The pro forma data was prepared based on the historical financial information of Schlumberger, Smith and
Geoservices and has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the
transactions, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The pro
forma data is not necessarily indicative of what Schlumberger’s results of operations actually would have been had the
transactions been completed on January 1, 2009. Additionally, the pro forma data does not purport to project the future
results of operations of the combined company nor do they reflect the expected realization of synergies associated with
the transactions. The pro forma data reflects the application of the following adjustments:
k
Elimination of the gain resulting from Schlumberger’s remeasurement of its previously held 40% equity
interest in M-I SWACO, which is considered non-recurring.
k
Additional depreciation and amortization expense associated with fair value adjustments to acquired
identifiable intangible assets and property, plant and equipment.
k
Elimination of charges incurred in 2010 related to the fair value adjustments to Smith’s inventory that has
been sold as they will not have a long-term continuing impact.
k
Reductions in interest expense as a result of increasing the carrying value of acquired debt obligations to its
estimated fair value.
k
Elimination of transaction costs incurred in 2010 that are directly related to the transactions, and do not have
a continuing impact on the combined company’s operating results.
k
The issuance of 176 million of shares of Schlumberger common stock.
Included in the 2010 and 2009 pro forma net income attributable to Schlumberger and diluted earnings per share
presented above are the following significant charges and credits:
Net Income
Impact
Diluted
EPS
Impact *
Net Income
Impact
Diluted
EPS
Impact
2010
2009
(Stated in millions, except per share data)
Severance and other
(1)
$ 77 $ 0.06
$ 85
$0.06
Impairment relating to WesternGeco’s first generation Q-Land acquisition system
(1)
71
0.05
–
–
Other WesternGeco-related charges
(1)
63
0.05
–
–
Impact of elimination of tax deduction related to Medicare Part D subsidy
(1)
40
0.03
–
–
Mexico restructuring
(1)
36
0.03
–
–
Venezuelan currency-related losses
(2)
35
0.03
–
–
Repurchase of bonds
(1)
37
0.03
–
–
Gain on remeasurement of investment in @Balance
(2)
(18)
(0.01)
–
–
Postretirement benefits curtailment
(1)
–
–
122
0.09
Employee severance
(2)
–
–
32
0.02
$341 $ 0.25
$239
$0.17
* Does not add due to rounding
(1) Relates to Schlumberger’s historical operations and is more fully described in Note 3 –
Charges and Credits
.
(2) Relates to Smith’s historical operations.
5. Inventory
A summary of inventory follows:
As at December 31,
2010 2009
(Stated in millions)
Raw materials & field materials
$1,833
$1,646
Work in process
249
74
Finished goods
1,722
146
$3,804
$1,866
51
Part II, Item 8
