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EX-95 - EX-95 - SCHLUMBERGER LIMITED/NVslb-ex95_7.htm
EX-31.1 - EX-31.1 - SCHLUMBERGER LIMITED/NVslb-ex311_6.htm
EX-31.2 - EX-31.2 - SCHLUMBERGER LIMITED/NVslb-ex312_8.htm
EX-32.1 - EX-32.1 - SCHLUMBERGER LIMITED/NVslb-ex321_9.htm
EX-32.2 - EX-32.2 - SCHLUMBERGER LIMITED/NVslb-ex322_10.htm
EX-10.1 - EX-10.1 - SCHLUMBERGER LIMITED/NVslb-ex101_169.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: March 31, 2016

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 March 31, 2016

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,252,334,169

 

 

 


SCHLUMBERGER LIMITED

First Quarter 2016 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

17

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

23

 

 

 

 

Item 4.

 

Controls and Procedures

23

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

23

 

 

 

 

Item 1A.

 

Risk Factors

24

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

24

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

24

 

 

 

 

Item 4.

 

Mine Safety Disclosures

24

 

 

 

 

Item 5.

 

Other Information

24

 

 

 

 

Item 6.

 

Exhibits

25

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2016

 

 

2015

 

Revenue

$

6,520

 

 

$

10,248

 

Interest & other income

 

45

 

 

 

49

 

Expenses

 

 

 

 

 

 

 

Cost of revenue

 

5,460

 

 

 

8,096

 

Research & engineering

 

240

 

 

 

267

 

General & administrative

 

110

 

 

 

119

 

Restructuring & other

 

-

 

 

 

439

 

Interest

 

133

 

 

 

82

 

Income before taxes

 

622

 

 

 

1,294

 

Taxes on income

 

99

 

 

 

306

 

Net income

 

523

 

 

 

988

 

Net income attributable to noncontrolling interests

 

22

 

 

 

13

 

Net income attributable to Schlumberger

$

501

 

 

$

975

 

 

 

 

 

 

 

 

 

Basic earnings per share of Schlumberger

$

0.40

 

 

$

0.76

 

 

 

 

 

 

 

 

 

Diluted earnings per share of Schlumberger

$

0.40

 

 

$

0.76

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

1,254

 

 

 

1,276

 

Assuming dilution

 

1,259

 

 

 

1,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

See Notes to Consolidated Financial Statements

 

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2016

 

 

2015

 

Net income

$

523

 

 

$

988

 

Currency translation adjustments

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

17

 

 

 

(113

)

Marketable securities

 

 

 

 

 

 

 

Unrealized gain (loss) arising during the period

 

3

 

 

 

(18

)

Cash flow hedges

 

 

 

 

 

 

 

Net loss on cash flow hedges

 

(85

)

 

 

(152

)

Reclassification to net income of net realized loss

 

94

 

 

 

118

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

Amortization to net income of net actuarial loss

 

45

 

 

 

74

 

Prior service cost

 

 

 

 

 

 

 

Amortization to net income of net prior service cost

 

25

 

 

 

27

 

Income taxes on pension and other postretirement benefit plans

 

(7

)

 

 

(15

)

Comprehensive income

 

615

 

 

 

909

 

Comprehensive income attributable to noncontrolling interests

 

22

 

 

 

13

 

Comprehensive income attributable to Schlumberger

$

593

 

 

$

896

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

 

 

 

 

2016

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

2,080

 

 

$

2,793

 

Short-term investments

 

12,352

 

 

 

10,241

 

Receivables less allowance for doubtful accounts (2016 - $333; 2015 - $333)

 

8,382

 

 

 

8,780

 

Inventories

 

3,612

 

 

 

3,756

 

Deferred taxes

 

208

 

 

 

208

 

Other current assets

 

1,066

 

 

 

1,134

 

 

 

27,700

 

 

 

26,912

 

Fixed Income Investments, held to maturity

 

401

 

 

 

418

 

Investments in Affiliated Companies

 

3,341

 

 

 

3,311

 

Fixed Assets less accumulated depreciation

 

13,259

 

 

 

13,415

 

Multiclient Seismic Data

 

1,108

 

