<PAGE> 1
EXHIBIT 99.1
PRESS RELEASE
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SMITH INTERNATIONAL, INC.
P.O. BOX 60068
HOUSTON, TX 77205-0068
WEBSITE ADDRESS: smith.com
FOR RELEASE
THURSDAY, OCTOBER 19, 2000
CONTACT: MARGARET K. DORMAN
CHIEF FINANCIAL OFFICER
(281) 443-3370
SMITH INTERNATIONAL, INC. REPORTS
QUARTERLY EARNINGS OF 41 CENTS PER SHARE
HOUSTON, Texas (October 19, 2000)... Smith International, Inc. (NYSE: SII;
PCX) today announced third quarter net income of $20.5 million, or 41 cents per
share on a diluted basis. After excluding the impact of a non-recurring gain,
the Company's net operating earnings for the prior year period were $1.8
million, or 4 cents per share on a diluted basis. Revenues for the three months
ended September 30, 2000 were 49 percent above the prior year quarter and
compared to a 34 percent increase in the M-I worldwide rig count between the
corresponding periods. The quarter-to-quarter revenue increase is primarily
attributable to improved exploration and production activity levels, increased
market penetration and new contract awards. Demand for the Company's products
and services increased in all geographic regions, with the majority of the
revenue growth reported in the United States, Europe/Africa and Latin America.
After excluding the effect of the acquired Texas Mill operations, revenues were
41 percent above the prior year quarter.
For the nine months ended September 30, 2000, the Company reported net
income of $46.8 million, or 93 cents per share on a diluted basis, on revenues
of $2.0 billion. After excluding the impact of the non-recurring gain recorded
in the prior year quarter, net operating earnings for the first nine months of
1999 were $5.4 million, or 11 cents per share on a diluted basis, on revenues of
$1.3 billion. Organic growth and acquisitions contributed to the revenue
increase from
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EXHIBIT 99.1
the prior year in fairly equal amounts. Excluding the impact of acquired and
divested operations, revenues increased by 35 percent over the amounts reported
for the first nine months of 1999.
Revenues for the M-I operations were $326.4 million, a 54 percent increase
over the prior year quarter. The majority of the revenue increase was reported
in the United States, Europe/Africa and Latin America which benefited from a
combination of increased activity levels, new contract awards and increased
market penetration. Synthetic fluid revenues more than doubled over the prior
year quarter due to the impact of higher offshore activity levels in the United
States and Europe/Africa.
Smith Bits reported revenues of $84.0 million for the third quarter of
2000, a 41 percent increase over the amount reported in the prior year period.
Over half of the period-to-period revenue growth was reported in the United
States as higher drilling activity levels favorably impacted demand for
petroleum three-cone and diamond bits. Compared to the third quarter of 1999,
diamond bit revenues rose 54 percent reflecting higher activity levels in the
Gulf of Mexico and North Sea markets.
Smith Services' revenues were $75.3 million, an increase of 37 percent over
the third quarter of 1999. While a significant portion of the revenue growth was
reported in the United States due to higher exploration and production activity,
strong revenue growth was reported in all areas of the world. Increased customer
spending for fishing and remedial products and services, directional drilling
services and tubular goods accounted for the majority of the increase over the
prior year period.
Wilson's revenues increased to $232.7 million for the third quarter of
2000, 50 percent above the amount reported in the prior year quarter. Internal
growth and acquisitions contributed equally to the revenue increase over the
prior year period. The improvement in base revenues was primarily attributable
to the higher sales generated from the energy sector, which benefited from the
improvement in North American activity levels. Excluding the impact of the
acquired Texas Mill operations, revenues were 26 percent above third quarter
1999 levels.
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EXHIBIT 99.1
Commenting on the results, Chairman and CEO, Doug Rock stated, "Worldwide
drilling activity for 2000 steadily improves, providing a foundation for gradual
and predictable growth in coming quarters. We've experienced improved
profitability across all operations as customers increase exploration and
production spending levels. I'm pleased that our operating margins in the
oilfield segment continue to accelerate, reaching over 10 percent in the current
period - a 1.3 percentage point increase over the second quarter of 2000."
