Schlumberger First Quarter 2000 Results.Business Editors NEW YORK--(BUSINESS WIRE)--April 18, 2000 Schlumberger Limited (NYSE NYSE See: New York Stock Exchange :SLB SLB Solomon Islands (ISO Country code) SLB Schlumberger Ltd. (oil field services firm) SLB Server Load Balancing SLB Sport Lisboa e Benfica (soccer) ) reported today that first quarter operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of $2.14 billion was 1% higher versus last year. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $136 million ($0.24 per share-diluted) compared with $127 million ($0.23 per share - diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) last year, before the 1999 first quarter net charge. Earnings per share, excluding goodwill amortization was $0.27 per share (diluted) compared with $0.26 per share (diluted and before the 1999 first quarter net charge) for the same period last year. Oilfield Services revenue increased 2% versus the first quarter of 1999 as the worldwide M-I rig count grew 25%. Compared with the fourth quarter of 1999, revenue increased 1%. Resource Management Services revenue was 6% lower than in the first quarter last year. Excluding the adverse effect of currency exchange rates, revenue increased 2%. Test & Transactions revenue increased 14% versus the same period last year. Chairman and Chief Executive Officer Euan Baird commented: "OPEC's determination to hold oil prices around $25 per barrel bodes well for sustainable increases in oil demand and oilfield activity. Our investments in new technology including leadership initiatives in e-commerce will help the industry meet the increasing demand for oil and gas in a cost effective manner."
CONSOLIDATED STATEMENT OF INCOME (Unaudited)(1)(2)
(Stated in thousands except per share amounts)
For Periods Ended March 31 2000 1999(3)
Revenue
Operating $ 2,137,442 $ 2,117,304
Interest and other income 76,110 164,111
2,213,552 2,281,415
Expenses
Cost of goods sold
and services 1,633,623 1,775,577
Research & engineering 131,042 131,843
Marketing 103,009 103,283
General 104,234 99,190
Interest 63,096 44,954
2,035,004 2,154,847
Income before taxes 178,548 126,568
Taxes on income 42,390 57,525
Net Income
from continuing operations(1) 136,158 69,043
Net Income
from discontinued operations(2) - 20,124
Net Income $ 136,158 $ 89,167
Basic Earnings Per Share
Continuing Operations $ 0.24 $ 0.12
Discontinued Operations - 0.04
Net Income $ 0.24 $ 0.16
Diluted Earnings Per Share
Continuing Operations(1) $ 0.24 $ 0.12
Discontinued Operations(2) - 0.04
Net Income $ 0.24 $ 0.16
Average shares outstanding 566,886 546,377
Average shares outstanding
assuming dilution 576,541 559,914
Depreciation and amortization
included in expenses $ 254,290 $ 252,008
(1) The 1999 results from continuing operations include a net charge
of $58 million ($0.10 per share-diluted), $44 million pretax.
(2) The 1999 results from discontinued operations include a charge of
$33 million ($0.06 per share-diluted).
(3) Restated for comparative purposes.
