<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 1-8514
SMITH INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-3822631
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
OR ORGANIZATION)
16740 HARDY STREET 77032
HOUSTON, TEXAS 77032 (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
(713) 443-3370
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
-------- --------
The number of shares outstanding of the Registrant's common stock as of May
8, 1996 was 39,952,762.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
---
<S> <C>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Operations --
For the Three Months Ended March 31, 1996 and 1995................................. 3
Consolidated Balance Sheets --
As of March 31, 1996 and December 31, 1995......................................... 4
Consolidated Statements of Cash Flows --
For the Three Months Ended March 31, 1996 and 1995................................. 5
Notes to Consolidated Financial Statements............................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..........................................
PART II: OTHER INFORMATION
ITEMS 1-6. OTHER INFORMATION............................................................ 12
Signatures............................................................................ 13
</TABLE>
2
<PAGE> 3
SMITH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
REVENUES............................................................... $238,820 $199,603
COSTS AND EXPENSES:
Costs of Revenues.................................................... 157,911 134,067
Selling Expenses..................................................... 41,826 34,648
General and Administrative Expenses.................................. 14,033 11,440
-------- --------
Total Costs and Expenses........................................ 213,770 180,155
-------- --------
EARNINGS BEFORE INTEREST AND TAXES..................................... 25,050 19,448
INTEREST EXPENSE, net.................................................. 3,039 2,894
-------- --------
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS...................... 22,011 16,554
INCOME TAX PROVISION................................................... 5,015 2,559
-------- --------
INCOME BEFORE MINORITY INTERESTS....................................... 16,996 13,995
MINORITY INTERESTS..................................................... 4,048 3,190
-------- --------
NET INCOME............................................................. $ 12,948 $ 10,805
======== ========
EARNINGS PER SHARE (Note 2)............................................ $ .33 $ .28
======== ========
AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING................ 39,719 39,033
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
SMITH INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 31,
1996 1995
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................... $ 13,314 $ 14,845
Receivables, net.................................................... 237,229 230,590
Inventories, net (Note 3)........................................... 234,390 221,952
Deferred tax assets, net............................................ 3,925 3,925
Prepaid expenses and other.......................................... 17,721 13,979
-------- --------
Total current assets........................................ 506,579 485,291
-------- --------
PROPERTY, PLANT AND EQUIPMENT, net (Note 4)........................... 139,508 132,499
OTHER ASSETS.......................................................... 41,515 41,129
GOODWILL, net......................................................... 43,977 43,925
-------- --------
TOTAL ASSETS.......................................................... $731,579 $702,844
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................... $ 73,300 $ 71,439
Short-term borrowings and current portion of long-term debt (Note
5)............................................................... 15,768 25,147
Accrued payroll costs............................................... 27,972 30,922
Income taxes payable................................................ 13,701 11,977
Other............................................................... 48,901 45,804
-------- --------
Total current liabilities................................... 179,642 185,289
-------- --------
LONG-TERM DEBT (Note 5)............................................... 132,701 117,238
OTHER LONG-TERM LIABILITIES........................................... 16,232 15,754
MINORITY INTERESTS.................................................... 87,714 83,677
SHAREHOLDERS' EQUITY:
Common stock --
Authorized -- 60,000 shares, $1 par value; issued and
outstanding --
39,941 and 39,807 in 1996 and 1995, respectively............... 39,941 39,807
Common stock warrants --
Class C warrants: outstanding -- 451 in 1996 and 1995............ 7,278 7,278
Additional paid-in capital.......................................... 276,905 275,432
Retained earnings (Accumulated deficit)............................. 10,986 (1,962)
Cumulative translation adjustment................................... (5,906) (5,755)
Less -- treasury securities, at cost (629 common shares and
451 Class C warrants in 1996 and 1995)........................... (13,914) (13,914)
-------- --------
Total shareholders' equity.................................. 315,290 300,886
-------- --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY.............................. $731,579 $702,844
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
SMITH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income.......................................................... $ 12,948 $ 10,805
Adjustments to reconcile net income to net cash provided by
operating activities excluding the net effects of the Company's
1995 acquisition of Baker Hughes Treatment Services:
Depreciation and amortization.................................. 7,093 5,620
Provision for losses on accounts receivable.................... 216 233
Gain on disposal of fixed assets............................... (1,223) (930)
Foreign currency translation................................... 37 606
