What was the primary reason for SLB's significant net loss in 2002?

The primary reason for the substantial net loss of $2.32 billion in 2002 was a goodwill impairment charge of $2.64 billion within the SchlumbergerSema segment. This write-down was necessary due to the challenging market conditions in the telecommunications and IT services sectors, which affected the segment's current business values and future outlook.

How did the Oilfield Services (OFS) segment perform in 2002?

The Oilfield Services segment remained the company's core revenue generator, with revenues of $9.35 billion, a 5% decrease from 2001. This decline was mainly due to reduced activity in North America and Latin America. However, strong performance in Europe/CIS/West Africa and the Middle East & Asia partially offset these decreases. The segment reported a pretax segment income of $1.33 billion.

What is the outlook for SLB's liquidity and debt?

SLB experienced negative liquidity at the end of 2002, with net debt exceeding cash and investments. The company has set a target to improve its liquidity by reducing net debt to under $4 billion by the end of 2003. This will be achieved through improved operating results from its business segments and the successful completion of planned business divestitures.

Has SLB made any significant acquisitions or divestitures recently?

In 2002, SLB continued its strategy of portfolio management. A notable divestiture was the Reed Hycalog drillbits business in December 2002. Earlier in 2001, the company had completed a significant acquisition of Sema plc, which formed the basis of its SchlumbergerSema segment. The company also made several smaller acquisitions in 2002 to bolster its technological capabilities, such as Inside Reality, DBR International, A.Comeau and Associates, and Technoguide AS.

SLB 10-K FY2002 Annual Report — Revenue, Net Income, EPS

Summary

SLB Limited/NV (SLB) reported a challenging year in 2002, marked by a significant net loss of $2.32 billion. This loss was largely attributable to a substantial goodwill impairment charge of $2.64 billion related to the SchlumbergerSema segment, reflecting difficulties in the telecommunications and IT services sectors. Despite the overall net loss, the core Oilfield Services (OFS) segment demonstrated resilience, generating $9.35 billion in revenue and a pretax segment income of $1.33 billion. Revenue in OFS saw a 5% decline year-over-year, primarily due to reduced activity in North America and Latin America, though this was partially offset by growth in Europe/CIS/West Africa and the Middle East & Asia. SchlumbergerSema's revenue grew 32% compared to 2001, significantly boosted by the acquisition of Sema plc in April 2001, though its operational performance as a whole showed a pretax segment income of only $34 million. The company continued to strategically divest non-core assets, such as the Reed Hycalog drillbits business. Looking ahead, SLB aimed to improve its liquidity position, which was negative at year-end 2002, with a target of reducing net debt below $4 billion by the end of 2003, contingent on segment operating results and successful divestitures.

Key Highlights

1Significant net loss of $2.32 billion in 2002, primarily driven by a $2.64 billion goodwill impairment charge in the SchlumbergerSema segment.

2Oilfield Services (OFS) segment revenue declined 5% to $9.35 billion, with pretax segment income of $1.33 billion, impacted by lower activity in North America and Latin America but supported by growth in other regions.

3SchlumbergerSema revenue increased 32% to $2.99 billion, largely due to the acquisition of Sema plc, though its pretax segment income was only $34 million.

4The company continues to divest non-core assets, with the sale of the Reed Hycalog drillbits business in December 2002.

5Negative liquidity at year-end 2002 ($5.02 billion), with plans to improve by reducing net debt to under $4 billion by year-end 2003.

6Strong R&D investment continued, with $650 million spent across segments in 2002, particularly in Oilfield Services ($438 million).

SLB LIMITED/NV Annual Report, Year Ended Dec 31, 2002

Summary

Key Highlights

Frequently Asked Questions