 

 

1,026

 

Goodwill

 

15,649

 

 

 

15,605

 

Intangible Assets

 

4,551

 

 

 

4,569

 

Other Assets

 

3,132

 

 

 

2,749

 

 

$

69,141

 

 

$

68,005

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

6,725

 

 

 

7,727

 

Estimated liability for taxes on income

 

1,269

 

 

 

1,203

 

Long-term debt - current portion

 

3,267

 

 

 

3,011

 

Short-term borrowings

 

987

 

 

 

1,546

 

Dividends payable

 

632

 

 

 

634

 

 

 

12,880

 

 

 

14,121

 

Long-term Debt

 

17,233

 

 

 

14,442

 

Postretirement Benefits

 

1,392

 

 

 

1,434

 

Deferred Taxes

 

923

 

 

 

1,075

 

Other Liabilities

 

1,051

 

 

 

1,028

 

 

 

33,479

 

 

 

32,100

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,700

 

 

 

12,693

 

Treasury stock

 

(13,620

)

 

 

(13,372

)

Retained earnings

 

40,745

 

 

 

40,870

 

Accumulated other comprehensive loss

 

(4,466

)

 

 

(4,558

)

Schlumberger stockholders' equity

 

35,359

 

 

 

35,633

 

Noncontrolling interests

 

303

 

 

 

272

 

 

 

35,662

 

 

 

35,905

 

 

$

69,141

 

 

$

68,005

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

523

 

 

$

988

 

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

 

 

 

 

 

 

 

Restructuring and other charges

 

-

 

 

 

439

 

Depreciation and amortization (1)

 

967

 

 

 

1,042

 

Pension and other postretirement benefits expense

 

60

 

 

 

114

 

Stock-based compensation expense

 

61

 

 

 

80

 

Pension and other postretirement benefits funding

 

(45

)

 

 

(120

)

Earnings of equity method investments, less dividends received

 

(25

)

 

 

(35

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

Decrease in receivables

 

414

 

 

 

793

 

Decrease (increase) in inventories

 

125

 

 

 

(52

)

Decrease (increase) in other current assets

 

85

 

 

 

(97

)

Decrease (increase) in other assets

 

5

 

 

 

(60

)

Decrease in accounts payable and accrued liabilities

 

(983

)

 

 

(1,348

)

Decrease in estimated liability for taxes on income

 

(104

)

 

 

(66

)

Increase (decrease) in other liabilities

 

2

 

 

 

(57

)

Other

 

125

 

 

 

149

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

1,210

 

 

 

1,770

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(549

)

 

 

(606

)

SPM investments

 

(597

)

 

 

(109

)

Multiclient seismic data capitalized

 

(167

)

 

 

(101

)

Business acquisitions and investments, net of cash acquired

 

(81

)

 

 

(44

)

Purchase of investments, net

 

(2,093

)

 

 

(307

)

Other

 

(26

)

 

 

(70

)

NET CASH USED IN INVESTING ACTIVITIES

 

(3,513

)

 

 

(1,237

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(629

)

 

 

(512

)

Proceeds from employee stock purchase plan

 

116

 

 

 

144

 

Proceeds from exercise of stock options

 

47

 

 

 

38

 

Stock repurchase program

 

(475

)

 

 

(719

)

Proceeds from issuance of long-term debt

 

3,542

 

 

 

1,572

 

Repayment of long-term debt

 

(500

)

 

 

(1,144

)

Net decrease in short-term borrowings

 

(561

)

 

 

(902

)

Other

 

47

 

 

 

(2

)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

1,587

 

 

 

(1,525

)

Net decrease in cash before translation effect

 

(716

)

 

 

(992

)

Translation effect on cash

 

3

 

 

 

(17

)

Cash, beginning of period

 

2,793

 

 

 

3,130

 

Cash, end of period

$

2,080

 

 

$

2,121

 

 

(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, 2016 – March 31, 2016

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interest

 

 

Total

 

Balance, January 1, 2016

$

12,693

 

 

$

(13,372

)

 

$

40,870

 

 

$

(4,558

)

 

$

272

 

 

$

35,905

 

Net income

 

 

 

