What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-22 compared with 2020-02-21 · 547 added, 447 removed, 829 unchanged (55% of the section changed)

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In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control–Integrated Framework (2013 Framework).

Based on our assessment we believe that, as of December 31, 2019 , the Company's internal control over financial reporting is effective based on those criteria.

Based on our assessment we believe that, as of December 31, 2020, our internal control over financial reporting is effective based on those criteria.

The effectiveness of Oil States' internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as described below.

(b) Attestation report of the registered public accounting firm.

The attestation report of Ernst & Young LLP, the Company's independent registered public accounting firm, on the Company's internal control over financial reporting is set forth in this Annual Report on Form 10‑K on page 62 and is incorporated herein by reference.

The attestation report of Ernst & Young LLP, our independent registered public accounting firm, on our internal control over financial reporting is set forth in this Annual Report on Form 10‑K on page 62 and is incorporated herein by reference.

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There was no information required to be disclosed in a report on Form 8‑K during the fourth quarter of 2020 that was not reported on a Form 8‑K during such time.

Executive Officer Retirement

On February 17, 2021, Mr.

"Jeff" Steen, our Executive Vice President, Human Resources & Legal voluntarily retired from his executive officer position.

He will continue to be employed in a non-executive officer role on a part-time basis by Oil States for an indefinite period of time.

Directors, Executive Officers and Corporate Governance

Information concerning directors, including the Company's audit committee financial experts, appears in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, under "Election of Directors." This portion of the Definitive Proxy Statement is incorporated herein by reference.

Information with respect to executive officers appears in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, under "Executive Officers of the Registrant." This portion of the Definitive Proxy Statement is incorporated herein by reference.

Information concerning Section 16(a) beneficial ownership reporting compliance appears in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, under "Section 16(a) Beneficial Ownership Reporting Compliance." This portion of the Definitive Proxy Statement is incorporated herein by reference.

Information concerning corporate governance and the Company's code of ethics appears in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, under "Financial Code of Ethics for Senior Officers." This portion of the Definitive Proxy Statement is incorporated herein by reference.

(1) Information concerning directors, including our audit committee financial experts, appears in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, under "Election of Directors." This portion of the Definitive Proxy Statement is incorporated herein by reference.

(2) Information with respect to executive officers appears in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, under "Executive Officers of the Registrant." This portion of the Definitive Proxy Statement is incorporated herein by reference.

(3) Information concerning Section 16(a) beneficial ownership reporting compliance appears in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, under "Section 16(a) Beneficial Ownership Reporting Compliance." This portion of the Definitive Proxy Statement is incorporated herein by reference.

(4) Information concerning corporate governance and our code of ethics appears in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, under "Financial Code of Ethics for Senior Officers." This portion of the Definitive Proxy Statement is incorporated herein by reference.

Executive Compensation

The information required by Item 11 hereby is incorporated by reference to such information as set forth in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders.

The information required by Item 11 hereby is incorporated by reference to such information as set forth in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 hereby is incorporated by reference to such information as set forth in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders.

The information required by Item 12 hereby is incorporated by reference to such information as set forth in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders.

Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 hereby is incorporated by reference to such information as set forth in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders.

The information required by Item 13 hereby is incorporated by reference to such information as set forth in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders.

Principal Accounting Fees and Services

Information concerning principal accounting fees and services and the audit committee's preapproval policies and procedures appear in the Company's Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders under the heading "Fees Paid to Ernst & Young LLP" and is incorporated herein by reference.

Information concerning principal accounting fees and services and the audit committee's preapproval policies and procedures appear in our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders under the heading "Fees Paid to Ernst & Young LLP" and is incorporated herein by reference.

Exhibits, Financial Statement Schedules

Index to Financial Statements, Financial Statement Schedules and Exhibits

(a) Index to Financial Statements, Financial Statement Schedules and Exhibits

(1) Financial Statements:

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See Index of Exhibits, below, for a list of those exhibits filed herewith, which index also includes and identifies management contracts or compensatory plans or arrangements required to be filed as exhibits to this Annual Report on Form 10‑K by Item 601 of Regulation S‑K.

Index of Exhibits

Separation and Distribution Agreement by and between Oil States International, Inc.

and Civeo Corporation, dated May 27, 2014 (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8‑K, as filed with the SEC on June 2, 2014 (File No.

(b) Index of Exhibits

— Stock Purchase Agreement, dated as of December 12, 2017, by and among GEODynamics B.V., GEODynamics, Inc., the Seller Shareholders, GD Development Corporation and Oil States International, Inc.

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— Form of common stock certificate (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S‑1, as filed with the SEC on November 7, 2000 (File No.

Registration Rights Agreement, dated as of January 12, 2018, between Oil States International, Inc., and GEODynamics B.V.

(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, as filed with the SEC on January 19, 2018 (File No.

— Indenture, dated January 30, 2018, between Oil States International, Inc., and Wells Fargo Bank, National Association, as trustee, relating to the Company's 1.50% Convertible Senior Notes Due 2023 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, as filed with the SEC on February 2, 2018 (File No.

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— Form of Change of Control Severance Plan for Selected Members of Management (incorporated by reference to Exhibit 10.11 of the Company's Registration Statement on Form S‑1, as filed with the SEC on December 12, 2000 (File No.

— Asset-based Credit Agreement, dated as of February 10, 2021, among Oil States International, Inc., as Borrower, the Lenders from time to time party thereto, and Wells Fargo Bank, National Association as Agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, as filed with the SEC on February 12 , 2021 (File No.

— Amended and Restated Credit Agreement dated January 30, 2018, among the Company, Wells Fargo Bank, N.A., as administrative agent and the financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, as filed with the SEC on February 2, 2018 (File No.

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1 to the Amended and Restated Credit Agreement, dated May 14, 2018, among the Company, Wells Fargo Bank, N.A., as administrative agent and the financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, as filed with the SEC on July 31, 2018 (File No.

— Omnibus Amendment to Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, as filed with the Commission on June 18, 2020 (File No.

— Form of Indemnification Agreement (incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10‑Q for the quarter ended September 30, 2004, as filed with the SEC on November 5, 2004 (File No.

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Steen) effective May, 20, 2009 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10‑Q for the quarter ended March 31, 2014, as filed with the SEC on May 2, 2014 (File No.

Indemnification and Release Agreement by and between Oil States International, Inc.

and Civeo Corporation, dated May 27, 2014 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8‑K, as filed with the SEC on June 2, 2014 (File No.

Tax Sharing Agreement by and between Oil States International, Inc.

and Civeo Corporation, dated May 27, 2014 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8‑K, as filed with the SEC on June 2, 2014 (File No.

Employee Matters Agreement by and between Oil States International, Inc.

and Civeo Corporation, dated May 27, 2014 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8‑K, as filed with the SEC on June 2, 2014 (File No.

Transition Services Agreement by and between Oil States International, Inc.

and Civeo Corporation, dated May 27, 2014 (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8‑K, as filed with the SEC on June 2, 2014 (File No.

— Executive Agreement between Oil States International, Inc.

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Moses) effective July 1, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8‑K, as filed with the SEC on July 8, 2015 (File No.

— Annual Incentive Compensation Plan, dated January 1, 2020 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as filed with the SEC on May 1, 2020 (File No.

— List of subsidiaries of the Company.

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pursuant to Rules 13a‑14(b) or 15d‑14(b) under the Securities Exchange Act of 1934.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

101.INS* — XBRL Instance Document

101.SCH* — XBRL Taxonomy Extension Schema Document

101.CAL* — XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* — XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* — XBRL Taxonomy Extension Label Linkbase Document

101.PRE* — XBRL Taxonomy Extension Presentation Linkbase Document

104.1* — Cover Page Interactive Data File (embedded within the Inline XBRL document)

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OIL STATES INTERNATIONAL, INC.

By /s/ Cindy B.

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities indicated on February 22, 2021.

Signature Title

* Chairman of the Board

Director, President & Chief Executive Officer

(Principal Executive Officer)

Executive Vice President, Chief Financial Officer

and Treasurer

Taylor Director, President & Chief Executive Officer

Taylor (Principal Executive Officer)

Hajdik Executive Vice President, Chief Financial Officer

Hajdik and Treasurer

(Principal Financial Officer)

Vice President, Controller and Chief Accounting Officer

(Principal Accounting Officer)

Taylor Vice President, Controller and Chief Accounting Officer

Taylor (Principal Accounting Officer)

James Nelson, Jr.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Oil States International, Inc.

To the Stockholders and the Board of Directors of Oil States International, Inc.

Opinion on the Financial Statements

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment - Downhole Technologies

Goodwill Impairment - Offshore/Manufactured Products

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, goodwill is evaluated for impairment annually on December 1 and when an event occurs or circumstances change to suggest that the carrying amount may not be recoverable.

Based on this quantitative assessment, the Company concluded that the goodwill amount recorded in its Downhole Technologies reporting unit was partially impaired and recognized a goodwill impairment charge of $165.0 million in the fourth quarter of 2019.

As reflected in the Company's consolidated financial statements, at December 31, 2019, the Company's goodwill was $192.5 million in the Downhole Technologies reporting unit.

Auditing management's goodwill impairment test for the Company's reporting unit was subjective and required the involvement of specialists due to the significant measurement uncertainty in determining the fair value of the reporting unit.

In particular, the fair value estimate attributable to the income approach was sensitive to changes in significant assumptions such as the estimated future net annual cash flows and the discount rate, both of which are affected by published industry trends and market forecasts of commodity prices, rig count, well count, and onshore drilling and completion spending.

As discussed in Note 2 to the consolidated financial statements, goodwill is assessed for impairment annually and when an event occurs or circumstances change to suggest that the carrying amount may not be recoverable.

Given the significance of the March 2020 events described in Note 6, the Company performed a quantitative assessment of goodwill for impairment at March 31, 2020.

Based on this quantitative assessment, the Company recognized non-cash goodwill impairment charges of $406.1 million, which included a partial goodwill impairment charge of $86.5 million in its Offshore/Manufactured Products reporting unit.

As reflected in the Company's consolidated financial statements at December 31, 2020, the Company's remaining goodwill was $76.5 million in the Offshore/Manufactured Products reporting unit.

Auditing management's interim goodwill impairment assessment for the Company's Offshore/Manufactured Products reporting unit was subjective and required the involvement of specialists due to the significant measurement uncertainty in determining the fair value of the reporting unit.

In particular, the fair value estimate attributable to the income approach was sensitive to changes in significant assumptions, such as the discount rate and the revenue growth rate, both of which are affected by market forecasts of commodity prices and the level of capital expenditures in the oil and gas industry.

How We Addressed the Matter in Our Audit

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For example, we tested controls over the Company's forecasting process as well as controls over management's review of the significant assumptions in estimating the fair value of the reporting unit and the related evaluation of management's specialist.

To test the fair value of the reporting unit, specifically using the income approach, our audit procedures included assessing the methodologies and testing the significant assumptions and underlying data used by the Company.

We evaluated the Company's forecast by comparing the significant assumptions to current industry and economic trends, and also by assessing the historical accuracy of management's estimates.

For example, we evaluated the forecasted revenue by analyzing trends in market growth and related margin assumptions as well as changes in estimates compared to historical results.

In addition, we also performed sensitivity analyses of significant assumptions to evaluate changes in the fair value of the reporting unit resulting from changes in the assumptions.

We also involved a valuation specialist to assist in evaluating the significant assumptions in the fair value estimate.

To test the estimated fair value of the reporting unit, our audit procedures included, among others, assessing the valuation methodology and testing the significant assumptions discussed herein.

For example, we compared the revenue growth rate in the prospective financial data used by management to external forecasted spending trends in industry, analysts' forecasted commodity prices and historical performance.

We performed sensitivity analyses of certain significant assumptions to evaluate the change in the fair value resulting from changes in the significant assumptions.

We also involved our valuation specialists to assist in the evaluation of the fair value methodology and the discount rate assumption in the fair value estimate.

We further tested the completeness and accuracy of the underlying data used in the fair value estimate.

/s/ Ernst & Young LLP

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Oil States International, Inc.

To the Stockholders and the Board of Directors of Oil States International, Inc.

Opinion on Internal Control Over Financial Reporting

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and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018 , the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2019 and related notes, and our report dated February 21, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020 and the related notes, and our report dated February 22, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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Year Ended December 31,

2020 2019 2018

Products $ 331,272 $ 483,359 $ 501,822

Service 306,803 533,995 586,311

638,075 1,017,354 1,088,133

Costs and expenses:

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Depreciation and amortization expense 98,543 123,319 123,530

Impairment of goodwill

Impairment of fixed assets

Other operating (income) expense, net

Impairments of goodwill 406,056 165,000 —

Impairments of fixed and lease assets 12,447 33,697 —

Other operating income, net ( 538 ) ( 2,003 ) ( 2,104 )

1,172,415 1,245,534 1,094,009

Operating loss ( 534,340 ) ( 228,180 ) ( 5,876 )

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Loss before income taxes ( 534,329 ) ( 240,727 ) ( 21,732 )

Income tax (provision) benefit

Income tax benefit 65,946 8,919 2,627

Net loss $ ( 468,383 ) $ ( 231,808 ) $ ( 19,105 )

Net loss per share:

Basic $ ( 7.83 ) $ ( 3.90 ) $ ( 0.33 )

Diluted ( 7.83 ) ( 3.90 ) ( 0.33 )

Weighted average number of common shares outstanding:

Basic 59,812 59,379 58,712

Diluted 59,812 59,379 58,712

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

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Year Ended December 31,

2020 2019 2018

Net loss $ ( 468,383 ) $ ( 231,808 ) $ ( 19,105 )

Other comprehensive income (loss):

Currency translation adjustments, net of tax ( 3,750 ) 3,462 ( 13,088 )

Other 111 189 184

Total other comprehensive income (loss) ( 3,639 ) 3,651 ( 12,904 )

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Other noncurrent assets 29,727 28,701

Total assets $ 1,152,260 $ 1,727,867

LIABILITIES AND STOCKHOLDERS' EQUITY

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Treasury stock, at cost, 12,283,817 and 12,045,065 shares, respectively

( 623,989 ) ( 621,244 )

Total stockholders' equity 757,631 1,223,967

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(In Thousands)

Additional Paid‑In Capital

Retained Earnings

Accumulated Other

Comprehensive Loss

Total Stockholders' Equity

Stock Additional Paid‑In Capital Retained Earnings Accumulated Other

Comprehensive Loss Treasury

Stock Total Stockholders' Equity

Balance, December 31, 2017 $ 627 $ 754,607 $ 1,048,623 $ ( 58,493 ) $ ( 612,651 ) $ 1,132,713

Net loss — — ( 19,105 ) — — ( 19,105 )

Currency translation adjustment (excluding intercompany advances) — — — ( 10,984 ) — ( 10,984 )

