<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 11-K
ANNUAL REPORT
___________________________________
(Mark One)
(xx) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
___________________________________
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
___________________________________
M-I DRILLING FLUIDS
COMPANY PROFIT SHARING
AND SAVINGS PLAN
P.O. BOX 42842
HOUSTON, TX 77242-2842
(Full title of the plan and the address,
if different from that of the issuer named below)
___________________________________
SMITH INTERNATIONAL, INC.
16740 Hardy Street
P. O. Box 60068
Houston, Texas 77205-0068
(Name and Address of issuer of the
Securities held Pursuant to the Plan)
<PAGE> 2
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Benefits Committee of
M-I Drilling Fluids Company
Profit Sharing and Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of M-I Drilling Fluids Company Profit Sharing and Savings Plan (the
Plan) as of December 31, 1994 and 1993, and the related statement of changes in
net assets available for plan benefits for the year ended December 31, 1994.
These financial statements and the schedules referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and schedules 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 the
Plan's 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 Plan benefits as of December
31, 1994 and 1993, and the changes in its net assets available for Plan benefits
for the year ended December 31, 1994, in conformity with generally accepted
accounting principles.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 1994, was made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental Schedules I and II are
presented for purposes of additional analysis and are not a required part of the
basic financial statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The fund information in the
statement of net assets available for plan benefits and the statement of changes
in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present
<PAGE> 3
-2-
the net assets available for Plan benefits and changes in net assets available
for Plan benefits of each fund. The supplemental schedules and fund information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
As explained in the notes to the schedule of reportable transactions,
information certified by the former trustee and presented therein does not
disclose the historical cost of certain investments. Disclosure of this
information which is not considered material to the financial statements taken
as a whole is required by the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974.
/s/ Arthur Andersen LLP
- -----------------------
Houston, Texas
June 5, 1995
<PAGE> 4
M-I DRILLING FLUIDS COMPANY
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Participant-Directed
-------------------------------------------------------------------------
Smith Long-
International, Term
Stable Inc., Corporate Money
Income Stock Wellington Windsor Bond Market
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value-
Registered investment companies $ 577,703 $ -- $18,842,869 $4,274,097 $786,780 $980,890
Investment contracts-
Providential Life Insurance Company Guaranteed
Investment Contract 4,797,495 -- -- -- -- --
Vanguard Investment Contract Trust 3,775,943 -- -- -- -- --
Diversified Investors Guaranteed Investment
Contract 882,690 -- -- -- -- --
Fidelity Institutional Cash Portfolio
Money Market Fund #59 -- -- -- -- -- --
Smith International, Inc., common stock -- 667,083 -- -- -- --
Loans to participants -- -- -- -- -- --
----------- -------- ----------- ---------- -------- --------
Total investments at fair value 10,033,831 667,083 18,842,869 4,274,097 786,780 980,890
Receivables-
Participant contributions 59,248 425 29,172 30,297 5,244 6,652
Company contributions 1,688 395 77,628 2,120 217 177
Loan repayments 15,181 85 9,307 7,460 1,817 2,004
----------- -------- ----------- ---------- -------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $10,109,948 $667,988 $18,958,976 $4,313,974 $794,058 $989,723
=========== ======== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Participant-Directed
-----------------------------------------------------------------------
Index
500 International Company-
Portfolio PRIMECAP Growth Loan Directed
Fund Fund Fund Fund Fund Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value-
Registered investment companies $70,865 $419,651 $306,299 $ -- $ -- $26,259,154
Investment contracts-
Providential Life Insurance Company Guaranteed
Investment Contract -- -- -- -- -- 4,797,495
Vanguard Investment Contract Trust -- -- -- -- -- 3,775,943
