What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-22 compared with 2021-02-22 · 395 added, 512 removed, 864 unchanged (51% of the section changed)

26 unchanged sentences

There was no information required to be disclosed in a report on Form 8‑K during the fourth quarter of 2021 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

28 unchanged sentences

— 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.

— Description of Common Stock.

— Oil States International, Inc.

2018 Equity Participation Plan (incorporated by reference to Exhibit 4.5 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 17, 2018 (File No.

— Indenture, dated March 19, 2021, by and among Oil States International, Inc.

and Wells Fargo Bank, National Association, as trustee, relating to the 4.75% Convertible Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, as filed with the Commission on March 22, 2021 (File No.

— Description of Common Stock (incorporated by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on February 21, 2020) .

— Amended and Restated Equity Participation Plan of Oil States International, Inc.

(incorporated by reference to Exhibit 4.

4 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 28 , 2021 (File No.

333‑ 2565777 )).

— Second Amended and Restated 2001 Equity Participation Plan effective January 1, 2017 (incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10 K for the year ended December 31, 2016, as filed with the SEC on February 17, 2017 (File No.

— Form of Deferred Stock Award Election under the Company's Amended and Restated Equity Participation Plan.

— Form of Deferred Stock Grant Notice and Agreement under the Company's Amended and Restated Equity Participation Plan.

— Deferred Compensation Plan effective January 1, 2012 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10‑Q for the quarter ended March 31, 2013, as filed with the SEC on April 25, 2013 (File No.

4 unchanged sentences

— 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.

— Amendment No.

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.

— First Amendment to Credit Agreement , dated March 16, 2021, among Oil States International, Inc.

, as Borrower, the Lenders from time to t ime hereto, and Wells Fargo Bank, National Asso ciation 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 March 22, 2021 (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.

— Form of Director Stock Option Agreement under the Company's 2001 Equity Participation Plan (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10‑K for the year ended December 31, 2004, as filed with the SEC on March 2, 2005 (File No.

— Form of Employee Nonqualified Stock Option Agreement under the Company's 2018 Equity Participation Plan (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 17, 2018 (File No.

— Form of Employee Nonqualified Stock Option Agreement under the Company's Amended and Restated Equity Participation Plan (incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 28, 2021 (File No.

333‑2565777)).

— Form of Restricted Stock Agreement under the Company's 2018 Equity Participation Plan (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 17, 2018 (File No.

— Form of Restricted Stock Agreement under the Company's Amended and Restated Equity Participation Plan (incorporated by reference to Exhibit 4.

5 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 28, 2021 (File No.

333‑2565777)).

— Form of Deferred Stock Performance Award Agreement under the Company's Second Amended and Restated 2001 Equity Participation Plan (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10‑K for the year ended December 31, 2016, as filed with the SEC on February 17, 2017 (File No.

— Form of Performance Award Agreement under the Company's 2018 Equity Participation Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, as filed with the SEC on July 29, 2019 (File No.

— Form of Performance Award Agreement under the Company's Amended and Restated Equity Participation Plan (incorporated by reference to Exhibit 4.

8 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 28, 2021 (File No.

333‑2565777)).

— Form of Cash Award Agreement (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the SEC on April 29, 2021 (File No.

— Non-Employee Director Compensation Summary (incorporated by reference to Exhibit 10.21 to the Company's Report on Form 8‑K as filed with the SEC on November 15, 2006 (File No.

— Executive Agreement between Oil States International, Inc.

and named executive officer (Mr.

Cragg) (incorporated by reference to Exhibit 10.22 to the Company's Quarterly Report on Form 10‑Q for the quarter ended March 31, 2005, as filed with the SEC on April 29, 2005 (File No.

— Form of Non-Employee Director Restricted Stock Agreement under the Company's 2018 Equity Participation Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, as filed with the SEC on July 29, 2019 (File No.

— Form of Non-Employee Director Restricted Stock Agreement under the Company's Amended and Restated Equity Participation Plan (incorporated by reference to Exhibit 4.

6 to the Company's Registration Statement on Form S-8, as filed with the SEC on May 28, 2021 (File No.

333‑2565777)).

