slb-10q_20190630.htm
false Q2 SLB SCHLUMBERGER LIMITED/NV 0000087347 Yes --12-31 Large Accelerated Filer false false false TX Yes true false P8

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, 2019

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:   (713513-2000

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

common stock, par value $0.01 per share

SLB

New York Stock Exchange

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 every Interactive Data File required to be submitted 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 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

 

  

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, 2019

COMMON STOCK, $0.01 PAR VALUE PER SHARE

1,383,005,073

 

 

 

 


SCHLUMBERGER LIMITED

Second Quarter 2019 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

18

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

24

 

 

 

 

Item 4.

 

Controls and Procedures

25

 

 

 

 

 PART II

 

Other Information

 

 

 

 

 

Item 1.

 

Legal Proceedings

25

 

 

 

 

Item 1A.

 

Risk Factors

25

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

25

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

26

 

 

 

 

Item 4.

 

Mine Safety Disclosures

26

 

 

 

 

Item 5.

 

Other Information

26

 

 

 

 

Item 6.

 

Exhibits

27

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

$

6,153

 

 

$

6,141

 

 

$

12,059

 

 

$

11,876

 

Product sales

 

2,116

 

 

 

2,162

 

 

 

4,090

 

 

 

4,255

 

Total Revenue

 

8,269

 

 

 

8,303

 

 

 

16,149

 

 

 

16,131

 

Interest & other income

 

25

 

 

 

40

 

 

 

39

 

 

 

82

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

5,308

 

 

 

5,196

 

 

 

10,422

 

 

 

10,076

 

Cost of sales

 

1,944

 

 

 

1,983

 

 

 

3,787

 

 

 

3,904

 

Research & engineering

 

179

 

 

 

175

 

 

 

351

 

 

 

347

 

General & administrative

 

114

 

 

 

114

 

 

 

225

 

 

 

225

 

Impairments & other

 

-

 

 

 

184

 

 

 

-

 

 

 

184

 

Interest

 

156

 

 

 

144

 

 

 

302

 

 

 

287

 

Income before taxes

 

593

 

 

 

547

 

 

 

1,101

 

 

 

1,190

 

Tax expense

 

99

 

 

 

106

 

 

 

178

 

 

 

219

 

Net income

 

494

 

 

 

441

 

 

 

923

 

 

 

971

 

Net income attributable to noncontrolling interests

 

2

 

 

 

11

 

 

 

10

 

 

 

16

 

Net income attributable to Schlumberger

$

492

 

 

$

430

 

 

$

913

 

 

$

955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of Schlumberger

$

0.36

 

 

$

0.31

 

 

$

0.66

 

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share of Schlumberger

$

0.35

 

 

$

0.31

 

 

$

0.65

 

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1,384

 

 

 

1,384

 

 

 

1,385

 

 

 

1,385

 

Assuming dilution

 

1,395

 

 

 

1,392

 

 

 

1,396

 

 

 

1,393

 

    

See Notes to Consolidated Financial Statements

 

 

3


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

 

Six Months

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

$

494

 

 

$

441

 

 

$

923

 

 

$

971

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net change arising during the period

 

(37

)

 

 

(121

)

 

 

39

 

 

 

(81

)

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss arising during the period

 

-

 

 

 

(40

)

 

 

-

 

 

 

(21

)

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on cash flow hedges

 

1

 

 

 

(15

)

 

 

(4

)

 

 

(10

)

Reclassification to net income of net realized (gain) loss

 

1

 

 

 

(1

)

 

 

4

 

 

 

(5

)

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization to net income of net actuarial loss

 

23

 

 

 

37

 

 

 

47

 

 

 

94

 

Amortization to net income of net prior service credit

 

(3

)

 

 

(1

)

 

 

(6

)

 

 

(3

)

Income taxes on pension and other postretirement benefit plans

 

(2

)

 

 

(5

)

 

 

(2

)

 

 

(5

)

Comprehensive income

 

477

 

 

 

295

 

 

 

1,001

 

 

 

940

 

Comprehensive income attributable to noncontrolling interests

 

2

 

 

 

11

 

 

 

10

 

 

 

16

 

Comprehensive income attributable to Schlumberger

$

475

 

 

$

284

 

 

$

991

 

 

$

924

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


SCHLUMBERGER LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

Jun. 30,

 

 

 

 

 

 

2019

 

 

Dec. 31,

 

 

(Unaudited)

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

$

1,466

 

 

$

1,433

 

Short-term investments

 

882

 

 

 

1,344

 

Receivables less allowance for doubtful accounts (2019 - $238; 2018 - $249)

 

8,471

 

 

 

7,881

 

Inventories

 

4,389

 

 

 

4,010

 

Other current assets

 

1,125

 

 

 

1,063

 

 

 

16,333

 

 

 

15,731

 

Investments in Affiliated Companies

 

1,558

 

 

 

1,538

 

Fixed Assets less accumulated depreciation

 

11,359

 

 

 

11,679

 

Multiclient Seismic Data

 

577

 

 

 

601

 

Goodwill

 

24,950

 

 

 

24,931

 

Intangible Assets

 

8,485

 

 

 

8,727

 

Other Assets

 

7,329

 

 

 

7,300

 

 

$

70,591

 

 

$

70,507

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

9,851

 

 

$

10,223

 

Estimated liability for taxes on income

 

1,123

 

 

 

1,155

 

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

 

98

 

 

 

1,407

 

Dividends payable

 

701

 

 

 

701

 

 

 

11,773

 

 

 

13,486

 

Long-term Debt

 

16,978

 

 

 

14,644

 