 

 

 

 

 

 

501

 

 

 

 

 

 

 

22

 

 

 

523

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

17

 

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

3

 

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

9

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

 

63

 

Shares sold to optionees, less shares exchanged

 

(17

)

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47

 

Vesting of restricted stock

 

(28

)

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(19

)

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

Stock repurchase program

 

 

 

 

 

(475

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(475

)

Stock-based compensation expense

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

Dividends declared ($0.50 per share)

 

 

 

 

 

 

 

 

 

(626

)

 

 

 

 

 

 

 

 

 

 

(626

)

Other

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

19

 

Balance, March 31, 2016

$

12,700

 

 

$

(13,620

)

 

$

40,745

 

 

$

(4,466

)

 

$

303

 

 

$

35,662

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2015 – March 31, 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

 

 

 

 

 

 

 

 

 

975

 

 

 

 

 

 

 

13

 

 

 

988

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(113

)

 

 

 

 

 

 

(113

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

 

(18

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

(34

)

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

 

86

 

Shares sold to optionees, less shares exchanged

 

(16

)

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

Vesting of restricted stock

 

(39

)

 

 

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

9

 

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

144

 

Stock repurchase program

 

 

 

 

 

(719

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(719

)

Stock-based compensation expense

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80

 

Dividends declared ($0.50 per share)

 

 

 

 

 

 

 

 

 

(639

)

 

 

 

 

 

 

 

 

 

 

(639

)

Other

 

6

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

7

 

Balance, March 31, 2015

$

12,535

 

 

$

(12,260

)

 

$

41,669

 

 

$

(4,285

)

 

$

210

 

 

$

37,869

 

 

SHARES OF COMMON STOCK

(Unaudited)

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Issued

 

 

In Treasury

 

 

Outstanding

 

Balance, January 1, 2016

 

1,434

 

 

 

(178

)

 

 

1,256

 

Shares sold to optionees, less shares exchanged

 

-

 

 

 

1

 

 

 

1

 

Vesting of restricted stock

 

-

 

 

 

-

 

 

 

-

 

Shares issued under employee stock purchase plan

 

-

 

 

 

2

 

 

 

2

 

Stock repurchase program

 

-

 

 

 

(7

)

 

 

(7

)

Balance, March 31, 2016

 

1,434

 

 

 

(182

)

 

 

1,252

 

 

See Notes to Consolidated Financial Statements

 

 

7


SCHLUMBERGER LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.    Basis of Presentation

The accompanying unaudited consolidated financial statements of Schlumberger Limited and its subsidiaries (Schlumberger) have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with 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 generally accepted accounting principles for complete financial statements.  In the opinion of Schlumberger management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited financial statements.  All intercompany transactions and balances have been eliminated in consolidation.  Operating results for the three-month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.  The December 31, 2015 balance sheet information has been derived from the Schlumberger 2015 audited financial statements.  For further information, refer to the Consolidated Financial Statements and notes thereto included in the Schlumberger Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on January 27, 2016.

Certain prior period items have been reclassified to conform to the current period presentation.

Merger with Cameron International Corporation

On April 1, 2016, Schlumberger acquired all of the outstanding shares of Cameron International Corporation (Cameron), a leading provider of flow equipment products, systems and services to the oil and gas industry worldwide.  The merger will create technology-driven growth by integrating Schlumberger’s reservoir and well technologies with Cameron wellhead and surface equipment, flow control and processing technology.  The combination of the two complementary technology portfolios provides the industry’s most comprehensive range of products and services, from exploration to production and integrated pore-to-pipeline solutions that optimize hydrocarbon recovery to deliver reservoir performance.  Cameron’s revenue for the year ended December 31, 2015 and the three months ended March 31, 2016 was $8.8 billion and $1.6 billion, respectively.