Loren Carroll, Executive Vice President, also noted that, "Revenue growth
combined with improved operating margins had a positive impact on our third
quarter results. Evidencing our strong operating leverage, Smith's earnings
before interest, taxes and minority interests ("EBIT") increased 25 percent
sequentially on revenue growth of 9 percent. Additionally, year-to-date
operating cash flow, reflecting Smith's ownership interest in EBIT, depreciation
and amortization, totaled $149.4 million, or $2.97 per share."
Smith International, Inc. is a leading worldwide supplier of premium
products and services to the oil and gas exploration and production industry,
the petrochemical industry and other industrial markets through its four
principal business units - M-I, Smith Bits, Smith Services and Wilson.
Unaudited financial highlights follow:
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EXHIBIT 99.1
SMITH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues ................................... $ 718,470 $ 481,541 $ 2,001,131 $ 1,268,258
Costs and expenses:
Costs of revenues ........................ 523,118 362,705 1,469,961 939,398
Selling expenses ......................... 107,060 81,213 302,158 221,911
General and administrative expenses ...... 34,073 23,284 95,558 65,706
Non-recurring items ...................... -- (81,378) -- (83,999)
----------- ----------- ----------- -----------
Total costs and expenses ............ 664,251 385,824 1,867,677 1,143,016
----------- ----------- ----------- -----------
Income before interest and taxes ........... 54,219 95,717 133,454 125,242
Interest expense, net ...................... 8,554 7,816 26,077 31,188
----------- ----------- ----------- -----------
Income before income taxes and
minority interests ....................... 45,665 87,901 107,377 94,054
Income tax provision ....................... 15,131 38,549 36,219 42,044
----------- ----------- ----------- -----------
Income before minority interests ........... 30,534 49,352 71,158 52,010
Minority interests ......................... 10,060 2,492 24,387 1,565
----------- ----------- ----------- -----------
Net income ................................. $ 20,474 $ 46,860 $ 46,771 $ 50,445
=========== =========== =========== ===========
Earnings per share:
Basic .................................... $ 0.41 $ 0.96 $ 0.94 $ 1.04
=========== =========== =========== ===========
Diluted .................................. $ 0.41 $ 0.95 $ 0.93 $ 1.03
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic .................................... 49,750 48,835 49,550 48,474
Diluted .................................. 50,387 49,471 50,231 49,082
OTHER DATA:
Depreciation and amortization .............. $ 20,430 $ 19,353 $ 59,600 $ 56,610
=========== =========== =========== ===========
Capital spending (a) ....................... $ 27,954 $ 15,469 $ 66,779 $ 42,060
=========== =========== =========== ===========
EBIT excluding minority interests (b) ...... $ 41,513 $ 10,764 $ 101,328 $ 37,866
=========== =========== =========== ===========
EBITDA excluding minority interests (b) .... $ 57,959 $ 27,183 $ 149,419 $ 91,427
=========== =========== =========== ===========
</TABLE>
NOTE (a):
Capital spending is reported gross and not reduced for the proceeds arising on
lost-in-hole sales or sales of fixed asset equipment replaced. The net capital
spending was approximately $55.0 million and $28.6 million for the first nine
months of 2000 and 1999, respectively.
NOTE (b):
"Earnings before interest and taxes (EBIT) excluding minority interests" and
"Earnings before interest, taxes, depreciation and amortization (EBITDA)
excluding minority interests" represent the amount of EBIT and EBITDA earned by
the Company after reduction for the portion of the respective amounts allocable
to the minority interest partners. The three and nine month 1999 amounts also
exclude the impact of non-recurring items.
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EXHIBIT 99.1
SMITH INTERNATIONAL, INC.
REVENUE ANALYSIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER 30,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
M-I $ 326,446 $ 211,644
SMITH BITS 84,018 59,720
SMITH SERVICES 75,296 54,908
WILSON 232,710 155,269
---------- ----------
TOTAL $ 718,470 $ 481,541
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</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
M-I $ 888,648 $ 601,437
SMITH BITS 235,448 174,439
SMITH SERVICES 209,157 166,477
WILSON 667,878 325,905
---------- ----------
TOTAL $2,001,131 $1,268,258
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</TABLE>