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Stock options — 492 — — — 492

Stock repurchases

Issuance of common stock in connection with GEODynamics Acquisition 87 294,823 — — — 294,910

Issuance of 1.50 % convertible senior notes, net of income taxes of $ 7,744

— 25,683 — — — 25,683

Surrender of stock to settle taxes on restricted stock awards — — — — ( 4,178 ) ( 4,178 )

Balance, December 31, 2018 718 1,097,758 1,029,518 ( 71,397 ) ( 616,829 ) 1,439,768

Net loss — — ( 231,808 ) — — ( 231,808 )

Currency translation adjustment (excluding intercompany advances) — — — 3,925 — 3,925

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Stock options — 53 — — — 53

Issuance of common stock in connection with GEODynamics Acquisition

Issuance of 1.50% convertible senior notes, net of income taxes of $7,744

Stock repurchases — — — — ( 757 ) ( 757 )

Surrender of stock to settle taxes on restricted stock awards — — — — ( 3,698 ) ( 3,698 )

Common stock withdrawn from deferred compensation plan — 3 — — 40 43

Balance, December 31, 2019 726 1,114,521 797,710 ( 67,746 ) ( 621,244 ) 1,223,967

Net loss — — ( 468,383 ) — — ( 468,383 )

Currency translation adjustment (excluding intercompany advances) — — — 2,065 — 2,065

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Restricted stock 7 8,424 — — — 8,431

Stock options

Stock repurchases

Surrender of stock to settle taxes on restricted stock awards — — — — ( 2,745 ) ( 2,745 )

Common stock withdrawn from deferred compensation plan

Balance, December 31, 2020 $ 733 $ 1,122,945 $ 329,327 $ ( 71,385 ) $ ( 623,989 ) $ 757,631

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Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net loss $ ( 468,383 ) $ ( 231,808 ) $ ( 19,105 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization expense 98,543 123,319 123,530

Impairment of goodwill

Impairment of fixed assets

Impairments of goodwill 406,056 165,000 —

Impairments of inventories 31,151 — —

Impairments of fixed and lease assets 12,447 33,697 —

Stock-based compensation expense 8,431 16,768 22,649

Amortization of debt discount and deferred financing costs 7,736 7,884 7,408

Deferred income tax expense (benefit)

Gain on disposals of assets

Deferred income tax benefit ( 24,404 ) ( 15,469 ) ( 3,489 )

Gains on extinguishment of 1.50 % convertible senior notes

( 10,721 ) — —

Gains on disposals of assets ( 2,444 ) ( 4,291 ) ( 6,288 )

Other, net 4,668 3,079 1,411

Changes in operating assets and liabilities, net of effect from acquired businesses:

Accounts receivable 63,876 50,257 ( 16,792 )

Inventories 17,578 ( 10,774 ) ( 7,283 )

Accounts payable and accrued liabilities ( 37,315 ) ( 6,173 ) 5,796

Income taxes payable

Deferred revenue 25,549 3,470 ( 4,808 )

Other operating assets and liabilities, net ( 13 ) 2,473 141

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Proceeds from flood insurance claims — — 3,850

Other, net ( 581 ) ( 1,912 ) ( 1,184 )

Net cash flows used in investing activities ( 3,729 ) ( 51,982 ) ( 461,375 )

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Purchases of 1.50 % convertible senior notes

( 20,078 ) ( 6,724 ) —

Other debt and finance lease repayments, net ( 8,222 ) ( 500 ) ( 537 )

Payment of financing costs ( 1,041 ) ( 16 ) ( 7,372 )

Purchase of treasury stock

Shares added to treasury stock as a result of net share settlements

due to vesting of restricted stock ( 2,745 ) ( 3,698 ) ( 4,178 )

Purchases of treasury stock — ( 757 ) —

Net cash flows (used in) provided by financing activities ( 65,017 ) ( 95,908 ) 324,058

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Cash and cash equivalents, end of year $ 72,011 $ 8,493 $ 19,316

Cash paid for:

Income taxes, net of refunds

Cash paid (received) for:

Interest $ 6,402 $ 9,626 $ 9,864

Income taxes, net ( 36,766 ) ( 1,303 ) 2,993

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

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Certain prior-year amounts in the Company's consolidated financial statements have been reclassified to conform to the current year presentation.

The Company, through its subsidiaries, is a leading provider of specialty products and services to oil and gas companies throughout the world.

The Company operates in a substantial number of the world's active crude oil and natural gas producing regions, including:

The Company, through its subsidiaries, is a leading provider of specialty products and services to oil and gas and industrial companies throughout the world.

The Company operates in a substantial number of the world's active resource intensive regions, including:

onshore and offshore United States, West Africa, the North Sea, the Middle East, South America and Southeast and Central Asia.

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Use of Estimates

As further discussed in Note 14, "Commitments and Contingencies," the impact of the Coronavirus Disease 2019 ("COVID-19") pandemic and the related economic, business and market disruptions continues to evolve and its future effects remain uncertain.

The actual impact of these developments on the Company will depend on numerous factors, many of which are beyond management's control and knowledge.

It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company.

During 2020, the Company recorded asset impairments, severance and restructuring charges in response to these recent developments, as further discussed in Note 3, "Asset Impairments and Other Charges." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Examples of a few such estimates include goodwill and long-lived asset impairment, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, the fair value of assets and liabilities acquired and identification of associated goodwill and intangible assets, reserves on inventory, allowances for doubtful accounts and potential future adjustments related to contractual indemnification and other agreements.

Examples of such estimates include goodwill and long-lived asset impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, the fair value of assets and liabilities acquired including identification of associated goodwill and intangible assets, reserves on inventory, allowances for doubtful accounts, settlement of litigation and potential future adjustments related to contractual indemnification and other agreements.

Actual results could materially differ from those estimates.

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.

All highly liquid investments purchased with an original maturity of three months or less are classified as cash equivalents.

Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, investments, receivables, payables, debt instruments and foreign currency forward contracts.

The Company believes that the carrying values of these instruments, other than its 1.50 % convertible senior notes due 2023 (the "Notes") described in Note 7 , "Long-term Debt," on the accompanying consolidated balance sheets approximate their fair values.

The estimated fair value of the Notes as of December 31, 2019 was $ 173.9 million , based on quoted market prices (a Level 1 fair value measurement), which compares to $ 192.3 million in principal amount of the Notes.

Financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments.

The carrying values of these instruments, other than the 1.50 % convertible senior notes due February 2023 (the "Notes") described in Note 7, "Long-term Debt," on the accompanying consolidated balance sheets, approximates their fair values.

The estimated fair value of the Notes as of December 31, 2020 was $ 120.6 million, based on quoted market prices (a Level 2 fair value measurement), which compares to $ 157.4 million principal amount of the Notes.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories consist of consumable oilfield products, manufactured equipment, spare parts for manufactured equipment, and work-in-process.

Inventories also include raw materials, labor, subcontractor charges, manufacturing overhead and supplies and are carried at the lower of cost or net realizable value, or estimated fair market value at acquisition date if acquired in a business combination.

Inventories also include raw materials, labor, subcontractor charges, manufacturing overhead and supplies and are carried at the lower of cost or net realizable value.

The cost of inventories is determined on an average cost or specific-identification method.

A reserve for excess and/or obsolete inventory is maintained based on the age, turnover or condition of the inventory.

A reserve for excess and/or obsolete inventory is maintained based on the age, turnover, condition, expected near-term utility and market pricing of the goods.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost or at estimated fair market value at acquisition date if acquired in a business combination, and depreciation is computed, for assets owned or recorded under finance lease, using the straight-line method, after allowing for estimated salvage value where applicable, over the estimated useful lives of the assets.

Property, plant, and equipment are recorded at cost, or at estimated fair market value at acquisition date if acquired in a business combination, and depreciation is computed, for assets owned or recorded under a finance lease, using the straight-line method over the estimated useful lives of the assets, after allowing for estimated salvage value where applicable.

Leasehold improvements are capitalized and amortized over the lesser of the life of the lease or the estimated useful life of the asset.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Expenditures for repairs and maintenance are charged to expense when incurred.

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Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the statements of operations.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price paid for acquired businesses over the allocated fair value of the related net assets after impairments, if applicable.

Goodwill is evaluated for impairment annually on December 1 and when an event occurs or circumstances change to suggest that the carrying amount may not be recoverable.

Reporting units with goodwill as of December 31, 2019 include Completion Services, Downhole Technologies and Offshore/Manufactured Products.

In the evaluation of goodwill, each reporting unit with goodwill on its balance sheet is assessed separately and different relevant events and circumstances are evaluated for each unit.

Goodwill represents the excess after impairments, if applicable, of the purchase price for acquired businesses over the allocated fair value of related net assets.

In accordance with current accounting guidance, the Company does not amortize goodwill, but rather assesses goodwill for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable.

In the evaluation of goodwill, each reporting unit with goodwill on its balance sheet is assessed separately using relevant events and circumstances.

Management estimates the fair value of each reporting unit and compares that fair value to its recorded carrying value.

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If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded.

As further discussed in Note 6 , “Goodwill and Other Intangible Assets,” the Company concluded that goodwill recorded in its Downhole Technologies segment was partially impaired during the fourth quarter of 2019 and recognized a non-cash impairment charge of $ 165.0 million .

The goodwill impairment test performed as of December 1, 2019 indicated that the fair value of each of the other reporting unit is greater than its carrying amount.

No other goodwill impairment losses have been recorded for the periods presented.

For other amortized intangible assets, the useful life of the intangible asset is reviewed and evaluated each reporting period for events and circumstances that may warrant a revision of the remaining useful life.

Based on the Company's review, the carrying values of its other intangible assets are recoverable, and no impairment losses have been recorded for the periods presented.

See Note 6 , "Goodwill and Other Intangible Assets."

Impairment of Long-Lived Assets

The recoverability of the carrying values of long-lived assets at the asset group level, including finite-lived intangible assets, is assessed whenever, in management's judgment, events or changes in circumstances indicate that the carrying value of such asset groups may not be recoverable based on estimated future cash flows.

If this assessment indicates that the carrying values will not be recoverable, as determined based on undiscounted cash flows over the remaining useful lives, an impairment loss is recognized.

The impairment loss, if any, equals the excess of the carrying value over the fair value of the asset group.

As further discussed in Note 6, "Goodwill and Other Intangible Assets," the Company recognized non-cash goodwill impairment charges of $ 406.1 million in the first quarter of 2020 and $ 165.0 million in the fourth quarter of 2019.

These impairment charges did not impact the Company's liquidity position, debt covenants or cash flows.

Long-Lived Assets

The Company amortizes the cost of long-lived assets, including finite-lived intangible assets, over their estimated useful life.

The recoverability of the carrying values of long-lived assets is assessed at the asset group level whenever, in management's judgment, events or changes in circumstances indicate that the carrying value of such asset groups may not be recoverable based on estimated undiscounted future cash flows.

If this assessment indicates that the carrying values will not be recoverable, an impairment loss equal to the excess of the carrying value over the fair value of the asset group is recognized.

The fair value of the asset group is based on appraised values, prices of similar assets (if available), or discounted cash flows.

As further discussed in Note 4 , “Details of Selected Balance Sheet Accounts,” the Company reduced the carrying value of its vertical drilling rigs in the third quarter of 2019 to the estimated salvage or fair value and recorded a non-cash fixed asset impairment charge of $ 33.7 million .

No additional impairment losses have been recorded for the periods presented.

As further discussed in Note 4, "Details of Selected Balance Sheet Accounts," and Note 8, "Operating Leases," the Company recognized non-cash asset impairment charges totaling $ 12.4 million and $ 33.7 million in 2020 and 2019, respectively, to reduce the carrying value of certain equipment and facilities (owned and leased) to their estimated realizable value.

Based on the Company's review, the carrying values of its other long-lived assets are recoverable, and no impairment losses were recorded during the periods presented.

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The Company leases a portion of its facilities, office space, equipment and vehicles under contracts which provide it with the right to control identified assets.

Following adoption of the new lease accounting guidance effective January 1, 2019, the Company recognizes the right to use identified assets under operating leases (with an initial term of greater than 12 months) as operating lease assets and the related obligations to make payments under the lease arrangements as operating lease liabilities.

Consistent with the Company's historical practice, finance lease obligations, which are not material, are classified within long-term debt while related assets are included within property, plant and equipment.

The Company recognizes the right to use identified assets under operating leases (with an initial term of greater than 12 months) as operating lease assets and the related obligations to make payments under the lease arrangements as operating lease liabilities.

Finance lease obligations, which are not material, are classified within long-term debt while related assets are included within property, plant and equipment.

Lease assets and liabilities are recorded at the commencement date based on the present value of lease payments over the lease term.

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Therefore, the Company's incremental borrowing rate, based on available information at the lease commencement date, is used to determine the present value of lease payments.

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Most of the Company's operating leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years.

The exercise of lease renewal options is at the Company's sole discretion.

The depreciable life of lease-related assets and leasehold improvements are limited by the expected lease term.

The depreciable lives of lease-related assets and leasehold improvements are limited by the expected lease term.

Certain operating lease agreements include rental payments adjusted periodically for inflation.

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Costs incurred internally in researching and developing products are charged to expense until technological feasibility has been established for the product.

Research and development expense totaled $ 7.0 million , $ 6.6 million and $ 5.3 million in 2019 , 2018 and 2017 , respectively.

Research and development expenses totaled $ 6.1 million, $ 7.0 million and $ 6.6 million in 2020, 2019 and 2018, respectively, and are reported within cost of revenues in the accompanying consolidated statements of operations.

Foreign Currency and Other Comprehensive Loss

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Remeasurements of intercompany advances denominated in a currency other than the functional currency of the entity that are of a long-term investment nature are recognized as a separate component of other comprehensive loss within stockholders' equity.

Gains and losses resulting from balance sheet remeasurements of assets and liabilities denominated in a different currency than the functional currency, other than intercompany advances that are of a long-term investment nature, are included in the consolidated statements of operations within "other operating (income) expense , net" as incurred and were not material during the periods presented.

Gains and losses resulting from balance sheet remeasurements of assets and liabilities denominated in a different currency than the functional currency, other than intercompany advances that are of a long-term investment nature, are included in the consolidated statements of operations within "other operating income, net" as incurred and were not material during the periods presented.

Currency Exchange Rate Risk

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Revenue and Cost Recognition

The Company accounts for revenue in accordance with Financial and Accounting Standards Board ("FASB") guidance on revenue from contracts with customers ("ASC 606"), which the Company adopted as of January 1, 2018.

Adoption of this new guidance did not have a material impact on the Company's recognition of revenues.

The Company's revenue contracts may include one or more promises to transfer a distinct good or service to the customer, which is referred to under ASC 606 as a "performance obligation," and to which revenue is allocated.

The Company's revenue contracts may include one or more promises to transfer a distinct good or service to the customer, which is referred to as a "performance obligation," and to which revenue is allocated.

