What is the primary driver for the improved net income in the second quarter of 2002 compared to the prior year?

The significant improvement in net income from a loss to a profit is primarily driven by a substantial reduction in expenses and charges. The second quarter of 2001 included a significant impairment charge of $280 million related to the disposition of certain businesses. Additionally, while revenue declined year-over-year, expense management, including the impact of adopting SFAS 142 which ceased goodwill amortization, contributed to the improved profitability.

How did the performance of the two main segments, Oilfield Services (OFS) and SchlumbergerSema (SLSEMA), compare?

Oilfield Services (OFS) revenue decreased 5% year-over-year but increased 2% sequentially, showing resilience despite a 23% decline in the M-I rig count year-over-year. SchlumbergerSema (SLSEMA) revenue decreased 3% year-over-year but also increased 2% sequentially. While both segments faced revenue declines compared to the previous year, the sequential improvements indicate stabilizing or improving market conditions.

What is the impact of adopting SFAS 142 on the company's financial statements?

Effective January 1, 2002, Schlumberger adopted SFAS 142, which ended the amortization of goodwill and assembled workforce. This change resulted in the elimination of goodwill amortization expense from the income statement and a reclassification of $179 million of assembled workforce to goodwill. This accounting change positively impacted reported net income by removing amortization charges that were present in prior periods.

What is the company's liquidity position and how has it changed?

The company defines liquidity as cash plus short-term and fixed income investments, less debt. Liquidity decreased by $435 million in the second quarter and $782 million year-to-date, primarily due to adverse currency translation effects from strengthening European currencies, payments related to the Sema acquisition, and severance costs. The company's consolidated liquidity was a negative $(5.8) billion at June 30, 2002.

SLB 10-Q Quarterly Report Q2 FY2002 — Revenue, Net Income, EPS

Summary

SLB LIMITED/NV (SLB) reported its financial results for the quarter and six months ended June 30, 2002. The company saw a significant shift in profitability compared to the prior year, with net income of $196 million ($0.34 per diluted share) for the second quarter of 2002, a substantial improvement from a net loss of $93 million ($-0.16 per diluted share) in the same period of 2001. For the six months ended June 30, 2002, net income was $369 million ($0.64 per diluted share), compared to $143 million ($0.25 per diluted share) in the first six months of 2001. Revenue for the second quarter of 2002 was $3.4 billion, a 10% decrease year-over-year, reflecting challenging market conditions, particularly in the Oilfield Services (OFS) segment which experienced a 5% revenue decline. However, OFS revenue showed sequential growth of 2% compared to the first quarter of 2002. The SchlumbergerSema (SLSEMA) segment revenue decreased 3% year-over-year but increased 2% sequentially. The company highlights that its Oilfield Services revenue decline was substantially less than the M-I rig count decline, indicating market share resilience.

Key Highlights

1Net income for Q2 2002 was $196 million ($0.34/share), a significant turnaround from a net loss of $93 million ($-0.16/share) in Q2 2001.
2Six-month net income was $369 million ($0.64/share), up from $143 million ($0.25/share) in the comparable period of 2001.
3Total revenue for Q2 2002 was $3.4 billion, down 10% year-over-year, with Oilfield Services (OFS) revenue down 5% and SchlumbergerSema (SLSEMA) revenue down 3%.
4Despite a challenging market, OFS revenue increased 2% sequentially quarter-over-quarter, demonstrating resilience.
5SLSEMA revenue also showed sequential growth of 2% in Q2 2002.
6The company adopted SFAS 142 (Goodwill and Other Intangible Assets) effective January 1, 2002, ceasing amortization of goodwill and workforce, and reclassified $179 million of assembled workforce to goodwill.
7Cash and cash equivalents decreased from $177.7 million at year-end 2001 to $153.4 million at June 30, 2002.

SLB LIMITED/NV Quarterly Report for Q2 Ended Jun 30, 2002

Summary

Key Highlights

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