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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):
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Net Income Before Impact of Non-Recurring, 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 non-recurring
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. |
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Earnings per Diluted Share, Excluding Non-Recurring, 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 non-recurring
items; we felt that presentation provides the public a clearer comparison with the
numbers reported in prior quarters. |
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Operating Earnings Before Impact of Non-Recurring 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 non-recurring items; we felt that presentation provides the public a clearer comparison with the numbers reported in prior quarters. |
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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. |
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Free Cash Flow:
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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. |
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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.
Debt-to-equity, as calculated, is 40.2% versus 23.3% for net debt-to-capital at
December 31, 2005. |
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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. |
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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. |
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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. |
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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.
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