-----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, D/Cxm7+JzYQb4vuUKIA2SuFblco/0yrtHd3AP0gpOoIk6lBZLqj5BZI0tmfhG0P3 QxD6pYt6xarE4xP9uUoXiQ== 0000950129-02-002240.txt : 20020502 0000950129-02-002240.hdr.sgml : 20020501 ACCESSION NUMBER: 0000950129-02-002240 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020502 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020502 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: 02631236 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 h96518e8-k.txt SMITH INTERNATIONAL INC - MAY 2, 2002 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 MAY 2, 2002 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 May 2, 2002 announcing the Company's results for the three months ended March 31, 2002 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 May 2, 2002. 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: May 2, 2002 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 99.1 Press Release dated May 2, 2002.
EX-99.1 3 h96518ex99-1.txt PRESS RELEASES - FIRST QUARTER RESULTS EXHIBIT 99.1 PRESS RELEASE - -------------------------------------------------------------------------------- SMITH INTERNATIONAL, INC. P.O. BOX 60068 HOUSTON, TX 77205-0068 WEBSITE ADDRESS: smith.com FOR RELEASE THURSDAY, MAY 2, 2002 CONTACT: MARGARET K. DORMAN CHIEF FINANCIAL OFFICER (281) 443-3370 SMITH INTERNATIONAL, INC. REPORTS FIRST QUARTER RESULTS HOUSTON, Texas (May 2, 2002)... Smith International, Inc. (NYSE: SII) today announced first quarter net income of $28.7 million, or 58 cents per share, on revenues of $827.4 million. The first quarter's results include $7.9 million, or six cents per share after-tax, of operating costs recognized for estimated asset write-downs in Argentina and severance costs incurred during the last half of the quarter. In the comparable prior year period, the Company reported revenues of $865.3 million with earnings of $34.2 million, or 68 cents per share on a diluted basis. The prior year results include the impact of goodwill amortization which, if eliminated in accordance with the current accounting standard, would have resulted in earnings of 72 cents per share on a diluted basis. Consolidated revenues for the three months ended March 31, 2002 were four percent below the prior year quarter and compared to a 20 percent decline in the M-I worldwide rig count between the corresponding periods. Revenues associated with 15 acquisitions completed during the prior fiscal year, partially offset the effect of lower drilling activity in the Western Hemisphere markets. Excluding the impact of acquired and divested operations, consolidated revenues declined ten percent from the first quarter of 2001. The majority of the base business revenue decline was reported in Wilson, which has the most significant North American revenue exposure of the Company's operations and was impacted by a 30 percent reduction in North American activity levels. M-I's revenues totaled $396.7 million for the quarter, slightly above the amounts reported in the prior year period, as incremental revenues from acquisitions offset the effect of the decline in drilling activity. Excluding the impact of acquisitions, revenues were seven percent below the prior year period due to a reduction in the number of offshore U.S. shelf-based drilling programs and lower Latin American activity levels, primarily Venezuela, Argentina and Brazil. On a sequential quarter basis, M-I's revenues decreased $33.9 million, or eight percent. Offshore U.S. drilling activity weakened throughout the first quarter, resulting in reduced sales of synthetic drilling fluids. Smith Bits reported revenues of $89.5 million, a decrease of 13 percent from the prior year quarter. After excluding the effect of the mining bit operations contributed to an unconsolidated venture in the fourth quarter of 2001, revenues declined eight percent from the prior year period. Although the base revenue reduction was reported in the North American market, where demand for petroleum three-cone drill bits was impacted by a 30 percent decline in the average rig count, the inclusion of several, large international export orders partially offset the lower North American revenue base. On a sequential quarter basis, revenues increased despite the six percent reduction in average drilling activity due to the higher level of export orders that occurred during the quarter. Smith Services' revenues were $106.7 million, or 23 percent, above the prior year period. Incremental revenues from acquisitions completed in the last half of 2001 contributed the majority of the year-over-year revenue increase. Base business revenues grew two percent over the prior year quarter, with the majority of the improvement related to higher tubular sales attributable to an alliance with a drill pipe manufacturer. Compared to the fourth quarter of 2001, Smith Services' revenues declined eight percent as lower drilling activity in the United States and Latin America resulted in reduced customer spending, particularly in the drilling and remedial product lines. Wilson's revenues for the quarter totaled $234.5 million, 17 percent below the prior year quarter. Approximately 60 percent of the revenue decline related to the C.E. Franklin Ltd. operations, which were impacted by lower Canadian activity levels and the completion of a large customer project in the second half of 2001. Lower sales in Wilson's U.S. operations, which decreased 10 percent from the prior year period, also contributed to the reported variance. Declines in drilling and completion activity, plus lower customer spending in the refining and petrochemical markets, accounted for the revenue reduction in the U.S. operations. On a sequential quarter basis, Wilson's revenues declined by 13 percent as a result of lower U.S. drilling and completion activity, decreased project spending in the midstream segment and a reduction in the number of well completions in Canada. Commenting on the results, Chairman and CEO, Doug Rock stated, "Smith's first quarter results reflect the deterioration in U.S. activity levels. However, our exposure to the international markets and our positioning in the deepwater Gulf of Mexico helped mitigate the overall impact. In the near-term, I'm encouraged by a number of factors we're seeing in the market, namely the recent change in direction of the domestic rig count. Our Smith Tool Activity Tracking System, or STATS(TM), count has reported higher U.S. drilling activity in six of the past seven weeks, and is currently nine percent above the low point seen in early March 2002." Loren Carroll, Executive Vice President, also noted that, "In spite of the lower North American activity levels, our operations reported solid results for the quarter. Sequential oilfield segment operating margins, net of the special charges recorded during the period, decreased less than a percentage point on a seven percent revenue decline. Moreover, our continued focus on improving the balance sheet has generated favorable working capital reductions during the quarter. Excess cash flow has been used to reduce outstanding borrowings, resulting in our debt to total capitalization decreasing to 31 percent at quarter-end." 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: SMITH INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
Three Months Ended March 31, 2002 2001 - ------------------------------------------------------------------------------------------------------------------------- Revenues $ 827,377 $ 865,311 - ------------------------------------------------------------------------------------------------------------------------- Costs and expenses: Costs of revenues 585,875 619,222 Selling expenses 131,059 123,176 General and administrative expenses 35,995 33,496 Goodwill amortization - 3,831 - ------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 752,929 779,725 - ------------------------------------------------------------------------------------------------------------------------- Operating income 74,448 85,586 Interest expense, net 10,016 10,343 - ------------------------------------------------------------------------------------------------------------------------- Income before income taxes and minority interests 64,432 75,243 Income tax provision 19,645 24,805 - ------------------------------------------------------------------------------------------------------------------------- Income before minority interests 44,787 50,438 Minority interests 16,057 16,220 - ------------------------------------------------------------------------------------------------------------------------- Net income $ 28,730 $ 34,218 ========================================================================================================================= Earnings per share: Basic $ 0.58 $ 0.69 ========================================================================================================================= Diluted $ 0.58 $ 0.68 ========================================================================================================================= Diluted, excluding impact of goodwill amortization $ 0.58 $ 0.72 ========================================================================================================================= Weighted average shares outstanding: Basic 49,420 49,844 ========================================================================================================================= Diluted 49,919 50,439 =========================================================================================================================
SMITH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
March 31, December 31, 2002 2001 - ------------------------------------------------------------------------------------------------------------------------- (Unaudited) Current Assets: Cash and cash equivalents $ 43,935 $ 44,683 Receivables, net 723,617 752,165 Inventories 644,567 653,151 Other current assets 72,248 73,032 - ------------------------------------------------------------------------------------------------------------------------- Total current assets 1,484,367 1,523,031 - ------------------------------------------------------------------------------------------------------------------------- Property, Plant and Equipment, net 490,197 488,497 Goodwill, net 577,124 574,550 Other Assets 163,564 149,750 - ------------------------------------------------------------------------------------------------------------------------- Total Assets $2,715,252 $ 2,735,828 ========================================================================================================================= Current Liabilities: Short-term borrowings $ 133,352 $ 148,693 Accounts payable 262,509 284,502 Other current liabilities 194,514 232,809 - ------------------------------------------------------------------------------------------------------------------------- Total current liabilities 590,375 666,004 - ------------------------------------------------------------------------------------------------------------------------- Long-Term Debt 534,420 538,842 Other Long-Term Liabilities 104,621 91,531 Minority Interests 506,240 490,292 Stockholders' Equity 979,596 949,159 - ------------------------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $2,715,252 $2,735,828 =========================================================================================================================
SMITH INTERNATIONAL, INC. SUPPLEMENTARY DATA (In thousands) (Unaudited)
Three Months Ended March 31, 2002 2001 - ------------------------------------------------------------------------------------------------------------------------- Revenues: M-I $ 396,656 $ 392,269 Smith Bits 89,478 102,787 Smith Services 106,736 86,435 - ------------------------------------------------------------------------------------------------------------------------- Oilfield Products and Services 592,870 581,491 Wilson 234,507 283,820 - ------------------------------------------------------------------------------------------------------------------------- Total $ 827,377 $ 865,311 ========================================================================================================================= Operating Income: Oilfield Products and Services $ 75,939 $ 80,401 Distribution 68 6,771 General corporate (1,559) (1,586) - ------------------------------------------------------------------------------------------------------------------------- Total $ 74,448 $ 85,586 ========================================================================================================================= Other Data: Depreciation and amortization $ 21,024 $ 22,170 ========================================================================================================================= Capital spending (a) $ 25,746 $ 28,440 ========================================================================================================================= EBIT excluding minority interests (b) $ 55,540 $ 65,634 ========================================================================================================================= EBITDA excluding minority interests (b) $ 72,229 $ 83,163 =========================================================================================================================
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 $21.7 million and $25.1 million for the three months ended March 31, 2002 and 2001, 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. -----END PRIVACY-ENHANCED MESSAGE-----