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Acquisition of Cameron (Tables)
9 Months Ended
Sep. 30, 2016
Business Combinations [Abstract]  
Schedule of Fair Value of Consideration Transferred to Effect Acquisition

The following details the fair value of the consideration transferred to effect the acquisition of Cameron:

 

(stated in millions, except exchange ratio and per share amounts)

 

 

 

 

 

 

 

 

 

Equity consideration:

 

 

 

 

 

 

 

Number of shares of Cameron stock outstanding

 

192

 

 

 

 

Exchange ratio

 

0.716

 

 

 

 

Schlumberger shares of common stock issued

 

 

138

 

 

 

 

Schlumberger closing stock share price on April 1, 2016

 

$

72.12

 

 

 

 

Equity consideration

 

 

 

 

$

9,924

 

Cash consideration:

 

 

 

 

 

 

 

Number of shares of Cameron stock outstanding

 

192

 

 

 

 

Cash consideration per Cameron share

 

$

14.44

 

 

 

 

Cash consideration

 

 

 

 

 

2,776

 

Other:

 

 

 

 

 

 

 

Fair value of replacement equity awards

 

 

 

 

103

 

Total fair value of the consideration transferred

 

 

 

 

$

12,803

 

 

Schedule of Preliminary Estimates of Fair Values of Identifiable Assets Acquired and Liabilities Assumed

The following amounts represents the preliminary estimates of the fair value of assets acquired and liabilities assumed in the merger.  The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained.  These amounts, which may differ materially from these preliminary estimates, will be finalized as soon as practicable, but no later than one year from the acquisition date.

(Stated in millions)

 

 

 

 

 

Cash

$

785

 

Short-term investments

 

1,448

 

Accounts receivable

 

1,691

 

Inventories (1)

 

2,422

 

Fixed assets

 

1,342

 

Intangible assets:

 

 

 

Customer relationships (weighted-average life of 25 years)

 

2,371

 

Technology/Technical know-how (weighted-average life of 16 years)

 

1,736

 

Tradenames (weighted-average life of 25 years)

 

1,225

 

Other assets

 

633

 

Accounts payable and accrued liabilities

 

(2,594

)

Long-term debt (2)

 

(3,018

)

Deferred taxes (3)

 

(1,691

)

Other liabilities

 

(621

)

Sub-total

$

5,729

 

Less:

 

 

 

Investment in OneSubsea (4)

 

(2,065

)

Noncontrolling interests

 

(57

)

Total identifiable net assets

$

3,607

 

Goodwill (5)

 

9,196

 

Total consideration transferred

$

12,803

 

 

(1) Schlumberger recorded an adjustment of $299 million to write-up the acquired inventory to its estimated fair value.  Schlumberger’s cost of sales reflected this increased valuation as this inventory was sold.  

(2) In connection with the merger, Schlumberger assumed all of the debt obligations of Cameron, including their $2.75 billion of fixed rate notes.  Schlumberger recorded a $244 million adjustment to increase the carrying amount of these notes to their estimated fair value.  This adjustment is being amortized as a reduction of interest expense over the remaining term of the respective obligations.

(3) In connection with the acquisition accounting, Schlumberger provided deferred taxes related to, among other items, the estimated fair value adjustments for acquired inventory, intangible assets and assumed debt obligations.

(4) Prior to the completion of the merger, Cameron and Schlumberger operated OneSubsea, a joint venture that manufactured and developed products, systems and services for the subsea oil and gas market, which was 40% owned by Schlumberger and 60% owned by Cameron.  OneSubsea is now owned 100% by Schlumberger.  As a result of obtaining control of this joint venture, Schlumberger was required to remeasure its previously held equity interest in the joint venture to its acquisition-date fair value. Schlumberger determined that the estimated fair value of its previously held equity interest approximated its carrying value.  Accordingly, Schlumberger did not recognize any gain or loss on this transaction.

(5) The goodwill recognized is primarily attributable to expected synergies that will result from combining the operations of Schlumberger and Cameron, as well as intangible assets which do not qualify for separate recognition.  The amount of goodwill that is deductible for income tax purposes is not significant.  

Schedule of Supplemental Pro Forma Financial Information from Results of Operations

The supplemental pro forma financial information presented below does not include any anticipated cost savings or the expected realization of other synergies associated with this transaction.  Accordingly, this supplemental pro forma financial information is presented for informational purposes only and is not necessarily indicative of what the actual results of operations of the combined company would have been had the acquisition occurred on January 1, 2015, nor is it indicative of future results of operations.

 

 

 

 

 

 

(Stated in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

Nine Months

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenue

$

7,019

 

 

$

10,694

 

 

$

22,331

 

 

$

34,473

 

Net income (loss) attributable to Schlumberger

$

353

 

 

$

1,103

 

 

$

(1,028

)

 

$

2,987

 

Diluted earnings (loss) per share

$

0.25

 

 

$

0.78

 

 

$

(0.74

)

 

$

2.10