale of discontinued operations		14,789			—
Premiums on life insurance		(1,385	)		(788	)		(467	)		(419	)
Net cash used in investing activities	$	(543	)	$	(64,865	)	$	(3,884	)	$	(5,205	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt borrowings	$	(96,000	)	$	(80,000	)	$	(20,000	)	$	(32,000	)
Proceeds from debt borrowings		103,000			150,000			17,000			37,000
Debt financing costs		—			(1,645	)
Non-controlling interest-dividends		—			(10	)
Dividends paid		(73,168	)		(72,929	)		(11,111	)		(24,374	)
Repurchase of common shares		(1,502	)		(4,777	)		(1,238	)		(487	)
Other financing activities								6			—
Net cash used in financing activities	$	(67,670	)	$	(9,361	)	$	(15,343	)	$	(19,861	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		12			(300	)		2,798			90
CASH AND CASH EQUIVALENTS, beginning of period		13,116			14,400			11,092			13,116
CASH AND CASH EQUIVALENTS, end of period	$	13,128		$	14,100		$	13,890		$	13,206

Supplemental disclosures of cash flow information:
Cash payments for interest	$	11,832		$	9,768		$	4,523		$	4,795
Cash payments for income taxes	$	11,081		$	21,821		$	3,117		$	1,476

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying unaudited consolidated financial statements include the accounts of Core Laboratories N.V. and its subsidiaries for which we have a controlling voting interest and/or a controlling financial interest. These financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information using the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnote disclosures required by U.S. GAAP and should be read in conjunction with the audited financial statements and the summary of significant accounting policies and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the ~~"2018~~"2019 Annual Report").

Core Laboratories N.V. uses the equity method of accounting for investments in which it has less than a majority interest and over which it does not exercise control but does exert significant influence. We use the cost method to record certain other investments in which we own less than 20% of the outstanding equity and do not exercise control or exert significant influence. Non-controlling interests have been recorded to reflect outside ownership attributable to consolidated subsidiaries that are less than 100% owned. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included in these financial statements. Furthermore, the operating results presented for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 may not necessarily be indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020.

Core Laboratories N.V.'s balance sheet information for the year ended December 31, ~~2018~~2019 was derived from the ~~2018~~2019 audited consolidated financial statements but does not include all disclosures in accordance with U.S. GAAP.

References to "Core Lab", the "Company", "we", "our" and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Core Laboratories N.V. and its consolidated subsidiaries.

We operate our business in 2 reportable segments. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields.

Certain reclassifications were made to prior period amounts in order to conform to the current period presentation. These reclassifications had no impact on the reported net income or cash flows for the three ~~and nine~~ months ended ~~September 30, 2018.~~

	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Finished goods	$	28,915	$	26,636	$	29,118	$	26,507
Parts and materials		22,385		13,704		20,335		21,419
Work in progress		2,228		5,324		2,810		2,237
Total inventories	$	53,528	$	45,664	$	52,263	$	50,163

We include freight costs incurred for shipping inventory to our clients in the Cost of product sales caption in the accompanying Consolidated Statements of Operations.

Our significant accounting policies are detailed in "Note 2: Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Significant changes to our accounting policies as a result of adopting Topic ~~842 -~~326 – ~~Leases~~Financial Instruments-Credit Losses and Topic 350 – Intangibles-Goodwill and Other are discussed below:

We have ~~operating leases~~adopted the expected credit losses methodology for measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss impairment methodology. Our financial instruments that are potentially subject to credit losses consist primarily ~~consisting~~ of ~~offices~~cash and ~~lab space, machinery~~cash equivalents and ~~equipment and vehicles. We determine if an arrangement~~accounts receivable. There is ~~a lease at inception. Operating leases are included in right of use (“ROU”) assets, current operating lease liabilities and long-term operating lease liabilities~~no significant impact in our ~~Consolidated Balance Sheet. Finance leases, if any, are included in property~~consolidated financial statements or on our accounting policies and ~~equipment, other current liabilities~~processes upon the adoption of this standard.

Intangibles-Goodwill and ~~other long term liabilities in our Consolidated Balance Sheet.~~Other

~~Lease assets and lease liabilities are recognized based on~~We assess goodwill for impairment by comparing the ~~present~~fair value of the ~~future minimum lease payments over~~reporting unit to its carrying amount. If the ~~lease term at commencement date. Where~~fair value of a reporting unit is less than its carrying value, then there is an impairment loss limited to the amount of goodwill-allocated to that reporting unit. Our reporting units are the same as our ~~lease does not provide an implicit rate,~~2 reportable segments. On January 1, 2020, we ~~estimate~~adopted the discount rate used to discount the future minimum lease payments using our incremental borrowing rate and other information available at the commencement date. The ROU assets also include all initial direct costs incurred. Our lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.FASB new methodology for assessing goodwill impairment, see Note 20 - Recent Accounting Pronouncements for additional information.

Contract assets and liabilities result due to the timing of revenue recognition, billings and cash collections.

Contract assets include our right to payment for goods and services already transferred to a customer when the right to payment is conditional on something other than the passage of time, for example contracts where we recognize revenue over time but do not have a contractual right to payment until we complete the performance obligations. Contract assets are included in accounts receivable in our Consolidated Balance Sheet.

Contract liabilities consist of advance payments received and billings in excess of revenue recognized. We generally receive up-front payments relating to our consortia studies; we recognize revenue over the life of the study as the testing and analysis results are made available to our consortia members. We record billings in excess of revenue recognized for contracts with a duration less than twelve months as unearned revenue. We classify contract liabilities for contracts with a duration greater than twelve months as current or non-current based on the timing of when we expect to recognize revenue. The current portion of contract liabilities is included in unearned revenue and the non-current portion of contract liabilities is included in other long-term liabilities in our Consolidated Balance Sheet.

The balance of contract assets and contract liabilities consisted of the following (in thousands):

	September 30, 2019		March 31, 2020
Estimate of when contract liabilities will be recognized as revenue
within 12 months	$	3,929	$	3,636
within 12 to 24 months		434		249
greater than 24 months		—		—

We did 0t recognize any impairment losses on our receivables and contract assets for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020.

In 2018, we acquired a business providing downhole technologies associated with perforating systems for $48.9 million in cash. These downhole technologies will significantly enhance Core Lab's Production Enhancement operations and its ability to bring new and innovative product offerings to our clients. ~~During the three months ended September 30, 2019, we~~We finalized the fair value assessment of the assets ~~acquired.~~acquired during the third quarter of 2019. We have determined the fair value of tangible assets acquired to be $4.1 million, and intangible assets, including patents, customer-relationship benefits, non-compete agreements and trade secrets to be $9.4 million. We have accounted for this acquisition by allocating the purchase price to the net assets acquired based on their fair values at the date of acquisition which resulted in an increase to goodwill of $35.4 million. ~~During the three months ended September 30, 2019, we increased the fair value of intangible assets by $0.9 million.~~ The acquisition is included in the Production Enhancement business segment.

~~The acquisition of this business did not have a material impact on our Consolidated Balance Sheet or Consolidated Statements of Operations.~~

In 2018, in a continuing effort to streamline our business and align our business strategy for further integration of services and products, the Company committed to divest the business of our full range of permanent downhole monitoring systems and related services, which had been part of our Production Enhancement segment.

On June 7, 2019, we entered into a definitive purchase agreement for ~~the divestiture of our full range of permanent downhole monitoring systems and related services, which was previously part of our Production Enhancement segment for~~ approximately $16.6 million in cash. ~~The purchase agreement also provides for additional proceeds of up to $2.5 million based on the results of operations of the sold business in 2019 and 2020, none of which has been recognized.~~ A pre-tax gain of $8.3 million was recognized in connection with this transaction, subject to adjustments for working capital purposes and is classified in Income from discontinued operations in the Consolidated Statements of Operations. The purchase agreement also provides for additional proceeds of up to $2.5 million based on the results of operations of the sold business in 2019 and 2020, none of which has been recognized.

The associated results of operations are separately reported as Discontinued Operations for all periods presented on the Consolidated Statements of Operations. Balance sheet items for this discontinued business, including an allocation of goodwill from the Production Enhancement segment, have been reclassified to Other current assets and Other current liabilities in the Consolidated Balance Sheet as of December 31, 2018. Cash flows from this discontinued business are shown below. As such,

the results from continuing operations for the Company and segment highlights for Production Enhancement, exclude these discontinued operations.

Selected data for this discontinued business consisted of the following (in thousands):

	Nine Months Ended					Three Months Ended
	September 30, 2019		September 30, 2018				March 31, 2019
Service revenue	$	1,165	$	1,069			$	699
Product sales		4,233		3,768				1,768
Total revenue		5,398		4,837				2,467
Cost of services, exclusive of depreciation expense shown below		690		961				345
Cost of product sales, exclusive of depreciation expense shown below		3,196		4,124				1,642
Depreciation and amortization		—		115
Other expense		91		22				(26	)
Operating income (loss)		1,421		(385	)			506
Gain on sale		8,319		—
Income (loss) from discontinued operations before income tax expense		9,740		(385	)
Income tax expense		1,907		81
Income tax expense (benefit)								247
Income (loss) from discontinued operations, net of income taxes	$	7,833	$	(466	)		$	259

There are 0 balances recorded for the discontinued operations as of March 31, 2020 and December 31, 2019.

Net cash provided by (used in) operating activities of discontinued operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$0.1~~$0.0 million and ~~$(0.5)~~$0.7 million, respectively.

~~Net cash provided by investing activities of discontinued operations for the nine months ended September 30, 2019 and 2018 was $14.8 million and $0.0 million, respectively.~~

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Senior Notes	$	150,000		$	150,000		$	150,000		$	150,000
Credit Facility		149,000			142,000			154,000			157,000
Total long-term debt		299,000			292,000			304,000			307,000
Less: Debt issuance costs		(1,852	)		(2,230	)		(1,580	)		(1,717	)
Long-term debt, net	$	297,148		$	289,770		$	302,420		$	305,283

We have 2 series of senior notes outstanding with an aggregate principal amount of $150 million ("Senior Notes") issued in a private placement transaction. Series A consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.01% and are due in full on September 30, 2021. Series B consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.11% and are due in full on September 30, 2023. Interest on each series of the Senior Notes is payable semi-annually on March 30 and September 30.

The aggregate borrowing commitment under our revolving credit facility (the “Credit Facility”) is $300 million. The Credit Facility provides an option to increase the commitment under the Credit Facility by an additional $100 million to bring the total borrowings available to $400 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due June 19, 2023, when the Credit Facility matures. Our available capacity at any point in time is reduced by borrowings outstanding at the time and outstanding letters of credit which totaled ~~$19.1~~$14.6 million at ~~September 30, 2019,~~March 31, 2020, resulting in an available borrowing capacity under the Credit Facility of ~~$131.9~~$131.4 million. In addition to those items under the Credit Facility, we had ~~$12.0~~$6.6 million of outstanding letters of credit and performance guarantees and bonds from other sources as of ~~September 30, 2019.~~March 31, 2020.

