1
FILED PURSUANT TO
RULE 424(b)(4)
REGISTRATION NO. 333-36042
4,644,988 Shares
[CORE LAB LOGO]
CORE LABORATORIES N.V.
Common Shares
------------------
The selling shareholders are selling 4,644,988 common shares. We will not
receive any of the proceeds from the sale of the common shares sold by the
selling shareholders.
Our common shares are listed for trading on the New York Stock Exchange
under the symbol "CLB." On May 31, 2000, the last reported sale price for our
common shares was $26.00 per share.
The underwriters have an option to purchase a maximum of 696,748 additional
common shares from us to cover over-allotments of shares.
INVESTING IN OUR COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE
6.
UNDERWRITING
DISCOUNTS AND PROCEEDS TO SELLING
PRICE TO PUBLIC COMMISSIONS SHAREHOLDERS
--------------- ------------- -------------------
Per share............................................ $ 26.125 $ 1.125 $ 25.00
Total(1)............................................. $121,350,312 $5,225,612 $116,124,700
- ---------------
(1) If the underwriters exercise the over-allotment option in full, the total
price to the public, underwriting discounts and commissions, proceeds to the
selling shareholders, and proceeds to us would be $139,552,853, $6,009,453,
$116,124,700, and $17,418,700, respectively. See "Underwriting."
Delivery of the common shares will be made on or about June 5, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Joint Lead Managers
CREDIT SUISSE FIRST BOSTON SALOMON SMITH BARNEY
------------------
DEUTSCHE BANC ALEX. BROWN
CIBC WORLD MARKETS
DAIN RAUSCHER WESSELS
MORGAN KEEGAN & COMPANY, INC.
The date of this prospectus is May 31, 2000.
2
[LOGO]
------------------
TABLE OF CONTENTS
PROSPECTUS SUMMARY...................... 1
RISK FACTORS............................ 6
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS............ 8
USE OF PROCEEDS......................... 9
DIVIDEND POLICY......................... 9
CAPITALIZATION.......................... 10
PRINCIPAL AND SELLING SHAREHOLDERS...... 11
UNDERWRITING............................ 12
NOTICE TO CANADIAN RESIDENTS............ 14
LEGAL MATTERS........................... 15
EXPERTS................................. 15
WHERE YOU CAN FIND MORE INFORMATION..... 15
INCORPORATION OF DOCUMENTS BY
REFERENCE............................. 15
------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
3
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company and the common shares being sold in this
offering and our consolidated financial statements and related notes appearing
elsewhere in this prospectus or incorporated by reference in this prospectus. In
this prospectus, "we," "us" and "our" each refers to Core Laboratories N.V. and,
unless otherwise stated, our subsidiaries.
CORE LABORATORIES N.V.
OUR BUSINESS
We were established in 1936 and are one of the world's leading providers of
proprietary and patented reservoir description, production enhancement and
reservoir management services to the oil and gas industry. These services are
directed toward enabling our clients to improve reservoir performance and
increase oil and gas recovery from their producing fields. Our customers include
major, national and independent oil and gas producers. They employ our
technologies to increase daily production of oil and gas and to maximize the
ultimate recovery from their fields. Our technologies are designed to increase
our customers' cash flow thereby increasing their return on investments.
We believe we are the most technologically advanced, uniquely focused
reservoir optimization company in the oilfield services sector. Our reservoir
optimization technologies are closely interrelated and are organized into three
complementary segments.
- Reservoir Description: Encompasses the characterization of petroleum
reservoir rock, fluid and gas samples. We provide analytical and field
services to characterize properties of crude oil and petroleum products
to the oil and gas industry.
- Production Enhancement: Includes services and products relating to
reservoir well completions, perforations, stimulations and production. We
provide integrated services to evaluate the effectiveness of well
completions and to develop solutions aimed at increasing the
effectiveness of enhanced oil recovery projects.
- Reservoir Management: Combines and integrates information from reservoir
description and production enhancement services to increase production
and improve recovery of oil and gas from our clients' reservoirs.
We offer our services worldwide through our global network of offices, and
we manufacture products primarily in three facilities for distribution on a
global basis. We have over 70 offices in more than 50 countries and have
approximately 3,500 employees. Services accounted for approximately 81% of our
revenues for the year ended December 31, 1999, with the balance being generated
from product sales.
RESERVOIR DESCRIPTION
Most commercial oil and gas fields consist of porous and permeable
reservoir rocks that contain natural gas, crude oil and water. Due to the
density differences of the fluids, natural gas typically caps the field and
overlies an oil layer, which overlies the water. We provide services that
characterize the porous reservoir rock and all three reservoir fluids.
We analyze samples of reservoir rocks for their porosity, which determines
reservoir storage capacity, and for their permeability, which defines the
ability of the fluids to flow through the rock. These measurements are used to
determine how much oil and gas is present in a reservoir and the rates at which
the oil and gas can be produced. We also use our proprietary technologies to
correlate the reservoir description data to wireline logs and seismic data.