The Company recognizes revenue and the related cost when, or as, the performance obligations are satisfied.

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The Company's product sales terms do not include significant post-performance obligations.

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The Company's performance obligations may be satisfied at a point in time or over time as work progresses.

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Revenues from products and services transferred to customers over time accounted for approximately 62 %, 66 % and 71 % of consolidated revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

The majority of the Company's revenue recognized over time is for services provided under short-term contracts with revenue recognized as the customer receives and

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consumes the services.

In addition, the Company manufactures certain products to individual customer specifications under short-term contracts for which control passes to the customer as the performance obligations are fulfilled and for which, under the new standard, revenue is recognized over time.

The majority of the Company's revenue recognized over time is for services provided under short-term contracts, with revenue recognized as the customer receives and consumes the services.

For significant project-related contracts involving custom engineered products within the Offshore/Manufactured Products segment (also referred to as "project-driven products"), revenues are typically recognized over time using an input measure such as the percentage of costs incurred to date relative to total estimated costs at completion for each contract (cost-to-cost method).

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If at any time the estimate of contract profitability indicates an anticipated loss will be incurred on the contract, the full loss is recognized in the period it is identified.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, and that are collected by the Company from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of products.

Proceeds from customers for the cost of oilfield rental equipment that is damaged or lost downhole are reflected as gains or losses on the disposition of assets after considering the write-off of the remaining net book value of the equipment.

Product costs and service costs include all direct material and labor costs and those costs related to contract performance, such as indirect labor, supplies, tools and repairs.

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Selling, general and administrative costs are charged to expense as incurred.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of products.

As of December 31, 2020, the Company had $ 161.9 million of remaining backlog related to contracts with an original expected duration of greater than one year .

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Under this method, deferred income taxes are recorded based upon the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect at the time the underlying assets or liabilities are recovered or settled.

As further discussed in Note 9 , "Income Taxes," on December 22, 2017, legislation commonly known as the Tax Cuts and Jobs Act ("Tax Reform Legislation") was signed into law which enacts significant changes to U.S.

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As further discussed in Note 9, "Income Taxes," on December 22, 2017, legislation commonly known as the Tax Cuts and Jobs Act ("Tax Reform Legislation") was signed into law which enacted significant changes to U.S.

tax and related laws, including certain key U.S.

federal income tax provisions applicable to oilfield service and manufacturing companies such as the Company.

state or other regulatory bodies have not finalized potential changes to existing laws and regulations which may result from the new U.S.

tax and related laws.

In accordance with the Securities and Exchange Commission's Staff Accounting Bulletin No.

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During 2018, the Company adjusted these provisional estimates based upon additional guidance issued by the Internal Revenue Service.

Prior to December 22, 2017, the majority of the Company's earnings from international subsidiaries were considered to be indefinitely reinvested outside of the United States and no provision for U.S.

income taxes was made for these earnings.

However, certain historical foreign earnings were not considered to be indefinitely reinvested outside of the United States and were subject to U.S income tax as earned.

If any of the Company's subsidiaries distributed earnings in the form of dividends or otherwise, the

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Company generally was subject to both U.S.

income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law, which allowed the carryback of U.S.

federal net operating losses.

Prior to the enactment of the CARES Act, such tax losses could only be carried forward.

As of December 31, 2020, the Company's total investment in foreign subsidiaries is considered to be indefinitely reinvested outside of the United States.

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This assessment requires analysis of changes in tax laws as well as available positive and negative evidence, including consideration of losses in recent years, reversals of temporary differences, forecasts of future income and assessment of future business and tax planning strategies.

During 2019, 2018 and 2017, the Company recorded valuation allowances primarily with respect to net operating loss carryforwards of certain operations outside the United States.

As a result of the changes in U.S.

tax laws in 2017 discussed above, the Company also recorded a valuation allowance on its foreign tax credit carryforwards during the fourth quarter of 2017.

During 2020, 2019 and 2018, the Company recorded valuation allowances primarily with respect to foreign and U.S.

state net operating loss ("NOL") carryforwards.

The calculation of tax liabilities involves assessing uncertainties regarding the application of complex tax regulations.

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Note 15, "Segments and Related Information," provides further information with respect to the Company's geographic revenues and significant customers.

The Company evaluates the credit-worthiness of its significant, new and existing customers' financial condition and, generally, the Company does not require significant collateral from its customers.

The Company evaluates the credit-worthiness of significant customers' financial condition and, generally, the Company does not require significant collateral from its customers.

Allowances for Doubtful Accounts

The determination of the collectability of amounts due from customers requires us to make judgments regarding future events and trends.

Allowances for doubtful accounts are determined based on a continuous process of assessing our portfolio on an individual customer basis taking into account current and expected future market conditions and trends.

This process consists of a thorough review of historical collection experience, current aging status of the customer accounts, and financial condition of our customers.

Based on a review of these factors, we will establish or adjust allowances for trade and unbilled receivables.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments.

If a trade receivable is deemed to be uncollectible, the receivable is charged-off against allowance for doubtful accounts.

The Company considers the following factors when determining if collection of revenue is reasonably assured:

customer credit-worthiness, past transaction history with the customer, customer solvency and changes in customer payment terms.

If the Company has no previous experience with the customer, the Company typically obtains reports from various credit organizations to ensure that the customer has a history of paying its creditors.

The Company may also request financial information, including financial statements or other documents to ensure that the customer has the means of making payment.

If these factors do not indicate collection is reasonably assured, the Company may require a prepayment or other arrangement to support revenue recognition and recording of a trade receivable.

If the financial condition of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.

The Company maintains allowances for estimated losses resulting from the inability of the Company's customers to make required payments.

Determination of the collectability of amounts due from customers requires management to make judgments regarding future events and trends.

Allowances for doubtful accounts are established through an assessment of the Company's portfolio on an individual customer and consolidated basis taking into account current and expected future market conditions and trends.

This process consists of a thorough review of historical collection experience, current aging status of customer accounts, and financial condition of the Company's customers as well as political and economic factors in countries of operations and other customer-specific factors.

Based on a review of these factors, the Company establishes or adjusts allowances for trade and unbilled receivables as well as contract assets.

If the financial condition of the Company's customers were to deteriorate further, adversely affecting their ability to make payments, additional allowances may be required.

If a customer receivable is deemed to be uncollectible, the receivable is charged-off against allowance for doubtful accounts.

Earnings per Share

Diluted earnings per share ("EPS") amounts include the effect, if dilutive, of the Company's outstanding stock options, restricted stock and convertible securities under the treasury stock method.

Currently issued and outstanding shares of restricted stock remain subject to vesting requirements.

The Company is required to compute earnings per share amounts under the two class method in periods with earnings.

Holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as holders of outstanding common stock and are thus considered participating securities.

Under applicable accounting guidance, undistributed earnings, if any, for each period are allocated based on the participation rights of both the common stockholders and

Basic earnings per share ("EPS") on the face of the accompanying consolidated statements of operations is computed by dividing the net income or loss applicable to the Company's common stockholders by the weighted average shares of outstanding common stock.

The calculation of diluted EPS is similar to basic EPS, except that the denominator includes dilutive common stock equivalents and the income or loss in the numerator excludes the impact, if any, of dilutive common stock equivalents.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

holders of any participating securities as if earnings for the respective periods had been distributed.

Diluted EPS includes the effect, if dilutive, of the Company's outstanding stock options, restricted stock and convertible securities under the treasury stock method.

Currently issued and outstanding shares of restricted stock remain subject to vesting requirements.

The Company is required to compute EPS amounts under the two class method in periods with earnings.

Holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as holders of outstanding common stock and are thus considered participating securities.

Under applicable accounting guidance, undistributed earnings, if any, for each period are allocated based on the participation rights of both the common stockholders and holders of any participating securities as if earnings for the respective periods had been distributed.

Because both the liquidation and dividend rights are identical, undistributed earnings are allocated on a proportionate basis.

The presentation of basic EPS amounts on the face of the accompanying consolidated statements of operations is computed by dividing the net income or loss applicable to the Company's common stockholders by the weighted average shares of outstanding common stock.

The calculation of diluted EPS is similar to basic EPS, except that the denominator includes dilutive common stock equivalents and the income or loss included in the numerator excludes the impact, if any, of dilutive common stock equivalents.

Stock-Based Compensation

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Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB, which are adopted by the Company as of the specified effective date.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB"), which are adopted by the Company as of the specified effective date.

Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

In February 2016, the FASB issued guidance on leases which, as amended, introduces the recognition of lease assets and lease liabilities by lessees for all leases that are not short-term in nature.

In August 2020, the FASB issued updated guidance to simplify the accounting for convertible instruments and contracts in an entity's own equity.

This new guidance eliminated the requirement that the carrying value of convertible debt instruments, such as the Company's Notes, be allocated between the debt and equity components.

As permitted under the standard, the Company adopted the new guidance on January 1, 2021, using the modified retrospective transition method.

Adoption of the standard resulted in a $ 12.2 million increase in the net carrying value of the Notes, a $ 3.7 million decrease in deferred income taxes and an $ 8.5 million net decrease in stockholders' equity.

The effective interest rate associated with the Notes after adoption decreased from approximately 6 % to approximately 2 %, which compares to the contractual interest rate of 1.50 %.

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In June 2016, the FASB issued guidance on credit impairment for short-term receivables which, as amended, introduced the recognition of management's current estimate of credit losses that are expected to occur over the remaining life of a financial asset.

The Company adopted this guidance on January 1, 2020, using the optional transition method of recognizing any cumulative effect of adopting this guidance as an adjustment to the opening balance of retained earnings.

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Prior periods were not retrospectively adjusted.

In addition, the Company elected a package of practical expedients permitted under transition guidance for the new standard which, among other things, allowed for the carryforward of historical lease classification.

The Company has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.

Most of the Company's leases do not provide an implicit interest rate.

Therefore, the Company's incremental borrowing rate, based on available information at the lease commencement date, is used to determine the present value of lease payments.

Asset Impairments and Other Charges

In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50 % in response to current and expected material reductions in global demand stemming from the global response to the COVID-19 pandemic, coupled with announcements by Saudi Arabia and Russia of plans to increase crude oil production.

Following this unprecedented collapse in crude oil prices, the spot price of Brent and WTI crude oil closed at $ 15 and $ 21 per barrel, respectively, on March 31, 2020.

Crude oil prices further declined in April of 2020 to record low levels, and while the spot price of Brent and WTI crude oil increased to an average of $ 44 and $ 43 per barrel, respectively, in the fourth quarter of 2020, these average prices continue to remain below historical price levels.

Demand for most of the Company's products and services depends substantially on the level of capital expenditures invested in the oil and natural gas industry, which reached 15-year lows in 2020.

The decline in crude oil prices, coupled with higher crude oil inventory levels in 2020, caused rapid reductions in most of the Company's customers' drilling, completion and production activities and their related spending on products and services, particularly those supporting activities in the U.S.

shale play regions.

These conditions have and may continue to result in a material adverse impact on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and, in certain instances, non-payments of amounts owed.

Consistent with most oilfield service industry peers, the Company's stock price declined dramatically during the first quarter of 2020, with its market capitalization falling substantially below the carrying value of stockholders' equity.

Following these March 2020 events, the Company immediately implemented significant cost reduction initiatives.

The Company also assessed the carrying value of goodwill, long-lived and other assets based on the industry outlook regarding overall demand for and pricing of its products and services, other market considerations and the financial condition of the Company's customers.

As a result of these events, actions and assessments during 2020, the Company recorded the following charges (in thousands):

Completion Services Drilling Services Downhole Technologies Offshore/

Manufactured Products Corporate Pre-tax Total Tax After-tax Total

Impairments of:

Goodwill (Note 6)

$ 127,054 $ — $ 192,502 $ 86,500 $ — $ 406,056 $ 19,600 $ 386,456

Fixed assets (Note 4)

3,647 5,198 1,623 — — 10,468 2,198 8,270

Operating lease assets (Note 8)

— — 1,979 — — 1,979 416 1,563

Inventories (Note 4)

8,981 — 5,921 16,249 — 31,151 5,979 25,172

Severance and restructuring charges 4,094 217 2,018 1,355 1,385 9,069 1,904 7,165

During 2019, the Company recorded the following charges (in thousands):

Completion Services Drilling Services Downhole Technologies Offshore/

Manufactured Products Corporate Pre-tax Total Tax After-tax Total

Impairments of:

Goodwill (Note 6)

$ — $ — $ 165,000 $ — $ — $ 165,000 $ — $ 165,000

Fixed assets (Note 4)

— 33,697 — — — 33,697 7,076 26,621

Severance and restructuring charges 1,847 — — 1,655 — 3,502 735 2,767

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In connection with the adoption of the new standard, the Company recorded $ 47.7 million of operating lease assets and liabilities as of January 1, 2019.

The standard did not materially impact the Company's consolidated statement of operations and had no impact on cash flows.

As of December 31, 2019 , net operating lease assets and liabilities totaled $ 43.6 million and $ 44.1 million , respectively.

On January 1, 2018, the Company adopted FASB issued guidance on revenue from contracts with customers that superseded the previous revenue recognition guidance, using the modified retrospective transition method.

Prior periods were not retrospectively adjusted.

Based on analysis of existing contracts with customers, the Company concluded that the cumulative impact of the new standard was not material to its consolidated financial statements through January 1, 2018.

During 2018, the Company recorded the following charges (in thousands):

Completion Services Drilling Services Downhole Technologies Offshore/

Manufactured Products Corporate Pre-tax Total Tax After-tax Total

Patent defense costs $ — $ — $ 8,365 $ — $ — $ 8,365 $ 1,757 $ 6,608

Transaction-related costs (Note 5)

— — 327 — 3,274 3,601 756 2,845

Fair Labor Standards Act claim settlements 3,034 — — — — 3,034 637 2,397

Severance and restructuring charges 151 — — 1,478 — 1,629 342 1,287

Details of Selected Balance Sheet Accounts

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Accounts receivable, net:

Trade $ 109,294 $ 178,813

Unbilled revenue 23,173 28,341

Contract assets 35,870 26,034

Other 3,102 9,044

Total accounts receivable 171,439 242,232

Allowance for doubtful accounts ( 8,304 ) ( 8,745 )

$ 163,135 $ 233,487

Deferred revenue (contract liabilities) $ 43,384 $ 17,761

As of December 31, 2020, accounts receivable, net in the United States and the United Kingdom represented 63 % and 21 %, respectively, of the total.

No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of December 31, 2020.

A summary of activity in the allowance for doubtful accounts for the years ended December 31, 2020, 2019 and 2018 is provided in Note 17, "Valuation Allowances."

For the majority of contracts with customers, the Company receives payments based upon established contractual terms as products are delivered and services are performed.

