k
Schlumberger wrote off certain assets, primarily accounts receivable relating to one client with liquidity
issues. Accordingly, Schlumberger recorded a pretax charge of $42 million ($28 million after-tax and
noncontrolling interest).
The following is a summary of these charges:
Pretax Tax
Non-
controlling
Interests Net Income Statement Classification
(Stated in millions)
Workforce reductions
$ 74 $ 9
$– $65
Restructuring & other
Provision for doubtful accounts
32
8
6 18
Restructuring & other
Other
10
–
– 10
Restructuring & other
$116 $17
$6 $93
4. Acquisitions
Merger with Smith International, Inc.
On August 27, 2010, Schlumberger acquired all of the outstanding shares of Smith, a leading supplier of premium
products and services to the oil and gas exploration and production industry. The merger brings together the
complementary drilling and measurements technologies and expertise of Schlumberger and Smith in order to facilitate
the engineering of complete drilling systems which optimize all of the components of the drill string. Such systems will
enable Schlumberger’s customers to achieve improved drilling efficiency, better well placement and increased wellbore
assurance as they face increasingly more challenging environments. In addition, Schlumberger’s geographic footprint
will facilitate the extension of joint offerings on a worldwide basis.
Under the terms of the merger agreement, Smith became a wholly-owned subsidiary of Schlumberger. Each share of
Smith common stock issued and outstanding immediately prior to the effective time of the merger was converted into
the right to receive 0.6966 shares of Schlumberger common stock, with cash paid in lieu of fractional shares.
At the effective time of the merger, each outstanding option to purchase Smith common stock was converted pursuant
to the merger agreement into a stock option to acquire shares of Schlumberger common stock on the same terms and
conditions as were in effect immediately prior to the completion of the merger. The number of shares of Schlumberger
common stock underlying each converted Smith stock option was determined by multiplying the number of Smith stock
options by the 0.6966 exchange ratio, and rounding down to the nearest whole share. The exercise price per share of
each converted Smith stock option was determined by dividing the per share exercise price of such stock option by the
0.6966 exchange ratio, and rounded up to the nearest whole cent. Smith stock options, whether or not then vested and
exercisable, became fully vested and exercisable and assumed by Schlumberger at the effective date of the merger in
accordance with preexisting change-in-control provisions. Smith stock options were converted into 0.6 million of
Schlumberger stock options.
At the effective time of the merger, Smith restricted stock units, whether or not then vested, became fully vested
(except for grants between the date of the merger agreement and closing, which were not significant and did not
automatically vest) and were converted into shares of Schlumberger common stock in connection with the merger,
determined by multiplying the number of shares of Smith common stock subject to each award by the 0.6966 exchange
ratio, rounded to the nearest whole share (assuming, in the case of performance-based Smith restricted stock unit
awards, the deemed attainment of the performance goals under the award at the target level).
Calculation of Consideration Transferred
The following details the fair value of the consideration transferred to effect the merger with Smith.
48
Part II, Item 8
