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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:
 WILSON 401(k) RETIREMENT PLAN
 1301
Conti Street
Houston, Texas 77002
 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
    
    $
    79,120,842
    
    
    $
    66,156,726Receivables-Company contributions
    
    
    2,210,200
    
    
    
    1,952,069Participant contributions
    
    
    577
    
    
    
    586Total receivables
    
    
    2,210,777
    
    
    
    1,952,655NET ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE
    
    
    81,331,619
    
    
    
    68,109,381Adjustments from fair value to contract
value for fully benefit-responsive
investment contracts
    
    
    6,157
    
    
    
    8,468NET ASSETS AVAILABLE FOR BENEFITS
    
    $
    81,337,776
    
    
    $
    68,117,849
  4




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ADDITIONS:Income -Interest and dividend income
    
    $
    3,840,601Net appreciation in fair value of investments (Note 6)
    
    
    5,043,029Net investment gain
    
    
    8,883,630Contributions-Company
    
    
    4,522,103Participant
    
    
    4,972,955Rollover
    
    
    325,672Total contributions
    
    
    9,820,730Transfers from other plans, net
    
    
    98,717Total additions
    
    
    18,803,077DEDUCTIONS:Benefits paid to participants
    
    
    5,579,407Administrative expenses
    
    
    3,743Total deductions
    
    
    5,583,150Net increase
    
    
    13,219,927NET ASSETS AVAILABLE FOR BENEFITS AT BEGINNING OF YEAR
    
    
    68,117,849NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR
    
    $
    81,337,776
  5




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SUMMARY OF SIGNIFICANT PLAN PROVISIONS
  General and Eligibility
  Administration and Trustee
  Contributions
 1 4
 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
    
    2005Domestic Stock Funds
    
    
    38.2
    %
    
    
    40.2
    %Balanced Funds (Stocks and Bonds)
    
    
    27.1
    
    
    
    24.8Smith International, Inc. common stock
    
    
    10.6
    
    
    
    10.3Money Market Fund
    
    
    8.5
    
    
    
    8.9Bond Funds
    
    
    5.3
    
    
    
    6.3International Stock Funds
    
    
    5.1
    
    
    
    4.0Participant loans and other
    
    
    4.4
    
    
    
    4.5Stable Value Fund
    
    
    0.8
    
    
    
    1.0100.0
    %
    
    
    100.0
    %
 RELATED-PARTY TRANSACTIONS
  9




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INVESTMENTS
  2006
    
    2005Vanguard Wellington Fund
    
    $
    16,878,557
    
    
    $
    14,062,157Vanguard 500 Index Portfolio Fund
    
    
    13,050,827
    
    
    
    11,884,626Vanguard PRIMECAP Fund
    
    
    10,031,594
    
    
    
    9,328,491Smith International, Inc. common stock
    
    
    8,374,851
    
    
    
    6,801,920Vanguard Prime Money Market Fund
    
    
    6,708,454
    
    
    
    5,900,341Vanguard Windsor Fund
    
    
    5,852,431
    
    
    
    4,938,957
  2006Equity funds
    
    $
    2,910,012Balanced funds
    
    
    1,253,659Smith International, Inc. common stock
    
    
    879,358$
    5,043,029
 RECONCILATION OF FINANCIAL STATEMENTS TO FORM 5500
  Net assets available for benefits per financial statements, contract value
    
    $
    81,337,776Less: Adjustment from fair value to contract value for fully
benefit-responsive investment contracts
    
    
    (6,157
    )Net assets available for benefits per Form 5500, fair value
    
    $
    81,331,619
  Increase in net assets available for benefits per financial statements
    
    $
    13,219,927Less: Adjustment from contract value to fair value
    
    
    (6,157
    )Increase in net assets available for benefits per Form 5500
    
    $
    13,213,770
 10




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(a)
    
    (b)
    
    (c)
    
    (d)
    
    
    (e)Identity of Issue,
    
    Description of Investment, IncludingBorrower,
    
    Maturity Date, Rate of Interest,Lessor or Similar Party
    
    Collateral, Par or Maturity Value
    
    Cost
    
    Current Value*
    
    Vanguard Group
    
    Vanguard Wellington Fund
    
    
    *
    *
    
    $
    16,878,557*
    
    Vanguard Group
    
    Vanguard 500 Index Portfolio Fund
    
    
    *
    *
    
    
    13,050,827*
    
    Vanguard Group
    
    Vanguard PRIMECAP Fund
    
    
    *
    *
    
    
    10,031,594*
    
    Smith International, Inc.
    
