##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2007
 Commission file number 001-15423
 Grant Prideco, Inc.
  Delaware
    
    76-0312499(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)400 N . Sam Houston Pkwy. EastSuite 900Houston, Texas
    
    77060(Address of Principal Executive Offices)
    
    (Zip Code)
 (281) 878-8000
  þ o
 
 þ o o
 o þ
  Title of Each Class
    
    Outstanding at August 2, 2007Common Stock, par value $0.01 per share
    
    128,269,084




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 3. Quantitative and Qualitative Market Risk DisclosuresITEM 4. Controls and ProceduresPART IIITEM 1A. Risk FactorsITEM 2. Unregistered Sales of Equity Securities and Use of ProceedsITEM 4. Submission of Matters to a Vote of Security HoldersITEM 6. ExhibitsSIGNATURESEXHIBIT INDEXCertification of Michael McShaneCertification of Matthew D. FitzgeraldSection 1350 Certification    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 GRANT PRIDECO, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except per share data)Revenues
    
    $
    522,178
    
    
    $
    431,784
    
    
    $
    1,018,641
    
    
    $
    846,209Operating Expenses:Cost of sales
    
    
    264,049
    
    
    
    227,365
    
    
    
    518,127
    
    
    
    455,894Sales and marketing
    
    
    45,424
    
    
    
    37,305
    
    
    
    91,011
    
    
    
    73,285General and administrative
    
    
    33,061
    
    
    
    28,490
    
    
    
    66,815
    
    
    
    56,330Research and engineering
    
    
    10,754
    
    
    
    8,561
    
    
    
    20,777
    
    
    
    16,257353,288
    
    
    
    301,721
    
    
    
    696,730
    
    
    
    601,766Operating Income
    
    
    168,890
    
    
    
    130,063
    
    
    
    321,911
    
    
    
    244,443Interest Expense
    
    
    (4,059
    )
    
    
    (3,587
    )
    
    
    (9,128
    )
    
    
    (7,418
    )Other Expense, Net
    
    
    (1,247
    )
    
    
    (1,587
    )
    
    
    (1,799
    )
    
    
    (1,847
    )Equity Income in Unconsolidated Affiliate
    
    
    30,026
    
    
    
    37,312
    
    
    
    74,639
    
    
    
    64,661Income Before Income Taxes and Minority Interests
    
    
    193,610
    
    
    
    162,201
    
    
    
    385,623
    
    
    
    299,839Income Tax Provision
    
    
    (56,664
    )
    
    
    (52,993
    )
    
    
    (114,621
    )
    
    
    (96,057
    )Income Before Minority Interests
    
    
    136,946
    
    
    
    109,208
    
    
    
    271,002
    
    
    
    203,782Minority Interests
    
    
    (1,994
    )
    
    
    (3,621
    )
    
    
    (4,501
    )
    
    
    (5,765
    )Net Income
    
    $
    134,952
    
    
    $
    105,587
    
    
    $
    266,501
    
    
    $
    198,017Basic Net Income Per Share
    
    $
    1.05
    
    
    $
    0.80
    
    
    $
    2.08
    
    
    $
    1.51Basic Weighted Average Shares Outstanding
    
    
    128,434
    
    
    
    131,472
    
    
    
    128,260
    
    
    
    131,444Diluted Net Income Per Share
    
    $
    1.04
    
    
    $
    0.79
    
    
    $
    2.05
    
    
    $
    1.48Diluted Weighted Average Shares Outstanding
    
    
    130,071
    
    
    
    133,659
    
    
    
    130,134
    
    
    
    133,765
  2




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GRANT PRIDECO, INC.
Condensed Consolidated Balance Sheets
(In thousands, except par value amounts)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCurrent Assets:Cash
    
    $
    111,789
    
    
    $
    57,344Short-term investments
    
    
    82,075
    
    
    
    Accounts receivable, net of allowance for doubtful accounts
of $3,140 and $3,523 for 2007 and 2006, respectively
    
    
    387,900
    
    
    
    368,695Inventories
    
    
    529,760
    
    
    
    454,947Deferred charges
    
    
    2,935
    
    
    
    3,964Current deferred tax assets
    
    
    44,833
    
    
    
    48,101Other current assets
    
    
    21,984
    
    
    
    14,395Total Current Assets
    
    
    1,181,276
    
    
    
    947,446Property, Plant and Equipment, Net
    
    
    343,806
    
    
    
    305,524Goodwill
    
    
    525,175
    
    
    
    520,992Other Intangible Assets, Net
    
    
    86,611
    
    
    
    89,827Investment in Unconsolidated Affiliate
    
    
    73,242
    
    
    
    135,428Other Assets
    
    
    25,448
    
    
    
    22,850Total Assets
    
    $
    2,235,558
    
    
    $
    2,022,067LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term borrowings and current portion of long-term debt
    
    $
    768
    
    
    $
    8,640Accounts payable
    
    
    131,715
    
    
    
    138,942Accrued payroll and benefits
    
    
    49,204
    
    
    
    74,952Deferred revenues
    
    
    21,885
    
    
    
    18,190Income taxes payable
    
    
    26,399
    
    
    
    33,039Other current liabilities
    
    
    32,858
    
    
    
    33,576Total Current Liabilities
    
    
    262,829
    
    
    
    307,339Long-Term Debt
    
    
    203,683
    
    
    
    237,212Deferred Tax Liabilities
    
    
    99,454
    
    
    
    68,310Other Long-Term Liabilities
    
    
    30,892
    
    
    
    28,801Commitments and ContingenciesMinority Interests
    
    
    19,847
    
    
    
    17,522Stockholders Equity:Preferred stock, $0.01 par value
    
    
    
    
    
    
    Common stock, $0.01 par value; issued 134,608
and 132,706 in 2007 and 2006, respectively
    
    
    1,346
    
    
    
    1,327Capital in excess of par value
    
    
    731,722
    
    
    
    687,384Retained earnings
    
    
    1,111,508
    
    
    
