THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Smith International, Inc. (SII)

3/30/2006 Proxy Information

Jerry W. Neely held a number of positions with Smith International from 1965 to 1987, including President from February 1976 to December 1977, and Chairman, Chief Executive Officer and President from 1977 until December 1987.

Smith has not engaged in any transaction, or series of similar transactions, since the beginning of 2005, nor is there any currently proposed transaction, or series of similar transactions, to which Smith or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any of SmithÕs directors or executive officers or members of their immediate family had, or will have, a direct or indirect material interest.

None of the following persons has been indebted to Smith or its subsidiaries at any time since the beginning of 2005: any director or executive officer of Smith; any nominee for election as a director; any member of the immediate family of any of the directors, executive officers or nominees for director; any corporation or organization of which any of the directors, executive officers or nominees is an executive officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities (except trade debt entered into in the ordinary course of business); and any trust or other estate in which any of the directors, executive officers or nominees for director has a substantial beneficial interest or for which such person serves as a trustee or in a similar capacity.

Smith has various types of business arrangements with corporations and other organizations in which a Smith director, executive officer or nominee for director may also be a director, trustee, investor or have some other direct or indirect relationship. Smith enters into these arrangements in the ordinary course of business and they typically involve Smith receiving or providing some product or service on a non-exclusive basis and at arms-length negotiated rates. Examples include: (1) distribution of maintenance, repair and operating supplies and equipment by SmithÕs Wilson business unit to Frontier Refining and the sale of products and services by SmithÕs Services and Technologies business units to Frontier Well, both of which are subsidiaries of Frontier Oil Corporation (Jim Gibbs, a Smith director, is Chairman of the Board, President & Chief Executive Officer of Frontier and Mr. Buck, a Smith director, is a director of Frontier); (2) the sale of equipment and services and drilling fluid products by SmithÕs M-I SWACO, Smith Technologies, Smith Services and Wilson business units to Forest Oil Corporation (Dod Fraser, a Smith director, is a director of Forest Oil), Cabot Oil and Gas Corporation and OGE Energy Corp. (Robert Kelley, a Smith director, is a director of Cabot Oil and OGE Energy) and (3) the purchase of tubular products by Wilson from Lone Star Technologies (Mr. Kelley is a director of Lone Star).

The Board of Directors has determined that Messrs. Bailar, Fraser, Gibbs, Kelley and Neely are independent and, in addition, satisfy the independence requirements of the New York Stock Exchange. To be considered independent, the Board of Directors must affirmatively determine that a director has no material relationship with Smith. In each case, the Board of Directors broadly considers all relevant facts and circumstances, including the directorÕs commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships and such other criteria as the Board of Directors may determine from time to time. In making its independence determination for Messrs. Gibbs, Fraser and Kelley, the Board of Directors reviewed the purchases by Cabot Oil, Forest Oil, Frontier Oil and OGE from SmithÕs business units and WilsonÕs purchases from Lone Star. During 2005, none of the payments to or payments received from any of these companies exceeded the greater of $1.0 million or 2% of such companyÕs consolidated gross revenues. All of these companies expect to continue their business relationship in 2006. The Board of Directors determined that these relationships do not affect Messrs. FraserÕs, GibbsÕ and KelleyÕs independence.

Smith does not believe that in any such case either Smith or the other corporation or organization is a sole-source supplier to the other with regard to the relevant good or service. Smith further does not believe that in any case the director, executive officer or nominee for director receives any compensation from the other corporation or organization that is directly linked to the revenue or profits of the Smith-related business. Any revenue or profits from Smith-related business may, of course, be indirectly reflected in the overall revenue or profits of the other corporation or organization, which in turn may affect the individualÕs overall compensation or value of his or her investments in the corporation or organization.

Smith has a corporate charitable donations program. SmithÕs charitable activities focus primarily on education. Smith has a program whereby it will match certain charitable donations of individual employees to educational institutions. The maximum matching gift is $5,000 per employee per year; however, no more than $10,000 will be given to any one school in a year. Directors and executive officers are eligible to participate in this matching program on the same terms as other Smith employees. It is possible that, through this matching program, Smith may make charitable contributions to organizations where a Smith director or executive officer, or one of their family members, is a director, trustee, consultant or employee.

3/28/2005 Proxy Information

Mr. Neely held a number of positions with Smith International from 1965 to 1987, including President from February 1976 to December 1977, and Chairman, Chief Executive Officer and President from 1977 until December 1987.