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For the year ended December 31, 2020, the $ 9.8 million net increase in contract assets was primarily attributable to $ 32.4 million in revenue recognized during the year, which was partially offset by $ 22.8 million transferred to accounts receivable.

Deferred revenue increased by $ 3.6 million in 2019 , reflecting $ 12.2 million in new customer billings which were not recognized as revenue during the year, partially offset by the recognition of $ 8.5 million of revenue that was deferred at the beginning of the period.

For the year ended December 31, 2018 , the $ 20.0 million net decrease in contract assets was primarily attributable to $ 17.7 million in revenue recognized during the year, which was more than offset by $ 38.0 million transferred to accounts receivable.

Deferred revenue decreased by $ 4.1 million in 2018 , reflecting the recognition of $ 11.1 million of revenue that was deferred at the beginning of the period, partially offset by $ 7.4 million in new customer billings which were not recognized as revenue during the year.

Deferred revenue (contract liabilities) increased by $ 25.6 million in 2020, reflecting $ 41.6 million in new customer billings which were not recognized as revenue during the year, partially offset by the recognition of $ 16.0 million of revenue that was deferred at the beginning of the period.

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For the year ended December 31, 2019, the $ 4.8 million net increase in contract assets was primarily attributable to $ 25.0 million in revenue recognized during the year, which was more than offset by $ 20.0 million transferred to accounts receivable.

Deferred revenue (contract liabilities) increased by $ 3.6 million in 2019, reflecting $ 12.2 million in new customer billings which were not recognized as revenue during the year, partially offset by the recognition of $ 8.5 million of revenue that was deferred at the beginning of the period.

Inventories, net:

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Allowance for excess or obsolete inventory (1)

( 40,731 ) ( 19,031 )

$ 170,376 $ 221,342

____________________

(1) During 2020, the Company recorded impairment charges totaling $ 31.2 million to reduce the carrying value of inventories to their estimated net realizable value based on changes in expectations regarding the near-term utility, customer demand and market pricing of certain goods.

Useful Life (in years) 2020 2019

Property, plant and equipment, net:

Land $ 34,968 $ 37,507

Buildings and leasehold improvements 1 – 40 267,072 273,384

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Office furniture and equipment 1 – 10 35,767 45,309

Vehicles 3 – 10 81,607 97,264

Construction in progress 7,207 13,281

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Accumulated depreciation ( 790,800 ) ( 764,584 )

During the third quarter of 2019, the Company made the strategic decision to reduce the scope of its Drilling Services business unit (adjusting from 34 rigs to 9 rigs) due to the ongoing weakness in customer demand for vertical drilling rigs in the U.S.

$ 383,562 $ 459,724

For the years ended December 31, 2020, 2019 and 2018, depreciation expense was $ 74.0 million, $ 96.5 million and $ 97.2 million, respectively.

During 2019, the Company made the strategic decision to reduce the scope of its Drilling Services business unit (adjusting from 34 rigs to 9 rigs) due to the ongoing weakness in customer demand for vertical drilling rigs in the U.S.

land market, particularly the Permian Basin.

As a result of this decision, the carrying value of 25 rigs which were decommissioned or sold was reduced to their estimated salvage value, resulting in the recognition of a $ 25.5 million non-cash impairment charge.

Additionally, indicators of impairment were identified for the remaining rigs which the Company plans to continue operating.

The Company performed a fair value assessment on the remaining drilling rigs and recognized an additional non-cash impairment charge of $ 8.2 million (a Level 3 fair value measurement).

This fixed asset impairment charge was based in part on the estimated future cash flows that these assets are projected to generate (income approach), which included unobservable inputs that required significant judgments including projected day rates and costs, rig utilization and remaining economic useful life.

The income approach was also weighted with a market approach, which included estimates of the selling price for each drilling rig, resulting in a fair value measurement of $ 4.9 million .

These non-cash charges totaling $ 33.7 million are reported in the Drilling Services business and are separately presented in the consolidated statement of operations.

In connection with this fixed asset impairment and as reflected in the preceding table, the cost basis of drilling rigs (included in machinery and equipment) and other fixed assets, along with related accumulated depreciation, were both reduced by a total of $ 257.8 million in 2019 .

As a result of this decision, the carrying value of 25 rigs, which were decommissioned or sold, was reduced to their estimated realizable value, resulting in the recognition of a $ 25.5 million non-cash impairment charge.

The Company also performed a fair value assessment on the remaining drilling rigs and recognized an additional non-cash impairment charge of $ 8.2 million (a Level 3 fair value measurement).

These non-cash 2019 fixed asset impairment charges totaled $ 33.7 million.

During 2020, the Drilling Services reporting unit recognized a non-cash impairment charge of $ 5.2 million to further reduce the carrying value of the business' fixed assets to their estimated realizable value.

Additionally, during 2020, the Completion Services reporting unit recognized non-cash impairment charges of $ 3.6 million to reduce the carrying value of certain facilities to their estimated realizable value and the Downhole Technologies reporting unit recognized a non-cash impairment charge of $ 1.6 million to reduce the carrying value of the business' fixed assets to their estimated realizable value.

During 2018, the Company and its insurance carriers reached a final settlement on flood insurance claims resulting from Hurricane Harvey in 2017.

In connection with this settlement, the Company's Offshore/Manufactured Products segment recognized a gain of $ 3.8 million following the remediation and repair of buildings and equipment and, to a lesser extent, the disposal of equipment damaged beyond repair.

In connection with this settlement, the Company's Offshore/Manufactured Products segment recognized a gain of $ 3.8 million following the remediation and repair of buildings and equipment.

This gain is reported as other operating income in the accompanying consolidated statement of operations for the year ended December 31, 2018.

Depreciation expense was $ 96.5 million , $ 97.2 million and $ 99.0 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

Other noncurrent assets:

Deferred compensation plan

Deferred income taxes

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Other noncurrent assets:

Deferred compensation plan $ 22,801 $ 22,268

Deferred income taxes 1,280 685

Other 5,646 5,748

$ 29,727 $ 28,701

Accrued liabilities:

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Accrued taxes, other than income taxes 7,307 3,424

Accrued interest 2,202 2,387

Accrued commissions 1,416 1,481

Other 7,422 5,012

$ 44,504 $ 48,840

Business Acquisitions

GEODynamics Acquisition

On January 12, 2018, the Company acquired GEODynamics for a purchase price consisting of (i) $ 295.4 million in cash (net of cash acquired), which was funded through borrowings under the Company's Revolving Credit Facility (as defined in Note 7 , "Long-term Debt"), (ii) approximately 8.66 million shares of the Company's common stock (having a market value of approximately $ 295 million as of the closing date of the acquisition) and (iii) an unsecured $ 25 million promissory note that bears interest at 2.5 % per annum.

Under the terms of the purchase agreement, the Company is entitled to indemnification in respect of certain matters occurring prior to acquisition and payments due under the promissory note are subject to set-off, in part or in full, in respect of such indemnified matters.

On January 12, 2018, the Company acquired GEODynamics for a purchase price consisting of (i) $ 295.4 million in cash (net of cash acquired), which was funded through borrowings under the Company's Revolving Credit Facility (as defined in Note 7, "Long-term Debt,"), (ii) approximately 8.66 million shares of the Company's common stock (having a market value of $ 294.9 million as of the closing date of the GEODynamics Acquisition) and (iii) an unsecured $ 25 million promissory note that bears interest at 2.5 % per annum.

Under the terms of agreements with the seller in the GEODynamics Acquisition (the "Seller"), the Company believes it is entitled to indemnification in respect of certain matters occurring prior to the GEODynamics Acquisition and payments due under the promissory note are subject to set-off, in part or in full, in respect of such indemnified matters.

As a result of certain indemnity claims pending against the Seller, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.1 million as of December 31, 2020, which is its current best estimate of what is owed after set-off for indemnification matters.

See Note 14, "Commitments and Contingencies."

GEODynamics' results of operations (reported as the Downhole Technologies segment) have been included in the Company's consolidated financial statements subsequent to the closing of the acquisition on January 12, 2018.

Falcon Acquisition

On February 28, 2018, the Company acquired Falcon, a full-service provider of flowback and well testing services for the separation and recovery of fluids, solid debris and proppant used during hydraulic fracturing operations.

Falcon provides additional scale and diversity to Completion Services' well testing operations in key shale plays in the United States.

The purchase price was $ 84.2 million (net of cash acquired).

The Falcon acquisition was funded by borrowings under the Company's Revolving Credit Facility.

Under the terms of the purchase agreement, the Company is entitled to indemnification in respect of certain matters occurring prior to the acquisition.

Falcon's results of operations have been included in the Company's consolidated financial statements and have been reported within the Completion Services business subsequent to the closing of the acquisition on February 28, 2018.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The GEODynamics and Falcon acquisitions have been accounted for using the acquisition method of accounting.

The following table summarizes the fair value of assets acquired and liabilities assumed in the acquisitions, as of their respective dates of acquisitions (in thousands):

Accounts receivable, net

Property, plant and equipment

Intangible assets

Customer relationships

Patents/Technology/Know-how

Noncompete agreements

Accounts payable and accrued liabilities

Deferred income taxes

Other liabilities

Total identifiable net assets

Total net assets

Consideration consists of:

Cash, net of cash acquired

Oil States common stock

Promissory note

Total consideration

____________________

In connection with the acquisition accounting for GEODynamics, the Company provided deferred taxes related to, among other items, fair value adjustments for acquired property, plant and equipment, intangible assets and U.S.

tax net operating loss carryforwards.

Goodwill recognized is primarily attributable to expected synergies resulting from combining the operations of the Company and GEODynamics, as well as intangible assets which did not qualify for separate recognition.

The amount of goodwill that is deductible for income tax purposes is not significant.

Goodwill recognized is primarily attributable to expected synergies resulting from combining the operations of the Company and Falcon, as well as intangible assets which did not qualify for separate recognition.

All goodwill is deductible for income tax purposes.

In accordance with FASB issued guidance, the 8.66 million shares of common stock issued by the Company were valued at $ 34.05 per share, the closing price of the Company's common stock on January 12, 2018.

The Company's common stock price was $ 23.40 per share on December 12, 2017, when it entered into the definitive agreement to purchase GEODynamics.

During the years ended December 31, 2018 and 2017, the Company expensed $ 3.6 million and $ 0.9 million , respectively, in transaction-related costs incurred in connection with the acquisitions of GEODynamics and Falcon, which are included within selling, general and administrative expense and within other operating (income) expense , net.

During the year ended December 31, 2018, the Company expensed $ 3.6 million in transaction-related costs incurred in connection with the acquisitions of GEODynamics and Falcon, which are included within selling, general and administrative expense and within other operating income, net.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Unaudited Pro Forma Financial Information

The following supplemental unaudited pro forma results of operations data for the Company gives pro forma effect to the consummation of the GEODynamics and Falcon acquisitions as if they had occurred on January 1, 2017.

The supplemental unaudited pro forma financial information for the Company was prepared based on historical financial information, adjusted to give pro forma effect to fair value adjustments on depreciation and amortization expense, interest expense, and related tax effects, among others.

The pro forma results for the year ended December 31, 2018 and 2017 reflect adjustments to exclude the after-tax impact of transaction costs of $ 2.8 million and $ 0.6 million , respectively.

The supplemental pro forma financial information is unaudited and may not reflect what the results of the combined operations would have been were the acquisitions to have occurred on January 1, 2017.

As such, it is presented for informational purposes only (in thousands, except per share amounts).

Unaudited Pro Forma Information

Year Ended December 31,

Diluted net loss per share

Diluted weighted average common shares outstanding

Other Acquisitions

During 2017, the Company invested a total of $ 12.9 million in cash in connection with the acquisitions discussed below.

In January 2017, the Company's Offshore/Manufactured Products segment acquired the intellectual property and assets of complementary product lines to its global crane manufacturing and service operations.

The acquisition included adding active heave compensation technology and knuckle-boom crane designs to its existing portfolio.

In April 2017, the Company's Offshore/Manufactured Products segment acquired assets and intellectual property that are complementary to its riser testing, inspection and repair service offerings.

This complementary technology allows the segment to provide automated inspection techniques either on board an offshore vessel or on the quayside, without the requirements to transport to a facility to remove the buoyancy materials.

Goodwill and Other Intangible Assets

The Company tests for impairment of goodwill at the "reporting unit" level using a fair value approach.

A reporting unit is the operating segment, or a business one level below that operating segment (the "component" level) if discrete financial information is prepared and regularly reviewed by management at the component level.

The Company has three reporting units – Completion Services, Downhole Technologies and Offshore/Manufactured Products – with goodwill balances totaling $ 646.7 million as of September 30, 2019.

Goodwill is allocated to each reporting unit based on acquisitions made by the Company.

If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded.

Changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019 are as follows (in thousands):

Well Site Services Downhole Technologies Offshore / Manufactured

Products Total

Services Drilling

Services Subtotal

Balance as of December 31, 2018

Goodwill $ 221,582 $ 22,767 $ 244,349 $ 357,502 $ 162,462 $ 764,313

Accumulated impairment losses ( 94,528 ) ( 22,767 ) ( 117,295 ) — — ( 117,295 )

127,054 — 127,054 357,502 162,462 647,018

Goodwill impairment (December 2019) — — — ( 165,000 ) — ( 165,000 )

Foreign currency translation — — — — 288 288

Balance as of December 31, 2019 $ 127,054 $ — $ 127,054 $ 192,502 $ 162,750 $ 482,306

Balance as of December 31, 2019

Goodwill $ 221,582 $ 22,767 $ 244,349 $ 357,502 $ 162,750 $ 764,601

Accumulated impairment losses ( 94,528 ) ( 22,767 ) ( 117,295 ) ( 165,000 ) — ( 282,295 )

127,054 — 127,054 192,502 162,750 482,306

Goodwill impairments (March 2020) ( 127,054 ) — ( 127,054 ) ( 192,502 ) ( 86,500 ) ( 406,056 )

Foreign currency translation — — — — 239 239

Balance as of December 31, 2020 $ — $ — $ — $ — $ 76,489 $ 76,489

Balance as of December 31, 2020

Goodwill $ 221,582 $ 22,767 $ 244,349 $ 357,502 $ 162,989 $ 764,840

Accumulated impairment losses ( 221,582 ) ( 22,767 ) ( 244,349 ) ( 357,502 ) ( 86,500 ) ( 688,351 )

$ — $ — $ — $ — $ 76,489 $ 76,489

As further discussed in Note 2, "Significant Accounting Policies," goodwill is allocated to each reporting unit based on acquisitions made by the Company and is assessed for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable.

December 2019 Impairment

The Company had three reporting units – Completion Services, Downhole Technologies and Offshore/Manufactured Products – whose goodwill balances totaled approximately $ 647 million as of September 30, 2019.

During the fourth quarter of 2019, U.S.

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Additionally, a number of other market indicators declined to levels not experienced in recent years.