— Amendment to the Executive Agreement of Cindy Taylor, effective January 1, 2009 (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10‑K for the year ended December 31, 2008, as filed with the SEC on February 20, 2009 (File No.

— Amendment to the Executive Agreement of Christopher Cragg, effective January 1, 2009 (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10‑K for the year ended December 31, 2008, as filed with the SEC on February 20, 2009 (File No.

— Deferred Stock Performance Award Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8‑K, as filed with the SEC on February 23, 2012 (File No.

— Deferred Stock Agreement effective February 19, 2013 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10‑Q for the quarter ended March 31, 2013, as filed with the SEC on April 25, 2013 (File No.

— Executive Agreement between Oil States International, Inc.

2 unchanged sentences

— Executive Agreement between Oil States International, Inc.

and named executive officer (Lias J.

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.

— Executive Agreement between Oil States International, Inc.

and named executive officer (Philip S.

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(Principal Financial Officer)

Taylor Vice President, Controller and Chief Accounting Officer

Taylor Senior Vice President, Controller and Chief Accounting Officer

Taylor (Principal Accounting Officer)

James Nelson, Jr.

Denise Castillo-Rhodes

Christopher T.

3 unchanged sentences

Annual Report on Form 10-K

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID:

Report of Independent Registered Public Accounting Firm on the Company's Internal Control Over Financial Reporting 61

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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 - Offshore/Manufactured Products

Goodwill Impairment Assessment – Offshore/Manufactured Products

Description of the Matter

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.

At December 31, 2021, the Company's goodwill in the Offshore/Manufactured Products reporting unit was $76.4 million.

As described in Note 2 to the consolidated financial statements, goodwill is assessed for impairment annually (as of December 1) and when an event occurs or circumstances change to suggest that the carrying amount may not be recoverable.

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 impairment was required for the year ended December 31, 2021.

Auditing management's annual 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

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's goodwill impairment assessment process.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's annual goodwill impairment assessment process.

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.

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Products $ 299,293 $ 331,272 $ 483,359

Service 306,803 533,995 586,311

Services 273,868 306,803 533,995

573,161 638,075 1,017,354

3 unchanged sentences

Cost of revenues (exclusive of depreciation and amortization expense presented below) 470,396 561,805 802,589

Selling, general and administrative expenses 94,102 122,932 138,070

Selling, general and administrative expense 83,692 94,102 122,932

Depreciation and amortization expense 80,741 98,543 123,319

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Other comprehensive income (loss):

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

Release of currency translation adjustments on liquidation of an international operation 9,320 — —

Other currency translation adjustments ( 4,044 ) ( 3,750 ) 3,462

Other 78 111 189

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(In Thousands, Except Share Amounts)

2021 December 31, 2020

Current assets:

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(In Thousands)

Stock Additional Paid‑In Capital Retained Earnings Accumulated Other

Comprehensive Loss Treasury

Stock Total Stockholders' Equity

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders'

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

6 unchanged sentences

Stock options — 53 — — — 53

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

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

5 unchanged sentences

Restricted stock 7 8,424 — — — 8,431

Stock options — 53 — — — 53

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

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

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

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

Net loss — — ( 63,993 ) — — ( 63,993 )

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

Currency translation adjustment on intercompany advances — — — ( 5,815 ) — ( 5,815 )

Currency translation adjustments (excluding intercompany advances) — — — ( 1,096 ) — ( 1,096 )

Currency translation adjustments on intercompany advances — — — ( 2,948 ) — ( 2,948 )

Release of currency translation adjustments on liquidation of an international operation — — — 9,320 — 9,320

Other comprehensive income — — — 78 — 78

2 unchanged sentences

Surrender of stock to settle taxes on restricted stock awards — — — — ( 1,595 ) ( 1,595 )

Adoption of ASU 2020-06 — ( 25,683 ) 16,233 — — ( 9,450 )

Balance, December 31, 2021 $ 739 $ 1,105,135 $ 281,567 $ ( 66,031 ) $ ( 625,584 ) $ 695,826

16 unchanged sentences

Deferred income tax benefit ( 8,639 ) ( 24,404 ) ( 15,469 )

Release of foreign currency translation adjustments on liquidation of an international operation 9,320 — —