CONDENSED BALANCE SHEET (Unaudited)
(Stated in
thousands)
Assets Mar. 31, 2000 Dec. 31, 1999
Current Assets
Cash and short-term investments $ 4,299,436 $ 4,389,837
Other current assets 4,412,458 4,216,131
8,711,894 8,605,968
Long-term investments,
held to maturity 733,491 726,496
Fixed assets 3,495,448 3,560,740
Excess of investment over
net assets of companies purchased 1,352,945 1,333,681
Deferred taxes on income,
and other assets 878,703 854,307
$ 15,172,481 $ 15,081,192
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and
accrued liabilities $ 2,216,185 $ 2,282,884
Estimated liability for
taxes on income 406,107 383,159
Bank loans and current portion
of long-term debt 601,498 701,792
Dividend payable 106,796 106,653
3,330,586 3,474,488
Long-term debt 3,281,077 3,183,174
Postretirement benefits 458,760 451,466
Other liabilities 262,222 251,036
7,332,645 7,360,164
Stockholders' Equity 7,839,836 7,721,028
$ 15,172,481 $ 15,081,192
BUSINESS REVIEW
(Stated in millions)
Resource
Oilfield Management
Services Services
First Quarter 2000 1999 %chg 2000 1999 %chg
Operating Revenue $1,528 $1,503 2% $ 324 $ 345 (6)%
Pretax Operating
Income(1) $ 172 $ 155 11% $ 11 $ 6 101%
Test &
Transactions(2)
First Quarter 2000 1999 %chg
Operating Revenue $ 307 $ 270 14%
Pretax Operating
Income(1) $ - $ 8 -%
(1) Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. represents income before taxes, excluding interest expense, interest income and the first quarter 1999 net charge. (2) Test & Transactions results include Schlumberger Omnes, formerly a joint venture, which was 100% acquired during the third quarter of 1999. OILFIELD SERVICES Oilfield Services operating revenue in the first quarter increased 1% sequentially and 2% versus the same period last year, mainly due to the improved activity levels in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . The worldwide M-I rig count increased 5% sequentially and 25% year over year. Pretax operating income in the first quarter increased 11% versus the same period last year, despite a substantial loss from Reservoir Evaluation Seismic activity as compared with last year. Pretax operating income grew 4% versus the prior quarter. Compared with the same period last year, revenue increased in North and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. and decreased in all other major geographical regions. Oilfield Services geographical results include Camco activity. In January, Schlumberger launched a new energy business-to-business e-commerce portal, www.IndigoPool.com, offering the first Internet-based global service for acquisitions and divestitures of oil and gas properties. Through IndigoPool.com, oil and gas companies, regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. and brokers are able to market their properties on-line to a worldwide audience, with secure access to commercial and proprietary data sets, scaleable property marketing services and virtual data interpretation centers. In addition, customers will have access to evaluation tools, consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" and industry-related news. The Merak division of GeoQuest and Wood Mackenzie, a division of Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank AG, formed a strategic alliance to jointly develop economic analysis and data mapping Data mapping is the process of creating data element mappings between two distinct data models. Data mapping is used as a first step for a wide variety of data integration tasks including:
In late March, Schlumberger introduced the land component of the revolutionary Q* seismic data acquisition and processing system at a special event in Bahrain. The new Q-Land* digital land seismic system offers significant improvements in the imaging of reservoirs to show details that are not visible using conventional technology. North America In North America, first quarter revenue of $511 million increased 5% sequentially and 32% compared with the first quarter of 1999 as the M-I rig count increased 49% year over year. Pretax operating income increased 14% sequentially and 275% year over year. Compared with last year, revenue increased across all oilfield services with Reservoir Evaluation Wireline and pressure pumping services posting the highest levels of growth. The continued shift toward natural gas drilling led to increased activity in all areas except Alaska, with both the lower 48 states and Canada up substantially versus the same quarter last year. Positive pricing trends continued throughout the region due to the introduction of new value-added technology and to increasing demand. First quarter revenue for well productivity-related services showed improvement over the prior quarter as a result of pricing changes and the launch of the new PowerSTIM* well optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. service in the US. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. In Latin America, first quarter revenue of $249 million decreased 3% sequentially but increased 17% year over year as the M-I rig count increased 15% versus the same period last year. Pretax operating income showed strong improvement sequentially and increased 30% year over year. Revenue in all geographic regions increased by double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. versus last year, with Venezuela posting the largest increase. Marine seismic revenue showed a second straight quarter of improvement, with significant sales of Brazilian multiclient surveys. The Schlumberger Electrical Hydraulic Deepwater Control System (E/H DWCS DWCS Dynamic Window-Constrained Scheduling DWCS Diamond Wire Cutting System * system) was used in conjunction with a SenTREE*-3 subsea Subsea is a general term frequently used to refer to equipment, technology, and