1.0.0.3 false Significant Accounting Policies false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 Significant Accounting Policies [Abstract] 0 sii_SignificantAccountingPoliciesAbstract sii false na duration string Significant Accounting Policies. false false false false false true false false false 1 false false 0 0 false false Significant Accounting Policies. false 3 Significant Accounting Policies 1 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0  <html> <head></head> <body>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left"> </div>  <div align="center" style="font-size: 10pt"><b></b></div> <div align="center" style="font-size: 10pt"></div> <div align="center" style="font-size: 10pt"></div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. Significant Accounting Policies</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Basis of Presentation</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited consolidated condensed financial statements of Smith International, Inc. and subsidiaries (“Smith” or the “Company”) were prepared in accordance with U.S. generally accepted accounting principles and applicable rules and regulations of the Securities and Exchange Commission (the “Commission”) pertaining to interim financial information. These interim financial statements do not include all information or footnote disclosures required by generally accepted accounting principles for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2008 Annual Report on Form 10-K and other current filings with the Commission. All adjustments that are, in the opinion of management, of a normal and recurring nature and are necessary for a fair presentation of the interim financial statements have been included. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosed amounts of contingent assets and liabilities and the reported amounts of revenues and expenses. If the underlying estimates and assumptions, upon which the financial statements are based, change in future periods, actual amounts may differ from those included in the accompanying consolidated condensed financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Management is also required to consider material events that occur after the date, but prior to the issuance, of the financial statements and evaluate whether such events require modification to the reported results or footnote disclosures. Our subsequent event review has been conducted through August 7, 2009, immediately prior to the filing of the financial statements with the Commission. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Management believes the consolidated condensed financial statements present fairly the financial position, results of operations and cash flows of the Company as of the dates indicated. The results of operations for the interim period presented may not be indicative of results which may be reported on a fiscal year basis. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Recently Adopted Accounting Pronouncements</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”). The following standards were adopted by the Company on the specified effective date. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2009, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 141(R), “Business Combinations” (“SFAS 141(R)”) which revises the accounting and disclosure requirements for acquisition transactions. SFAS 141(R) differs from the previous standard in that it requires the Company to expense professional fees and other transaction-related costs as incurred instead of capitalizing these costs as purchase price consideration. Additionally, the Company will be required to estimate contingent assets, liabilities and transaction-related consideration as of the purchase date with future changes in the underlying estimates recognized in the statement of operations. Finally, SFAS 141(R) requires the Company to reflect any adjustments to deferred tax asset valuation allowances and income tax uncertainties associated with acquisitions completed prior to January 1, 2009 as income tax expense rather than an adjustment to goodwill. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2009, the Company implemented SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS 160”) which modifies the accounting and disclosure requirements for subsidiaries which are not wholly-owned. In accordance with the provisions of SFAS 160, the Company has reclassified the noncontrolling interest previously reflected as a long-term liability and included the amount as a component of stockholders’ equity in the accompanying consolidated condensed balance sheets. Additionally, the Company has presented the net income attributable to the Company and the noncontrolling ownership interests separately in the accompanying consolidated condensed statements of operations. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2009, the Company adopted SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133” which requires enhanced disclosure about derivative instruments. The standard requires the inclusion of tabular information reflecting the impact of derivative financial instruments on the Company’s consolidated financial position and results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the second quarter of 2009, the Company adopted FASB Staff Position No. 107-1 and Accounting Principles Board Opinion No. 28-1, “Interim Disclosure about Fair Value of Financial Instruments” which requires additional fair value disclosure with respect to financial instruments in our interim financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the second quarter of 2009, the Company adopted the provisions of SFAS No. 165, “Subsequent Events” which requires the disclosure of specifics related to the Company’s subsequent review, including the date through which such review was completed. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Management believes the impact of other recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption. </div> </div> </body> </html>  1. 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