Schlumberger Ld.
Schlumberger Announces Fourth Quarter and Full Year 2003 Results
Schlumberger Limited (NYSE:SLB) reported today 2003 operating revenue of $13.9
billion versus $13.1 billion in 2002.
Income from continuing operations, before credits and charges, of $913 million
was 32% higher than last year with diluted earnings per share of $1.56 versus
$1.20 in 2002. Income from continuing operations, including credits and charges,
was $473 million representing diluted earnings per share of $0.82. Net income
was $383 million or $0.67 per share.
Fourth Quarter Results
Fourth quarter operating revenue of $3.67 billion was 10% above fourth quarter
2002 and 6% above the prior quarter. Net income from continuing operations
before credits and charges was $295 million, 95% above 2002 and 23% above the
prior quarter. Diluted earnings per share from continuing operations, excluding
credits and charges, of $0.50 increased 92% versus the same period last year and
22% sequentially. Including a net charge of $61 million ($0.10 per share) for
the write-down of an investment partially offset by the gain on the sale of a
note, the earnings per share from continuing operations was $0.40.
Discontinued operations recorded a loss of $57 million ($0.10 per share) in the
quarter. Net income was $177 million ($0.30 per share).
Oilfield Services revenue of $2.31 billion increased 12% versus the same period
last year and 3% sequentially. Pretax operating income of $420 million grew 48%
year-on-year and 5% sequentially.
WesternGeco revenue of $308 million was 17% higher sequentially, but 7% lower
compared to the same period last year. Pretax operating income of $32 million
improved $69 million sequentially, and $26 million year-on-year.
SchlumbergerSema revenue improved 12% to $721 million sequentially and 16%
year-on-year. Pretax operating income of $31 million increased 86% sequentially
and 26% year-on-year.
Within Other activities, Cards revenue of $206 million increased 6% versus the
same period last year and 2% sequentially, while pretax operating income of $27
million grew 36% year-on-year and 21% sequentially.
The following credits and charges were taken in the quarter:
-- In August 2001, Schlumberger sold its Oilfield Services worldwide gas
compression activity to Hanover Compressor Company (NYSE:HC). The
proceeds included 8.7 million shares of Hanover Compressor with a value
at closing of $173 million which are restricted from marketability until
Aug. 30, 2004, and a $150 million long-term subordinated note maturing
Dec. 15, 2005. During the fourth quarter of 2003, Schlumberger sold the
note for $177 million realizing an after-tax gain of $20 million. As of
Dec. 31, 2003 the carrying value of Schlumberger's investment in Hanover
Compressor common stock exceeded the market value. As required by
generally accepted accounting principles and SEC regulations,
Schlumberger wrote down its investment to fair market value at Dec. 31,
2003. The write-down was $81 million after tax.
-- Discontinued operations in the quarter consisted of the parking and mass
transit terminals (e-City) activities sold to Apax Partners in October
2003 for $84 million in cash. e-City had nine-month 2003 revenue of $88
million and a pretax operating loss of $2.3 million. As a consequence of
this sale, Schlumberger recorded a loss from discontinued operations of
$57.4 million, including a $65 million allocation of goodwill.
Schlumberger Chairman and CEO, Andrew Gould, commented, "The fourth quarter
activity continued the trend set earlier in the year, posting sequential gains
that contributed to an encouraging year-on-year performance. In particular,
Oilfield Services activity was strong in North America, India,
Peru/Colombia/Ecuador, Indonesia, and Mexico driven by new contracts, new
technologies, and demand for project management and information solutions
services.
Further divestitures of non-core assets were made during the quarter. These,
together with strong cash flow from operations, lowered net debt by $691 million
to $4.18 billion at the quarter end in spite of unfavorable currency effects
that increased European debt by $154 million.
The recent acceleration of the global economic recovery has led to several
successive upward revisions of oil demand for 2004, particularly in China.
Current supplies are likely to be adequate, as existing new projects come on
line. However, there is no doubt that any sustained economic recovery and the
consequent increase in demand coupled with the acceleration of the underlying
rate of decline of the world's aging production base will require higher E&P
investment going forward. Current signs are that the customer base is beginning
to respond to this need."
Notes:
-- Following the Atos Origin shareholder meeting held on Jan. 22, 2004, the
closing of the sale of certain SchlumbergerSema businesses is expected
at the end of January. The transaction proceeds will consist of EUR400
million in cash and a fixed number of 19.3 million of Atos Origin common
shares that will represent approximately 29% of the common shares
outstanding of Atos Origin. As previously announced and subsequent to
closing, Schlumberger expects to reduce its ownership in Atos Origin to
19%.