These data sets are also used to determine the different acoustic velocities of
reservoir rocks containing natural gas, crude oil and water. These velocity
measurements are used in conjunction with our in-reservoir seismic monitoring
services.
PRODUCTION ENHANCEMENT
The data we produce to describe a reservoir system is used to enhance oil
and gas production so that it will exceed the average oilfield recovery factor,
which is approximately 40%. Many oilfields today are
1
4
hydraulically fractured and flooded to maximize oil and gas recovery. We conduct
dynamic flow tests of the reservoir fluids through the reservoir rock, at actual
reservoir pressure and temperature, to realistically simulate the actual
flooding of a producing zone. We use proprietary technologies, such as our
Saturation Monitoring by the Attenuation of X-rays (SMAX(TM)), to help design
enhanced recovery projects. After a field flood is initiated, we are often
involved in monitoring the progress of the flood to ensure the maximum amount of
incremental production.
We are also an industry leader in high-performance perforating and
completion systems engineered to maximize well productivity by reducing,
eliminating or overcoming formation damage during the completion of oil and gas
wells. Among the numerous technologies we offer is our new Excape(TM) Completion
Process. Excape(TM) is a unique completion system we developed in cooperation
with Marathon Oil Company and BJ Services Company. Excape(TM) allows multiple
reservoir zones to be sequentially perforated and individually stimulated, thus
reducing completion time and rig cost. Patent applications covering the
technologies underlying Excape(TM) have been filed in the United States and in
certain foreign jurisdictions.
RESERVOIR MANAGEMENT
Reservoir description and production enhancement information, when applied
across an entire oilfield, is used to maximize daily production and the ultimate
total recovery from the reservoir. We are involved in numerous large-scale
reservoir management projects, applying proprietary and state-of-the-art
technologies from the earliest phases of a field development program until the
last economic barrel of oil is recovered. These projects are of increasing
importance to oil companies as the incremental barrel is often the lowest cost
and most profitable barrel in the reservoir. We believe that increased cash
flows from incremental production will result in increased capital expenditures,
ultimately leading to future opportunities for us.
We recently developed our Reservoir Information Browser(TM) (RIB(TM)) that
allows oil companies to collect, store, integrate and access well or entire
field data sets via their worldwide internal intranets. Our clients access
RIB(TM) for ongoing updates to be used in reservoir management.
OUR STRATEGY
Our business strategy is to continue to provide advanced technologies that
improve reservoir performance by (i) continuing the development of proprietary
technologies through client-driven research and development, (ii) expanding the
services and products offered throughout our global network of offices and (iii)
acquiring complementary businesses that add key technologies or market presence
and enhance existing products and services.
DEVELOPMENT OF NEW TECHNOLOGIES, SERVICES AND PRODUCTS
We conduct research and development to meet the needs of our customers, who
are continually seeking new technologies to lower their costs of finding,
developing and producing oil and gas. While the aggregate number of oil and gas
wells being drilled per year has remained relatively constant in recent years,
oil and gas producers have increased expenditures on high-technology services
which improve their understanding of the reservoir. They are also spending more
on advanced technologies to increase production of oil and gas from their
producing fields. We intend to continue concentrating our efforts on
technologies that enhance development and production efficiencies. We believe
our patents, trademarks and other intellectual property rights are an important
factor in maintaining our technological advantage, although no one patent is
considered essential to our success.
INTERNATIONAL EXPANSION OF SERVICES AND PRODUCTS
Another component of our business strategy is to broaden the spectrum of
services and products offered to our clients on a global basis. We plan to use
our worldwide network of offices to offer many of our services and products that
have been developed internally or obtained through acquisitions. This allows us
to enhance our revenues through efficient and effective utilization of our
global network. Our non-U.S. operations accounted for approximately 58% of our
revenues during the year ended December 31, 1999.
2
5
ACQUISITIONS
We continually review potential acquisitions to add key technologies,
enhance market presence or complement existing businesses. Our recent
acquisitions reflect our desire to broaden the services offered to our clients
in the field of reservoir optimization. Over the past 12 months, we completed
the following three significant acquisitions:
- TomoSeis: In January 2000, we acquired TomoSeis Corporation. TomoSeis
provides highly detailed reservoir imaging technologies that are the
critical component for successful 4D seismic and reservoir monitoring
programs. Proprietary and patented energy-source and seismic-receiver
hardware, specialized imaging technology and internally developed data
processing capabilities make TomoSeis the industry-leading provider of
in-reservoir seismic services;
- Reservoirs: In August 1999, we acquired Reservoirs, Inc. Reservoirs
provides reservoir description services to the oil and gas industry and
is a recognized leader in the geology and petrophysics of deepwater
reservoirs; and
- CTC: In July 1999, we acquired Coherence Technology Company, Inc. CTC
provides specialized seismic data processing and interpretation services
and is licensed by BP Amoco to provide its patented Coherence Cube(TM)
seismic data processing technology to the oil and gas industry.