Smith has not engaged in any transaction, or series of similar transactions, since the beginning of 2004, nor is there any currently proposed transaction, or series of similar transactions, to which Smith or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any of Smith's directors or executive officers or members of their immediate family had, or will have, a direct or indirect material interest.

None of the following persons has been indebted to Smith or its subsidiaries at any time since the beginning of 2004: any director or executive officer of Smith; any nominee for election as a director; any member of the immediate family of any of the directors, executive officers or nominees for director; any corporation or organization of which any of the directors, executive officers or nominees is an executive officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities (except trade debt entered into in the ordinary course of business); and any trust or other estate in which any of the directors, executive officers or nominees for director has a substantial beneficial interest or for which such person serves as a trustee or in a similar capacity.

Smith does have various types of business arrangements with corporations and other organizations in which a Smith director, executive officer or nominee for director may also be a director, trustee, investor or have some other direct or indirect relationship. Smith enters into these arrangements in the ordinary course of business and they typically involve Smith receiving or providing some good or service on a non-exclusive basis and at arms-length negotiated rates. Examples include: (1) distribution of maintenance, repair and operating supplies and equipment by Smith's Wilson business unit to Frontier Refining, a subsidiary of Frontier Oil Corporation (Jim Gibbs, a Smith Director, is Chairman of the Board, President & Chief Executive Officer of Frontier and Mr. Buck, a Smith director, is a director of Frontier); and (2) the sale of equipment and services and drilling fluid products by Smith's M-I SWACO, Smith Technologies, Smith Services and Wilson business units to Forest Oil Corporation (Dod Fraser, a Smith director, is a director of Forest Oil). The Board of Directors has determined that Messrs. Bailar, Buck, Fraser, Gibbs and Neely are independent and, in addition, satisfy the independence requirements of the New York Stock Exchange. To be considered independent, the Board of Directors must affirmatively determine that a director has no material relationship with Smith. In each case, the Board of Directors broadly considers all relevant facts and circumstances, including the director's commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships and such other criteria as the Board of Directors may determine from time to time. In making its independence determination for Messrs. Buck and Gibbs, the Board of Directors reviewed Frontier Refining's purchases from Smith's Wilson business unit and Forest Oil's purchases from Smith's M-I SWACO, Smith Technologies, Smith Services and Wilson business units. During 2004, Frontier Refining paid $755,887 to Smith and Forest Oil paid $6.5 million to Smith. Frontier Refining expects to make purchases from Smith's Wilson business unit in 2005 and Forest Oil expects to make purchases from all of Smith's business units in 2005. The Board of Directors determined that these relationships do not affect Messrs. Buck's, Fraser's and Gibbs' independence.

Smith does not believe that in any such case either Smith or the other corporation or organization is a sole-source supplier to the other with regard to the relevant good or service. Smith further does not believe that in any case the director, executive officer or nominee for director receives any compensation from the other corporation or organization that is directly linked to the revenue or profits of the Smith-related business. Any revenue or profits from Smith-related business may, of course, be indirectly reflected in the overall revenue or profits of the other corporation or organization, which in turn may affect the individual's overall compensation or value of his or her investments in the corporation or organization.

Smith has a corporate charitable donations program. Smith's charitable activities focus primarily on education. Smith has a program whereby it will match certain charitable donations of individual employees to educational institutions. The maximum matching gift is $5,000 per employee per year; however, no more than $10,000 will be given to any one school in a year. Directors and executive officers are eligible to participate in this matching program on the same terms as other Smith employees. It is possible that, through this matching program, Smith may make charitable contributions to organizations where a Smith director or executive officer, or one of their family members, is a director, trustee, consultant or employee.

3/26/2004 Proxy Information

Mr. Neely held a number of positions with Smith International from 1965 to 1987, including President from February 1976 to December 1977, and Chairman, Chief Executive Officer and President from 1977 until December 1987.

Mr. Wilson was President of Wilson Industries, Inc. from 1964 to 1980, at which time he assumed the additional roles of Chairman and Chief Executive Officer. He served as Chairman, President and Chief Executive Officer of Wilson Industries until April 1998, when Wilson Industries was purchased by Smith International, Inc.

3/26/2003 Proxy Information

No related party transactions or special relationships reported for this company. Director relationships marked "Outside Related" at this firm will most often be former executives of the company. Additional information regarding these relationships will be added during our regular updates.