0000950129-01-503598.txt : 20011029 0000950129-01-503598.hdr.sgml : 20011029 ACCESSION NUMBER: 0000950129-01-503598 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20011018 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011023 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: 1934 Act SEC FILE NUMBER: 001-08514 FILM NUMBER: 1764357 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 h91527e8-k.txt SMITH INTERNATIONAL INC - OCTOBER 18, 2001 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 OCTOBER 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) ITEM 5: OTHER EVENTS A copy of the press release dated October 18, 2001 announcing the Company's results for the three months ended September 30, 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 October 18, 2001. 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: October 18, 2001 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION ----------- ----------- 99.1 Press Release dated October 18, 2001. EX-99.1 3 h91527ex99-1.txt PRESS RELEASE EXHIBIT 99.1 PRESS RELEASE =============================================================================== SMITH INTERNATIONAL, INC. P.O. BOX 60068 HOUSTON, TX 77205-0068 WEBSITE ADDRESS: smith.com FOR RELEASE THURSDAY, OCTOBER 18, 2001 CONTACT: MARGARET K. DORMAN CHIEF FINANCIAL OFFICER (281) 443-3370 SMITH INTERNATIONAL, INC. REPORTS RECORD EARNINGS OF $42.1 MILLION, OR 84 CENTS PER SHARE HOUSTON, Texas (October 18, 2001)... Smith International, Inc. (NYSE: SII) today announced third quarter net income of $42.1 million, or 84 cents per share, more than twice the prior year's earnings of $20.5 million, or 41 cents per share. Revenues for the three months ended September 30, 2001 were $909.7 million, a 27 percent increase over the amount reported during the prior year quarter. The majority of the revenue improvement related to increased natural gas-directed drilling activity in the United States, which grew over 30 percent between the comparable periods. The improvement over the prior year quarter was also attributable to incremental revenues from acquisitions as well as increased customer spending in markets outside the United States, primarily the North Sea, the Commonwealth of Independent States and Latin America. After excluding the effect of acquired and divested operations, oilfield segment revenues were 23 percent above the amount reported in the prior year quarter and compared to a 15 percent increase in drilling activity period-to-period. For the nine months ended September 30, 2001, the Company reported net income of $114.0 million, or $2.26 per share on a diluted basis, on revenues of $2.6 billion. In the comparable period of the prior year, earnings were $46.8 million, or 93 cents per share on a diluted basis, on revenues of $2.0 billion. Revenues grew across all business units and geographic areas with the majority of the increase attributable to improved North American activity levels and the impact of acquisitions. M-I's revenues were $412.4 million in the third quarter of 2001, a 26 percent increase over the prior year period. The majority of the year-over-year revenue growth related to increased sales of base-fluid products, attributable to a 27 percent improvement in U.S. land-directed drilling, and the impact of acquisitions completed during the prior twelve-month period. Increased demand for SWACO's fluid processing and waste management services combined with higher completion fluid sales in the U.S. Gulf of Mexico also contributed to the period-to-period revenue improvement. After excluding the effect of acquired operations, revenues were 19 percent above the amount reported in the third quarter of 2000. Smith Bits' revenues totaled $105.1 million, 25 percent above the third quarter 2000 revenue levels. Increased drilling activity across all geographic regions, particularly the United States and Europe/Africa, had a favorable impact on unit sales volumes as compared to the prior year period. Combined petroleum three-cone and diamond bit revenues rose 28 percent over the prior year quarter, almost double the 15 percent increase in activity levels, due to improved volumes, the impact of pricing and increased market penetration. Smith Bits' mining bit operations, which generated revenue of $5.8 million during the period ended September 30, 2001, were contributed to the Sandvik Smith AB joint venture earlier in the month and are currently being accounted for under the equity method. Smith Services reported revenues of $104.7 million, a 39 percent increase over the amounts reported in the prior year quarter. Base business revenues grew in excess of the market in all geographic regions; however, improved North American spending levels accounted for the majority of the increase from the third quarter of 2000. Incremental revenues from acquisitions were partially offset by the effect of the directional operations sale which occurred earlier in the year, resulting in a limited quarter-to-quarter impact. On a product basis, over 60 percent of the revenue improvement was attributable to higher drilling products and services revenues, including increased demand for tubular products and inspection services. Wilson's revenues were $287.5 million, a 24 percent increase over the third quarter of 2000. Approximately three-quarters of the revenue increase was attributable to the impact of the Van Leeuwen acquisition, which was completed in January 2001. Excluding