Schlumberger is retaining the strategic activities of IT
services for the oil & gas industry and the operations that
provide connectivity with the upstream oil and gas business.
These activities are reported under Oilfield Services, the
figures of which are restated for the quarter, the full year,
and prior periods.
-- Additionally, Schlumberger will retain a number of specific
SchlumbergerSema businesses, which are in the process of divestiture.
These include Business Continuity, Infodata, and all software products
related to SchlumbergerSema telecommunications activity. These
activities are reported under "Other," the figures of which are also
restated.
Consolidated Statement of Income
(Stated in thousands except per share amounts)
Fourth Quarter Twelve Months
For Periods Ended --------------------------------------------------
December 31 2003 2002 2003(6) 2002
----------------------------------------------------------------------
Revenue
Operating $3,670,774 $3,350,412 $13,892,604 $13,117,562
Interest and
other income(1) 68,168 26,138 166,493 139,068
----------------------------------------------------------------------
3,738,942 3,376,550 14,059,097 13,256,630
----------------------------------------------------------------------
Expenses
Cost of goods
sold and
services
(2)(4)(5) 2,911,633 5,804,399 11,419,873 13,525,742
Research &
engineering 138,269 146,284 556,124 595,675
Marketing 92,443 97,173 350,996 353,622
General 165,273 166,067 662,224 640,641
Debt
extinguishment
costs(3) - - 167,801 -
Interest 73,246 91,069 334,336 367,973
----------------------------------------------------------------------
3,380,864 6,304,992 13,491,354 15,483,653
----------------------------------------------------------------------
Income (Loss) from
continuing
operations
before taxes and
minority
interest 358,078 (2,928,442) 567,743 (2,227,023)
Taxes on income(4)
(5)(8) 119,999 95,341 209,386 282,070
----------------------------------------------------------------------
Income (Loss) from
continuing
operations
before minority
interest 238,079 (3,023,783) 358,357 (2,509,093)
Minority interest
(2)(4)(5) (3,600) 94,328 114,200 91,879
----------------------------------------------------------------------
Income (Loss) from
Continuing
Operations 234,479 (2,929,455) 472,557 (2,417,214)
Income (Loss) from
Discontinued
Operations (57,439) 68,116 (89,555) 97,219
----------------------------------------------------------------------
Net Income (Loss) $177,040 $(2,861,339) $383,002 $(2,319,995)
----------------------------------------------------------------------
Diluted Earnings
(Loss) Per Share(a):
Income (Loss)
from Continuing
Operations $0.40 $(5.04) $0.82 $(4.18)
Income (Loss)
from
Discontinued
Operations (0.10) 0.12 (0.15) 0.17
--------- --------- --------- ---------
Net Income
(Loss) $0.30 $(4.92) $0.67 $(4.01)
========= ========= ========= =========
Average shares
outstanding 585,755 581,174 583,904 578,588
Average shares
outstanding
assuming dilution(a) 607,967 581,174 597,057 578,588
(a) There was no dilution of shares in the fourth quarter and twelve
months of 2002 due to the net loss.
Depreciation &
Amortization
included in
expenses(7) $360,537 $385,950 $1,570,851 $1,533,406
----------------------------------------------------------------------
1) Includes interest income of:
-- Fourth quarter 2003 - $14 million (2002 - $13 million)
-- Twelve months 2003 - $52 million (2002 - $69 million)
2) The first quarter of 2002 includes a $29 million charge (pretax $30
million and minority interest credit of $1 million) related to the
financial/economic crisis in Argentina ($0.05 per share -
diluted).
3) Related to the repurchase of European Bonds ($0.14 per share in the
second quarter 2003 and $0.14 per share in the third quarter
2003).
4) The third quarter of 2003 includes a $205 million ($0.34 per share)
Multiclient library impairment charge (pretax $398 million, tax
benefit $106 million and minority interest credit $88 million), a
$38 million ($0.06 per share) vessel impairment charge (pretax $54
million and minority interest credit of $16 million) and a pretax
and after-tax gain of $31 million ($0.05 per share) on the sale of
a rig. In addition, the quarter included a provision for insurance
claims and a release of a prior period business divestiture
reserve, which substantially offset. The fourth quarter of 2003
includes a net $61 million ($0.10 per share - diluted) charge
related to the write-down of an investment (pretax and after tax,
$81 million), which is recorded in Cost of goods sold and
services, partially offset by a $20 million credit (pretax $32
million, tax charge $12 million) related to the gain on the sale
of a note, which is recorded in Interest and other income.
