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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 11-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO
FEE REQUIRED)
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
 For the transition period from  to
 Commission File Number 1-8514
 A.
    
    Full title of the plan and the address of the plan, if different from that
of the issuer named below:
 M-I RETIREMENT PLAN
 P.O. BOX 42842
 HOUSTON, TX 77242-2842
 B.
    
    Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
 Smith International, Inc.
411 North Sam Houston Parkway, Suite 600
Houston, Texas 77060




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Index to Financial Statements and Supplementary Information
 PageReport of Independent Registered Public Accounting Firm
    
    
    3Financial Statements:Statements of Net Assets Available for Benefits
as of December 31, 2006 and 2005
    
    
    4Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2006
    
    
    5Notes to Financial Statements
    
    
    6Supplemental Schedule:Form 5500, Schedule H, Part IV, Line 4i  Schedule of Assets
(Held at End of Year) December 31, 2006
    
    
    11Exhibit:23.1  Consent of Independent Registered Public Accounting Firm
    
    
    14
 2




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3




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2006
    
    
    2005ASSETS:Investments, at fair value
    
    $
    338,527,263
    
    
    $
    281,806,442Receivables-Company contributions
    
    
    13,397,682
    
    
    
    8,128,607Participant contributions
    
    
    1,115,875
    
    
    
    1,322Total receivables
    
    
    14,513,557
    
    
    
    8,129,929NET ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE
    
    
    353,040,820
    
    
    
    289,936,371Adjustments from fair value to contract
value for fully benefit-responsive
investment contracts
    
    
    293,125
    
    
    
    386,174NET ASSETS AVAILABLE FOR BENEFITS
    
    $
    353,333,945
    
    
    $
    290,322,545
  4




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ADDITIONS:Income -Interest and dividend income
    
    $
    18,006,616Net appreciation in fair value of investments (Note 6)
    
    
    20,608,409Net investment gain
    
    
    38,615,025Contributions-Company, net of forfeitures
    
    
    20,869,645Participant
    
    
    16,968,593Rollover
    
    
    1,755,854Total contributions
    
    
    39,594,092Total additions
    
    
    78,209,117DEDUCTIONS:Benefits paid to participants
    
    
    14,482,823Administrative expenses
    
    
    106,032Transfers to other plans, net
    
    
    608,862Total deductions
    
    
    15,197,717Net increase
    
    
    63,011,400NET ASSETS AVAILABLE FOR BENEFITS AT BEGINNING OF YEAR
    
    
    290,322,545NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR
    
    $
    353,333,945
  5




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SUMMARY OF SIGNIFICANT PLAN PROVISIONS
  General and Eligibility
  Administration and Trustee
  Contributions
 1 2
 Vesting
   6




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Investment Options
  Administrative Expenses
  Plan Termination
  Loans
  Withdrawals and Forfeitures
   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Accounting
  7




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Recent Accounting Pronouncements
  Investment Valuation and Income Recognition
   Participant Account Valuation
   Use of Estimates
  8




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FEDERAL INCOME TAX STATUS
   RISKS AND UNCERTAINTIES
  2006
    
    2005Balanced Funds (Stocks and Bonds)
    
    
    39.1
    %
    
    
    38.4
    %Domestic Stock Funds
    
    
    26.4
    
    
    
    27.7Smith International, Inc. common stock
    
    
    11.7
    
    
    
    10.5Stable Value Fund
    
    
    9.1
    
    
    
    10.5International Stock Funds
    
    
    3.9
    
    
    
    2.7Money Market Fund
    
    
    3.6
    
    
    
    3.4Participant loans
    
    
    3.5
    
    
    
    3.8Bond Funds
    
    
    2.7
    
    
    
    3.0100.0
    %
    
    
    100.0
    %
 RELATED-PARTY TRANSACTIONS
  9




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INVESTMENTS
  2006
    
    2005Vanguard Wellington Fund
    
    $
    115,214,242
    
    
    $
    95,256,553Smith International, Inc. common stock
    
    
    39,646,289
    
    
    
    29,622,018Vanguard PRIMECAP Fund
    
    
    39,064,468
    
    
    
    35,808,859Vanguard Retirement Savings Trust
    
    
    30,754,929
    
    
    
    29,669,171Vanguard Windsor Fund
    
    
    25,445,380
    
    
    
    22,277,475Vanguard 500 Index Portfolio Fund
    
    
    19,265,939
    
    
    
    16,071,812
  2006Balanced funds
    
    $
    7,780,796Equity funds
    
    
    7,276,293Smith International, Inc. common stock
    
    
    5,551,320$
    20,608,409
 RECONCILATION OF FINANCIAL STATEMENTS TO FORM 5500
  Net assets available for benefits per financial statements, contract value
    
