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EX-31.1 - EX-31.1 - SCHLUMBERGER LIMITED/NVslb-ex311_10.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, 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 September 30, 2017

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,385,261,690

 


SCHLUMBERGER LIMITED

Third 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

27

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

Nine Months

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

$

5,895

 

 

$

5,023

 

 

$

16,308

 

 

$

15,741

 

Product sales

 

2,010

 

 

 

1,996

 

 

 

5,953

 

 

 

4,962

 

Total Revenue

 

7,905

 

 

 

7,019

 

 

 

22,261

 

 

 

20,703

 

Interest & other income

 

64

 

 

 

54

 

 

 

172

 

 

 

153

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

4,939

 

 

 

4,355

 

 

 

13,816

 

 

 

13,482

 

Cost of sales

 

1,858

 

 

 

1,936

 

 

 

5,527

 

 

 

4,734

 

Research & engineering

 

189

 

 

 

253

 

 

 

595

 

 

 

750

 

General & administrative

 

115

 

 

 

92

 

 

 

323

 

 

 

305

 

Impairments & other

 

-

 

 

 

-

 

 

 

510

 

 

 

2,573

 

Merger & integration

 

49

 

 

 

88

 

 

 

213

 

 

 

272

 

Interest

 

142

 

 

 

149

 

 

 

422

 

 

 

431

 

Income (loss) before taxes

 

677

 

 

 

200

 

 

 

1,027

 

 

 

(1,691

)

Taxes on income (loss)

 

121

 

 

 

10

 

 

 

269

 

 

 

(259

)

Net income (loss)

 

556

 

 

 

190

 

 

 

758

 

 

 

(1,432

)

Net income attributable to noncontrolling interests

 

11

 

 

 

14

 

 

 

9

 

 

 

50

 

Net income (loss) attributable to Schlumberger

$

545

 

 

$

176

 

 

$

749

 

 

$

(1,482

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share of Schlumberger

$

0.39

 

 

$

0.13

 

 

$

0.54

 

 

$

(1.10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share of Schlumberger

$

0.39

 

 

$

0.13

 

 

$

0.54

 

 

$

(1.10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1,385

 

 

 

1,392

 

 

 

1,388

 

 

 

1,345

 

Assuming dilution

 

1,392

 

 

 

1,401

 

 

 

1,395

 

 

 

1,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

See Notes to Consolidated Financial Statements

 

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

Nine Months

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss)

$

556

 

 

$

190

 

 

$

758

 

 

$

(1,432

)

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

75

 

 

 

27

 

 

 

49

 

 

 

(26

)

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss arising during the period

 

(41

)

 

 

(5

)

 

 

(66

)

 

 

(2

)

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on cash flow hedges

 

8

 

 

 

(18

)

 

 

19

 

 

 

(86

)

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

 

(4

)

 

 

29

 

 

 

4

 

 

 

109

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income (loss) of net actuarial loss

 

40

 

 

 

40

 

 

 

119

 

 

 

119

 

Prior service cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

20

 

 

 

25

 

 

 

60

 

 

 

76

 

Income taxes on pension and other postretirement benefit plans

 

-

 

 

 

(6

)

 

 

(2

)

 

 

(20

)

Comprehensive income (loss)

 

654

 

 

 

282

 

 

 

941

 

 

 

(1,262

)

Comprehensive income attributable to noncontrolling interests

 

11

 

 

 

14

 

 

 

9

 

 

 

50

 

Comprehensive income (loss) attributable to Schlumberger

$

643

 

 

$

268

 

 

$

932

 

 

$

(1,312

)

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Sept. 30,

 

 

 

 

 

 

2017

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

1,690

 

 

$

2,929

 

Short-term investments

 

3,262

 

 

 

6,328

 

Receivables less allowance for doubtful accounts (2017 - $321; 2016 - $397)

 

9,436

 

 

 

9,387

 

Inventories

 

4,308

 

 

 

4,225

 

Other current assets

 

1,218

 

 

 

1,058

 

 

 

19,914

 

 

 

23,927

 

Fixed Income Investments, held to maturity

 

-

 

 

 

238

 

Investments in Affiliated Companies

 

1,481

 

 

 

1,243

 

Fixed Assets less accumulated depreciation

 

12,338

 

 

 

12,821

 

Multiclient Seismic Data

 

992

 

 

 

1,073

 

Goodwill

 

25,113

 

 

 

24,990

 

Intangible Assets

 

9,540

 

 

 

9,855

 

Other Assets

 

4,191

 

 

 

3,809

 

 

$

73,569

 

 

$

77,956

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

9,715

 

 

$

10,016

 

Estimated liability for taxes on income

 

1,310

 

 

 

1,188

 

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

 

1,289

 

 

 

3,153

 

Dividends payable

 

700

 

 

 

702

 

 

 

13,014

 

 

 

15,059

 

Long-term Debt

 

15,871

 

 

 

16,463

 

Postretirement Benefits

 

1,340

 

 

 

1,495

 

Deferred Taxes

 

1,893

 

 

 

1,880

 

Other Liabilities

 

1,441

 

 

 

1,530

 

 

 

33,559

 

 

 

36,427

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,863

 

 

 

12,801

 

Treasury stock

 

(3,966

)

 

 

(3,550

)

Retained earnings

 

35,136

 

 

 

36,470

 

Accumulated other comprehensive loss

 

(4,460

)

 

 

(4,643

)

Schlumberger stockholders' equity

 

39,573

 

 

 

41,078

 

Noncontrolling interests

 

437

 

 

 

451

 

 

 

40,010

 

 

 

41,529

 

 

$

73,569

 

 

$

77,956

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

758

 

 

$

(1,432

)

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

 

 

 

 

 

 

 

Impairments and other charges

 

723

 

 

 

3,144

 

Depreciation and amortization (1)

 

2,931

 

 

 

3,078

 

Pension and other postretirement benefits expense

 

79

 

 

 

139

 

Stock-based compensation expense

 

261

 

 

 

210

 

Pension and other postretirement benefits funding

 

(107

)

 

 

(127

)

Earnings of equity method investments, less dividends received

 

(52

)

 

 

(51

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

(Increase) decrease in receivables

 

(1,049

)

 

 

851

 

Decrease in inventories

 

14

 

 

 

556

 

(Increase) decrease in other current assets

 

(86

)

 

 

241

 

Decrease (increase) in other assets

 

202

 

 

 

(335

)

Decrease in accounts payable and accrued liabilities

 

(533

)

 

 

(1,684

)

Increase (decrease) in estimated liability for taxes on income

 

181

 

 

 

(187

)

(Decrease) increase in other liabilities

 

(74

)

 

 

40

 

Other

 

164

 

 

 

(195

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

3,412

 

 

 

4,248

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(1,482

)

 

 

(1,401

)

SPM investments

 

(492

)

 

 

(869

)

Multiclient seismic data costs capitalized

 

(223

)

 

 

(497

)

Business acquisitions and investments, net of cash acquired

 

(382

)

 

 

(2,251

)

Sale of investments, net

 

3,310

 

 

 

4,439

 

Other

 

(92

)

 

 

(13

)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

639

 

 

 

(592

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(2,086

)

 

 

(1,951

)

Proceeds from employee stock purchase plan

 

212

 

 

 

231

 

Proceeds from exercise of stock options

 

49

 

 

 

113

 

Stock repurchase program

 

(868

)

 

 

(662

)

Proceeds from issuance of long-term debt

 

681

 

 

 

3,586

 

Repayment of long-term debt

 

(2,206

)

 

 

(4,749

)

Net (decrease) increase in short-term borrowings

 

(1,110

)

 

 

401

 

Other

 

17

 

 

 

(8

)

NET CASH USED IN FINANCING ACTIVITIES

 

(5,311

)

 

 

(3,039

)

Net (decrease) increase in cash before translation effect

 

(1,260

)

 

 

617

 

Translation effect on cash

 

21

 

 

 

31

 

Cash, beginning of period

 

2,929

 

 

 

2,793

 

Cash, end of period

$

1,690

 

 

$

3,441

 

 

 

(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 – September 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

 

 

 

 

 

 

 

 

 

749

 

 

 

 

 

 

 

9

 

 

 

758

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

 

 

 

 

49

 

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(66

)

 

 

 

 

 

 

(66

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

23

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

177

 

 

 

 

 

 

 

177

 

Shares sold to optionees, less shares exchanged

 

(39

)

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

Vesting of restricted stock

 

(98

)

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(52

)

 

 

264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

212

 

Stock repurchase program

 

 

 

 

 

(868

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(868

)

Stock-based compensation expense

 

261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

261

 

Dividends declared ($1.50 per share)

 

 

 

 

 

 

 

 

 

(2,083

)

 

 

 

 

 

 

 

 

 

 

(2,083

)

Other

 

(10

)

 

 

2

 

 

 

 

 

 

 

 

 

 

 

(23

)

 

 

(31

)

Balance, September 30, 2017

$

12,863

 

 

$

(3,966

)

 

$

35,136

 

 

$

(4,460

)

 

$

437

 

 

$

40,010

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2016 – September 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

 

 

 

 

 

 

 

 

 

(1,482

)

 

 

 

 

 

 

50

 

 

 

(1,432

)

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

(26

)

 

 

 

 

 

 

(26

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

(2

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

23

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

175

 

 

 

 

 

 

 

175

 

Shares sold to optionees, less shares exchanged

 

(52

)

 

 

165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

113

 

Vesting of restricted stock

 

(84

)

 

 

84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(55

)

 

 

286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

231

 

Stock repurchase program

 

 

 

 

 

(662

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(662

)

Stock-based compensation expense

 

210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

210

 

Dividends declared ($1.50 per share)

 

 

 

 

 

 

 

 

 

(2,018

)

 

 

 

 

 

 

 

 

 

 

(2,018

)

Acquisition of Cameron International Corporation

 

103

 

 

 

9,924

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

10,084

 

Other

 

8

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

(39

)

 

 

(27

)

Balance, September 30, 2016

$

12,823

 

 

$

(3,571

)

 

$

37,370

 

 

$

(4,388

)

 

$

340

 

 

$

42,574

 

 

SHARES OF COMMON STOCK

(Unaudited)

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Issued

 

 

In Treasury

 

 

Outstanding

 

Balance, January 1, 2017

 

1,434

 

 

 

(43