5) In the fourth quarter of 2002, Cost of goods sold and services,
Taxes on income, and Minority interest include the following ($
millions):
Goodwill impairment $2,638
Intangibles impairment 147
SchlumbergerSema severance & other 97
WesternGeco severance & other 117
Multiclient library impairment 184
Other 42
-----
Pretax 3,225
Tax (a) 33
Minority interest (90)
-----
3,168
Gain on sale of drilling rigs (87)
-----
$3,081
-----
(a) Includes deferred tax valuation allowance of $94 million.
6) Reclassified, in part, for comparative purposes.
7) Including Multiclient seismic data costs.
8) The effective tax rate for continuing operations excluding the
charges/credits referred to in notes 1, 2, 3, 4, and 5 above were
as follows:
-- Fourth quarter 2003: 26.6%
-- Fourth quarter 2002: 29.7%
-- Total year 2003: 25.2%
-- Total year 2002: 26.4%
Condensed Consolidated Balance Sheet
(Stated in
thousands)
Assets Dec. 31, 2003 Dec. 31, 2002
----------------------------------------------------------------------
Current Assets
Cash and short-term investments $3,108,973 $1,736,016
Assets held for sale (a) 3,140,153 -
Other current assets 4,049,627 5,449,424
----------------------------------------------------------------------
10,298,753 7,185,440
Fixed income investments, held to
maturity 223,300 407,500
Fixed assets 3,799,711 4,663,756
Multiclient seismic data 505,784 1,018,483
Goodwill 3,284,254 4,229,993
Other assets 1,823,835 1,930,023
----------------------------------------------------------------------
$19,935,637 $19,435,195
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
----------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued
liabilities $3,225,546 $4,580,762
Estimated liability for taxes on
income 807,938 625,058
Bank loans and current portion of
long-term debt 1,411,168 1,135,533
Dividend payable 110,511 109,565
Liabilities held for sale (a) 1,119,880 -
----------------------------------------------------------------------
6,675,043 6,450,918
Long-term debt 6,097,418 6,028,549
Postretirement benefits 614,850 544,456
Other liabilities 254,707 251,607
----------------------------------------------------------------------
13,642,018 13,275,530
Minority interest 398,330 553,527
Stockholders' Equity 5,895,289 5,606,138
----------------------------------------------------------------------
$19,935,637 $19,435,195
(a) Assets and liabilities held for sale represent the gross assets
and liabilities of the SchlumbergerSema businesses to be sold to
Atos Origin.
Net Debt
Net Debt represents gross debt less cash, short-term investments and
fixed income investments, held to maturity. Details of the Net Debt is
as follows:
(Stated in millions)
Qtr. ended Year ended
Dec. 31, 2003 Dec. 31, 2003
----------------------------------------------------------------------
Net Debt, beginning of period $(4,867) $(5,021)
Net income from continuing operations 234 473
Charges 61 440
Depreciation and amortization 361 1,571
Change in working capital 247 (228)
Capital expenditures (355) (1,175)
Dividends paid (110) (437)
Employee stock plans 51 172
Sale of NPTest - 220
Sale of e-City 79 79
Debt extinguishment costs - (168)
Sale of Grant Prideco stock - 106
Sale of Hanover note 177 177
Other 100 76
Translation effect on net debt (154) (461)
------------- -------------
Net Debt, end of period $(4,176) $(4,176)
============= =============
(Stated in millions)
Components of Net Debt Dec. 31, 2003 Dec. 31, 2002
----------------------------------------------------------------------
Cash and short-term investments $3,109 $1,736
Fixed income investments, held to maturity 223 408
Bank loans and current portion of long-term
debt (1,411) (1,136)
Long-term debt (6,097) (6,029)
------------- -------------
$(4,176) $(5,021)
============= =============
Business Review
(Stated in millions) Fourth Quarter Twelve Months
--------------------- -----------------------
2003(2) 2002 %chg 2003(2) 2002(2) %chg
--------------------- -----------------------
Oilfield Services
-----------------------
Operating Revenue $2,313 $2,073 12% $8,823 $8,171 8%
Pretax Operating
Income(1) $420 $283 48% $1,536 $1,278 20%
WesternGeco
-----------------------
Operating Revenue $308 $332 (7)% $1,183 $1,476 (20)%
Pretax Operating
Income(1)(3) $32 $6 412% $(20) $71 -
SchlumbergerSema
-----------------------
Operating Revenue $721 $623 16% $2,677 $2,409 11%
Pretax Operating
Income(1) $31 $25 26% $61 $17 249%
Other(4)
-----------------------
Operating Revenue $409 $377 9% $1,480 $1,334 11%
Pretax Operating
Income(1) $47 $22 109% $109 $18 505%
1) Pretax operating income represents income before taxes and minority
interest, excluding interest income, interest expense and
amortization of intangibles.
