UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

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, 2008

o		TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from                      to                     

A.

Full title of the plan and the address of the plan, if different from that of the issuer named below:

GREYBULL RETIREMENT PLAN

B.

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

 

Index to Financial Statements and Supplementary Information

		Page
Report of Independent Registered Public Accounting Firm			3
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2008 and 2007			4
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2008			5
Notes to Financial Statements			6
Supplemental Schedules:
Form 5500, Schedule H, Part IV, Line 4i – Schedule of Assets (Held at End of Year) December 31, 2008			11
Schedule G, Part III – Schedule of Nonexempt Transactions			12
EX-23.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Administrative Committee of the
Greybull Retirement Plan:

We have audited the accompanying statements of net assets available for benefits of the Greybull Retirement Plan (the “Plan”) as of December 31, 2008 and 2007, and the related statement of changes in net assets available for benefits for the year ended December 31, 2008. These financial statements are the responsibility of the Administrative Committee. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Administrative Committee, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2008 and 2007, and the changes in net assets available for benefits for the year ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets (held at end of year) and nonexempt transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Administrative Committee. Such supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic 2008 financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

DELOITTE & TOUCHE LLP

Houston, Texas
June 29, 2009

GREYBULL RETIREMENT PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

AS OF DECEMBER 31, 2008 AND 2007

		2008				2007
ASSETS:
Investments, at fair value		$	2,655,982			$	3,355,927
Receivables-
Company contributions			8,702				7,700
Participant contributions			10,082				11,274
Total receivables			18,784				18,974
NET ASSETS AVAILABLE FOR BENEFITS		$	2,674,766			$	3,374,901

The accompanying notes are an integral part of these financial statements.

GREYBULL RETIREMENT PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2008

ADDITIONS:
Income (Loss) -
Interest and dividend income		$	115,504
Net depreciation in fair value of investments (Note 7)			(887,754	)
Net investment loss			(772,250	)
Contributions-
Company			211,607
Participant			282,206
Plan transfers			12,104
Total contributions			505,917
DEDUCTIONS:
Benefits paid to participants			418,365
Administrative expenses			15,437
Total deductions			433,802
Net decrease			(700,135	)
NET ASSETS AVAILABLE FOR BENEFITS AT BEGINNING OF YEAR			3,374,901
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR		$	2,674,766

The accompanying notes are an integral part of this financial statement.

GREYBULL RETIREMENT PLAN

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT PLAN PROVISIONS

The following description of the Greybull Retirement Plan (the “Plan”) provides only general information about the Plan’s provisions in effect for the plan year ended December 31, 2008. Participants should refer to the Plan document for a more complete explanation of the Plan’s provisions.

General and Eligibility

The Plan consists of a prototype 401(k) savings plan which has been adopted as a defined contribution plan by M-I L.L.C. (the “Company”). The Company is a majority-owned subsidiary of Smith International, Inc. (“Smith”). The Plan is operated for the sole benefit of the employees of the Company’s U.S. operations and their beneficiaries and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Participation in the Plan may commence on the first day of the month following a 60 day waiting period from the date of hire. There is no minimum age requirement under the Plan.

Administration and Trustee

The Company is the plan administrator and sponsor of the Plan as defined under ERISA. The Plan’s operations are monitored by an administrative committee (the “Administrative Committee”) which is comprised of officers and employees of the Company or of Smith. Vanguard Fiduciary Trust Company (“Vanguard Trust” or the “Trustee”) is the trustee of all investments held by the Plan.

Contributions

The Plan allows participants to contribute a percentage of their compensation, as defined by the Plan, subject to certain limitations of the Internal Revenue Code of 1986, as amended (the “Code”). The Company makes basic and matching contributions to each participant’s account under the Plan. Participants are eligible to receive a basic contribution equal to three percent of qualified compensation, and a full match on employee contributions of up to one percent of qualified compensation. The matching contribution is equal to 50% of the participant’s elective contribution, and is not to exceed 2% of the participant’s compensation.

Vesting

Participants are fully vested in their contributions and related earnings and vest in Company contributions and related earnings at the rate of 20 percent for each year of service. Upon death, termination of employment by reason of total or permanent disability or retirement from the Company upon reaching the normal retirement age of  65, participants become fully vested in Company contributions and related earnings.

Investment Options

Participants have the option of investing their contributions and the Company’s basic, matching and discretionary contributions among one or all of the available investments, including Smith common stock, 21 registered investment company funds and a common/collective trust offered by the Vanguard Group of Investment Companies. Participants may transfer some or all of the balances out of any fund into one or any combination of the other funds, including Smith common stock, at any time, subject to certain limitations.

Administrative Expenses

The Plan is responsible for its administrative expenses. The Company may elect to pay administrative expenses from the forfeitures of the Plan or pay expenses on behalf of the Plan.

The Company intends for the Plan to be permanent; however, in the event of termination, partial termination or discontinuance of contributions under the Plan, the total balances of all participants shall become fully vested.