The terms of the Credit Facility and Senior Notes require us to meet certain covenants, including, but not limited to, an interest coverage ratio (consolidated EBITDA divided by interest expense) and a leverage ratio (consolidated net indebtedness divided by consolidated EBITDA), where consolidated EBITDA (as defined in each agreement) and interest expense are calculated using the most recent four fiscal quarters. The Credit Facility and Senior Notes include a cross-default provision, which means that a default under one agreement may result in the default of the other agreement. The Credit Facility has the more restrictive covenants with a minimum interest coverage ratio of 3.0 to 1.0 and a maximum leverage ratio of 2.5 to 1.0. The Credit Facility agreement allows non-cash charges such as impairment of assets, stock compensation and other non-cash charges to be added back in the calculation of EBITDA. The terms of our Credit Facility also allow us to negotiate in good faith to amend any ratio or requirement to preserve the original intent of the agreement if any change in accounting principle would affect the computation of any financial ratio or requirement of the Credit Facility. ~~The adoption on January 1, 2019~~Pursuant to the terms of ~~ASU 2016-02 does not affect~~our Credit Facility, we have calculated our leverage ratio to be 1.93, and our interest coverage ratio to be 8.59 for the ~~calculation of consolidated EBITDA under the agreement.~~period ending March 31, 2020. We believe that we are in compliance with all such covenants contained in our credit agreements. Certain of our material, wholly-owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes.

~~In 2014, we~~We entered into 2 interest rate swap agreements for a total notional amount of $50 million, including one of which ~~expired~~was entered during the three months ended ~~September 30, 2019.~~March 31, 2020. See Note 1517 - Derivative Instruments and Hedging Activities.

The estimated fair value of total debt at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 approximated the book value of total debt. The fair value was estimated using Level 2 inputs by calculating the sum of the discounted future interest and principal payments through the date of maturity.

~~We provide~~Prior to January 2020, we provided a noncontributory defined benefit pension plan covering substantially all of our Dutch employees ("Dutch Plan") who were hired prior to 2000. ~~The~~During 2019 and 2018, there was a curtailment of the Dutch Plan for our Dutch employees whose pension benefit iswas based on years of service and final pay or career average pay, depending on when the employee began participating. ~~The benefits earned by~~These employees have been moved into the ~~employees are immediately vested.~~Dutch defined contribution plan. However, the unconditional indexation for this group or participants remains as long as they stay in active service for the company. There is 0 further contribution to fund the Dutch Plan since end of 2019.

The following table summarizes the components of net periodic pension cost under the Dutch Plan (in thousands):

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019
Service cost	$	191		$	359		$	572		$	1,100		$	—		$	192
Interest cost		259			308			778			944			168			260
Expected return on plan assets		(231	)		(266	)		(692	)		(815	)		(154	)		(232	)
Amortization of prior service cost		(25	)		(19	)		(75	)		(58	)		—			(25	)
Amortization of actuarial loss		15			84			44			252			—			15
Net periodic pension cost	$	209		$	466		$	627		$	1,423		$	14		$	210

~~During the nine months ended September 30, 2019, we contributed $1.5 million~~

We have been and may from time to time be named as a defendant in legal actions that arise in the ordinary course of business. These include, but are not limited to, employment-related claims and contractual disputes or claims for personal injury or property damage which occur in connection with the provision of our services and products. A liability is accrued when a loss is both probable and can be reasonably estimated.

During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, we repurchased ~~8,397 and 24,453~~33,741 of our common shares for ~~$0.4~~$1.2 million. Included in this total were rights to 3,741 shares valued at $0.1 million, ~~and $1.5 million, respectively,~~ which were surrendered to us pursuant to the terms of a stock-based compensation plan in consideration of the participants' tax burdens that may result from the issuance of common shares under that plan. Such common shares, unless canceled, may be reissued for a variety of purposes such as future acquisitions, non-employee director stock awards or employee stock awards. We distributed ~~28,452 and 82,460~~12,356 treasury shares upon vesting of stock-based awards during the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020.

In February ~~May and August 2019,~~2020, we paid a quarterly dividend of ~~$0.55~~$0.25 per share of common stock. ~~In addition, on October 8, 2019, we declared a quarterly dividend of $0.55 per share of common stock for shareholders of record on October 18, 2019 and payable on November 19, 2019.~~

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Prior service cost	$	537		$	593
Unrecognized net actuarial loss		(6,210	)		(6,243	)		(5,640	)		(5,640	)
Fair value of derivatives, net of tax		(931	)		194			(2,599	)		(690	)
Total accumulated other comprehensive loss	$	(6,604	)	$	(5,456	)	$	(8,239	)	$	(6,330	)

We compute basic earnings per common share by dividing net income attributable to Core Laboratories N.V. by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common shares include additional shares in the weighted average share calculations associated with the incremental effect of dilutive restricted stock awards and contingently issuable shares, as determined using the treasury stock method. The following table summarizes the calculation of weighted average common shares outstanding used in the computation of diluted earnings per share (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2019		2018		2019		2018		2020		2019
Weighted average basic common shares outstanding		44,371		44,216		44,349		44,199		44,447		44,323
Effect of dilutive securities:
Performance shares		4		221		111		269		—		393
Restricted stock		341		154		394		145		—		18
Weighted average diluted common and potential common shares outstanding		44,716		44,591		44,854		44,613		44,447		44,734

During the three months ended March 31, 2020 the novel coronavirus disease 2019 (“COVID-19”) spread across the globe and resulted in government mandated shut-downs, home sheltering and social distancing efforts to mitigate the spread of the virus. The COVID-19 mitigation actions also caused a sharp decrease in the consumption and demand for crude-oil, and led to

a sharp decrease in current and projected crude oil prices. These events have resulted in sharp decreases to the valuation of companies associated with the energy industry, including Core Laboratories. As a result, we determined that it was more likely than not that the fair value of our reporting units was less than their carrying value, which triggered the Company to perform an updated impairment assessment as of March 31, 2020. We performed an impairment test in accordance with ASC Topic 360, Impairment or Disposal of Long-Lived Assets and ASC Topic 350, Intangibles-Goodwill and Other, on our indefinite-lived and long-lived assets related to asset groups, and our reporting units.

As of March 31, 2020, we have 2 reporting units that are the same as our 2 reportable segments, with goodwill balances aggregating $213.4 million. We performed a detailed quantitative impairment assessment of our reporting units. We determined that the fair value of one of the reporting units, our Production Enhancement segment representing approximately $114.0 million of the goodwill, was less than the carrying value. We determined that the Reservoir Description reporting unit’s fair value is above the carrying value, which represented $99.4 million of goodwill. As the result of this assessment, we concluded that the goodwill associated with our Production Enhancement segment was fully impaired, resulting in a $114.0 million goodwill impairment charge.

We applied the income approach to estimate the fair value of the reporting unit. The income approach estimates the fair value by discounting each reporting unit’s estimated future cash flows using the company estimate of the discount rate, or expected return, that a market participant would have required as of the valuation date.

Some of the significant assumptions in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. These estimates are based on assumptions we believed to be reasonable, however, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, actual result may differ from those used in our valuation which could result in additional impairment charges in the future. The discount rates utilized to value the reporting units were approximately 10.3% and 15.1%, depending on the risk and uncertainty inherent in the respective reporting unit.

As of March 31, 2020, we identified a triggering event for one of the asset groups under the reporting unit, Production Enhancement. The estimated fair value, based on applying the income approach model, of one of the asset groups was determined to be below their carrying value. As a result, we recorded a charge of $8.2 million to impair the intangible assets relating to the business acquisition of Guardian Technology in 2018. This impairment charge was associated with our Production Enhancement segment.

The changes in the carrying amount of goodwill for each reportable segment for the three months ended March 31, 2020 were as follows (in thousands):

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019
Gain on sale of assets	$	(151	)	$	(136	)	$	(458	)	$	(643	)	$	4		$	(246	)
Results of non-consolidated subsidiaries		(96	)		(57	)		(193	)		(126	)		(26	)		(73	)
Foreign exchange		570			1,135			389			2,221			(576	)		37
Rents and royalties		(134	)		(264	)		(727	)		(500	)		(135	)		(106	)
Employment related charges		—			—			2,866			—			—			3,200
Return on pension assets and other pension costs		(232	)		(201	)		(714	)		(621	)		168			260
Acquisition-related costs		—			623			—			623
Gain on sale of business		—			—			(1,154	)		—
Curtailment														(1,187	)		—
Cost reduction and other charges		—			—			2,977			—			1,154			—
Other, net		(669	)		(970	)		(333	)		(784	)		(372	)		(699	)
Total other (income) expense, net	$	(712	)	$	130		$	2,653		$	170		$	(970	)	$	2,373

Foreign exchange gains and losses are summarized in the following table (in thousands):

	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
(Gains) losses by currency	2019		2018			2019			2018		2020			2019
British Pound	$	163	$	89		$	341		$	65	$	(88	)	$	13
Canadian Dollar		197		(113	)		285			244		723			59
Euro		18		108			20			92		2			(90	)
Other currencies, net		192		1,051			(257	)		1,820		(1,213	)		55
Total loss, net	$	570	$	1,135		$	389		$	2,221	$	(576	)	$	37

During the nine months ended September 30, 2019, we sold a business for a cash payment of $3.0 million. As this represented a single location within our business units, the sale did not constitute a discontinued operation and, accordingly, the effects of this transaction are included in continuing operations.

The ~~effective tax rates for the three months ended September 30, 2019 and 2018 were 12.1% and 29.8%, respectively. The~~Company recorded an income tax ~~expense~~benefit of ~~$3.3~~$4.0 million and $27.6 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~decreased~~respectively. The effective tax rate for the three months ended March 31, 2020 was 3.6% recorded on a loss from continuing operations before taxes of $112.4 million. The lower effective tax rate for the first quarter of 2020, was primarily effected by ~~$6.1~~the impairment of goodwill and intangible assets, which were largely not deductible for tax purposes. The tax benefit associated with the $122.2 million ~~compared~~impairment charge was limited to ~~$9.4~~$9 million, and is a discrete item for the first quarter of 2020. We will continue to refine our estimate of the tax effect from the impairment through the year. The effective tax rate for the three months ended March 31, 2019 was (217.6%) on income from continuing operations before tax of $12.7 million. The income tax benefit recorded in the ~~same period in 2018, due to~~first quarter of 2019 is the result of ~~several items discrete to each quarter, along with changes~~a corporate restructuring which resulted in activity levels in jurisdictions with differing tax rates. The effective tax rates for the nine months ended September 30, 2019 and 2018 were (30.2)% and 21.7%, respectively. Tax expense for the nine months ended September 30, 2019 includes a net deferred tax benefit of $58.5 million, which ~~resulted from a corporate restructuring in the first quarter and~~was reduced by tax expense of $26.7 million related to unremitted earnings of foreign subsidiaries that we no longer consider to be indefinitely reinvested, each of which was a discrete item to the quarter ended March 31, 2019. Income tax expense will continue to be impacted by changes in ~~the first quarter of 2019.~~activity levels in jurisdictions with differing tax rates.

