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EX-31.1 - EX-31.1 - SCHLUMBERGER LIMITED/NVslb-ex311_17.htm
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EX-95 - EX-95 - SCHLUMBERGER LIMITED/NVslb-ex95_13.htm
EX-32.2 - EX-32.2 - SCHLUMBERGER LIMITED/NVslb-ex322_7.htm
EX-32.1 - EX-32.1 - SCHLUMBERGER LIMITED/NVslb-ex321_6.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: September 30, 2015

Commission file No.: 1-4601

 

SCHLUMBERGER N.V.

(SCHLUMBERGER LIMITED)

(Exact name of registrant as specified in its charter)

 

 

CURAÇAO

 

52-0684746

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

42 RUE SAINT-DOMINIQUE

 

 

PARIS, FRANCE

 

75007

 

 

 

5599 SAN FELIPE, 17th FLOOR

 

 

HOUSTON, TEXAS, U.S.A.

 

77056

 

 

 

62 BUCKINGHAM GATE

 

 

LONDON, UNITED KINGDOM

 

SW1E 6AJ

 

 

 

PARKSTRAAT 83 THE HAGUE,

 

 

THE NETHERLANDS

 

2514 JG

(Addresses of principal executive offices)

 

(Zip Codes)

Registrant’s telephone number in the United States, including area code, is:

(713) 513-2000

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

x

Accelerated filer

¨

 

 

 

 

Non-accelerated filer

¨  (Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

Outstanding at September 30, 2015

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,261,103,708

 

 

 


SCHLUMBERGER LIMITED

Third Quarter 2015 Form 10-Q

Table of Contents

 

 

 

 

Page

 PART I

 

Financial Information

 

 

 

 

 

Item 1.

 

Financial Statements

3

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

28

 

 

 

 

Item 4.

 

Controls and Procedures

28

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

29

 

 

 

 

Item 1A.

 

Risk Factors

29

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

32

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

32

 

 

 

 

Item 4.

 

Mine Safety Disclosures

32

 

 

 

 

Item 5.

 

Other Information

32

 

 

 

 

Item 6.

 

Exhibits

33

 

 

 

 

 

 

Certifications

 

 

 

 

2


PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

 

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

 

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

Nine Months

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenue

$

8,472

 

 

$

12,646

 

 

$

27,731

 

 

$

35,939

 

Interest & other income

 

60

 

 

 

79

 

 

 

155

 

 

 

220

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

6,798

 

 

 

9,689

 

 

 

22,028

 

 

 

27,708

 

Research & engineering

 

273

 

 

 

301

 

 

 

819

 

 

 

893

 

General & administrative

 

122

 

 

 

125

 

 

 

362

 

 

 

353

 

Restructuring & other

 

-

 

 

 

-

 

 

 

439

 

 

 

-

 

Interest

 

86

 

 

 

90

 

 

 

254

 

 

 

282

 

Income before taxes

 

1,253

 

 

 

2,520

 

 

 

3,984

 

 

 

6,923

 

Taxes on income

 

250

 

 

 

556

 

 

 

859

 

 

 

1,530

 

Income from continuing operations

 

1,003

 

 

 

1,964

 

 

 

3,125

 

 

 

5,393

 

Loss from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

(205

)

Net income

 

1,003

 

 

 

1,964

 

 

 

3,125

 

 

 

5,188

 

Net income attributable to noncontrolling interests

 

14

 

 

 

15

 

 

 

37

 

 

 

52

 

Net income attributable to Schlumberger

$

989

 

 

$

1,949

 

 

$

3,088

 

 

$

5,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schlumberger amounts attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

989

 

 

 

1,949

 

 

 

3,088

 

 

 

5,341

 

Loss from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

(205

)

Net income

$

989

 

 

$

1,949

 

 

$

3,088

 

 

$

5,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of Schlumberger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.78

 

 

$

1.51

 

 

$

2.43

 

 

$

4.11

 

Loss from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

(0.16

)

Net income

$

0.78

 

 

$

1.51

 

 

$

2.43

 

 

$

3.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share of Schlumberger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.78

 

 

$

1.49

 

 

$

2.42

 

 

$

4.07

 

Loss from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

(0.16

)

Net income

$

0.78

 

 

$

1.49

 

 

$

2.42

 

 

$

3.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1,265

 

 

 

1,294

 

 

 

1,270

 

 