Participants may borrow from their accounts no more than once annually, subject to terms specified by the Plan document. The Plan permits participants to borrow the lesser of $50,000 or 50 percent of their vested account balances in the Plan. These loans bear interest at prime and are repaid through payroll withholdings over a period not to exceed five years, except for qualifying loans to purchase a primary residence which may be repaid over an extended period.

A participant may elect to receive benefit payments through any one of the several methods provided by the Plan upon termination or retirement. The Plan also provides for hardship distributions to participants with immediate and significant financial needs, subject to authorization by Plan management and limited to the participant’s vested account balance.

In the event that a participant terminates employment with the Company, the participant’s vested balances will be distributed in accordance with the Plan’s distribution provisions including, when applicable, the participant’s distribution election. Any unvested Company contributions and related earnings/losses are forfeited if participants do not return to the Company within 60 months of their termination. During 2008, forfeitures of $13,074 were used to pay Plan expenses. Forfeitures available at December 31, 2008 and 2007, totaled $8,651 and $3,089, respectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounts of the Plan are maintained on the cash basis of accounting. For financial reporting purposes, however, the financial statements have been converted to an accrual basis in accordance with accounting principles generally accepted in the United States of America.

The Plan’s investments are stated at fair value. Registered investment company funds are valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end. The common/collective trust, which contains fully benefit-responsive investment contracts, is stated at fair value based on the value of the underlying investments and is expressed in units and is then adjusted by the issuer to contract value. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. The Company determined that the difference between contract value and fair value of its common/collective trust was not material to the Plan’s financial position. There are no reserves against contract value for credit risk of the contract issue or otherwise. The crediting interest rates were 4.6 percent and 4.7 percent at December 31, 2008 and 2007, respectively. The average yield for the year ended December 31, 2008 was 3.7 percent. The Smith common stock fund is valued at its year-end unit closing price (computed by dividing the sum of (i) the year-end market price plus (ii) the uninvested cash position, by the total number of member units). Participant loans are valued at cost which approximates fair value.

Purchases and sales of Plan investments are recorded as of the trade date. The net appreciation or depreciation in the fair value of investments reflected in the accompanying statement of changes in net assets available for benefits includes realized, as well as unrealized, gains or losses on the sale of investments. The net change in realized gains and losses on sales are determined using the actual purchase and sale price of the related investments. The net changes in unrealized gains and losses are determined using the fair values as of the beginning of the year or the purchase price if acquired since that date.

The Plan provides that net changes in unrealized appreciation and depreciation and gains and losses upon sale are allocated daily to the individual participant’s account. The net changes, unrealized and realized, in a particular investment fund are allocated in proportion to the respective participant’s account balance in each fund, after reducing the participant’s account for distributions, if any.

Dividend and interest income from investments is reported as earned on an accrual basis in the statement of changes in net assets available for benefits and is allocated to participants’ accounts based upon each participant’s proportionate share of assets in each investment fund.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Administrative Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

3. FAIR VALUE MEASUREMENTS

On January 1, 2008, the Plan adopted Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“SFAS 157”). The fair value hierarchy established by SFAS 157 divides fair value measurement into three broad levels: Level 1 is comprised of active-market quoted prices for identical instruments; Level 2 is comprised of market-based data obtained from independent sources; and Level 3 is comprised of non-market based estimates which reflect the best judgment of the Administrative Committee. The following table sets forth, by level within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2008:

		Fair Value Measurements
		Level 1				Level 2				Level 3				Total
Balanced Funds (Stocks and Bonds)		$	1,655,441			$	—			$	—			$	1,655,441
Domestic Stock Funds			376,010				—				—				376,010
Participant Loans			—				—				277,718				277,718
Bond Funds			156,144				—				—				156,144
International Stock Funds			76,553				—				—				76,553
Money Market Fund			61,552				—				—				61,552
Retirement Savings Trust			—				35,980				—				35,980
Smith International, Inc. Common Stock Fund			16,584				—				—				16,584
		$	2,342,284			$	35,980			$	277,718			$	2,655,982

The table below sets forth a summary of changes in fair value of the Plan’s Level 3 Participant Loan investments for the year ended December 31, 2008:

Balance at Beginning of Year		$	281,492
Loan Repayments			(96,221	)
Loan Withdrawals			92,447
Balance at End of Year		$	277,718

4. FEDERAL INCOME TAX STATUS

The plan relies on the opinion letter dated March 31, 2008 for the Vanguard Prototype Non-standardized Profit Sharing Plan with Cash or Deferred Arrangement (CODA), in which the IRS stated that the form of the Plan is acceptable under the Internal Revenue Code. The Administrative Committee believes the Plan, as amended, is designed and is currently being operated in compliance with the applicable requirements of the Code. Therefore, the Administrative Committee believes that the Plan is qualified and the related trust was tax-exempt as of the financial statement date.