    Smith International, Inc. common stock
    
    
    *
    *
    
    
    8,374,851*
    
    Vanguard Group
    
    Vanguard Prime Money Market Fund
    
    
    *
    *
    
    
    6,708,454*
    
    Vanguard Group
    
    Vanguard Windsor Fund
    
    
    *
    *
    
    
    5,852,431*
    
    Vanguard Group
    
    Vanguard International Growth Fund
    
    
    *
    *
    
    
    4,041,954*
    
    Vanguard Group
    
    Vanguard Long-Term Corporate Fund
    
    
    *
    *
    
    
    3,430,759*
    
    The Plan
    
    Participant loans (highest and lowest
interest rates are 10.50% and 5.00%,
respectively)
    
    
    *
    *
    
    
    3,241,130*
    
    Vanguard Group
    
    Vanguard Target Retirement 2015 Fund
    
    
    *
    *
    
    
    1,949,173*
    
    Vanguard Group
    
    Vanguard Target Retirement 2025 Fund
    
    
    *
    *
    
    
    1,371,915*
    
    Vanguard Group
    
    Vanguard Extended Market Index Fund
    
    
    *
    *
    
    
    812,176*
    
    Vanguard Group
    
    Vanguard Retirement Savings Trust
    
    
    *
    *
    
    
    639,806*
    
    Vanguard Group
    
    Vanguard Explorer Fund
    
    
    *
    *
    
    
    446,301*
    
    Vanguard Group
    
    Vanguard Target Retirement 2005 Fund
    
    
    *
    *
    
    
    441,330*
    
    Vanguard Group
    
    Vanguard Total Bond Market Index Fund
    
    
    *
    *
    
    
    378,375*
    
    Vanguard Group
    
    Vanguard Target Retirement 2035 Fund
    
    
    *
    *
    
    
    362,450*
    
    Vanguard Group
    
    Vanguard Target Retirement 2045 Fund
    
    
    *
    *
    
    
    321,654*
    
    Vanguard Group
    
    Vanguard Brokerage Option Fund
    
    
    *
    *
    
    
    262,438*
    
    Vanguard Group
    
    Vanguard Short-Term Treasury Fund
    
    
    *
    *
    
    
    203,105*
    
    Vanguard Group
    
    Vanguard Intermediate-Term Treasury Fund
    
    
    *
    *
    
    
    136,367*
    
    Vanguard Group
    
    Vanguard Target Retirement 2010 Fund
    
    
    *
    *
    
    
    91,324*
    
    Vanguard Group
    
    Vanguard Long-Term Treasury Fund
    
    
    *
    *
    
    
    64,212*
    
    Vanguard Group
    
    Vanguard Target Retirement Income Fund
    
    
    *
    *
    
    
    21,030*
    
    Vanguard Group
    
    Vanguard Target Retirement 2020 Fund
    
    
    *
    *
    
    
    7,572*
    
    Vanguard Group
    
    Vanguard Target Retirement 2030 Fund
    
    
    *
    *
    
    
    710*
    
    Vanguard Group
    
    Vanguard Target Retirement 2050 Fund
    
    
    *
    *
    
    
    268*
    
    Vanguard Group
    
    Vanguard Target Retirement 2040 Fund
    
    
    *
    *
    
    
    79Total Investments
    
    
    
    
    
    $
    79,120,842
 
 *
    
    Party-in-interest.**
    
    Cost information is not required for participant-directed investments and, therefore, is not
included. 11




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SIGNATURES
  Date: June 28, 2007
    
    WILSON 401(k) RETIREMENT PLANBy:
    
    Administrative Committee for
the Wilson 401(k) Retirement PlanBy:
    

/s/
Kenneth Bourne

Kenneth Bourne, 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