 

1,300

 

Assuming dilution

 

1,272

 

 

 

1,310

 

 

 

1,278

 

 

 

1,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

See Notes to Consolidated Financial Statements

 

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

Nine Months

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net income

$

1,003

 

 

$

1,964

 

 

$

3,125

 

 

$

5,188

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

(166

)

 

 

(146

)

 

 

(260

)

 

 

(176

)

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss arising during the period

 

(26

)

 

 

(162

)

 

 

(36

)

 

 

(132

)

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss on cash flow hedges

 

(13

)

 

 

(151

)

 

 

(123

)

 

 

(138

)

Reclassification to net income of net realized loss

 

21

 

 

 

53

 

 

 

161

 

 

 

59

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income of net actuarial loss

 

87

 

 

 

32

 

 

 

230

 

 

 

132

 

Prior service cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income of net prior service cost

 

25

 

 

 

40

 

 

 

76

 

 

 

96

 

Income taxes on pension and other postretirement benefit plans

 

(13

)

 

 

(8

)

 

 

(35

)

 

 

(28

)

Comprehensive income

 

918

 

 

 

1,622

 

 

 

3,138

 

 

 

5,001

 

Comprehensive income attributable to noncontrolling interests

 

14

 

 

 

15

 

 

 

37

 

 

 

52

 

Comprehensive income attributable to Schlumberger

$

904

 

 

$

1,607

 

 

$

3,101

 

 

$

4,949

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Sept. 30,

 

 

 

 

 

 

2015

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2014

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

3,172

 

 

$

3,130

 

Short-term investments

 

3,433

 

 

 

4,371

 

Receivables less allowance for doubtful accounts (2015 - $308; 2014 - $275)

 

9,372

 

 

 

11,171

 

Inventories

 

4,228

 

 

 

4,628

 

Deferred taxes

 

150

 

 

 

144

 

Other current assets

 

1,177

 

 

 

1,250

 

 

 

21,532

 

 

 

24,694

 

Fixed Income Investments, held to maturity

 

439

 

 

 

442

 

Investments in Affiliated Companies

 

3,359

 

 

 

3,235

 

Fixed Assets less accumulated depreciation

 

14,554

 

 

 

15,396

 

Multiclient Seismic Data

 

966

 

 

 

793

 

Goodwill

 

15,610

 

 

 

15,487

 

Intangible Assets

 

4,524

 

 

 

4,654

 

Other Assets

 

2,358

 

 

 

2,203

 

 

$

63,342

 

 

$

66,904

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

7,186

 

 

 

9,246

 

Estimated liability for taxes on income

 

1,425

 

 

 

1,647

 

Long-term debt - current portion

 

3,250

 

 

 

1,244

 

Short-term borrowings

 

1,511

 

 

 

1,521

 

Dividends payable

 

638

 

 

 

518

 

 

 

14,010

 

 

 

14,176

 

Long-term Debt

 

7,487

 

 

 

10,565

 

Postretirement Benefits

 

1,282

 

 

 

1,501

 

Deferred Taxes

 

1,276

 

 

 

1,296

 

Other Liabilities

 

1,108

 

 

 

1,317

 

 

 

25,163

 

 

 

28,855

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,642

 

 

 

12,495

 

Treasury stock

 

(13,023

)

 

 

(11,772

)

Retained earnings

 

42,515

 

 

 

41,333

 

Accumulated other comprehensive loss

 

(4,193

)

 

 

(4,206

)

Schlumberger stockholders' equity

 

37,941

 

 

 

37,850

 

Noncontrolling interests

 

238

 

 

 

199

 

 

 

38,179

 

 

 

38,049

 

 

$

63,342

 

 

$

66,904

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended Sept. 30,

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

3,125

 

 

$

5,188

 

Add: Loss from discontinued operations

 

-

 

 

 

205

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

Restructuring and other charges

 

439

 

 

 

-

 

Depreciation and amortization (1)

 

3,115

 

 

 

3,029

 

Pension and other postretirement benefits expense

 

326

 

 

 

266

 

Stock-based compensation expense

 

250

 

 

 

246

 

Pension and other postretirement benefits funding

 

(292

)

 

 

(318

)

Earnings of equity method investments, less dividends received

 

(83

)

 

 

(68

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

Decrease (increase) in receivables

 

1,848

 

 

 

(779

)