5. RISKS AND UNCERTAINTIES

The Plan provides for various investments in registered investment company funds, a common/collective trust and Smith common stock. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility risk. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values and concentrations of investment securities will occur in the near term and those changes could materially affect the amounts reported in the statement of net assets available for Plan benefits. The allocation of total Plan investments by type at December 31 is as follows:

		2008				2007
Balanced Funds (Stocks and Bonds)			62.4	%			65.9	%
Domestic Stock Funds			14.2				16.3
Participant Loans			10.4				8.3
Bond Funds			5.9				2.3
International Stock Funds			2.9				3.1
Money Market Fund			2.3				2.3
Retirement Savings Trust			1.3				—
Smith International, Inc. Common Stock Fund			0.6				1.8
			100.0	%			100.0	%

6. RELATED-PARTY TRANSACTIONS

The Plan invests in shares of common stock of Smith. As Smith is the majority owner of the sponsor, these transactions qualify as party-in-interest transactions. In addition, the Plan invests in shares of registered investment company funds and a common/collective trust fund managed by the Vanguard Group, an affiliate of Vanguard Trust. As Vanguard Trust is the Trustee of the Plan, these transactions qualify as party-in-interest transactions.

7. INVESTMENTS

Individual investments, which exceed five percent of net assets available for Plan benefits as of December 31, 2008 or December 31, 2007, are as follows:

		2008				2007
Vanguard Wellington Fund		$	1,508,842			$	1,995,966
Participant Loans			277,718				281,492
Vanguard 500 Index Portfolio Fund			194,215				266,576

During 2008, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value as follows:

		2008
Balanced Funds		$	(556,871	)
Equity Funds			(301,760	)
Smith International, Inc. Common Stock Fund			(29,123	)
		$	(887,754	)

8. NONEXEMPT TRANSACTIONS

As reported on Schedule G, Part III – Schedule of Nonexempt Transactions, certain Plan contributions and loan repayments were not remitted to the trust within the time frame specified by the Department of Labor’s Regulation 29 CFR 2510.3-102, thus constituting a nonexempt transaction between the Plan and the Company.

GREYBULL RETIREMENT PLAN
EIN: 76-0596553

FORM 5500, SCHEDULE H, PART IV, LINE 4i –
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2008

(a)		(b)		(c)		(d)		(e)
		Identity of Issue,		Description of Investment, Including Maturity
		Borrower,		Date, Rate of Interest,
		Lessor or Similar Party		Collateral, Par or Maturity Value		Cost		Current Value
*		Vanguard Group		Vanguard Wellington Fund		**		$	1,508,842
*		The Plan		Participant Loans (highest and lowest interest rates are 8.25% and 3.25%, respectively)		**			277,718
*		Vanguard Group		Vanguard 500 Index Portfolio Fund		**			194,215
*		Vanguard Group		Vanguard PRIMECAP Fund		**			104,968
*		Vanguard Group		Vanguard Total Bond Market Index Fund		**			80,165
*		Vanguard Group		Vanguard Target Retirement 2015 Fund		**			78,296
*		Vanguard Group		Vanguard International Growth Fund		**			76,553
*		Vanguard Group		Vanguard Prime Money Market Fund		**			61,552
*		Vanguard Group		Vanguard Long-Term Investment Grade Fund		**			57,406
*		Vanguard Group		Vanguard Windsor Fund		**			47,626
*		Vanguard Group		Vanguard Target Retirement 2035 Fund		**			46,423
*		Vanguard Group		Vanguard Retirement Savings Trust		**			35,980
*		Vanguard Group		Vanguard Extended Market Index Fund		**			25,636
*		Smith International, Inc.		Smith International, Inc. Common Stock Fund		**			16,584
*		Vanguard Group		Vanguard Long-Term Treasury Fund Investor Shares		**			10,989
*		Vanguard Group		Vanguard Target Retirement 2030 Fund		**			10,765
*		Vanguard Group		Vanguard Intermediate-Term Fund Investor Shares		**			7,584
*		Vanguard Group		Vanguard Target Retirement 2025 Fund		**			5,786
*		Vanguard Group		Vanguard Explorer Fund		**			3,565
*		Vanguard Group		Vanguard Target Retirement 2040 Fund		**			1,536
*		Vanguard Group		Vanguard Target Retirement 2050 Fund		**			1,374
*		Vanguard Group		Vanguard Target Retirement 2020 Fund		**			1,252
*		Vanguard Group		Vanguard Target Retirement 2045 Fund		**			717
*		Vanguard Group		Vanguard Target Retirement Income		**			450
				Total Investments				$	2,655,982

GREYBULL RETIREMENT PLAN
EIN: 76-0596553

SCHEDULE G, PART III – SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2008

Identity of		Relationship to Plan,
Party		Employer or Other								Interest
Involved		Party in Interest		Description of Transactions		Amount				on Loan
				There was one untimely remittance of contributions and loan repayments to the Plan
M-I L.L.C.		Employer		Late Deposit of Employee Contributions		$	9,912			$	—
				Late Deposit of Plan Loan Repayments			2,972				28
						$	12,884			$	28

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: June 29, 2009		GREYBULL RETIREMENT PLAN
		By:		Administrative Committee for the Greybull Retirement Plan
		By:		/s/ W. Frank Richter
				W. Frank Richter, Member
		By:		/s/ Malcolm W. Anderson
				Malcolm W. Anderson, Member

EXHIBIT INDEX

Exhibit
Number		Description
23.1		Consent of Independent Registered Public Accounting Firm