Diversified Investors Guaranteed Investment
Contract -- -- -- -- -- 882,690
Fidelity Institutional Cash Portfolio
Money Market Fund #59 -- -- -- -- 100,115 100,115
Smith International, Inc., common stock -- -- -- -- -- 667,083
Loans to participants -- -- -- 2,219,404 -- 2,219,404
------- -------- -------- ---------- -------- -----------
Total investments at fair value 70,865 419,651 306,299 2,219,404 100,115 38,701,884
Receivables-
Participant contributions 550 1,273 1,182 -- -- 134,043
Company contributions 219 1,021 688 -- -- 84,153
Loan repayments 219 310 331 -- -- 36,714
------- -------- -------- ---------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $71,853 $422,255 $308,500 $2,219,404 $100,115 $38,956,794
======= ======== ======== ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 5
M-I DRILLING FLUIDS COMPANY
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1993
<TABLE>
<CAPTION>
Participant-Directed
-----------------------------------------------
Guaranteed
Special Money Investment
Equity Market Contract Balanced
Fund Fund Fund Fund
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at fair value-
Diversified Investors Special Equity Fund $3,121,052 $ -- $ -- $ --
Diversified Investors Money Market Fund -- 1,066,405 --
Diversified Investors Guaranteed Investment Contract -- -- 529,738 --
Principal Mutual Life Insurance Company Guaranteed Investment -- -- 430,427 --
Provident National Assurance Company Guaranteed Investment Contract -- -- 4,393,713 --
Institutional Investors Guaranteed Investment Contract Fund -- -- 2,015,504 --
Fidelity Institutional Cash Portfolio Money Market Fund #59 -- -- 2,006,952 --
Diversified Investors Equity Income Fund -- -- -- --
Diversified Investors Equity Growth Fund -- -- -- --
Diversified Investors International Equity Fund -- -- -- --
Diversified Investors Balanced Fund -- -- -- 3,992,040
Diversified Investors High Quality Bond Fund -- -- -- --
Diversified Investors Private Placement Fund -- -- -- --
Texas Commerce Bank Prime Series 34,181 20,324 80,099 38,917
Loans to participants -- -- -- --
---------- ---------- ---------- ----------
Total investments at fair value 3,155,233 1,086,729 9,456,433 4,030,957
Receivables-
Company contributions -- -- -- --
Participant contributions 20,298 8,692 58,580 24,336
Short term interest receivable 62 37 336 50
Loan repayments -- -- -- --
Transfer from (to) other funds 16,942 14,079 (61,672) 104,038
---------- ---------- ---------- ----------
Total assets 3,192,535 1,109,537 9,453,677 4,159,381
---------- ---------- ---------- ----------
LIABILITIES:
Loans in process -- -- -- --
---------- ---------- ---------- ----------
Total liabilities -- -- -- --
---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $3,192,535 $1,109,537 $9,453,677 $4,159,381
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Participant-Directed Company-
--------------------- Directed
High -----------
Quality Asset
Bond Loan Allocation
Fund Pool Fund Total
-------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at fair value-
Diversified Investors Special Equity Fund $ -- $ -- $ 1,411,705 $ 4,532,757
Diversified Investors Money Market Fund -- -- -- 1,066,405
Diversified Investors Guaranteed Investment Contract -- -- 284,176 813,914
Principal Mutual Life Insurance Company Guaranteed Investment -- -- -- 430,427
Provident National Assurance Company Guaranteed Investment Contract -- -- -- 4,393,713
Institutional Investors Guaranteed Investment Contract Fund -- -- -- 2,015,504
Fidelity Institutional Cash Portfolio Money Market Fund #59 -- -- -- 2,006,952
Diversified Investors Equity Income Fund -- -- 3,487,144 3,487,144
Diversified Investors Equity Growth Fund -- -- 1,417,761 1,417,761
Diversified Investors International Equity Fund -- -- 1,339,554 1,339,554
Diversified Investors Balanced Fund -- -- -- 3,992,040
Diversified Investors High Quality Bond Fund 864,697 -- 2,554,610 3,419,307
Diversified Investors Private Placement Fund -- -- 3,789,105 3,789,105
Texas Commerce Bank Prime Series 13,135 62,228 30,000 278,884
Loans to participants -- 2,098,990 -- 2,098,990
-------- ---------- ----------- -----------
Total investments at fair value 877,832 2,161,218 14,314,055 35,082,457
Receivables-
Company contributions -- -- 177,516 177,516
Participant contributions 7,016 -- -- 118,922
Short term interest receivable 22 169 136 812
Loan repayments -- 66,420 -- 66,420
Transfer from (to) other funds (37,404) (40,217) 4,234 --
-------- ---------- ----------- -----------
Total assets 847,466 2,187,590 14,495,941 35,446,127
-------- ---------- ----------- -----------
LIABILITIES:
Loans in process -- 88,600 -- 88,600
-------- ---------- ----------- -----------
Total liabilities -- 88,600 -- 88,600
-------- ---------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $847,466 $2,098,990 $14,495,941 $35,357,527
======== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 6
M-I DRILLING FLUIDS COMPANY
PROFIT SHARING AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Participant-Directed
----------------------------------------------------------------------------
Smith Long-
International, Term
Stable Inc., Corporate Money
Income Stock Wellington Windsor Bond Market
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT DECEMBER 31, 1993 $ -- $ -- $ -- $ -- $ -- $ --
----------- -------- ----------- ---------- -------- --------
PLAN ADDITIONS:
Investment income-
Interest 185,441 -- -- -- 13,194 11,770
Dividends -- -- 298,891 333,031 -- --
Realized gain (loss) on sale of investments -- -- (42,782) (6,136) (265) --
Unrealized appreciation (depreciation) -- (55,682) (465,668) (436,812) (2,057) --
Net investment gain on pooled
separate accounts -- -- -- -- -- --
----------- -------- ----------- ---------- -------- --------
185,441 (55,682) (209,559) (109,917) 10,872 11,770
----------- -------- ----------- ---------- -------- --------
Contributions-
Company 9,346 1,045 662,973 10,064 736 1,011
Participants 439,388 1,219 215,692 221,612 39,238 48,515
----------- -------- ----------- ---------- -------- --------
448,734 2,264 878,665 231,676 39,974 49,526
----------- -------- ----------- ---------- -------- --------
Total additions 634,175 (53,418) 669,106 121,759 50,846 61,296
----------- -------- ----------- ---------- -------- --------
PLAN DEDUCTIONS:
Benefits paid to participants 29,831 -- 90,268 31,100 1,382 422
Administrative expenses -- -- -- -- -- --
INTERFUND TRANSFERS, net (272,254) 721,406 (1,217,473) 136,847 73,477 6,038
TRANSFERS FROM OTHER FUND OPTIONS 9,777,858 -- 19,597,611 4,086,468 671,117 922,811
----------- -------- ----------- ---------- -------- --------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT DECEMBER 31, 1994 $10,109,948 $667,988 $18,958,976 $4,313,974 $794,058 $989,723
=========== ======== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Participant-Directed
--------------------------------------------
Index
500 International Company- Former
Portfolio PRIMECAP Growth Loan Directed Investment
Fund Fund Fund Fund Fund Options Total
---- ---- ---- ---- ---- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT DECEMBER 31, 1993 $ -- $ -- $ -- $2,098,990 $ -- $ 33,258,537 $35,357,527
------- -------- -------- ---------- -------- ------------ -----------
PLAN ADDITIONS:
Investment income-
Interest -- -- -- 131,035 -- 537,473 878,913
Dividends 1,055 9,101 3,779 -- -- -- 645,857
Realized gain (loss) on sale of
investments (20) (302) -- -- -- -- (49,505)
Unrealized appreciation (depreciation) (139) (4,714) (5,119) -- -- -- (970,191)
Net investment gain on pooled
separate accounts -- -- -- -- -- 275,155 275,155
------- -------- -------- ---------- -------- ------------ -----------
896 4,085 (1,340) 131,035 -- 812,628 780,229
------- -------- -------- ---------- -------- ------------ -----------
Contributions-
Company 515 3,079 2,398 -- -- 1,338,883 2,030,050
Participants 1,647 4,442 4,579 -- -- 2,363,182 3,339,514
------- -------- -------- ---------- -------- ------------ -----------
2,162 7,521 6,977 -- -- 3,702,065 5,369,564
------- -------- -------- ---------- -------- ------------ -----------
Total additions 3,058 11,606 5,637 131,035 -- 4,514,693 6,149,793
------- -------- -------- ---------- -------- ------------ -----------
PLAN DEDUCTIONS:
Benefits paid to participants -- -- -- 88,719 -- 2,266,583 2,508,305
Administrative expenses -- -- -- 3,528 -- 38,693 42,221
INTERFUND TRANSFERS, net 68,795 410,649 302,863 81,626 -- (311,974) --
TRANSFERS FROM OTHER FUND OPTIONS -- -- -- -- 100,115 (35,155,980) --
------- -------- -------- ---------- -------- ------------ -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT DECEMBER 31, 1994 $71,853 $422,255 $308,500 $2,219,404 $100,115 $ -- $38,956,794
======= ======== ======== ========== ======== ============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 7
M-I DRILLING FLUIDS COMPANY
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT
PLAN PROVISIONS AND
ACCOUNTING POLICIES:
The following description of the M-I Drilling Fluids Company Profit Sharing and
Savings Plan (the Plan) provides only general information. Participants should
refer to the Plan document for a more complete explanation of the Plan's
provisions as the Plan document is controlling at all times.