Change in receivables.......................................... (6,976) 2,276
Change in inventories.......................................... (12,437) (9,358)
Change in accounts payable..................................... 1,809 (11,967)
Changes in other current assets and liabilities................ (4,935) (3,752)
Changes in other noncurrent assets and liabilities............. 4,944 6,595
-------- --------
Net cash provided by operating activities................... 1,476 128
-------- --------
Cash flows from investing activities:
Acquisition of Baker Hughes Treatment Services...................... -- (5,131)
Fixed asset additions............................................... (14,075) (8,902)
Proceeds from disposal of fixed assets.............................. 3,435 3,090
-------- --------
Net cash used in investing activities....................... (10,640) (10,943)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in short-term borrowing..................... (9,379) 14,762
Net increase in long-term bank revolver and other................... 25,463 6,042
Repayments of term loan debt........................................ (10,000) (10,000)
Proceeds from exercise of stock options and warrants................ 1,607 1,188
Distributions to minority interests, net............................ -- (1,800)
-------- --------
Net cash provided by financing activities................... 7,691 10,192
-------- --------
Effect of exchange rate changes on cash............................. (58) 67
-------- --------
Decrease in cash and cash equivalents............................... (1,531) (556)
Cash and cash equivalents at beginning of period.................... 14,845 8,145
-------- --------
Cash and cash equivalents at end of period.......................... $ 13,314 $ 7,589
======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest.............................................. $ 2,238 $ 2,143
Cash paid for income taxes.......................................... $ 3,291 $ 846
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
SMITH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1) BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of Smith
International, Inc. and subsidiaries (the "Company") have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with the audited financial statements and accompanying notes
included in the Company's 1995 Annual Report on Form 10-K.
The unaudited consolidated financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which the Company considers
necessary for a fair presentation of the interim periods. All significant
intercompany balances and transactions have been eliminated in the accompanying
financial statements. Results for the interim periods are not necessarily
indicative of results for the year.
2) EARNINGS PER SHARE
Earnings per share is computed using the weighted average number of shares
of common stock and common stock equivalents outstanding during the period.
Common stock equivalents include the number of shares issuable upon exercise of
stock options, less the number of shares that could have been repurchased with
the exercise proceeds using the treasury stock method.
The number of shares used in the computation was determined as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
------ ------
<S> <C> <C>
Weighted average number of common shares outstanding.... 39,296 38,856
Common stock equivalents................................ 423 177
------ ------
39,719 39,033
====== ======
</TABLE>
3) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
by the last-in, first-out ("LIFO") method for substantially all of the domestic
inventories and by the first-in, first-out ("FIFO") method for all other
inventories. Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1996
-------- --------
<S> <C> <C>
Raw Materials........................................ $ 20,570 $ 31,052
Work in Process...................................... 42,246 40,718
Finished Goods....................................... 184,989 163,597
-------- --------
247,805 235,367
Reserves to state certain domestic inventories
($104,288 and $99,113 in 1996 and 1995,
respectively) on a LIFO basis...................... (13,415) (13,415)
-------- --------
Inventories, net..................................... $234,390 $221,952
======== ========
</TABLE>
6
<PAGE> 7
SMITH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4) PROPERTY, PLANT AND EQUIPMENT, NET
Property, Plant and Equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Land................................................. $ 17,036 $ 16,997
Buildings and improvements........................... 30,854 31,199
Machinery and equipment.............................. 248,969 250,221
-------- --------
296,859 298,417
Less-accumulated depreciation........................ (157,351) (165,918)
-------- --------
Net property, plant and equipment.................... $139,508 $132,499
======== ========
</TABLE>
5) DEBT
Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Current:
Short-term bank borrowings......................... $ 5,076 $ 14,438
Current portion of long-term debt.................. 10,692 10,709
-------- --------
15,768 25,147
-------- --------
Long-term:
Notes payable...................................... 46,000 46,000
Bank revolver...................................... 76,000 50,400
Term loan.......................................... 20,000 30,000
Other.............................................. 1,393 1,547
-------- --------
143,393 127,947
Less current portion of long-term debt............. (10,692) (10,709)
-------- --------
Long-term debt..................................... $132,701 $117,238
======== ========
</TABLE>
On April 4, 1996, the Company and M-I Drilling Fluids entered into new
unsecured revolving line of credit agreements which increased the available
facilities under the Company's domestic line of credit from $65.0 million to
$80.0 million and under the M-I Drilling Fluids line of credit from $20.0
million to $40.0 million. The new credit agreements provide for interest at
rates ranging from LIBOR + 3/8 to LIBOR + 5/8, based upon certain financial
ratios of the Company, and expire in March 2001.