    845,877Accumulated other comprehensive income (loss)
    
    
    8,029
    
    
    
    (960
    )Treasury stock, at cost
    
    
    (244,761
    )
    
    
    (180,557
    )Deferred compensation obligation
    
    
    11,009
    
    
    
    9,812Total Stockholders Equity
    
    
    1,618,853
    
    
    
    1,362,883Total Liabilities and Stockholders Equity
    
    $
    2,235,558
    
    
    $
    2,022,067
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GRANT PRIDECO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Six Months Ended June 30,2007
    
    
    2006(In thousands)Cash Flows From Operating Activities:Net income
    
    $
    266,501
    
    
    $
    198,017Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    29,853
    
    
    
    24,026Deferred income tax
    
    
    28,179
    
    
    
    (8,617
    )Equity income in unconsolidated affiliate, net of dividends
    
    
    69,972
    
    
    
    23,057Stock-based compensation expense
    
    
    5,907
    
    
    
    6,725Excess tax benefits of stock option exercises
    
    
    (15,983
    )
    
    
    (11,989
    )Deferred compensation expense
    
    
    1,742
    
    
    
    1,626Minority interests in consolidated subsidiaries, net of dividends
    
    
    1,089
    
    
    
    5,765Gain on sale of fixed assets, net
    
    
    (97
    )
    
    
    (493
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (16,914
    )
    
    
    (33,128
    )Inventories
    
    
    (74,458
    )
    
    
    (67,701
    )Other current assets
    
    
    (7,589
    )
    
    
    (1,403
    )Accounts payable
    
    
    (4,902
    )
    
    
    24,615Income taxes payable
    
    
    8,028
    
    
    
    34,945Other current liabilities
    
    
    (26,625
    )
    
    
    (12,044
    )Other, net
    
    
    4,959
    
    
    
    3,052Net cash provided by operating activities
    
    
    269,662
    
    
    
    186,453Cash Flows From Investing Activities:Capital expenditures for property, plant and equipment
    
    
    (64,456
    )
    
    
    (28,368
    )Acquisition of businesses
    
    
    (3,394
    )
    
    
    Proceeds from sale of fixed assets
    
    
    625
    
    
    
    658Purchases of available-for-sale securities
    
    
    (82,117
    )
    
    
    (115,475
    )Proceeds from sale of available-for-sale securities
    
    
    
    
    
    
    55,000Other, net
    
    
    
    
    
    
    (240
    )Net cash used in investing activities
    
    
    (149,342
    )
    
    
    (88,425
    )Cash Flows From Financing Activities:Repayments on credit facility, net
    
    
    (34,346
    )
    
    
    (11,200
    )Repayments on debt, net
    
    
    (7,070
    )
    
    
    (6,448
    )Excess tax benefits on stock option exercises
    
    
    15,983
    
    
    
    11,989Repurchases of common stock
    
    
    (64,859
    )
    
    
    (53,887
    )Proceeds from issuance of common stock
    
    
    22,535
    
    
    
    19,531Other, net
    
    
    900
    
    
    
    Net cash used in financing activities
    
    
    (66,857
    )
    
    
    (40,015
    )Effect of Exchange Rate Changes on Cash
    
    
    982
    
    
    
    249Net Increase in Cash
    
    
    54,445
    
    
    
    58,262Cash at Beginning of Period
    
    
    57,344
    
    
    
    28,164Cash at End of Period
    
    $
    111,789
    
    
    $
    86,426
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GRANT PRIDECO, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 1. General
 Basis of Presentation
   Use of Estimates
  Derivative Instruments
 Accounting for Derivative Instruments and Hedging Activities,
  5




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2. Income Taxes
      3. Stock-Based Compensation
  Stock Options
  2007Valuation Assumptions:Expected Option Term (Years)
    
    
    5Expected Volatility
    
    
    40
    %Expected Dividend Rate
    
    
    Risk Free Interest Rate
    
    
    4.68
    %Weighted-Average Grant Date Fair Value
    
    $
    18.70
 Restricted Stock
  6




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4. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Net Income
    
    $
    134,952
    
    
    $
    105,587
    
    
    $
    266,501
    
    
    $
    198,017Foreign Currency Translation Adjustments
    
    
    2,812
    
    
    
    2,132
    
    
    
    3,548
    
    
    
    7,025Other Comprehensive Income for
Unconsolidated Affiliate, Net of Tax
    
    
    2,545
    
    
    
    7,082
    
    
    
    5,301
    
    
    
    9,768Unrealized Gain on Derivative
Instruments, Net of Tax
    
    
    167
    
    
    
    
    
    
    
    167
    
    
    
    Unrealized Loss on Short-Term
Investments, Net of Tax
    
    
    (27
    )
    
    
    
    
    
    
    (27
    )
    
    
    Total Comprehensive Income
    
    $
    140,449
    
    
    $
    114,801
    
    
    $
    275,490
    
    
    $
    214,810
 5. Net Income Per Share
  6. Short-Term Investments
  Accounting for Certain Investments in Debt and Equity Securities
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7. Inventories
  June 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Raw Materials, Components and Supplies
    
    $
    237,455
    
    
    $
    203,368Work in Process
    
    
    152,662
    
    
    
    129,966Finished Goods
    
    
    106,561
    
    
    
    97,565Rental Bits
    
    
    33,082
    
    
    
    24,048$
    529,760
    
    
    $
    454,947
 8. Property, Plant and Equipment
  June 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Land
    
    $
    25,002
    
    
    $
    24,915Buildings and Improvements
    
    
    102,943
    
    
    
    101,809Machinery and Equipment
    
    
    358,527
    
    
    
    332,401Furniture and Fixtures
    
    
    46,211
    
    
    
    44,267Construction in Progress
    
    
    75,098
    
    
    
    42,864607,781
    
    
    
    546,256Less: Accumulated Depreciation
    
    
    (263,975
    )
    
    
    (240,732
    )$
    343,806
    
    
    $
    305,524
 9. Goodwill
  Drilling
    
    
    
