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EX-95 - EX-95 - SCHLUMBERGER LIMITED/NVslb-ex95_8.htm
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EX-31.2 - EX-31.2 - SCHLUMBERGER LIMITED/NVslb-ex312_6.htm
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EX-23 - EX-23 - SCHLUMBERGER LIMITED/NVslb-ex23_279.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, 2018

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 March 31, 2018

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,385,133,215

 


SCHLUMBERGER LIMITED

First Quarter 2018 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

16

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

19

 

 

 

 

Item 4.

 

Controls and Procedures

20

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

20

 

 

 

 

Item 1A.

 

Risk Factors

20

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

20

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

20

 

 

 

 

Item 4.

 

Mine Safety Disclosures

21

 

 

 

 

Item 5.

 

Other Information

21

 

 

 

 

Item 6.

 

Exhibits

22

 

 

 

 

 

 

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,

 

 

2018

 

 

2017

 

Revenue

 

 

 

 

 

 

 

Services

$

5,736

 

 

$

4,828

 

Product sales

 

2,093

 

 

 

2,066

 

Total Revenue

 

7,829

 

 

 

6,894

 

Interest & other income

 

42

 

 

 

46

 

Expenses

 

 

 

 

 

 

 

Cost of services

 

4,880

 

 

 

4,181

 

Cost of sales

 

1,922

 

 

 

1,895

 

Research & engineering

 

172

 

 

 

211

 

General & administrative

 

111

 

 

 

98

 

Merger & integration

 

-

 

 

 

82

 

Interest

 

143

 

 

 

139

 

Income before taxes

 

643

 

 

 

334

 

Taxes on income

 

113

 

 

 

50

 

Net income

 

530

 

 

 

284

 

Net income attributable to noncontrolling interests

 

5

 

 

 

5

 

Net income attributable to Schlumberger

$

525

 

 

$

279

 

 

 

 

 

 

 

 

 

Basic earnings per share of Schlumberger

$

0.38

 

 

$

0.20

 

 

 

 

 

 

 

 

 

Diluted earnings per share of Schlumberger

$

0.38

 

 

$

0.20

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

1,385

 

 

 

1,393

 

Assuming dilution

 

1,394

 

 

 

1,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

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,

 

 

2018

 

 

2017

 

Net income

$

530

 

 

$

284

 

Currency translation adjustments

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

39

 

 

 

45

 

Marketable securities

 

 

 

 

 

 

 

Unrealized gain (loss) arising during the period

 

19

 

 

 

(4

)

Cash flow hedges

 

 

 

 

 

 

 

Net gain on cash flow hedges

 

5

 

 

 

11

 

Reclassification to net income of net realized gain

 

(3

)

 

 

-

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

Amortization to net income of net actuarial loss

 

56

 

 

 

43

 

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

 

(1

)

 

 

20

 

Income taxes on pension and other postretirement benefit plans

 

-

 

 

 

(1

)

Comprehensive income

 

645

 

 

 

398

 

Comprehensive income attributable to noncontrolling interests

 

5

 

 

 

5

 

Comprehensive income attributable to Schlumberger

$

640

 

 

$

393

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

 

 

 

 

2018

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

1,865

 

 

$

1,799

 

Short-term investments

 

2,300

 

 

 

3,290

 

Receivables less allowance for doubtful accounts (2018 - $235; 2017 - $241)

 

8,472

 

 

 

8,084

 

Inventories

 

4,174

 

 

 

4,046

 

Other current assets

 

1,244

 

 

 

1,278

 

 

 

18,055

 

 

 

18,497

 

Investments in Affiliated Companies

 

1,483

 

 

 

1,519

 

Fixed Assets less accumulated depreciation

 

11,556

 

 

 

11,576

 

Multiclient Seismic Data

 

707

 

 

 

727

 

Goodwill

 

25,120

 

 

 

25,118

 

Intangible Assets

 

9,217

 

 

 

9,354

 

Other Assets

 

5,340

 

 

 

5,196

 

 

$

71,478

 

 

$

71,987

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

9,598

 

 

$

10,036

 

Estimated liability for taxes on income

 

1,311

 

 

 

1,223

 

