SMITH INTERNATIONAL, INC. 16740 Hardy Street P.O. Box 60068 Houston, TX ###-###-#### ###-###-####

Exhibit 10.3

Mack Anderson
Senior Vice President, Human Resources

October 1, 2009

Mr. William Restrepo
3219 Oakmont Drive
Sugar Land, TX 77479

Dear William:

It is a pleasure to extend an offer of employment to you with Smith International, Inc. If you choose to accept our offer, the terms of your employment will be as follows:

Job Title

Senior Vice President, Chief Financial Officer and Treasurer

Start Date

On or before October 16, 2009.

Reporting

Position reports to John Yearwood, President & CEO of Smith International, Inc.

Base Salary

$37,500 per month paid in bi-weekly pay periods (26 pay periods per annum).

Equity

Upon the approval of the Compensation and Benefits Committee, you will be awarded $750,000 of Time Based Performance Stock Units.

Bonus Plan

You will be eligible to participate in Smith’s Annual Incentive Program (AIP). The AIP is calculated and paid annually. The bonus target will be 65%. Additional Information regarding this program will be provided upon your employment.

Benefits

You will be entitled to the standard benefit package offered to all eligible employees of Smith International, Inc. A summary of our benefit offering has been provided.

SMITH INTERNATIONAL, INC.		16740 Hardy Street		P.O. Box 60068		Houston, TX ###-###-####		281 ###-###-####

SERP

You will be eligible to participate in the Smith International, Inc SERP effective the first day of your employment with Smith International, Inc. A summary of the SERP has been provided.

PERQ

You will receive a PERQ payment of $1,558 per month, paid in bi-weekly pay periods (26 pay periods per annum).

This offer of employment is contingent upon a successful background verification, completion of your reference check, pre-employment physical and drug screen. This offer is not to be construed as a guaranteed contract of employment for a definite period of time. Both you and the Company are free to voluntarily terminate your employment at any time. Should you accept our offer of employment, please sign below where indicated acknowledging your acceptance of the terms herein.

William, we look forward to hearing from you soon with a positive response to our offer.

Should you have any questions, please feel free to contact me at (281)  ###-###-####.

Sincerely,

Mack Anderson
Senior Vice President, Human Resources

Accepted by:		/s/ William Restrepo		Date: October 1, 2009
		William Restrepo

cc:		File
		John Yearwood