<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
For the quarterly period ended March 31, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________ to ___________
Commission File Number
1-8514
Smith International, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 95-3822631
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
Number)
16740 Hardy Street
Houston, Texas 77032
(Address of principal executive offices) (Zip Code)
(281) 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, 1998 was 48,242,799.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Operations -
For the Three Months Ended March 31, 1998 and 1997.................................. 1
Consolidated Balance Sheets -
As of March 31, 1998 and December 31, 1997.......................................... 2
Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 1998 and 1997.................................. 3
Notes to Consolidated Financial Statements.............................................. 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................................ 7
PART II: OTHER INFORMATION
ITEMS 1 - 6.......................................................................................... 11
SIGNATURES................................................................................................ 12
</TABLE>
<PAGE> 3
SMITH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
----------------------------------------------
1998 1997
---- ----
<S> <C> <C>
Revenues.................................................. $ 423,441 $ 357,484
Costs and expenses:
Costs of revenues....................................... 269,320 236,219
Selling expenses........................................ 69,879 56,287
General and administrative expenses..................... 19,623 19,953
--------- ---------
Total costs and expenses............................. 358,822 312,459
--------- ---------
Income before interest and taxes.......................... 64,619 45,025
Interest expense, net..................................... 7,803 5,234
Income before income taxes and minority interests......... 56,816 39,791
Income tax provision...................................... 16,967 9,967
--------- ---------
Income before minority interests.......................... 39,849 29,824
Minority interests........................................ 11,088 8,711
--------- ---------
Net income................................................ $ 28,761 $ 21,113
========= =========
Earnings per share:
Basic................................................... $ 0.72 $ 0.53
========= =========
Diluted................................................. $ 0.72 $ 0.53
========= =========
Weighted average shares outstanding:
Basic................................................... 39,672 39,539
========= =========
Diluted................................................. 40,153 40,068
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
================================================================================
SMITH INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value data)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................................. $ 26,980 $ 28,971
Receivables, net....................................................... 439,270 409,765
Inventories, net....................................................... 391,656 358,361
Deferred tax assets, net............................................... 25,108 25,254
Prepaid expenses and other............................................. 38,202 28,620
----------- ---------
Total current assets................................................. 921,216 850,971
----------- ---------
Property, plant and equipment, net....................................... 282,936 270,941
Other assets............................................................. 73,644 64,786
Goodwill, net............................................................ 210,129 209,335
----------- ---------
Total Assets............................................................. $ 1,487,925 $ 1,396,033
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and current portion of long-term debt............ $ 81,542 $ 91,523
Accounts payable....................................................... 120,365 119,353
Accrued payroll costs.................................................. 47,227 54,620
Income taxes payable................................................... 37,780 25,796
Other.................................................................. 69,113 81,635
----------- ---------
Total current liabilities.......................................... 356,027 372,927
----------- ---------
Long-term debt........................................................... 373,265 306,279
Deferred tax liabilities................................................. 16,317 16,578
Other long-term liabilities.............................................. 22,822 24,087
Minority interests....................................................... 222,318 206,705
Shareholders' Equity:
Preferred Stock, $1 par value; 5,000 shares authorized; no shares
issued or outstanding in 1998 or 1997................................ -- --
Common Stock, $1 par value; 60,000 shares authorized; 40,337 shares
issued and outstanding in 1998 (40,316 in 1997)...................... 40,337 40,316
Additional paid-in capital............................................. 283,360 282,772
Retained earnings...................................................... 193,594 164,833
Cumulative translation adjustments..................................... (12,413) (10,762)
Less - treasury securities, at cost; 656 common shares in 1998 and 1997 (7,702) (7,702)
----------- ---------
Total shareholders' equity......................................... 497,176 469,457
----------- ---------
Total Liabilities and Shareholders' Equity............................... $ 1,487,925 $1,396,033
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
SMITH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
------------------------
1998 1997
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................................... $ 28,761 $ 21,113
Adjustments to reconcile net income to net cash provided
by (used in) operating activities, excluding the net effects of acquisitions:
Depreciation and amortization................................................... 13,394 9,166
Minority interests.............................................................. 11,088 8,711
Provision for losses on receivables............................................. 189 231
Gain on disposal of property, plant and equipment............................... (752) (125)
Foreign currency translation losses............................................. 205 41
Changes in operating assets and liabilities:
Receivables..................................................................... (29,694) (41,904)
Inventories, net................................................................ (33,295) (8,580)
Accounts payable................................................................ 1,012 1,882
Other current assets and liabilities............................................ (12,272) 7,662
Other non-current assets and liabilities........................................ 1,341
(11,850)
--------- ----------
Net cash used in operating activities............................................... (33,214) (462)
--------- ----------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired..................................... (7,300) (4,880)
Purchases of property, plant and equipment.......................................... (25,150) (14,708)
Proceeds from disposal of property, plant and equipment............................. 1,777 1,366
--------- ----------
Net cash used in investing activities............................................... (30,673) (18,222)
--------- ----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt............................................ 67,722 25,857
Principal payments of long-term debt................................................ (10,151) (10,000)
Net decrease in short-term borrowings............................................... (357) (1,994)
Proceeds from exercise of stock options............................................. 274 526
Contributions from minority interest partner........................................ 4,572 2,880
--------- ----------
Net cash provided by financing activities........................................... 62,060 17,269
--------- ----------
Effect of exchange rate changes on cash............................................. (164) (207)
--------- ----------
Decrease in cash and cash equivalents............................................... (1,991) (1,622)
Cash and cash equivalents at beginning of period.................................... 28,971 25,540
--------- ----------
Cash and cash equivalents at end of period.......................................... $ 26,980 $ 23,918
========= ==========
Supplemental disclosures of cash flow information:
Cash paid for interest.............................................................. $ 8,699 $ 2,523
Cash paid for income taxes.......................................................... $ 3,273 $ 2,214
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<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 1997 Annual Report on Form 10-K and other current
filings with the Commission.
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.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2) Earnings Per Share
During 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128 "Earnings Per Share", which requires dual presentation of basic
and diluted earnings per share ("EPS") data. Basic EPS is computed using the
weighted average number of common shares outstanding during the period. Diluted
EPS gives effect to the potential dilution of earnings which could have occurred
if additional shares were issued for stock option exercises under the treasury
stock method. The following schedule reconciles the income and shares used in
the basic and diluted EPS computations (in thousands, except per share data):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-----------------------------
1998 1997
---- ----
<S> <C> <C>
Basic EPS
---------
Net income................................ $28,761 $21,113
======= =======
Weighted average number of common
shares outstanding...................... 39,672 39,539
------- -------
Basic EPS................................. $ 0.72 $ 0.53
====== ======
1998 1997
---- ----
Diluted EPS
-----------
Net income................................ $28,761 $21,113
======= =======
Weighted average number of common
shares outstanding...................... 39,672 39,539
Dilutive effect of stock options.......... 481 529
------ ------
40,153 40,068
------ ------
Diluted EPS............................... $ 0.72 $ 0.53
====== ======
</TABLE>
4
<PAGE> 7
3) Comprehensive Income
In 1998, the Company adopted Statement of Financial Accounting Standards No.
130 ("SFAS 130") "Reporting Comprehensive Income", which requires companies to
display comprehensive income and its components in the financial statements.
Comprehensive income, which encompasses net income and currency translation
adjustments, is as follows (in thousands):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
------------------------------
1998 1997
---- ----
<S> <C> <C>
Net income......................................................... $ 28,761 $ 21,113
Currency translation adjustments,
net of tax of $495 and $585 for 1998 and 1997, respectively...... (1,156) (1,754)
-------- --------
Comprehensive income............................................... $ 27,605 $ 19,359
======== ========
</TABLE>
4) Inventories
Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out ("LIFO") method for certain U.S. inventories and the
first-in, first-out ("FIFO") method for all other inventories. Inventory costs,
consisting of materials, labor and factory overhead, are as follows (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Raw materials..................................................... $ 38,939 $ 35,206
Work-in-process................................................... 81,445 72,233
Finished goods.................................................... 289,161 268,611
------------ -----------
409,545 376,050
Reserves to state certain domestic inventories
($153,569 and $146,431 in 1998 and 1997,
respectively) on a LIFO basis................................. (17,889) (17,689)
------------ -----------
Inventories, net.................................................. $ 391,656 $ 358,361
============ ===========
</TABLE>
5) Property, Plant and Equipment, Net
Property, plant and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
Land.............................................................. $ 21,916 $ 22,226
Buildings......................................................... 48,256 46,046
Machinery and equipment........................................... 405,445 387,016
----------- -----------
475,617 455,288
Less-accumulated depreciation.....................................
(192,681) (184,347)
----------- -----------
Net property, plant and equipment................................. $ 282,936 $ 270,941
=========== ==========
</TABLE>
5
<PAGE> 8
6) Subsequent Event
On April 30, 1998, the Company acquired Wilson Industries, Inc. ("Wilson")
by issuing 7.9 million shares of common stock in exchange for all of the
outstanding Wilson shares. The transaction will be accounted for as a pooling of
interests and, accordingly, all prior period financial statements will be
restated to include the results of Wilson as if the transaction had occurred at
the earliest date presented. In connection with the acquisition, the Company
expects to incur approximately $35 million of costs related to effecting the
transaction and integrating the Wilson operations.
Wilson, which operates through Wilson Supply and Houston Engineers, is based
in Houston, Texas. Wilson Supply is a U.S.-based stocking distributor of
materials for drilling, production, refining and petrochemical plants and
pipeline operations. Houston Engineers provides drilling and fishing tools and
directional drilling services worldwide to the exploration and production
industry. Wilson reported revenues of $605 million for the fiscal year ended
December 31, 1997.
6
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The following 'Management's Discussion and Analysis of Financial Condition
and Results of Operations" is provided to assist readers in understanding the
Company's financial performance during the periods presented and significant
trends which may impact the future performance of the Company. It should be read
in conjunction with the Consolidated Financial Statements of the Company and the
related notes thereto.
The Company's primary business is the manufacture and sale of premium
products and services to the oil and gas industry's exploration and production
sectors. The Company 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.
The Company's worldwide operations are largely driven by the level of
exploration and production activity in major energy producing areas and the
depth and drilling conditions of these projects. Drilling activity levels are
primarily influenced by the price of oil and natural gas but may also be
affected by political actions and uncertainties, environmental concerns, capital
expenditure plans of exploration and production companies and the overall level
of global economic growth and activity.
North American drilling activity has decreased from average activity levels
experienced in the first quarter of 1998. Although the long-term outlook for
exploration and production activity is favorable based upon expected growth in
worldwide energy consumption, several factors have, and may continue to, impact
activity levels on a short-term basis. A significant portion of the North
American rig count decrease relates to lower Canadian activity levels associated
with the annual spring break-up. However, lower crude oil prices, which have
declined approximately 25 percent from average 1997 levels, have negatively
impacted U.S. land-based drilling activity resulting in a 13 percent decrease in
the average rig count from the first quarter of 1998. If crude oil prices remain
at or below current levels for a prolonged period of time, management believes
demand for products and services could be impacted in North American and
certain other markets.
Results of Operations
Revenues
Smith International operates through five business units which market the
Company's products and services throughout the world. The following table
presents revenue and average rig count information for the periods shown (in
thousands, except rig count information).
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------------------------
1998 1997
------------------------------------------
Amount % Amount %
-------------------- --------------------
<S> <C> <C> <C> <C>
Revenues by Business Unit:
M-I Fluids................................... $ 230,228 54 $ 206,101 58
M-I SWACO.................................... 36,693 9 27,538 8
Smith Tool................................... 67,213 16 58,242 16
Smith Drilling & Completions................. 65,633 15 47,738 13
Smith Diamond Technology..................... 23,674 6 17,865 5
---------- --- ----------- ---
Total................................ $ 423,441 100 $ 357,484 100
========== === =========== ===
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Revenues by Area:
U.S.......................................... $ 159,227 38 $ 135,705 38
Export....................................... 27,068 6 20,260 6
Non-U.S...................................... 237,146 56 201,519 56
---------- --- ----------- ---
Total................................ $ 423,441 100 $ 357,484 100
========== === =========== ===
Average Active Rig Count:
U.S.......................................... 966 856
Canada....................................... 459 395
Non-North America............................ 811 804
---------- -----------
Total................................ 2,236 2,055
========== ===========
</TABLE>
M-I Fluids
M-I Fluids, a division of M-I L.L.C. ("M-I"), provides drilling fluid and
completion fluid systems, engineering and technical services to the oil and gas
industry. M-I Fluids' revenues increased $24.1 million, or 12 percent, over the
first quarter of 1997. The majority of the revenue growth relates to incremental
revenues from acquisitions and, to a lesser extent, increased drilling activity
levels in the U.S.
M-I SWACO
M-I SWACO, a division of M-I, manufactures and markets equipment and
services for solids control, pressure control, rig instrumentation and waste
management. M-I SWACO's revenues increased $9.2 million, or 33 percent, from the
first quarter of 1997. Incremental revenues from acquisitions and increased
solids control equipment sales under an alliance contract accounted for the
majority of the quarter-to-quarter revenue growth.