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

 

4,586

 

 

 

3,324

 

Dividends payable

 

700

 

 

 

699

 

 

 

16,195

 

 

 

15,282

 

Long-term Debt

 

13,526

 

 

 

14,875

 

Postretirement Benefits

 

1,027

 

 

 

1,082

 

Deferred Taxes

 

1,579

 

 

 

1,650

 

Other Liabilities

 

1,825

 

 

 

1,837

 

 

 

34,152

 

 

 

34,726

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,998

 

 

 

12,975

 

Treasury stock

 

(3,937

)

 

 

(4,049

)

Retained earnings

 

32,022

 

 

 

32,190

 

Accumulated other comprehensive loss

 

(4,159

)

 

 

(4,274

)

Schlumberger stockholders' equity

 

36,924

 

 

 

36,842

 

Noncontrolling interests

 

402

 

 

 

419

 

 

 

37,326

 

 

 

37,261

 

 

$

71,478

 

 

$

71,987

 

 

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,

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

530

 

 

$

284

 

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

 

 

 

 

 

 

 

Merger & integration charges

 

-

 

 

 

82

 

Depreciation and amortization (1)

 

874

 

 

 

989

 

Pension and other postretirement benefits expense

 

18

 

 

 

37

 

Stock-based compensation expense

 

90

 

 

 

88

 

Pension and other postretirement benefits funding

 

(39

)

 

 

(29

)

Earnings of equity method investments, less dividends received

 

(5

)

 

 

(10

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

(Increase) decrease in receivables

 

(152

)

 

 

58

 

Increase in inventories

 

(81

)

 

 

(33

)

Increase in other current assets

 

(48

)

 

 

(115

)

Increase in other assets

 

(70

)

 

 

(56

)

Decrease in accounts payable and accrued liabilities

 

(600

)

 

 

(670

)

Increase (decrease) in estimated liability for taxes on income

 

45

 

 

 

(31

)

Decrease in other liabilities

 

(7

)

 

 

(28

)

Other

 

13

 

 

 

90

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

568

 

 

 

656

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(454

)

 

 

(381

)

SPM investments

 

(240

)

 

 

(144

)

Multiclient seismic data costs capitalized

 

(26

)

 

 

(116

)

Business acquisitions and investments, net of cash acquired

 

(13

)

 

 

(273

)

Sale of investments, net

 

980

 

 

 

883

 

Other

 

35

 

 

 

(24

)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

282

 

 

 

(55

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(692

)

 

 

(696

)

Proceeds from employee stock purchase plan

 

107

 

 

 

96

 

Proceeds from exercise of stock options

 

20

 

 

 

39

 

Stock repurchase program

 

(97

)

 

 

(372

)

Proceeds from issuance of long-term debt

 

12

 

 

 

334

 

Repayment of long-term debt

 

(51

)

 

 

(1

)

Net decrease in short-term borrowings

 

(105

)

 

 

(1,015

)

Other

 

19

 

 

 

(22

)

NET CASH USED IN FINANCING ACTIVITIES

 

(787

)

 

 

(1,637

)

Net increase (decrease) in cash before translation effect

 

63

 

 

 

(1,036

)

Translation effect on cash

 

3

 

 

 

9

 

Cash, beginning of period

 

1,799

 

 

 

2,929

 

Cash, end of period

$

1,865

 

 

$

1,902

 

 

 

(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, 2018 – March 31, 2018

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total

 

Balance, January 1, 2018

$

12,975

 

 

$

(4,049

)

 

$

32,190

 

 

$

(4,274

)

 

$

419

 

 

$

37,261

 

Net income

 

 

 

 

 

 

 

 

 

525

 

 

 

 

 

 

 

5

 

 

 

530

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

5

 

 

 

44

 

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

19

 

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

2

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

 

 

 

 

55

 

Shares sold to optionees, less shares exchanged

 

(20

)

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

Vesting of restricted stock

 

(29

)

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(33

)

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

107

 

Stock repurchase program

 

 

 

 

 

(97

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(97

)

Stock-based compensation expense

 

90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90

 

Dividends declared ($0.50 per share)

 

 

 

 

 

 

 

 