General
The Plan is a defined contribution plan of M-I Drilling Fluids L.L.C. (the
Company). Smith International, Inc., has a 64 percent majority ownership and
Halliburton Company has a 36 percent minority ownership in the Company. The Plan
is operated for the sole benefit of the employees of the Company and their
beneficiaries and is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan became effective on March 1, 1987, and is
available to all employees who meet certain eligibility requirements.
Administration
The fiduciary responsibilities of the Plan are performed by the M-I Drilling
Fluids Company Employee Benefits Committee (the Committee). In 1993, Texas
Commerce Bank, N.A. (the Former Trustee), was appointed as the trustee of the
Plan. On July 27, 1994, Vanguard Fiduciary Trust Company (the Trustee) was
appointed Trustee of the Plan effective October 1, 1994. The responsibilities of
the Trustee are to invest Plan assets in accordance with guidelines set forth by
the Committee and to make disbursements from Plan assets as directed by the
Committee. Expenses incident to the administration of the Plan and trust may be
paid by the Company or by the Plan.
Eligibility
An employee may participate in the Plan on the first day of the first month
following the date on which the employee has attained one year of active service
(as defined by the Plan) with the Company.
Compensation
Compensation, as defined in the Plan, includes the cash compensation that is
paid by the Company to the participants during the Plan year for services
performed and is currently includible in the employee's gross income under the
Internal Revenue Code (the Code), including regular or base salary, wages,
commissions, overtime, bonuses, nondeferred incentive awards and foreign service
allowance, as such compensation items are reported on the employee's Form W-2
(or its successor) for the calendar year. Compensation shall exclude benefits
paid or credited under the Plan or any other deferred compensation plan
maintained by the Company.
Contributions
Participants may elect to contribute voluntarily, in 1/2 percent increments,
from 1/2 percent to 12 percent of their compensation (except, for participants
whose annual compensation, as defined by the Plan, exceeds $54,000, the elective
contribution is from 1/2 percent to 10 percent), subject to a maximum amount of
$9,240 during 1994 under Section 402(g) of the Code.
<PAGE> 8
-2-
The Company provides basic contributions to the Plan for each participant equal
to 3 percent of the participant's compensation during the Plan year (Basic
Contribution). In addition to the Company's Basic Contribution, the Company
matches 100 percent of each participant's Compensation Deferral up to 1.5
percent of that participant's compensation (Matching Contribution) during the
Plan year.
With respect to each Plan year, the Company may contribute to the Plan (from the
Company's net income or any accumulated earnings and profits) profit-sharing
contributions in such amounts, if any, as determined by the Committee and
approved and ratified by the Company's board of directors. For years 1994 and
1993, the Company did not approve or provide a profit-sharing contribution to
the Plan.
Vesting
Participants are immediately vested in their voluntary contributions and the net
earnings thereon. Participants vest annually in the Company's contributions in
20 percent increments commencing with the third year of membership service, as
defined in the Plan. Participants, or their beneficiaries, as appropriate, may
also become fully vested in the Company's contributions in the event of the
participant's death, termination of employment by reason of total or permanent
disability or retirement from the Company upon reaching the normal retirement
age of 65.
Investment Options
At December 31, 1994, the Plan's investments are held in a trust fund
administered by Vanguard Fiduciary Trust Company. Plan investments included in
the statement of net assets available for plan benefits, with fund information,
are stated at their fair value as of the statement date.