Consistent with other oilfield service industry peers, the Company's stock price declined and its market capitalization was below the carrying value of stockholders' equity.

Given current market conditions, the Company reduced its near-term outlook for demand related to its short-cycle products and services in the U.S.

Consistent with most other oilfield service industry peers, the Company's stock price declined and its market capitalization was below the carrying value of stockholders' equity.

Given these market conditions, the Company reduced its near-term demand outlook for its short-cycle products and services in the U.S.

shale play regions.

This refined outlook was incorporated in the December 1, 2019 annual impairment assessment, which indicated that the fair value of the Downhole Technologies segment was less than its carrying amount.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

This refined outlook was incorporated in the December 1, 2019 annual impairment assessment.

Management utilizes, depending on circumstances, a combination of valuation methodologies including a market approach and an income approach, as well as guideline public company comparables.

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The fair value of the Company's reporting units were determined using significant unobservable inputs (a Level 3 fair value measurement).

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The income approach estimates the fair value of each reporting unit by discounting the Company's current forecast of future cash flows by its estimate of the discount rate (or expected return) that a market participant would require.

The starting point for each reporting unit's forecasted cash flows was based on the reporting unit's 2020 operating plan.

The market approach includes the use of comparative multiples to corroborate the discounted cash flow results.

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Significant assumptions used in the income approach include, among others, the estimated future net annual cash flows and discount rates for each reporting unit.

Management selected estimates used in the discounted cash flow projections using historical data as well as current and anticipated market conditions and estimated growth rates.

These estimates are based upon assumptions that consider published industry trends and market forecasts of commodity prices, rig count, well count and offshore/onshore drilling and completion spending, and are believed to be reasonable.

However, given the inherent estimation uncertainty in the assumptions underlying a discounted cash flow analysis, actual conditions may differ materially from the Company's estimates, which could result in additional impairment charges.

Management selected estimates used in the discounted cash flow projections using historical data as well as then-current and anticipated market conditions and estimated growth rates.

These estimates were based upon assumptions that considered published industry trends and market forecasts of commodity prices, rig count, well count and offshore/onshore drilling and completion spending, and were believed to be reasonable at the time.

Based on this quantitative assessment, the Company concluded that the goodwill amount recorded in its Downhole Technologies reporting unit was partially impaired and recognized a non-cash goodwill impairment charge of $ 165.0 million in the fourth quarter of 2019.

This impairment charge did not impact the Company's liquidity position, its debt covenants or cash flows.

Following the impairment charge, the Downhole Technologies reporting unit did not have a fair value substantially in excess of its carrying amount.

The fair value of the Completion Services and Offshore/Manufactured Products reporting units exceeded their carrying amounts by 24 % and 38 % respectively, as of December 1, 2019.

The discount rates used to value the Company's reporting units ranged between 12.5 % and 13.0 % .

The discount rates used to value the Company's reporting units as of December 1, 2019 ranged between 12.5 % and 13.0 %.

Holding all other assumptions and inputs used in each of the respective discounted cash flow analysis constant, a 50 basis point increase in the discount rate assumption would have increased the goodwill impairment charge by approximately $ 28 million.

The Company amortizes the cost of other intangible assets over their estimated useful lives unless such lives are deemed indefinite.

Amortizable intangible assets are reviewed for impairment if there are indicators of impairment based on undiscounted cash flows and, if impaired, are written down to fair value based on either appraised values or discounted cash flows.

As of December 31, 2019 and 2018 , no provisions for impairment of other intangible assets were required.

March 2020 Impairments

Given the significance of the March 2020 events described in Note 3, "Asset Impairments and Other Charges," the Company performed a quantitative assessment of goodwill for further impairment as of March 31, 2020.

This interim assessment indicated that the fair value of each of the reporting units was less than their respective carrying amounts due to, among other factors, the significant decline in the Company's stock price and that of its peers and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic.

In addition, the estimated returns required by market participants increased materially in the Company's March 31, 2020 assessment from the assessment performed as of December 1, 2019, resulting in higher discount rates used in the discounted cash flow analysis.

The valuation techniques used in the March 31, 2020 assessment were consistent with those used during the December 1, 2019 assessment, except for the Completion Services reporting unit where the income approach was used to estimate its fair value – with the market approach used only to validate the results in 2020.

The fair value of the Company's reporting units were determined using significant unobservable inputs (a Level 3 fair value measurement).

Significant assumptions and estimates used in the income approach include, among others, estimated future net annual cash flows and discount rates for each reporting unit, current and anticipated market conditions, estimated growth rates and historical data.

These estimates relied upon significant management judgment, particularly given the uncertainties regarding the COVID-19 pandemic and its impact on activity levels and commodity prices as well as future global economic growth.

Based on this quantitative assessment as of March 31, 2020, the Company concluded that goodwill recorded in the Completion Services and Downhole Technologies businesses was fully impaired while goodwill recorded in the Offshore/Manufactured Products business was partially impaired.

The Company therefore recognized non-cash goodwill impairment charges totaling $ 406.1 million in the first quarter of 2020, as presented in further detail in the table above.

The discount rates used to value the Company's reporting units as of March 31, 2020 ranged between 16.8 % and 18.5 %.

Holding all other assumptions and inputs used in the discounted cash flow analysis constant, a 50 basis point increase in the discount rate assumption for the Offshore/Manufactured Products reporting unit would have increased the goodwill impairment charge by approximately $ 10 million.

December 2020 Assessment

As of December 1, 2020, the Company had only one reporting unit – Offshore/Manufactured Products – with a goodwill balance of $ 76 million.

The Company performed its annual quantitative assessment of goodwill for impairment, which indicated that the fair value of the Offshore/Manufactured Products reporting unit was greater than its carrying amount and no additional provision for impairment was required.

The fair value of the Offshore/Manufactured Products reporting unit was determined using significant unobservable inputs (a Level 3 fair value measurement).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018 are as follows (in thousands):

Well Site Services

Downhole Technologies

Offshore / Manufactured

Balance as of December 31, 2017

Accumulated impairment losses

Goodwill acquired

Foreign currency translation

Balance as of December 31, 2018

Accumulated impairment losses

Goodwill impairment

Foreign currency translation

Balance as of December 31, 2019

Accumulated impairment losses

The following table presents the gross carrying amount and the related accumulated amortization for major intangible asset classes as of December 31, 2019 and 2018 (in thousands):

The valuation techniques used in the December 1, 2020 assessment were consistent with those used during the March 31, 2020 assessment.

The discount rate used to value the Offshore/Manufactured Products reporting unit as of December 1, 2020 was approximately 15 %.

The estimated returns required by market participants decreased in the Company's December 1, 2020 assessment from the assessment as of March 31, 2020, resulting in lower discount rate used in the discounted cash flow analysis.

Holding all other assumptions and inputs used in the discounted cash flow analysis constant, a 100 basis point increase in the discount rate assumption for the Offshore/Manufactured Products reporting unit would not result in a goodwill impairment.

The March 2020 and December 2019 impairment charges did not impact the Company's liquidity position, debt covenants or cash flows.

Other Intangible Assets

Net Carrying Amount

The following table presents the gross carrying amount and the related accumulated amortization for major intangible asset classes as of December 31, 2020 and 2019 (in thousands):

Other Intangible Assets Gross

Amount Accumulated

Amortization Net Carrying Amount Gross

Amount Accumulated

Amortization Net Carrying Amount

Customer relationships $ 168,288 $ 55,380 $ 112,908 $ 168,278 $ 44,296 $ 123,982

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Amortization expense is expected to total $ 20.6 million in 2021, $ 19.8 million in 2022, $ 16.8 million in 2023, $ 16.7 million in 2024 and $ 16.6 million in 2025.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2020 and 2019, no provisions for impairment of other intangible assets were required.

Long-term Debt

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Revolving credit facility (1)

1.50% convertible senior notes (2)

$ 18,408 $ 50,534

1.50 % convertible senior notes due February 2023 (2)

143,242 167,594

Promissory note 17,095 25,000

Other debt and finance lease obligations 4,792 5,041

Total debt 183,537 248,169

Current portion ( 17,778 ) ( 25,617 )

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(2) The outstanding principal amount of the 1.50 % convertible senior notes was $ 157.4 million and $ 192.3 million as of December 31, 2020 and 2019, respectively.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scheduled maturities of total debt as of December 31, 2020, are as follows (in thousands):

2021 $ 17,778

Thereafter 1,892

Asset-based Revolving Credit Facility

On February 10, 2021, the Company entered into a senior secured credit facility with certain lenders, which provides for a $ 125.0 million asset-based revolving credit facility (the "Asset-based Revolving Credit Facility") under which credit availability is subject to a borrowing base calculation.

Concurrent with entering into this facility, the Amended Credit Agreement (further discussed below) was terminated.

The Asset-based Revolving Credit Facility is governed by a credit agreement with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto (the "Asset-based Credit Agreement").

The Asset-based Credit Agreement matures on February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 17.5 million (excluding the unsecured promissory note to the Seller).

The Asset-based Credit Agreement provides funding based on a borrowing base calculation that includes eligible U.S.

customer accounts receivable and inventory and provides for a $ 50.0 million sub-limit for the issuance of letters of credit.

Borrowings under the Asset-based Credit Agreement are secured by a pledge of substantially all of the Company's domestic assets and the stock of certain foreign subsidiaries.

Borrowings under the Asset-based Credit Agreement bear interest at a rate equal to the London Interbank Offered Rate ("LIBOR") plus a margin of 2.75 % to 3.25 % and subject to a LIBOR floor rate of 0.50 %, or at a base rate plus a margin of 1.75 % to 2.25 %, in each case based on average borrowing availability.

The Company must also quarterly pay a commitment fee of 0.375 % to 0.50 % per annum, based on unused commitments under the Asset-based Credit Agreement.

The Asset-based Credit Agreement places restrictions on the Company's ability to incur additional indebtedness, grant liens on assets, pay dividends or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the Notes), engage in mergers, and other matters, in each case, subject to certain exceptions.

The Asset-based Credit Agreement contains customary default provisions, which, if triggered, could result in acceleration of all amounts then outstanding.

The Asset-based Credit Agreement also requires the Company to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 for specified periods of time in the event that availability under the Asset-based Credit Agreement is less than the greater of 15 % of the borrowing base and $ 14.1 million or if an event of default has occurred and is continuing.

Revolving Credit Facility

The Company's senior secured revolving credit facility, as amended (the "Revolving Credit Facility") is governed by a credit agreement with Wells Fargo Bank, N.A., as administrative agent for the lenders party thereto and collateral agent for the secured parties thereunder, and the lenders and other financial institutions from time to time party thereto, dated as of January 30, 2018, as amended and restated (the "Credit Agreement"), and matures on January 30, 2022.

The Credit Agreement governs the Company's Revolving Credit Facility.

The Revolving Credit Facility provides for $ 350 million in lender commitments with an option to increase the maximum borrowings to $ 500 million subject to additional lender commitments prior to its maturity on January 30, 2022.

Under the Revolving Credit Facility, $ 50 million is available for the issuance of letters of credit.

As of December 31, 2019 , the Company had $ 51.9 million of borrowings outstanding under the Credit Agreement and $ 19.3 million of outstanding letters of credit, leaving $ 131.1 million available to be drawn.

The total amount available to be drawn under the Revolving Credit Facility was less than the lender commitments as of December 31, 2019 , due to limits imposed by maintenance covenants in the Credit Agreement.

Amounts outstanding under the Revolving Credit Facility bear interest at LIBOR plus a margin of 1.75 % to 3.00 % , or at a base rate plus a margin of 0.75 % to 2.00 % , in each case based on a ratio of the Company's total net funded debt to consolidated EBITDA (as defined in the Credit Agreement).

The Company must also pay a quarterly commitment fee of 0.25 % to 0.50 % , based on the Company's ratio of total net funded debt to consolidated EBITDA, on the unused commitments under the Credit Agreement.

The Credit Agreement contains customary financial covenants and restrictions.

Specifically, the Company must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.0 to 1.0, a maximum senior secured leverage ratio, defined as the ratio of senior secured debt to consolidated EBITDA, of no greater than 2.25 to 1.0 and a total net leverage ratio, defined as the ratio of total net funded debt to consolidated EBITDA, of no greater than 3.75 to 1.0.

The financial covenants give pro forma effect to acquired businesses and the annualization of EBITDA for acquired businesses.

Until its termination on February 10, 2021, the Company's former senior secured revolving credit facility, (the "Revolving Credit Facility") was governed by an amended and restated credit agreement with Wells Fargo Bank, N.A., as administrative agent for the lenders party thereto and collateral agent for the secured parties thereunder, and the lenders and other financial institutions from time to time party thereto, dated as of January 30, 2018, as amended and restated (the "Credit Agreement"), which was scheduled to mature on January 30, 2022.

The Credit Agreement governed the Company's Revolving Credit Facility.

Prior to June 17, 2020, the Revolving Credit Facility provided for $ 350 million in lender commitments including $ 50 million available for the issuance of letters of credit.

On June 17, 2020, the Company entered into an omnibus amendment to the Credit Agreement (as amended, the "Amended Credit Agreement").

Lender commitments under the Amended Credit Agreement were reduced to $ 200.0 million in exchange for the suspension of the financial covenants described below from July 1, 2020 through March 30, 2021.

During the financial covenant suspension period, borrowing availability under the Revolving Credit Facility (as amended, the "Amended Revolving Credit Facility") was limited to 85 % of the lesser of (i) $ 200.0 million or (ii) a borrowing base, calculated monthly, equal to the

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Each of the factors considered in the calculation of these ratios are defined in the Credit Agreement.

Consolidated EBITDA and consolidated interest, as defined, exclude non-cash goodwill and fixed asset impairment charges, losses on extinguishment of debt, debt discount amortization, stock-based compensation expense and other non-cash charges.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of the Company's assets and the assets of its domestic subsidiaries.

The Company's obligations under the Credit Agreement are guaranteed by its significant domestic subsidiaries.

The Credit Agreement also contains negative covenants that limit the Company's ability to borrow additional funds, encumber assets, pay dividends, sell assets and enter into other significant transactions.

Under the Credit Agreement, the occurrence of specified change of control events involving the Company would constitute an event of default that would permit the banks to, among other things, accelerate the maturity of the facility and cause it to become immediately due and payable in full.

As of December 31, 2019 , the Company was in compliance with its debt covenants.

1.50 % Convertible Senior Notes

On January 30, 2018, the Company issued $ 200 million aggregate principal amount of its 1.50 % convertible senior notes due 2023 (the "Notes") pursuant to an indenture, dated as of January 30, 2018 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

sum of 70 % of the consolidated net book value of eligible receivables and 20 % of the consolidated net book value of eligible inventory (the "Borrowing Base").

As of December 31, 2020, the Company had $ 19.0 million of borrowings outstanding under the Credit Agreement and $ 29.2 million of outstanding letters of credit.

