-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JMyj1jCyT2Tn812Zjz/SGyz6CAkB3paQkypZW2PwBVwoTMundAAefI6bHBcx19lp A2U1Lb0ME8/iNgg+ynR8XQ== 0000950129-01-502021.txt : 20010720 0000950129-01-502021.hdr.sgml : 20010720 ACCESSION NUMBER: 0000950129-01-502021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010718 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITH INTERNATIONAL INC CENTRAL INDEX KEY: 0000721083 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 953822631 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08514 FILM NUMBER: 1684387 BUSINESS ADDRESS: STREET 1: 16740 HARDY ST STREET 2: P O BOX 60068 CITY: HOUSTON STATE: TX ZIP: 77032 BUSINESS PHONE: 2814433370 MAIL ADDRESS: STREET 1: 16740 HARDY ST STREET 2: P O BOX 60068 CITY: HOUSTON STATE: TX ZIP: 77205 8-K 1 h89180e8-k.txt SMITH INTERNATIONAL INC - DATE OF REPORT 7/18/2001 1 SMITH INTERNATIONAL, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 JULY 18, 2001 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) SMITH INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-8514 95-3822631 (STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.) 411 N. SAM HOUSTON PARKWAY, SUITE 600 HOUSTON, TEXAS (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 77060 (ZIP CODE) (281) 443-3370 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 2 ITEM 5: OTHER EVENTS A copy of the press release announcing the Company's results for the second quarter of 2001 is filed as Exhibit 99.1 and is hereby incorporated herein by reference. ITEM 7. Financial Statements and Exhibits (a) Financial statements of businesses acquired Not applicable. (b) Pro forma financial information Not applicable. (c) Exhibits 99.1 Press Release issued by the Registrant dated July 18, 2001. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SMITH INTERNATIONAL, INC. /s/ NEAL S. SUTTON ------------------ By: Neal S. Sutton Senior Vice President - Administration, General Counsel and Secretary Date: July 18, 2001 4 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 99.1 Press Release dated July 18, 2001. EX-99.1 2 h89180ex99-1.txt PRESS RELEASE - SECOND QUARTER EARNINGS 1 EXHIBIT 99.1 PRESS RELEASE - ------------------------------------------------------------------------------- SMITH INTERNATIONAL, INC. P.O. BOX 60068 HOUSTON, TX 77205-0068 WEBSITE ADDRESS: smith.com FOR RELEASE WEDNESDAY, JULY 18, 2001 CONTACT: MARGARET K. DORMAN CHIEF FINANCIAL OFFICER (281) 443-3370 SMITH INTERNATIONAL, INC. REPORTS SECOND QUARTER EARNINGS OF 75 CENTS PER SHARE HOUSTON, Texas (July 18, 2001)... Smith International, Inc. (NYSE: SII) today announced second quarter net income of $37.7 million, or 75 cents per share, on revenues of $872.4 million. In the comparable period of the prior year, the Company reported earnings of $15.0 million, or 30 cents per share, on revenues of $657.2 million. Revenues grew 33 percent over the second quarter of 2000, as improved activity levels across all geographic regions impacted demand for the Company's products and services and influenced pricing in the oilfield segment operations. The majority of the base business revenue growth was reported in the United States and Europe/Africa, including the North Sea, West Africa and the Commonwealth of Independent States. Incremental revenues from acquisitions completed during the prior twelve-month period also contributed to the reported increase, accounting for approximately one-third of the quarter-to-quarter revenue improvement. After excluding the effect of acquired and divested operations, oilfield segment revenues were 29 percent above the amounts reported in the prior year quarter and compared to a 27 percent increase in drilling activity levels period-to-period. For the six months ended June 30, 2001, the Company reported net income of $71.9 million, or $1.42 per share on a diluted basis, on revenues of $1.7 billion. In the comparable period of the prior year, earnings were $26.3 million, or 52 cents per share on a diluted basis, on revenues of $1.3 billion. Revenues grew across all business units and geographic areas with the majority of the increase attributable to improved North American activity levels and acquisitions. 2 M-I's revenues were $392.4 million, a 33 percent increase over the second quarter of 2000. Increased demand for base-fluid products, attributable to a 40 percent improvement in U.S. land-directed drilling, accounted for the majority of the organic revenue growth over the second quarter of 2000. To a lesser extent, increased rig activity in the offshore markets favorably impacted drilling and completion fluid sales and the related engineering service revenue. SWACO's revenues more than doubled over the prior year period due to increased demand for fluid processing equipment and services and the impact of the Sweco transaction, which was completed in the fourth quarter of 2000. After excluding the effect of acquired operations, revenues were 25 percent above the amounts reported in the prior year quarter. Smith Bits reported revenues of $101.7 million, an increase of 34 percent over the second quarter of 2000. Although revenue growth was reported in all geographic regions, increased demand for products and services in the United States and Europe/Africa accounted for the majority of the revenue increase over the prior year period. Improved pricing, particularly in the North American market, and the continual introduction of technologically-advanced products and services also contributed to the second quarter's financial results. On a combined basis, sales of petroleum three-cone and diamond bits rose 37 percent over the prior year period, comparing favorably to the 27 percent improvement in average activity levels quarter-to-quarter. Smith Services' revenues totaled $91.4 million for the second quarter of 2001. After excluding the impact of the directional operations divested in January 2001, revenues were 39 percent above the second quarter of 2000. The majority of the revenue increase was generated in the United States; however, strong revenue growth was also reported in areas outside North America, particularly Latin America and the Middle East. The majority of the base business increase related to improved drilling products and services revenues, which grew more than 80 percent over the prior year period. Subsequent to June 30, 2001, Smith Services completed the acquisition of Star Tool Company, which provides fishing services in the U.S. Permian Basin market. 