We have operating leases primarily consisting of offices and lab space, machinery and equipment and vehicles. The components of lease expense are as follows (in thousands):

	Three months ended			Nine months ended			Three months ended
	September 30, 2019			September 30, 2019			March 31, 2020			March 31, 2019
Lease Cost
Operating lease cost	$	4,724		$	14,027		$	4,340		$	4,752
Short-term lease cost		402			1,024			462			294
Variable lease cost		162			521			423			119
Total lease cost	$	5,288		$	15,572		$	5,225		$	5,165

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,306		$	13,729		$	4,336		$	4,597
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	3,837		$	11,066
Right-of-use assets obtained in exchange for new lease liabilities							$	3,073		$	3,670
Weighted-average remaining lease term- operating leases	9.18 years			9.18 years			8.79 years			9.21 years
Weighted-average discount rate - operating leases		4.95	%		4.95	%		4.99	%		5.01	%

Scheduled undiscounted cash flows for non-cancellable leases at ~~September 30, 2019~~March 31, 2020 consist of the following (in thousands):

	Operating Leases			Operating Leases
Remainder of 2019	$	4,132
2020		14,566
Remainder of 2020				$	11,599
2021		12,130			13,163
2022		10,754			11,453
2023		9,193			9,827
2024					7,702
Thereafter		43,842			36,563
Total undiscounted lease payments	$	94,617		$	90,307
Less: Imputed Interest		(18,994	)		(17,562	)
Total lease liabilities	$	75,623		$	72,745

We adopted ASU 2017-06 using the cumulative effect transition method on January 1, 2019. As required, the following disclosure is provided for periods prior to adoption. Scheduled minimum rental commitments under non-cancellable operating leases at December 31, 2018, consist of the following (in thousands):

The Company has elected to apply the short-term lease exemption to all of its classes of underlying assets. Accordingly, 0 ROU asset or lease liability is recognized for leases with a term of twelve months or less.

The Company has elected to apply the practical expedient for combining lease and non-lease components for vehicle leases and elected not to apply the practical expedient for combining lease and non-lease components to all other classes of underlying assets.

We are exposed to market risks related to fluctuations in interest rates. To mitigate these risks, we utilize derivative instruments in the form of interest rate swaps. We do not enter into derivative transactions for speculative purposes.

~~In 2014,~~Our Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. As a result of two interest rate swap agreements, we are subject to interest rate risk on debt in excess of $50 million drawn on our Credit Facility.

We entered into 2 interest rate swap agreements for a total notional amount of $50 million to hedge changes in the variable rate interest expense on $50 million of our existing or replacement LIBOR-priced debt. ~~The~~Under the first swap agreement of $25 million, ~~expired on August 29, 2019, and under the second swap agreement,~~ we have fixed the LIBOR portion of the interest rate at 2.5% through August 29, 2024. ~~This~~During the first quarter of 2020, we entered into the second swap agreement of $25 million, we have fixed the LIBOR portion of the interest rate at 1.3% through February 28, 2025. Each swap is measured at fair value and recorded in our Consolidated Balance Sheet as an asset or liability. ~~It is~~They are designated and ~~qualifies~~qualify as a cash flow hedging ~~instrument~~instruments and isare highly effective. Unrealized losses

are deferred to shareholders' equity as a component of accumulated other comprehensive gain (loss) and are recognized in income as an increase or decrease to interest expense in the period in which the related cash flows being hedged are recognized in expense.

Our Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. As a result of the interest rate swap agreement, we are subject to interest rate risk on debt in excess of $25 million drawn on our Credit Facility.

At ~~September 30, 2019,~~March 31, 2020, we had fixed rate long-term debt aggregating ~~$175~~$200 million and variable rate long-term debt aggregating ~~$124~~$104 million, after taking into account the effect of the swap.

The fair values of outstanding derivative instruments are as follows (in thousands):

	Fair Value of Derivatives							Fair Value of Derivatives
	September 30, 2019			December 31, 2018			Balance Sheet Classification	March 31, 2020			December 31, 2019			Balance Sheet Classification
Derivatives designated as hedges:
5 year interest rate swap	$	—		$	135		Other current assets	$	(988	)	$	—		Other current (liabilities)
10 year interest rate swap		(1,359	)		(70	)	Other long-term (liabilities)		(2,348	)		(1,054	)	Other long-term (liabilities)
	$	(1,359	)	$	65			$	(3,336	)	$	(1,054	)

The fair value of all outstanding derivatives was determined using a model with inputs that are observable in the market (Level 2) or can be derived from or corroborated by observable data.

The effect of the interest rate swaps on the Consolidated Statement of Operations was as follows (in thousands):

		Three Months Ended						Nine Months Ended								Three Months Ended
		September 30,						September 30,								March 31,
		2019			2018			2019			2018			Income Statement Classification		2020			2019			Income Statement Classification
Derivatives designated as hedges:	Derivatives designated as hedges:														Derivatives designated as hedges:
5 year interest rate swap		$	(24	)	$	(23	)	$	(120	)	$	(27	)	(Decrease) to interest expense		$	(6	)	$	(49	)	(Decrease) to interest expense
10 year interest rate swap			16			27			18			120		Increase to interest expense			52			—		Increase to interest expense
		$	(8	)	$	4		$	(102	)	$	93				$	46		$	(49	)

The Company's only financial assets and liabilities which are measured at fair value on a recurring basis relate to certain aspects of the Company's benefit plans and our derivative instruments. We use the market approach to value certain assets and liabilities at fair value using significant other observable inputs (Level 2) with the assistance of a third-party specialist. We do not have any assets or liabilities measured at fair value on a recurring basis using quoted prices in an active market (Level 1) or significant unobservable inputs (Level 3). Gains and losses related to the fair value changes in the deferred compensation assets and liabilities are recorded in General and administrative expense in the Consolidated Statements of Operations. Gains and losses related to the fair value of the interest rate swaps are recorded in Other comprehensive income.

At March 31, 2020, we had fixed rate long-term debt aggregating $200 million and variable rate long-term debt aggregating $96 million, after taking into account the effect of the swaps.

			Fair Value Measurement at								Fair Value Measurement at
			September 30, 2019								March 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets ⁽¹⁾	$	44,630	$	—	$	44,630	$	—	$	40,518	$	—	$	40,518	$	—
	$	44,630	$	—	$	44,630	$	—	$	40,518	$	—	$	40,518	$	—
Liabilities:
Deferred compensation plan	$	33,714	$	—	$	33,714	$	—	$	31,000	$	—	$	31,000	$	—
5 year interest rate swap										988		—		988		—
10 year interest rate swap		1,359		—		1,359		—		2,348		—		2,348		—
	$	35,073	$	—	$	35,073	$	—	$	34,336	$	—	$	34,336	$	—

			Fair Value Measurement at								Fair Value Measurement at
			December 31, 2018								December 31, 2019
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation assets ⁽¹⁾	$	42,161	$	—	$	42,161	$	—	$	47,009	$	—	$	47,009	$	—
5 year interest rate swap		135		—		135		—		—		—		—		—
	$	42,296	$	—	$	42,296	$	—	$	47,009	$	—	$	47,009	$	—
Liabilities:
Deferred compensation plan	$	33,287	$	—	$	33,287	$	—	$	34,081	$	—	$	34,081	$	—
10 year interest rate swap		70		—		70		—		1,054		—		1,054		—
	$	33,357	$	—	$	33,357	$	—	$	35,135	$	—	$	35,135	$	—

We operate our business in2 reportable segments. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields.

Results for these segments are presented below. We use the same accounting policies to prepare our segment results as are used to prepare our Consolidated Financial Statements. All interest and other non-operating income (expense) is attributable to Corporate & Other and is not allocated to specific segments. Summarized financial information concerning our segments is shown in the following table (in thousands):

		Reservoir Description		Production Enhancement		Corporate & Other ¹			Consolidated			Reservoir Description		Production Enhancement			Corporate & Other ¹			Consolidated
Three months ended September 30, 2019
Three months ended March 31, 2020
Revenue from unaffiliated clients												$	102,702	$	49,698		$	—		$	152,400
Inter-segment revenue													100		316			(416	)		—
Segment operating income (loss)													11,062		(121,299	)		1,264			(108,973	)
Total assets (at end of period)													337,406		159,608			149,595			646,609
Capital expenditures													1,412		1,914			14			3,340
Depreciation and amortization													3,521		1,642			278			5,441
Three months ended March 31, 2019
Revenue from unaffiliated clients		$	109,339	$	63,861	$	—		$	173,200		$	103,292	$	65,902		$	—		$	169,194
Inter-segment revenue			99		199		(298	)		—			96		44			(140	)		—
Segment operating income			18,835		11,456		916			31,207			6,179		9,912			323			16,414
Total assets (at end of period)			347,475		287,431		152,790			787,696			342,617		290,734			158,409			791,760
Capital expenditures			3,260		1,982		65			5,307			1,902		2,851			430			5,183
Depreciation and amortization			3,684		1,650		363			5,697			3,987		1,183			417			5,587
Three months ended September 30, 2018
Revenue from unaffiliated clients		$	103,609	$	78,537	$	—		$	182,146
Inter-segment revenue			58		141		(199	)		—
Segment operating income			14,956		19,243		680			34,879
Total assets (at end of period)			321,025		276,345		69,227			666,597
Capital expenditures			2,437		1,680		31			4,148
Depreciation and amortization			4,138		1,037		505			5,680
Nine months ended September 30, 2019
Revenue from unaffiliated clients		$	318,280	$	193,152	$	—		$	511,432
Inter-segment revenue			346		419		(765	)		—
Segment operating income			40,892		31,792		2,945			75,629
Total assets			347,475		287,431		152,790			787,696
Capital expenditures			7,906		9,114		517			17,537
Depreciation and amortization			11,505		4,377		1,188			17,070
Nine months ended September 30, 2018
Revenue from unaffiliated clients		$	306,525	$	221,114	$	—		$	527,639
Inter-segment revenue			178		293		(471	)		—
Segment operating income			44,473		55,357		814			100,644
Total assets			321,025		276,345		69,227			666,597
Capital expenditures			10,002		5,465		596			16,063
Depreciation and amortization			12,675		3,045		1,646			17,366

(1) "Corporate & Other" represents those items that are not directly related to a particular segment, eliminations and the assets and liabilities of discontinued operations.	(1) "Corporate & Other" represents those items that are not directly related to a particular segment, eliminations and the assets and liabilities of discontinued operations.										(1) "Corporate & Other" represents those items that are not directly related to a particular segment, eliminations and the assets and liabilities of discontinued operations.