2) The fourth quarter of 2003 does not include a net charge of $49
million for the write-down of an investment and the gain on the
sale of a note. The third quarter of 2003 does not include $86
million of debt extinguishment costs and a charge of $421 million
for impairment and other charges/credits. The second quarter of
2003 does not include $81 million of debt extinguishment costs.
The first quarter of 2002 does not include an aggregate $30
million charge related to the financial/economic crisis in
Argentina.
3) The third quarter of 2003 does not include impairment charges of
$398 million for Multiclient library and $54 million for vessels.
The fourth quarter of 2002 does not include an impairment charge
of $184 million for Multiclient library and charges of $117
million for severance and other costs.
4) Principally comprises the Cards and Meters North America
activities. Also included are the Business Continuity, Infodata
and Telecom activities.
Oilfield Services
Revenue of $8.82 billion increased 8% in 2003 versus 2002. North America led
with an increase of 14%, followed by Latin America and Middle East & Asia, which
both increased 9%, and Europe/CIS/West Africa, which was up 4%. Pretax operating
income of $1.54 billion in 2003 was 20% higher than in 2002.
Fourth quarter revenue of $2.31 billion was 3% higher sequentially and increased
12% year-on-year. The M-I rig count increased 3% sequentially and 23%
year-on-year. Pretax operating income of $420 million increased 5% sequentially
and 48% year-on-year.
Overall sequential revenue growth was strongest in the Gulf Coast, India,
Peru/Colombia/Ecuador, Indonesia, and Mexico GeoMarkets. By product, demand was
particularly strong for Schlumberger Information Solutions (SIS) services,
Integrated Project Management, Data & Consulting Services, Wireline and Drilling
& Measurements.
The year-on-year revenue growth reflected strong activity across most of the
GeoMarkets, but particularly in Mexico, Indonesia and U.S. Land. Most technology
segments recorded double-digit increases with record levels being achieved in
Drilling & Measurements from introduction of new technologies, and Data &
Consulting Services from the award of several contracts for reservoir modeling,
field assessments and production optimization projects.
North America
Revenue of $679 million increased 1% sequentially and 19% year-on-year as the
M-I rig count was up 4% sequentially and 36% year-on-year. Pretax operating
income of $106 million increased 17% sequentially and 91% year-on-year due
mainly to a better geographic mix.
Year-on-year, activity remained strong with the US Land, Alaska, and Canada
GeoMarkets posting significant increases while the Gulf of Mexico showed a more
modest gain. New Well Services technologies, such as ClearFRAC(a) polymer-free
fracturing fluid, and Viscoelastic Diverting Acid (VDA(a)), an advanced
acidizing system, continued to penetrate the market in US Land and Canada.
Sequentially, Gulf of Mexico activity increased following the end of the
tropical storm season that had impacted results in the prior quarter, partially
offsetting lower activity in US Land due to an early activity reduction by a
major customer related to budget restrictions.
New measurement-while-drilling (MWD) and logging-while-drilling (LWD) depth and
pressure records for the Gulf of Mexico were set during operations on
ChevronTexaco's deepwater Tonga Exploratory Prospect located in Green Canyon
Block 727. Drilling & Measurements wellsite engineers delivered continuous
real-time surveys that allowed the well trajectory to be kept on target during
the entire drilling and logging process.
Latin America
Revenue of $408 million was up 8% sequentially and 15% year-on-year as the M-I
rig count increased 3% sequentially and 16% year-on-year. Pretax operating
income of $67 million rose 7% sequentially and 32% year-on-year.