Postretirement Benefits

 

1,119

 

 

 

1,153

 

Deferred Taxes

 

1,330

 

 

 

1,441

 

Other Liabilities

 

3,118

 

 

 

3,197

 

 

 

34,318

 

 

 

33,921

 

Equity

 

 

 

 

 

 

 

Common stock

 

13,037

 

 

 

13,132

 

Treasury stock

 

(3,827

)

 

 

(4,006

)

Retained earnings

 

31,186

 

 

 

31,658

 

Accumulated other comprehensive loss

 

(4,544

)

 

 

(4,622

)

Schlumberger stockholders' equity

 

35,852

 

 

 

36,162

 

Noncontrolling interests

 

421

 

 

 

424

 

 

 

36,273

 

 

 

36,586

 

 

$

70,591

 

 

$

70,507

 

 

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,

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

923

 

 

$

971

 

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

 

 

 

 

 

 

 

Impairments and other charges

 

-

 

 

 

184

 

Depreciation and amortization (1)

 

1,841

 

 

 

1,750

 

Stock-based compensation expense

 

194

 

 

 

176

 

Earnings of equity method investments, less dividends received

 

-

 

 

 

(26

)

Change in assets and liabilities: (2)

 

 

 

 

 

 

 

Increase in receivables

 

(581

)

 

 

(284

)

Increase in inventories

 

(332

)

 

 

(71

)

Increase in other current assets

 

(57

)

 

 

66

 

Increase in other assets

 

(16

)

 

 

(120

)

Decrease in accounts payable and accrued liabilities

 

(422

)

 

 

(1,015

)

Decrease in estimated liability for taxes on income

 

(68

)

 

 

(34

)

Decrease in other liabilities

 

(39

)

 

 

(10

)

Other

 

(9

)

 

 

(32

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

1,434

 

 

 

1,555

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(817

)

 

 

(974

)

SPM investments

 

(332

)

 

 

(434

)

Multiclient seismic data costs capitalized

 

(109

)

 

 

(47

)

Business acquisitions and investments, net of cash acquired

 

(17

)

 

 

(47

)

Sale of investments, net

 

464

 

 

 

1,692

 

Other

 

(63

)

 

 

(20

)

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

 

(874

)

 

 

170

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid

 

(1,385

)

 

 

(1,385

)

Proceeds from employee stock purchase plan

 

85

 

 

 

107

 

Proceeds from exercise of stock options

 

21

 

 

 

26

 

Stock repurchase program

 

(199

)

 

 

(200

)

Proceeds from issuance of long-term debt

 

2,350

 

 

 

14

 

Repayment of long-term debt

 

(1,413

)

 

 

(467

)

Net decrease in short-term borrowings

 

(22

)

 

 

(106

)

Other

 

32

 

 

 

(40

)

NET CASH USED IN FINANCING ACTIVITIES

 

(531

)

 

 

(2,051

)

Net increase (decrease) in cash before translation effect

 

29

 

 

 

(326

)

Translation effect on cash

 

4

 

 

 

(12

)

Cash, beginning of period

 

1,433

 

 

 

1,799

 

Cash, end of period

$

1,466

 

 

$

1,461

 

 

 

(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 STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2019 – June 30, 2019

 

Issued

 

 

In Treasury

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total

 

Balance, January 1, 2019

 

$

13,132

 

 

$

(4,006

)

 

$

31,658

 

 

$

(4,622

)

 

$

424

 

 

$

36,586

 

Net income

 

 

 

 

 

 

 

 

 

 

913

 

 

 

 

 

 

 

10

 

 

 

923

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

 

39

 

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

 

39

 

Shares sold to optionees, less shares exchanged

 

 

(26

)

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

Vesting of restricted stock

 

 

(126

)

 

 

126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

 

(115

)

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85

 

Stock repurchase program

 

 

 

 

 

 

(199

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(199

)

Stock-based compensation expense

 

 

194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

194

 

Dividends declared ($1.00 per share)

 

 

 

 

 

 

 

 

 

 

(1,385

)

 

 

 

 

 

 

 

 

 

 

(1,385

)

Other

 

 

(22

)

 

 

5

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

(30

)

Balance, June 30, 2019

 

$

13,037

 

 

$

(3,827

)

 

$

31,186

 

 

$

(4,544

)

 

$

421

 

 

$

36,273

 

 

 

 

(Stated in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Retained

 

 

Comprehensive

 

 

Noncontrolling

 

 

 

 

 

January 1, 2018 – June 30, 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

 

 

 

 

 

 

 

 

 

 

955

 

 

 

 

 

 

 

16

 

 

 

971

 

Currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(81

)

 

 

(1

)

 

 

(82

)

Changes in unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

 

(21

)

Changes in fair value of cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

(15

)

Pension and other postretirement benefit plans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

 

86

 

Shares sold to optionees, less shares exchanged

 

 

(27

)

 

 

53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

Vesting of restricted stock

 

 

(52

)

 

 

52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued under employee stock purchase plan

 

 

(33

)

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

107

 

Stock repurchase program

 

 

 

 

 

 

(200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(200

)

Stock-based compensation expense

 

 

176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

176

 

Dividends declared ($1.00 per share)

 

 

 

 

 

 

 

 

 

 

(1,385

)

 

 

 

 

 

 

 

 

 

 

(1,385

)

Other

 

 

(9

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

(27

)

Balance, June 30, 2018

 

$

13,030

 

 

$

(4,001

)

 

$

31,760

 

 

$

(4,305

)

 

$

413

 

 

$

36,897

 

 


7


CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

(Stated in millions)