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EX-95 - EX-95 - SCHLUMBERGER LIMITED/NVslb-ex95_7.htm
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EX-31.2 - EX-31.2 - SCHLUMBERGER LIMITED/NVslb-ex312_10.htm
EX-31.1 - EX-31.1 - SCHLUMBERGER LIMITED/NVslb-ex311_15.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: June 30, 2017

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

 

 

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      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      No  

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

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

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

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 June 30, 2017

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,384,524,170

 


SCHLUMBERGER LIMITED

Second Quarter 2017 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

27

 

 

 

 

Item 4.

 

Controls and Procedures

27

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

28

 

 

 

 

Item 1A.

 

Risk Factors

28

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

28

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

28

 

 

 

 

Item 4.

 

Mine Safety Disclosures

28

 

 

 

 

Item 5.

 

Other Information

28

 

 

 

 

Item 6.

 

Exhibits

30

 

 

 

 

 

 

Certifications

 

 

 

 

2


PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

 

SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (LOSS)

(Unaudited)

 

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

 

Six Months

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

$

5,477

 

 

$

4,955

 

 

$

10,414

 

 

$

10,718

 

Product sales

 

1,985

 

 

 

2,209

 

 

 

3,942

 

 

 

2,966

 

Total Revenue

 

7,462

 

 

 

7,164

 

 

 

14,356

 

 

 

13,684

 

Interest & other income

 

62

 

 

 

54

 

 

 

108

 

 

 

98

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

4,624

 

 

 

4,332

 

 

 

8,875

 

 

 

9,127

 

Cost of sales

 

1,844

 

 

 

2,133

 

 

 

3,669

 

 

 

2,798

 

Research & engineering

 

196

 

 

 

257

 

 

 

406

 

 

 

497

 

General & administrative

 

110

 

 

 

103

 

 

 

208

 

 

 

213

 

Impairments & other

 

510

 

 

 

2,573

 

 

 

510

 

 

 

2,573

 

Merger & integration

 

81

 

 

 

185

 

 

 

164

 

 

 

185

 

Interest

 

142

 

 

 

149

 

 

 

281

 

 

 

282

 

Income (loss) before taxes

 

17

 

 

 

(2,514

)

 

 

351

 

 

 

(1,893

)

Taxes on income (loss)

 

98

 

 

 

(368

)

 

 

148

 

 

 

(270

)

Net income (loss)

 

(81

)

 

 

(2,146

)

 

 

203

 

 

 

(1,623

)

Net income (loss) attributable to noncontrolling interests

 

(7

)

 

 

14

 

 

 

(2

)

 

 

36

 

Net income (loss) attributable to Schlumberger

$

(74

)

 

$

(2,160

)

 

$

205

 

 

$

(1,659

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share of Schlumberger

$

(0.05

)

 

$

(1.56

)

 

$

0.15

 

 

$

(1.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share of Schlumberger

$

(0.05

)

 

$

(1.56

)

 

$

0.15

 

 

$

(1.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1,387

 

 

 

1,389

 

 

 

1,390

 

 

 

1,321

 

Assuming dilution

 

1,387

 

 

 

1,389

 

 

 

1,397

 

 

 

1,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

See Notes to Consolidated Financial Statements

 

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

 

Six Months

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss)

$

(81

)

 

$

(2,146

)

 

$

203

 

 

$

(1,623

)

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

(71

)

 

 

(70

)

 

 

(26

)

 

 

(51

)

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) arising during the period

 

(21

)

 

 

-

 

 

 

(25

)

 

 

3

 

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on cash flow hedges

 

-

 

 

 

17

 

 

 

11

 

 

 

(68

)

Reclassification to net income (loss) of net realized loss (gain)

 

8

 

 

 

(14

)

 

 

8

 

 

 

80

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income (loss) of net actuarial loss

 

36

 

 

 

34

 

 

 

79

 

 

 

79

 

Prior service cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income (loss) of net prior service cost

 

20

 

 

 

26

 

 

 

40

 

 

 

51

 

Income taxes on pension and other postretirement benefit plans

 

(1

)

 

 

(7

)

 

 

(2

)

 

 

(14

)

Comprehensive income (loss)

 

(110

)

 

 

(2,160

)

 

 

288

 

 

 

(1,543

)

Comprehensive income (loss) attributable to noncontrolling interests

 

(7

)

 

 

14

 

 

 

(2

)

 

 

36

 

Comprehensive income (loss) attributable to Schlumberger

$

(103

)

 

$

(2,174

)

 

$

290

 

 

$

(1,579

)

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Jun. 30,

 

 

 

 

 

 

2017

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

1,903

 

 

$

2,929

 

Short-term investments

 

4,315

 

 

 

6,328

 

Receivables less allowance for doubtful accounts (2017 - $345; 2016 - $397)

 

8,925

 

 

 

9,387

 

Inventories

 

4,338

 

 

 

4,225

 

Other current assets

 

1,792

 

 

 

1,058

 

 

 

21,273

 

 

 

23,927

 

Fixed Income Investments, held to maturity

 

13

 

 

 

238

 

Investments in Affiliated Companies

 

1,553

 

 

 

1,243

 

Fixed Assets less accumulated depreciation

 

12,358

 

 

 

12,821

 

Multiclient Seismic Data

 

1,042

 

 

 

1,073

 

Goodwill

 

25,058

 

 

 

24,990

 

Intangible Assets

 

9,636

 

 

 

9,855

 

Other Assets

 

3,929

 

 

 

3,809

 

 

$

74,862

 

 

$

77,956

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

9,444

 

 

$

10,016

 

Estimated liability for taxes on income

 

1,159

 

 

 

1,188

 

Short-term borrowings and current portion of long-term debt

 

2,224

 

 

 

3,153

 

Dividends payable

 

700

 

 

 

702

 

 

 

13,527

 

 

 

15,059

 

Long-term Debt

 

16,600

 

 

 

16,463

 

Postretirement Benefits

 

1,385

 

 

 

1,495

 

Deferred Taxes

 

2,000

 

 

 

1,880

 

Other Liabilities

 

1,398

 

 

 

1,530

 

 

 

34,910

 

 

 

36,427

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,843

 

 

 

12,801

 

Treasury stock

 

(4,049

)

 

 

(3,550

)

Retained earnings

 

35,284

 

 

 

36,470

 

Accumulated other comprehensive loss

 

(4,558

)

 

 

(4,643

)

Schlumberger stockholders' equity

 

39,520

 

 

 

41,078

 

Noncontrolling interests

 

432

 

 

 

451

 

 

 

39,952

 

 

 

41,529

 

 

$

74,862

 

 

$

77,956

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

203

 

 

$

(1,623

)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

 

 

 

 

Impairments and other charges

 

674

 

 

 

2,908

 

Depreciation and amortization (1)

 

1,975

 

 

 

2,080

 

Pension and other postretirement benefits expense

 

52

 

 

 

92

 

Stock-based compensation expense

 

180

 

 

 

145

 

Pension and other postretirement benefits funding

 

(74

)

 

 

(83

)

Earnings of equity method investments, less dividends received

 

(30

)

 

 

(30

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

(Increase) decrease in receivables

 

(406

)

 

 

1,057

 

(Increase) decrease in inventories

 

(51

)

 

 

334

 

(Increase) decrease in other current assets

 

(123

)

 

 

92

 

Increase in other assets

 

(140

)

 

 

(247

)

Decrease in accounts payable and accrued liabilities

 

(738

)

 

 

(1,491

)

Decrease in estimated liability for taxes on income

 

(21

)

 

 

(242

)

(Decrease) increase in other liabilities

 

(37

)

 

 

11

 

Other

 

50

 

 

 

(161

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

1,514

 

 

 

2,842

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(884

)

 

 

(998

)

SPM investments

 

(328

)

 

 

(729

)

Multiclient seismic data costs capitalized

 

(190

)

 

 

(333

)

Business acquisitions and investments, net of cash acquired

 

(364

)

 

 

(2,220

)

Sale of investments, net

 

2,245

 

 

 

3,476

 

Other

 

(61

)

 

 

26

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

418

 

 

 

(778

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(1,393

)

 

 

(1,255

)

Proceeds from employee stock purchase plan

 

96

 

 

 

116

 

Proceeds from exercise of stock options

 

47

 

 

 

79

 

Stock repurchase program

 

(770

)

 

 

(506

)

Proceeds from issuance of long-term debt

 

625

 

 

 

3,560

 

Repayment of long-term debt

 

(475

)

 

 

(3,401

)

Net decrease in short-term borrowings

 

(1,097

)

 

 

(564

)

Other

 

(2

)

 

 

48

 

NET CASH USED IN FINANCING ACTIVITIES

 

(2,969

)

 

 

(1,923

)

Net (decrease) increase in cash before translation effect

 

(1,037

)

 

 

141

 

Translation effect on cash

 

11

 

 

 

13

 

Cash, beginning of period

 

2,929

 

 

 

2,793

 

Cash, end of period

$

1,903

 

 

$

2,947

 

 

 

(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, 2017 – June 30, 2017

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total

 

Balance, January 1, 2017

$

12,801

 

 

$

(3,550

)

 

$

36,470

 

 

$

(4,643

)

 

$

451

 

 

$

41,529

 

Net income

 

 

 

 

 

 

 

 

 

205

 

 

 

 

 

 

 

(2

)

 

 

203

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(26

)

 

 

 

 

 

 

(26

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

 

 

 

(25

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

19

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

117

 

 

 

 

 

 

 

117

 

Shares sold to optionees, less shares exchanged

 

(33

)

 

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47

 

Vesting of restricted stock

 

(80

)

 

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(12

)

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96

 

Stock repurchase program

 

 

 

 

 

(770

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(770

)

Stock-based compensation expense

 

180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

180

 

Dividends declared ($1.00 per share)

 

 

 

 

 

 

 

 

 

(1,391

)

 

 

 

 

 

 

 

 

 

 

(1,391

)

Other

 

(13

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

(27

)

Balance, June 30, 2017

$

12,843

 

 

$

(4,049

)

 

$

35,284

 

 

$

(4,558

)

 

$

432

 

 

$

39,952

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2016 – June 30, 2016

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total

 

Balance, January 1, 2016

$

12,693

 

 

$

(13,372

)

 

$

40,870

 

 

$

(4,558

)

 

$

272

 

 

$

35,905

 

Net loss

 

 

 

 

 

 

 

 

 

(1,659

)

 

 

 

 

 

 

36

 

 

 

(1,623

)

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(51

)

 

 

 

 

 

 

(51

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

3

 

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

12

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

 

 

 

 

 

 

116

 

Shares sold to optionees, less shares exchanged

 

(38

)

 

 

117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

79

 

Vesting of restricted stock

 

(63

)

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(19

)

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

Stock repurchase program

 

 

 

 

 

(506

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(506

)

Stock-based compensation expense

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

145

 

Dividends declared ($1.00 per share)

 

 

 

 

 

 

 

 

 

(1,322

)

 

 

 

 

 

 

 

 

 

 

(1,322

)

Acquisition of Cameron International Corporation

 

103

 

 

 

9,924

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

10,084

 

Other

 

14

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

21

 

Balance, June 30, 2016

$

12,835

 

 

$

(3,636

)

 

$

37,889

 

 

$

(4,478

)

 

$

369

 

 

$

42,979

 

 

SHARES OF COMMON STOCK

(Unaudited)

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Issued

 

 

In Treasury

 

 

Outstanding

 

Balance, January 1, 2017

 

1,434

 

 

 

(43