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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________
Commission File Number 001-14273
CORE LABORATORIES N.V.
(Exact name of registrant as specified in its charter)
The Netherlands Not Applicable
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Herengracht 424
1017 BZ Amsterdam
The Netherlands Not Applicable
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (31-20)420-3191
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------- ------
The number of common shares of the Registrant, par value NLG 0.03 per
share, outstanding at May 11, 2001 was 32,411,442.
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CORE LABORATORIES N.V.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2001
INDEX
Page
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at March 31, 2001 and December 31, 2000......................... 1
Consolidated Statements of Operations for the Three Months Ended
March 31, 2001 and 2000................................................................ 2
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2001 and 2000................................................................ 3
Notes to Consolidated Financial Statements ................................................. 4
Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of
Operations ........................................................................ 9
Item 3 -- Quantitative & Qualitative Disclosures of Market Risk................................. 12
Part II -- Other Information
Item 1 -- Legal Proceedings..................................................................... 13
Item 2 -- Changes in Securities................................................................. 13
Item 3 -- Defaults Upon Senior Securities....................................................... 13
Item 4 -- Submission of Matters to a Vote of Security Holders .................................. 13
Item 5 -- Other Information..................................................................... 13
Item 6 -- Exhibits and Reports on Form 8-K...................................................... 13
Signature ....................................................................................... 14
CORE LABORATORIES N.V.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
2001 2000
---------- ----------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents................................................... $ 13,587 $ 12,918
Accounts receivable, less allowance for doubtful accounts of
$9,014 and $9,067 in 2001 and 2000, respectively........................ 105,337 110,915
Inventories ................................................................ 35,337 34,067
Prepaid expenses and other.................................................. 9,776 7,053
Deferred tax asset.......................................................... 7,928 10,265
---------- ----------
Total current assets.................................................... 171,965 175,218
PROPERTY, PLANT AND EQUIPMENT, net............................................... 84,404 83,338
INTANGIBLES AND GOODWILL, net.................................................... 147,629 147,918
OTHER LONG-TERM ASSETS........................................................... 3,391 4,130
---------- ----------
Total assets....................................................... $ 407,389 $ 410,604
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt........................................ $ 667 $ 632
Current lease obligations................................................... 134 247
Accounts payable............................................................ 18,924 25,186
Other accrued expenses...................................................... 26,124 25,445
---------- ----------
Total current liabilities............................................... 45,849 51,510
LONG-TERM DEBT .................................................................. 78,965 82,015
LONG-TERM LEASE OBLIGATIONS...................................................... 31 35
OTHER LONG-TERM LIABILITIES...................................................... 21,481 23,298
MINORITY INTEREST................................................................ 2,053 1,888
SHAREHOLDERS' EQUITY:
Preference shares, NLG 0.03 par value; 3,000,000 shares authorized,
no shares issued or outstanding......................................... -- --
Common shares, NLG 0.03 par value; 100,000,000 shares authorized,
32,360,552 and 32,208,364 issued and outstanding
at March 31, 2001 and December 31, 2000, respectively................... 536 534
Additional paid-in capital.................................................. 183,958 182,695
Retained earnings........................................................... 74,516 68,629
---------- ----------
Total shareholders' equity.............................................. 259,010 251,858
---------- ----------
Total liabilities and shareholders' equity......................... $ 407,389 $ 410,604
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
1
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three Months Ended
March 31,
--------------------------------
2001 2000
------------- ------------
(Unaudited)
SERVICES......................................................................... $ 70,305 $ 60,269
SALES............................................................................ 19,358 11,965
------------- ------------
89,663 72,234
OPERATING EXPENSES:
Cost of services............................................................ 54,823 50,778
Cost of sales............................................................... 15,204 8,076
General and administrative expenses ........................................ 3,660 3,303
Depreciation and amortization............................................... 4,347 3,732
Goodwill amortization....................................................... 1,027 1,027
Other income, net........................................................... 469 (569)
------------- ------------
79,530 66,347
INCOME BEFORE INTEREST
EXPENSE AND INCOME TAX EXPENSE.............................................. 10,133 5,887
INTEREST EXPENSE................................................................. 1,957 2,050
------------- -------------
INCOME BEFORE INCOME TAX EXPENSE................................................. 8,176 3,837
INCOME TAX EXPENSE............................................................... 2,289 1,151
------------- -------------
NET INCOME....................................................................... $ 5,887 $ 2,686
============= =============
PER SHARE INFORMATION:
BASIC EARNINGS PER SHARE.................................................... $ 0.18 $ 0.09
============= ============
WEIGHTED AVERAGE BASIC COMMON SHARES
OUTSTANDING........................................................... 32,279,377 31,247,546
============= =============
DILUTED EARNINGS PER SHARE.................................................. $ 0.18 $ 0.08
============= =============
WEIGHTED AVERAGE DILUTED COMMON SHARES
OUTSTANDING........................................................... 33,352,438 32,652,538
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
2
CORE LABORATORIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
---------------------------
2001 2000
----------- -----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................. $ 5,887 $ 2,686
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................................... 5,374 4,759
Gain on sale of fixed assets............................................ (15) (98)
Changes in assets and liabilities:
Decrease in accounts receivable......................................... 5,625 4,378
Increase in inventories................................................. (1,270) (6,414)
Increase in prepaid expenses............................................ (2,723) (664)
Decrease in accounts payable............................................ (6,326) (372)
Increase in other accrued expenses..................................... 1,070 4,084
Decrease in net deferred tax asset...................................... 81 195
Decrease in other long-term liabilities................................. (166) (185)
Other................................................................... (119) (384)
----------- ------------
Net cash provided by operating activities.......................... 7,418 7,985
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................................ (5,159) (7,532)
Proceeds from sale of fixed assets.......................................... 22 750
Other ...................................................................... 15 (63)
----------- -----------
Net cash used in investing activities................................... (5,122) (6,845)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt.................................................. (3,068) (5,324)
Borrowings under long-term debt............................................. 136 109
Capital lease obligation, net............................................... (88) (503)
Exercise of stock options................................................... 1,422 1,038
Other....................................................................... (29) (74)
----------- -----------
Net cash used in financing activities................................... (1,627) (4,754)
----------- -----------
NET CHANGE IN CASH............................................................... 669 (3,614)
CASH, beginning of period........................................................ 12,918 18,983
----------- ----------
CASH, end of period.............................................................. $ 13,587 $ 15,369
=========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
3
CORE LABORATORIES N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the
accounts of Core Laboratories and 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, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 2001
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. Balance sheet information as of December 31, 2000 was
derived from the 2000 annual audited financial statements. These financial
statements should be read in conjunction with the financial statements and the
summary of significant accounting policies and notes thereto included in our
Form 10-K for the year ended December 31, 2000.
Recent Pronouncements
In June 1998, Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities", was issued and
was subsequently amended by SFAS No. 137, which delayed its effective date. As a
result, SFAS No. 133 is effective for fiscal years beginning after June 15,
2000, and establishes accounting and reporting standards for derivative
instruments (including certain derivative instruments embedded in other
contracts). We do not enter into derivative instruments or buy and sell
commodities. Accordingly, adoption of SFAS No. 133 did not have an impact on our
financial position or operational results.
The Emerging Issues Task Force ("EITF") issued EITF 00-10 which gives
guidance on revenue recognition. EITF 00-10 requires that revenue be recognized
on all amounts billed to a customer in a sale transaction related to shipping
and handling. As a result of the application of this guidance in December 2000,
we recognized shipping charges as revenues and an increase to cost of sales.
Prior period financial statements reflect this change, which was less than 1% of
revenues.