    
    
    
    TubularProducts and
    
    
    
    
    
    
    TechnologyServices
    
    
    ReedHycalog
    
    
    and Services
    
    
    Other
    
    
    Total(In thousands)Balance, December 31, 2006
    
    $
    132,203
    
    
    $
    275,928
    
    
    $
    97,153
    
    
    $
    15,708
    
    
    $
    520,992Acquisitions
    
    
    
    
    
    
    3,394
    
    
    
    
    
    
    
    
    
    
    
    3,394Translation and Other Adjustments
    
    
    445
    
    
    
    (336
    )
    
    
    680
    
    
    
    
    
    
    
    789Balance, June 30, 2007
    
    $
    132,648
    
    
    $
    278,986
    
    
    $
    97,833
    
    
    $
    15,708
    
    
    $
    525,175
  8




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10. Investment in Unconsolidated Affiliate
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006(In thousands)Net Sales
    
    $
    189,455
    
    
    $
    202,199
    
    
    $
    407,423
    
    
    $
    373,068Gross Profit
    
    
    57,520
    
    
    
    74,030
    
    
    
    144,269
    
    
    
    134,945Net Income
    
    
    59,853
    
    
    
    71,493
    
    
    
    148,468
    
    
    
    130,169Companys Equity Income
    
    $
    30,026
    
    
    $
    37,312
    
    
    $
    74,639
    
    
    $
    64,661Dividends Received
    
    
    144,611
    
    
    
    87,719
    
    
    
    144,611
    
    
    
    87,719
  11. Derivative Instruments
   Cash Flow Hedges
  Other Derivative Instruments
  9




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12. Pension Plans
 U.S. Pension Plan
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Service Cost
    
    $
    103
    
    
    $
    101
    
    
    $
    205
    
    
    $
    202Interest Cost
    
    
    223
    
    
    
    222
    
    
    
    446
    
    
    
    445Expected Return on Plan Assets
    
    
    (275
    )
    
    
    (238
    )
    
    
    (550
    )
    
    
    (476
    )Amortization of Prior Service Cost
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Amortization of Actuarial Loss
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    8Administration Expenses
    
    
    24
    
    
    
    15
    
    
    
    49
    
    
    
    30Net Periodic Benefit Cost
    
    $
    81
    
    
    $
    110
    
    
    $
    162
    
    
    $
    221
  Non-U.S. Pension Plan
  Three MonthsEnded
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Service Cost
    
    $
    4
    
    
    $
    
    
    
    $
    8
    
    
    $
    Interest Cost
    
    
    244
    
    
    
    229
    
    
    
    488
    
    
    
    458Expected Return on Plan Assets
    
    
    (248
    )
    
    
    (226
    )
    
    
    (496
    )
    
    
    (452
    )Amortization of Prior Service Cost
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    54Amortization of Actuarial Gain
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    (60
    )Net Periodic Benefit Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  13. Stockholders Equity
  14. Segment Information
 ®
 10




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Drilling
    
    
    
    
    
    TubularProducts and
    
    
    
    
    
    Technology
    
    CorporateServices
    
    ReedHycalog
    
    and Services
    
    and Other
    
    Total(In thousands)Three Months Ended:June 30, 2007Revenues from Unaffiliated
Customers
    
    $
    282,765
    
    
    $
    148,344
    
    
    $
    87,202
    
    
    $
    3,867
    
    
    $
    522,178Intersegment Revenues
    
    
    250
    
    
    
    
    
    
    
    3,623
    
    
    
    
    
    
    
    3,873Operating Income (Loss)
    
    
    116,430
    
    
    
    46,823
    
    
    
    20,979
    
    
    
    (15,342
    )
    
    
    168,890Income (Loss) Before Income Taxes
and Minority Interests
    
    
    144,247
    
    
    
    40,376
    
    
    
    20,587
    
    
    
    (11,600
    )
    
    
    193,610June 30, 2006Revenues from Unaffiliated
Customers
    
    $
    213,586
    
    
    $
    116,239
    
    
    $
    101,786
    
    
    $
    173
    
    
    $
    431,784Intersegment Revenues
    
    
    90
    
    
    
    40
    
    
    
    1,555
    
    
    
    
    
    
    
    1,685Operating Income (Loss)
    
    
    78,749
    
    
    
    40,814
    
    
    
    29,237
    
    
    
    (18,737
    )
    
    
    130,063Income (Loss) Before Income Taxes
and Minority Interests
    
    
    114,175
    
    
    
    38,809
    
    
    
    28,919
    
    
    
    (19,702
    )
    
    
    162,201
 Drilling
    
    
    
    
    
    TubularProducts and
    
    
    
    
    
    Technology
    
    CorporateServices
    
    ReedHycalog
    
    and Services
    
    and Other
    
    Total(In thousands)Six Months Ended:June 30, 2007Revenues from Unaffiliated
Customers
    
    $
    558,713
    
    
    $
    300,249
    
    
    $
    154,374
    
    
    $
    5,305
    
    
    $
    1,018,641Intersegment Revenues
    
    
    756
    
    
    
    
    
    
    
    6,742
    
    
    
    8
    
    
    
    7,506Operating Income (Loss)
    
    
    229,082
    
    
    
    92,624
    
    
    
    34,046
    
    
    
    (33,841
    )
    
    
    321,911Income (Loss) Before Income Taxes
and Minority Interests
    
    
    300,475
    
    
    
    79,212
    
    
    
    33,124
    
    
    
    (27,188
    )
    
    
    385,623June 30, 2006Revenues from Unaffiliated
Customers
    
    $
    407,845
    
    
    $
    233,030
    
    
    $
    205,059
    
    
    $
    275
    
    
    $
    846,209Intersegment Revenues
    
    
    226
    
    
    
    40
    
    
    
    2,256
    
    
    
    
    
    
    
    2,522Operating Income (Loss)
    
    
    143,761
    
    
    
    76,372
    
    
    
    60,480
    
    
    
    (36,170
    )
    