In February 2016, the FASB issued ASU 2016-02 ("Leases"), which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. In July 2018, the FASB issued ASU 2018-11 ("Targeted Improvements to Leases"), which

provides companies with an additional transition method that allows the effects of the adoption of the new standard to be recognized as a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We elected this optional transition method for adoption. The adoption of this standard on January 1, 2019 had a material impact to our Consolidated Balance Sheet; but not to our Consolidated Statement of Operations or Cash Flows. The most significant impact was the recognition of $77.5 million of ROU assets and liabilities for operating leases, while our accounting for finance leases remained substantially unchanged.

In June 2016, the FASB issued ASU 2016-13 ("Measurement of Credit Losses on Financial Instruments") which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. ~~The adoption of~~We have adopted this standard ~~will not have a~~on January 1, 2020, and there is no significant impact on our consolidated financial statements or on our accounting policies and processes.

20In January 2017, the FASB issued ASU 2017-04 (“Simplifying the Test for Goodwill Impairment”) which eliminates a step in computing the implied fair value of goodwill with a new methodology of an entity performing an annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. We adopted this standard on January 1, 2020, and although the new methodology was applied for the goodwill impairment analysis performed for the three month period ending March 31, 2020, it did not change the conclusion that goodwill had been impaired, and there is no significant impact on our consolidated financial statements or on our accounting policies and processes as a result of adopting this updated accounting standard.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion highlights the current operating environment and summarizes the financial position of Core Laboratories N.V. and its subsidiaries as of ~~September 30, 2019~~March 31, 2020 and should be read in conjunction with (i) the unaudited consolidated interim financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and (ii) the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 (the ~~"2018~~"2019 Annual Report").

Core Laboratories N.V. is a limited liability company incorporated and domiciled in the Netherlands. It was established in 1936 and is one of the world's leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry. These services and products can enable our clients to improve reservoir performance and increase oil and gas recovery from their producing fields. Core Laboratories N.V. has over 70 offices in more than 50 countries and employs approximately ~~4,400~~4,300 people worldwide.

References to "Core Lab", the "Company", "we", "our" and similar phrases are used throughout this Quarterly Report and relate collectively to Core Laboratories N.V. and its consolidated affiliates.

We operate our business in two reportable segments: Reservoir Description and Production Enhancement. These complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields.

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations section, including those under the headings "Outlook" and "Liquidity and Capital Resources", and in other parts of this Quarterly Report, are forward-looking. In addition, from time to time, we may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. Forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "believe", "expect", "anticipate", "estimate", "continue", or other similar words, including statements as to the intent, belief, or current expectations of our directors, officers, and management with respect to our future operations, performance, or positions or which contain other forward-looking information. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, no assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While we believe that these statements are and will be accurate, our actual results and experience may differ materially from the anticipated results or other expectations expressed in our statements due to a variety of risks and uncertainties.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see "Item 1A - Risk Factors" in our ~~2018~~2019 Annual Report and in Part II of this Quarterly Report, as well as the other reports filed by us with the Securities and Exchange Commission ("SEC").

The events occurring during first quarter of 2020 associated with the coronavirus disease 2019 (“COVID-19”) pandemic and global government mandated shut-downs, home sheltering and social distancing policies have caused a significant decline in the demand for crude oil and associated products. The significant decline in demand has resulted in a significant decline in the price of crude oil, which has also resulted in a high degree of uncertainty about future demand and the future price for crude oil. As a result, it is anticipated that the activity associated with the energy markets and our clients will remain low and the commodity price of crude oil will also continue to be depressed and volatile for the remainder of 2020. OPEC nations, Russia and other oil producing nations continue to work towards negotiating and implementing potentially substantial reductions to current levels of oil being produced, if such negotiations are successful and executed, these actions could help to improve the balance of the supply with demand of crude oil in the mid-term and longer-term.

As part of our long-term growth strategy, we continue ~~our efforts~~ to expand our market presence by opening or expanding facilities in strategic areas and realizing synergies within our business lines subject to client demand and market conditions. We believe our market presence in strategic areas provides us a unique opportunity to ~~service~~serve our clients who have global operations whether they are international oil companies, national oil companies, or independent oil companies.

~~We are encouraged by the increased focus of our~~Our major clients ~~regarding~~continue to focus on capital management, return on invested capital (“ROIC”), free cash flow, and returning capital back to their shareholders, as opposed to a focus on production growth at any cost. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base. WeConsidering a longer term strategy, we expect to benefit from our clients’ shift in focus from strictly production growth to employing higher technological solutions in their efforts to maximize economic production growth and estimated ultimate recovery ("EUR").

~~During~~We believe operators will continue to manage their capital spending within approved budgets, and maintain their focus on strengthening their balance sheets with an effort to generate positive free cash flow. This was apparent during the ~~third~~first quarter of ~~2019, the balance~~2020 with the notable declines in both the U.S. onshore rig count, U.S. land completion activity, and public announcements from oil and gas operators stating their 2020 capital expenditures programs have been reduced significantly. As a result, we believe the U.S. onshore activity in 2020 will decrease significantly and continue to be constrained by these factors.

Core Laboratories expects international field development spending will be funded largely from operating budgets. Reservoir Description continues to work with clients and discuss the progression of ~~supply~~longer-term international projects with clients. Longer-term international and ~~demand for the global crude oil market did~~offshore projects which are commonly announced through Final Investment Decisions (“FIDs”), and have been previously announced and initiated are not ~~materially change although there was a temporary disruption in the supply from Saudi Arabia. While market concerns exist regarding the balance of future crude oil supply and demand, expected growth~~as susceptible or at-risk to delay or suspension due to shorter-term volatility in crude oil ~~production~~commodity price. Additionally, the reservoir fluids analysis that is ~~limited~~performed on projects associated with current producing fields, continues to be critical and will be less affected by lower commodity prices for crude oil. The revenue opportunity for Reservoir Description occurs once the well has been drilled and core and fluid samples are recovered from the well and analyzed. The adverse impact from COVID-19 and the depression of crude-oil prices has resulted in increased uncertainty associated with the activity levels and revenue opportunities from these international and offshore projects, however most of the larger projects, especially the projects that have already been commissioned and are underway, are focused on a ~~global basis, and the current production from mature crude oil fields outside the U.S. continues~~longer term forecast versus a short to decline. We also expect the decline in global crude oil inventory levels will also result in a reduction in days of consumption of crude oil in inventory, which should support a higher price of crude oil.

These underlying fundamentals for the crude oil market are what continue to support the international activity levels of Core Lab’s clients. The balancing of crude oil supply and demand and associated price of crude oil, is what underpins the reinvestment and Final Investment Decisions for these emerging international crude oil field projects. These investments in international crude oil projects are critical, as the decline in production from mature fields continues and the development of new fields are required to retain current levels of supply. Consequently, we expect our client’s spending to continue on international crude oil projects.

~~Operators continue to focus on generating FCF, returns on investment, and operating within their capital budgets, and with the weakening~~mid-term assessment of the crude oil ~~prices,~~commodity prices.

Core Laboratories continued to operate as an essential business in response to COVID-19. We have experienced some business disruptions, which is expected to continue for the ~~rig count~~remainder of the year and ~~activity levels~~possibly beyond 2020. These disruptions mainly relating to operational workflow such as travel, product delivery and quarantine restrictions that caused the delay in client’s projects. We have ~~decreased for operators in the U.S. onshore market. We believe this trend will continue, and anticipate a decline~~not experienced any significant disruption in our ~~client’s activity levels associated~~supply chain, and do not anticipate significant

disruption in our supply chain. We have implemented a continuity plan across our global organization to protect the health of employees while servicing the clients.

In response to market conditions, in March 2020, Core Lab’s Board of Supervisory Directors (the “Supervisory Board”) approved a plan to reduce the Company’s future quarterly dividends to $0.01 per share beginning with ~~U.S. onshore~~the second quarter of 2020 and to focus excess free cash flow on debt reduction. In December 2019, the Supervisory Board had previously reduced the dividends to $0.25 per share beginning with the first quarter of 2020. The Company is also actively enacting cost control plans which include: (i) corporate and operating cost reductions; (ii) annual capital expenditures reduced to below the 2016 level of $11.4 million, and (iii) eliminating all non-essential costs. The corporate and operating cost reductions include reductions in workforce and reduction of senior executive and employee compensation.

Specifically, the Company has reduced senior executives’ annual base salary by 20% for the ~~fourth quarter~~foreseeable future. In addition, David Demshur, the current CEO and Chairman of ~~2019.~~

Wethe Company, has decided to accelerate his retirement to the end of May 2020. Mr. Demshur will be available in an uncompensated advisory role after his retirement to support the Company as needed. Core Lab believes these immediate actions, as well as continue evaluation and adjustments, will allow Core Lab, as it has for over 83 years, to ~~focus~~navigate through these challenging times. Core Lab remains focused on ~~large-scale core analyses~~preserving the quality of service for its clients and reservoir fluid characterization studies in the Asia-Pacific areas, offshore Europe and Africa, offshore South America, North America and the Middle East. We also focus on complex completions in unconventional tight-oil reservoirs, technological solutions and servicesproducing returns for ~~increasing daily productions and EURs.~~its shareholders.

Our results of operations as a percentage of applicable revenue were as follows (in thousands):

		Three months ended September 30,								Change					Three months ended March 31,								Change
		2019				2018				$			%		2020				2019				$			%
REVENUE:
Services		$	120,817		70%	$	124,145		68%	$	(3,328	)	(3)%		$	109,967		72%	$	120,338		71%	$	(10,371	)	(9)%
Product sales			52,383		30%		58,001		32%		(5,618	)	(10)%			42,433		28%		48,856		29%		(6,423	)	(13)%
Total revenue			173,200		100%		182,146		100%		(8,946	)	(5)%			152,400		100%		169,194		100%		(16,794	)	(10)%
OPERATING EXPENSES:
Cost of services, exclusive of depreciation expense shown below*			86,243		71%		88,435		71%		(2,192	)	(2)%			80,941		74%		92,359		77%		(11,418	)	(12)%
Cost of product sales, exclusive of depreciation expense shown below*			39,753		76%		39,744		69%		9		0%			34,190		81%		35,024		72%		(834	)	(2)%
Total cost of services and product sales			125,996		73%		128,179		70%		(2,183	)	(2)%			115,131		76%		127,383		75%		(12,252	)	(10)%
General and administrative expense			11,012		6%		13,278		7%		(2,266	)	(17)%			19,567		13%		17,437		10%		2,130		12%
Depreciation and amortization			5,697		3%		5,680		3%		17		0%			5,441		4%		5,587		3%		(146	)	(3)%
Impairments																122,204		80%		—		—%		122,204		NM
Other (income) expense, net			(712	)	—%		130		—%		(842	)	NM			(970	)	(1)%		2,373		1%		(3,343	)	NM
Operating income			31,207		18%		34,879		19%		(3,672	)	(11)%			(108,973	)	(72)%		16,414		10%		(125,387	)	NM
Interest expense			3,662		2%		3,278		2%		384		12%			3,411		2%		3,726		2%		(315	)	(8)%
Income before income tax expense			27,545		16%		31,601		17%		(4,056	)	(13)%			(112,384	)	(74)%		12,688		7%		(125,072	)	NM
Income tax expense			3,335		2%		9,404		5%		(6,069	)	(65)%
Income tax expense (benefit)																(4,046	)	(3)%		(27,610	)	(16)%		23,564		85%
Income from continuing operations			24,210		14%		22,197		12%		2,013		9%			(108,338	)	(71)%		40,298		24%		(148,636	)	NM
Income (loss) from discontinued operations, net of tax			(397	)	—%		208		—%		(605	)	NM			—		—%		259		—%		(259	)	NM
Net Income			23,813		14%		22,405		12%		1,408		6%			(108,338	)	(71)%		40,557		24%		(148,895	)	NM
Net income (loss) attributable to non-controlling interest			84		—%		(7	)	—%		91		NM			83		—%		47		—%		36		NM
Net income attributable to Core Laboratories N.V.		$	23,729		14%	$	22,412		12%	$	1,317		6%		$	(108,421	)	(71)%	$	40,510		24%	$	(148,931	)	NM