The total amount available to be drawn as of January 1, 2021 was $ 69.3 million, calculated based on 85 % of the Borrowing Base less outstanding borrowings and letters of credit.

Prior to June 17, 2020, amounts outstanding under the Revolving Credit Facility accrued interest at LIBOR plus a margin of 1.75 % to 3.00 %, or at a base rate plus a margin of 0.75 % to 2.00 %, in each case based on a ratio of the Company's total net funded debt to consolidated EBITDA (as defined in the Credit Agreement).

The Company was also required to pay a quarterly commitment fee of 0.25 % to 0.50 %, based on the Company's ratio of total net funded debt to consolidated EBITDA, on the unused commitments under the Credit Agreement.

Effective June 17, 2020, borrowings outstanding under the Amended Revolving Credit Facility accrued interest at LIBOR plus a margin of 2.50 % to 3.75 %, or at a base rate plus a margin of 1.50 % to 2.75 %, in each case based on a ratio of the Company's total net funded debt to consolidated EBITDA.

The Company also paid a quarterly commitment fee of 0.50 %, based on unused commitments under the Amended Credit Agreement.

The Company expensed $ 0.5 million of previously deferred financing costs in 2020, which is included in interest expense, net, as a result of the amendment of the Credit Agreement.

As of December 31, 2020, the Company was in compliance with its debt covenants under the Amended Credit Agreement.

1.50 % Convertible Senior Notes due February 2023

On January 30, 2018, the Company issued $ 200 million aggregate principal amount of the Notes pursuant to an indenture, dated as of January 30, 2018 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

Net proceeds from the Notes, after deducting issuance costs, were approximately $ 194 million, which was used by the Company to repay a portion of the outstanding borrowings under the Revolving Credit Facility during the first quarter of 2018.

During 2019, the Company repurchased $ 7.8 million in principal amount of the outstanding Notes for $ 6.7 million , which approximated the net carrying amount of the related liability.

The initial carrying amount of the Notes recorded in the consolidated balance sheet was less than the $ 200 million in principal amount of the Notes, in accordance with applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that does not have a conversion feature.

The Company recorded the value of the conversion feature as a debt discount, which is amortized as interest expense over the term of the Notes, with a similar amount allocated to additional paid-in capital.

As a result of this amortization, the interest expense the Company recognizes related to the Notes for accounting purposes is based on an effective interest rate of approximately 6.0 % , which is greater than the cash interest payments the Company is obligated to pay on the Notes.

Interest expense associated with the Notes for the years ended December 31, 2019 and 2018 was $ 10.2 million and $ 9.0 million , respectively, while the related contractual cash interest expense totaled $ 3.0 million and $ 2.8 million , respectively.

The following table presents the carrying amounts of the Notes in the consolidated balance sheets (in thousands):

During 2020, the Company purchased $ 34.9 million principal amount of the outstanding Notes for $ 20.1 million in cash.

The net carrying amount of the liability component of these Notes totaled $ 30.8 million.

In connection with extinguishment of these Notes, the Company recognized non-cash gains totaling $ 10.7 million during 2020, which is included within other income, net.

During 2019, the Company repurchased $ 7.8 million principal amount of the outstanding Notes for $ 6.7 million in cash, which approximated the net carrying amount of the related liability.

The initial carrying amount of the Notes recorded in the Company's consolidated balance sheet was less than the $ 200 million in principal amount of the Notes, in accordance with then-applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that does not have a conversion feature.

The Company recorded the value of the conversion feature as a debt discount, to be amortized as interest expense over the term of the Notes, with a similar amount allocated to additional paid-in capital.

As a result of this amortization, the interest expense the Company recognized related to the Notes for accounting purposes was based on an effective interest rate of approximately 6 %, which is greater than the cash interest payments the Company is obligated to pay on the Notes.

Interest expense associated with the Notes for the years ended December 31, 2020, 2019 and 2018 was $ 9.3 million, $ 10.2 million and $ 9.0 million, respectively, while the related contractual cash interest expense totaled $ 2.6 million, $ 3.0 million and $ 2.8 million, respectively.

The following table presents the carrying amounts of the Notes in the Company's consolidated balance sheets (in thousands):

Principal amount of the liability component $ 157,369 $ 192,250

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Net carrying amount of the equity component $ 25,683 $ 25,683

See Note 2, "Summary of Significant Accounting Policies," for discussion of the recent revision to accounting guidance for convertible instruments, which changed the Company's method of accounting for the Notes upon its adoption of the standard effective January 1, 2021.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Notes bear interest at a rate of 1.50 % per year until maturity.

Interest is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2018.

Interest is payable semi-annually in arrears on February 15 and August 15 of each year.

In addition, additional interest and special interest may accrue on the Notes under certain circumstances as described in the Indenture.

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The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the Indenture.

The Company's intent is to repay the principal amount of the Notes in cash and the conversion feature in shares of the Company's common stock.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's intent is to repay the principal amount of the Notes in cash and settle the conversion feature in shares of the Company's common stock.

Noteholders may convert their Notes, at their option only in the following circumstances:

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If specified change in control events involving the Company as defined in the Indenture occur, then noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest.

Additionally, the Notes contain certain events of default as set forth in the Indenture.

Additionally, the Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $ 40.0 million.

As of December 31, 2020, none of the conditions allowing holders of the Notes to convert, or requiring the Company to repurchase the Notes, had been met.

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In connection with the GEODynamics Acquisition, the Company issued a $ 25.0 million promissory note that bears interest at 2.50 % per annum and was scheduled to mature on July 12, 2019.

Payments due under the promissory note are subject to set-off, in part or in full, against certain indemnification claims related to matters occurring prior to the Company's acquisition of GEODynamics.

As more fully described in Note 14 , "Commitments and Contingencies," the Company has provided notice to and asserted indemnification claims against the seller of GEODynamics.

As a result, the maturity date of the note is extended until the resolution of these indemnity claims.

The Company expects that the amount ultimately paid in respect of such note will be reduced as a result of these indemnification claims.

The Company believes that payments due under the promissory note are subject to set-off, in full or in part, against certain claims related to matters occurring prior to the GEODynamics Acquisition.

The Company has provided notice to and asserted indemnification claims against the Seller, and the Seller has filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of the note.

The Company has incurred settlement costs and expenses of $ 7.9 million related to such indemnification claims, and believes that the maturity date of the note is extended until the resolution of these claims and expects that the amount ultimately paid in respect of such note will be reduced as a result of the indemnification claims.

Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.1 million as of December 31, 2020, which is its current best estimate of what is owed after set-off for indemnification matters.

See Note 14, "Commitments and Contingencies."

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating Leases

Operating Lease Assets

The following table presents the carry value of operating lease assets in the Company's consolidated sheets (in thousands):

Operating lease assets, net $ 33,140 $ 43,616

Operating lease asset additions are offset by a corresponding increase to operating lease liabilities and do not impact the consolidated statement of cash flows at commencement.

The non-cash effect of operating lease additions in 2020 and 2019 totaled $ 1.9 million and $ 53.7 million (inclusive of $ 47.7 million recognized in 2019 upon adoption of the revised lease accounting guidance), respectively.

Operating lease expense was $ 16.6 million, $ 17.9 million and $ 14.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The following table provides details regarding the components of operating lease expense based on the initial term of underlying agreements for the years ended December 31, 2020 and 2019 (in thousands):

Operating lease expense components:

Leases with initial term of greater than 12 months $ 12,564 $ 11,972

Leases with initial term of 12 months or less 4,024 5,906

Total operating lease expense $ 16,588 $ 17,878

During 2020, the Downhole Technologies segment made decisions to close certain lease facilities in connection with restructuring activities and recognized a non-cash impairment charge of $ 2.0 million to reduce the carrying value of the related operating lease assets to their estimated realizable value.

Operating Lease Liabilities

The following table provides the scheduled maturities of operating lease liabilities as of December 31, 2020 (in thousands):

Thereafter 13,787

Total lease payments 43,841

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Weighted-average discount rate 5.0 %

Operating lease expense was $ 17.9 million , $ 14.9 million and $ 9.1 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The following table provides details regarding the components of operating lease expense based on the initial term of underlying agreements for the year ended December 31, 2019 (in thousands):

Operating lease expense components:

Leases with initial term of greater than 12 months

Leases with initial term of 12 months or less

Total operating lease expense

The following table provides information regarding the non-cash impact of operating lease additions for the year ended December 31, 2019 (in thousands):

Operating lease assets obtained in exchange for operating lease liabilities:

Upon adoption of standard (January 1, 2019)

Subsequent to adoption of standard

Total non-cash operating lease additions

OIL STATES INTERNATIONAL, INC.

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Consolidated loss before income taxes for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in thousands):

2020 2019 2018

United States $ ( 534,452 ) $ ( 254,291 ) $ ( 29,424 )

The 2019 U.S.

loss before income taxes includes a non-cash goodwill impairment charge of $ 165.0 million and a non-cash fixed asset impairment charge of $ 33.7 million .

The goodwill impairment charge is not deductible for income tax purposes.

Components of income tax provision (benefit) for the years ended December 31, 2019 , 2018 and 2017 consisted of the following (in thousands):

Foreign 123 13,564 7,692

Total $ ( 534,329 ) $ ( 240,727 ) $ ( 21,732 )

The 2020 and 2019 U.S.

losses before income taxes included non-cash goodwill impairment charges of $ 406.1 million and $ 165.0 million, respectively, and non-cash fixed asset and lease impairment charges of $ 12.4 million and $ 33.7 million, respectively.

Regarding the goodwill impairment charges recognized in 2020 and 2019, approximately $ 313.1 million and $ 165.0 million, respectively, were not deductible for income tax purposes.

Components of income tax benefit for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in thousands):

2020 2019 2018

United States $ ( 44,399 ) $ 300 $ ( 5,549 )

state 235 292 1,534

Foreign 2,622 5,958 4,877

( 41,542 ) 6,550 862

United States ( 20,913 ) ( 13,972 ) ( 2,592 )

Total income tax provision (benefit)

state ( 1,798 ) ( 473 ) ( 95 )

Foreign ( 1,693 ) ( 1,024 ) ( 802 )

( 24,404 ) ( 15,469 ) ( 3,489 )

Total income tax benefit $ ( 65,946 ) $ ( 8,919 ) $ ( 2,627 )

A reconciliation of the U.S.

statutory tax benefit rate to the effective tax provision (benefit) rate for the years ended December 31, 2019 , 2018 and 2017 is as follows:

statutory tax benefit rate to the effective tax benefit rate for the years ended December 31, 2020, 2019 and 2018 is as follows:

2020 2019 2018

statutory tax benefit rate ( 21.0 ) % ( 21.0 ) % ( 21.0 ) %

Impairment of goodwill

Impairments of goodwill 12.3 14.4 —

Effect of CARES Act ( 3.1 ) — —

Effect of Tax Reform Legislation — — ( 26.1 )

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State income taxes, net of federal benefits ( 1.1 ) ( 0.4 ) ( 0.3 )

Effective tax provision (benefit) rate

Other, net — 1.3 2.5

Effective tax benefit rate ( 12.3 ) % ( 3.7 ) % ( 12.1 ) %

OIL STATES INTERNATIONAL, INC.

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Employee benefits 7,353 10,778

Inventory 9,696 7,725

Operating lease liabilities 6,697 8,171

Other 7,649 4,562

Gross deferred tax asset 90,103 106,368

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Convertible senior notes discount ( 2,790 ) ( 4,964 )

Operating lease assets ( 5,884 ) ( 8,047 )

Other ( 910 ) ( 1,669 )

Deferred tax liability ( 67,589 ) ( 107,934 )

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Net deferred tax liability $ ( 12,983 ) $ ( 37,394 )

On March 27, 2020, the CARES Act was signed into law.

In accordance with the rules and provisions under the CARES Act, the Company has filed carryback claims regarding U.S.

net operating losses generated in 2018 and 2019.

Prior to the enactment of the CARES Act, such tax losses could only be carried forward.

The Company recognized a discrete tax benefit of $ 16.4 million and received cash of $ 41.3 million related to these CARES Act carryback claims in 2020.

On December 22, 2017, the United States enacted Tax Reform Legislation which resulted in significant changes to U.S.

tax and related laws, including certain key federal income tax provisions applicable to multinational companies such as the Company.

tax and related laws, including certain key U.S.

federal income tax provisions applicable to multinational companies such as the Company.

These changes included, among others, the implementation of a territorial tax system with a one-time mandatory tax on undistributed foreign earnings of subsidiaries and a reduction in the U.S.

corporate income tax rate to 21% from 35% beginning in 2018.

As a result of these U.S.

tax law changes, during 2017 the Company recorded a net provisional charge of $ 28.2 million within income tax provision, consisting primarily of incremental income tax expense of $ 41.4 million related to the one-time, mandatory transition tax on the Company's unremitted foreign subsidiary earnings (the "Transition Tax") and a valuation allowance established against the Company's foreign tax credit carryforwards which were recorded as assets prior to Tax Reform Legislation, offset by a tax benefit of $ 13.2 million related the remeasurement of the Company's U.S.

net deferred tax liabilities based on the new 21% U.S.

corporate income tax rate.

The Company did not incur a material cash tax payable with respect to the Transition Tax.

During 2018, the Company adjusted its December 2017 provisional estimates with respect to Tax Reform Legislation resulting in an income tax benefit of $ 5.8 million.

The Company had $ 74.6 million of U.S.

federal net operating loss ("NOL") carryforwards as of December 31, 2019 , which can be carried forward indefinitely.

federal NOL carryforwards as of December 31, 2020, which can be carried forward indefinitely.

Approximately $ 37.6 million of the U.S.

federal NOL carryforwards are attributable to the acquired GEODynamics operations and are subject to certain limitation provisions.

The Company's state NOL carryforwards as of December 31, 2019 totaled $ 138.5 million , of which $ 15.0 million are attributable to the acquired GEODynamics operations and are subject to certain limitation provisions.

The Company's U.S.

state NOL carryforwards as of December 31, 2020 totaled $ 171.8 million, of which $ 13.9 million are attributable to the acquired GEODynamics operations and are subject to certain limitation provisions.

As of December 31, 2020, the Company had NOL carryforwards related to certain of its international operations totaling $ 35.0 million, of which $ 14.1 million can be carried forward indefinitely.

As of December 31, 2019 and 2018 , the Company had recorded valuation allowances of $ 15.5 million and $ 13.9 million , respectively, with respect to state and foreign NOL carryforwards.

As of December 31, 2020 and 2019, the Company had recorded valuation allowances of $ 18.4 million and $ 15.5 million, respectively, with respect to foreign and U.S.

state NOL carryforwards.

As of December 31, 2020, the Company's foreign tax credit carryforwards totaled $ 20.9 million.

These foreign tax credits will expire in varying amounts from 2022 to 2029.