RECENT DEVELOPMENTS
On April 28, we reported our results for the first quarter of 2000.
Revenues totaled $68.5 million as compared to $67.2 million for the first
quarter of 1999. Earnings for the first quarter of 2000 totaled $0.10 per fully
diluted share, as compared to a loss of $0.23 per fully diluted share for the
first quarter of 1999. Earnings for the first quarter of 2000, excluding
goodwill amortization and non-recurring charges, net of tax, totaled $0.13 per
fully diluted share, as compared to $0.04 per fully diluted share for the first
quarter of 1999.
In April 2000, we signed a memorandum of intent to acquire Production
Enhancement Corporation ("PENCOR"), which provides fluid phase behavior services
used to characterize crude oils, natural gases, and other reservoir fluids.
Clients use PENCOR's services to enhance daily production and ultimate field
recovery values, especially in high pressure reservoirs and deep water projects.
------------------
Our principal executive offices are located at Herengracht 424, 1017 BZ
Amsterdam, The Netherlands. Our telephone number is (31-20) 420-3191.
3
6
THE OFFERING
Common shares offered by the selling
shareholders....................... 4,644,988 shares
Common shares to be outstanding after
this offering...................... 30,585,341 shares
Use of proceeds...................... We will not receive any proceeds from the sale of the
common shares sold by the selling shareholders. If the
over-allotment option is exercised in full, we will
receive net proceeds of approximately $17,378,700. We
will use any net proceeds from the exercise of the
over-allotment option for general working capital
purposes.
New York Stock Exchange symbol....... CLB
The number of common shares to be outstanding immediately following this
offering is based on the number of common shares outstanding as of May 9, 2000,
and does not include:
- 696,748 common shares subject to purchase from us upon the exercise by
the underwriters of their over-allotment option. If the over-allotment
option is exercised in full, 31,282,089 common shares will be outstanding
after this offering; and
- 3,035,771 common shares reserved, as of May 9, 2000, for the exercise of
outstanding options granted pursuant to our stock option plans.
4
7
SUMMARY CONSOLIDATED FINANCIAL DATA
The following selected historical consolidated financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements,
both of which are included in the documents incorporated by reference in this
prospectus.
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1995 1996 1997 1998 1999
------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA(3):
Revenues:
Services.......................................... $75,679 $104,718 $217,673 $261,970 $246,936
Sales............................................. 13,473 10,047 17,735 36,580 56,722
------- -------- -------- -------- --------
Total revenues.................................... 89,152 114,765 235,408 298,550 303,658
Operating expenses:
Costs of services................................. 63,917 87,594 172,719 207,667 198,425
Cost of sales..................................... 9,995 6,532 14,984 26,147 47,029
General and administrative expenses............... 2,719 3,559 5,974 8,447 12,301
Depreciation and amortization..................... 3,118 4,695 10,041 14,930 14,659
Goodwill amortization............................. 74 172 1,498 2,933 4,024
Transaction costs associated with merger.......... -- 355 -- -- --
Write-offs and other charges(1)................... -- -- -- -- 10,670
Restructuring charges(2).......................... -- -- -- -- 7,036
Other (income) expense, net....................... 973 (595) (1,139) 1,078 (3,308)
------- -------- -------- -------- --------
Income from continuing operations before interest
expense and income tax............................ 8,356 12,453 31,331 37,348 12,822
Interest expense.................................... 3,102 1,554 6,552 6,339 7,796
------- -------- -------- -------- --------
Income from continuing operations before income
tax............................................... 5,254 10,899 24,779 31,009 5,026
Income tax.......................................... 1,979 4,507 8,992 9,337 1,659
------- -------- -------- -------- --------
Income from continuing operations................... $ 3,275 $ 6,392 $ 15,787 $ 21,672 $ 3,367
======= ======== ======== ======== ========
PER SHARE DATA(3):
Income from continuing operations per common share:
Basic............................................. $ 0.18 $ 0.29 $ 0.65 $ 0.78 $ 0.11
Diluted........................................... 0.18 0.29 0.64 0.76 0.11
Weighted average common shares outstanding:
Basic............................................. 18,042 22,070 24,141 27,635 29,851
Diluted........................................... 18,148 22,267 24,822 28,428 30,567
OTHER DATA(3):
Diluted earnings per share from continuing
operations excluding goodwill amortization...... $ 0.18 $ 0.29 $ 0.70 $ 0.86 $ 0.24
AT DECEMBER 31,
--------------------------------------------------
1995 1996 1997 1998 1999
------- ------- -------- -------- --------
(IN THOUSANDS)
BALANCE SHEET DATA(3):
Working capital..................................... $18,519 $17,883 $ 51,572 $ 61,473 $ 93,324
Total assets........................................ 82,530 93,827 253,972 353,962 361,133
Long-term debt, including current maturities........ 20,247 17,354 74,660 87,793 83,328
Shareholders' equity................................ 40,947 48,616 115,487 199,109 208,944
- ---------------------------
(1) In the first quarter of 1999, we recorded write-offs and other charges
totaling $10.7 million. This amount included $4.4 million of asset
write-offs, $2.6 million related to facility closures and personnel
reductions, and $3.7 million associated with the termination of the proposed
acquisition of GeoScience Corporation.
(2) In the fourth quarter of 1999, we recorded a $7.0 million charge to cover
the cost of exiting redundant facilities and restructuring certain of our
operations. We are combining personnel and equipment from eight facilities
into one Houston facility. We also reorganized our operations in Canada and
Mexico, consolidated certain service lines and are further centralizing our
operations in Latin America, Europe and the Asia-Pacific region. No
operations are being discontinued.
(3) In the first quarter of 2000, we completed the acquisition of TomoSeis
Corporation, which was accounted for using the pooling-of-interest
accounting method. The amounts and share data for the periods presented
above have not been restated to include the historical results of operations
and financial position of TomoSeis Corporation. The amounts and share data
included in our March 31, 2000 Form 10-Q incorporated by reference in this
prospectus reflect the restated historical results of operations and
financial position of TomoSeis Corporation.
5
8
RISK FACTORS
An investment in our common shares involves a high degree of risk. You
should carefully consider the following factors in addition to the other
information presented or incorporated by reference in this prospectus before
buying common shares in the offering.
FUTURE DOWNTURNS IN THE OIL AND GAS INDUSTRY, OR IN THE OIL FIELD SERVICES
BUSINESS, MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
The oil and gas industry is cyclical and has been subject to significant
economic downturns at various times as a result of numerous factors affecting
the supply of and demand for oil and natural gas, which include:
- the level of capital expenditures of the oil and gas industry;
- the level of drilling activity;
- the level of production activity;
- market prices of oil and gas;
- mergers, consolidations and downsizing among our clients;
- worldwide economic conditions;
- interest rates and the cost of capital;
- environmental regulation;
- tax policies;
- political requirements of national governments;
- coordination by the Organization of Petroleum Exporting Countries (OPEC);
- cost of producing oil and natural gas; and
- technological advances.
IF WE ARE NOT ABLE TO DEVELOP OR ACQUIRE NEW PRODUCTS OR OUR PRODUCTS
BECOME TECHNOLOGICALLY OBSOLETE, OUR RESULTS OF OPERATIONS MAY BE ADVERSELY
AFFECTED.
The market for our products and services is characterized by changing
technology and frequent product introduction. As a result, our success is
dependent upon our ability to develop or acquire new products and services on a
cost-effective basis and to introduce them into the marketplace in a timely
manner. While we intend to continue committing substantial financial resources
and effort to the development of new products and services, we may not be able
to successfully differentiate our products and services from those of our
competitors. The market may not consider our proposed products and services to
be superior to our competitors' products and services. In addition, we may not
be able to adapt to evolving markets and technologies, develop new products, or
achieve and maintain technological advantages.
If we are unable to continue developing competitive products in a timely
manner in response to changes in technology, our businesses and operating
results may be materially and adversely affected. In addition, continuing
development of new products inherently carries the risk of inventory
obsolescence with respect to our older products.
IF WE ARE UNABLE TO OBTAIN PATENTS, LICENSES AND OTHER INTELLECTUAL
PROPERTY RIGHTS COVERING OUR PRODUCTS AND SERVICES, OUR OPERATING RESULTS MAY BE
ADVERSELY AFFECTED.
Our success depends in part on our ability to obtain patents, licenses and
other intellectual property rights covering our products and services. To that
end, we have obtained certain patents and intend to continue to seek patents on
some of our inventions and services. While we have patented some of our key
technologies, we do not patent all of our proprietary technology, even when
regarded as patentable. The process of seeking patent protection can be long and
expensive. There can be no assurance that patents will be issued from currently
pending or future applications or that, if patents are issued, they will be of
6
9
sufficient scope or strength to provide meaningful protection or any commercial
advantage to us. In addition, effective copyright and trade secret protection
may be unavailable or limited in certain countries. Litigation, which could
demand financial and management resources, may be necessary to enforce our
patents or other intellectual property rights. Also, there can be no assurance
that we can obtain licenses or other rights to necessary intellectual property
on acceptable terms.
WE DEPEND ON THE RESULTS OF OUR INTERNATIONAL OPERATIONS, WHICH EXPOSES US
TO RISKS INHERENT IN DOING BUSINESS ABROAD.
We operate facilities in more than 50 countries around the world. Our
non-U.S. operations accounted for approximately 58% of our revenues during the
year ended December 31, 1999. In addition, some of our revenues in the U.S. are
generated by projects located outside the U.S. Our business is subject to
various risks beyond our control, including:
- the instability of foreign economies and governments;
- currency fluctuations;
- potential income tax liabilities in multiple jurisdictions; and
- changes in laws and policies affecting trade and investment.