    
    244,443Income (Loss) Before Income Taxes
and Minority Interests
    
    
    205,577
    
    
    
    73,180
    
    
    
    59,683
    
    
    
    (38,601
    )
    
    
    299,839
 15. Recent Accounting Standards
  16. Subsidiary Guarantor Financial Information
  11




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GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended June 30, 2007
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Revenues
    
    $
    
    
    
    $
    397,734
    
    
    $
    233,142
    
    
    $
    (108,698
    )
    
    $
    522,178Operating Expenses:Cost of sales
    
    
    
    
    
    
    237,006
    
    
    
    120,012
    
    
    
    (92,969
    )
    
    
    264,049Selling, general and administrative and
research and engineering
    
    
    29
    
    
    
    61,497
    
    
    
    27,713
    
    
    
    
    
    
    
    89,23929
    
    
    
    298,503
    
    
    
    147,725
    
    
    
    (92,969
    )
    
    
    353,288Operating Income (Loss)
    
    
    (29
    )
    
    
    99,231
    
    
    
    85,417
    
    
    
    (15,729
    )
    
    
    168,890Interest Expense
    
    
    (3,954
    )
    
    
    (69
    )
    
    
    (36
    )
    
    
    
    
    
    
    (4,059
    )Other Income (Expense), Net
    
    
    2,047
    
    
    
    4,197
    
    
    
    (7,491
    )
    
    
    
    
    
    
    (1,247
    )Equity Income in Unconsolidated Affiliate
    
    
    
    
    
    
    30,025
    
    
    
    
    
    
    
    1
    
    
    
    30,026Equity in Subsidiaries, Net of Taxes
    
    
    139,788
    
    
    
    8,797
    
    
    
    
    
    
    
    (148,585
    )
    
    
    Income Before Income Taxes and Minority Interests
    
    
    137,852
    
    
    
    142,181
    
    
    
    77,890
    
    
    
    (164,313
    )
    
    
    193,610Income Tax Provision
    
    
    (2,900
    )
    
    
    (38,753
    )
    
    
    (15,011
    )
    
    
    
    
    
    
    (56,664
    )Income Before Minority Interests
    
    
    134,952
    
    
    
    103,428
    
    
    
    62,879
    
    
    
    (164,313
    )
    
    
    136,946Minority Interests
    
    
    
    
    
    
    
    
    
    
    (1,994
    )
    
    
    
    
    
    
    (1,994
    )Net Income
    
    $
    134,952
    
    
    $
    103,428
    
    
    $
    60,885
    
    
    $
    (164,313
    )
    
    $
    134,952
 GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Six Months Ended June 30, 2007
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Revenues
    
    $
    
    
    
    $
    764,157
    
    
    $
    462,840
    
    
    $
    (208,356
    )
    
    $
    1,018,641Operating Expenses:Cost of sales
    
    
    
    
    
    
    450,000
    
    
    
    243,525
    
    
    
    (175,398
    )
    
    
    518,127Selling, general and administrative and
research and engineering
    
    
    86
    
    
    
    123,993
    
    
    
    54,524
    
    
    
    
    
    
    
    178,60386
    
    
    
    573,993
    
    
    
    298,049
    
    
    
    (175,398
    )
    
    
    696,730Operating Income (Loss)
    
    
    (86
    )
    
    
    190,164
    
    
    
    164,791
    
    
    
    (32,958
    )
    
    
    321,911Interest Expense
    
    
    (8,675
    )
    
    
    (140
    )
    
    
    (313
    )
    
    
    
    
    
    
    (9,128
    )Other Income (Expense), Net
    
    
    2,559
    
    
    
    10,060
    
    
    
    (14,418
    )
    
    
    
    
    
    
    (1,799
    )Equity Income in Unconsolidated Affiliate
    
    
    
    
    
    
    74,292
    
    
    
    
    
    
    
    347
    
    
    
    74,639Equity in Subsidiaries, Net of Taxes
    
    
    275,811
    
    
    
    16,198
    
    
    
    
    
    
    
    (292,009
    )
    
    
    Income Before Income Taxes and Minority Interests
    
    
    269,609
    
    
    
    290,574
    
    
    
    150,060
    
    
    
    (324,620
    )
    
    
    385,623Income Tax Provision
    
    
    (3,108
    )
    
    
    (81,746
    )
    
    
    (29,767
    )
    
    
    
    
    
    
    (114,621
    )Income Before Minority Interests
    
    
    266,501
    
    
    
    208,828
    
    
    
    120,293
    
    
    
    (324,620
    )
    
    
    271,002Minority Interests
    
    
    
    
    
    
    
    
    
    
    (4,501
    )
    
    
    
    
    
    
    (4,501
    )Net Income
    
    $
    266,501
    
    
    $
    208,828
    
    
    $
    115,792
    
    
    $
    (324,620
    )
    
    $
    266,501
 12




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##### Table of Contents



GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
As of June 30, 2007
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)ASSETSCurrent Assets:Cash
    
    $
    
    
    
    $
    73,059
    
    
    $
    38,730
    
    
    $
    
    
    
    $
    111,789Short-term investments
    
    
    
    
    
    
    82,075
    
    
    
    
    
    
    
    
    
    
    
    82,075Accounts receivable
    
    
    
    
    
    
    270,531
    
    
    
    117,369
    
    
    
    
    
    
    
    387,900Inventories
    
    
    
    
    
    
    390,629
    
    
    
    203,845
    
    
    
    (64,714
    )
    
    
    529,760Deferred charges
    
    
    
    
    
    
    2,882
    
    
    
    53
    
    
    
    
    
    
    
    2,935Current deferred tax assets
    
    
    81
    
    
    
    26,015
    
    
    
    18,737
    
    
    
    
    
    
    
    44,833Other current assets
    
    
    
    
    
    
    8,139
    
    
    
    13,845
    
    
    
    
    
    
    
    21,98481
    
    
    
    853,330
    
    
    
    392,579
    
    
    
    (64,714
    )
    
