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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1999
-----------------
Or
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (no fee required)
For the transition period from ________________ to ________________
Commission file number 333-65049
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below Grey Wolf Drilling Company 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office Grey Wolf, Inc.
10370 Richmond Ave., Suite 600
Houston, Texas 77042-4136
REQUIRED INFORMATION
The Grey Wolf Drilling Company 401(k) Plan (the "Plan") is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the financial
statements and schedules prepared in accordance with financial reporting
requirements of ERISA are filed herewith.
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Grey Wolf Drilling Company 401(k) Plan
Financial Statements and Supplemental Schedule
Year ended December 31, 1999
CONTENTS
Independent Auditors' Report
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of December 31,
1999 and 1998
Statement of Changes in Assets Available for Plan Benefits for the year
ended December 31, 1999.
Notes to Financial Statements
Schedule:
Schedule - Schedule of Assets Held for Investment
Purposes at End of Year
Exhibit 23.1 - Consent of KPMG LLP
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
Grey Wolf Drilling Company 401(k) Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Grey Wolf Drilling Company 401(k) Plan (the Plan) as of December 31,
1999 and 1998 and the related statement of changes in net assets available for
plan benefits for the year ended December 31, 1999. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Grey Wolf
Drilling Company 401(k) Plan as of December 31, 1999 and 1998, and the changes
in net assets available for benefits for the year ended December 31, 1999 in
conformity with generally accepted accounting principles.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 1999 was performed for the purpose of forming an opinion on the
financial statements taken as a whole. The schedule of assets held for
investment purposes at end of year is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This schedule is the responsibility of the Plan's
management. The schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
May 5, 2000
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Assets:
Investments at fair value:
Scudder Stable Value Fund $ 8,626,788 $ 9,199,658
Scudder Income Fund 294,094 311,400
Scudder Balanced Fund 780,511 659,563
Scudder Growth & Income Fund 1,952,632 1,877,113
Scudder Value Fund 597,857 448,122
Scudder Small Company Fund 332,698 306,091
Scudder International Fund 525,656 282,559
Grey Wolf Stock Fund 1,078,992 126,067
Loans receivable 749,040 547,531
----------- -----------
Total investments $14,938,268 $13,758,104
----------- -----------
Contributions receivable:
Employee 147,320 169,843
Employer 88,783 101,650
----------- -----------
236,103 271,493
----------- -----------
Total assets 15,174,371 14,029,597
Liabilities -- refunds of excess contributions 257,342 --
----------- -----------
Net assets available for plan benefits $14,917,029 $14,029,597
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1999
<TABLE>
<S> <C>
Additions:
Contributions:
Employee $1,721,730
Employer 867,821
Rollovers 21,868
-----------
Total contributions 2,611,419
Investment income -- net appreciation in fair value of
investments (including interest, dividends and net
realized gains) 1,535,426
-----------
Total additions 4,146,845
Deductions:
Benefits paid to participants 3,251,451
Plan expenses 7,962
-----------
Total deductions 3,259,413
-----------
Net increase in net assets available for plan benefits 887,432
Net assets available for plan benefits:
Beginning of year 14,029,597
-----------
End of year $14,917,029
===========
</TABLE>
See accompanying notes to financial statements.
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) THE PLAN
The following brief description of the Grey Wolf, Inc. (the Company or
the Sponsor) Grey Wolf Drilling Company 401(k) Plan is provided for
general informational purposes only. Participants should refer to the
plan agreement for a more complete description of the Plan's provisions.
GENERAL
Effective August 1, 1991, the DI Industries, Inc. Salary Deferral Plan
(the DI Plan) was amended, to merge the defined contribution plans of
Butler Johnson, Inc., Cubby Drilling, Inc., and Western Oil Well Service
Company into the Plan. Additionally, the DI Plan's year end was changed
to December 31. The DI Plan was sponsored by DI Industries, Inc.
On June 27, 1997, Drillers, Inc., a subsidiary of DI Industries, Inc.,
acquired Grey Wolf Drilling Company. The name of Drillers, Inc. changed
to Grey Wolf Drilling Company. Prior to the acquisition, DI Industries,
Inc. offered their employees a Salary Deferral Plan (the DI Plan), while
Grey Wolf Drilling Company offered to their employees a 401(k) and Profit
Sharing Plan (the old Grey Wolf Plan).
Prior to the acquisition, the assets of the old Grey Wolf Plan were held
by Massachusetts Mutual Life Insurance Company (Mass Mutual), acting as
custodian. The assets of the DI Plan were held by General American Life
Insurance Company (General American) acting as custodian.
Beginning July 1, 1997, all contributions relating to former members of
the old Grey Wolf Plan were forwarded to General American. The assets of
the old Grey Wolf Plan held by Mass Mutual as of June 30, 1997, however,
were not transferred to General American as of July 1, 1997.
Contributions relating to the former members of the DI Plan were still
forwarded to General American.
Effective October 1, 1997, Grey Wolf Drilling Company changed custodians
from General American to Scudder Trust Company (Scudder), and the DI Plan
was merged into the Grey Wolf Drilling Company 401(k) Plan (the Plan). As
such, on September 30, 1997, the assets of both the DI Plan and the old
Grey Wolf Plan were transferred to Scudder.
CONTRIBUTIONS
The Plan provides for employee pretax contributions of up to 15% of
covered compensation, subject to the Internal Revenue Service (IRS)
limitations. The Company matches 100% of each employee's contribution, up
to the first 3% of covered compensation, plus 50% of the next 3% of
covered compensation.
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
PARTICIPANT ACCOUNTS
Under the Plan, each participant's account is credited with the
participant's contribution, the Company's matching contribution and an
allocation of investment income. Investment income allocations are based
on the participant's weighted average account balance during the period.
LOANS RECEIVABLE
Participants are allowed to borrow up to the lesser of $50,000 reduced by
the amount by which the highest outstanding balance of all loans to the
participant during the one-year period ending on the day before the date
on which the loan is made, exceeds the outstanding balance of all loans
to the participant on the date on which the loan is made; or 50% of the
participant's vested account balance, $50,000 being the maximum amount of
loan. Loans are granted for any reason.
INVESTMENT OPTIONS
The Plan offers the following seven Scudder investment funds in which
participants may invest:
o STABLE VALUE FUND - Consists of guaranteed investment
contracts, money market securities and treasury bills.
o INCOME FUND - Consists of intermediate and long-term,
high-grade corporate bonds.
o BALANCED FUND - Consists of seasoned stocks and
investment-grade bonds.
o GROWTH AND INCOME FUND - Consists of primarily common stocks
and convertible securities of established companies.
o VALUE FUND - Consists of under valued common stocks of medium
to large U.S. companies.
o SMALL COMPANY VALUE FUND - Consists of under valued common
stocks of small U.S. companies.
o INTERNATIONAL FUND - Consists of primarily foreign stocks.
In addition, participants may invest on the Grey Wolf Stock Fund. This
fund consists of shares of Grey Wolf, Inc. common stock.
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
VESTING
Participants become immediately vested in their contributions and the
related earnings. Vesting in the employer's matching contributions for
terminated employees is 0% for less than one year of service, graduating
to 100% for five or more years of service. Upon death or permanent total
disability, the participant or beneficiary becomes 100% vested in the
employer's contribution. In the event of termination, nonvested portions
of the employer's contributions are forfeited by participants and are
utilized to reduce future employer matching contributions.
PAYMENT OF BENEFITS
Upon termination of service, a participant with a vested account balance
not exceeding $5,000 shall receive a lump-sum amount equal to the amount
of the vested benefits in his or her account. If a participant's account
balance exceeds $5,000, the participant may elect distribution under the
following forms:
o FOR ACCOUNT BALANCES (INCLUDING EARNINGS) ON AND AFTER
OCTOBER 1, 1997 - Vested account balances shall be
distributed in the form of a single lump sum cash payment, or
the participant may also choose to receive any Grey Wolf,
Inc. stock.
o FOR ACCOUNT BALANCES (INCLUDING EARNINGS) AS OF SEPTEMBER 30,
1997, FOR FORMER PARTICIPANTS OF THE OLD GREY WOLF PLAN AND
THE DI PLAN - The participant can elect distribution under
one of the following methods: (a) joint and survivor annuity
if the participant is married, (b) lump sum in cash, or in
shares of Grey Wolf, Inc. stock, (c) installment payments and
(d) life annuity payments.
(2) SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
The financial statements are presented on the accrual basis of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
INVESTMENTS
Investments are stated at fair value as determined by the custodian.
Mutual fund asset values are determined by the custodian based on quoted
market prices in an active market. Any unrealized appreciation or
depreciation is recognized as a gain or loss currently. Loans receivable
are valued at cost which approximates fair value.
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
ADMINISTRATIVE EXPENSES
All administrative expenses of the Plan are paid by the Company.
BENEFITS PAYABLE
Benefits payments are recorded when paid.
(3) INVESTMENTS
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure
Matters (SOP 99-3). SOP 99-3 simplifies the disclosure for certain
investments and is effective for plan years ending after December 15,
1999 with earlier application encouraged. The Plan adopted SOP 99-3
during the Plan year ending December 31, 1999. Accordingly, information
previously required to be disclosed about participate-directed fund
investment programs is not presented in the Plan's 1999 financial
statements. The Plan's 1998 financial statements have been reclassified
to conform with the current year's presentation.
The following table represents fair value of individual investments which
exceed 5% of the Plan's net assets:
<TABLE>
<CAPTION>
1999 1998
------------------ -----------------
<S> <C> <C>
Mutual funds:
Scudder Stable Value Fund $ 8,626,788 9,199,658
Scudder Balanced Fund 780,511 -
Scudder Growth and Income Fund 1,952,632 1,877,113
Common stock:
Grey Wolf Stock Fund 1,078,992 -
Loans receivable 749,040 -
-------------- ----------
</TABLE>
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $835,670 as follows:
<TABLE>
<S> <C>
Mutual funds $ 190,485
Common stock 645,185
--------------
$ 835,670
==============
</TABLE>
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GREY WOLF DRILLING COMPANY 401(k) PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(4) PLAN TERMINATION
The Plan has been established to continue indefinitely; however, the
Company has the right to terminate the Plan, in whole or in part, subject
to provisions of ERISA. In the event of termination, all amounts credited
to the accounts of the participants become fully vested and shall be
distributed upon satisfaction of all obligations of the Plan.
(5) TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated August 11, 1997, that the Plan is designated in accordance
with applicable sections of the Internal Revenue Code (IRC). The Plan has
been amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the IRS.
(6) FORFEITURES
Upon termination of a participant, the nonvested portion of a
participant's employer contributions account is forfeited. The Company
reserves the right to use the forfeited balance to reduce future
contributions by the employer.
(7) RELATED PARTY TRANSACTIONS
Certain of the Plan investments are managed by Scudder. Scudder is the
recordkeeper as defined by the amended Plan and, therefore, these
transactions qualify as party-in-interest.
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SCHEDULE
GREY WOLF DRILLING COMPANY 401(k) PLAN
Schedule of Assets Held for Investment Purposes at End of Year
As of December 31, 1999
<TABLE>
<CAPTION>
IDENTITY OF ISSUE, DESCRIPTION OF INVESTMENTS INCLUDING
BORROWER, LESSOR MATURITY DATE, RATE OF INTEREST, MARKET
OR SIMILAR PARTY COLLATERAL AND PAR OR MATURITY VALUE VALUE
------------------------- ------------------------------------------ ---------------
<S> <C> <C>
* Scudder 8,626,788 shares of Stable Value Fund $ 8,626,788
* Scudder 24,027 shares of Income Fund 294,094
* Scudder 36,904 shares of Balanced Fund 780,511
* Scudder 73,160 shares of Growth and Income Fund 1,952,632
* Scudder 25,344 shares of Value Fund 597,857
* Scudder 19,388 shares of Small Company Value Fund 332,698
* Scudder 7,431 shares of International Fund 525,656
* Grey Wolf 374,811 shares of Grey Wolf Stock 1,078,992
* Various participants Loans receivable bearing interest at 9.5%
with maturities ranging from 12 to 120
months 749,040
---------------
$ 14,938,268
===============
</TABLE>
* Party-in-interest.
See accompanying independent auditors' report.
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INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Grey Wolf Drilling Company 401(k) Plan:
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Grey Wolf Drilling Company (filed under Securities and Exchange
Commission File No. 333-65049) of our report dated May 5, 2000, relating to the
statements of net assets available for plan benefits of Grey Wolf Drilling
Company 401(k) Plan at December 31, 1999 and 1998, the related statement of
changes in net assets available for plan benefits for the year ended December
31, 1999, which report appears in the December 31, 1999 annual report of Form
11-K of Grey Wolf Drilling Company 401(k) Plan.
Houston, Texas
June 26, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (ot other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
GREY WOLF DRILLING COMPANY 401(k) PLAN
June 26, 2000 /s/ Donald J. Guedry, Jr.
------------------------- ------------------------------
Donald J. Guedry, Jr.
Vice President & Treasurer for Grey Wolf, Inc.
And Grey Wolf Drilling Company 401(k) Plan
Administrative Committee Member
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