As discussed above, as a result of the enactment of Tax Reform Legislation, the Company provided a full valuation allowance on these foreign tax credits in 2017 due to uncertainties with respect to its ability to utilize such credits in future periods.

As of December 31, 2020 and 2019, the Company had recorded valuation allowances of $ 17.1 million and $ 20.4 million, respectively, with respect to foreign tax credit carryforwards.

OIL STATES INTERNATIONAL, INC.

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The following table provides details with respect to changes in the number of shares of common stock, $ 0.01 par value, issued, held in treasury and outstanding during 2020 and 2019 (in thousands).

Treasury Stock

Issued Treasury Stock Outstanding

Shares of common stock - December 31, 2018 71,754 11,784 59,970

Acquisition of GEODynamics

Restricted stock awards, net of forfeitures 792 — 792

Shares withheld for taxes on vesting of restricted stock awards — 210 ( 210 )

Purchase of treasury stock — 51 ( 51 )

Shares of common stock - December 31, 2019 72,546 12,045 60,501

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Shares withheld for taxes on vesting of restricted stock awards — 239 ( 239 )

Purchase of treasury stock

Shares of common stock - December 31, 2020 73,289 12,284 61,005

As of December 31, 2020 and 2019, the Company had 25 million shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

The Company maintains a share repurchase program which was extended to July 29, 2020 by the Company's Board of Directors.

During 2019 , the Company repurchased 51 thousand shares of common stock at a total cost of $ 0.8 million .

The Company maintained a share repurchase program, which was allowed to expire on July 29, 2020.

During 2020, there were no repurchases of common stock under the program.

During 2019, the Company repurchased 51 thousand shares of common stock at a total cost of $ 0.8 million.

The amount remaining under the current share repurchase authorization as of December 31, 2019 was $ 119.8 million .

Subject to applicable securities laws, any purchases will be at such times and in such amounts as the Company deems appropriate.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss decreased from $ 71.4 million at December 31, 2018 to $ 67.7 million at December 31, 2019 , due primarily to changes in currency exchange rates.

Accumulated other comprehensive loss increased from $ 67.7 million at December 31, 2019 to $ 71.4 million at December 31, 2020, due primarily to changes in currency exchange rates.

Accumulated other comprehensive loss is primarily related to fluctuations in currency exchange rates against the U.S.

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dollar while the Brazilian real weakened by 23 % compared to the U.S.

dollar during the same period, contributing to other comprehensive income of $ 3.7 million .

During the year ended December 31, 2018 , the exchange rate of the British pound and the Brazilian real compared to the U.S.

dollar weakened by 6 % and 14 % , respectively, contributing to other comprehensive loss of $ 12.9 million .

dollar, contributing to other comprehensive loss of $ 3.6 million.

During the year ended December 31, 2019, the exchange rate of the British pound strengthened by 4 % compared to the U.S.

dollar while the Brazilian real weakened by 4 % compared to the U.S.

dollar during the same period, contributing to other comprehensive loss of $ 3.7 million.

OIL STATES INTERNATIONAL, INC.

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The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the years ended December 31, 2020, 2019 and 2018 (in thousands, except per share amounts):

Income attributable to unvested restricted stock awards

Numerator for basic net loss per share

2020 2019 2018

Net loss $ ( 468,383 ) $ ( 231,808 ) $ ( 19,105 )

Income attributable to unvested restricted stock awards — — —

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Net loss per share:

Basic $ ( 7.83 ) $ ( 3.90 ) $ ( 0.33 )

Diluted ( 7.83 ) ( 3.90 ) ( 0.33 )

The calculation of diluted net loss per share for the years ended December 31, 2020, 2019 and 2018 excluded 582 thousand shares, 659 thousand shares and 696 thousand shares, respectively, issuable pursuant to outstanding stock options and restricted stock awards, due to their antidilutive effect.

Additionally, shares issuable upon conversion of the 1.50 % convertible senior notes were not convertible and were, therefore, excluded for the year ended December 31, 2019 , due to their antidilutive effect.

Additionally, shares issuable upon conversion of the 1.50 % convertible senior notes were excluded for the years ended December 31, 2020, 2019 and 2018, due to their antidilutive effect.

Long-Term Incentive and Deferred Compensation Plans

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The fair value of performance-based restricted awards in 2017 was estimated using a Monte Carlo simulation model due to the inclusion of performance metrics that are not based solely on the performance of the Company's common stock.

The fair value of stock option awards was estimated using option-pricing models.

The resulting cost, net of estimated forfeitures, is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period.

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The performance objectives for performance-based stock units granted during 2020, 2019 and 2018 are based on the Company's EBITDA growth rate over a three-year period.

The performance objective for the 2017 awards is relative total stockholder return compared to a peer group of companies.

In the event the predefined targets are exceeded for any performance-based award, additional shares up to a maximum of 200 % of the target award may be granted.

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The following table presents changes in restricted stock awards and related information for the year ended December 31, 2020 (shares in thousands):

Service-based Restricted Stock

Performance-based Restricted Stock

Number of Shares

Weighted Average Grant Date Fair Value

Number of Shares

Weighted Average Grant Date Fair Value

Service-based Restricted Stock Performance-based Restricted Stock

Number of Shares Weighted Average Grant Date Fair Value

Total Number of Restricted Shares

Unvested, December 31, 2019 1,064 $ 22.84 248 1,312

Granted 687 10.01 180 $ 11.15 867

Performance adjustment (1)

Vested ( 595 ) 24.44 ( 125 ) 62.66 ( 720 )

Forfeited ( 69 ) 19.42 ( 17 ) 11.15 ( 85 )

Unvested, December 31, 2020 1,087 14.07 310 1,397

____________________

Reflects an adjustment to the number of shares to be issued upon vesting of the 2017 performance-based awards, resulting from a 167 % achievement level compared to target.

(1) Reflects an adjustment to the number of shares to be issued upon vesting of the 2018 performance-based awards.

The total fair value of restricted stock awards that vested in 2020, 2019 and 2018 was $ 14.5 million, $ 18.2 million and $ 19.4 million, respectively.

As of December 31, 2019 , there was $ 14.0 million of total compensation costs related to nonvested restricted stock awards not yet recognized, which is expected to be recognized over a weighted average vesting period of 1.5 years .

At December 31, 2019 , approximately 1.7 million shares were available for future grant under the Oil States International, Inc.

As of December 31, 2020, there was $ 8.6 million of total compensation costs related to unvested restricted stock awards not yet recognized, which is expected to be recognized over a weighted average vesting period of 1.5 years.

As of December 31, 2020, approximately 1.0 million shares were available for future grant under the Oil States International, Inc.

2018 Equity Participation Plan.

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No options were exercised in 2020, 2019 or 2018.

The following table presents the changes in stock options outstanding and related information for the year ended December 31, 2019 (shares in thousands):

Weighted Average Exercise Price (1)

Weighted Average Contractual Life (years)

Aggregate Intrinsic Value (thousands)

The following table presents the changes in stock options outstanding (all exercisable) and related information for the year ended December 31, 2020 (shares in thousands):

Options Weighted Average Exercise Price (1)

Weighted Average Contractual Life (years) Aggregate Intrinsic Value (thousands)

Outstanding Options, December 31, 2019 636 $ 48.81 3.0 $ —

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Outstanding Options, December 31, 2020 530 48.67 2.3 —

Exercisable Options, December 31, 2019

____________________

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Long-Term Cash Incentive Awards

During 2019 and 2018 , the Company issued conditional long-term cash incentive awards ("Cash Awards") of approximately $ 1.3 million each year, with the ultimate dollar amount to be awarded ranging from zero to a maximum of $ 2.7 million .

During 2020 and 2019, the Company issued conditional long-term cash incentive awards ("Cash Awards") of approximately $ 2.0 million and $ 1.4 million, respectively, with the ultimate dollar amount to be awarded ranging from zero to a maximum of $ 4.0 million for the 2020 Cash Award and from zero to a maximum of $ 2.7 million for the 2019 Cash Award.

The performance measure for these Cash Awards is relative total stockholder return compared to a peer group of companies measured over a three-year period.

The ultimate dollar amount to be awarded for the 2020 and 2019 Cash Awards is limited to their targeted award value ($ 2.0 million and $ 1.4 million, respectively) if the Company's total stockholder return is negative over the performance period.

The obligation related to the Cash Awards is classified as a liability and recognized over the vesting period.

The ultimate dollar amount to be awarded for the 2019 Cash Awards is limited to their targeted award value ( $ 1.3 million ) if the Company's total stockholder return is negative over the three-year performance period.

Deferred Compensation Plan

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Employee contributions to the Deferred Compensation Plan are matched by the Company at the same percentage as if the employee was a participant in the Company's 401(k) Retirement Plan and was not subject to the IRS limitations on match-eligible compensation.

In the second quarter of 2020, the Company suspended matching contributions to the Deferred Compensation Plan in response to the significant decline in activity levels due to the COVID-19 pandemic.

The Deferred Compensation Plan also permits the Company to make discretionary contributions to any employee's account, although none have been made to date.

Directors' contributions are not matched by the Company.

Since inception of the

Since inception of the plan, this

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

plan, this discretionary contribution provision has been limited to a matching of the participants' contributions on a basis equivalent to matching permitted under the Company's 401(k) Retirement Savings Plan.

discretionary contribution provision has been limited to a matching of the participants' contributions on a basis equivalent to matching permitted under the Company's 401(k) Retirement Savings Plan.

The vesting of contributions to the participants' accounts is also equivalent to the vesting requirements of the Company's 401(k) Retirement Savings Plan.

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The fair value of the investments was based on quoted market prices in active markets (a Level 1 fair value measurement).

Amounts payable to the plan participants at December 31, 2019 , including the fair value of the shares of the Company's common stock that are reflected as treasury stock, was $ 22.3 million and is classified as "Other noncurrent liabilities" in the consolidated balance sheet.

The Company accounts for the Deferred Compensation Plan in accordance with current accounting standards regarding the accounting for deferred compensation arrangements where amounts earned are held in a Rabbi Trust and invested.

Amounts payable to the plan participants as of December 31, 2020, including the fair value of the shares of the Company's common stock that are reflected as treasury stock, was $ 22.8 million and is classified as "Other noncurrent liabilities" in the Company's consolidated balance sheet.

Increases or decreases in the value of the Trust assets, exclusive of the shares of common stock of the Company held by the Trust, have been included as compensation adjustments in the consolidated statements of operations.

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The Company recognized expenses of $ 3.4 million, $ 9.5 million and $ 8.6 million, respectively, related to matching contributions under its various defined contribution plans during the years ended December 31, 2020, 2019 and 2018, respectively.

In the second quarter of 2020, the Company suspended matching contributions to the Company's 401(k) Retirement Savings Plan in response to the significant decline in activity levels due to the COVID-19 pandemic.

Commitments and Contingencies

Following the Company's acquisition of GEODynamics in January 2018, the Company determined that certain steel products historically imported by GEODynamics from China for use in its manufacturing process may potentially be subject to anti-dumping and countervailing duties based on recent clarifications/decisions rendered by the U.S.

Department of Commerce and the U.S.

Court of International Trade.

Following these findings, the Company commenced an internal review of this matter and ceased further purchases of these potentially affected Chinese products.

As part of the Company's internal review, the Company engaged trade counsel and decided to voluntarily disclose this matter to U.S.

Customs and Border Protection in September 2018.

In connection with the GEODynamics Acquisition, the seller agreed to indemnify and hold the Company harmless against certain claims related to matters such as this, and the Company has provided notice to and asserted indemnification claims against the seller.

Additionally, the Company is able to set-off payments due under the $ 25.0 million promissory note (see Note 7 , "Long-term Debt") issued to the seller of GEODynamics in respect of indemnification claims which could affect both the timing of payment and the amount due under the promissory note.

Such note was scheduled to mature on July 12, 2019, but, because the Company has provided notice to and asserted indemnification claims, the maturity date of the note is extended until the resolution of such claims.

The Company expects that the amount ultimately paid in respect of such note will be reduced as a result of these indemnification claims.

Additionally, in the ordinary course of conducting its business, the Company becomes involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state and local levels.

In past years, a number of lawsuits were filed in Federal Court, against the Company and/or one of its subsidiaries, by current and former employees alleging violations of the Fair Labor Standards Act (the "FLSA").

The Company reached a final settlement for the remaining individual plaintiffs' claims in 2018.

The Company is a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations.

Some of these claims relate to matters occurring prior to the acquisition of businesses (including GEODynamics and Falcon), and some relate to businesses the Company has sold.

In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other

The impact of the COVID-19 pandemic and related economic, business and market disruptions continues to evolve and its future effects remain uncertain.

The most direct and immediate impact that the Company has experienced and expects to continue to experience from the COVID-19 pandemic is decreased demand for its products and services due to lower activity levels by its customers resulting from the precipitous decline in crude oil prices.

The overall impact of the pandemic and oil price collapse on the Company and its customers will depend on numerous factors, many of which are beyond management's control and knowledge.

In response to public health concerns related to COVID-19, many federal, state, local and other authorities around the world have imposed mandatory regulations directing individuals to stay at home and have limited their ability to travel domestically or internationally.

In certain cases, when travel is permitted, a multi-week quarantine period is required before an individual can work in the area.

Additionally, rules and regulations regarding employer responsibilities continue to be promulgated.

Facility closures, quarantines, travel restrictions, and possible future workforce shortages may, among numerous other impacts, result in delays by the Company in fulfilling its existing contractual obligations to its customers, which could result in adverse financial consequences.

Additionally, the Company procures a variety of raw materials and component products, including steel, in the manufacture of its products from companies which may be impacted by similar challenges.

The Company continues to monitor the effect of COVID-19 on its employees, customers, critical suppliers and other stakeholders.

The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of the worldwide population, and the related impact on crude oil prices and the U.S.

and global economy and capital markets remains uncertain.

Following the GEODynamics Acquisition in January 2018, the Company determined that certain steel products historically imported by GEODynamics from China for use in its manufacturing process were potentially be subject to anti-dumping and countervailing duties.

Following an internal review, the Company voluntarily disclosed this matter to U.S.

Customs and Border Protection ("CBP") and, in December 2020, reached an agreement with CBP to settle this matter for $ 7.3 million.

The Company believes that the Seller is required to indemnify and hold the Company harmless against the amount of this and other

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cases, the Company has indemnified the buyers of businesses.

settlements and related costs of $ 7.9 million, and the Company has provided notice to and asserted indemnification claims against the Seller.

Additionally, the Company believes that its agreements with the Seller allow it to set-off such amounts against payments due under the $ 25.0 million promissory note and that, because the Company has asserted indemnification claims, the maturity date of the note is extended until the resolution of such claims.

Accordingly, the Company has reduced the carrying amount of such note in its consolidated balance sheet to $ 17.1 million as of December 31, 2020, which is the Company's current best estimate of what is owed after set-off for indemnification matters.