Smith Tool
Smith Tool manufactures and sells three-cone bits for use in the oil and gas
industry and in mining applications. Smith Tool's revenues increased $9.0
million over the first quarter of 1997 due to increased unit sales, a favorable
shift in the sales mix and improved pricing. On a geographical basis, higher
tender sales outside the U.S., improved market penetration in the Eastern
Hemisphere and increased Canadian activity levels accounted for the majority of
the growth.
Smith Drilling & Completions
Smith Drilling & Completions manufactures and markets products and services
used in the oil and gas industry for drilling, workover, well completion and
well re-entry. Smith Drilling & Completions' revenues increased $17.9 million,
or 37 percent, from the first quarter of 1997. Over half of the increase from
the prior year related to incremental revenues from acquisitions, while higher
demand for remedial products and services in the U.S. and Latin America
contributed to the base business growth.
Smith Diamond Technology
Smith Diamond Technology manufactures and markets shear bits featuring
cutters made of polycrystalline diamond or natural diamond at its GeoDiamond
division. Smith Diamond Technology also manufactures polycrystalline diamond and
cubic boron nitride at its MegaDiamond and Supradiamant subsidiaries. These
ultrahard materials are used in the Company's three-cone and diamond drill bits
and in other specialized cutting tools. Smith Diamond Technology's revenues
increased $5.8 million, or 33 percent, over the first quarter of 1997. The
growth over the comparable period of the prior year was attributable to higher
unit sales and improved pricing. On a geographical basis, higher market
penetration in certain Eastern Hemisphere markets coupled with increased
drilling activity in the U.S. accounted for the majority of the revenue growth.
8
<PAGE> 11
For the periods indicated, the following table summarizes the results of the
Company and presents these results as a percentage of total revenues (dollars in
thousands):
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------------------------------
1998 1997
--------------------------------------------------
Amount % Amount %
--------------------------------------------------
<S> <C> <C> <C> <C>
Revenues............................................. $ 423,441 100 $ 357,484 100
---------- --- --------- ---
Gross profit......................................... 154,121 36 121,265 34
Operating expenses................................... 89,502 21 76,240 21
---------- --- --------- ---
Income before interest and taxes..................... 64,619 15 45,025 13
Interest expense, net................................ 7,803 2 5,234 2
---------- --- --------- ---
Income before income taxes and
minority interests.................................. 56,816 13 39,791 11
Income tax provision................................. 16,967 4 9,967 3
---------- --- --------- ---
Income before minority interests..................... 39,849 9 29,824 8
Minority interests................................... 11,088 2 8,711 2
---------- --- --------- ---
Net income........................................... $ 28,761 7 $ 21,113 6
========= === ========= ===
</TABLE>
Total revenues increased $66.0 million, or 18 percent, from the prior year
quarter as the Company experienced growth across all business units and
geographic areas. Over half of the revenue increase was reported in North
America which benefited from the impact of acquired operations and, to a lesser
extent, higher drilling activity levels. Non-U.S. revenues, however, continue to
account for a significant portion of the Company's operations and approximated
62 percent of total revenues for the first quarter of 1998 and 1997.
Gross profit as a percentage of revenues increased from 34 percent in the
first quarter of the prior year to 36 percent in the first quarter of 1998. The
improvement in gross profit margins resulted from price increases enacted during
the last half of 1997 and increased manufacturing efficiencies associated with
the higher volumes.
Operating expenses, consisting of selling expenses and general and
administrative expenses, increased $13.3 million over the first quarter of 1997;
however, as a percentage of revenues, operating expenses were comparable to the
prior year quarter. The majority of the dollar variance is attributable to
increased variable costs associated with the higher level of revenues. Costs
associated with acquired operations and, to a lesser extent, changes in
compensation and benefit programs to maintain industry-competitive levels, also
contributed to the increase over the prior year.
Net interest expense, which represents interest expense less interest
income, increased $2.6 million from the first quarter of 1997. The increase is
related to the higher level of borrowings used to fund acquisitions and general
working capital needs attributable to the revenue growth.
The effective tax rate for the quarter approximated 30 percent, which is
higher than the rate for the comparable period of the prior year and lower than
the U.S. statutory rate. The rate exceeded the first quarter 1997 effective rate
as the prior year quarter benefited from U.S. net operating loss carryforwards,
which were fully utilized during 1997. The effective tax rate was lower than the
statutory rate due to the method of recording the minority interest partner's
U.S. earnings. The effective rate is expected to remain below the statutory rate
as the Company properly consolidates the pretax income related to the minority
interest partner's share of U.S. partnership earnings but excludes the related
tax provision.
9
<PAGE> 12
Minority interests represent the share of M-I's profits associated with the
36 percent minority partner's interest in those operations and, to a lesser
extent, minority interests in investments in other joint ventures held by M-I.
Minority interests increased $2.4 million from the first quarter of 1997 due to
the increased profitability of the M-I operations.
Liquidity and Capital Resources
The Company's financial condition remained solid in the first quarter of
1998. Cash and cash equivalents decreased $2.0 million during the quarter and
equaled $27.0 million at March 31, 1998. The Company's operations utilized $33.2
million of cash flows in the first quarter of 1998 which is $32.8 million higher
than the amounts required in the comparable quarter of the prior year. Increased
receivable and inventory levels associated with the revenue growth accounted for
a significant portion of the change from the first quarter of 1997. Borrowings
under available facilities were utilized to fund working capital growth as
well as capital expenditure requirements for the operations.
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. Various revolving line of credit facilities, which are
available for operating and financing needs, had additional borrowing capacity
of $118 million at March 31, 1998. The Company believes funds generated from
operations, cash on hand and amounts available under existing credit facilities
will be sufficient to finance capital expenditures and other working capital
needs of the existing operations for the foreseeable future.
Subsequent to March 31, 1998, the Company acquired Wilson by issuing 7.9
million shares of common stock in exchange for all of the outstanding Wilson
shares. In connection with the transaction, the Company expects to incur
approximately $35 million of costs related to effecting the transaction and
integrating the Wilson operations. Aside from the Wilson acquisition, management
continues to evaluate opportunities to acquire products or businesses
complimentary to the Company's operations. These acquisitions, if they arise,
may involve the use of cash or, depending upon the size and terms of the
acquisition, may require debt or equity financing.
This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 concerning the Company's
outlook for its operations, which are subject to certain risks, uncertainties
and assumptions. These forward-looking statements are identified by the use of
terms and phrases such as "expects", "believes", and similar terms and phrases.
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.
10
<PAGE> 13
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
(a) Exhibits
(2) Plan of Acquisition, Reorganization, Arrangement or Succession
2.1 Merger Agreement dated January 19, 1998 by and among Wilson
Industries, Inc., Smith International, Inc. and SII
Acquisition Corp. filed as Exhibit 2.1 to the Company's
registration statement on Form S-4 dated March 11, 1998
(Reg. No. 333-47729) and incorporated herein by reference.
(27) Financial Data Schedule
27.1 Financial data schedule for the three months ended March
31, 1998.
27.2 Financial data schedules for the three months ended March
31, 1997; six months ended June 30, 1997; and nine months
ended September 30, 1997.
27.3 Financial data schedules for the three months ended March
31, 1996; six months ended June 30, 1996; nine months ended
September 30, 1996; and twelve months ended December 31,
1996.
27.4 Financial data schedule for the year ended December 31,
1995.
(b) Reports on Form 8-K
The Registrant filed a Form 8-K dated March 6, 1998, reporting
under "Item 5. Other Events", related to a press release announcing
1997 fiscal year operating results.
11
<PAGE> 14
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.
SMITH INTERNATIONAL, INC.
Registrant
Date: May 15, 1998 By: /s/ Douglas L. Rock
-------------------- ----------------------------------------
Douglas L. Rock
Chairman of the Board, Chief Executive
Officer, President and Chief Operating
Officer
Date: May 15, 1998 By: /s/ John J. Kennedy
-------------------- ----------------------------------------
John J. Kennedy
Senior Vice President and
Chief Financial Officer
(Principal Accounting Officer)
12
<PAGE> 15
INDEX TO EXHIBITS
(27) Financial Data Schedule
-----------------------
27.1 Financial data schedule for the three months ended March
31, 1998.
27.2 Financial data schedules for the three months ended March
31, 1997; six months ended June 30, 1997; and nine months
ended September 30, 1997.
27.3 Financial data schedules for the three months ended March
31, 1996; six months ended June 30, 1996; nine months ended
September 30, 1996; and twelve months ended December 31,
1996.
27.4 Financial data schedule for the year ended December 31,
1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 26,980
<SECURITIES> 0
<RECEIVABLES> 445,371
<ALLOWANCES> 6,101
<INVENTORY> 391,656
<CURRENT-ASSETS> 921,216
<PP&E> 475,617
<DEPRECIATION> 192,681
<TOTAL-ASSETS> 1,487,925
<CURRENT-LIABILITIES> 356,027
<BONDS> 373,265
0
0
<COMMON> 40,337
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