Any of these factors might cause our facilities in some countries to become
unprofitable, possibly resulting in the closing of these facilities. We attempt
to limit our exposure to foreign currency fluctuations by limiting the amount by
which our foreign contracts are denominated in a currency other than U.S.
dollars to an amount generally equal to expenses expected to be incurred in such
foreign currency. We have not historically engaged in and do not currently
intend to engage in any significant hedging or currency trading transactions
designed to compensate for adverse currency fluctuations.
THERE ARE RISKS RELATED TO OUR ACQUISITION STRATEGY. IF WE ARE UNABLE TO
SUCCESSFULLY INTEGRATE AND MANAGE BUSINESSES THAT WE HAVE ACQUIRED AND ANY
BUSINESSES ACQUIRED IN THE FUTURE, OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION COULD BE ADVERSELY AFFECTED.
One of our key business strategies is to acquire technologies, operations
and assets that are complementary to our existing businesses. There are
financial, operational and legal risks inherent in any acquisition strategy,
including:
- increased financial leverage;
- increased interest expense; and
- difficulties involved in combining disparate company cultures and
facilities.
The success of any completed acquisition will depend on our ability to
integrate effectively the acquired business into our existing operations. The
process of integrating acquired businesses may involve unforeseen difficulties
and may require a disproportionate amount of our managerial and financial
resources. In addition, possible future acquisitions may be larger and for
purchase prices significantly higher than those paid for recent and pending
acquisitions. No assurance can be given that we will be able to continue to
identify additional suitable acquisition opportunities, negotiate acceptable
terms, obtain financing for acquisitions on acceptable terms or successfully
acquire identified targets. Our failure to achieve consolidation savings, to
incorporate the acquired businesses and assets into our existing operations
successfully or to minimize any unforeseen operational difficulties could have a
material adverse effect on our financial condition and results of operation.
WE ARE SUBJECT TO A VARIETY OF ENVIRONMENTAL LAWS AND REGULATIONS, WHICH
MAY RESULT IN INCREASED COSTS TO OUR BUSINESS.
We are subject to a variety of governmental regulations relating to the
use, storage, discharge and disposal of chemicals and gases used in our
analytical and manufacturing processes. Environmental claims or the failure to
comply with present or future environmental laws and regulations could result in
the
7
10
assessment of damages or imposition of fines against us or the suspension or
cessation of operations. New regulations could require us to acquire costly
equipment or to incur other significant expenses. If we fail to control the use,
or adequately restrict the discharge of, hazardous substances, we could be
subject to future material liabilities. In addition, public interest in the
protection of the environment has increased dramatically in recent years. We
anticipate that the trend of more expansive and stricter environmental laws and
regulations will continue, the occurrence of which may require us to increase
our capital expenditures or could result in increased operating expenses.
BECAUSE WE ARE A NETHERLANDS COMPANY, IT MAY BE DIFFICULT FOR YOU TO SUE
OUR SUPERVISORY DIRECTORS OR US, AND IT MAY NOT BE POSSIBLE TO OBTAIN OR ENFORCE
JUDGMENTS AGAINST US.
We are a Netherlands company and a substantial portion of our assets are
located outside the United States. In addition, some members of our supervisory
board of directors are residents of countries other than the United States. As a
result, it may not be possible for you to effect service of process within the
United States upon our supervisory directors or to enforce against our
supervisory directors or us, judgments of courts of the United States predicated
upon civil liabilities under the United States federal securities laws. Because
there is no treaty between the United States and The Netherlands providing for
the reciprocal recognition and enforcement of judgments, United States judgments
are not automatically enforceable in The Netherlands. In addition, there is
doubt as to whether a Netherlands court would impose civil liability on us or on
the members of our supervisory board of directors in an original action brought
against us or our supervisory directors in a court of competent jurisdiction in
The Netherlands and predicated solely upon the federal securities laws of the
United States.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
We believe that some statements contained or incorporated by reference in
this prospectus are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. We caution that
forward-looking statements involve risks and uncertainties that may affect our
actual results of operations. Statements in this prospectus that are
forward-looking and that provide other than historical information involve those
risks and uncertainties.
Also, when we use words like "may," "may not," "believes," "does not
believe," "expects," "does not expect," "anticipates," "does not anticipate,"
"intends," "plan," "estimate," and similar expressions, including the negative
or other variations of these words, we are making forward-looking statements.
We continue to face many risks and uncertainties (including those set forth
in "Risk Factors") that could cause actual results to differ from those
forward-looking statements, including:
- our ability to continue to develop or acquire new and useful technology;
- the realization of anticipated synergies from acquired businesses and
future acquisitions;
- our dependence on one industry, oil and gas, and the impact of commodity
prices on the expenditure levels of our customers;
- competition in the markets we serve;
- the risks and uncertainties attendant to adverse industry, political,
economic and financial market conditions, including stock prices,
government regulations, interest rates and credit availability;
- unsettled political conditions, war, civil unrest, currency controls and
governmental actions in the numerous countries in which we operate;
- changes in the price of oil and natural gas;
- integration of acquired businesses; and
- the effects of industry consolidation.
