<PAGE> 1
PROSPECTUS Filed pursuant to
Rule 424(b)(3)
Registration No. 333-62629
542,198 Shares
Smith International, Inc.
Common Stock
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This Prospectus relates to 542,198 shares (the "Shares") of common stock,
$1.00 par value (the "Common Stock"), of Smith International, Inc. ("Smith" or
the "Company"), which may be offered by or for the account of certain
stockholders of the Company named herein (the "Selling Stockholders"). The
Shares were originally issued by the Company to the Selling Stockholders in
connection with the acquisition by the Company of Safeguard Disposal Systems,
Inc. ("Safeguard") on May 27, 1998 (the "Acquisition"). See "Selling
Stockholders." The Company will not receive any of the proceeds from sales of
the Shares offered hereby.
The Selling Stockholders may from time to time sell the Shares on the New
York Stock Exchange (the "NYSE"), the Pacific Stock Exchange (the "PSE") or any
other national securities exchange on which the Common Stock may be listed or
traded, including block trades, in negotiated transactions, or by a combination
of such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation to a particular broker-dealer might be
in excess of customary commissions). See "Plan of Distribution."
The Company has agreed to bear certain expenses (other than any brokerage
fees or commissions) in connection with the registration and sale of the Shares.
The Company and certain Selling Stockholders have agreed to indemnify the other
and their respective controlling persons against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act").
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
Shares of the Common Stock are listed on the NYSE and the PSE under the
trading symbol "SII." On September 14, 1998, the closing price of the Common
Stock on the NYSE was $27 5/16 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN EVALUATING THE SECURITIES
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS SEPTEMBER 15, 1998
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports and
other information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington
D.C. 20549, and at the following regional offices of the Commission: Northwest
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material may also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a site on the World Wide Web that contains reports, proxy
and information statements and other information filed electronically by the
Company with the Commission that can be accessed at http://www.sec.gov. In
addition, reports, proxy statements and other information filed by the Company
can be inspected at the offices of The New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005, and at the offices of The Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104.
The Company has filed a Registration Statement on Form S-3 (together with
all the amendments, supplements and exhibits thereto, the "Registration
Statement") with the Commission under the Securities Act with respect to the
Shares. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. The
Registration Statement and any amendments hereto, including exhibits filed as a
part thereof, are available for inspection and copying as set forth above.
Statements contained in this Prospectus or in any document incorporated in this
Prospectus by reference as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (Commission File No. 1-8514)
with the Commission pursuant to the Exchange Act are hereby incorporated herein
by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998;
(3) The Company's Current Reports on Form 8-K dated March 6, 1998, May
15, 1998, July 13, 1998 and August 31, 1998; and
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as filed with the Commission on May 20,
1959.
All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering described herein shall be deemed to
be incorporated by reference herein and to be a part hereof from the respective
dates of filing of such documents or reports. Any person to whom a copy of this
Prospectus is delivered may obtain, without charge, upon written or oral
request, a copy of any of the documents incorporated by reference herein, except
for the exhibits to such documents (other than exhibits expressly incorporated
by reference into such documents). Requests for such documents should be
addressed to the Investor Relations, Smith International, Inc., 16740 Hardy
Street, P.O. Box 60068, Houston, Texas, 77205, or directed to Investor Relations
at (281) 443-3370.