the impact of acquisitions, revenues increased seven percent over the prior year period as higher North American energy branch sales were partially offset by lower maintenance, repair and operating spending in the U.S. industrial customer base. Commenting on the results, Chairman and CEO, Doug Rock stated, "Smith reported record revenues and earnings in the third quarter. The significant cash flow has enabled us to complete ten acquisitions and repurchase more than half a million of our shares since the beginning of July, without an appreciable increase in our leverage. Although U.S. gas drilling activity has fallen 12 percent since the end of the second quarter, we continue to believe the medium to longer-term fundamentals for the North American natural gas market remain very strong. The U.S. gas drilling decline has had little impact on our U.S. revenues to date; however, further significant drilling reductions, if they were to occur, could effect Smith's future results." Loren Carroll, Executive Vice President, also noted that, "Smith's earnings before interest and taxes ("EBIT") grew 84 percent on a revenue increase of 27 percent evidencing the incremental earnings power in our oilfield segment. Year-to-date operating cash flow, consisting of EBIT plus depreciation and amortization and reduced for minority partner ownership interests in these amounts, equaled $267.6 million or $5.31 per share. Our strong cash flow should enable us to continue creating value for our shareholders, combining strategic acquisitions with further repurchases under our share buyback program." 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: CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Three Months Ended September 30, Nine Months Ended September 30, --------------------------------- --------------------------------- 2001 2000 2001 2000 --------------- --------------- ---------------- --------------- Revenues....................................... $ 909,682 $ 718,470 $ 2,647,382 $ 2,001,131 -------------- -------------- --------------- ------------- Costs and expenses: Costs of revenues............................ 636,626 523,118 1,869,301 1,469,961 Selling expenses............................. 132,735 107,060 384,452 302,158 General and administrative expenses.......... 36,574 31,269 105,176 87,414 Goodwill amortization........................ 3,966 2,804 11,738 8,144 -------------- -------------- --------------- ------------- Total costs and expenses............. 809,901 664,251 2,370,667 1,867,677 -------------- -------------- --------------- ------------- Income before interest and taxes............... 99,781 54,219 276,715 133,454 Interest expense, net.......................... 10,653 8,554 31,734 26,077 -------------- -------------- --------------- ------------- Income before income taxes and minority interests...................................... 89,128 45,665 244,981 107,377 Income tax provision........................... 28,941 15,131 79,833 36,219 -------------- -------------- --------------- ------------- Income before minority interests............... 60,187 30,534 165,148 71,158 Minority interests............................. 18,121 10,060 51,182 24,387 -------------- -------------- --------------- ------------- Net income..................................... $ 42,066 $ 20,474 $ 113,966 $ 46,771 ============== =============== =============== ============= Earnings per share: Basic........................................ $ 0.84 $ 0.41 $ 2.29 $ 0.94 ============== =============== =============== ============= Diluted...................................... $ 0.84 $ 0.41 $ 2.26 $ 0.93 ============== =============== =============== ============= Weighted average shares outstanding: Basic........................................ 49,831 49,750 49,862 49,550 Diluted...................................... 50,210 50,387 50,400 50,231 OTHER DATA: Depreciation and amortization.................. $ 23,171 $ 20,430 $ 68,108 $ 59,600 Capital spending (a)........................... $ 31,493 $ 27,954 $ 88,313 $ 66,779 EBIT excluding minority interests (b).......... $ 77,777 $ 41,513 $ 213,928 $ 101,328 EBITDA excluding minority interests (b)....... $ 96,071 $ 57,959 $ 267,636 $ 149,419
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 $73.5 million and $55.0 million for the nine months ended September 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. SMITH INTERNATIONAL, INC. REVENUE ANALYSIS (IN THOUSANDS)
Three Months Ended September 30, ---------------------------------------- 2001 2000 ---------- --------- M-I................................................. $412,364 $326,446 Smith Bits.......................................... 105,135 84,018 Smith Services...................................... 104,704 75,296 Wilson.............................................. 287,479 232,710 -------- -------- TOTAL.............................................. $909,682 $718,470 ======== ========
Nine Months Ended September 30, ----------------------------------------- 2001 2000 ------------ ----------- M-I................................................. $1,197,036 $ 888,648 Smith Bits.......................................... 309,617 235,448 Smith Services...................................... 282,526 209,157 Wilson.............................................. 858,203 667,878 ---------- ---------- TOTAL............................................... $2,647,382 $2,001,131 ========== ===========