    
    1,181,276Property, Plant and Equipment, Net
    
    
    
    
    
    
    198,351
    
    
    
    145,455
    
    
    
    
    
    
    
    343,806Goodwill
    
    
    
    
    
    
    252,670
    
    
    
    272,505
    
    
    
    
    
    
    
    525,175Investment In and Advances to Subsidiaries
    
    
    1,857,092
    
    
    
    95,383
    
    
    
    
    
    
    
    (1,952,475
    )
    
    
    Investment In Unconsolidated
Affiliate
    
    
    
    
    
    
    73,242
    
    
    
    
    
    
    
    
    
    
    
    73,242Other Assets
    
    
    6,287
    
    
    
    59,610
    
    
    
    46,162
    
    
    
    
    
    
    
    112,059$
    1,863,460
    
    
    $
    1,532,586
    
    
    $
    856,701
    
    
    $
    (2,017,189
    )
    
    $
    2,235,558LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term borrowings and current portion of
long-term debt
    
    $
    
    
    
    $
    768
    
    
    $
    
    
    
    $
    
    
    
    $
    768Accounts payable
    
    
    
    
    
    
    90,622
    
    
    
    41,093
    
    
    
    
    
    
    
    131,715Deferred revenues
    
    
    
    
    
    
    16,663
    
    
    
    5,222
    
    
    
    
    
    
    
    21,885Income taxes payable
    
    
    (88,408
    )
    
    
    99,043
    
    
    
    15,764
    
    
    
    
    
    
    
    26,399Intercompany liabilities (assets)
    
    
    137,145
    
    
    
    (312,578
    )
    
    
    175,433
    
    
    
    
    
    
    
    Other current liabilities
    
    
    4,625
    
    
    
    47,153
    
    
    
    30,284
    
    
    
    
    
    
    
    82,06253,362
    
    
    
    (58,329
    )
    
    
    267,796
    
    
    
    
    
    
    
    262,829Long-Term Debt
    
    
    200,000
    
    
    
    3,429
    
    
    
    254
    
    
    
    
    
    
    
    203,683Deferred Tax Liabilities
    
    
    (8,755
    )
    
    
    68,603
    
    
    
    39,606
    
    
    
    
    
    
    
    99,454Other Long-Term Liabilities
    
    
    
    
    
    
    30,188
    
    
    
    704
    
    
    
    
    
    
    
    30,892Commitments and ContingenciesMinority Interests
    
    
    
    
    
    
    
    
    
    
    19,847
    
    
    
    
    
    
    
    19,847Stockholders Equity
    
    
    1,618,853
    
    
    
    1,488,695
    
    
    
    528,494
    
    
    
    (2,017,189
    )
    
    
    1,618,853$
    1,863,460
    
    
    $
    1,532,586
    
    
    $
    856,701
    
    
    $
    (2,017,189
    )
    
    $
    2,235,558
 13




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##### Table of Contents



GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2007
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Cash Flows From Operating Activities:Net cash provided by operating activities
    
    $
    37,487
    
    
    $
    212,012
    
    
    $
    20,163
    
    
    $
    
    
    
    $
    269,662Cash Flows From Investing Activities:Capital expenditures for property, plant and equipment
    
    
    
    
    
    
    (47,484
    )
    
    
    (16,972
    )
    
    
    
    
    
    
    (64,456
    )Acquisition of businesses
    
    
    (3,394
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,394
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    370
    
    
    
    255
    
    
    
    
    
    
    
    625Purchases of available-for-sale securities
    
    
    
    
    
    
    (82,117
    )
    
    
    
    
    
    
    
    
    
    
    (82,117
    )Net cash used in investing activities
    
    
    (3,394
    )
    
    
    (129,231
    )
    
    
    (16,717
    )
    
    
    
    
    
    
    (149,342
    )Cash Flows From Financing Activities:(Repayments)
borrowings on credit facility, net
    
    
    
    
    
    
    (34,600
    )
    
    
    254
    
    
    
    
    
    
    
    (34,346
    )(Repayments)
borrowings on debt, net
    
    
    (8,000
    )
    
    
    930
    
    
    
    
    
    
    
    
    
    
    
    (7,070
    )Borrowings (repayments) on debt between subsidiaries, net
    
    
    248
    
    
    
    11,419
    
    
    
    (11,667
    )
    
    
    
    
    
    
    Excess tax benefits on stock option exercises
    
    
    15,983
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,983Repurchases of common stock
    
    
    (64,859
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64,859
    )Proceeds from issuance of common stock
    
    
    22,535
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,535Other, net
    
    
    
    
    
    
    
    
    
    
    900
    
    
    
    
    
    
    
    900Net cash (used in) provided by financing activities
    
    
    (34,093
    )
    
    
    (22,251
    )
    
    
    (10,513
    )
    
    
    
    
    
    
    (66,857
    )Effect of Exchange Rate Changes on Cash
    
    
    
    
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    982Net Increase (Decrease) in Cash
    
    
    
    
    
    
    60,530
    
    
    
    (6,085
    )
    
    
    
    
    
    
    54,445Cash at Beginning of Period
    
    
    
    
    
    
    12,529
    
    
    
    44,815
    
    
    
    
    
    
    
    57,344Cash at End of Period
    
    $
    
    
    
    $
    73,059
    
    
    $
    38,730
    
    
    $
    
    
    
    $
    111,789
 14




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##### Table of Contents



GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended June 30, 2006
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Revenues
    
    $
    
    
    
    $
    337,600
    
    
    $
    181,487
    
    
    $
    (87,303
    )
    
    $
    431,784Operating Expenses:Cost of sales
    
    
    
    
    
    
    206,623
    
    
    
    91,134
    
    
    
    (70,392
    )
    
    
    227,365Selling, general and administrative and
research and engineering
    
    
    55
    
    
    
    54,413
    
    
    
    19,888
    
    
    
    
    
    
    
    74,35655
    
    
    
    261,036
    
    
    
    111,022
    
    
    