4
2. INVENTORIES
Inventories consist primarily of manufactured goods, materials and supplies
used for sales or services provided to customers. Inventories are stated at the
lower of average or standard cost (including direct material, labor and
overhead) or estimated net realizable value and are reflected net of valuation
reserves of $1,196,000 at March 31, 2001 and December 31, 2000. Inventories
consisted of the following (in thousands):
March 31, March 31,
2001 2000
----------------- -----------------
(Unaudited)
Finished goods................ $ 27,667 $ 27,651
Parts and materials........... 4,200 4,126
Work in process............... 3,470 2,290
----------------- -----------------
Total......... $ 35,337 $ 34,067
================= =================
3. INTANGIBLES AND GOODWILL
Intangibles include patents, trademarks, service marks and trade names.
Goodwill represents the excess of purchase price over the value of the net
assets acquired in acquisitions accounted for as purchases. Intangibles and
goodwill are charged to expense in equal amounts over their estimated useful
lives. We believe that there have been no events or circumstances that warrant
revision to the remaining useful lives or which affect the recoverability of
intangibles and goodwill. The components of intangibles and goodwill are as
follows:
Original
Life March 31, December 31,
in Years 2001 2000
--------- ------------ ------------
(Unaudited)
(in thousands)
Acquired trade secrets........................... 5 $ 165 $ 125
Acquired patents, trademarks and trade names..... 10-20 4,497 3,686
Acquired trade name.............................. 40 4,614 4,614
------------ ------------
Total intangibles....................... 9,276 8,425
------------ ------------
Goodwill......................................... 5-10 2,506 2,506
Goodwill......................................... 20 3,736 3,736
Goodwill......................................... 40 147,784 147,784
------------ ------------
Total goodwill.......................... 154,026 154,026
------------ ------------
Total intangibles and goodwill..... 163,302 162,451
Less - accumulated amortization.................. 15,673 14,533
------------ ------------
Net intangibles and goodwill.. $ 147,629 $ 147,918
============ ============
5
4. LONG-TERM DEBT
Long-term debt is summarized in the following table (in thousands):
March 31, December 31,
2001 2000
----------------- -----------------
(Unaudited)
Credit Facility with a bank group:
$100,000 revolving debt facilities................... $ 4,000 $ 7,000
Senior Notes..................... 75,000 75,000
Other indebtedness.................................... 632 647
----------------- -----------------
Total debt................................... 79,632 82,647
Less - current maturities............................. 667 632
----------------- -----------------
Total long-term debt......................... $ 78,965 $ 82,015
================= =================
In July 1999, we entered into a $100 million Credit Facility which provides
for (i) a committed revolving debt facility of $95 million and (ii) a
Netherlands guilder denominated revolving debt facility with U.S. dollar
equivalency of $5 million. At March 31, 2001, approximately $96 million was
available for borrowing under the revolving debt facility. Loans under the
Credit Facility bear interest at rates which range from LIBOR plus 1.25% to a
maximum of LIBOR plus 1.75%. The interest rate in effect at March 31, 2001 was
6.48% and the average for 2001 was 7.13%. The revolving debt facilities require
interest payments only, until maturity in June 2004.
In July 1999, we issued $75 million in Senior Notes which bear an average
interest rate of 8.16% and require annual principal payments beginning in July
2005 and continuing through July 2011.
The terms of the Credit Facility and Senior Notes require us to meet
certain financial covenants, including certain minimum equity and cash flow
tests. We believe that we are in compliance with all such covenants contained in
our credit agreements. All of our material subsidiaries are guarantors or
co-borrowers under both credit agreements.