Activity levels in the Peru/Colombia/Ecuador GeoMarket improved sequentially due
to additional rig activity in Ecuador and resumption of Camisea operations in
Peru, but decreased year-on-year due to the one-off sale of Florena facilities
in the prior year. Mexico showed year-on-year and sequential growth from almost
all technology segments. Activity in Venezuela was stable both year-on-year and
sequentially.
Contract wins during the quarter included the Repsol YPF D-150 integrated well
construction project in Argentina. This project entails the drilling,
completion, testing, and tie-in of 150 wells in the Manantiales Behr Field over
a two-year period.
Europe/CIS/West Africa
Revenue of $670 million increased 2% sequentially and 7% year-on-year, as the
M-I rig count (excluding Russia) increased 3% sequentially and 1% year-on-year.
Pretax operating income of $115 million declined 6% sequentially, but increased
72% year-on-year.
Year-on-year increases were recorded in the Caspian and Russia, fueled by Well
Completions & Productivity Artificial Lift pump and PhaseWatcher(a) fixed
multiphase well production monitoring equipment, and Well Services fracturing
technologies, including ClearFRAC(a), which continued to penetrate the market.
However, revenue growth was partially offset by lower exploration activity in
the Norwegian sector of the North Sea and an overall decline in activity in
Nigeria. Sequentially revenue growth across the region was also partially offset
by the lower activity in the U.K. and West & South Africa.
In the North Sea, wellbore instability and geological uncertainties threatened
the success of the BG Group Blake Flank development project. The No Drilling
Surprises (NDS) process from Drilling & Measurements, which combines real-time
wellbore stability modeling and geosteering, was implemented in close
collaboration with BG, resulting in the successful completion of the F1 well.
This has resulted in a global wellbore stability agreement between BG Group and
Schlumberger as an important part of the BG well assurance process.
The sequential decline in pretax operating income was due to the recognition of
gains from the sale of the Langley facilities and rigs in the prior quarter,
start-up costs for projects in Eastern Europe, appreciation of local currencies
against the U.S. dollar, and a less favorable revenue mix.
Middle East & Asia
Revenue of $538 million increased 1% sequentially and was 13% higher
year-on-year, while the M-I rig count increased 1% sequentially and 7%
year-on-year. Pretax operating income of $131 million increased 2% sequentially
and 13% year-on-year.
Strong year-on-year improvements across the region were tempered by reduced rig
activity in the Arabian GeoMarket and lower activity in China. The Wireline
ABC(a) Analysis Behind Casing suite of services contributed to significantly
improved results sequentially and year-on-year in Indonesia, where the Slim
Cased Hole Resistivity Tool, which extends the range of service and can be
operated through tubing, was introduced, and the Cased Hole Drilling Tool was
used to obtain formation pressures in a complex wellbore environment. Sequential
increases were posted throughout by Integrated Project Management and SIS, but
were partially offset by a decline in Well Completions & Productivity due to the
artificial lift pump delivery in the prior quarter.
During the quarter, Kuwait Oil Company (KOC) chose Schlumberger to build and
support the first 3D Visual Reality center in Kuwait. The contract includes full
time IT support together with Schlumberger experts in software and domain
science working alongside KOC multidisciplinary teams for improved
decision-making.
Highlights
-- espWatcher(a), a service for remote real-time surveillance and control
for electric submersible pumps, continued successful introduction this
quarter. In total, over 600 wells were connected in 2003 worldwide,
making this the largest number of wells monitored with a centralized
system of this type. Once online, pumps can be monitored to maximize
well performance, reducing workovers and enabling a step change in
production and lift system performance with lower operating costs for
producing assets.
-- MRX(a) Magnetic Resonance eXpert, the leading Wireline magnetic
resonance tool, was commercialized in the quarter to wide industry
acceptance. Operations were run in multiple locations, including Saudi
Arabia, Egypt and Gulf of Mexico. Customer demand for this service has
grown rapidly due to improved fluid characterization.
-- Well Services introduced LiteCRETE(a) Coalbed Methane (CBM) slurry
system, a technology specifically designed for cementing coalbed methane
wells that exerts lower pressure on the coalbed to prevent breakdown and
inhibit cement flow into factures and fissures. In the U.S., one large
coalbed methane operator saw cementing success rise from 40% to 75% when
using LiteCRETE.
-- The growing family of PowerDrive(a) rotary steerable systems (RSS)
continues to penetrate markets while realizing record-breaking
performance. In Norway, a record 2,784 meters were drilled on Norsk
Hydro Njord field in one run. Operators continue to see reduced drilling
time, improved wellbore quality, and lower well construction costs.