    (70,392
    )
    
    
    301,721Operating Income (Loss)
    
    
    (55
    )
    
    
    76,564
    
    
    
    70,465
    
    
    
    (16,911
    )
    
    
    130,063Interest Expense
    
    
    (3,519
    )
    
    
    (129
    )
    
    
    61
    
    
    
    
    
    
    
    (3,587
    )Other Income (Expense), Net
    
    
    526
    
    
    
    
    
    
    
    (2,113
    )
    
    
    
    
    
    
    (1,587
    )Equity Income in Unconsolidated Affiliate
    
    
    
    
    
    
    37,312
    
    
    
    
    
    
    
    
    
    
    
    37,312Equity in Subsidiaries, Net of Taxes
    
    
    116,328
    
    
    
    3,918
    
    
    
    
    
    
    
    (120,246
    )
    
    
    Income Before Income Taxes and Minority Interests
    
    
    113,280
    
    
    
    117,665
    
    
    
    68,413
    
    
    
    (137,157
    )
    
    
    162,201Income Tax Provision
    
    
    (7,693
    )
    
    
    (30,939
    )
    
    
    (14,361
    )
    
    
    
    
    
    
    (52,993
    )Income Before Minority Interests
    
    
    105,587
    
    
    
    86,726
    
    
    
    54,052
    
    
    
    (137,157
    )
    
    
    109,208Minority Interests
    
    
    
    
    
    
    
    
    
    
    (3,621
    )
    
    
    
    
    
    
    (3,621
    )Net Income
    
    $
    105,587
    
    
    $
    86,726
    
    
    $
    50,431
    
    
    $
    (137,157
    )
    
    $
    105,587
 GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Six Months Ended June 30, 2006
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Revenues
    
    $
    
    
    
    $
    650,591
    
    
    $
    355,786
    
    
    $
    (160,168
    )
    
    $
    846,209Operating Expenses:Cost of sales
    
    
    
    
    
    
    404,809
    
    
    
    181,968
    
    
    
    (130,883
    )
    
    
    455,894Selling, general and administrative and
research and engineering
    
    
    108
    
    
    
    105,808
    
    
    
    39,956
    
    
    
    
    
    
    
    145,872108
    
    
    
    510,617
    
    
    
    221,924
    
    
    
    (130,883
    )
    
    
    601,766Operating Income (Loss)
    
    
    (108
    )
    
    
    139,974
    
    
    
    133,862
    
    
    
    (29,285
    )
    
    
    244,443Interest Expense
    
    
    (7,065
    )
    
    
    (249
    )
    
    
    (104
    )
    
    
    
    
    
    
    (7,418
    )Other Income (Expense), Net
    
    
    1,053
    
    
    
    337
    
    
    
    (3,237
    )
    
    
    
    
    
    
    (1,847
    )Equity Income in Unconsolidated Affiliate
    
    
    
    
    
    
    64,661
    
    
    
    
    
    
    
    
    
    
    
    64,661Equity in Subsidiaries, Net of Taxes
    
    
    220,566
    
    
    
    8,084
    
    
    
    
    
    
    
    (228,650
    )
    
    
    Income Before Income Taxes and Minority Interests
    
    
    214,446
    
    
    
    212,807
    
    
    
    130,521
    
    
    
    (257,935
    )
    
    
    299,839Income Tax Provision
    
    
    (16,429
    )
    
    
    (51,183
    )
    
    
    (28,445
    )
    
    
    
    
    
    
    (96,057
    )Income Before Minority Interests
    
    
    198,017
    
    
    
    161,624
    
    
    
    102,076
    
    
    
    (257,935
    )
    
    
    203,782Minority Interests
    
    
    
    
    
    
    
    
    
    
    (5,765
    )
    
    
    
    
    
    
    (5,765
    )Net Income
    
    $
    198,017
    
    
    $
    161,624
    
    
    $
    96,311
    
    
    $
    (257,935
    )
    
    $
    198,017
 15




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##### Table of Contents



GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2006
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)ASSETSCurrent Assets:Cash
    
    $
    
    
    
    $
    12,529
    
    
    $
    44,815
    
    
    $
    
    
    
    $
    57,344Accounts receivable
    
    
    
    
    
    
    240,407
    
    
    
    128,288
    
    
    
    
    
    
    
    368,695Inventories
    
    
    
    
    
    
    334,242
    
    
    
    178,667
    
    
    
    (57,962
    )
    
    
    454,947Deferred charges
    
    
    
    
    
    
    3,712
    
    
    
    252
    
    
    
    
    
    
    
    3,964Current deferred tax assets
    
    
    131
    
    
    
    28,082
    
    
    
    19,888
    
    
    
    
    
    
    
    48,101Other current assets
    
    
    
    
    
    
    6,450
    
    
    
    7,945
    
    
    
    
    
    
    
    14,395131
    
    
    
    625,422
    
    
    
    379,855
    
    
    
    (57,962
    )
    
    
    947,446Property, Plant and Equipment, Net
    
    
    
    
    
    
    170,965
    
    
    
    134,559
    
    
    
    
    
    
    
    305,524Goodwill
    
    
    
    
    
    
    249,976
    
    
    
    271,016
    
    
    
    
    
    
    
    520,992Investment In and Advances to Subsidiaries
    
    
    1,569,776
    
    
    
    79,185
    
    
    
    
    
    
    
    (1,648,961
    )
    
    
    Investment In Unconsolidated Affiliate
    
    
    
    
    
    
    135,428
    
    
    
    
    
    
    
    
    
    
    
    135,428Other Assets
    
    
    6,830
    
    
    
    61,376
    
    
    
    44,471
    
    
    
    
    
    
    
    112,677$
    1,576,737
    
    
    $
    1,322,352
    
    
    $
    829,901
    
    
    $
    (1,706,923
    )
    
    $
    2,022,067LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term borrowings and current portion of
long-term debt
    
    $
    7,924
    
    
    $
    716
    
    
    $
    
    
    
    $
    
    
    
