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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 19, 2000
Date of Report
(Date of earliest event reported)
SMITH INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-8514 95-3822631
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
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16740 Hardy Street
Houston, Texas
(Address of principal executive offices)
77032
(Zip Code)
(281) 443-3370
(Registrant's telephone number, including area code)
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ITEM 5: OTHER EVENTS
A copy of the press release announcing the Company's results for the
first quarter of 2000 is filed as Exhibit 99.1 and is hereby incorporated herein
by reference.
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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 hereunto duly authorized.
SMITH INTERNATIONAL, INC.
/s/ NEAL S. SUTTON
-----------------------
By: Neal S. Sutton
Senior Vice President - Administration,
General Counsel and Secretary
Date: April 19, 2000
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99.1 Press Release dated 4/19/00
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Exhibit 99.1
PRESS RELEASE
================================================================================
SMITH INTERNATIONAL, INC.
P.O. BOX 60068
HOUSTON, TX 77205-0068
WEBSITE ADDRESS: smith.com
FOR RELEASE
WEDNESDAY, APRIL 19, 2000
Contact: Margaret K. Dorman
Chief Financial Officer
(281) 443-3370
SMITH INTERNATIONAL, INC. REPORTS
71 PERCENT INCREASE IN QUARTERLY EARNINGS
HOUSTON, Texas (April 19, 2000)... Smith International, Inc. (NYSE: SII;
PCX) today announced first quarter earnings of $11.3 million, or 23 cents per
share on a diluted basis, compared with net income of $6.6 million, or 14 cents
per share on a diluted basis, in the first quarter of 1999. Revenues for the
three months ended March 31, 2000 were $625.4 million, a 58 percent increase
over the amount reported in the prior year period. The majority of the revenue
improvement was experienced in the U.S. and Canada due to a combination of
increased North American activity levels, new product introductions and acquired
operations. After excluding the effect of acquired and divested operations,
revenues were 19 percent above amounts reported in the first quarter of 1999.
M-I L.L.C., which consists of the M-I Fluids and M-I SWACO operating units,
reported revenues of $267.8 million for the first quarter of 2000. Revenues grew
30 percent over the prior year quarter, due to the impact of increased deepwater
drilling activity, new contracts awarded in the last half of 1999 and formation
of the drilling fluids joint venture. After excluding incremental revenues
associated with Schlumberger's Dowell drilling fluid operations, revenues
increased approximately 16 percent from the first quarter of 1999. The majority
of the base business revenue growth
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Exhibit 99.1
related to higher sales of synthetic fluids and engineering services, primarily
in the U.S. Gulf Coast area.
Smith Bits' revenues were $75.4 million for the first quarter of 2000, a 25
percent increase over the amount reported in the prior year period. Increases in
North American drilling activity levels and new product introductions
contributed the majority of the revenue growth. Products introduced within the
last 12 months accounted for approximately one-third of petroleum three-cone and
diamond bit sales in the first quarter of 2000.
Smith Services reported revenues of $64.7 million, an increase of 13
percent over the first quarter of 1999. The revenue increase is attributable to
the improvement in North American activity levels, particularly in the U.S. Gulf
Coast area. Revenue growth was experienced across all product groups with higher
inspection services and tubular sales accounting for the majority of the
increase over the prior year period.
Wilson's revenues were $217.6 million for the first quarter of 2000, almost
three times the amount reported in the prior year period. The increase primarily
relates to the inclusion of revenues from acquired operations, including the
impact of the Texas Mill transaction completed on January 15, 2000. Growth in
base business revenues, resulting from increased product sales to the energy
sector and higher demand for line pipe, also contributed to the improvement over
the prior year. Excluding the impact of acquired and divested operations,
revenues were 28 percent above first quarter 1999 levels.
Commenting on the results, Chairman and CEO, Doug Rock stated, "The
recovery in North American activity levels led to Smith posting its third
consecutive quarter of earnings increases. More significantly, this was the
first time we've reported both year-over-year and sequential earnings
improvement in the past nine quarters. The combined
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Exhibit 99.1
operating margin of our non-distribution businesses reached 8 percent of
revenues during the period, resulting in incremental operating margins of 25
percent on a sequential quarter basis. We're pleased with the progress to date
and will continue to concentrate on margin improvement as activity levels pick
up in the last half of the year."
Loren Carroll, Executive Vice President also noted that, "Revenue growth
combined with improved operating margins has positively impacted the first
quarter's results. Excluding the impact of non-recurring items recorded in the
first quarter of 1999, our earnings before interest, taxes and minority
interests ("EBIT") increased 75 percent on revenue growth of 58 percent.
Additionally, operating cash flow, which consists of EBIT plus depreciation and
amortization reduced for our minority partners' share, increased to $43.0
million, or $0.86 per share for the quarter."
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 L.L.C., 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)
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<CAPTION>
Three Months Ended
March 31,
--------------------------------
2000 1999
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(Unaudited)
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Revenues.......................................... $ 625,432 $ 397,022
Costs and expenses:
Cost of revenues................................ 463,949 285,683
Selling expenses................................ 95,304 69,907
General and administrative expenses............. 30,254 20,943
Non-recurring items............................. -- (2,621)
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Total costs and expenses...................... 589,507 373,912
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Earnings before interest and taxes............ 35,925 23,110
Interest expense, net............................. 8,765 12,075
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Income before income taxes and
minority interests.............................. 27,160 11,035
Income tax provision.............................. 9,675 4,950
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Income before minority interests.................. 17,485 6,085
Minority interests................................ 6,162 (521)
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Net income........................................ $ 11,323 $ 6,606
========= =========
Earnings per share:
Basic.......................................... $ 0.23 $ 0.14
========= ==========
Diluted........................................ $ 0.23 $ 0.14
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Weighted average shares outstanding:
Basic.......................................... 49,169 48,159
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Diluted........................................ 49,930 48,607
========= ==========
OTHER DATA:
Depreciation and amortization..................... $ 19,434 $ 18,763
========= ==========
Capital spending (a).............................. $ 15,639 $ 13,315
========= ==========
EBIT excluding minority interests (b)............. $ 27,317 $ 20,489
========= ==========
EBITDA excluding minority interests (b)........... $ 43,022 $ 39,252
========= ==========
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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 $12.6 million and $9.3 million for the
first quarter 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 1999 amounts also exclude the impact of
non-recurring items.
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Exhibit 99.1
SMITH INTERNATIONAL, INC.
REVENUE ANALYSIS
(IN THOUSANDS)
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<CAPTION>
THREE MONTHS
ENDED MARCH 31,
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2000 1999
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M-I L.L.C. $267,777 $205,901
SMITH BITS 75,439 60,421
SMITH SERVICES 64,664 57,157
WILSON 217,552 73,543
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TOTAL $625,432 $397,022
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