Other Data:
Current ratio ⁽¹⁾															2.03:1				1.82:1
Debt to EBITDA ratio ⁽²⁾															2.35:1				2.25:1
Debt to Adjusted EBITDA ratio⁽³⁾															1.93:1				1.72:1

"NM" means not meaningful	"NM" means not meaningful													"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue	*Percentage based on applicable revenue rather than total revenue													*Percentage based on applicable revenue rather than total revenue
(1) Current ratio is calculated as follows: current assets divided by current liabilities.														(1) Current ratio is calculated as follows: current assets divided by current liabilities.
(2) Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, and amortization.														(2) Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, and amortization.
(3) Debt to Adjusted EBITDA ratio (as defined in our Bank Revolving Credit Facility) is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization, impairments, severance, and certain non-cash adjustments.														(3) Debt to Adjusted EBITDA ratio (as defined in our Bank Revolving Credit Facility) is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization, impairments, severance, and certain non-cash adjustments.

		Three months ended							Change					Three months ended								Change
		September 30, 2019				June 30, 2019			$			%		March 31, 2020				December 31, 2019				$			%
REVENUE:
Services		$	120,817		70%	$	117,874	70%	$	2,943		2%		$	109,967		72%	$	115,164		73%	$	(5,197	)	(5)%
Product sales			52,383		30%		51,164	30%		1,219		2%			42,433		28%		41,614		27%		819		2%
Total revenue			173,200		100%		169,038	100%		4,162		2%			152,400		100%		156,778		100%		(4,378	)	(3)%
OPERATING EXPENSES:
Cost of services, exclusive of depreciation expense shown below*			86,243		71%		86,007	73%		236		0%			80,941		74%		83,025		72%		(2,084	)	(3)%
Cost of product sales, exclusive of depreciation expense shown below*			39,753		76%		38,444	75%		1,309		3%			34,190		81%		34,724		83%		(534	)	(2)%
Total cost of services and product sales			125,996		73%		124,451	74%		1,545		1%			115,131		76%		117,749		75%		(2,618	)	(2)%
General and administrative expense			11,012		6%		9,801	6%		1,211		12%			19,567		13%		9,773		6%		9,794		100%
Depreciation and amortization			5,697		3%		5,786	3%		(89	)	(2)%			5,441		4%		5,535		4%		(94	)	(2)%
Impairments															122,204		80%		—		—%		122,204		NM
Other (income) expense, net			(712	)	—%		992	1%		(1,704	)	NM			(970	)	(1)%		2,666		2%		(3,636	)	NM
Operating income			31,207		18%		28,008	17%		3,199		11%			(108,973	)	(72)%		21,055		13%		(130,028	)	NM
Interest expense			3,662		2%		3,714	2%		(52	)	(1)%			3,411		2%		3,588		2%		(177	)	(5)%
Income before income tax expense			27,545		16%		24,294	14%		3,251		13%			(112,384	)	(74)%		17,467		11%		(129,851	)	NM
Income tax expense			3,335		2%		4,808	3%		(1,473	)	NM
Income tax expense (benefit)															(4,046	)	(3)%		7,177		5%		(11,223	)	NM
Income from continuing operations			24,210		14%		19,486	12%		4,724		24%			(108,338	)	(71)%		10,290		7%		(118,628	)	NM
Income (loss) from discontinued operations, net of tax			(397	)	—%		7,971	5%		(8,368	)	NM			—		—%		—		—%		—		NM
Net income			23,813		14%		27,457	16%		(3,644	)	(13)%			(108,338	)	(71)%		10,290		7%		(118,628	)	NM
Net income attributable to non-controlling interest			84		—%		43	—%		41		95%			83		—%		(40	)	—%		123		NM
Net income attributable to Core Laboratories N.V.		$	23,729		14%	$	27,414	16%	$	(3,685	)	(13)%		$	(108,421	)	(71)%	$	10,330		7%	$	(118,751	)	NM

Other Data:
Current ratio ⁽¹⁾														2.03:1				1.98:1
Debt to EBITDA ratio ⁽²⁾														2.35:1				2.33:1
Debt to Adjusted EBITDA ratio⁽³⁾														1.93:1				1.93:1

"NM" means not meaningful	"NM" means not meaningful												"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue	*Percentage based on applicable revenue rather than total revenue												*Percentage based on applicable revenue rather than total revenue
(1) Current ratio is calculated as follows: current assets divided by current liabilities.													(1) Current ratio is calculated as follows: current assets divided by current liabilities.
(2) Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, and amortization.													(2) Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, and amortization.
(3) Debt to Adjusted EBITDA ratio (as defined in our Bank Revolving Credit Facility) is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization, impairments, severance, and certain non-cash adjustments.													(3) Debt to Adjusted EBITDA ratio (as defined in our Bank Revolving Credit Facility) is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization, impairments, severance, and certain non-cash adjustments.

Nine months ended September 30,

Change

2019

2018

$

%

REVENUE:

Services

$
359,029

70%

$
366,025

69%

$
(6,996
)

(2)%

Product sales

152,403

30%

161,614

31%

(9,211
)

(6)%

Total revenue

511,432

100%

527,639

100%

(16,207
)

(3)%

OPERATING EXPENSES:

Cost of services, exclusive of depreciation
   expense shown below*

262,616

73%

258,482

71%

4,134

2%

Cost of product sales, exclusive of depreciation
   expense shown below*

115,214

76%

112,788

70%

2,426

2%

Total cost of services and product sales

377,830

74%

371,270

70%

6,560

2%

General and administrative expense

38,250

7%

38,189

7%

61

0%

Depreciation and amortization

17,070

3%

17,366

3%

(296
)

(2)%

Other (income) expense, net

2,653

1%

170

—%

2,483

NM

Operating income

75,629

15%

100,644

19%

(25,015
)

(25)%

Interest expense

11,102

2%

9,694

2%

1,408

15%

Income before income tax expense

64,527

13%

90,950

17%

(26,423
)

(29)%

Income tax expense (benefit)

(19,467
)

(4)%

19,697

4%

(39,164
)

NM

Income from continuing operations

83,994

16%

71,253

14%

12,741

18%

Income (loss) from discontinued operations, net of tax

7,833

2%

(466
)

—%

8,299

NM

Net income

91,827

18%

70,787

13%

21,040

30%

Net income attributable to non-controlling
   interest

174

—%

96

—%

78

81%

Net income attributable to Core Laboratories N.V.

$
91,653

18%

$
70,691

13%

$
20,962

30%

"NM" means not meaningful

*Percentage based on applicable revenue rather than total revenue

Operating Results for the Three Months Ended ~~September 30, 2019~~March 31, 2020 Compared to the Three Months Ended ~~September 30, 2018 and June 30,~~March 31, 2019 and ~~for the Nine Months Ended September 30,~~December 31, 2019 ~~compared to the Nine Months Ended September 30, 2018~~

Services revenue ~~which~~ is primarily tied ~~more~~ to activities associated with the exploration and production of oil and gas outside the U.S., For the three months ended March 31, 2020, services revenue of ~~$120.8~~$110.0 million ~~in the third quarter of 2019~~ decreased year-over-year from ~~$124.1~~$120.3 million for the three months ended March 31, 2019 and decreased sequentially from $115.2 million for the three months ended December 31, 2019. Crude-oil prices partially rebounded in 2019 from the ~~third~~fourth quarter of 2018, however, the events occurring during first quarter of 2020 associated with COVID-19 pandemic and ~~increased sequentially from $117.9 million~~global government mandated shut-downs, home sheltering and social distancing policies have caused a significant decline in the second quarter of 2019. Services revenue of $359.0 million in the nine months ended September 30, 2019 decreased from $366.0 million in the nine months ended September 30, 2018. Crude oil prices strengthened throughout 2018 until the fourth quarter, when they dropped some 40% by year-end. Although, thedemand for crude oil ~~prices partially rebounded, the average price has been lower for the first three quarters of 2019, which has~~and associated products. This resulted in decreased and disrupted activity by our clients and disruptions to our revenue generating operational

activities leading to ~~lower~~a sharp decrease in service revenue in the North America ~~on-shore~~onshore market, with some disruptions to the markets outside the U.S. onshore during the first ~~three quarters~~quarter of ~~2019~~2020. These events caused services revenue to decline in the first quarter of 2020 when compared to the ~~same period~~first and fourth quarter of 2019. The COVID-19 pandemic has resulted in ~~2018. However, improvement in the level~~a delay of work performed for projects within the offshore and international ~~exploration and production projects has partially offset some of the~~markets. The decline in the demand for crude oil resulted in a more severe decrease of activity in the U.S. onshore market, which ~~provides a more positive outlook and support for larger and longer-term projects.~~

~~International activity remained effectively flat through 2018 as most international development projects continued~~is expected to be ~~funded largely from operating budgets, however capital spending directed towards international projects has expanded during 2019.~~ depressed for a longer term.

We continue to focus on large-scale core analyses and reservoir fluids characterization studies in the Eagle Ford, the Permian Basin and the Gulf of Mexico, along with Guyana, Suriname, Malaysia and other international locations such as offshore South America, Australia, and the Middle East, including Kuwait and the United Arab Emirates. Analysis of crude oil derived products also occurs in every major producing region of the world.