    $
    8,640Accounts payable
    
    
    
    
    
    
    94,649
    
    
    
    44,293
    
    
    
    
    
    
    
    138,942Deferred revenues
    
    
    
    
    
    
    14,259
    
    
    
    3,931
    
    
    
    
    
    
    
    18,190Income taxes payable
    
    
    (48,719
    )
    
    
    59,800
    
    
    
    21,958
    
    
    
    
    
    
    
    33,039Intercompany liabilities (assets)
    
    
    61,345
    
    
    
    (302,256
    )
    
    
    240,911
    
    
    
    
    
    
    
    Other current liabilities
    
    
    4,815
    
    
    
    70,031
    
    
    
    33,682
    
    
    
    
    
    
    
    108,52825,365
    
    
    
    (62,801
    )
    
    
    344,775
    
    
    
    
    
    
    
    307,339Long-Term Debt
    
    
    200,000
    
    
    
    37,212
    
    
    
    
    
    
    
    
    
    
    
    237,212Deferred Tax Liabilities
    
    
    (11,511
    )
    
    
    40,916
    
    
    
    38,905
    
    
    
    
    
    
    
    68,310Other Long-Term Liabilities
    
    
    
    
    
    
    28,151
    
    
    
    650
    
    
    
    
    
    
    
    28,801Commitments and Contingencies
Minority Interests
    
    
    
    
    
    
    
    
    
    
    17,522
    
    
    
    
    
    
    
    17,522Stockholders Equity
    
    
    1,362,883
    
    
    
    1,278,874
    
    
    
    428,049
    
    
    
    (1,706,923
    )
    
    
    1,362,883$
    1,576,737
    
    
    $
    1,322,352
    
    
    $
    829,901
    
    
    $
    (1,706,923
    )
    
    $
    2,022,067
 16




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##### Table of Contents



GRANT PRIDECO, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2006
(Unaudited)
 Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Cash Flows From Operating Activities:Net cash provided by operating activities
    
    $
    19,986
    
    
    $
    112,116
    
    
    $
    65,072
    
    
    $
    (10,721
    )
    
    $
    186,453Cash Flows From Investing Activities:Capital expenditures for property, plant and equipment
    
    
    
    
    
    
    (19,407
    )
    
    
    (8,961
    )
    
    
    
    
    
    
    (28,368
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    552
    
    
    
    106
    
    
    
    
    
    
    
    658Purchases of available-for-sale securities
    
    
    
    
    
    
    (115,475
    )
    
    
    
    
    
    
    
    
    
    
    (115,475
    )Proceeds from sale of available-for-sale securities
    
    
    
    
    
    
    55,000
    
    
    
    
    
    
    
    
    
    
    
    55,000Other, net
    
    
    (39
    )
    
    
    
    
    
    
    (201
    )
    
    
    
    
    
    
    (240
    )Net cash used in investing activities
    
    
    (39
    )
    
    
    (79,330
    )
    
    
    (9,056
    )
    
    
    
    
    
    
    (88,425
    )Cash Flows From Financing Activities:Repayments on credit facility, net
    
    
    
    
    
    
    
    
    
    
    (11,200
    )
    
    
    
    
    
    
    (11,200
    )Repayments on debt, net
    
    
    
    
    
    
    (6,448
    )
    
    
    
    
    
    
    
    
    
    
    (6,448
    )Borrowings (repayments) on debt between subsidiaries, net
    
    
    2,420
    
    
    
    10,652
    
    
    
    (13,072
    )
    
    
    
    
    
    
    Excess tax benefits on stock option exercises
    
    
    11,989
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,989Repurchases of common stock
    
    
    (53,887
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,887
    )Proceeds from issuance of common stock
    
    
    19,531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,531Dividends paid
    
    
    
    
    
    
    
    
    
    
    (10,721
    )
    
    
    10,721
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (19,947
    )
    
    
    4,204
    
    
    
    (34,993
    )
    
    
    10,721
    
    
    
    (40,015
    )Effect of Exchange Rate Changes on Cash
    
    
    
    
    
    
    
    
    
    
    249
    
    
    
    
    
    
    
    249Net Increase in Cash
    
    
    
    
    
    
    36,990
    
    
    
    21,272
    
    
    
    
    
    
    
    58,262Cash at Beginning of Period
    
    
    
    
    
    
    13,088
    
    
    
    15,076
    
    
    
    
    
    
    
    28,164Cash at End of Period
    
    $
    
    
    
    $
    50,078
    
    
    $
    36,348
    
    
    $
    
    
    
    $
    86,426
 17




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   General
 ®
 Critical Accounting Policies and Estimates
  Market Trends
  18




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##### Table of Contents



Three Months Ended June 30,2007
    
    2006WTI Oil(a)Average
    
    $
    64.95
    
    
    $
    70.51Ending
    
    
    70.68
    
    
    
    73.93Henry Hub Gas(b)Average
    
    $
    7.53
    
    
    $
    6.51Ending
    
    
    6.36
    
    
    
    5.83North
American Rig Count(c)Average
    
    
    1,896
    
    
    
    1,914Ending
    
    
    1,981
    
    
    
    2,073International Rig Count(c)Average
    
    
    1,002
    
    
    
    913Ending
    
    
    1,015
    
    
    
    906
 
    Future Market Trends and Expectations
       19




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##### Table of Contents



Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    % Change(In thousands)Revenues:Drilling Products and Services
    
    $
    282,765
    
    
    $
    213,586
    
    
    
    32
    %
    
    $
    558,713
    
    
    $
    407,845
    
    
    
    37
    %ReedHycalog
    
    
    148,344
    
    
    
    116,239
    
    
    
    28
    %
    
    
    300,249
    
    
    
    233,030
    
    
    
    29
    %Tubular Technology and Services
    
    
    87,202
    
    
    
    101,786
    
    
    
    (14
    %)
    
    
    154,374
    
    
    
    205,059
    
    
    
    (25
    %)Corporate and Other
    
    
    3,867
    
    
    
