Schlumberger 2011 Annual Report - page 78

Schlumberger classifies interest and penalties relating to uncertain tax positions within
Taxes on income
in the
Consolidated Statement of Income
. During 2011, 2010 and 2009, Schlumberger recognized approximately $15 million,
$42 million and $32 million in interest and penalties, respectively.
The following table summarizes the tax years that are either currently under audit or remain open and subject to
examination by the tax authorities in the most significant jurisdictions in which Schlumberger operates:
2005 –2011
2004 –2011
2006 –2011
2003 – 2011
2008 – 2011
Saudi Arabia
2001 – 2011
United Kingdom
2009 – 2011
United States
2005 – 2011
In certain of the jurisdictions noted above, Schlumberger operates through more than one legal entity, each of which
has different open years subject to examination. The table above presents the open years subject to examination for
the most material of the legal entities in each jurisdiction. Additionally, it is important to note that tax years are
technically not closed until the statute of limitations in each jurisdiction expires. In the jurisdictions noted above, the
statute of limitations can extend beyond the open years subject to examination.
15. Leases and Lease Commitments
Total rental expense was $1.6 billion in 2011, $1.2 billion in 2010, and $1.0 billion in 2009. Future minimum rental
commitments under noncancelable operating leases for each of the next five years are as follows:
(Stated in millions)
$ 313
16. Contingencies
In 2007, Schlumberger received an inquiry from the United States Department of Justice (“DOJ”) related to the
DOJ’s investigation of whether certain freight forwarding and customs clearance services of Panalpina, Inc., and other
companies provided to oil and oilfield service companies, including Schlumberger, violated the Foreign Corrupt
Practices Act. Schlumberger is cooperating with the governmental authorities.
In 2009, Schlumberger learned that United States officials began a grand jury investigation and an associated
regulatory inquiry, both related to certain Schlumberger operations in specified countries that are subject to United
States trade and economic sanctions. Also in 2009, prior to being acquired by Schlumberger, Smith received an
administrative subpoena with respect to its historical business practices in certain countries that are subject to United
States trade and economic sanctions. Schlumberger is cooperating with the governmental authorities.
On April 20, 2010, a fire and explosion occurred onboard the semisubmersible drilling rig
Deepwater Horizon
, owned
by Transocean Ltd. and under contract to a subsidiary of BP plc. Pursuant to a contract between M-I SWACO and BP,
M-I SWACO provided certain services under the direction of BP. A number of legal actions, certain of which name an
M-I SWACO entity as a defendant, have been filed in connection with the
Deepwater Horizon
incident, and additional
legal actions may be filed in the future. Based on information currently known, the amount of any potential loss
attributable to M-I SWACO with respect to potential liabilities related to the incident would not be material to
Schlumberger’s consolidated financial statements.
Schlumberger and its subsidiaries are party to various other legal proceedings from time to time. A liability is
accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a
material loss is remote. However, litigation is inherently uncertain and it is not possible to predict the ultimate
disposition of these proceedings.
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