Gains on extinguishment of 1.50 % convertible senior notes

2 unchanged sentences

Other, net ( 511 ) 4,668 3,079

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

Changes in operating assets and liabilities:

Accounts receivable ( 24,407 ) 63,876 50,257

6 unchanged sentences

Capital expenditures ( 17,517 ) ( 12,749 ) ( 56,116 )

Proceeds from disposition of property, plant and equipment 9,601 6,046 3,659

Acquisitions of businesses, net of cash acquired — — ( 379,676 )

Proceeds from flood insurance claims — — 3,850

Proceeds from disposition of property and equipment 11,527 9,601 6,046

Other, net ( 636 ) ( 581 ) ( 1,912 )

8 unchanged sentences

Payment of financing costs ( 7,791 ) ( 1,041 ) ( 16 )

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

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

due to vesting of stock awards ( 1,595 ) ( 2,745 ) ( 3,698 )

Net cash flows used in financing activities ( 19,568 ) ( 65,017 ) ( 95,908 )

Effect of exchange rate changes on cash and cash equivalents ( 159 ) ( 491 ) ( 365 )

Net change in cash and cash equivalents ( 19,159 ) 63,518 ( 10,823 )

Cash and cash equivalents, beginning of year 8,493 19,316 53,459

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

Cash and cash equivalents, beginning of period 72,011 8,493 19,316

Cash and cash equivalents, end of period $ 52,852 $ 72,011 $ 8,493

Cash paid (received) for:

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All significant intercompany accounts and transactions between the Company and its consolidated subsidiaries have been eliminated in the accompanying Consolidated Financial Statements.

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 and industrial companies throughout the world.

The Company operates through three business segments – Offshore/Manufactured Products, Downhole Technologies and Well Site Services – and, through its subsidiaries, is a leading provider of specialty products and services to oil and gas and industrial companies around 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.

The Company operates through three business segments – Well Site Services, Downhole Technologies and Offshore/Manufactured Products.

On January 12, 2018, the Company acquired GEODynamics, Inc., ("GEODynamics" and the "GEODynamics Acquisition").

These acquired operations are reported as the Downhole Technologies segment.

On February 28, 2018, the Company acquired Falcon Flowback Services, LLC ("Falcon"), which was integrated into the Completion Services business unit.

There have been no other changes in reporting structure.

Summary of Significant Accounting Policies

1 unchanged sentence

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 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.

The 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 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 and 2021, the Company recorded asset impairments, severance and restructuring charges in response to these developments, as further discussed in Note 3, "Asset Impairments and Other Restructuring Items." 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 generally accepted accounting principles 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 such estimates include, but are not limited to, goodwill and long-lived asset impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax 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.

2 unchanged sentences

Fair Value of Financial Instruments

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.

The Company's financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments.

The Company believes that the carrying values of these instruments, other than the 2023 Notes (as defined below) and 2026 Notes (as defined below), on the accompanying consolidated balance sheets approximate their fair values.

The estimated fair value of the 2023 Notes as of December 31, 2021 was $ 24.3 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 26.0 million.

The estimated fair value of the 2026 Notes as of December 31, 2021 was $ 122.9 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 135.0 million.

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.

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

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

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.

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

identification method.

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.

6 unchanged sentences

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 accordance with current accounting guidance, the Company does not amortize goodwill, but rather assesses goodwill for impairment annually (as of December 1) 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.

3 unchanged sentences

As part of the process of assessing goodwill for potential impairment, the total market capitalization of the Company is compared to the sum of the fair values of all reporting units to assess the reasonableness of aggregated fair values.

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

If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded based on the excess of the carrying amount over the reporting unit's fair value.

As further discussed in Note 5, "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

3 unchanged sentences

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," 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.

As further discussed in Note 4, "Details of Selected Balance Sheet Accounts," and Note 7, "Operating Leases," the Company recognized non-cash asset impairment charges totaling $ 4.2 million, $ 12.4 million and $ 33.7 million in 2021, 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 additional impairment losses were recorded during the periods presented.

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.

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

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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.

13 unchanged sentences

Foreign Currency and Other Comprehensive Loss

Gains and losses resulting from balance sheet translation of international operations where the local currency is the functional currency are included as a component of accumulated other comprehensive loss within stockholders' equity and represent substantially all of the accumulated other comprehensive loss balance.