 

(693

)

 

 

 

 

 

 

 

 

 

 

(693

)

Other

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27

)

 

 

(12

)

Balance, March 31, 2018

$

12,998

 

 

$

(3,937

)

 

$

32,022

 

 

$

(4,159

)

 

$

402

 

 

$

37,326

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2017 – March 31, 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

 

 

 

 

 

 

 

 

 

279

 

 

 

 

 

 

 

5

 

 

 

284

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

45

 

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

(4

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

11

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

62

 

 

 

 

 

 

 

62

 

Shares sold to optionees, less shares exchanged

 

(29

)

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

Vesting of restricted stock

 

(49

)

 

 

49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

(12

)

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96

 

Stock repurchase program

 

 

 

 

 

(372

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(372

)

Stock-based compensation expense

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

88

 

Dividends declared ($0.50 per share)

 

 

 

 

 

 

 

 

 

(697

)

 

 

 

 

 

 

 

 

 

 

(697

)

Other

 

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

(27

)

Balance, March 31, 2017

$

12,780

 

 

$

(3,697

)

 

$

36,052

 

 

$

(4,529

)

 

$

448

 

 

$

41,054

 

 

SHARES OF COMMON STOCK

(Unaudited)

 

 

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Issued

 

 

In Treasury

 

 

Outstanding

 

Balance, January 1, 2018

 

1,434

 

 

 

(50

)

 

 

1,384

 

Shares issued under employee stock purchase plan

 

-

 

 

 

2

 

 

 

2

 

Stock repurchase program

 

-

 

 

 

(1

)

 

 

(1

)

Balance, March 31, 2018

 

1,434

 

 

 

(49

)

 

 

1,385

 

 

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, 2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018.  The December 31, 2017 balance sheet information has been derived from the Schlumberger 2017 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, 2017, filed with the Securities and Exchange Commission on January 24, 2018.  

Recently Adopted Accounting Pronouncement

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers.  This ASU amended the existing accounting standards for revenue recognition and requires companies to recognize revenue when control of the promised goods or services is transferred to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services.  Schlumberger adopted this ASU on January 1, 2018 using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018.   Prior period amounts have not been adjusted and continue to be reflected in accordance with Schlumberger’s historical accounting.  The adoption of this ASU did not have a material impact on Schlumberger’s Consolidated Financial Statements.  

Schlumberger recognizes revenue upon the transfer of control of promised products or services to customers at an amount that reflects the consideration it expects to receive in exchange for these products or services.  The vast majority of Schlumberger’s services and product offerings are short-term in nature.  The time between invoicing and when payment is due under these arrangements is generally 30 to 60 days.

Revenue is occasionally generated from contractual arrangements that include multiple performance obligations.  Revenue from these arrangements is allocated to each performance obligation based on its relative standalone selling price.  Standalone selling prices are generally based on the prices charged to customers or using expected costs plus margin.

Revenue is recognized for certain long-term construction-type contracts over time.  These contracts involve significant design and engineering efforts in order to satisfy custom designs for customer-specific applications.  Revenue is recognized as work progresses on each contract.  Progress is measured by the ratio of actual costs incurred to date on the project in relation to total estimated project costs.  The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project.  Revenue and profits on contracts can also be significantly affected by change orders and claims.  Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs may be required as work progresses.  Progress billings are generally issued upon completion of certain phases of work as stipulated in the contract.  Any expected losses on a project are recorded in full in the period in which they became probable.

Revenue in excess of billings related to contracts where revenue is recognized over time was $0.3 billion at both March 31, 2018 and December 31, 2017.  Such amounts are included within Receivables less allowance for doubtful accounts in the Consolidated Balance Sheet.

Due to the nature of its business Schlumberger does not have significant backlog.  Total backlog was $2.8 billion at March 31, 2018, of which approximately 50% is expected to be recognized as revenue over the next 12 months.

Billings and cash collections in excess of revenue was $0.9 billion at March 31, 2018 and $0.8 billion at December 31, 2017.  Such amounts are included within Accounts payable and accrued liabilities in the Consolidated Balance Sheet.