3 Wilson's revenues totaled $286.9 million for the second quarter of 2001, 32 percent above the amount reported in the prior year quarter. The majority of the revenue growth was attributable to the effect of the Van Leeuwen transaction, which was completed in January 2001. Wilson's base revenue growth related primarily to the U.S.energy branches, which benefited from the significantly higher exploration and production activity. Lower spending by customers in the petrochemical market, due to the impact of higher commodity prices on feedstock and operating costs, partially offset this increase. After excluding the impact of the acquired Van Leeuwen operations, revenues increased 12 percent over the second quarter of 2000. Commenting on the results, Chairman and CEO, Doug Rock stated, "In spite of the impact of the seasonal break-up in Canada, Smith posted strong sequential earnings growth over the first quarter. Improved North American activity levels have led to favorable pricing in the oilfield product and service lines. Our growth in coming quarters will likely be concentrated in international markets where Smith has significant exposure, particularly the North Sea, the Middle East and West Africa." Loren Carroll, Executive Vice President, also noted that, "Smith's oilfield segment businesses generated operating margins of 14.7 percent, surpassing the level seen during the 1997 fiscal year. Increased profitability levels have favorably impacted operating cash flow, which improved to $88.4 million, or $1.75 per share, for the second quarter of 2001. Operating cash flow consists of earnings before interest, taxes, minority interests plus depreciation and amortization, and is reduced for any minority partner ownership interests in these amounts." Smith International, Inc. is a leading worldwide supplier of premium products and services to the oil and gas exploration and production industry, the petrochemical industry and other industrial markets through its four principal business units - M-I, Smith Bits, Smith Services and Wilson. Financial highlights follow: 4 SMITH INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30, --------------------------------- --------------------------------- 2001 2000 2001 2000 -------------- -------------- --------------- -------------- Revenues....................................... $ 872,389 $ 657,229 $ 1,737,700 $ 1,282,661 Costs and expenses: Costs of revenues............................ 613,453 482,894 1,232,675 946,843 Selling expenses............................. 128,541 99,794 251,717 195,098 General and administrative expenses.......... 35,106 28,532 68,602 56,145 Goodwill amortization........................ 3,941 2,699 7,772 5,340 -------------- -------------- --------------- -------------- Total costs and expenses............. 781,041 613,919 1,560,766 1,203,426 -------------- -------------- --------------- -------------- Income before interest and taxes............... 91,348 43,310 176,934 79,235 Interest expense, net.......................... 10,738 8,758 21,081 17,523 -------------- -------------- --------------- -------------- Income before income taxes and minority interests...................................... 80,610 34,552 155,853 61,712 Income tax provision........................... 26,087 11,413 50,892 21,088 -------------- -------------- --------------- -------------- Income before minority interests............... 54,523 23,139 104,961 40,624 Minority interests............................. 16,841 8,165 33,061 14,327 -------------- -------------- --------------- -------------- Net income..................................... $ 37,682 $ 14,974 $ 71,900 $ 26,297 ============== ============== =============== ============== Earnings per share: Basic........................................ $ 0.75 $ 0.30 $ 1.44 $ 0.53 ================ ================= ================ =============== Diluted...................................... $ 0.75 $ 0.30 $ 1.42 $ 0.52 ================ ================= ================ =============== Weighted average shares outstanding: Basic........................................ 49,910 49,725 49,877 49,448 Diluted...................................... 50,517 50,363 50,505 50,153 OTHER DATA: Depreciation and amortization.................. $ 22,767 $ 19,736 $ 44,937 $ 39,170 Capital spending (a)........................... $ 28,380 $ 23,186 $ 56,820 $ 38,825 EBIT excluding minority interests (b).......... $ 70,517 $ 32,498 $ 136,151 $ 59,815 EBITDA excluding minority interests (b)....... $ 88,402 $ 48,438 $ 171,565 $ 91,460
NOTE (a): Capital spending is reported gross and not reduced for the proceeds arising on lost-in-hole sales or sales of fixed asset equipment replaced. Net capital spending was approximately $47.6 million and $31.9 million for the six months ended June 30, 2001 and 2000, respectively. NOTE (b): "Earnings before interest and taxes (EBIT) excluding minority interests" and "Earnings before interest, taxes, depreciation and amortization (EBITDA) excluding minority interests" represent the amount of EBIT and EBITDA earned by the Company after reduction for the portion of the respective amounts allocable to the minority interest partners. 5 SMITH INTERNATIONAL, INC. REVENUE ANALYSIS (IN THOUSANDS)
THREE MONTHS ENDED JUNE 30, --------------------------------------- 2001 2000 ---------------- ----------------- M-I................................................. $392,403 $294,425 SMITH BITS.......................................... 101,695 75,991 SMITH SERVICES...................................... 91,387 69,197 WILSON.............................................. 286,904 217,616 ----------------- ----------------- TOTAL.............................................. $872,389 $657,229 ================= =================
SIX MONTHS ENDED JUNE 30, ---------------------------------------- 2001 2000 ---------------- ----------------- M-I................................................. $784,672 $562,202 SMITH BITS.......................................... 204,482 151,430 SMITH SERVICES...................................... 177,822 133,861 WILSON.............................................. 570,724 435,168 ---------------- ------------------ TOTAL............................................... $1,737,700 $1,282,661 ================ ==================
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