    173
    
    
    
    2135
    %
    
    
    5,305
    
    
    
    275
    
    
    
    1829
    %Total Revenues
    
    $
    522,178
    
    
    $
    431,784
    
    
    
    21
    %
    
    $
    1,018,641
    
    
    $
    846,209
    
    
    
    20
    %Operating Income (Loss):Drilling Products and Services
    
    $
    116,430
    
    
    $
    78,749
    
    
    
    48
    %
    
    $
    229,082
    
    
    $
    143,761
    
    
    
    59
    %ReedHycalog
    
    
    46,823
    
    
    
    40,814
    
    
    
    15
    %
    
    
    92,624
    
    
    
    76,372
    
    
    
    21
    %Tubular Technology and Services
    
    
    20,979
    
    
    
    29,237
    
    
    
    (28
    %)
    
    
    34,046
    
    
    
    60,480
    
    
    
    (44
    %)Corporate and Other
    
    
    (15,342
    )
    
    
    (18,737
    )
    
    
    (18
    %)
    
    
    (33,841
    )
    
    
    (36,170
    )
    
    
    (6
    %)Total Operating Income
    
    $
    168,890
    
    
    $
    130,063
    
    
    
    30
    %
    
    $
    321,911
    
    
    $
    244,443
    
    
    
    32
    %
 Consolidated Revenues and Operating Income
 Results for the three- and six-month periods ended June 30, 2007 and 2006
    Drilling Products and Services
 Results for the three- and six-month periods ended June 30, 2007 and 2006
  20




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##### Table of Contents



ReedHycalog
 Results for the three- and six-month periods ended June 30, 2007 and 2006
  Tubular Technology and Services
 Results for the three- and six-month periods ended June 30, 2007 and 2006
  Corporate and Other
 Results for the three- and six-month periods ended June 30, 2007 and 2006
  Other Items
     21




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##### Table of Contents



Liquidity and Capital Resources
 Overview
  Historical Cash Flows
  Six Months EndedJune 30,2007
    
    
    2006(In thousands)Net Cash Provided by Operating Activities
    
    $
    269,662
    
    
    $
    186,453Net Cash Used in Investing Activities
    
    
    (149,342
    )
    
    
    (88,425
    )Net Cash Used in Financing Activities
    
    
    (66,857
    )
    
    
    (40,015
    )
 Operating Activities
  Investing Activities
  Capital Expenditures
  Financing Activities
  Long-Term Debt
   22




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##### Table of Contents



Recent Accounting Pronouncements
  Forward-Looking Statements and Exposures
  Risk Factors and Exposures
  Off-Balance Sheet Financing
  
 ITEM 3. Quantitative and Qualitative Market Risk Disclosures
  Foreign Currency Risk
  23




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##### Table of Contents



Interest Rates
  
 ITEM 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  24




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##### Table of Contents



PART II
 
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Number of
    
    
    
    
    
    
    Total Number of SharesShares
    
    
    Average Price
    
    
    Purchased as Part of aPeriod
    
    Purchased (a)
    
    
    Per Share
    
    
    Publicly Announced Plan (b)April 1 - 30, 2007
    
    
    2,982
    
    
    $
    53.46
    
    
    
    0May 1 - 31, 2007
    
    
    2,761
    
    
    
    54.67
    
    
    
    0June 1 - 30, 2007
    
    
    302,655
    
    
    
    57.59
    
    
    
    300,000Total
    
    
    308,398
    
    
    $
    57.53
    
    
    
    300,000
   
 ITEM 4. Submission of Matters to a Vote of Security Holders
  Votes For
    
    Votes WithheldDavid J. Butters
    
    
    108,076,685
    
    
    
    2,095,854Eliot M. Fried
    
    
    104,190,980
    
    
    
    5,981,559Dennis R. Hendrix
    
    
    108,719,193
    
    
    
    1,453,346Harold E. Layman
    
    
    101,720,539
    
    
    
    8,452,000Michael McShane
    
    
    107,572,206
    
    
    
    2,600,333Robert K. Moses, Jr.
    
    
    108,062,915
    
    
    
    2,109,624Joseph E. Reid
    
    
    108,767,379
    
    
    
    1,405,160David A. Trice
    
    
    84,340,930
    
    
    
    25,831,609
 25




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##### Table of Contents



ITEM 6. Exhibits
 Exhibit Number
    
    Description10.1
    
    Grant Prideco, Inc. Supplemental Executive
Retirement Plan, as amended (incorporated by reference
to Exhibit 99.1 to Grant Prideco, Inc.s Current Report
on Form 8-K, filed on April 3, 2007).10.2
    
    Change of Control Agreement, dated April 16, 2007,
with Quintin Kneen (incorporated by reference to
Exhibit 99.1 to Grant Prideco, Inc.s Current Report on
Form 8-K, filed on April 20, 2007).31.1
    
    Certification of Michael McShane31.2
    
    Certification of Matthew D. Fitzgerald32.1
    
    Section 1350 Certification
 26




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##### Table of Contents



SIGNATURES
  GRANT PRIDECO, INC.By:
    
    /s/ MATTHEW D. FITZGERALDMatthew D. FitzgeraldSr. Vice President, Chief Financial Officer and TreasurerBy:
    
    /s/ GREG L. BOANEGreg L. BoaneVice President and Controller
  27




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##### Table of Contents



Exhibit Number
    
    Description10.1
    
    Grant Prideco, Inc. Supplemental Executive
Retirement Plan, as amended (incorporated by reference
to Exhibit 99.1 to Grant Prideco, Inc.s Current Report
on Form 8-K, filed on April 3, 2007).10.2
    
    Change of Control Agreement, dated April 16, 2007,
with Quintin Kneen (incorporated by reference to
Exhibit 99.1 to Grant Prideco, Inc.s Current Report on
Form 8-K, filed on April 20, 2007).31.1
    
    Certification of Michael McShane31.2
    
    Certification of Matthew D. Fitzgerald32.1
    
    Section 1350 Certification
 28