Under the terms of the merger agreement, Cameron became a wholly-owned subsidiary of Schlumberger.  Each share of Cameron common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive 0.716 share of Schlumberger stock and $14.44 in cash.  As a result, Schlumberger issued approximately 138 million shares of its common stock and paid cash of approximately $2.8 billion in connection with this transaction.  Based on the closing price of Schlumberger’s common stock on April 1, 2016, the total fair value of the consideration transferred to effect the acquisition of Cameron was approximately $12.9 billion.  Due to the fact that the acquisition just recently closed, the initial accounting for the transaction has not yet been completed.  Cameron reported net tangible assets of approximately $3.0 billion as of December 31, 2015, consisting of $2.4 billion of cash and short-term investments, $2.0 billion of accounts receivable, $2.4 billion of inventories, $1.7 billion of fixed assets, $2.8 billion of debt and $2.7 billion of other net liabilities.  

As this transaction closed subsequent to the end of the first quarter of 2016, the Consolidated Financial Statements and the related footnotes do not reflect any amounts relating to the acquired Cameron business.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Schlumberger is required to adopt this ASU on January 1, 2018, with early adoption permitted on January 1, 2017, and does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as non-current on the balance sheet.  Schlumberger is required to adopt this ASU no later than January 1, 2018, with early adoption permitted, and the guidance may be applied either prospectively or retrospectively.  Schlumberger does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU requires lessees to recognize for all leases, with the exception of short-term leases, a liability equal to the present value of lease payments and a corresponding right-of-use asset also

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based on the present value of lease payments. Schlumberger is evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.

2.   Charges and Credits

Schlumberger did not record any charges or credits during the first quarter of 2016.

2015

Schlumberger recorded the following charges and credits during the first quarter of 2015:

 

·

As a result of the severe fall in activity in North America, combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices, Schlumberger decided to reduce its headcount during the first quarter of 2015.  Schlumberger recorded a $390 million charge during the first quarter associated with this headcount reduction as well as an incentivized leave of absence program.

 

 

·

In February 2015, the Venezuelan government replaced the SICAD II exchange rate with a new foreign exchange market system known as SIMADI. The SIMADI exchange rate was approximately 192 Venezuelan Bolivares fuertes to the US dollar as of March 31, 2015. As a result, Schlumberger recorded a $49 million devaluation charge during the first quarter of 2015, reflecting the adoption of the SIMADI exchange rate.  This change resulted in a reduction in the US dollar reported amount of local currency denominated revenues, expenses and, consequently, income before taxes and net income in Venezuela.  

The following is a summary of these charges, all of which were classified as Restructuring & other in the Consolidated Statement of Income:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax

 

 

Tax

 

 

Net

 

Workforce reduction

$

390

 

 

$

56

 

 

$

334

 

Currency devaluation loss in Venezuela

 

49

 

 

 

-

 

 

 

49

 

 

$

439

 

 

$

56

 

 

$

383

 

 

 

 

3.   Earnings Per Share

The following is a reconciliation from basic earnings per share of Schlumberger to diluted earnings per share of Schlumberger:

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

2015

 

 

Schlumberger Net Income

 

 

Average

Shares

Outstanding

 

 

Earnings per Share

 

 

Schlumberger Net Income

 

 

Average

Shares

Outstanding

 

 

Earnings per Share

 

First Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

501

 

 

 

1,254

 

 

$

0.40

 

 

$

975

 

 

 

1,276

 

 

$

0.76

 

Assumed exercise of stock options

 

-

 

 

 

1

 

 

 

 

 

 

 

-

 

 

 

5

 

 

 

 

 

Unvested restricted stock

 

-

 

 

 

4

 

 

 

 

 

 

 

-

 

 

 

4

 

 

 

 

 

Diluted

$

501

 

 

 

1,259

 

 

$

0.40

 

 

$

975

 

 

 

1,285

 

 

$

0.76

 

 

    

The number of outstanding options to purchase shares of Schlumberger common stock which were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect, was as follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

2016

 

 

2015

 

First Quarter

 

32

 

 

 

16

 

 

 

9


4.   Inventories

A summary of inventories follows:  

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2016

 

 

2015

 

Raw materials & field materials

$

2,355

 

 

$

2,300

 

Work in progress

 

155

 

 

 

178

 

Finished goods

 

1,102

 

 

 

1,278

 

 

$

3,612

 

 

$

3,756

 

 

 

 

5.   Fixed Assets

A summary of fixed assets follows:

 

(Stated in millions)