methods employed to explore, drill, and develop oil and gas fields that exist below the ocean floors. This may be in "shallow" or "deepwater". test tree system to perform a 114-hour "full package" exploration test campaign in 5896 feet (1797 meters) of water offshore Brazil. This second successful job for the E/H DWCS system highlighted the advances in deepwater subsea technology and equipment reliability that continue to bring benefits to the industry and permit testing operations to be safely performed in water depths up to 10,000 feet (3048 meters). The Burgos Alliance Project, focusing on the optimization of drilling and completion techniques for gas in northern Mexico, continued to reduce the cycle time required to drill and complete wells. The techniques and technologies developed in this project can be successfully employed in the expanding gas drilling activity in other geographic markets as well. Europe/CIS/West Africa Quarterly revenue of $338 million increased 3% sequentially but declined 22% year over year. The M-I rig count was up 10% versus the fourth quarter of 1999, and down 1% over the same period last year, excluding the CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S . Pretax operating income decreased 12% sequentially and 42% year over year. Geographically, the CIS was the only area reporting a revenue increase year over year, driven primarily by well productivity related services. All other areas were down versus last year, with Reservoir Evaluation Seismic services posting the largest decline. The successful use of 3D multicomponent seismic data to significantly reduce well construction costs was demonstrated in a value sharing drilling project in the North Sea. The superior quality of the 3D/4C seismic data resulted in a much clearer image of the subsurface sub·sur·face adj. Of, relating to, or situated in an area beneath a surface, especially the surface of the earth or of a body of water. Adj. 1. , enabling a joint team to accurately identify and plan around potential drilling hazards between the surface and the target reservoir. The well was subsequently drilled and completed successfully, without the costly adverse drilling events that had plagued previous wells in the field. Other Eastern Hemisphere Eastern Hemisphere Part of the Earth east of the Atlantic Ocean. It includes Europe, Asia, Australia, and Africa. Longitudes 20° W and 160° E are often considered its boundaries. Quarterly revenue of $380 million was flat sequentially and down 12% year over year, while the M-I rig count declined 8% year over year. Pretax operating income declined 16% sequentially and 27% year over year. Compared with the same period last year, well intervention A well intervention, or 'well work', is an activity involving maintenance, modification, repair or completion of an oil or gas well. Types of well work Pumping
adj. Possible to estimate, measure, or perceive: appreciable changes in temperature. See Synonyms at perceptible. growth. Activity related to maximizing well productivity continued to increase throughout the region, highlighted by the successful introduction of CoilFRAC* stimulation technology in Indonesia -- the first application outside North America. CoilFRAC technology provides cost-effective service using coiled tubing Coiled tubing refers to metal piping, normally 1" to 2" in diameter, used for interventions in oil and gas wells, which comes spooled on a large drum. The main benefits over wireline are the ability to pump chemicals through the coil and the ability to push it into hole rather than to access new or bypassed productive zones for hydraulic fracturing Hydraulic fracturing is a method used to create fractures that extend from a borehole into rock formations, which are typically maintained by a proppant. The method is informally called fracing. . RESOURCE MANAGEMENT SERVICES Resource Management Services (RMS (1) (Record Management Services) A file management system used in VAXs. (2) (Root Mean Square) A method used to measure electrical output in volts and watts. 1. RMS - Record Management Services. 2. ) revenue and orders decreased 6% versus the first quarter of 1999. Excluding the adverse effect of currency exchange rates, revenue and orders increased 2%. Pretax operating income in the first quarter rose, mainly due to gains in the UK, the US and South America. In North America, revenue grew 3% compared with the first quarter of 1999, while orders rose 12%, spurred by the increased interest in the Centron* static electricity meter with built-in communication and networking capabilities. Increased shipments of the Protectus* large industrial meter and of radio-frequency (RF) remote-read R900* and R300* meter interface units also helped the increase in revenue for the quarter. In February, Schlumberger agreed to acquire the assets of CellNet Data Systems, Inc., a market-leading provider of telemetry telemetry Highly automated communications process by which data are collected from instruments located at remote or inaccessible points and transmitted to receiving equipment for measurement, monitoring, display, and recording. services for the development and deployment of large-scale automatic meter reading Automatic meter reading, or AMR, is the technology of automatically collecting data from water meter or energy metering devices (water, gas, electric) and transferring that data to a central database for billing and/or analyzing. systems. The acquisition is being handled through a Chapter 11 procedure and is subject to final approval by the bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. . Schlumberger also acquired an exclusive utility industry license to Metricom Inc.'s UtiliNet RF technology to enhance the ability of RMS to provide a