What is the primary driver of the decrease in net income compared to the prior year?

The primary driver of the decrease in net income for the first quarter of 2002 was a $29 million charge related to the financial and economic crisis in Argentina, which involved currency devaluation and a significant increase in currency exposure.

How did the Oilfield Services (OFS) segment perform relative to market conditions?

The Oilfield Services segment performed strongly, with revenue remaining flat year-over-year at $2.4 billion despite a 20% decline in the worldwide M-I rig count. This suggests that SLB maintained or increased its market share and benefited from sustained pricing levels.

What is the impact of the adoption of SFAS 142 on the company's financial results?

The adoption of SFAS 142 on January 1, 2002, has ceased the amortization of goodwill and workforce. This means that amortization charges that were previously expensed are no longer being recorded. For the first quarter of 2001, this accounted for a $29.9 million (after-tax) benefit when comparing reported net income to 'adjusted net income'.

What is the company's current liquidity situation and recent financing activities?

Consolidated liquidity decreased by $347 million in the first quarter of 2002, largely due to acquisition-related payments for Sema plc and other provisions. To manage its financing, SLB initiated a Euro commercial paper program and, shortly after the quarter end, issued $1 billion in 10-year senior unsecured notes to replace existing US commercial paper borrowings.

SLB 10-Q Quarterly Report Q1 FY2002 — Revenue, Net Income, EPS

Summary

Schlumberger Limited (SLB) reported first quarter 2002 results with a notable decrease in net income compared to the prior year, primarily impacted by a $29 million charge related to the financial crisis in Argentina. Despite this, the company's Oilfield Services (OFS) segment demonstrated resilience, with revenue remaining flat year-over-year despite a significant decline in the M-I rig count, indicating strong market share and pricing power. The SchlumbergerSema (SLSEMA) segment saw a substantial revenue increase due to the prior year acquisition of Sema plc, although its operating income declined sequentially. Financially, SLB maintained a solid liquidity position, though it decreased during the quarter due to acquisition-related payments and other provisions. The company also refined its debt structure by issuing new long-term notes to replace commercial paper. Investors should note the adoption of new accounting standards, SFAS 142 and SFAS 144, effective January 1, 2002, which have ceased goodwill amortization and impacted reporting, though not cash flow or net income.

Key Highlights

1Net income decreased to $172 million ($0.30 per share) in Q1 2002 from $236 million ($0.41 per share) in Q1 2001, impacted by a $29 million charge related to the Argentine crisis.
2Oilfield Services (OFS) revenue remained flat at $2.4 billion year-over-year, outperforming the 20% decline in the M-I rig count, suggesting market share gains.
3SchlumbergerSema (SLSEMA) revenue increased significantly to $835 million from $301 million in the prior year, largely due to the acquisition of Sema plc, but saw a sequential revenue decline.
4The company adopted SFAS 142 (Goodwill and Other Intangible Assets) effective January 1, 2002, ceasing goodwill amortization, which positively impacted net income by $30 million in Q1 2001 compared to Q1 2002.
5Liquidity decreased by $347 million during the quarter, mainly due to payments related to the Sema plc acquisition and other provisions.
6Total assets decreased slightly to $22.1 billion from $22.3 billion at the end of 2001, while total liabilities also decreased.
7The company issued $1 billion in 10-year senior unsecured notes on April 4, 2002, to replace US commercial paper borrowings.

SLB LIMITED/NV Quarterly Report for Q1 Ended Mar 31, 2002

Summary

Key Highlights

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