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, net" as incurred and were not material during the periods presented.

Currency Exchange Rate Risk

A portion of revenues, earnings and net investments in operations outside the United States are exposed to changes in currency exchange rates.

2 unchanged sentences

As of December 31, 2021 and 2020, the Company had no outstanding foreign currency forward purchase contracts.

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.

Revenue and Cost Recognition

4 unchanged sentences

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

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

right to payment for the product, transfer of legal title to the customer, transfer of physical possession of the product, transfer of risk and customer acceptance of the product.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenues from products and services transferred to customers over time accounted for approximately 65 %, 62 % and 66 % of consolidated revenues for the years ended December 31, 2021, 2020 and 2019, respectively.

22 unchanged sentences

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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

118, the Company recorded provisional estimates to reflect the effect of the Tax Reform Legislation on the Company's income tax assets and liabilities as of December 31, 2017.

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

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.

As of December 31, 2021, the Company's total investment in foreign subsidiaries is considered to be permanently reinvested outside of the United States.

The Company accounts for the U.S.

1 unchanged sentence

The Company records a valuation allowance in the reporting period when management believes that it is more likely than not that any deferred tax asset will not be realized.

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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

future income and assessment of future business and tax planning strategies.

During 2021, 2020 and 2019, the Company recorded valuation allowances primarily with respect to foreign and U.S.

1 unchanged sentence

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

The Company recognizes liabilities for tax expenses based on estimates of whether, and the extent to which, additional taxes will be due.

Uncertain tax positions are accounted for using a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

If management ultimately determines that payment of these amounts is unnecessary, the liability is reversed and a tax benefit is recognized during the period in which management determines that the liability is no longer necessary.

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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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

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

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

The fair value of share-based payments is estimated using the quoted market price of the Company's common stock and pricing models as of the date of grant as further discussed in Note 11, "Long-Term Incentive and Deferred Compensation Plans." 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.

In addition to service-based awards, the Company issues performance-based awards, which are conditional based upon Company performance and may vest in an amount that will depend on the Company's achievement of specified performance objectives.

In addition to service-based awards, the Company issues performance-based awards, which are conditional based upon Company performance.

Performance-based award expense, and ultimate vesting, is recognized in an amount that depends on the Company's probable achievement of specified performance objectives.

Some product sales in the Offshore/Manufactured Products segment are sold with an assurance warranty, generally ranging from 12 to 18 months.

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Upon the ultimate resolution of these uncertainties, future reported financial results will be impacted by the difference between the accruals and actual amounts paid in settlement.

Examples of areas with important estimates of future liabilities include duties, income taxes, litigation, insurance claims, warranty claims, contractual claims and obligations and discontinued operations.

Examples of areas with important estimates of future liabilities include duties, income taxes, litigation, insurance claims and contractual claims and obligations.

Recent Accounting Pronouncements

1 unchanged sentence

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 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.

In August 2020, the FASB issued updated guidance to simplify the accounting for convertible instruments and contracts in an entity's own equity (referred to as "ASU 2020-06").

This guidance eliminated the requirement that the carrying value of convertible debt instruments, such as the Company's 1.50 % convertible senior notes due 2023 (the "2023 Notes"), be allocated between debt and equity components.

As permitted under the standard, the Company adopted the 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 2023 Notes, a $ 2.7 million decrease in deferred income taxes and a $ 9.5 million net decrease in stockholders' equity.

The effective interest rate associated with the 2023 Notes after adoption decreased from approximately 6 % to approximately 2 %, which compares to the contractual interest rate of 1.50 %.

As further discussed in Note 6, "Long-term Debt," the Company issued $ 135.0 million principal amount of its 4.75 % convertible senior notes due 2026 (the "2026 Notes") on March 19, 2021, which have been accounted for in accordance with the provisions of ASU 2020-06.

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The cumulative impact of the adoption of the new standard was not material to the Company's consolidated financial statements.

Prior periods were not retrospectively adjusted.

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.