broader array of high-end data collection and control systems solutions to its electric, water and gas clients. In Europe, revenue in the first quarter declined 14% versus the first quarter of 1999, with orders down 20% over the same period. In continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. , the devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Euro against the dollar accounted for most of the revenue decline. While electricity business revenue was generally weaker due to continued pressure on prices, the gas business in the UK was up significantly. In South America, revenue grew 16% versus last year led by a significant increase in Brazil, where the January 1999 currency devaluation Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. adversely impacted activity in the first half of last year. Orders in South America were up by 33%. In Asia, revenue rose 27% compared with the same period last year, while improved economic conditions helped orders increase by 61%. Revenue from the RMS integrated solutions business grew 10% during the quarter compared with last year, with increased momentum seen across all regions. The RMS integrated solutions activities include packaged meter, data and revenue management services for energy suppliers, network operators and consumers, in addition to consulting, project design, implementation, management, maintenance, operation and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . TEST & TRANSACTIONS Test & Transactions first quarter orders increased 51% compared with the same quarter last year and 51% versus last quarter. The increase in orders includes a major contribution from the Omnes contract to manage the Schlumberger global network. Revenue, including Omnes, increased 14% compared with the same quarter last year and fell 6% compared with the prior quarter. Smart Cards Example of widely used contactless smart cards are Hong Kong's Octopus card, Paris' Calypso/Navigo card and Lisbon' LisboaViva card, which predate the ISO/IEC 14443 standard. The following tables list smart cards used for public transportation and other electronic purse applications. & Terminals orders increased 31% year over year and 25% compared with the fourth quarter of 1999. Revenue increased 13% versus the same quarter of last year but was off 8% versus a seasonally strong prior quarter. For the third consecutive quarter, sales and orders for smart cards were led by strong demand from the Global System for Mobile (GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. ) communications market in both Asia and Europe. The recent introduction of the Simera card (open Java* programmable SIM card SIM card abbr (= subscriber identity module card) → carte f SIM SIM card n (Tel) (= Subscriber Identity Module card) → SIM-Karte f ) has resulted in market share gains in all regions. European SIM (subscriber identity module (telecommunications, wireless communications) Subscriber Identity Module - (SIM or "SIM card") A component, usually in the form of a miniature smart-card, that is theoretically tamper-proof and is used to associate a mobile subscriber with a mobile network subscription. ) card sales for the quarter doubled over last year. Asian SIM card activity showed continued strong growth, with significant orders and revenue from China. Payphone payphone Noun a coin-operated telephone payphone pay n → Münztelefon nt; (card phone) → Kartentelefon nt activity improved in both the Middle East and Asia. Automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. Test Equipment (ATE) orders for the first quarter, including SABER* (Schlumberger Advanced Business Engineering Resources) and service activities, improved 24% versus the same quarter last year and 61% compared with last quarter. The growth in orders over last quarter is attributable to the strong demand from Europe and Taiwan for SOC (system on a chip) test systems, initial orders for Rambus** production test systems and entry into the front-end wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. inspection market. Revenue for the first quarter decreased 18% versus the same quarter last year and 12% compared with the prior quarter. The revenue decline is primarily due to reduced demand for high-end logic systems. SABER continued to report record revenue and orders. SABER orders were strongest in North America due to the regional density of fabless design companies engaging its services. Omnes orders in the first quarter were characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by strong activity in North America, South America and Asia and reflected growing requirements for services related to local and wide area network (LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. and WAN) activity and firewall security. Omnes revenue for the quarter increased 12% versus last quarter. CHANGE IN LIQUIDITY Liquidity represents cash plus short-term and long-term investments less debt. A summary of the major components of the change in liquidity follows:
(Stated in millions)
Three Months 2000 1999(1)
Funds provided by:
Net income from continuing operations $ 136 $ 69
Charges - 58
Depreciation and amortization 254 252
Employee stock option plan 84 21
Sale of financial instruments - 204
Funds used for:
Fixed asset additions (211) (225)
Business acquired (28) -
Dividends paid (106) (102)
Working capital and other (210) (5)
Discontinued operations, net - (78)
Change in liquidity (81) 194
Liquidity, beginning of period 1231 731
Liquidity, end of period $ 1150 $ 925
(1) Restated for comparative purposes.
* Mark of Schlumberger ** Rambus is a registered trademark of Rambus, Inc. This press release is on the Schlumberger Realtime web site at http://www.slb.com |
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