Product sales revenue ~~which~~ is tied more to the completion of wells in North America, with the U.S. onshore market being the largest market for these products. For the three months ended March 31, 2020, product sales revenue, of ~~$52.4~~$42.4 million decreased 13% year-over-year from $48.9 million in the ~~third~~three months ended March 31, 2019 and increased 2% from $41.6 million for the three months ended December 31, 2019. For the three months ended March 31, 2020, product sales to international markets were higher, which also includes product sales through our Reservoir Description segment of instrumentation used in the evaluation of crude oil characterization properties of producing oil fields. Rig count is one indicator of activity levels associated with the exploration and production of oil and gas. The rig count for North America decreased from the first quarter of 2019 ~~decreased 10% year-over-year from $58.0 million in~~to the ~~third~~first quarter of ~~2018 but~~2020 by over 20%, and increased 2% from $51.2 million for the second quarter of 2019. Product sales revenue of $152.4 million in the nine months ended September 30, 2019, decreased 6% from $161.6 million in the nine months ended September 30, 2018. Our product sales revenue is primarily driven by completions of wells in the North American market and, more specifically, the activity associated with the completion of each stage in a wellbore. The sharp decrease of crude oil prices during the fourth quarter of ~~2018 combined with the supply chain logistics and take-away restrictions associated with the Permian Basin resulted~~2019 as rig count in ~~decreased activity~~Canada is seasonally higher during winter. The rig count for ~~the~~ U.S. onshore ~~market at the end of~~decreased over 25% from last year and over 4% from the fourth quarter of ~~2018 and into~~ 2019. This resulting decrease in the U.S. onshore activity has continued into the first three quarters of 2019. However, we continue to benefit from our clients' acceptance of new products which were led by our newly introduced technologies, including our HERO^® ~~PerFRAC and GoGun~~^TM ~~perforating systems.~~

Cost of services was ~~$86.2~~$80.9 million for the three months ended ~~September 30, 2019,~~March 31, 2020, a 3%12% decrease compared to ~~$88.4~~$92.4 million in the three months ended ~~September 30, 2018~~March 31, 2019 and ~~relatively flat~~down slightly compared to ~~$86.0~~$83.0 million for the three months ended ~~June 30,~~December 31, 2019. Cost of services expressed as a percentage of services revenue ~~was flat at 71%~~decreased to 74% for the three months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~the three months ended September 30, 2018, but a decrease from 73%~~77% for the three months ended ~~June 30, 2019. Cost of services~~March 31, 2019, but increased ~~to $262.6 million~~from 72% for the ~~nine~~three months ended September 30, 2019 compared to $258.5 million in the nine months ended September 30, 2018. Cost of services expressed as a percentage of services revenue increased to 73% for the nine months ended September 30, 2019, compared to 71% in the nine months ended September 30, 2018. The increase inDecember 31, 2019. Although cost of services decreased during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, the unforeseen disruptions to our operations as a result of government imposed shutdowns to mitigate the spread of the COVID-19 pandemic impacted the first quarter of 2020, as some client project activities were delayed while personnel costs of the company were still incurred. Additionally, the first quarter of 2019 ~~was primarily due to~~and 2020 include a charge for accelerated stock compensation ~~and related charges.~~associated with stock based compensation for employees who reached their eligible retirement age.

Cost of product sales of ~~$39.8~~$34.2 million for the three months ended ~~September 30, 2019 was flat~~March 31, 2020 decreased when compared to ~~$39.7~~$35.0 million for the three months ended ~~September 30, 2018~~March 31, 2019 and ~~a 3% increase from $38.4~~$34.7 million for the three months ended ~~June 30,~~December 31, 2019. Given product sales are primarily associated with our Production Enhancement segment and the North American market, the cost of sales are impacted by the decreased activities associated with clients operating in these segments and geographic markets. Cost of product sales expressed as a percentage of product sales revenue for the first quarter of 2020 was ~~76%~~81% compared to 72% for the three months ended ~~September 30,~~March 31, 2019 compared to 69% and 75% for the three months ended September 30, 2018 and June 30, 2019, respectively. Cost of product sales of $115.2 million for the nine months ended September 30, 2019 increased 2% compared to $112.8 million in the nine months ended September 30, 2018. Cost of product sales expressed as a percentage of product sales revenue was 76% for the nine months ended September 30, 2019, compared to 70% for the nine months ended September 30, 2018. Higher cost of product sales as a percentage of product sales revenue is primarily due to absorbing fixed costs against a ~~lower~~decreased revenue base. The changes in cost of product sales compared to the quarter ending December 31, 2019 of 83% is due to slightly higher sales in the first quarter of 2020 and improved absorption of our fixed cost structure.

General and administrative ("G&A") expense includes corporate management and centralized administrative services that benefit our operations. G&A expense for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$11.0~~$19.7 million compared to ~~$13.3~~$17.4 million and $9.8 million for the three months ended ~~September 30, 2018~~March 31, 2019 and ~~June 30,~~December 31, 2019, respectively. ~~G&A expense for the nine months ended September 30, 2019 was $38.3 million compared to $38.2 million for the nine months ended September 30, 2018.~~ The variances are primarily due to changes in compensation expense during those ~~periods.~~periods, including additional stock compensation expense of $6.8 million

and $7.2 million recorded in the three months ended March 31, 2020 and March 31, 2019, respectively, for retirement eligible employees.

Depreciation and amortization expense for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$5.7~~$5.4 million compared to ~~$5.7~~$5.6 million and ~~$5.8~~$5.5 million for the three months ended ~~September 30, 2018~~March 31, 2019 and ~~June 30,~~December 31, 2019, respectively. ~~Depreciation and amortization expense for~~

During the ~~nine~~three months ended ~~September 30, 2019 was $17.1 million compared~~March 31, 2020, the recent events associated with the global spread of COVID-19, and the resulting sharp decrease in the price of crude oil, triggered the Company to ~~$17.4~~update its analysis associated with future cash flows and the valuation of assets, and potential impairment of goodwill and intangible assets. Our updated analysis resulted in the Company recording a charge of $114.0 million for impairment of goodwill and $8.2 million for impairment to intangible assets during the ~~nine months ended September 30, 2018.~~first quarter of 2020. These loss on impairments are related to our Production Enhancement segment.

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019
Gain on sale of assets	$	(151	)	$	(136	)	$	(458	)	$	(643	)	$	4		$	(246	)
Results of non-consolidated subsidiaries		(96	)		(57	)		(193	)		(126	)		(26	)		(73	)
Foreign exchange		570			1,135			389			2,221			(576	)		37
Rents and royalties		(134	)		(264	)		(727	)		(500	)		(135	)		(106	)
Employment related charges		—			—			2,866			—			—			3,200
Return on pension assets and other pension costs		(232	)		(201	)		(714	)		(621	)		168			260
Acquisition-related costs		—			623			—			623
Gain on sale of business		—			—			(1,154	)		—
Curtailment														(1,187	)		—
Cost reduction and other charges		—			—			2,977			—			1,154			—
Other, net		(669	)		(970	)		(333	)		(784	)		(372	)		(699	)
Total other (income) expense, net	$	(712	)	$	130		$	2,653		$	170		$	(970	)	$	2,373

Foreign exchange (gain) loss, net by currency is summarized in the following table (in thousands):

	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
(Gains) losses by currency	2019		2018			2019			2018		2020			2019
British Pound	$	163	$	89		$	341		$	65	$	(88	)	$	13
Canadian Dollar		197		(113	)		285			244		723			59
Euro		18		108			20			92		2			(90	)
Other currencies, net		192		1,051			(257	)		1,820		(1,213	)		55
Total loss, net	$	570	$	1,135		$	389		$	2,221	$	(576	)	$	37

Interest expense for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$3.7~~$3.4 million compared to ~~$3.3~~$3.7 million and ~~$3.7~~$3.6 million for the three months ended ~~September 30, 2018~~March 31, 2019 and ~~June 30,~~December 31, 2019, respectively. ~~Interest expense for the nine months ended September 30, 2019 was $11.1 million compared to $9.7 million for the nine months ended September 30, 2018.~~ The variances ~~between 2019 and 2018~~ are primarily due to changes in the ~~$47 million increase in~~aggregated variable rate debt ~~drawn against~~taken in the ~~Credit Facility in September 2018 to fund the acquisition of Guardian Global Technologies Ltd.~~respective quarters.

The Company recorded an income tax benefit of $4.0 million and $27.6 million for the three months ended March 31, 2020 and 2019, respectively. The effective tax rate for the three months ended ~~September 30, 2019 and 2018~~March 31, 2020 was ~~12.1% and 29.8%, respectively. In~~3.6% recorded on a loss from continuing operations before taxes of $112.4 million. The lower effective tax rate for the ~~third~~first quarter of ~~2019, we recorded net income~~2020, was primarily effected by the impairment of goodwill and intangible assets, which were largely not deductible for tax ~~expense~~purposes. The tax

benefit associated with the $122.2 million impairment charge was limited to $9 million, and is a discrete item for the first quarter of ~~$3.3 million compared~~2020. We will continue to ~~income~~refine our estimate of the tax ~~expense of $9.4 million in~~effect from the ~~same period in 2018, due to~~impairment through the ~~result of several items discrete to each quarter, along with changes in activity levels in jurisdictions with differing tax rates.~~year. The effective tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 ~~and 2018~~ was ~~(30.2)% and 21.7%, respectively. Resulting~~(217.6%) on income from ~~a corporate restructuring~~continuing operations before tax of $12.7 million. The income tax benefit recorded in the first quarter of 2019 ~~there~~ is the result of a corporate restructuring which resulted in a net deferred tax benefit of $58.5 million, ~~and~~which was reduced by tax expense of $26.7 million related to unremitted earnings of foreign subsidiaries that we no longer consider to be indefinitely reinvested, each of which was a discrete item to the quarter ended March 31, 2019. Income tax expense will continue to be impacted by changes in ~~the first quarter of 2019.~~activity levels in jurisdictions with differing tax rates.

~~The tax benefit of the corporate restructuring is reflected as a deferred tax asset on the Consolidated Balance Sheet which will be realized over the years 2019 until 2033.~~

In 2018, in a continuing effort to streamline our business and align our business strategy for further integration of services and products, the Company committed to divest our full range of permanent downhole monitoring systems and related services, which have been part of our Production Enhancement segment. We entered into the definitive purchase agreement on June 7, 2019 for the divestiture of this business during the second quarter of 2019.

We operate our business in two reportable segments. These complementary segments provide different services and products and utilize different technologies for ~~improving~~optimizing reservoir performance and ~~increasing~~improving the recovery of oil and gas ~~recovery~~ from new and existing fields. The following tables summarize our results by segment (in thousands):

Three months ended September 30,

2019/2018

Three months ended June 30,

Q2 / Q1

2019

2018

$ Change

% Change

2019

$ Change

% Change

Revenue:

Reservoir Description

$
109,339

$
103,609

$
5,730

6%

$
105,649

$
3,690

4%

Production Enhancement

63,861

78,537

(14,676
)

(19)%

63,389

472

1%

Consolidated

$
173,200

$
182,146

$
(8,946
)

(5)%

$
169,038

$
4,162

3%

Operating income:

Reservoir Description

$
18,835

$
14,956

$
3,879

26%

$
15,878

$
2,957

19%

Production Enhancement

11,456

19,243

(7,787
)

(41)%

10,424

1,032

10%

Corporate and Other¹

916

680

236

NM

1,706

(790
)

NM

Consolidated

$
31,207

$
34,879

$
(3,672
)

(11)%

$
28,008

$
3,199

11%

(1) "Corporate and Other" represents those items that are not directly related to a particular segment.
"NM" means not meaningful

		Nine months ended September 30,									Three months ended March 31,					2020/2019				Three months ended December 31,		Q1 / Q4
		2019		2018		$ Change			% Change		2020			2019		$ Change			% Change	2019		$ Change			% Change
Revenue:
Reservoir Description		$	318,280	$	306,525	$	11,755		4%		$	102,702		$	103,292	$	(590	)	(1)%	$	102,616	$	86		0%
Production Enhancement			193,152		221,114		(27,962	)	(13)%			49,698			65,902		(16,204	)	(25)%		54,162		(4,464	)	(8)%
Consolidated		$	511,432	$	527,639	$	(16,207	)	(3)%		$	152,400		$	169,194	$	(16,794	)	(10)%	$	156,778	$	(4,378	)	(3)%
Operating income:
Reservoir Description		$	40,892	$	44,473	$	(3,581	)	(8)%		$	11,062		$	6,179	$	4,883		79%	$	14,248	$	(3,186	)	(22)%
Production Enhancement			31,792		55,357		(23,565	)	(43)%			(121,299	)		9,912		(131,211	)	NM		6,586		(127,885	)	NM
Corporate and Other¹			2,945		814		2,131		NM			1,264			323		941		NM		221		1,043		NM
Consolidated		$	75,629	$	100,644	$	(25,015	)	(25)%		$	(108,973	)	$	16,414	$	(125,387	)	NM	$	21,055	$	(130,028	)	NM
(1) "Corporate and Other" represents those items that are not directly related to a particular segment. "NM" means not meaningful	(1) "Corporate and Other" represents those items that are not directly related to a particular segment. "NM" means not meaningful									(1) "Corporate and Other" represents those items that are not directly related to a particular segment. "NM" means not meaningful

Revenue from the Reservoir Description segment of ~~$109.3~~$102.7 million for the ~~third quarter of 2019 increased 6%~~three months ended March 31, 2020 was relatively flat from ~~$103.6~~$103.3 million and $102.6 million for the ~~third quarter of 2018, and increased 4% from $105.6 million in the second quarter of 2019. Revenue from the Reservoir Description segment of $318.3 million for the nine~~three months ended ~~September 30,~~March 31, 2019 ~~increased 4% from $306.5 million for~~and the ~~nine~~three months ended ~~September 30, 2018.~~December 31, 2019, respectively. Reservoir Description operations are heavily exposed to international and offshore activity levels, including the existing producing fields across the globe, with approximately 80% of its revenue sourced from producing fields and development projects outside the U.S. ~~Improvement in year-over-year and sequential~~Year-over-year financial performance in this segment is a result of ~~increased~~continued investment in international and offshore ~~client activity which was partially offset~~projects by ~~the sale of~~clients who are continuing to operate and progress long-term international and offshore projects through a ~~business, located in the Asia-Pacific region, during the second quarter of 2019.~~low crude-oil price market. We continue to focus on large-scale core analyses and reservoir fluids characterization studies in the Asia-Pacific areas, offshore Europe and

Africa, offshore South America, North America, and the Middle East as well as both newly developed fields and brownfield extensions in offshore areas such as Australia,

Brazil, Guyana, the Gulf of Mexico, the Middle East and the North Sea. Analysis of crude oil derived products also occurs in every major producing region of the world.

Operating income of ~~$18.8~~$11.1 million infor the ~~third quarter of 2019~~three months ended March 31, 2020 increased ~~26%~~79% year-over-year compared to ~~$15.0~~$6.2 million infor the ~~third quarter of 2018 and increased 19% sequentially from $15.9 million in the second quarter of~~three months ended March 31. 2019. Operating income ~~of $40.9~~for the three months ended March 31, 2020 decreased 22% sequentially compared to $14.2 million for the ~~nine~~three months ended ~~September 30,~~December 31, 2019 ~~decreased 8% compared to $44.5 million for the nine months ended September 30, 2018. The year-over-year decrease~~and was primarily due to ~~additional~~lower compensation expense recorded for accelerated stock compensation related to retirement eligible ~~employees~~employees. Additionally, cost reduction and employment-related charges of $7.9 million were recorded in the first quarter of 2019, ~~and severance and related charges of $1.7~~as compared to $5.1 million in the ~~second~~first quarter of ~~2019.~~2020. During the fourth quarter of 2019, a $2.1 million charge was recorded in association with cost reduction and initiatives.

Operating margins were ~~17% in~~11% for the ~~third quarter of~~three months ended March 31, 2020, up from 6% during the three months ended March 31, 2019, upbut down from 14% during the ~~third quarter~~three months ended December 31, 2019, primarily as a result of ~~2018~~the charges and ~~up from 15% during the second quarter of 2019.~~accelerated stock compensation expenses described above.

Revenue from the Production Enhancement segment, was $49.7 million for the three months ended March 31, 2020, a decrease of 25% year-over-year from $65.9 million for the three months ended March 31, 2019 and 8% sequentially compared to $54.2 million for the three months ended December 31, 2019. Production Enhancement operations are largely focused on complex completions in unconventional tight-oil reservoirs in the U.S. as well as conventional projects across the globe. The price of crude-oil continued to weaken throughout the first quarter of 2020, which has a direct impact to the activity levels of oil and ~~conventional offshore~~gas development projects ~~was $63.9 million~~ in the ~~third quarter of 2019, a decrease of 19% year-over-year from $78.5 million in~~U.S. onshore market. Additionally, the third quarter of 2018 and flat sequentially compared to $63.4 million in the second quarter of 2019. Revenue from the Production Enhancement segment was $193.2 million for the nine months ended September 30, 2019, a decrease of 13% from $221.1 million for the nine months ended September 30, 2018. The significant decrease in the price of crude oil ~~commodity price~~ in March 2020 and further declines in April 2020, due to the ~~fourth quarter of 2018,~~adverse impact from the COVID-19 pandemic and the related decrease in demand for crude oil and associated products, resulted in a further decrease of drilling and well completion ~~activities~~activity in the U.S. onshore ~~market at~~market. These recent events and disruptions to the ~~end~~global supply chain of ~~the fourth quarter 2018. The lower level~~air freight and other supporting vendors also resulted in some delay of ~~drilling and well completion activity continued into the first three quarters~~shipments of ~~2019. However,~~ our product to some international markets. Our clients continue to seek and use technological solutions for ~~increasing~~their projects in an effort to optimize and improve daily production and ~~estimated ultimate recoveries~~EUR from their ~~reservoirs and we~~reservoirs. We continue to benefit from our clients' acceptance of new services and products which were led by the HERO^® PerFRAC, GoGun^TM, FLOWPROFILER EDS^TM and ReFRAC technologies.

Operating income in the third quarter of 2019 was $11.5 million, a decrease from $19.2 million, or 41%, in the third quarter of 2018 and an increase from $10.4 million, or 10%, in the second quarter of 2019. Operating income for the ~~nine~~three months ended ~~September 30, 2019 was $31.8~~March 31, 2020 includes a charge of $122.2 million ~~a decrease from $55.4 million, or 43%,~~ for ~~the nine months ended September 30, 2018. The increased profitability sequentially is due to increased demand for our higher margin services~~impairment of goodwill and ~~products. The first quarter of 2019 includes~~intangible assets, accelerated stock compensation expense of ~~$2.5~~$2.3 million, for retirement eligible employees and ~~cost reduction and other related charges~~a charge of $1.3 million associated with cost reduction initiatives. Operating income, excluding the charge of $122.2 million for impairment of goodwill and intangible assets, decreased to $0.9 for the three months ended March 31, 2020, as compared to $9.9 million for the three months ended March 31, 2019, which was primarily the result of lower activity and revenue in the ~~second~~three months ended March 31, 2020. Excluding these same charges for the impairment of goodwill and intangible assets, operating income for the three months ended March 31, 2020 of $0.9 million decreased as compared to $6.6 million for the three months ended December 31, 2019, primarily due to the additional $2.3 million of accelerated stock compensation expense and $1.3 million charge for cost reduction initiatives recorded in the three months ended March 31, 2020, and to a lesser extent by the 8% decrease in revenue.

Operating margins, excluding loss on impairments, were 2% in the first quarter of 2020, which decreased when compared to 15% in the first quarter of 2019 and 12% for the fourth quarter of 2019.

Operating margins were 18% in the third quarter of 2019, down from 25% in the third quarter of 2018 but up from 16% for the second quarter of 2019. Operating margins were 17% for the nine months ended September 30, 2019, down from 25% for the nine months ended September 30, 2018. The decrease in operating margin ~~in the nine months ended September 30, 2019 compared to the same period in 2018~~ is primarily due to ~~absorbing~~the charges recorded in the first quarter of 2020 as described above and also the improved absorption of our fixed costs ~~against a lower~~on higher revenue ~~base, acceleration~~in the first quarter of ~~stock compensation expense and cost reduction related expense in~~ 2019.

We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provides the primary source of funds to finance

operating needs, capital expenditures, our dividend and share repurchase program. Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity, should be sufficient to fund our debt requirements, capital expenditures, working capital, dividend payments and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets. The events associated with COVID-19 pandemic have also disrupted these markets.

In response to market conditions, in March 2020, the Supervisory Board approved a plan to reduce the Company’s future quarterly dividends to $0.01 per share beginning with the second quarter of 2020 and to focus excess free cash flow on debt reduction. In December 2019, the Supervisory Board had previously reduced the dividends to $0.25 per share beginning with the first quarter of 2020. [The Company is also actively enacting cost control plans which include: (i) corporate and operating cost reductions; (ii) annual capital expenditures reduced to below the 2016 level of $11.4 million, and (iii) eliminating all non-essential costs. The corporate and operating cost reductions include reductions in workforce and reduction of senior executive and employee compensation.

As we are a Netherlands holding company, we conduct substantially all of our operations through subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us. There are no restrictions preventing any of our subsidiaries from repatriating earnings, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of ~~September 30, 2019, $10.4~~March 31, 2020, $9.4 million of our ~~$13.1~~$13.9 million of cash was held by our foreign subsidiaries.

	Nine months ended September 30,						2019/2018			Three months ended March 31,						2020/2019
	2019			2018			% Change			2020			2019			% Change
Cash flows provided by/(used in):
Operating activities	$	68,225		$	73,926			(8	)%	$	22,025		$	25,156			(12	)%
Investing activities		(543	)		(64,865	)	NM				(3,884	)		(5,205	)	NM
Financing activities		(67,670	)		(9,361	)		(623	)%		(15,343	)		(19,861	)	NM
Net change in cash and cash equivalents	$	12		$	(300	)		104	%	$	2,798		$	90		NM

Cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the same period in ~~2018~~2019 decreased primarily due to ~~increased net income~~lower levels of operating activities in the first quarter of 2020 which generated lower levels of cash flow, this was partially offset by ~~changes in~~improvements and lower levels of working capital.

