Š
Following the successful introduction of UniQ, a new generation single-sensor land acquisition system,
Schlumberger recorded a $78 million pretax charge ($71 million after-tax) related to the impairment of
WesternGeco’s first generation Q-Land system assets.
Š
A pretax and after-tax charge of $63 million primarily relating to the early termination of a vessel lease
associated with WesternGeco’s electromagnetic service offering as well as related assets, including a
$30 million impairment related to an equity-method investment.
Š
In connection with the acquisition of Smith, Schlumberger recorded the following pretax charges: $56 million
($55 million after-tax) of merger-related transaction costs including advisory and legal fees, $38 million
($32 million after-tax) relating to employee benefits for change in control payments and retention bonuses
and $38 million ($24 million after-tax) relating to the amortization of purchase accounting adjustments
associated with the write-up of acquired inventory to its estimated fair value.
Š
$40 million pretax charge ($36 million after-tax) for the early termination of rig contracts and workforce
reductions in Mexico due to the slowdown of project activity.
Š
Schlumberger repurchased $352 million of its 6.50% Notes due 2012 and, as a result, incurred a pretax charge
of $28 million ($18 million after-tax).
Š
Schlumberger recorded a pretax gain of $1.27 billion ($1.24 billion after-tax) as a result of remeasuring its
previously held 40% equity interest in the M-I SWACO joint venture. Refer to Note 4 –
Acquisitions
for further
details.
First quarter of 2010:
Š
Schlumberger incurred $35 million of pretax and after-tax merger-related costs in connection with the Smith
and Geoservices acquisitions. These costs primarily consisted of advisory and legal fees.
Š
During March 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law in the
United States. Among other things, the PPACA eliminated the tax deductibility of retiree prescription drug
benefits to the extent of the Medicare Part D subsidy that companies, such as Schlumberger, receive. As a
result of this change in law, Schlumberger recorded a $40 million charge to adjust its deferred tax assets to
reflect the loss of this future tax deduction.
The following is a summary of 2010 charges and credits:
(Stated in millions)
Pretax Tax
Net
Consolidated Statement
of Income Classification
Restructuring and Merger-related Charges:
Severance and other
$ 90 $ 13 $ 77
Restructuring & other
Impairment relating to WesternGeco’s first generation Q-Land acquisition
system
78
7
71
Restructuring & other
Other WesternGeco-related charges
63
–
63
Restructuring & other
Professional fees and other
107
1
106
Merger & integration
Merger-related employee benefits
54
10
44
Merger & integration
Inventory fair value adjustments
153
56
97
Cost of revenue
Mexico restructuring
40
4
36
Restructuring & other
Repurchase of bonds
60
23
37
Restructuring & other
Total restructuring and merger-related charges
645 114
531
Gain on investment in M-I SWACO
(1,270) (32) (1,238)
Gain on Investment in M-I SWACO
Impact of elimination of tax deduction related to Medicare Part D subsidy
– (40)
40
Taxes on income
$ (625) $ 42 $ (667)
4. Acquisitions
Acquisition of 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 transaction brought 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.
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