-- SIS announced a set of digital, auditable software reports, which are
compliant with the new disclosure regulations for publicly traded
upstream oil and gas companies in Canada. These reports work seamlessly
with the SIS Merak VOLTS(a) reserve management and reporting system, to
help reduce errors, speed up processing, and facilitate Canadian
securities reporting.
WesternGeco
Operating revenue for 2003 was $1.18 billion versus $1.48 billion in 2002,
reflecting a 20% decrease year-on-year. This was primarily due to lower land
crew activity following the exiting of the North American Land market combined
with the completion of some contracts in the Middle East and lower Multiclient
sales in North & South America. Pretax operating loss in 2003 was $20 million
versus a profit of $71 million in 2002.
Fourth quarter revenue of $308 million was 17% higher sequentially, but 7% lower
compared to the same period last year. Sequential growth was primarily impacted
by a return to traditional fourth quarter seasonal Multiclient revenue levels.
Data Processing revenue also increased sequentially, mainly in North America,
while a slight increase in Land in Mexico and Europe was offset by lower
activity in the Middle East. Marine revenue decreased due to the seasonal
slowdown in the North Sea, completion of projects in the Middle East, and vessel
transits. This was partially mitigated by the completion of a Q(a) project for a
large independent in West Africa, and expanded operations in North & South
America.
The year-on-year decline was mainly due to the reduction of Land, which was down
23% although revenue per crew was maintained. Multiclient revenue was 7% lower
due to a historically low third quarter in North America. Marine and Data
Processing business lines both showed slight increases.
Pretax operating income of $32 million improved by $69 million sequentially and
$26 million year-on-year. Sequential improvement was mainly in Multiclient due
to the combination of increased sales and lower amortization costs, and the
release of about $10 million of business related contingency reserves/accruals,
partially offset by seasonally lower Marine activity. The year-on-year increase
reflected the impact of contractual losses in Marine in India and Land in Mexico
during the same period the previous year.
Including Multiclient pre-commitments, the backlog at the end of the quarter
reached $408 million, a 22.5% increase over the previous quarter, reflecting the
award of a number of Land contracts in the Middle East and a material
Multiclient volume agreement signed in December 2003.
Highlights
-- Q(a) acceptance continued to grow during the fourth quarter, and
contract wins included a Q-Marine(a) contract for a major client in the
Gulf of Mexico, as well as an integrated project for Kuwait Oil Company
that includes Q-Land(a) acquisition, processing and interpretation. Q(a)
revenue approximately doubled year-on-year.
-- WesternGeco signed a long-term business agreement with a major energy
company that included the licensing of part of the WesternGeco data
library, as well as joint R&D and training on new technology for seismic
data processing.
SchlumbergerSema
The results for SchlumbergerSema are limited to the businesses being sold to
Atos Origin. The retained businesses are reported in Oilfield Services for IT
services for the oil & gas industry and network and infrastructure services for
the upstream oil and gas sector, and in Other for Business Continuity, Infodata,
and all software products related to the SchlumbergerSema telecommunications
activity.
Revenue of $2.68 billion in 2003 was 11% higher than in 2002. The increase was
mainly due to the strengthening of European currencies against the U.S. dollar
with a positive impact of $274 million.
Pretax operating income of $61 million increased $44 million over 2002
reflecting mainly the benefits of cost reduction programs carried out in North &
South America, Asia, the U.K. and Sweden coupled with an improvement in gross
margins in Asia and Brazil. These increases were partially offset by declining
prices in France, and lower activity in Germany.
Revenue of $721 million in the fourth quarter was 16% higher year-on-year and
12% higher sequentially. The improvement on prior year is mainly due to the
strengthening of the European currencies against the U.S. dollar, with a
positive impact of 12% year-on-year. Sequentially, excluding the positive impact
of exchange rates of 4%, revenue increased following the seasonally low revenue
in the third quarter due to vacations in Europe.
Pretax operating income of $31 million increased 26% year-on-year and 86%
sequentially. The improvement on prior year is mainly due to the benefit of cost
reduction programs carried on throughout the year, principally in North & South
America, Asia, and Sweden, partially offset by continued pricing pressures in
France. Sequential growth is consistent with increased revenues following the
seasonal effects of vacations in the third quarter, and increased customer
spending in the fourth.
Europe, Middle East & Africa
Revenue of $602 million increased 9% year-on-year and 17% sequentially. The
increase year-on-year was due to the strengthening of the European currencies
against the U.S. dollar, with a positive impact of $73 million, coupled with
stronger activity in the U.K. for the Public Sector. This was partially offset
by overcapacity in France leading to further pricing pressure. The sequential
increase was mainly a result of the seasonal and currency effects noted above
combined with increased activity in the Public Sector in the U.K.
Pretax operating income of $20 million decreased $29 million year-on-year, but
increased $10 million sequentially. The year-on-year decline was mainly due to
lower margins in France and Central Europe, partially offset by improvements in
Sweden from the cost-cutting programs implemented during the year, and the
African Games contract that started in the second quarter of 2003. The
sequential improvement was a result of higher Consulting & Systems Integration
utilization in France, and a general seasonal increase in activity in Spain and
Italy.
North & South America
Revenue of $86 million increased 16% year-on-year, but decreased 5%
sequentially. The year-on-year improvement was partially due to new contract
wins with Lee County and Sprint, partially offset by a decline in activity in
Consulting & Systems Integration. The sequential decline was mainly due to the
energy segment in the U.S., partially offset by new contracts in Mexico and
Brazil in the Telecom segment.
Pretax operating income of $1 million increased $15 million from a loss of $14
million last year, but decreased $3 million sequentially. The year-on-year
increase was a result of the cost reduction program in North America and
improved margins in Brazil and Mexico. The sequential decline was a direct
consequence of the lower activity base.
Asia
Revenue of $36 million decreased 12% year-on-year but increased 2% sequentially.
The year-on-year decrease was mainly due to lower activity in India. The
sequential improvement resulted mainly from higher activity in Malaysia.
Pretax operating income of $8 million increased $7 million year-on-year, but
showed a $1 million decrease sequentially. The year-on-year growth reflected
improved gross margins and indirect cost savings.
Other
� Cards revenue for 2003 was $717 million versus $658 million in
2002. Cards fourth quarter revenue of $206 million was up 2%
sequentially and 6% year-on-year. Pretax operating income of $27
million increased 21% sequentially and 36% year-on-year. Sequentially,
mobile communication card activity improved 12%, of which 3% was due
to the strengthening of European currencies against the U.S. dollar.
The increase was mainly in Europe due to strong demand coupled with a
shift toward high-end products, which led to a pricing increase, and
in North & South America, partially offset by lower demand in Asia.
� Electricity Meters North America revenue of $78 million increased
13% year-on-year, while pretax operating income was $21 million
compared to $9 million for the same period last year.
� About Schlumberger
� Schlumberger is a global oilfield and information services company
with major activity in the energy industry. The company employs 78,000
people of more than 140 nationalities working in 100 countries and
comprises three primary business segments. Schlumberger Oilfield
Services is the world's premier oilfield services company supplying a
wide range of technology services and solutions to the international
oil and gas industry. WesternGeco, jointly owned with Baker Hughes, is
the world's largest and most advanced surface seismic company.
SchlumbergerSema is a leading supplier of IT consulting, systems
integration, and network and infrastructure services. In 2003,
Schlumberger operating revenue was $13.9 billion. For more
information, visit www.slb.com.
� (a) Mark of Schlumberger
� Notes:
� -- Schlumberger will hold a conference call to discuss the above
announcement on Friday, Jan. 23, 2004, at 9:00 a.m. New York
City time (2:00 p.m. London time/3:00 p.m. Paris time). To
access the conference call, attendees should contact the
conference call operator at +1-888-428-4480 within North
America or +1-612-288-0318 outside of North America
approximately 10 minutes prior to the call's start time, and
ask for the "Schlumberger Earnings Conference Call." A replay
of the conference call will be available until Feb. 6, 2004,
and can be accessed by dialing +1-800-475-6701 within North
America or +1-320-365-3844 outside of North America, and
giving the access code 715631. A live webcast of the
conference call will be simultaneously broadcast at
www.slb.com/irwebcast on a listen-only basis. Attendees should
log-in 15 minutes ahead of time to test their browsers and
register for the webcast. Following the event, a replay will
be available at the same URL until Feb. 6, 2004.
� -- Supplemental information in the form of a question and answer
document on this press release is available at www.slb.com/ir.
CONTACT: Schlumberger
Investor Relations
Doug Pferdehirt or Paulo Loureiro, +1-212-350-9432
ir-nam@slb.com