Participants have the option of investing their contributions and the Company's
matching contributions in any of the following Vanguard Funds and/or the common
stock of Smith International, Inc. (the majority owner of the Company):
Vanguard Money Market Fund--Investments are made in high-quality money market
instruments which mature in one year or less, including negotiable certificates
of deposit, banker's acceptances issued by major U.S. banks, commercial paper
and short-term corporate obligations with the objective of preservation of
capital.
Vanguard PRIMECAP Fund--Investments are made principally in a portfolio of
common stocks with the objective of long-term growth of capital.
Vanguard Wellington Fund--Investments are made in a combination of common stocks
and fixed income securities with the objective of high-income yield.
Vanguard International Growth Fund--Investments are made in common stocks of
companies based outside of the United States with the objective of long-term
capital growth.
Smith International, Inc., Stock Fund--Investments are in the common stock of
Smith International, Inc., purchased on the open market.
Vanguard Stable Income Fund--Investments are made in money deposit contracts
with various insurance companies at guaranteed rates of return and are recorded
at contract value.
Vanguard Windsor Fund--Investments are made in a portfolio of common stocks with
the objective of long-term growth of capital and income.
<PAGE> 9
-3-
Vanguard Long-Term Corporate Bond Fund--Investments are made in a portfolio of
bonds with the objective of obtaining a high level of income while preserving
capital.
Vanguard Index 500 Portfolio Fund--Investments are made in a portfolio of
publicly traded stocks with the objective of providing the price and yield
performance represented by the Standard and Poor's 500 Composite Stock Price
Index.
Contributions may be invested in one fund or divided among two or more funds.
Participants may transfer some or all of the balances out of any fund into one
or any combination of the other funds at any time.
Effective October 1, 1994, the Plan began to offer the above investment options
to the participants, and a transfer from the former investments to the above
investment options was implemented by the Plan.
Payment of Benefits
A participant may elect to receive benefit payments by any one of the several
methods provided by the Plan upon termination of service or retirement.
The Plan also provides for hardship distributions to participants with immediate
and significant financial needs, subject to authorization by the Committee.
Such distributions are limited to the vested amount then credited to such
participant's account.
Plan assets allocated to accounts of participants who have withdrawn from
participation in the earnings and operations of the Plan amounted to $50,000 and
$53,636 at December 31, 1994 and 1993, respectively.
Termination of the Plan
The Company presently intends to continue the Plan indefinitely. However, the
Company reserves the right to discontinue the Plan at any time and for any
reason by resolution of the Committee. In the event of termination, partial
termination or discontinuance of contributions under the Plan, participants will
be credited with a fully vested interest in their respective Company
contributions.
Loans
Participants who have participated in the Plan for a minimum of one year may
borrow from their accounts no more than once annually, subject to terms
specified by the Committee. Participants may not take out loans that, in the
aggregate, exceed $50,000 or 50 percent of the member's vested interest in his
or her account. These loans bear annual rates of interest commensurate with the
prevailing interest rate charged on similar commercial loans had the loan been
made under similar circumstances by a lending institution.
Forfeitures
In the event that a participant terminates employment with the Company, the
participant's vested balances are distributed. Any nonvested employer
contributions shall be forfeited on the date the participant incurs a period of
five consecutive one-year periods of severance. Forfeitures are applied first to
reinstate the participant's previously forfeited amounts when the participant is
reemployed by the Company within the above five-year period. Any remaining
forfeitures are used to reduce subsequent employer contributions or offset Plan
expenses. Net assets available for Plan benefits as of December 31, 1994 and
1993, includes forfeited amounts of $100,115 and $1,660, respectively.
Forfeitures of $15,502 were used to pay certain administrative expenses in 1994.
Forfeitures of $42,600 were used to reduce employer contributions in 1993.
<PAGE> 10
-4-
2. FEDERAL INCOME TAX STATUS:
The Plan obtained its latest determination letter on June 10, 1988, in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Code. The Plan has been
amended since receiving the determination letter. However, the Committee and the
Plan's tax counsel believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Code. Therefore,
they believe that the Plan was qualified and the related trust was tax-exempt as
of the financial statement date.