In August 2020, the Seller filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries in federal court alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of the note.

Additionally, the Seller alleged that it was entitled to approximately $ 19 million in U.S.

federal income tax carryback claims received by the Company under the provisions of the CARES Act.

On February 15, 2021, the Seller dismissed the federal lawsuit without prejudice and refiled in state court.

The Company denies the validity of these breach of contract claims and plans to vigorously defend against this lawsuit.

The Company is a party to various other pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations.

Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses the Company has sold.

In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other cases, the Company has indemnified the buyers of businesses.

Although the Company can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on the Company, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

Segments and Related Information

As further discussed in Note 5 , "Business Acquisitions," on January 12, 2018 the Company completed the GEODynamics Acquisition, which, beginning in the first quarter of 2018, is reported as a separate business segment under the name "Downhole Technologies." Following this acquisition, the Company operates through three reportable segments:

Well Site Services, Downhole Technologies and Offshore/Manufactured Products.

The Company's reportable segments represent strategic business units that offer different products and services.

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The Well Site Services segment provides a broad range of equipment and services that are used to drill for, establish and maintain the flow of oil and natural gas from a well throughout its life cycle.

In this segment, operations primarily include completion-focused equipment and services as well as land drilling services.

The Completion Services operations provide solutions to its customers using its completion tools and highly-trained personnel throughout its service offerings which include wireline support, frac stacks, isolations tools, extended reach tools, ball launchers, well testing and flowback operations, thru tubing activity and sand control.

Drilling Services provides land drilling services for shallow to medium depth wells in the United States.

In this segment, operations primarily include completion-focused equipment and services.

The segment provides solutions to its customers using its completion tools, drilling rigs and highly-trained personnel throughout its service offerings which include wireline support, frac stacks, isolation tools, extended reach tools, ball launchers, well testing and flowback operations, thru tubing activity, sand control and land drilling.

Separate business lines within the Well Site Services segment have been disclosed to provide additional detail with respect to its operations.

Following the closing of the GEODynamics Acquisition on January 12, 2018, the Downhole Technologies segment provides oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations.

The Downhole Technologies segment provides oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations.

This segment designs, manufactures and markets its consumable engineered products to oilfield service as well as exploration and production companies, which are completing complex wells with longer lateral lengths, increased frac stages and more perforation clusters to increase unconventional well productivity.

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The segment also offers a broad line of complementary, value-added services including specialty welding, fabrication, cladding and machining services, offshore installation services, and inspection and repair services.

Corporate information includes corporate expenses, such as those related to corporate governance, stock-based compensation and other infrastructure support, as well as impacts from corporate-wide decisions for which individual operating units are not evaluated.

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial information by business segment for each of the three years ended December 31, 2020, 2019 and 2018, is summarized in the following table (in thousands).

Depreciation and amortization

Operating income (loss)

Capital expenditures

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total

Well Site Services -

Completion Services (1)

$ 191,529 $ 52,922 $ ( 187,869 ) $ 6,823 $ 241,038

Drilling Services (2)

8,310 318 ( 5,519 ) 114 3,894

Total Well Site Services 199,839 53,240 ( 193,388 ) 6,937 244,932

Downhole Technologies (3)

97,936 22,649 ( 224,414 ) 3,230 280,096

Offshore/Manufactured Products (4)

340,300 21,881 ( 80,794 ) 2,913 547,962

Corporate — 773 ( 35,744 ) ( 331 ) 79,270

Total $ 638,075 $ 98,543 $ ( 534,340 ) $ 12,749 $ 1,152,260

Well Site Services -

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Drilling Services (5)

41,346 9,973 ( 43,419 ) 2,664 19,171

Total Well Site Services 432,094 78,413 ( 55,040 ) 33,470 478,249

Downhole Technologies (6)

182,314 21,247 ( 164,008 ) 13,808 529,677

Offshore/Manufactured Products 402,946 22,842 36,022 7,692 677,036

Corporate — 817 ( 45,154 ) 1,146 42,905

Total $ 1,017,354 $ 123,319 $ ( 228,180 ) $ 56,116 $ 1,727,867

Well Site Services -

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Offshore/Manufactured Products 394,066 23,207 38,914 13,797 683,285

Operating loss for the Drilling Services business includes a non-cash fixed asset impairment charge of $ 33.7 million .

See Note 4 , “Details of Selected Balance Sheet Accounts,” for further discussion.

Operating loss for the Downhole Technologies segment includes a non-cash goodwill impairment charge of $ 165.0 million .

See Note 6 , "Goodwill and Other Intangible Assets," for further discussion.

No customer individually accounted for greater than 10% of the Company's 2019 consolidated revenues or individually accounted for greater than 10% of the Company's consolidated accounts receivable at December 31, 2019 .

One customer accounted for 10 % of the Company's 2018 consolidated revenues and whose receivables individually accounted for 11 % of the Company's consolidated accounts receivable at December 31, 2018 .

Corporate — 905 ( 54,485 ) 1,046 40,766

Total $ 1,088,133 $ 123,530 $ ( 5,876 ) $ 88,024 $ 2,003,821

(1) Operating loss in 2020 included a non-cash inventory impairment charge of $ 9.0 million and a non-cash goodwill impairment charge of $ 127.1 million to reduce the carrying value of the Completion Services reporting unit to its estimated fair value and non-cash fixed asset impairment charges of $ 3.6 million to reduce the carrying value of certain of the unit's facilities to their estimated realizable value.

(2) Operating loss in 2020 included a non-cash fixed asset impairment charge of $ 5.2 million to further reduce the carrying value of the Drilling Services business's fixed assets to their estimated realizable value.

(3) Operating loss in 2020 included a non-cash inventory impairment charge of $ 5.9 million, non-cash fixed and operating lease impairment charges of $ 3.6 million to reduce the carrying of these assets to their estimated realizable value and a non-cash goodwill impairment charge of $ 192.5 million to reduce the carrying value of the Downhole Technologies reporting unit to its estimated fair value.

(4) Operating loss in 2020 included a non-cash inventory impairment charge of $ 16.2 million and a non-cash goodwill impairment charge of $ 86.5 million to reduce the carrying value of the Offshore/Manufactured Products reporting unit to its estimated fair value.

(5) In late 2019, the Company reduced the scope of its Drilling Services business (adjusting from 34 rigs to 9 rigs) due to weakness in customer demand for vertical drilling rigs in the U.S.

Operating loss for the Drilling Services business included a non-cash fixed asset impairment charge of $ 33.7 million.

(6) Operating loss in 2019 for the Downhole Technologies segment included a non-cash goodwill impairment charge of $ 165.0 million.

See Note 3, "Asset Impairments and Other Charges," Note 4, "Details of Selected Balance Sheet Accounts," Note 6, “Goodwill and Other Intangible Assets,” and Note 8, "Operating Leases," for further discussion of these and other charges.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

No customer individually accounted for greater than 10% of the Company's 2020 or 2019 consolidated revenues or individually accounted for greater than 10% of the Company's consolidated accounts receivable at December 31, 2020.

One customer accounted for 10 % of the Company's 2018 consolidated revenues.

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Operating income (loss) excludes equity in net income of unconsolidated affiliates, which is immaterial and not reported separately herein.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides supplemental disaggregated revenue from contracts with customers by business segment for the three years ended December 31, 2020, 2019 and 2018 (in thousands):

Well Site Services

Downhole Technologies

Offshore/Manufactured Products

Well Site Services Downhole Technologies Offshore/Manufactured Products

2020 2019 2018 2020 2019 2018 2020 2019 2018

Major revenue categories -

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Other products and services — — — — — — 126,661 120,519 128,805

$ 199,839 $ 432,094 $ 480,254 $ 97,936 $ 182,314 $ 213,813 $ 340,300 $ 402,946 $ 394,066

Financial information by geographic location for each of the three years ended December 31, 2020, 2019 and 2018, is summarized below (in thousands).

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Long-lived assets are attributable to countries based on the physical location of the operations and its operating assets and do not include intercompany receivable balances.

United States

United States United

Kingdom Singapore Other Total

Revenues from unaffiliated customers $ 463,382 $ 76,808 $ 57,513 $ 40,372 $ 638,075

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Related Party Transactions

GEODynamics historically leased certain land and facilities from an equity holder and employee of the Company, following its acquisition of GEODynamics.

In connection with the acquisition of GEODynamics, the Company assumed these leases.

GEODynamics historically leased certain land and facilities from an equity holder and former employee of the Company, following the GEODynamics Acquisition.

In connection with the GEODynamics Acquisition, the Company assumed these leases.

The Company exercised its option to purchase the most significant leased facility and associated land for approximately $ 5.4 million in September 2018.

Rent expense related to leases with this employee for the years ended December 31, 2019 and 2018 totaled $ 157 thousand and $ 330 thousand , respectively.

Additionally, GEODynamics purchased products from and sold products to a company in which this employee is an investor in 2019.

Purchases from this company were $ 1.3 million in 2019 .

Sales to this company by GEODynamics were $ 1.4 million in 2019 .

Rent expense related to leases with this former employee for the years ended December 31, 2020, 2019 and 2018 totaled $ 44 thousand, $ 157 thousand and $ 330 thousand, respectively.

Additionally, in 2020 and 2019, GEODynamics purchased products from and sold products to a company in which this former employee is an investor.

In 2020, sales to this company were $ 1.8 million.

In 2019, sales to this company were $ 1.4 million and purchases from this company were $ 1.3 million.

Valuation Allowances

Activity in the valuation accounts was as follows (in thousands):

Balance at Beginning of Period

Charged to Costs and Expenses

Deductions (net of recoveries)

Translation and Other, Net (1)

Balance at Beginning of Period Charged to Costs and Expenses Deductions (net of recoveries) Translation and Other, Net (1)

Balance at End of Period

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____________________

For the year ended December 31, 2018, amount presented within allowance for doubtful accounts receivables and excess or obsolete inventory includes $ 0.6 million and $ 3.3 million , respectively, related to the acquired GEODynamics operations.

(1) For the year ended December 31, 2018, amount presented within allowance for doubtful accounts receivables and excess or obsolete inventory included $ 0.6 million and $ 3.3 million, respectively, related to the acquired GEODynamics operations.

OIL STATES INTERNATIONAL, INC.

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The following table summarizes quarterly financial information for 2020 and 2019 (in thousands, except per share amounts):

Revenues $ 219,694 $ 146,245 $ 134,759 $ 137,377

Gross profit (5)

( 4,156 ) ( 6,301 ) ( 9,885 ) ( 1,159 )

Net loss ( 405,041 ) ( 24,626 ) ( 19,969 ) ( 18,747 )

Basic and diluted net loss per share ( 6.79 ) ( 0.41 ) ( 0.33 ) ( 0.31 )

Revenues $ 250,611 $ 264,685 $ 263,697 $ 238,361

Gross profit (5)

Net income (loss)

Basic and diluted net income (loss) per share

19,452 24,872 31,431 16,508

During the first quarter of 2019 , the Company recognized $ 1.0 million (pre-tax) of severance and downsizing charges.

In the first quarter of 2018 , the Company recognized $ 0.8 million (pre-tax) of severance and downsizing charges, $ 2.6 million (pre-tax) of acquisition-related expenses, $ 0.9 million (pre-tax) in legal fees incurred for patent defense and $ 0.7 million (pre-tax) of provision for FLSA claims settlements.

During the second quarter of 2019 , the Company recognized $ 1.3 million (pre-tax) of severance and downsizing charges.

During the third quarter of 2019 , the Company recognized a non-cash fixed asset impairment charge of $ 33.7 million (pre-tax) and $ 0.7 million (pre-tax) of severance and downsizing charges.

In the third quarter of 2018 , the Company recognized $ 3.5 million (pre-tax) in legal fees incurred for patent defense and recorded $ 2.6 million (pre-tax) of provision for FLSA claims settlements.

Additionally, in the third quarter of 2018 , the Company recognized a $ 5.8 million discrete net tax benefit resulting from the Tax Reform Legislation discussed in Note 9 , "Income Taxes."

During the fourth quarter of 2019 , the Company recognized a non-cash goodwill impairment charge of $ 165.0 million (pre- and after-tax) and $ 0.5 million (pre-tax) of severance and downsizing charges.

In the fourth quarter of 2018 , the Company recognized $ 2.4 million (pre-tax) in legal fees incurred for patent defense, $ 0.8 million (pre-tax) of severance and downsizing charges and $ 0.7 million (pre-tax) of acquisition related expenses.

Net loss ( 14,648 ) ( 9,740 ) ( 31,868 ) ( 175,552 )

Basic and diluted net loss per share ( 0.25 ) ( 0.16 ) ( 0.54 ) ( 2.95 )

____________________

(1) During the first quarter of 2020, the Company recognized non-cash goodwill impairment charges of $ 406.1 million (pre-tax), a non-cash fixed asset impairment charge of $ 5.2 million (pre-tax), non-cash inventory charges of $ 25.2 million (pre-tax) and severance and restructuring charges of $ 0.7 million (pre-tax).

During the first quarter of 2019, the Company recognized $ 1.0 million (pre-tax) of severance and restructuring charges.

(2) During the second quarter of 2020, the Company recognized a non-cash fixed asset impairment charge of $ 3.0 million (pre-tax) and severance and restructuring charges of $ 5.4 million (pre-tax).

During the second quarter of 2019, the Company recognized $ 1.3 million (pre-tax) of severance and restructuring charges.

(3) During the third quarter of 2020, the Company recognized a non-cash inventory impairment charge of $ 5.9 million (pre-tax) and severance charges of $ 0.3 million (pre-tax).

During the third quarter of 2019, the Company recognized a non-cash fixed asset impairment charge of $ 33.7 million (pre-tax) and $ 0.7 million (pre-tax) of severance and restructuring charges.

(4) During the fourth quarter of 2020, the Company recognized non-cash fixed asset and lease impairment charges of $ 4.3 million (pre-tax) and severance and restructuring charges of $ 2.7 million (pre-tax).

During the fourth quarter of 2019, the Company recognized a non-cash goodwill impairment charge of $ 165.0 million (pre-tax) and $ 0.6 million (pre-tax) of severance and restructuring charges.

(5) Gross profit is calculated as revenues less costs of products and services and segment level depreciation and amortization expense.

The calculation of gross profit excluded non-cash goodwill and fixed asset impairment charges totaling $ 411.3 million in the first quarter of 2020, a non-cash fixed asset impairment charge of $ 3.0 million in the second quarter of 2020 and non-cash fixed asset and lease impairment charges totaling $ 4.3 million in the fourth quarter of 2020.

The calculation of gross profit excluded the $ 33.7 million non-cash fixed asset impairment charge recognized in the third quarter of 2019 and the $ 165.0 million non-cash goodwill impairment charge recognized in the fourth quarter of 2019.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures