Non-US GAAP Financial Measures
In addition to financial results determined in accordance with generally accepted accounting principles
(GAAP) that are included in our publicly filed documents and discussions, these documents and discussions
also include the following non-GAAP financial measures (as defined under the SEC's Regulation G and S-K
Item 10).
Net Income Before Impact of Excluded Items, After Tax Charges or Gains
Management believes that the exclusion of certain expenses and credits enables it to evaluate more effectively
the Company's operations period over period and to identify operating trends that could otherwise be masked by
the excluded items. For this reason, we used certain non-GAAP measures that excluded these items
and explained in the same sentence how they relate to the most directly comparable GAAP measure; we felt that
presentation provides the public a clearer comparison with the numbers reported in prior quarters.
Earnings per Diluted Share Before Impact of Excluded Items, After Tax Charges or Gains
Management believes that the exclusion of certain expenses and credits enables it to evaluate more effectively
the Company's operations period-over-period and to identify operating trends that could otherwise be masked by
the excluded items. For this reason, we used certain non-GAAP measures that exclude these items;
we felt that presentation provides the public a clearer comparison with the numbers reported in prior quarters.
Operating Earnings Before Impact of Excluded Items Charges or Gains
Management believes that the exclusion of certain expenses and credits enables it to evaluate more effectively
the Company's operations period-over-period and to identify operating trends that could otherwise be masked by
the excluded items. For this reason, we used certain non-GAAP measures that exclude these;
we felt that presentation provides the public a clearer comparison with the numbers reported in prior quarters.
Incremental Operating Margin
Incremental operating margin is computed as (1) the increase or decrease in income from continuing operations
before equity-based stock compensation, interest expense and income tax expense between two periods, divided by
(2) the increase or decrease in revenues between the same two periods. Management believes that incremental
margins provide useful information regarding the growth over the two periods being compared.
Free Cash Flow
Free cash flow represents cash from operations in excess of capital expenditures. The company believes this is
an important measurement because these are funds available to operate the business and fund non-discretionary
obligations.
Net Debt-to-Capital
Net debt-to-capital is calculated as long-term debt less cash divided by the sum of shareholders' equity plus
long-term debt plus cash. Management believes this capital structure ratio can provide a more accurate view of a
company's long-term leverage and risk, since it considers only long-term debt and capital. The most comparable
GAAP measure to the net debt-to-capital ratio provided in our conference call is debt-to-equity, which is calculated
as total long-term debt divided by equity.
Return on Equity
The calculation for return on equity is earnings before equity-based stock compensation, interest expense and tax expense
divided by shareholders' equity. Management utilizes return on equity in evaluating how much profit the Company generates
on the shareholders' equity in the Company and is useful for comparing the profitability of companies in the same industry.
Earning Before Interest and Tax Plus Depreciation and Amortization (EBITDA)
EBITDA is a non-GAAP measurement. Management uses EBITDA because it believes that such measurements are widely accepted
financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance
and that these measurements may be used by investors to make informed investment decisions..
Total Capital Returned to Shareholders per Diluted Share
The calculation for total capital returned to shareholders per diluted share is cash paid for dividends, share repurchases,
and shares represented by warrants settled for cash divided by the weighted average diluted share count. Management believes
this calculation is useful for comparing the yield to shareholders of other companies in the same industry because it is a
measure of Core’s enhancement of shareholder value over the period related to the weighted average diluted shares outstanding.
Return on Invested Capital (ROIC)
Return on Invested Capital ("ROIC") is calculated as Net Operating Profit (Loss) ("NOP") less Cash Operating Tax ("COT") divided by Total Invested Capital ("TIC"),
where NOP is defined as GAAP net income before minority interest plus the sum of income tax expense, interest expense, and pension expense less pension service cost
and COT is defined as income tax expense plus the sum of the change in net deferred taxes, and the tax effect on interest expense and TIC is defined as GAAP stockholder's
equity plus the sum of net long-term debt, allowance for doubtful accounts, net balance of deferred taxes, income tax payable, and other charges.
The calculation based on the trailing four quarters from the most recently reported quarter and the balance sheet of the most recent reported quarter,
and is presented based on our belief that this non-GAAP measure is useful information to investors and management when comparing our profitability
and the efficiency with which we have employed capital over time relative to other companies. ROIC is not a measure of financial performance
under GAAP and should not be considered as an alternative to net income.
The foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, net income,
cash flows or other measures of financial performance prepared in accordance with GAAP as more fully discussed in Core Laboratories
public discussions, financial statements and filings with the Securities and Exchange Commission.