BW20030121002734 20030122T010259Z UTC
( BW)(SCHLUMBERGER-LD.)(SCL) Final Results
Business Editors
UK REGULATORY NEWS
NEW YORK--(BUSINESS WIRE)--Jan. 21, 2003--
Schlumberger Announces Fourth Quarter and Full Year 2002 Results
Schlumberger Limited (NYSE:SLB) reported today 2002 operating
revenue of $13.5 billion versus $14 billion in 2001.
Income from continuing operations before charges of $692 million
was 36% lower than last year, as adjusted for goodwill amortization,
with earnings per share of $1.20 representing a 35% decrease on 2001
adjusted results. Net results were a loss of $2,320 million ($4.01 per
share).
FOURTH QUARTER 2002 RESULTS
Fourth quarter operating revenue of $3.4 billion was 7% below
fourth quarter 2001. Income from continuing operations before charges
was $145 million, 17% below 2001. Net results were a loss of $2,861
million ($4.92 per share).
Earnings per share from continuing operations, excluding charges,
were $0.25 compared with an adjusted $0.46 for the same period last
year and $0.29 for the third quarter 2002.
Oilfield Services revenue of $2.32 billion decreased 8% versus the
same period last year and 4% sequentially. Pretax operating income of
$282 million declined 38% year over year and 13% sequentially. The M-I
rig count declined 7% year over year but increased 2.5% sequentially.
SchlumbergerSema revenue improved 9% to $813 million sequentially
and 7% year over year. Pretax operating income, excluding the $16
million charge for severance in the third quarter, improved $20
million to $33 million sequentially and was up 35% year over year.
On December 10, Schlumberger announced that the Board of Directors
had approved an updated strategy for its SchlumbergerSema business
segment. As a result, certain charges were recorded related to the
business realignment, impairment of goodwill and intangibles and other
costs. The sum of all these charges was $3,168 million ($5.45 per
share). Also during the quarter, Schlumberger sold two jack-up
drilling rigs for a gain of $87 million ($0.15 per share).
Accordingly, the loss from continuing operations after charges was
$2,936 million ($5.05 per share).
In addition, during the quarter Schlumberger sold its drill bits
business and recognized a gain of $66 million. The drill bits business
has been classified as 'Discontinued Operations'. Results from
discontinued operations and the gain on sale aggregated $75 million
($0.13 per share) in the quarter.
Chairman and CEO Euan Baird commented:
"The fourth quarter confirmed our third-quarter expectations that
oilfield activity would continue to slowdown. Political uncertainty in
the Middle East, the strike in Venezuela, and reduced oil company
investment in Europe and Africa all contributed to make the business
environment in 2002 progressively more difficult. The absence of any
significant growth in energy demand has meant that our customers have
not increased spending despite high commodity prices. Uncertainty over
the direction of the economy makes it likely that this lackluster
situation will continue through the first half of 2003.
Against this background, SchlumbergerSema continues to make
progress in defining its strategy as part of Schlumberger, in reducing
costs and improving margins."
Note:
Supplemental information in the form of a question and answer
document on this press release is available at http://www.slb.com/ir.