<PAGE> 3
THE COMPANY
Smith is a leading worldwide supplier of premium products and services to
the oil and gas exploration and production and petrochemical industries. Smith
provides a comprehensive line of technologically-advanced products and
engineering services, including drilling and completion fluid systems, solids
control equipment, waste management services, three-cone drill bits, diamond
drill bits, fishing services, drilling tools, underreamers, sidetracking systems
and liner hangers. Smith also operates an extensive network of supply branches
through which it markets pipe, valves, fittings and other capital and expendable
maintenance products. Smith operates through five business units which provide
products and services throughout the world. Smith's business units include: (i)
M-I Fluids which provides drilling and completion fluid systems and services;
(ii) M-I SWACO which provides solids control, pressure control and rig
instrumentation equipment and waste management services; (iii) Smith Bits which
manufactures and sells three-cone and diamond drill bits primarily for use in
the oil and gas industry; (iv) Smith Drilling & Completions which manufactures
and markets products and services used in drilling, workover, well completion,
fishing and well re-entry operations; and (v) Wilson Supply which operates an
extensive network of supply branches, service centers and sales offices that
market pipe, valves, fittings and other capital and expendable maintenance
products. Smith was incorporated in the State of California in January 1937 and
reincorporated under Delaware law in May 1983. Smith's executive offices are
headquartered at 16740 Hardy Street, Houston, Texas 77032 and its telephone
number at that location is (281) 443-3370.
RISK FACTORS
This Prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. The words
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"will," "could," "may," "predict" and similar terms and phrases are intended to
identify forward-looking statements. These statements involve risks and
uncertainties that may cause actual future activities and results of operations
to be materially different from those suggested or described in this Prospectus.
These risks include changes in the level of petroleum industry exploration and
production expenditures, which may in turn be influenced by the price of and
demand for crude oil and natural gas, the policies of the Organization of
Petroleum Exporting Countries ("OPEC"), worldwide economic conditions and other
market factors, political instability in foreign counties in which the Company
operate, currency fluctuations and controls, increased competition in Smith's
markets, governmental restrictions affecting oil and gas exploration, dependence
on the ability of Smith to achieve and execute internal business plans and the
impact of any economic downturns and inflation. These risks are more
specifically described in this section and in Smith's Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q, which are incorporated herein by reference.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those expected, estimated or projected.
Smith's Dependence on Oil and Gas Industry. Smith's business and operations
are dependent on conditions in the oil and gas exploration and production
industry. There can be no assurance that current levels of oil and gas
exploration expenditures will be maintained or that demand for the Company's
products and services will reflect the level of such expenditures. The level of
exploration and development of oil and gas reserves is affected by both
short-term and long-term trends in oil and gas prices which, in turn, are
related to the demand for petroleum products and the current availability of oil
and gas resources. In recent years, oil and gas prices have been volatile and
have reacted to actual and perceived changes in demand and supply of oil and
natural gas, domestic and worldwide economic conditions, policies of OPEC in
setting and maintaining production levels and prices, the level of production by
non-OPEC countries and political instabilities in oil producing countries. In
this regard, there have been recent declines in the prevailing prices of oil and
natural gas as well as uncertainties as to the effect of the recent economic
downturn in Asia on world demand for oil. A significant or prolonged decline in
future oil and gas prices likely would result in reduced exploration and
development of oil and gas reserves and a decline in the demand for Smith's
products. Such reduced activity could have a material adverse effect on Smith's
financial condition and results of operations.
2
<PAGE> 4
Competition. Competition in the oilfield service and equipment segments of
the oil and gas industry is intense and, in certain markets, is dominated by a
small number of large competitors, some of which have greater financial and
other resources than Smith.
Anti-Takeover Provisions of the Smith Charter and the Smith Bylaws. Certain
provisions of the Restated Certificate of Incorporation of Smith and the Bylaws
of Smith and the adoption by the Board of Directors of Smith of a Stockholder
Rights Plan could have the effect of making it more difficult for a third party
to acquire, or discouraging a third party from acquiring, a majority of the
outstanding capital stock of Smith and could make it more difficult to
consummate certain types of transactions involving an actual or potential change
in control of Smith, such as a merger, tender offer or proxy contest.
3
<PAGE> 5
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders.
SELLING STOCKHOLDERS
This Prospectus relates to the sale by the Selling Stockholders named below
from time to time of up to 542,198 shares of Common Stock. The Shares were
originally issued in connection with the Company's acquisition of Safeguard
pursuant to the terms of a Merger Agreement dated May 12, 1998. The Shares are
being registered by the Company pursuant to a Registration Rights Agreement
entered into by and among the Company and the Selling Stockholders. Except as
described herein, the Company is unaware that any Selling Shareholder has had a
material relationship with the Company within the past three years other than as
a result of the ownership of Shares or other securities of the Company.
The following table provides certain information with respect to the number
of shares of Common Stock currently owned, offered hereby and to be owned by the
Selling Stockholders after this offering assuming all offered shares are sold in
this offering.
<TABLE>
<CAPTION>
NUMBER OF
SHARES SHARES BENEFICIALLY
BENEFICIALLY OWNED AFTER THE
OWNED SHARES OFFERING
BEFORE THE OFFERED --------------------
SELLING STOCKHOLDER OFFERING HEREBY NUMBER PERCENT
------------------- ------------ ------- -------- ---------
<S> <C> <C> <C> <C>
Gary H. Dietzen and Carolyn I. Dietzen.................. 341,585 341,585 0 0
Kenneth L. Harvey....................................... 6,018 6,018 0 0
Richard G. Harvey....................................... 6,018 6,018 0 0
Todd J. Harvey.......................................... 6,018 6,018 0 0
Belinda Turlich Harvey.................................. 90,277 90,277 0 0
Randy Lee Harvey........................................ 6,018 6,018 0 0
Ordale Dwain Harvey..................................... 6,018 6,018 0 0
Lynn Perkins Perez and Chalin O. Perez.................. 80,246 80,246 0 0
</TABLE>
PLAN OF DISTRIBUTION
The Selling Stockholders may from time to time sell all or any portion of
the Shares on the NYSE, the PSE or any other national securities exchange on
which the Common Stock is listed or traded, including block trades, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
4
<PAGE> 6
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company during
a period beginning one or five business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, each Selling
Stockholder will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including, without limitation, Rule 102, which
provisions may limit the timing of purchases and sales of shares of Common Stock
by the Selling Stockholders.
The Company will pay all costs and expenses incurred in connection with the
registration under the Securities Act of the Shares, including, without
limitation, all registration and filing fees, printing expenses and fees and
disbursements of counsel and accountants for the Company. The Selling
Stockholders will pay any brokerage fees and commissions and stock transfer and
other taxes attributable to the sale of the Shares. The Company also has agreed
to indemnify the Selling Stockholders and their respective officers and
directors and each person who controls (within the meaning of the Securities
Act) such Selling Stockholders against certain losses, claims, damages and
expenses arising under the securities laws in connection with this offering.
Each such Selling Stockholder has agreed to indemnify the Company, its officers,
directors and each person who controls (within the meaning of the Securities
Act) the Company against other losses, claims, damages and expenses arising
under the securities laws in connection with this offering with respect to
written information furnished to the Company by such Selling Stockholder.
There is no assurance that the Selling Stockholders will sell any or all of
the Shares.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon by Gardere Wynne Sewell & Riggs, L.L.P., 333 Clay Avenue, Suite 800,
Houston, Texas 77002.
EXPERTS
The audited consolidated financial statements of the Company included in
the Company's Current Report on Form 8-K dated August 31, 1998, incorporated by
reference herein have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report. It should be noted that the independent public accountant's
report on financial statements previously filed on Form 10-K and incorporated by
reference in this registration statement is no longer appropriate since related
financial statements have been presented giving effect to business combinations
accounted for as poolings of interests.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 1
Incorporation of Certain Documents by
Reference............................ 1
The Company............................ 2
Risk Factors........................... 2
Use of Proceeds........................ 4
Selling Stockholders................... 4
Plan of Distribution................... 4
Legal Matters.......................... 5
Experts................................ 5
</TABLE>
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542,198 SHARES
SMITH INTERNATIONAL, INC.
COMMON STOCK
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PROSPECTUS
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September 15, 1998
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