8
11
These forward-looking statements are based on assumptions that we believe
are reasonable, but they are open to a wide range of uncertainties and business
risks. Factors that could cause actual results to differ materially from those
anticipated are discussed in our periodic filings with the SEC, including our
Annual Report on Form 10-K for the year ended December 31, 1999 (as amended by
Form 10-K/A).
When considering these forward-looking statements, you should keep in mind
the risk factors and other cautionary statements in this document and the
documents we have incorporated by reference. We will not update these forward
looking statements unless the securities laws require us to do so.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common shares sold by
the selling shareholders. If the underwriters' over-allotment option is
exercised in full, we will receive net proceeds (after deducting the
underwriters discount and estimated offering expenses) of approximately
$17,378,700. We intend to use any net proceeds from the exercise of the
over-allotment option for general working capital purposes.
DIVIDEND POLICY
We have not paid dividends on our common shares and currently have no plans
to pay dividends on the common shares. We expect that we will retain all
available earnings generated by our operations for the development and growth of
our business. Any future determination as to the payment of dividends will be
made at the discretion of the our supervisory board and will depend upon our
operating results, financial condition, capital requirements, general business
conditions and such other factors as the supervisory board deems relevant.
Because we are a holding company that conducts substantially all of our
operations through subsidiaries, our ability to pay cash dividends on the common
shares is dependent upon the ability of our subsidiaries to pay cash dividends
or otherwise distribute or advance funds to us and on the terms and conditions
of our existing and future credit arrangements. Because we are a Netherlands
company, we may be required to withhold a portion of any dividends paid for
Netherlands tax purposes. The amount of the withholding will depend on
applicable law at the time the dividend is paid.
9
12
CAPITALIZATION
The following table sets forth our short-term debt and capitalization as of
December 31, 1999, on a historical basis, assuming that the underwriters'
over-allotment option is not exercised.
AS OF DECEMBER 31,
1999(1)
------------------
(IN THOUSANDS)
Total short-term debt and current portion of long-term
debt...................................................... $ 1,121
========
Long-term debt, less current portion:
Borrowings under credit facility(2)....................... $ 7,000
Senior notes.............................................. 75,000
Other long-term debt...................................... 207
--------
Total long-term debt.............................. $ 82,207
--------
Shareholders' equity:
Preference shares, Netherlands Guilders 0.03 par value;
3,000,000 shares authorized; no shares issued and
outstanding............................................ --
Common shares, Netherlands Guilders 0.03 par value;
100,000,000 shares authorized; 30,179,226 shares issued
and outstanding........................................ 508
Additional paid-in capital................................ 161,859
Retained earnings......................................... 46,577
--------
Total shareholders' equity........................ $208,944
--------
Total capitalization.............................. $291,151
========
- ---------------------------
(1) Assuming the underwriters' over-allotment option is exercised in full and
the net proceeds we receive are used for general corporate purposes, as of
December 31, 1999, total long term debt would have been $82,207, common
shares at par value would have been $517, additional paid-in capital would
have been $179,229, total shareholders' equity would have been $226,323, and
total capitalization would have been $308,530.
(2) Loans under the credit facility generally bear interest from LIBOR plus
1.25% to a maximum of LIBOR plus 1.75%. The revolving debt facilities
require only interest payments until maturity in June 2004.
10
13
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of common shares as of March 20, 2000, and as adjusted to give effect
to the sale of the common shares offered by the selling shareholders, by:
- each person known to us to be the beneficial owner of 5% or more of the
outstanding common shares;
- each of our supervisory directors;
- all of the our supervisory directors and executive officers as a group;
and
- the selling shareholders.
Unless otherwise indicated, each person has sole voting and dispositive
power over the common shares listed. See "Underwriting."