The decrease in cash flows used in investing activities during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the same period in ~~2018~~2019 was primarily attributable to the ~~$17.8~~lower capital expenditure of $3.3 million ~~proceeds from~~as compared to $5.2 million for the ~~sale of two businesses in the second quarter of 2019 and the acquisition of a business in 2018 for $47.3 million.~~three months ended March 31, 2019.

Cash flows used in financing activities for the ~~nine~~three months ended ~~September 30, 2019 increased~~March 31, 2020 decreased compared to the same period in ~~2018.~~2019. Debt ~~increased $7~~decreased $3.0 million during the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to debt increasing by ~~$70~~$5.0 million during the same period in ~~2018.~~2019. In the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we repurchased ~~24,453~~33,741 shares of our common stock for an aggregate purchase price of ~~$15~~$1.2 million compared to the repurchase of ~~42,994~~7,226 shares for an aggregate purchase price of ~~$4.8~~$0.5 million during the same period in ~~2018.~~2019. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we used ~~$73.2~~$11.1 million to pay dividends, which is ~~consistent with~~lower when compared to the ~~amount~~$24.4 million dividend paid for the same period in ~~2018.~~2019.

We utilize the non-GAAP financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under GAAP, and should not be considered in isolation nor construed as an

alternative to operating profit, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with GAAP and thus is susceptible to varying interpretations and calculations, free cash flow as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with GAAP (in thousands):

	Nine months ended September 30,						2019/2018			Three months ended March 31,						2020/2019
	2019			2018			% Change			2020			2019			% Change
Free cash flow calculation:
Net cash provided by operating activities	$	68,225		$	73,926			(8	)%	$	22,025		$	25,156			(12	)%
Less: cash paid for capital expenditures		(17,537	)		(16,063	)		(9	)%		(3,340	)		(5,183	)	NM
Free cash flow	$	50,688		$	57,863			(12	)%	$	18,685		$	19,973			(6	)%

The decrease in free cash flow for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the same period in ~~2018~~2019 was primarily due to ~~increased net income~~a lower level of operating activity and cash generated from operations in the first quarter of 2020, which was partially offset by ~~changes in~~an improved lower level of working capital.

We have two series of senior notes outstanding with an aggregate principal amount of $150 million ("Senior Notes") issued in a private placement transaction. Series A consists of $75 million in aggregate principal amount of notes that bear interest at a fixed rate of 4.01% and are due in full on September 30, 2021. Series B consists of $75 million in aggregate principal amount

of notes that bear interest at a fixed rate of 4.11% and are due in full on September 30, 2023. Interest on each series of the Senior Notes is payable semi-annually on March 30 and September 30.

The aggregate borrowing commitment under our Credit Facility is $300 million. The Credit Facility provides an option to increase the commitment under the Credit Facility by an additional $100 million to bring the total borrowings available to $400 million if certain prescribed conditions are met by the Company. The Credit Facility bears interest at variable rates from LIBOR plus 1.375% to a maximum of LIBOR plus 2.00%. Any outstanding balance under the Credit Facility is due June 19, 2023, when the Credit Facility matures. Our available capacity at any point in time is reduced by borrowings outstanding at the time and outstanding letters of credit which totaled ~~$19.1~~$14.6 million at ~~September 30, 2019,~~March 31, 2020, resulting in an available borrowing capacity under the Credit Facility of ~~$131.9~~$131.4 million. In addition to those items under the Credit Facility, we had ~~$12.0~~$6.6 million of outstanding letters of credit and performance guarantees and bonds from other sources as of ~~September 30, 2019.~~March 31, 2020.

The terms of the Credit Facility and Senior Notes require us to meet certain covenants, including, but not limited to, an interest coverage ratio (consolidated EBITDA divided by interest expense) and a leverage ratio (consolidated net indebtedness divided by consolidated EBITDA), where consolidated EBITDA (as defined in each agreement) and interest expense are calculated using the most recent four fiscal quarters. The Credit Facility and Senior Notes include cross-default provision, which means default under one agreement may result in default under the other agreement. The Credit Facility has the more restrictive covenants with a minimum interest coverage ratio of 3.0 to 1.0 and a maximum leverage ratio of 2.5 to 1.0. The Credit Facility agreement allows non-cash charges such as impairment of assets, stock compensation and other non-cash charges to be added back in the calculation of EBITDA. The terms of our Credit Facility also allow us to negotiate in good faith to amend any ratio or requirement to preserve the original intent of the agreement if any change in accounting principle would affect the computation of any financial ratio or requirement of the Credit Facility. The adoption on January 1, 2019 of ASU 2016-02 does not affect the calculation of consolidated EBITDA under the agreement. Pursuant to the terms of our Credit Facility, we have calculated our leverage ratio to be 1.93, and our interest coverage ratio to be 8.59 for the period ending March 31, 2020. We believe that we are in compliance with all such covenants contained in our credit agreements. Certain of our material, wholly-owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes.

~~In 2014,~~During the three months ended March 31, 2020, we entered into two interest rate swap agreements for a total notional amount of $50 million ~~one~~to hedge changes in the variable rate interest expense on $50 million of ~~which expired during~~our existing or replacement

LIBOR-priced debt. Under the ~~three months ended September 30, 2019.~~first swap agreement of $25 million, we have fixed the LIBOR portion of the interest rate at 2.5% through August 29, 2024, and under the second swap agreement of $25 million, we have fixed the LIBOR portion of the interest rate at 1.30% through February 28, 2025. See Note 1517 - Derivative Instruments and Hedging Activities.

Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity, should be sufficient to fund our debt requirements, capital expenditures, working capital, dividend payments and future acquisitions.

There have been no material changes in market risk from the information provided in Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our ~~2018~~2019 Annual Report.

A complete discussion of our controls and procedures is included in our 2018 Annual Report.

Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~September 30, 2019~~March 31, 2020 at the reasonable assurance level.

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. Further, the design of disclosure controls and internal control over financial reporting must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

There have been no changes in our system of internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended ~~September 30, 2019,~~March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

See Note 9 to our Consolidated Interim Financial Statements in Part I, Item 1 of this Quarterly Report.

Our business faces many risks. Any of the risks discussed in this Quarterly Report or our other SEC filings could have a material impact on our business, financial position or results of operations.

As of March 2020, the vast and accelerated spread of the COVID-19 virus has resulted in significant disruptions to the global economy. The retraction and, in some instances shutting-down of certain countries or regions has and will continue to have a very significant impact to both international and domestic organizations. Core Laboratories is considered an essential business associated with the energy industry, and thus operations have continued throughout the pandemic mitigation actions across the globe. The recent events and impact to the global economy associated with COVID-19 have resulted in an elevated level of risk for several of the topics described in the “Item 1A - Risk Factors" in our 2019 Annual Report.

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our securities, please refer to "Item 1A - Risk Factors" in our ~~2018~~2019 Annual Report.

The following table provides information about purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

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.

The Netherlands		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Strawinskylaan 913
Tower A, Level 9
1077 XX Amsterdam
The Netherlands		Not Applicable
(Address of principal executive offices)		(Zip Code)


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

		Page

Item 1.	Financial Statements

	Consolidated Balance Sheets (Unaudited) at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3

	Consolidated Statements of Operations (Unaudited) for the Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

	Consolidated Statements of ~~Operations (Unaudited) for the Nine Months Ended September 30, 2019 and 2018~~	5

	~~Consolidated Statements of~~ Comprehensive Income (Loss) (Unaudited) for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	65

	Consolidated Statements of Changes in Equity (Unaudited) for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	76

	Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	87

	Notes to the Unaudited Consolidated Interim Financial Statements	98

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2120

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31


PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	3332

Item 1A.	Risk Factors	3332

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3332

Item 6.	Exhibits	3433

	Signature	3534

	September 30, 2019		December 31, 2018
Contract assets
Current	$	1,339	$	1,145
Non-Current		397		188
	$	1,736	$	1,333
Contract Liabilities
Current	$	3,929	$	5,963
Non-current		434		1,401
	$	4,363	$	7,364

	Operating Leases
2019	$	16,267
2020		12,572
2021		9,774
2022		7,955
2023		4,938
Thereafter		14,815
Total commitments	$	66,321

	September 30, 2019		December 31, 2018
Current assets	$	—	$	3,712
Non-current assets		—		1,848
Total assets	$	—	$	5,560

Current liabilities	$	—	$	1,633
Non-current liabilities		—		82
Total liabilities	$	—	$	1,715

	Reservoir			Production
	Description			Enhancement			Total
Balance at December 31, 2019	$	99,484		$	113,941		$	213,425
Impairment		—			(114,049	)		(114,049	)
Other		(108	)		108			—
Balance at March 31, 2020		99,376			—			99,376

	Three months ended September 30,				2019/2018				Three months ended June 30,		Q2 / Q1
	2019		2018		$ Change			% Change	2019		$ Change			% Change
Revenue:
Reservoir Description	$	109,339	$	103,609	$	5,730		6%	$	105,649	$	3,690		4%
Production Enhancement		63,861		78,537		(14,676	)	(19)%		63,389		472		1%
Consolidated	$	173,200	$	182,146	$	(8,946	)	(5)%	$	169,038	$	4,162		3%
Operating income:
Reservoir Description	$	18,835	$	14,956	$	3,879		26%	$	15,878	$	2,957		19%
Production Enhancement		11,456		19,243		(7,787	)	(41)%		10,424		1,032		10%
Corporate and Other¹		916		680		236		NM		1,706		(790	)	NM
Consolidated	$	31,207	$	34,879	$	(3,672	)	(11)%	$	28,008	$	3,199		11%
(1) "Corporate and Other" represents those items that are not directly related to a particular segment. "NM" means not meaningful

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Maximum Number of Shares That May Yet be Purchased Under the Program (2)(3)
July 1 - 31, 2019 (1)		3,351	$	52.88		—		4,046,268
August 1 - 31, 2019 (1)		5,046	$	46.35		—		4,058,225
September 1 - 30, 2019		—		—		—		4,058,225
Total		8,397	$	48.96		—


Exhibit No.		Exhibit Title	Incorporated by reference from the following documents
31.1	-	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	-	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	-	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	-	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101.INS	-	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith
101.SCH	-	Inline XBRL Schema Document	Filed herewith
101.CAL	-	Inline XBRL Calculation Linkbase Document	Filed herewith
101.LAB	-	Inline XBRL Label Linkbase Document	Filed herewith
101.PRE	-	Inline XBRL Presentation Linkbase Document	Filed herewith
101.DEF	-	Inline XBRL Definition Linkbase Document	Filed herewith
104	-	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)	Filed herewith


		CORE LABORATORIES N.V.

Date:	~~October, 24 2019~~April 23, 2020	By:	/s/ Christopher S. Hill
			Christopher S. Hill
			Chief Financial Officer
			(Duly Authorized Officer and
			Principal Financial Officer)