Principal payments of long-term debt, including the renegotiated line of
credit agreements, are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 15,926
1998.............................................................. 20,533
1999.............................................................. 10,222
2000.............................................................. 10,222
Thereafter........................................................ 75,798
--------
$132,701
========
</TABLE>
7
<PAGE> 8
SMITH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6) SUBSEQUENT EVENT
On April 10, 1996, M-I Drilling Fluids signed a definitive agreement for
the acquisition of Anchor Drilling Fluids A.S., a Norwegian company, in a
transaction which is expected to be accounted for as a purchase. The Company has
negotiated new term loan agreements which will be effective prior to or upon
consummation of the transaction. Management anticipates financing the Company's
portion of the purchase price by utilizing approximately $70.0 million of
borrowings under the new term loan agreements.
The transaction is subject to approval by the United States Department of
Justice and modification of a 1993 judgment issued by the United States District
Court for the District of Columbia, neither of which has been obtained. M-I
Drilling Fluids expects to finalize this transaction during the Company's second
quarter; however, there are no assurances as to whether this transaction will
ultimately be consummated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Management's Discussion and Analysis of Financial Condition and Results of
Operations is the Company's discussion of its financial performance and of
significant trends which may impact the future performance of the Company. It
should be read in conjunction with the financial statements of the Company and
the related notes thereto.
The Company manufactures and supplies a wide range of products and services
to the worldwide oil and gas drilling and production and mining industries. The
Company's revenues are derived from sales of drilling and completion fluid
systems, solids control equipment, drill bits, downhole drilling tools and
tubular drill string components and from providing drilling and completion
services to the oil and gas industry.
The Company operates in the global oil and gas services market and is
significantly impacted by changes in exploration and drilling activity in the
major energy producing areas. Exploration and drilling activity is primarily
influenced by the prices of oil and natural gas. In addition, exploration and
drilling activity may be affected by political actions and uncertainties,
environmental concerns, capital expenditure plans of customers and the overall
level of global economic growth and activity.
8
<PAGE> 9
SMITH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
RESULTS OF OPERATIONS
Revenues
The Company operates through four business units which market the products
manufactured and provide services throughout the world. The following table sets
forth the amounts and percentages of revenues by business unit and by area, as
well as average rig count data (in thousands, except rig count information):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------------------
1996 1995
---------------- ----------------
AMOUNT % AMOUNT %
-------- --- -------- ---
<S> <C> <C> <C> <C>
Breakdown by Business Unit:
M-I Drilling Fluids.................................. $150,723 63 $122,367 61
Smith Tool........................................... 45,227 19 42,663 22
Smith Drilling & Completions......................... 30,775 13 26,171 13
Smith Diamond Technology............................. 12,095 5 8,402 4
-------- --- -------- ---
Total........................................ $238,820 100 $199,603 100
======== === ======== ===
Breakdown by Area:
U.S.................................................. 95,382 40 $ 82,311 41
Export............................................... 13,121 5 11,286 6
Non-U.S.............................................. 130,317 55 106,006 53
-------- --- -------- ---
Total........................................ $238,820 100 $199,603 100
======== === ======== ===
Average Active Rig Count:
U.S.................................................. 709 709
Canada............................................... 336 330
Non-North America.................................... 780 750
-------- --------
Total........................................ 1,825 1,789
======== ========
</TABLE>
M-I DRILLING FLUIDS
The M-I Drilling Fluids operation provides drilling fluids systems, solids
control equipment, products and technical services to end users engaged in
drilling oil, natural gas and geothermal wells worldwide. M-I Drilling Fluids
revenues increased $28.4 million or 23 percent from the first quarter of 1995
due primarily to the significant growth in international revenues, primarily in
Latin America and Europe/Africa. The increased international revenues resulted
from an expanded presence and increased drilling activity in the Latin American
market and heightened drilling activity in the Europe/Africa region.
