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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934


Date of Report (Date of Earliest Event Reported): February 25, 2004

Veritas DGC Inc.

(Exact Name of Registrant As Specified In Its Chapter)
         
Delaware
(State or other jurisdiction
of incorporation)
  001-7427
(Commission File No.)
  76-0343152
(IRS Employer
Identification No.)

10300 Town Park
Houston, Texas 77072
(Address of Principal Executive Offices) (Zip Code)

832-351-8300
(Registrant’s Telephone Number, Including Area Code)



 


TABLE OF CONTENTS

ITEM 5. OTHER EVENTS
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SIGNATURE
EXHIBIT INDEX
Press Release dated as of February 25, 2004
Press Release dated as of February 25, 2004


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ITEM 5. OTHER EVENTS

Floating Rate Convertible Senior Notes

     On February 25, 2004, Veritas DGC Inc. (the “Registrant”) issued a press release announcing that it intends to offer a new issue of Floating Rate Convertible Senior Notes Due 2024. The full text of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

     The information contained in this Current Report on Form 8-K, including the exhibits hereto, is neither an offer to sell nor a solicitation of an offer to purchase any of the securities to be offered. The securities to be offered have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933, as amended, and applicable state securities laws.

Results of Second Fiscal Quarter

     On February 25, 2004, the Registrant announced its results for the second fiscal quarter. Revenue for the second quarter was $147.8 million, an increase of 18% compared to the prior year’s second quarter. Net income increased to $14.2 million, or $0.42 per share, versus $4.5 million, or $0.14 per share, in the prior year’s second quarter. Revenue for the second quarter and six months breaks down as follows:

                                 
    Three Months Ended   Six Months Ended
    January 31,
  January 31,
    2004
  2003
  2004
  2003
    (millions)   (millions)
Multi-client:
                               
Land
  $ 15.9     $ 18.9     $ 29.8     $ 29.9  
Marine
    67.7       46.7       93.6       92.0  
 
   
 
     
 
     
 
     
 
 
Subtotal
    83.6       65.6       123.4       121.9  
Contract:
                               
Land
    31.7       32.0       68.4       80.3  
Marine
    32.5       27.7       60.3       60.6  
 
   
 
     
 
     
 
     
 
 
Subtotal
    64.2       59.7       128.7       140.9  
Total Revenues
  $ 147.8     $ 125.3     $ 252.1     $ 262.8  
 
   
 
     
 
     
 
     
 
 

     Our results for the three and six months ended January 31, 2004 were as follows:

                                 
    Three Months Ended   Six Months Ended
    January 31,
  January 31,
    2004
  2003
  2004
  2003
    (unaudited)
    (in thousands, except per share amounts)
                                 
Revenues
  $ 147,770     $ 125,321     $ 252,120     $ 262,828  
Costs of services
    114,690       102,672       231,525       221,384  
Research and development
    3,695       3,045       7,140       6,053  
Selling, general and administrative
    6,383       7,810       12,574       15,483  
 
   
 
     
 
     
 
     
 
 
Operating income
    23,002       11,794       881       19,908  
Interest expense
    4,197       4,425       8,475       8,367  
Other expense (income) – net
    (72 )     (22 )     (37 )     1,212  
 
   
 
     
 
     
 
     
 
 
Income before provision for income taxes
    18,877       7,391       (7,557 )     10,329  
Income taxes
    4,638       2,901       4,551       4,276  
 
   
 
     
 
     
 
     
 
 
Net income (loss)
  $ 14,239     $ 4,490     $ (12,108 )     6,053  
 
   
 
     
 
     
 
     
 
 
Earnings Per Share:
                               
Basic:
                               
Net income (loss) per common share
  $ .42     $ .14     $ (.36 )   $ .18  
 
                               
Weighted average common shares
    33,745       33,235       33,668       33,193  
 
                               
Diluted:
                               
Net income (loss) per common share
  $ .42     $ .14     $ (.36 )   $ .18  
 
                               
Weighted average common shares
    33,952       33,249       33,668       33,220  
 
                               

 

 


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Multi-client

     Multi-client revenue increased by 27% compared with the prior year’s second quarter. Revenue from shelf sales (i.e. sales of existing data) more than doubled, while prefunding revenue decreased by more than 50% due to reduced numbers of in-progress surveys.

     Marine multi-client revenue increased by 45% compared with the prior year’s second quarter. Shelf sales were particularly strong in the Gulf of Mexico and Nigeria, with sales in Brazil and the North Sea contributing to the excellent results. Prefunding revenue was generated on surveys in the Gulf of Mexico, Nigeria and Brazil.

     Land multi-client revenue decreased by 16% compared with the prior year’s second quarter due to lower prefunding and decreased investment. Shelf sales were steady, with most of the revenue generated from surveys in Wyoming and Oklahoma.

Contract

     Contract revenue increased by 8% compared with the prior year’s second quarter. Marine contract revenue increased 17% while contract land revenue remained relatively flat. During the quarter, the Company performed contract marine surveys in West Africa, the Mediterranean and India and operated land crews in Canada, Alaska, the Lower 48, Argentina and Oman.

Operating Income

     Operating income as a percent of revenue increased to 16% compared to 9% in the prior year’s second quarter. Margins increased due to the dominance of multi-client shelf sales in the overall revenue mix. Contract margins were relatively flat.

     General and administrative expense decreased by $1.4 million from the prior year’s second quarter. The largest single portion of this decrease, $0.6 million, was due to expense reduction efforts implemented in the prior fiscal year.

Income Tax

     The Company’s effective tax rate for the quarter was 25%, significantly lower than the 39% rate in the second quarter of fiscal year 2003. The reduction is due to the utilization of previously unrecognized deferred tax assets. Most of the Company’s current tax expense comes in the form of withholding taxes in various non-U.S. jurisdictions.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

     (c) Exhibits

     
Exhibit No.
  Description
99.1
  Press Release of Veritas DGC Inc. dated as of February 25, 2004 (convertible senior notes)
 
   
99.2
  Press Release of Veritas DGC Inc. dated as of February 25, 2004 (results of second fiscal quarter)

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On February 25, 2004, the Registrant issued a press release reporting financial results for its second fiscal quarter ended January 31, 2004. A copy of the press release is attached hereto as Exhibit 99.2.

     THE INFORMATION CONTAINED IN ITEM 12 OF THIS CURRENT REPORT, INCLUDING EXHIBIT 99.2 ATTACHED HERETO, SHALL NOT BE DEEMED “FILED” FOR THE PURPOSES OF SECTION 18 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, NOR SHALL IT BE DEEMED INCORPORATED BY REFERENCE INTO ANY REGISTRATION STATEMENT OR OTHER FILING PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, EXCEPT AS OTHERWISE EXPRESSLY STATED IN SUCH FILING.

 


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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

         
  Veritas DGC INC.
(Registrant)
 
 
  /s/ Larry L. Worden    
  Larry L. Worden   
Date: February 25, 2004  Vice President, General Counsel & Secretary  
 

 


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EXHIBIT INDEX

     
Exhibit No.
  Description
99.1
      Press Release of Veritas DGC Inc. dated as of February 25, 2004 (convertible senior notes)
 
   
99.2
      Press Release of Veritas DGC Inc. dated as of February 25, 2004 (results of second fiscal quarter)