5. RESTRUCTURING CHARGES
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. This charge affected each of our operating segments as follows:
Reservoir Description - $2.8 million; Production Enhancement - $1.9 million;
Reservoir Management - $2.3 million. We combined personnel and equipment from
eight facilities into one Houston facility. No operations were discontinued. The
move was completed in the second quarter of 2000. Related charges include
severance for approximately 100 field and administrative employees, the accrual
of future lease obligations and facility restoration costs and the write-off of
redundant fixed assets and leasehold improvements. Substantially all of these
employees were terminated as of June 30, 2000. Cash required for the costs
incurred through March 31, 2001 of $3.9 million, excluding asset write-offs,
was funded from operating activities. We anticipate that the remaining costs
will also be funded through cash from operating activities. This charge is
summarized in the following table:
6
Restructuring Charges
(Dollars in Thousands)
Asset
Lease Write-
Obligations Severance Restoration offs(a) Other Total
----------- --------- ----------- ------- ------- -------
Total restructuring charges............. $ 2,983 $ 879 $ 786 $ 2,080 $ 308 $ 7,036
Less: Costs incurred through
December 31, 2000.............. 1,955 879 683 2,080 308 5,905
------- ------- ------- ------- ------- -------
Accrual remaining at December 31, 2000.. 1,028 - 103 - - 1,131
Less: Costs incurred through
March 31, 2001................. 105 - - - - 105
------- ------- ------- ------- ------- -------
Accrual remaining at March 31, 2001..... $ 923 $ - $ 103 $ - $ - $ 1,026
======= ======= ======= ======= ======= =======
(a) The fixed assets and leasehold improvements related to the Houston
consolidation were disposed of by the end of June 2000. The write-off
approximates the carrying amount as these assets were abandoned or sold for
salvage value. Depreciation expense was reduced by approximately $490 in 2000,
and will be reduced by $333 in 2001 and $342 thereafter. Also included in this
amount were $915 of working capital write-offs related to the restructuring of
foreign operations. The asset write-offs attributable to each segment were as
follows: Reservoir Description - $1,176; Production Enhancement - $346;
Reservoir Management - $558.
6. SEGMENT REPORTING
Our business units have been aggregated into three complementary segments
which provide products and services for improving reservoir performance and
increasing oil and gas recovery from new and existing fields.
o Reservoir Description: Encompasses the characterization of
petroleum reservoir rock, fluid and gas samples. We provide
analytical and field services to characterize properties of crude
oil and petroleum products to the oil and gas industry.
o Production Enhancement: Includes products and services relating to
reservoir well completions, perforations, stimulations and production.
We provide integrated services to evaluate the effectiveness of well
completions and to develop solutions aimed at increasing the
effectiveness of enhanced oil recovery projects.
o Reservoir Management: Combines and integrates information from
reservoir description and production enhancement services to increase
production and improve recovery of oil and gas from our clients'
reservoirs.
7
Segment Analysis
We manage our business segments separately due to the different
technologies each segment utilizes and requires. Results of these segments are
presented below using the same accounting policies as used to prepare the
Consolidated Balance Sheets and Statements of Operations. We evaluate
performance based on income or loss from operations before income tax, interest
and other non-operating income (expense). Summarized financial information
concerning our segments is shown in the following table (in thousands):
Three Months Ended March 31,
2001 2000
-----------------------------------------
Revenues (Unaudited)
Reservoir Description.......$ 48,719 $ 44,963
Production Enhancement...... 29,624 18,759
Reservoir Management........ 11,320 8,512
--------------- ----------------
Consolidated..............$ 89,663 $ 72,234
=============== ================
Three Months Ended March 31,
2001 2000
-----------------------------------------
Income (loss) before interest and
taxes (Unaudited)
Reservoir Description....... $ 5,946 $ 3,448
Production Enhancement...... 4,912 4,189
Reservoir Management........ (676) (1,753)
Corporate and Other (a)..... (49) 3
-------------- ---------------
Consolidated.............. $ 10,133 $ 5,887
============== ===============
a) "Corporate and Other" represents those items that are not directly related to
a particular segment.
7. EARNINGS PER SHARE
We present earnings per share in accordance with SFAS No. 128, "Earnings
per Share" which requires dual presentation of both basic and diluted earnings
per share on the Consolidated Statement of Operations. Basic earnings per common
share is computed by dividing net income available to common stockholders by the
weighted average number of common share outstanding during the period. Diluted
earnings per share reflects the net additional shares which would be issued if
all dilutive stock options outstanding were exercised.
The following table summarizes the calculation of weighted average common
shares outstanding used in the computation of earnings per share:
Three Months Ended March 31,
2001 2000
--------------------------
Weighted average basic common shares outstanding. 32,279,377 31,247,546
Effect of dilutive stock options (a)............. 1,073,061 1,404,992
---------- ----------
Weighted average diluted common shares outstanding 33,352,438 32,652,538
========== ==========
a) Options totaling 14,676 and 11,676 equivalent common shares were not
included in the computation of weighted average diluted common shares for the
three months ended March 31, 2001, and 2000, respectively, because the impact
of these options was anti-dilutive.
8
CORE LABORATORIES N.V.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
This discussion includes 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. We have based the forward-looking statements relating to
our operations on our current expectations, estimates and projections. We
caution you that these statements are not guarantees of future performance and
involve risks and uncertainties that we cannot predict. In addition, we have
based many of these forward-looking statements on assumptions about future
events that may prove to be inaccurate. Accordingly, our actual outcomes and
results may differ materially from what we have expressed or forecast in the
forward-looking statements. Our operations are subject to various risk and other
factors including, but not limited to:
o our ability to continue to develop or acquire new and useful technology.
o the realization of anticipated synergies from acquired businesses and
future acquisitions.
o our dependence on the oil and gas industry, and the impact of commodity
prices on the expenditure levels of our customers.
o competition in our markets.
o the risks and uncertainties attendant to adverse industry, political,
economic and financial market conditions, including stock prices,
government regulations, interest rates and credit availability.
Core Laboratories was established in 1936 and is 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. We
have over 70 offices in more than 50 countries and have approximately 3,950
employees.
Results of Operations
Service revenues for the first quarter of 2001 increased $10.0 million, or
17% from the same period last year primarily through our Production Enhancement
segment driven by improvements in the North American natural gas market as well
as an increase in international activity.
Cost of services expressed as a percentage of service revenue were 78% and
84% in the first quarter of 2001 and the same period last year, respectively.
Sales revenues increased to $19.4 million in the first quarter of 2001 from
$12.0 million in the first quarter of 2000, a 62% increase. The increase was due
to higher demand for our well completion and stimulation technologies. The U.S.
and Venezuela were markets with the largest increases.
Cost of sales in the first quarter of 2001 were 79% of sales revenue as
compared to 68% the same period last year.
9
General and administrative expenses are comprised of corporate management
and centralized administrative services which benefit our operating
subsidiaries. Although general and administrative expenses are generally more
fixed in nature as a percentage of revenue, we did experience an increase of
$0.4 million in 2001 which was largely attributable to growth in the number of
people necessary to support increases in the scope of our operations. General
and administrative expenses as a percentage of revenues remained below 5% for
both periods.
Depreciation and amortization expense for the first quarter of 2001
increased $0.6 million as compared to the corresponding period in 2000. This
increase was due to additional capital investments, which include the new
Houston facility.
Amortization of goodwill in the first quarter of 2001 and 2000 was $1.0
million.
The decrease in the effective income tax rate to 28% in the first quarter
of 2001 from 30% in the same period in the prior year reflects the increase in
international earnings taxed at rates lower than The Netherlands statutory rate.
Segment Analysis
(Dollars in thousands)
Three Months Ended March 31,
2001 2000
-----------------------------------------
Revenues (Unaudited)
Reservoir Description.......$ 48,719 $ 44,963
Production Enhancement...... 29,624 18,759
Reservoir Management........ 11,320 8,512
--------------- ----------------
Consolidated..............$ 89,663 $ 72,234
=============== ================
Three Months Ended March 31,
2001 2000
-----------------------------------------
Income (loss) before interest and
taxes (Unaudited)
Reservoir Description....... $ 5,946 $ 3,448
Production Enhancement...... 4,912 4,189
Reservoir Management........ (676) (1,753)
Corporate and Other (a)..... (49) 3
-------------- ---------------
Consolidated.............. $ 10,133 $ 5,887
============== ===============
a) "Corporate and Other" represents those items that are not directly related to
a particular segment.
Reservoir Description
Revenues from the Reservoir Description segment increased $3.8 million in
the first quarter of 2001. Increased international demand for our existing
services and deepwater services, as well as the introduction of new
technologies, bolstered revenue in this segment.
Income before interest and taxes increased by $2.5 million due to higher
revenues and improved margins of our petroleum service unit.
10
Production Enhancement
Revenues from the Production Enhancement segment were $29.6 million in the
first quarter of 2001 compared to $18.8 million in the same period in the prior
year, an increase of 58%, due to increased demand for our well completion and
stimulation technologies. Income before interest and taxes improved $0.7 million
to $4.9 million, a 17% increase.
Reservoir Management
Revenues from the Reservoir Management segment in the first quarter of 2001
were $11.3 million, an increase of $2.8 million compared to the same period in
the prior year due to increasing international activity levels of our clients.
While we experienced a loss before interest and taxes of $0.7 million in the
first quarter of 2001, this showed considerable improvement as compared to a
loss of $1.8 million in the same period in the prior year. We anticipate
continued improvement throughout 2001.
Liquidity and Capital Resources
We have historically financed our activities through cash flows from
operations, bank credit facilities, equity financing and the issuance of debt.
During the three-month period ending March 31, 2001, cash flows from
operating activities were $7.4 million, a decrease of $0.6 million from the same
period in 2000. At March 31, 2001, we had working capital of $126.1 million and
a current ratio of 3.8 to 1.0, compared to working capital of $123.7 million and
a current ratio of 3.4 to 1.0 at December 31, 2000. We are a Netherlands holding
company and we conduct substantially all of our operations through subsidiaries.
Consequently, our cash flow is dependent upon the ability of our subsidiaries to
pay cash dividends or otherwise distribute or advance funds to us.
Our financing activities used $1.6 million in the three-month period ending
March 31, 2001, and $4.8 million in the same period in 2000 as we continued to
invest new capital into the company. Our investing activities used
$5.1 million in the three-month period ending March 31, 2001 compared to $6.8
million in the same period in 2000.
Our ability to maintain and grow our operating income and cash flows is
dependent upon continued investing activities. We believe our future cash flows
from operations, supplemented by our borrowing capacity and issuances of
additional equity should be sufficient to fund debt requirements, capital
expenditures, working capital and future acquisitions.
11
CORE LABORATORIES N.V.
QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
We are exposed to market risk, which is the potential loss arising from
adverse changes in market prices and rates. We do not enter, or intend to enter,
into derivative financial instruments for trading or speculative purposes. We do
not believe that our exposure to market risks, which are primarily related to
interest rate changes and fluctuations in foreign exchange rates, are material.
During 1999, we issued fixed rate Senior Notes denominated in U.S.
dollars. The proceeds were used to pay off variable rate term loans. This
significantly reduced our exposure to market risk. This section should
be read in conjunction with "Note 4 - Long-Term Debt" of the Notes to
Consolidated Financial Statements.
12
CORE LABORATORIES N.V.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
We are from time to time subject to legal proceedings and claims that arise
in the ordinary course of business. We believe that the outcome of current legal
actions will not have a material adverse effect upon our consolidated financial
position or results of operations.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
None
13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Core Laboratories N.V., has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CORE LABORATORIES N.V.
by: Core Laboratories International B.V.
Dated: May 14,2001 By: /s/ Richard L. Bergmark
-------------------------------------
Richard L. Bergmark
Chief Financial Officer
14