SMITH TOOL
The Smith Tool business unit manufactures and sells three-cone drill bits
used in the oil and gas drilling industry and in mining applications. Smith Tool
revenues increased $2.6 million or 6 percent from the first quarter of 1995 due
primarily to higher volumes and improved pricing of three-cone bits in the
United States and increased demand for mining bits.
SMITH DRILLING & COMPLETIONS
The Smith Drilling & Completions business unit manufactures and markets
downhole drilling tools and tubular drill string components and provides related
drilling and completion services for drilling oil and gas wells. Drilling &
Completions revenues increased $4.6 million or 18 percent from the first quarter
of 1995, due primarily to higher drilling activity in Latin America and higher
demand in the United States.
9
<PAGE> 10
SMITH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SMITH DIAMOND TECHNOLOGY
The Smith Diamond Technology business unit manufactures and markets shear
bits featuring cutters made of polycrystalline diamond (PDC) or natural diamonds
at its Geodiamond division. Smith Diamond Technology also manufactures PDC's and
cubic boron nitride at its Megadiamond and Supradiamant subsidiaries. These
ultrahard materials are used in the business unit's diamond drill bits and in
other specialized cutting tools. Smith Diamond Technology revenues increased
$3.7 million or 44 percent from the first quarter of 1995, due primarily to
higher sales volume resulting from increased drilling activity in Latin America.
For the periods indicated, the following table summarizes the operating
results of the Company and presents results as a percentage of total revenues:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
-------------------------------------
1996 1995
---------------- ----------------
AMOUNT % AMOUNT %
-------- --- -------- ---
<S> <C> <C> <C> <C>
Revenues......................................... $238,820 100 $199,603 100
-------- --- -------- ---
Gross profit..................................... 80,909 34 65,536 33
Operating expenses............................... 55,859 24 46,088 23
-------- --- -------- ---
Earnings before interest and taxes............... 25,050 10 19,448 10
Interest expense, net............................ 3,039 1 2,894 2
-------- --- -------- ---
Income before income taxes and minority
interests...................................... 22,011 9 16,554 8
Income tax provision............................. 5,015 2 2,559 1
-------- --- -------- ---
Income before minority interests................. 16,996 7 13,995 7
Minority interests............................... 4,048 2 3,190 2
-------- --- -------- ---
Net income....................................... $ 12,948 5 $ 10,805 5
======== === ======== ===
</TABLE>
Total revenues increased $39.2 million or 20 percent as compared to the
first quarter of 1995. The significant revenue growth relates to strong sales in
international markets, primarily Latin America, as well as increased revenues in
the United States. Increased drilling activity combined with an expanded
presence in Latin America contributed to the increase in international revenues.
Although drilling activity in the United States has remained relatively flat as
compared to the first quarter of 1995, the increased level of deep water and
re-entry drilling activity had a favorable impact on the Company's domestic
revenues for the first quarter of 1996.
Gross profit, computed as revenues less costs of revenues, increased by
$15.4 million or 24 percent from the first quarter of 1995. As a percentage of
revenues, gross profit increased from 33 percent in the first quarter of 1995 to
34 percent in the current quarter. The increase primarily reflects incremental
gross profit on the higher sales volumes.
Operating expenses, consisting of selling expenses and general and
administrative expenses, increased by $9.8 million or 21 percent from the first
quarter of 1995; however, as a percentage of revenues, operating expenses
remained relatively constant. The increase in absolute dollars primarily relates
to increased selling costs associated with the higher revenues and higher
general and administrative costs related to the expansion of various foreign
operations.
Net interest expense, which represents interest expense less interest
income, increased by $0.1 million from the first quarter of 1995 due primarily
to the impact of increased borrowings required to finance working capital needs.
The effect of the higher debt levels on interest expense was partially offset by
lower interest rates.