<PAGE> 11
M-I DRILLING FLUIDS COMPANY
PROFIT SHARING AND SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Description of Investment, Including Maturity Date, Current
Identity of Issue Rate of Interest or Par or Maturity Value Cost Value
- ------------------------------------------ -------------------------------------------------------- ---- -----
<S> <C> <C> <C>
Vanguard Group of Investment Companies (1) Vanguard Wellington Fund $19,308,537 $18,842,869
Vanguard Group of Investment Companies (1) Vanguard Windsor Fund 4,710,909 4,274,097
Vanguard Group of Investment Companies (1) Vanguard Long-Term Corporate Bond Fund 788,837 786,780
Vanguard Group of Investment Companies (1) Money Market Fund 980,890 980,890
Vanguard Group of Investment Companies (1) Vanguard Index 500 Portfolio Fund 71,004 70,865
Vanguard Group of Investment Companies (1) Vanguard PRIMECAP Fund 424,365 419,651
Vanguard Group of Investment Companies (1) Vanguard International Growth Fund 311,418 306,299
Vanguard Group of Investment Companies (1) Money Market Fund 577,703 577,703
Provident National Assurance Company Guaranteed Investment Contract, December 31, 1995, 9.19% 4,797,495 4,797,495
Vanguard Fiduciary Trust Company (1) Vanguard Investment Contract Trust 3,775,943 3,775,943
Diversified Investors Guaranteed Investment Contract, December 31, 1994, 8.45% 882,690 882,690
Fidelity Investments Institutional Cash Portfolio Money Market Fund #59 100,115 100,115
Smith International, Inc. (1) Common stock 722,765 667,083
M-I Drilling Fluids Company Profit Sharing Loans receivables from participants (highest and lowest
and Savings Plan (1) interest rates are 11% and 5.8%) 2,219,404 2,219,404
----------- -----------
$39,672,075 $38,701,884
=========== ===========
</TABLE>
(1) Identified party in interest.
The foregoing notes are an integral part of this schedule.
<PAGE> 12
SCHEDULE II
M-I DRILLING FLUIDS COMPANY
PROFIT SHARING AND SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Current Value
of Asset
Purchase Selling Cost of on Transaction Net Gain
Identity of Party Involved Description of Asset Price Price Asset Date (Loss)
- ---------------------------- -------------------- ----- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Diversified Investors Balanced Fund $ 626,834 $ -- $ 626,834 $ 626,834 $ --
-- 4,618,874 (a) 4,618,874 (a)
Diversified Investors High Quality Bond Fund 271,037 -- 271,037 271,037 --
-- 3,690,344 (a) 3,690,344 (a)
Diversified Investors Special Equity Fund 973,313 -- 973,313 973,313 --
-- 5,506,070 (a) 5,506,070 (a)
Diversified Investors Equity Income Fund 253,374 -- 253,374 253,374 --
-- 3,740,518 (a) 3,740,518 (a)
Diversified Investors Private Placement Fund 125,914 -- 125,914 125,914 --
-- 3,915,019 (a) 3,915,019 (a)
Firststar Trust Company Institutional Investors' GIC Fund 2,518,531 -- 2,518,531 2,518,531 --
-- 4,534,035 4,534,035 4,534,035 --
Fidelity Investments Institutional Cash Portfolio Money --
Market Fund #59 -- 2,006,953 2,006,953 2,006,953
Texas Commerce Bank Prime Series 6,030,078 -- 6,030,078 6,030,078 --
-- 6,308,962 6,308,962 6,308,962 --
Vanguard Group of Investment
Companies Vanguard Wellington Fund 20,835,364 -- 20,835,364 20,835,364 --
-- 1,484,046 1,526,828 1,484,046 (42,782)
Vanguard Group of Investment
Companies Vanguard Windsor Fund 4,932,026 -- 4,932,026 4,932,026 --
-- 214,981 221,117 214,981 (6,136)
Vanguard Fiduciary Trust
Company Vanguard Investment Contract Trust 4,277,961 -- 4,277,961 4,277,961 --
-- 502,018 502,018 502,018 --
</TABLE>
(a) The former trustee was unable to furnish the historical cost information and
net gain or loss related to these investment transactions.
The foregoing notes are an integral part of this schedule.
