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Print friendly pdf of Form 10-K Part II |
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Item 8 Notes to Consolidated Financial Statements
21. Income Tax Expense
Schlumberger and its subsidiaries operate in more than 100 taxing jurisdictions where statutory tax rates generally vary from 0% to 50%.
In 2003, the pretax loss in the US included the WesternGeco multiclient impairment charge of $283 million and a net pretax charge of $32 million related to Hanover Compressor. In 2002, pretax book income in the US included gains from a business divestiture aggregating approximately $143 million. Pretax book income from continuing operations subject to US and non-US income taxes for each of the three years ended December 31, was as follows:
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2003 |
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2002 |
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2001 |
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| United States |
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$ |
(177 |
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$ |
149 |
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$ |
714 |
| Outside United States |
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745 |
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(2,376 |
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373 |
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| Pretax income |
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$ |
568 |
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$ |
(2,227 |
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$ |
1,087 |
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Schlumberger had net deferred tax assets at December 31, 2003 of $632 million including a valuation allowance of $325 million relating to a certain European net operating loss, and $583 million at December 31, 2002. Significant components of net deferred tax assets at December 31, 2003 included postretirement and other long-term benefits ($213 million), current employee benefits ($183 million), fixed assets, inventory and other ($194 million) and net operating losses ($367 million less a partial valuation allowance of $325 million). At December 31, 2002, it included postretirement and other long-term benefits ($200 million), current employee benefits ($225 million), fixed assets, inventory and other ($123 million) and net operating losses ($182 million less a valuation allowance of $147 million).
The components of consolidated income tax expense from continuing operations were as follows:
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2003 |
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2002 |
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2001 |
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| Current: |
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| United States - Federal |
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$ |
96 |
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$ |
25 |
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$ |
342 |
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| United States - State |
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19 |
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1 |
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43 |
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| Outside United States |
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191 |
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182 |
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179 |
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$ |
306 |
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$ |
208 |
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$ |
564 |
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| Deferred: |
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| United States - Federal |
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$ |
(128 |
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$ |
28 |
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$ |
5 |
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| United States - State |
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(22 |
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2 |
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3 |
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| Outside United States |
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(24 |
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(103 |
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(8 |
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| Valuation allowance |
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77 |
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147 |
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— |
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$ |
(97 |
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$ |
74 |
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$ |
— |
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| Consolidated taxes on income |
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$ |
209 |
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$ |
282 |
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$ |
564 |
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Schlumberger reported several charges/credits in continuing operations in each of the three years. These are more fully described in the note Charges - Continuing Operations Part II, Item 8, Note 4 of this Report. A reconciliation of the US statutory federal tax rate (35%) to the consolidated effective tax rate is:
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2003 |
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2002 |
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2001 |
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| US federal statutory (benefit) rate |
35 |
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(35 |
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35 |
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| US state income taxes |
— |
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— |
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2 |
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| Non US income taxed at different rates |
(16 |
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(6 |
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(5 |
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| Valuation allowance |
6 |
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7 |
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— |
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| Charges and credits |
12 |
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47 |
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20 |
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| Effective income tax rate |
37 |
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13 |
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52 |
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Schlumberger's effective tax rate, excluding charges and credits, was 25%, 26% and 33% in 2003, 2002 and 2001 respectively. |
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Go to Part II, Item 8, Notes: 22. Leases and Lease Commitments |
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