Cash Flow
Net Debt represents gross debt less cash, short-term investments and fixed income investments, held to maturity.
Management believes that Net Debt provides useful information regarding the level of Schlumberger’s indebtedness by
reflecting cash and investments that could be used to repay debt.
Details of Net Debt follow:
2010 2009 2008
(Stated in millions)
Net Debt, beginning of year
$ (126)
$(1,129) $(1,857)
Net income
4,266
3,142
5,460
Depreciation and amortization
(1)
2,759
2,476
2,269
Gain on M-I SWACO investment
(1,270)
–
–
Pension and other postretirement benefits expense
299
306
127
Pension and other postretirement benefits curtailment charge
–
136
–
Pension and other postretirement benefits funding
(868)
(1,149)
(318)
Excess of equity income over dividends received
(85)
(103)
(235)
Stock -based compensation expense
198
186
172
Other non-cash items
327
162
128
Decrease (increase) in working capital
268
(204)
(592)
Capital expenditures
(2,914)
(2,395) (3,723)
Multiclient seismic data capitalized
(326)
(230)
(345)
Dividends paid
(1,040)
(1,006)
(964)
Stock repurchase program
(1,717)
(500) (1,819)
Proceeds from employee stock plans
401
206
351
Net debt assumed in merger with Smith
(1,829)
–
–
Geoservices acquisition, net of debt acquired
(1,033)
–
–
Other business acquisitions and minority interest investments
(212)
(514)
(345)
Conversion of debentures
320
–
448
Translation effect on net debt
30
(59)
166
Other
(86)
549
(52)
Net Debt, end of year
$(2,638)
$ (126) $(1,129)
(1) Includes multiclient seismic data costs.
Components of Net Debt
Dec. 31
2010
Dec. 31
2009
Dec. 31
2008
(Stated in millions)
Cash
$ 1,764
$ 617 $ 609
Short-term investments
3,226
3,999
3,083
Fixed income investments, held to maturity
484
738
470
Short-term borrowings and current
portion of long-term debt
(2,595)
(804) (1,598)
Convertible debentures
–
(321)
(321)
Long-term debt
(5,517)
(4,355) (3,372)
$(2,638)
$ (126) $(1,129)
Key liquidity events during 2010, 2009 and 2008 included:
k
As a result of the Smith merger, Schlumberger assumed net debt of $1.8 billion. This amount consisted of
$2.2 billion of debt (including a $0.4 billion adjustment to increase Smith’s long-term fixed rate debt to its
estimated fair value) and $0.4 billion of cash.
k
During the second quarter of 2010, Schlumberger completed the acquisition of Geoservices for cash of
$0.9 billion. Schlumberger assumed net debt of $0.1 billion in connection with this transaction.
27
Part II, Item 7