    $
    353,333,945Less: Adjustment from fair value to contract value for fully
benefit-responsive investment contracts
    
    
    (293,125
    )Net assets available for benefits per Form 5500, fair value
    
    $
    353,040,820
  Increase in net assets available for benefits per financial statements
    
    $
    63,011,400Less: Adjustment from contract value to fair value
    
    
    (293,125
    )Increase in net assets available for benefits per Form 5500
    
    $
    62,718,275
 10




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(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)Identity of Issue,
    
    Description of Investment, Including MaturityBorrower,
    
    Date, Rate of Interest,Lessor or Similar Party
    
    Collateral, Par or Maturity Value
    
    Cost
    
    Current Value*
    
    Vanguard Group
    
    Vanguard Wellington Fund
    
    **
    
    $
    115,214,242*
    
    Smith International, Inc.
    
    Smith International, Inc. common stock
    
    **
    
    
    39,646,289*
    
    Vanguard Group
    
    Vanguard PRIMECAP Fund
    
    **
    
    
    39,064,468*
    
    Vanguard Group
    
    Vanguard Retirement Savings Trust
    
    **
    
    
    30,461,806*
    
    Vanguard Group
    
    Vanguard Windsor Fund
    
    **
    
    
    25,445,380*
    
    Vanguard Group
    
    Vanguard 500 Index Portfolio Fund
    
    **
    
    
    19,265,939*
    
    Vanguard Group
    
    Vanguard International Growth Fund
    
    **
    
    
    13,340,453*
    
    Vanguard Group
    
    Vanguard Prime Money Market Fund
    
    **
    
    
    12,323,106*
    
    The Plan
    
    Participant loans (highest and lowest
 interest rates are 10.00% and 4.00%, respectively)
    
    **
    
    
    12,000,183*
    
    Vanguard Group
    
    Vanguard Target Retirement 2015 Fund
    
    **
    
    
    7,008,188*
    
    Vanguard Group
    
    Vanguard Long-Term Investment Grade Fund
    
    **
    
    
    5,265,541*
    
    Vanguard Group
    
    Vanguard Target Retirement 2025 Fund
    
    **
    
    
    4,146,562*
    
    Vanguard Group
    
    Vanguard Extended Market Index Fund
    
    **
    
    
    3,688,166*
    
    Vanguard Group
    
    Vanguard Target Retirement 2035 Fund
    
    **
    
    
    2,732,532*
    
    Vanguard Group
    
    Vanguard Explorer Fund
    
    **
    
    
    2,150,091*
    
    Vanguard Group
    
    Vanguard Total Bond Market Index Fund
    
    **
    
    
    1,841,825*
    
    Vanguard Group
    
    Vanguard Target Retirement 2005 Fund
    
    **
    
    
    1,209,012*
    
    Vanguard Group
    
    Vanguard Target Retirement 2045 Fund
    
    **
    
    
    1,065,830*
    
    Vanguard Group
    
    Vanguard Intermediate-Term Treasury Fund
    
    **
    
    
    966,110*
    
    Vanguard Group
    
    Vanguard Long-Term Treasury Fund
    
    **
    
    
    686,620*
    
    Vanguard Group
    
    Vanguard Short-Term Treasury Fund
    
    **
    
    
    366,723*
    
    Vanguard Group
    
    Vanguard Target Retirement Income Fund
    
    **
    
    
    284,577*
    
    Vanguard Group
    
    Vanguard Target Retirement 2020 Fund
    
    **
    
    
    185,396*
    
    Vanguard Group
    
    Vanguard Target Retirement 2030 Fund
    
    **
    
    
    65,979*
    
    Vanguard Group
    
    Vanguard Target Retirement 2040 Fund
    
    **
    
    
    43,150*
    
    Vanguard Group
    
    Vanguard Target Retirement 2010 Fund
    
    **
    
    
    36,840*
    
    Vanguard Group
    
    Vanguard Target Retirement 2050 Fund
    
    **
    
    
    22,255Total investments
    
    
    
    $
    338,527,263
 
 *
    
    Party-in-interest.**
    
    Cost information is not required for participant-directed investments and, therefore, is not
included. 11




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SIGNATURES
  Dated: June 28, 2007
    
    M-I RETIREMENT PLANBy:
    
    Administrative Committee for
the M-I Retirement PlanBy:
    
    /s/ W. Frank RichterW. Frank Richter, MemberBy:
    
    /s/ Malcolm W. AndersonMalcolm W. Anderson, Member
 12




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EXHIBIT INDEX
 ExhibitNumber
    
    Description23.1
    
    Consent of Independent Registered Public Accounting Firm
 13