COMMON SHARES
OWNED PRIOR TO COMMON SHARES
OFFERING OWNED AFTER OFFERING
-------------------- ---------------------
NUMBER OF NUMBER OF NUMBER OF
SUPERVISORY DIRECTORS, EXECUTIVE COMMON SHARES COMMON
OFFICERS AND PRINCIPAL SHAREHOLDERS SHARES PERCENT OFFERED SHARES PERCENT
- ----------------------------------- --------- ------- --------- ---------- --------
Lord, Abbett & Co.(1)................................ 2,190,520 7.1% -- 2,190,520 7.1%
Franklin Resource, Inc.(2)........................... 1,726,800 5.7 -- 1,726,800 5.7
Stephen D. Weinroth**(3)............................. 461,500 1.5 -- 461,500 1.5
David M. Demshur**................................... 339,113 1.1 -- 339,113 1.1
Richard L. Bergmark**................................ 207,219 * -- 207,219 *
Joseph R. Perna**.................................... 126,744 * -- 126,744 *
John D. Denson**..................................... 61,159 * -- 61,159 *
Timothy J. Probert**................................. 35,000 * -- 35,000 *
Bob G. Agnew**....................................... 34,600 * -- 34,600 *
James A. Read**...................................... 34,000 * -- 34,000 *
Monty L. Davis**..................................... 21,512 * -- 21,512 *
Randall D. Keys**.................................... 1,234 * -- 1,234 *
Jacobus Schouten..................................... -- * -- -- *
All supervisory directors and executive officers as a
group**............................................ 1,322,081 4.3 -- 1,322,081 4.3
SELLING SHAREHOLDERS
First Britannia Holdings N.V.(4)..................... 4,202,534 13.6% 4,202,534 -- --%
Robert Andrews(5).................................... 718,750 2.3 350,000 368,750 1.2
Estate of Paul J. Cernock............................ 72,454 * 36,227 36,227 *
Estate of Elizabeth M. Cernock....................... 72,454 * 36,227 36,227 *
Randall S. Miller(6)................................. 52,671 * 20,000 32,671 *
--------- ---- --------- --------- ---
Total selling shareholders................... 5,118,863 16.5% 4,644,988 473,875 1.5%
========= ==== ========= ========= ===
- ---------------------------
* Does not exceed 1.0%.
** Includes the following common shares which may be acquired within 60 days
through the exercise of stock options: Mr. Weinroth, 64,000; Mr. Demshur,
108,750; Mr. Bergmark, 112,000; Mr. Perna, 20,000; Mr. Denson, 39,250; Mr.
Probert, 34,000; Mr. Agnew, 30,000; Mr. Read, 34,000; Mr. Davis, 17,500; and
Mr. Keys, 718.
(1) As reported on Schedule 13G dated February 2, 2000. The business address of
Lord, Abbett & Co. is 90 Hudson Street, Jersey City, New Jersey 07302.
(2) As reported on Schedule 13G/A dated January 20, 2000. The business address
of Franklin is 777 Mariners Island Blvd., San Mateo, California 94404.
(3) Mr. Weinroth, a Managing Director of First Britannia Mezzanine N.V.,
disclaims beneficial ownership of the common shares beneficially owned by
First Britannia Mezzanine N.V., the ultimate parent of First Britannia
Holdings N.V.
(4) First Britannia Holdings N.V. is a wholly owned subsidiary of First
Britannia Mezzanine N.V. and its business address is de Ruyterkade 62,
Curacao, Netherlands Antilles.
(5) Mr. Andrews is Vice President, Marketing for Latin America. The number of
shares includes 3,750 common shares which may be acquired within 60 days
through the exercise of stock options.
(6) Mr. Miller is one of our general managers.
11
14
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated May 31, 2000, we and the selling shareholders have agreed to
sell to the underwriters named below, for whom Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc., Deutsche Bank Securities Inc., CIBC
World Markets Corp., Dain Rauscher Incorporated and Morgan Keegan & Company,
Inc. are acting as representatives, the following respective numbers of common
shares:
NUMBER OF
SHARES
UNDERWRITER ---------
Credit Suisse First Boston Corporation...................... 2,554,744
Salomon Smith Barney Inc. .................................. 696,748
Deutsche Bank Securities Inc. .............................. 348,374
CIBC World Markets Corp. ................................... 348,374
Dain Rauscher Incorporated.................................. 348,374
Morgan Keegan & Company, Inc. .............................. 348,374
---------
Total............................................. 4,644,988
=========
The underwriting agreement provides that the underwriters are obligated to
purchase all of the common shares in the offering if any are purchased, other
than those common shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults the
purchase commitments of non-defaulting underwriters may be increased or the
offering may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 696,748 additional common shares from us at the public offering
price less the underwriting discounts and commissions. The option may be
exercised only to cover any over-allotments of the common shares.
The underwriters propose to offer the common shares initially at the public
offering price on the cover page of this prospectus and to selling group members
at that price less a concession of $0.675 per share. The underwriters and
selling group members may allow a discount of $0.10 per share on sales to other
broker/dealers. After the public offering of the common shares, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation and estimated expenses we
and the selling shareholders will pay.
PER SHARE TOTAL
------------------------------- -------------------------------
WITHOUT WITH WITHOUT WITH
OVER-ALLOTMENT OVER-ALLOTMENT OVER-ALLOTMENT OVER-ALLOTMENT
-------------- -------------- -------------- --------------
Underwriting Discounts and Commissions paid
by selling shareholders(1)............... $1.125 $1.125 $5,225,612 $5,225,612
Expenses paid by the selling
shareholders(2).......................... $0.837 $0.728 $ 388,643 $ 388,643
Underwriters Discounts and Commissions
payable by us............................ $ -- $1.125 $ -- $ 783,842
Expenses payable by us..................... $0.009 $0.007 $ 40,000 $ 40,000
- ---------------------------
(1) The selling shareholders will pay the underwriters' discounts and
commissions allocable to the common shares sold by them in this offering.
