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SCHLUMBERGER LIMITED 10-Q 2016

Documents found in this filing:

  1. 10-Q
  2. Ex-10
  3. Ex-31
  4. Ex-31
  5. Ex-32
  6. Ex-32
  7. Ex-95
  8. Ex-95
slb-10q_20160630.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, 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 June 30, 2016

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,390,693,530

 

 

 


SCHLUMBERGER LIMITED

Second 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

20

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

28

 

 

 

 

Item 4.

 

Controls and Procedures

28

 

 

 

 

 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

29

 

 

 

 

Item 4.

 

Mine Safety Disclosures

29

 

 

 

 

Item 5.

 

Other Information

29

 

 

 

 

Item 6.

 

Exhibits

30

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

 

Six Months

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

$

4,955

 

 

$

8,080

 

 

$

10,718

 

 

$

17,322

 

Product sales

 

2,209

 

 

 

930

 

 

 

2,966

 

 

 

1,936

 

Total Revenue

 

7,164

 

 

 

9,010

 

 

 

13,684

 

 

 

19,258

 

Interest & other income

 

54

 

 

 

47

 

 

 

98

 

 

 

96

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

4,332

 

 

 

6,368

 

 

 

9,126

 

 

 

13,641

 

Cost of sales

 

1,983

 

 

 

768

 

 

 

2,648

 

 

 

1,591

 

Research & engineering

 

257

 

 

 

279

 

 

 

497

 

 

 

546

 

General & administrative

 

103

 

 

 

120

 

 

 

213

 

 

 

239

 

Impairments & other

 

2,573

 

 

 

-

 

 

 

2,573

 

 

 

439

 

Merger & integration

 

335

 

 

 

-

 

 

 

335

 

 

 

-

 

Interest

 

149

 

 

 

86

 

 

 

282

 

 

 

168

 

Income (loss) before taxes

 

(2,514

)

 

 

1,436

 

 

 

(1,892

)

 

 

2,730

 

Taxes on income (loss)

 

(368

)

 

 

302

 

 

 

(269

)

 

 

608

 

Net income (loss)

 

(2,146

)

 

 

1,134

 

 

 

(1,623

)

 

 

2,122

 

Net income attributable to noncontrolling interests

 

14

 

 

 

10

 

 

 

36

 

 

 

23

 

Net income (loss) attributable to Schlumberger

$

(2,160

)

 

$

1,124

 

 

$

(1,659

)

 

$

2,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share of Schlumberger

$

(1.56

)

 

$

0.89

 

 

$

(1.26

)

 

$

1.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share of Schlumberger

$

(1.56

)

 

$

0.88

 

 

$

(1.26

)

 

$

1.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1,389

 

 

 

1,269

 

 

 

1,321

 

 

 

1,273

 

Assuming dilution

 

1,389

 

 

 

1,280

 

 

 

1,321

 

 

 

1,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

See Notes to Consolidated Financial Statements

 

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

 

Six Months

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net income (loss)

$

(2,146

)

 

$

1,134

 

 

$

(1,623

)

 

$

2,122

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

(70

)

 

 

19

 

 

 

(51

)

 

 

(94

)

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) arising during the period

 

-

 

 

 

8

 

 

 

3

 

 

 

(10

)

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on cash flow hedges

 

17

 

 

 

42

 

 

 

(68

)

 

 

(110

)

Reclassification to net income (loss) of net realized loss

 

(14

)

 

 

22

 

 

 

80

 

 

 

140

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income (loss) of net actuarial loss

 

34

 

 

 

69

 

 

 

79

 

 

 

143

 

Prior service cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

26

 

 

 

24

 

 

 

51

 

 

 

51

 

Income taxes on pension and other postretirement benefit plans

 

(7

)

 

 

(7

)

 

 

(14

)

 

 

(22

)

Comprehensive income (loss)

 

(2,160

)

 

 

1,311

 

 

 

(1,543

)

 

 

2,220

 

Comprehensive income attributable to noncontrolling interests

 

14

 

 

 

10

 

 

 

36

 

 

 

23

 

Comprehensive income (loss) attributable to Schlumberger

$

(2,174

)

 

$

1,301

 

 

$

(1,579

)

 

$

2,197

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Jun. 30,

 

 

 

 

 

 

2016

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

2,947

 

 

$

2,793

 

Short-term investments

 

8,245

 

 

 

10,241

 

Receivables less allowance for doubtful accounts (2016 - $381; 2015 - $333)

 

9,374

 

 

 

8,780

 

Inventories

 

5,001

 

 

 

3,756

 

Deferred taxes

 

391

 

 

 

208

 