10
<PAGE> 11
SMITH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's effective tax rate for the first quarter of 1996 approximated
23 percent which is higher than the rate for the comparable period in the prior
year and lower than the U.S. statutory rate. The increase from the prior year
relates primarily to the inclusion of the M-I Drilling Fluids minority interest
partner's portion of a tax payment which related to periods prior to the
Company's acquisition of the M-I Drilling Fluids operation. The effective rate
was lower than the statutory rate, due primarily to the utilization of U.S. net
operating loss carryforwards.
Minority interests represent the share of M-I Drilling Fluids profits
associated with the minority interest partner in the M-I Drilling Fluids
operation as well as minority interests in investments in other joint ventures
held by M-I Drilling Fluids. Minority interests increased by $0.9 million from
the first quarter of 1995 due primarily to the higher level of M-I Drilling
Fluids earnings partially offset by the minority interest partner's portion of a
tax payment discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial condition remained strong at March 31, 1996.
Working capital at March 31, 1996 increased $26.9 million, or 9 percent, from
December 31, 1995. Cash flows from operations for the three months ended March
31, 1996, totaled $1.5 million, which is a $1.3 million increase from the
comparable period in the prior fiscal year.
The Company's primary internal source of liquidity is cash flow generated
from operations. External sources of liquidity include debt and, if needed,
equity financing. The Company has domestic and international borrowing
facilities for operating and financing needs. Subsequent to March 31, 1996, the
Company and M-I Drilling Fluids renegotiated certain revolving line of credit
agreements. At March 31, 1996, including the effect of the new line of credit
agreements, the Company had a $80.0 million revolving line of credit facility
with a bank group and approximately $22.0 million of international borrowing
facilities with various foreign banks. The Company had approximately $36.3
million of funds available for borrowings under these facilities. Additionally,
the renegotiated M-I Drilling Fluids revolving line of credit facility of $40.0
million had approximately $24.5 million of funds available for borrowing. The
Company expects to be able to meet its ongoing working capital and capital
expenditure requirements from existing cash on hand, operating cash flows and
existing credit facilities.
On April 10, 1996, M-I Drilling Fluids signed a definitive agreement for
the acquisition of Anchor Drilling Fluids A.S., a Norwegian company. Management
anticipates financing the Company's portion of the purchase price by utilizing
approximately $70.0 million in borrowings under new term loan facilities, which
will be effective prior to or upon finalizing the transaction. Aside from the
planned acquisition, management continues to evaluate opportunities to acquire
products or businesses complementary to the Company's operations. These
acquisitions may involve the use of cash or, depending on the size and terms of
the acquisition, may require debt or equity financing.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
12
<PAGE> 13
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 thereunto duly authorized.
<TABLE>
<S> <C>
SMITH INTERNATIONAL, INC.
Registrant
Date: May 13, 1996 By: /s/ DOUGLAS L. ROCK
--------------------------------------------
Douglas L. Rock
Chairman of the Board, Chief Executive
Officer, President and Chief Operating
Officer
Date: May 13, 1996 By: /s/ LOREN K. CARROLL
--------------------------------------------
Loren K. Carroll
Executive Vice President and Chief
Financial Officer (Principal Accounting
Officer)
</TABLE>
13
<PAGE> 14
INDEX TO EXHIBITS
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 13,314
<SECURITIES> 0
<RECEIVABLES> 237,229
<ALLOWANCES> 6,838
<INVENTORY> 234,390
<CURRENT-ASSETS> 506,579
<PP&E> 296,859
<DEPRECIATION> 157,351
<TOTAL-ASSETS> 731,579
<CURRENT-LIABILITIES> 179,642
<BONDS> 132,701
<COMMON> 39,941
0
0
<OTHER-SE> 275,349
<TOTAL-LIABILITY-AND-EQUITY> 731,579
<SALES> 238,820
<TOTAL-REVENUES> 238,820
<CGS> 157,911
<TOTAL-COSTS> 157,911
<OTHER-EXPENSES> 55,859
<LOSS-PROVISION> 216
<INTEREST-EXPENSE> 3,039
<INCOME-PRETAX> 22,011
<INCOME-TAX> 5,015
<INCOME-CONTINUING> 12,948
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,948
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