-O-
*T
Consolidated Statement of Income
(Stated in thousands except per share amounts)
Fourth Quarter Twelve Months
(Unaudited)
For Periods Ended 2002 2001(2) 2002 2001(2)
December 31
Revenue
Operating $3,433,787 $3,684,739 $13,473,662 $14,058,366
Interest and other
income(3) 26,138 52,079 139,068 242,258
------------------------------------------------
3,459,925 3,736,818 13,612,730 14,300,624
Expenses
Cost of goods sold and
services(1) 5,865,936 2,791,710 13,759,257 11,014,923
Research &
engineering(1) 160,054 175,598 650,038 700,096
Marketing 108,428 98,462 401,384 446,621
General 172,412 178,649 664,364 681,021
Interest 91,069 97,619 367,973 384,896
------------------------------------------------
6,397,899 3,342,038 15,843,016 13,227,557
Income (Loss) before
taxes and
minority interest (2,937,974) 394,780 (2,230,286) 1,073,067
Taxes on income(1) 92,631 214,681 279,122 553,887
Income (Loss) before
minority interest (3,030,605) 180,099 (2,509,408) 519,180
Minority interest(1) 94,328 (944) 91,879 (28,545)
Income (Loss) from Continuing
Operations (2,936,277) 179,155 (2,417,529) 490,635
Income from Discontinued
Operations(4) 74,938 5,811 97,534 31,582
Net Income (Loss)(1) $(2,861,339) $184,966 $(2,319,995) $522,217
Diluted Earnings Per Share (a):
Income (Loss) from Continuing
Operations $(5.05) $0.31 $(4.18) $0.85
Income from Discontinued
Operations 0.13 0.01 0.17 0.06
-------------------------------------------
Net Income (Loss) (4.92) 0.32 (4.01) 0.91
Add back amortization of
goodwill - 0.16 - 0.50
Adjusted earnings (loss)
per share $(4.92) $0.48 $(4.01) $1.41
===========================================
Average shares outstanding 581,174 575,783 578,588 574,328
Average shares outstanding
assuming dilution(a) 581,174 579,934 578,588 580,214
(a) There is no dilution of shares or earnings per share in the
fourth quarter and total year of 2002 due to the net loss.
Depreciation and amortization
included in expenses(5) $400,900 $525,592 $1,545,053 $1,887,559
1) A reconciliation of Net Income (Loss) to Net Income from
continuing operations, excluding charges/credits is as follows ($
millions):
EPS EPS EPS EPS
2002 2001 2002 2001 Q4'02 Q4'01 Q4'02 Q4'01
Net income
(loss) as
reported $(2,320) $522 $(4.01) $0.91 $(2,861) $185 $(4.92) $0.32
Charges/Credits:
First
quarter(a) 29 25 0.05 0.04
Second
quarter(b) - 280 - 0.48
Third
quarter(c) - (3) - -
Fourth
quarter(d) 3,081 (5) 5.33 (0.01) 3,081 (5) 5.30 (0.01)
Net income
excluding
charges/
credits 790 819 1.37 1.42 220 190 0.38 0.31
Discontinued
operations (98) (32)(0.17) (0.06) (75) (6) (0.13) (0.01)
Net income from
continuing
operations
excluding
charges/
credits $692 $787 $1.20 $1.36 $145 $184 $0.25 $0.30
Effective tax
rate-Continuing
operations
excluding
charges/
credits 26% 32% 30% 33%
(a) In the first quarter of 2002, Cost of goods sold and services
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). In the first quarter
of 2001, Research & engineering includes a charge of $25 million
(pretax and after tax) for in-process R&D related to the Bull CP8
acquisition ($0.04 per share - diluted).
(b) In the second quarter of 2001, Cost of goods sold and services
includes a $280 million charge (pretax and after tax) for the
estimated impairment charge from the disposition of certain Resource
Management Services Businesses ($0.48 per share - diluted).
(c) In the third quarter of 2001, Cost of goods sold and services
includes a pretax credit of $42 million representing the gain on sale
of the worldwide gas compression business partially offset by an
impairment charge relating to the disposition of certain other
activities. Taxes on income, in the third quarter of 2001, includes a
net charge of $39 million relating to these items. The third quarter
2001 consolidated effective tax rate was 36% excluding theses items.
(d) In the fourth quarter of 2002, Cost of goods sold and
services, Taxes on income and Minority interest include the following
($ 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.
The fourth quarter 2002 consolidated effective tax rate was 30%
excluding the above items.