Other current assets

 

1,237

 

 

 

1,134

 

 

 

27,195

 

 

 

26,912

 

Fixed Income Investments, held to maturity

 

386

 

 

 

418

 

Investments in Affiliated Companies

 

1,276

 

 

 

3,311

 

Fixed Assets less accumulated depreciation

 

13,226

 

 

 

13,415

 

Multiclient Seismic Data

 

976

 

 

 

1,026

 

Goodwill

 

24,603

 

 

 

15,605

 

Intangible Assets

 

9,921

 

 

 

4,569

 

Other Assets

 

3,588

 

 

 

2,749

 

 

$

81,171

 

 

$

68,005

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

9,494

 

 

$

7,727

 

Estimated liability for taxes on income

 

1,043

 

 

 

1,203

 

Long-term debt - current portion

 

2,385

 

 

 

3,011

 

Short-term borrowings

 

986

 

 

 

1,546

 

Dividends payable

 

701

 

 

 

634

 

 

 

14,609

 

 

 

14,121

 

Long-term Debt

 

18,252

 

 

 

14,442

 

Postretirement Benefits

 

1,341

 

 

 

1,434

 

Deferred Taxes

 

2,631

 

 

 

1,075

 

Other Liabilities

 

1,359

 

 

 

1,028

 

 

 

38,192

 

 

 

32,100

 

Equity

 

 

 

 

 

 

 

Common stock

 

12,835

 

 

 

12,693

 

Treasury stock

 

(3,636

)

 

 

(13,372

)

Retained earnings

 

37,889

 

 

 

40,870

 

Accumulated other comprehensive loss

 

(4,478

)

 

 

(4,558

)

Schlumberger stockholders' equity

 

42,610

 

 

 

35,633

 

Noncontrolling interests

 

369

 

 

 

272

 

 

 

42,979

 

 

 

35,905

 

 

$

81,171

 

 

$

68,005

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Six Months Ended Jun. 30,

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

(1,623

)

 

$

2,122

 

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

 

 

 

 

 

 

 

Impairments and other charges

 

2,908

 

 

 

439

 

Depreciation and amortization (1)

 

2,080

 

 

 

2,089

 

Stock-based compensation expense

 

145

 

 

 

167

 

Pension and other postretirement benefits expense

 

92

 

 

 

217

 

Pension and other postretirement benefits funding

 

(83

)

 

 

(214

)

Earnings of equity method investments, less dividends received

 

(30

)

 

 

(65

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

Decrease in receivables

 

1,057

 

 

 

1,682

 

Decrease in inventories

 

334

 

 

 

39

 

Decrease (increase) in other current assets

 

92

 

 

 

(13

)

(Increase) decrease in other assets

 

(247

)

 

 

3

 

Decrease in accounts payable and accrued liabilities

 

(1,491

)

 

 

(2,126

)

Decrease in estimated liability for taxes on income

 

(242

)

 

 

(419

)

Increase (decrease) in other liabilities

 

11

 

 

 

(86

)

Other

 

(161

)

 

 

249

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

2,842

 

 

 

4,084

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(998

)

 

 

(1,193

)

SPM investments

 

(729

)

 

 

(222

)

Multiclient seismic data costs capitalized

 

(333

)

 

 

(221

)

Business acquisitions and investments, net of cash acquired

 

(2,220

)

 

 

(171

)

Sale of investments, net

 

3,476

 

 

 

610

 

Other

 

26

 

 

 

(119

)

NET CASH USED IN INVESTING ACTIVITIES

 

(778

)

 

 

(1,316

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(1,255

)

 

 

(1,151

)

Proceeds from employee stock purchase plan

 

116

 

 

 

144

 

Proceeds from exercise of stock options

 

79

 

 

 

112

 

Stock repurchase program

 

(506

)

 

 

(1,239

)

Proceeds from issuance of long-term debt

 

3,560

 

 

 

1,779

 

Repayment of long-term debt

 

(3,401

)

 

 

(2,340

)

Net (decrease) increase in short-term borrowings

 

(564

)

 

 

586

 

Other

 

48

 

 

 

(2

)

NET CASH USED IN FINANCING ACTIVITIES

 

(1,923

)

 

 

(2,111

)

CASH FLOWS USED IN DISCONTINUED OPERATIONS - OPERATING ACTIVITIES

 

-

 

 

 

(233

)

Net increase in cash before translation effect

 

141

 

 

 

424

 

Translation effect on cash

 

13

 

 

 

(13

)

Cash, beginning of period

 

2,793

 

 

 

3,130

 

Cash, end of period

$

2,947

 

 

$

3,541

 

 

(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 – 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