Recently Issued Accounting Pronouncement

In February 2016, the FASB issued ASU No. 2016-02, Leases.  This ASU requires lessees to recognize a right of use asset and lease liability on the balance sheet for all leases, with the exception of short-term leases.  This ASU is effective for Schlumberger on

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January 1, 2019, with early adoption permitted.  Based on its current lease portfolio, Schlumberger estimates that the adoption of this ASU will result in approximately $1.3 billion of additional assets and liabilities being reflected on its Consolidated Balance Sheet.

2.   Charges and Credits

2018

There were no charges or credits recorded during the first quarter of 2018.

2017

In connection with Schlumberger’s acquisition of Cameron International Corporation (“Cameron”), Schlumberger recorded $82 million of charges during the first quarter of 2017 relating to employee benefits, facility closures and other merger and integration-related costs.  These charges are classified in Merger & integration in the Consolidated Statement of Income.

On December 22, 2017, the US enacted the Tax Cuts and Jobs Act (the “Act”).  The Act, which is also commonly referred to as “US tax reform”, significantly changes US corporate income tax laws by, among other things, reducing the US corporate income tax rate to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of US subsidiaries.  As a result, Schlumberger recorded a net charge of $76 million during the fourth quarter of 2017.  This amount consisted of two components: (i) a $410 million charge relating to the one-time mandatory tax on previously deferred earnings of certain non-US subsidiaries that are owned either wholly or partially by a US subsidiary of Schlumberger, and (ii) a $334 million credit resulting from the remeasurement of Schlumberger’s net deferred tax liabilities in the US based on the new lower corporate income tax rate.

Although the $76 million net charge represents a reasonable estimate of the impact of the income tax effects of the Act on Schlumberger’s Consolidated Financial Statements as of December 31, 2017, it should be considered provisional. Once Schlumberger finalizes certain tax positions when it files its 2017 US tax return, it will be able to conclude whether any further adjustments are required. Any adjustments to these provisional amounts will be reported as a component of Taxes on income in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2017

 

 

Schlumberger Net Income

 

 

Average

Shares

Outstanding

 

 

Earnings per Share

 

 

Schlumberger Net Income

 

 

Average

Shares

Outstanding

 

 

Earnings per Share

 

First Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

525

 

 

 

1,385

 

 

$

0.38

 

 

$

279

 

 

 

1,393

 

 

$

0.20

 

Assumed exercise of stock options

 

-

 

 

 

1

 

 

 

 

 

 

 

-

 

 

 

4

 

 

 

 

 

Unvested restricted stock

 

-

 

 

 

8

 

 

 

 

 

 

 

-

 

 

 

5

 

 

 

 

 

Diluted

$

525

 

 

 

1,394

 

 

$

0.38

 

 

$

279

 

 

 

1,402

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of outstanding options to purchase shares of Schlumberger common stock that 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)

 

 

 

 

 

 

 

 

2018

 

 

2017

 

First Quarter

 

39

 

 

 

23

 

9


 

4.   Inventories

A summary of inventories, which are stated at the lower of average cost or net realizable value, follows:  

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2018

 

 

2017

 

Raw materials & field materials

$

1,910

 

 

$

1,846

 

Work in progress

 

556

 

 

 

503

 

Finished goods

 

1,708

 

 

 

1,697

 

 

$

4,174

 

 

$

4,046

 

 

 

5.   Fixed Assets

A summary of fixed assets follows:

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

2018

 

 

2017

 

Property, plant & equipment

$

38,104

 

 

$

37,813

 

Less: Accumulated depreciation

 

26,548

 

 

 

26,237

 

 

$

11,556

 

 

$

11,576

 

 

Depreciation expense relating to fixed assets was $523 million and $613 million in first quarter of 2018 and 2017, respectively.

6.   Multiclient Seismic Data

The change in the carrying amount of multiclient seismic data for the three months ended March 31, 2018 was as follows:

 

(Stated in millions)

 

 

 

 

 

Balance at December 31, 2017

$

727

 

Capitalized in period

 

26

 

Charged to expense

 

(46

)

Balance at March 31, 2018

$

707

 

 

7.   Intangible Assets

The gross book value, accumulated amortization and net book value of intangible assets were as follows: