-----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, EazwdmyLJFFwi5FRrLD0m77ztsA4tA0ZBJKV4m1FcwcM9hY+M8in9FQ1D/qCWgWj CWWSAbgwAE3KpuUb7J9Wpg== 0000950129-99-001796.txt : 19990429 0000950129-99-001796.hdr.sgml : 19990429 ACCESSION NUMBER: 0000950129-99-001796 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990421 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990428 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: 99602872 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 SMITH INTERNATIONAL, INC. - DATED 4/21/99 1 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 April 21, 1999 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.) 16740 Hardy Street Houston, Texas (Address of principal executive offices) 77032 (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 earnings for the first quarter of 1999 is filed as Exhibit 99.1 and is hereby incorporated herein by reference. ITEM 7: Financial Statements and Exhibits (c) Exhibits 99.1 Press Release, dated 4/21/99 3 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: April 21, 1999 ---------------------- 4 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1 Press Release, dated 4/21/99 EX-99.1 2 PRESS RELEASE, DATED 4/21/99 1 Exhibit 99.1 - -------------------------------------------------------------------------------- SMITH INTERNATIONAL, INC. P.O. BOX 60068 HOUSTON, TX 77205-0068 WEBSITE ADDRESS: smith.com For Release Wednesday, April 21, 1999 Contact: John J. Kennedy Chief Financial Officer (281) 443-3370 SMITH INTERNATIONAL, INC. REPORTS FIRST QUARTER RESULTS HOUSTON, Texas (April 21, 1999)... Smith International, Inc. (NYSE, PSX: SII) today announced first quarter earnings of $6.6 million, or $0.14 per share on a diluted basis, compared with net income of $33.6 million, or $0.70 per share on a diluted basis, in the first quarter of 1998. The Company reported revenues of $397.0 million for the first quarter of 1999, a decrease of 31 percent compared to the first quarter of 1998. The revenue decrease resulted from lower worldwide drilling activity, which declined 35 percent over the same period. Although the number of rigs drilling for oil and gas worldwide declined significantly, the major areas of activity and revenue decrease were reported in North America and Latin America where drilling activity reduced by 41 percent and 34 percent, respectively. The revenue decline in the U.S. was lower than the rig activity decrease as fluid sales to deepwater operators in the U.S. Gulf of Mexico grew nearly 70 percent year-over-year. Reduced drilling activity in Venezuela, approximately half of the activity levels reported in the first quarter of 1998, contributed to the revenue decline in Latin America. 2 During the period, the Company recognized a pre-tax gain of $10.5 million on the sale of an industrial bentonite mine located on the island of Milos, Greece. Additionally, the Company recorded pre-tax charges approximating $7.9 million for start-up costs required to be expensed upon the adoption of a new accounting pronouncement and for amounts recognized related to the settlement of a customer receivable during the period. On an after-tax basis, the combined transactions were neutral to the reported net income. Revenues for the M-I Fluids unit decreased 23 percent from the comparable quarter of the prior year to $177.9 million. The majority of the decline was reported in the U.S. and Latin America and related to lower volumes associated with the activity declines in those markets. Increased sales of synthetic and completion fluids in deepwater markets resulted in an overall revenue decrease which was lower than the decline in rig activity. M-I SWACO reported revenues of $28.0 million, a 24 percent decrease from the first quarter of 1998. Lower fluid processing equipment sales and lower rentals in the U.S. and Latin America were partially offset by incremental revenues from the Safeguard acquisition. Smith Bits' revenues were $60.4 million for the first quarter of 1999, a 34 percent decline from the comparable quarter of the prior year. Over half of the revenue decrease was reported in North America as lower activity impacted sales of petroleum three-cone bits. Smith Drilling and Completions reported revenues of $57.2 million, a decrease of 32 percent from the first quarter of 1998. Nearly one-third of the revenue decline was associated with lower sales of tubular goods. Geographically, North America and Latin America accounted for the majority of the unit's revenue decline. 3 Wilson Supply revenues decreased 46 percent from the first quarter of 1998 to $73.5 million. The distribution operations, being primarily in the U.S., were impacted by the major decline in the U.S. activity. Lower product sales to the upstream sector contributed to the majority of the decline with tubular goods accounting for over 40 percent of the decrease from the first quarter of 1998. Commenting on the results, Chairman and CEO Doug Rock stated, "Although drilling activity continues to set new lows we've seen revenues stabilize during the quarter. Oil markets appear to be recovering but it will take time for operators to strengthen their balance sheets and begin to make E&P investments." Loren Carroll, Executive Vice President added, "Our focus on cash flow resulted in a reduction in our debt in the quarter of approximately $40 million. Since June 30, 1998, we have retired over $100 million in debt, strengthening our balance sheet. Lower net capital spending, approximately 70 percent lower than the first quarter of last year, and lower working capital requirements were the major contributors to the strong cash flow." Smith International, Inc. is a leading worldwide supplier of premium products and services to the oil and gas exploration, production and petrochemical industries through its five principal business units - M-I Fluids, M-I SWACO, Smith Bits, Smith Drilling & Completions and Wilson Supply. Unaudited financial highlights follow: 4 SMITH INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended March 31, ------------------------- 1999 1998 --------- --------- (Restated) Revenues.................................. $ 397,022 $ 578,933 Costs and expenses: Cost of revenues....................... 285,683 397,087 Selling expenses....................... 69,907 86,550 General and administrative expenses.... 20,943 22,204 Other non-recurring expenses........... 7,899 - Gain on sale........................... (10,520) - --------- --------- Total cost and expenses.............. 373,912 505,841 --------- --------- Earnings before interest and taxes........ 23,110 73,092 Interest expense, net..................... 12,075 9,113 --------- --------- Income before income taxes and minority interests..................... 11,035 63,979 Income tax provision...................... 4,950 19,314 --------- --------- Income before minority interests.......... 6,085 44,665 Minority interests........................ (521) 11,088 --------- --------- Net income................................ $ 6,606 $ 33,577 ========= ========= Earnings per share: Basic.................................. $ 0.14 $ 0.71 ========= ========= Diluted................................ $ 0.14 $ 0.70 ========= ========= Weighted average shares outstanding:...... Basic.................................. 48,159 47,572 Diluted................................ 48,607 48,053 OTHER DATA: Depreciation and Amortization............. $ 18,763 $ 17,002 Capital Spending (a)...................... $ 13,315 $ 35,214 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. The net capital spending was approximately $9.3 million and $31.3 million in the first quarter of 1999 and 1998, respectively. 5 SMITH INTERNATIONAL, INC. REVENUE ANALYSIS ($'s in Thousands) Three Months Ended March 31, ----------------------- 1999 1998 -------- -------- (Restated) M-I Fluids $177,870 $230,228 M-I SWACO 28,031 36,693 Smith Bits 60,421 90,887 Smith Drilling & Completions 57,157 84,522 Wilson Supply 73,543 136,603 -------- -------- TOTAL $397,022 $578,933 ======== ======== -----END PRIVACY-ENHANCED MESSAGE-----