The fourth quarter 2001 includes a net credit of $5.5 million
($0.01 per share-diluted), including an after tax gain on the sale of
the former Resource Management Services North American Water division
($117 million). This gain was partially offset by certain charges: (1)
an after tax provision of $37 million for employee termination costs,
principally in Europe and the USA, related to Oilfield Services and
SchlumbergerSema in response to current business conditions; (2) tax
reorganization costs of $29 million; (3) a further $20 million charge
related to the second quarter estimated loss on the divestiture of
certain Resource Management Services businesses following the actual
closing in the fourth quarter; (4) asset write down of $23 million
following a recent determination of technological impairment related
to certain Land seismic assets in the newly formed joint venture. Cost
of goods sold & services includes a net pretax credit of $119 million,
Taxes on income includes a net charge of $124 million and Minority
interest includes a credit of $10 million. The fourth quarter 2001
consolidated effective tax rate excluding all these items was 33%.
2) Reclassified, in part, for comparative purposes.
3) Includes interest income of:
Fourth quarter 2002 - $ 13 million (2001 - $30 million).
Twelve months 2002 - $ 69 million (2001 - $159 million).
4) Includes the operating results and the gain on sale ($66
million in the fourth quarter 2002) of the divested drill bits
activity.
5) Including multiclient seismic data costs and excluding
multiclient library impairment charges.
Consolidated Condensed Balance Sheet
(Stated in thousands)
Assets Dec. 31, 2002 Dec. 31, 2001
Current Assets
Cash and short-term
investments $1,736,016 $1,617,701
Other current assets 5,339,424 6,087,189
-------------------------------------------------
7,075,440 7,704,890
Fixed income investments,
held to maturity 407,500 576,000
Fixed assets 4,663,756 4,827,879
Multiclient seismic data 1,018,483 1,028,954
Goodwill 4,229,993 6,260,969
Other assets 1,930,023 1,927,675
-------------------------------------------------
$19,325,195 $22,326,367
Liabilities and
Stockholders' Equity
Current Liabilities
Accounts payable and
accrued liabilities $4,580,762 $4,506,634
Estimated liability
for taxes on
income 625,058 587,328
Bank loans and current
portion of long-term
debt 1,135,533 1,015,181
Dividend payable 109,565 108,642
-------------------------------------------------
6,450,918 6,217,785
Long-term debt 6,028,549 6,215,709
Postretirement benefits 544,456 504,797
Other liabilities 251,607 372,696
-------------------------------------------------
13,275,530 13,310,987
Minority interest 553,527 636,899
Stockholders' Equity 5,496,138 8,378,481
-------------------------------------------------
$19,325,195 $22,326,367
Business Review
(Stated in millions)
Oilfield SchlumbergerSema Other(1)(4)
Services(4) (4)
Fourth Quarter 2002 2001 %chg 2002 2001 %chg 2002 2001 %chg
----------------------------------------------------------------------
Operating
Revenue $2,321 $2,535 (8)% $813 $757 7% $396 $453 (13)%
Pretax
Operating
Income(2) $282 $454 (38)% $33 $25 35% $11 $5 140%
Oilfield SchlumbergerSema
Services(4) (4)
Twelve Months 2002 2001 %chg 2002 2001 %chg
----------------------------------------------------------------------
Operating
Revenue $9,347 $9,867 (5)% $2,991 $2,258(3) 32%
Pretax Operating
Income(2) $1,328 $1,803 (26)% $34 $(33) - %
Other(1)(4)
Twelve Months 2002 2001 %chg
----------------------------------------------------------------------
Operating Revenue $1,442 $2,136 (33)%
Pretax Operating Income(2) $20 $93 (78)%
1) Principally comprises the Cards, Terminals, Meters North
America and NPTest activities. In 2001, also included are the divested
Resource Management Services businesses.
2) Pretax operating income represents income before taxes and
minority interest, excluding interest income, interest expense, gain
on sale of securities and amortization of intangibles and charges,
net.
3) Sema plc was acquired April 1, 2001.
4) Restated, in part, for comparative purposes.
*T
Oilfield Services
Revenue for 2002 was $9.3 billion versus $9.9 billion in 2001
reflecting a 5% decrease due to reduced activity in North America and
Latin America, which was 24% and 7% lower respectively. However, this
was partially mitigated by higher activity in Europe/CIS/West Africa,
up 14% and the Middle East & Asia, where revenue increased 10%.
Fourth quarter operating revenue of $2.3 billion decreased 8%
versus the same period last year and 4% sequentially. In comparison,
the M-I rig count declined 7% year over year but increased 2.5%
sequentially. Pretax operating income of $282 million decreased 38%
year over year and 13% sequentially.
Lower fourth quarter results were largely due to a combination of
seasonal influences and significant activity decreases associated with
downward revisions in investment plans by operators in the eastern
hemisphere.
North America
Revenue of $675 million decreased 21% versus last year and 3%
sequentially as the M-I rig count fell 9% year over year but grew 2%
sequentially. Pretax operating income of $90 million decreased 48%
compared to 2001 and 6% sequentially.
The lower results reflected the lackluster drilling environment,
the closure of US land-based seismic operations, pricing pressures,
reduced non-rig related activity and the impact of the tropical storms
in the Gulf of Mexico all of which were partially offset by favorable
adjustments to certain benefit accruals. The sequential revenue
decrease was partially offset by growth in Canada, however, as a
result of the late start-up of the winter drilling campaign this was
less than expected. In addition, the Gulf of Mexico also recorded
solid sequential revenue growth due to strong multiclient seismic
license sales from deepwater blocks.
During the quarter, Schlumberger won several major contracts in
Canada including a 2,500-well shallow gas cementing program, a
600-well fracturing campaign using stimulation through coiled tubing
CoilFRAC* technology and four key directional, measurement-while- and
logging-while-drilling contracts.
Latin America
Revenue of $407 million was 4% lower than the same period last
year but was up 13% sequentially in contrast to the M-I rig count
which decreased 12% year over year but increased 11% sequentially.
Pretax operating income of $45 million was 35% lower year over year
but increased 60% sequentially.
The impact of ongoing economic and political instability in
Argentina and Venezuela was largely offset by higher year over year
and sequential revenues in the Mexico and Peru/Colombia/Ecuador
GeoMarkets. Growth in Mexico was due to high activity across all
technology segments in the Burgos Basin and strong marine seismic
activity. The completion of an IPM project that involved the sale of
production facilities for $26.5 million contributed to the revenue
increase in the Peru/Colombia/ Ecuador GeoMarket.
The sequential increase in pretax operating income resulted from a
combination of the WesternGeco land contract losses recognized in the
third quarter and the one-off gain in the fourth quarter from the sale
of facilities in the Peru/Colombia/Ecuador GeoMarket.
Schlumberger won a new 100-well contract in the Burgos Basin, its
fifth since the project's commencement in 1997. In addition, the
GecoSearcher commenced a Q*-Reservoir project in Mexico during the
quarter with the objective of helping the customer identify and
address a specific reservoir problem, reinforcing the developing role
of advanced seismic technology in maximizing production.
Europe/CIS/West Africa
Revenue of $656 million increased 2% year over year but decreased
12% sequentially compared with the M-I rig count, which dropped 11%
and 1% respectively. Pretax operating income of $51 million fell 48%
both for the same period last year and sequentially.
The sequential revenue change was due to winter weather conditions
in the North Sea and Russia that affected all services, particularly
seismic - which experienced a revenue drop of 46% across the Area. The
adverse weather also resulted in lower fracturing activity in Russia.
In the Caspian GeoMarket, high third-quarter completion and software
sales, a project closure in Turkmenistan and drilling delays in
Azerbaijan lowered revenue. Budget cuts in the Nigeria GeoMarket and
refocused UK North Sea investment decisions also contributed. Despite
the overall revenue decrease, the West Africa GeoMarket posted
double-digit growth.
Pretax operating income declines were due to high overhead costs
in Europe and parts of Africa, a restructuring charge associated with
severance costs and adverse currency effect as the US dollar weakened
against European currencies.
Increasing demand for integrated services in Russia was
highlighted with the award of a well construction services contract by
Sibneft covering 8 horizontal wells in Western Siberia.
In West Africa, Schlumberger was awarded a significant contract
offshore Cameroon as a result of a customized well services and
completions solution designed by the GeoMarket team backed by
technology center experts. This award is the third application of a
customized 'completions solution' in West Africa and reinforces the
competitive advantage of the GeoMarket organization in delivering
high-performance cost saving solutions to customers.
Middle East & Asia
Revenue of $568 million decreased 5% year over year and 6%
sequentially as the M-I rig count rose 5% and 2% respectively. Pretax
operating income of $106 million decreased 18% year over year and 5%
sequentially.
Year over year the Malaysia/Brunei/Philippines GeoMarket posted
the highest growth as a result of increased demand for well services
and completions technologies. This was offset by a significant
reduction in seismic activity throughout the Area.
Despite sequential revenue declines across most of the GeoMarkets,
India and Saudi Arabia posted solid double-digit revenue growth as a
result of strong marine seismic activity in India, and increased well
completions sales in Saudi Arabia.
Weak marine seismic activity in Malaysia/Brunei/Philippines and
China was primarily responsible for lower revenues in these countries
and the sequential decrease in pretax operating income.
The award of a five-year artificial lift contract for 91 wells
highlighted the increasing demand for well completions services in
Saudi Arabia in the quarter. This penetration of the offshore
artificial lift market represented an important milestone for the
GeoMarket.
Highlights:
-- Launched LivingModel(TM) workflow through the acquisition of
Technoguide AS, developer of the industry-leading Petrel(TM) Workflow
Tools. LivingModel combines Petrel software with Schlumberger
expertise in seismic and simulation to significantly accelerate the
seismic-to-simulation workflow. LivingModel is a complete asset
performance solution for real-time reservoir management.
-- Commercialized the Magnetic Resonance Fluid* (MRF) technique
building on the Schlumberger leadership position in downhole magnetic
resonance measurements and interpretations. The technique integrates
downhole data acquisition and wellsite inversion with a multi-fluid
response model to determine fluid saturations, volumes and oil
viscosities.
-- Launched ProVISION* real-time reservoir steering
logging-while-drilling magnetic resonance tool that delivers real-time
producability information needed for steering decisions to improve
well performance. ProVISION had an extensive track record including 49
runs for 13 different operators in 35 wells, with footage
logged-while-drilling now exceeding 100,000 feet and expands the
Schlumberger range of real-time services enabling customers to make
better decisions, faster.
-- Completed successfully the world's first integrated Level 6
RapidSeal* multilateral intelligent well system in the South Java Sea,
Indonesia with the China National Offshore Operating Company. The
combined mechanical and reservoir engineering expertise of
Schlumberger ensured the effective integration of downhole
measurements, flow control devices, multilateral junctions, artificial
lift and surface 3-phase monitoring systems. This is the first time
that a Level 6 multilateral intelligent well system has been designed,
integrated and delivered by a single service company and reflects the
capability of Schlumberger to provide a full portfolio of production
optimization services and solutions to its customers.
SchlumbergerSema
Operating revenue of $813 million in the fourth quarter
represented an increase of 9% sequentially, and 7% year-on-year
despite the IT industry's overall lackluster performance. This
increase primarily reflects traditionally strong seasonal activity
following the slower summer vacation months, the strengthening of the
European currencies, several major contract wins in Europe, and an
upturn in activity in Asia. However, these were partially offset by
decreased activities in North America due to utility regulatory
uncertainty and deferred capital spending.
Pretax operating income was $33 million, a 35% increase year over
year, primarily due to improved activity in the Europe, Middle East &
Africa GeoMarket, and general cost cutting initiatives. Excluding the
$16 million redundancy charge from third quarter results, pretax
operating income was up $20 million sequentially.
Europe, Middle East & Africa
Revenue of $656 million increased 13% sequentially and 15% year
over year. Pretax operating income increased to $64 million, due in
part to higher revenue in France, Spain, Germany and Sweden.
The ongoing deregulation of gas and electricity in Europe, coupled
with the company's industry expertise across the energy segment,
resulted in multiple contract wins in the fourth quarter, including
major projects in Belgium, Germany and Spain.
The UK had significant contract wins across all its vertical
sectors in the fourth quarter, producing a strong backlog that is
expected to have positive impact in 2003. Transportation and public
sector continued to be strong revenue contributors during the quarter.
In Continental Europe, consulting and systems integration
activities contributed to solid revenue and pretax operating income
growth, especially in the public sector and finance segments.
North and South America
Revenue of $125 million declined 6% sequentially and 19%
year-on-year primarily due to a weak spending in the
telecommunications and utility industries as customers continued to
revise budgets downwards and to delay decisions on contract awards.
Energy-related Network & Infrastructure Solutions contracts in
North America showed a 66% increase over the fourth quarter of last
year.
Asia
Revenue of $58 million was flat year over year, but increased 10%
sequentially, primarily due to increased managed services and data
center activities in the finance sector.
Emphasis continued to be on expanding business with existing
customers, reflected by the completion of a three-month Business
Continuity study covering a full range of business processes for
Unocal Thailand, and two new contracts for DeXa.Hosting* services with
Standard Chartered Bank in Hong Kong.
Highlights:
-- Selected by Atwood Oceanics to provide a global connectivity
solution to deliver communications for offshore and land facilities
worldwide. Using its DeXa.Net* solution, SchlumbergerSema will provide
the internal offshore drilling contractor with flexible networking to
remote rigs, as well as global links via MPLS-based secure private
network.
-- Contracted by the INTER-REGIES association of electricity and
gas distributors to develop and integrate a clearing house system for
the Belgian energy market. The system enables the secure, neutral
exchange and processing of supplier and supplier settlement
information, and is essential for compliance with the opening of the
market later this year.
-- Designed and implemented the security platform architecture for
the EUROpean CITIes (Euro-Citi) online transaction services, which
supports e-Government across the European Community.
-- Implemented an intranet-based IT architecture for major
international banking group Societe Generale. Linking 23,000 users at
2,000 retail banking branches through France, this represents one of
the largest intranet-based infrastructures in Europe.
Other
Revenue of $396 million and pretax operating income of $11 million
from the company's other businesses reflected solid growth in the
fourth quarter mainly due to strong sales of mobile communications
cards.
Change in Liquidity
Liquidity represents cash, short-term investments and fixed income
investments, held to maturity, less debt. A summary of the major
components of the fourth quarter and twelve months change in liquidity
follows:
-0-
*T
(Stated in millions)
Fourth Twelve
2002 Quarter Months
Funds provided by:
Income from continuing
operations $(2,936) $(2,418)
Charges, net 3,081 3,110
Depreciation and amortization 401 1,545
Employee stock option plan 6 67
Employee stock purchase plan - 108
Funds used for:
Capital expenditures (415) (1,711)
Dividends paid (109) (433)
Working capital 329 167
Impact of change in exchange
rates (158) (507)
Proceeds from sale of Drillbits
activity 259 259
Proceeds from sale of drilling rigs 95 95
Acquisition related payments (8) (247)
Discontinued operations 76 97
Other (110) (116)
Change in liquidity 511 16
Liquidity, beginning of period (5,532) (5,037)
Liquidity, end of period $(5,021) $(5,021)
*T
* Mark of Schlumberger
This press release is available at http://www.slb.com.
Short Name: Schlumberger Ld
Category Code: FR
Sequence Number: 00001651
Time of Receipt (offset from UTC): 20030121T225118+0000
--30--EB/ny*
CONTACT: Schlumberger Ld.
Investor Relations
Christian Lange
Tel: 212 350 9432
or
Paulo Loureiro - North America
Tel: 212 350 9432
Kamilla Gam Nielsen - Europe
Tel: 33 1 4062 1330
KEYWORD: NEW YORK UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: ENERGY OIL/GAS EARNINGS
SOURCE: Schlumberger Ld.
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