Decrease (increase) in inventories

 

445

 

 

 

(61

)

Decrease in other current assets

 

93

 

 

 

112

 

Increase in other assets

 

(9

)

 

 

(89

)

Decrease in accounts payable and accrued liabilities

 

(2,426

)

 

 

(256

)

Decrease in estimated liability for taxes on income

 

(469

)

 

 

(7

)

Decrease in other liabilities

 

(21

)

 

 

(78

)

Other

 

286

 

 

 

(108

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

6,627

 

 

 

7,282

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(1,783

)

 

 

(2,766

)

SPM investments

 

(350

)

 

 

(569

)

Multiclient seismic data capitalized

 

(336

)

 

 

(212

)

Business acquisitions and investments, net of cash acquired

 

(289

)

 

 

(556

)

Sale of investments, net

 

939

 

 

 

1,147

 

Other

 

(207

)

 

 

3

 

NET CASH USED IN INVESTING ACTIVITIES

 

(2,026

)

 

 

(2,953

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(1,786

)

 

 

(1,451

)

Proceeds from employee stock purchase plan

 

296

 

 

 

295

 

Proceeds from exercise of stock options

 

127

 

 

 

500

 

Stock repurchase program

 

(1,784

)

 

 

(3,582

)

Proceeds from issuance of long-term debt

 

1,714

 

 

 

2,005

 

Repayment of long-term debt

 

(2,815

)

 

 

(2,857

)

Net (decrease) increase in short-term borrowings

 

(41

)

 

 

455

 

Other

 

(14

)

 

 

(38

)

NET CASH USED IN FINANCING ACTIVITIES

 

(4,303

)

 

 

(4,673

)

CASH FLOWS (USED IN) PROVIDED BY DISCONTINUED OPERATIONS - OPERATING ACTIVITIES

 

(233

)

 

 

24

 

Net increase (decrease) in cash before translation effect

 

65

 

 

 

(320

)

Translation effect on cash

 

(23

)

 

 

(34

)

Cash, beginning of period

 

3,130

 

 

 

3,472

 

Cash, end of period

$

3,172

 

 

$

3,118

 

 

(1)

Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments.  

(2)

Net of the effect of business acquisitions.

 

See Notes to Consolidated Financial Statements

 

 

 

6


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2015 – September 30, 2015

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interest

 

 

Total

 

Balance, January 1, 2015

$

12,495

 

 

$

(11,772

)

 

$

41,333

 

 

$

(4,206

)

 

$

199

 

 

$

38,049

 

Net income

 

 

 

 

 

 

 

 

 

3,088

 

 

 

 

 

 

 

37

 

 

 

3,125

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(260

)

 

 

 

 

 

 

(260

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(36

)

 

 

 

 

 

 

(36

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

 

38

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

271

 

 

 

 

 

 

 

271

 

Shares sold to optionees, less shares exchanged

 

(30

)

 

 

157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

127

 

Vesting of restricted stock

 

(95

)

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

17

 

 

 

279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

296

 

Stock repurchase program

 

 

 

 

 

(1,784

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,784

)

Stock-based compensation expense

 

250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

250

 

Dividends declared ($1.50 per share)

 

 

 

 

 

 

 

 

 

(1,906

)

 

 

 

 

 

 

 

 

 

 

(1,906

)

Other

 

5

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

9

 

Balance, September 30, 2015

$

12,642

 

 

$

(13,023

)

 

$

42,515

 

 

$

(4,193

)

 

$

238

 

 

$

38,179

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2014 – September 30, 2014

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interest

 

 

Total

 

Balance, January 1, 2014

$

12,192

 

 

$

(8,135

)

 

$

37,966

 

 

$

(2,554

)

 

$

166

 

 

$

39,635

 

Net income

 

 

 

 

 

 

 

 

 

5,136

 

 

 

 

 

 

 

52

 

 

 

5,188

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(176

)

 

 

 

 

 

 

(176

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(132

)

 

 

 

 

 

 

(132

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

(79

)

 

 

 

 

 

 

(79

)

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

200

 

 

 

 

 

 

 

200

 

Shares sold to optionees, less shares exchanged

 

(18

)

 

 

518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500

 

Vesting of restricted stock

 

(68

)

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

33

 

 

 

262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

295

 

Stock repurchase program

 

 

 

 

 

(3,582

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,582

)

Stock-based compensation expense

 

246