Schlumberger Limited provided an update on the integration of Sema plc into Schlumberger Limited. As previously reported, the acquisition of Sema plc was completed on April 6, 2001 less than two months after the transaction was first announced. The new business segment, SchlumbergerSema, was created as a result of the merger of Sema plc with the businesses of Schlumberger Test & Transactions and Resource Management Services.
SchlumbergerSema will focus on six global market segments: telecommunications, utility, finance, transport, oil and gas and the public sector. The new SchlumbergerSema management structure is in place and will be presented at an analyst meeting to be held in Paris on June 27 along with an update on the business strategy.
Corporate cultural similarities, and synergies between the two companies, are contributing to the rapid and smooth integration of the combined businesses. Moreover, the attrition rate of Sema employees post acquisition has improved, and of the 2700 key Sema employees who received Schlumberger stock options in April, only a very small percentage have chosen to leave the company. Due mainly to the global slowdown in the telecommunications industry and a further weakening of the European currency against the US dollar, revenue for the businesses acquired with Sema plc is lower than previously estimated. Pretax operating income, before amortization of intangibles, is expected to be breakeven for the first six months following the acquisition.
The acquisition of Sema is being financed through existing cash resources of Schlumberger and from borrowings under the $3 billion floating rate credit facility. The after tax cost of funding is currently estimated to be 4.7%, which is lower than the previous estimate of 5.5%. Intangibles related to the acquisition are expected to be in the order of $5 billion and will be amortized over a composite life of 28 years. The Financial Accounting Standards Board (FASB) has proposed to eliminate goodwill amortization beginning January 2002. Starting in the second quarter, all acquisition related costs, including goodwill, will be reflected at the corporate level and not included in the business segments. Schlumberger Limited is a global technology services company consisting of two business segments. Schlumberger Oilfield Services is the leading provider of technology services and solutions to the international petroleum industry. SchlumbergerSema is a major IT services company providing information technology solutions to the telecommunications, utility, finance, transport and public sectors, and is the leading supplier of smart card technology. Schlumberger Limited acquired Sema plc in April, 2001. In 2000, Schlumberger revenue was $9.6 billion and Sema plc revenue was $2.4 billion. Additional information is available at [www.slb.com].