(2) First Britannia Mezzanine N.V. will pay certain other expenses related to
this offering.
We have agreed that we will not offer, sell, pledge, contract to sell or
otherwise dispose of, directly or indirectly, any of our common shares, or
securities convertible into or exchangeable or exercisable for any of our common
shares, or publicly disclose our intention to make any such offer, sale, pledge
or disposition, without the prior written consent of Credit Suisse First Boston
Corporation for a period of
12
15
90 days after the date of this prospectus, except issuances of common shares
pursuant to the exercise of employee stock plans. Credit Suisse First Boston
Corporation has waived this restriction with respect to the issuance of
approximately 250,000 common shares by us in connection with our proposed
acquisition of PENCOR.
Our executive officers, supervisory directors and certain selling
shareholders have agreed that they will not offer, sell, contract to sell, or
otherwise dispose of, directly or indirectly, any of our common shares or
securities convertible into or exchangeable or exercisable for any of our common
shares, enter into a transaction which would have the same effect, or enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of our common shares, whether any such
aforementioned transaction is to be settled by delivery of our common shares or
such other securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Credit Suisse First Boston Corporation for a period of 90
days after the date of this prospectus.
We and the selling shareholders have agreed to indemnify the underwriters
against certain liabilities including liabilities under the Securities Act of
1933, or contribute to payments which the underwriters may be required to make
in that respect.
Our common shares are traded on the NYSE under the symbol "CLB." We will
file an application with the NYSE to list the common shares to be sold in this
offering.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934.
- Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Syndicate covering transactions involve purchases of the common shares in
the open market after the distribution has been completed in order to
cover syndicate short positions.
- Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common shares originally sold by such
syndicate member are purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the common shares to be higher than it would otherwise be
in the absence of these transactions. These transactions may be effected on The
New York Stock Exchange or otherwise and, if commenced, may be discontinued at
any time.
A prospectus in electronic format will be made available on the websites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters for
sale to their online brokerage account holders. Internet distributions will be
allocated by the underwriters that will make internet distributions on the same
basis as other allocations.
13
16
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the common shares in Canada is being made only on a
private placement basis exempt from the requirement that we and the selling
shareholders prepare and file a prospectus with the securities regulatory
authorities in each province where trades of common shares are effected.
Accordingly, any resale of the common shares in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
are advised to seek legal advice prior to any resale of the common shares.
REPRESENTATIONS OF PURCHASERS
Each purchaser of common shares in Canada who receives a purchase
confirmation will be deemed to represent to us, the selling shareholders and the
dealer from whom such purchase confirmation is received that (i) such purchaser
is entitled under applicable provincial securities laws to purchase such common
shares without the benefit of a prospectus qualified under such securities laws,
(ii) where required by law, such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein and the selling shareholders may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon the issuer or such persons. All or a substantial
portion of the assets of the issuer and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
the issuer or such persons in Canada or to enforce a judgement obtained in
Canadian courts against such issuer or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of common shares to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common shares acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common shares acquired on the same date and under
the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of common shares should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
shares in their particular circumstances and with respect to the eligibility of
the common shares for investment by the purchaser under relevant Canadian
legislation.
14
17
LEGAL MATTERS
Certain legal matters have been passed on for us by Vinson & Elkins L.L.P.,
Houston, Texas. The validity of the securities will be passed upon for us by
Nauta Dutilh, Rotterdam, The Netherlands. Fulbright & Jaworski L.L.P., Houston,
Texas, will serve as counsel to the underwriters.
EXPERTS
The financial statements incorporated by reference in this prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934. The registration statement of which this
prospectus forms a part and these reports, proxy statements and other
information can be inspected and copied at the public reference room maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of the materials may also be obtained from the SEC at prescribed
rates by writing to the public reference room maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the public reference room by calling the
SEC at 1-800-SEC-0330.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933 with respect to this offering of common shares. This
prospectus, which constitutes a part of the registration statement, does not
contain all the information set forth in the registration statement and the
attached schedules and exhibits.
The SEC maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding us. The reports, proxy and information statements
and other information about us can be downloaded from the SEC's website and can
also be inspected and copied at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until our offering is completed:
- our annual report on Form 10-K (as amended by Form 10-K/A) for the year
ended December 31, 1999;
- our definitive proxy for the annual meeting of shareholders to be held in
May 2000;
- our quarterly report on Form 10-Q for the quarter ended March 31, 2000;
and
- the description of our common shares contained in our registration
statement on Form 8-A filed pursuant to Section 12 of the Securities
Exchange Act of 1934.
You may request a copy of these filings, at no cost, by writing or calling
our investor relations department at the following address: Core Laboratories
N.V., Herengracht 424, 1017 BZ Amsterdam, The Netherlands, (31-20) 420-3191.
15
18
[CORE LAB LOGO]