Asset Impairments and Other Restructuring Items

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

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

Impairments of:

Goodwill (Note 5)

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

Fixed assets (Note 4)

— — 33,697 — 33,697 7,076 26,621

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

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

As demand for most of the Company's products and services depends substantially on the level of capital expenditures by the oil and natural gas industry, these conditions caused rapid reductions to most of the Company's customers' drilling, completion and production activities and their related spending on the Company's products and services, particularly those supporting activities in the U.S.

shale play regions, until the supply/demand imbalances eased.

While the prices of and demand for crude oil have increased significantly since reaching record low levels in April 2020, uncertainty remains regarding the timing of demand recovery to pre-COVID-19 levels and the willingness of operators to invest in U.S.

land-based drilling, completion and production activities given regulatory pressures around environmental, social and governance considerations.

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

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

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

Impairments of:

7 unchanged sentences

16,249 5,921 8,981 — 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

Severance and restructuring costs 1,355 2,018 4,311 1,385 9,069 1,904 7,165

During 2021, the Company continued its restructuring efforts, closed additional facilities in the United States, liquidated an international operation and continued to assess the carrying value of its assets based on management actions and the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

Impairments of:

Goodwill (Note 6)

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

Fixed assets (Note 4)

$ — $ — $ 1,372 $ — $ 1,372 $ 289 $ 1,083

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

Operating lease assets (Note 7)

— — 2,794 — 2,794 587 2,207

Inventories (Note 4)

— 2,113 1,468 — 3,581 752 2,829

Severance and restructuring costs (1)

868 809 4,266 1,555 7,498 1,573 5,925

Release of foreign currency translation adjustments on liquidation of an international operation (Note 8)

— — — 9,320 9,320 — 9,320

____________________

(1) Includes recognition of $ 1.9 million in additional lease-related liabilities associated with the exit of a long-term lease supporting the Well Site Services segment.

OIL STATES INTERNATIONAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Additionally, during 2021, the Company recognized $ 8.8 million in aggregate reductions to payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") employee retention credit program.

Should, among other events and circumstances, global economic and industry conditions deteriorate, the COVID-19 pandemic business and market disruptions continue, the outlook for future operating results and cash flow for any of the Company's segments decline, income tax rates increase or regulations change, climate and environmental regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or management implement strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses in future periods.

Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts as of December 31, 2020 and 2019 is presented below (in thousands).

Additional information regarding selected balance sheet accounts as of December 31, 2021 and December 31, 2020 is presented below (in thousands):

Accounts receivable, net:

6 unchanged sentences

$ 186,080 $ 163,135

Allowance for doubtful accounts as a percentage of total accounts receivable 2 % 5 %

Deferred revenue (contract liabilities) $ 43,236 $ 43,384

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In the normal course of business, the Company also receives advance consideration from customers on many other short-term, smaller product and service contracts which is deferred and recognized as revenue once the related performance obligation is satisfied.

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 (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.

For the year ended December 31, 2021, the $ 3.9 million net increase in contract assets was primarily attributable to $ 38.9 million in revenue recognized during the period, which was partially offset by $ 35.0 million transferred to accounts receivable.

Deferred revenue (contract liabilities) decreased by $ 0.1 million in 2021, reflecting the recognition of $ 10.5 million of revenue that was deferred at the beginning of the period, offset by $ 10.4 million in new customer billings which were not recognized as revenue during the period.

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

6 unchanged sentences

$ 168,573 $ 170,376

$ 170,376 $ 221,342

____________________

During 2021, the Company recorded impairment charges totaling $ 3.6 million to reduce the carrying value of inventories to their estimated net realizable value based primarily on management's decisions to exit certain product and service offerings.

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

Useful Life (years) 2021 2020

Property, plant and equipment, net:

2 unchanged sentences

Machinery and equipment 2 – 28 247,285 239,986

Completion Services equipment 2 – 10 507,755 510,737

Completion-related rental equipment 1 – 10 510,816 507,755

Office furniture and equipment 1 – 10 33,155 35,767

5 unchanged sentences

For the years ended December 31, 2021, 2020 and 2019, depreciation expense was $ 60.1 million, $ 73.6 million and $ 96.5 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.

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

land market, particularly the Permian Basin.

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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.

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

During 2020, the Well Site Services segment recognized a non-cash impairment charge of $ 5.2 million to further reduce the carrying value of the segment's remaining drilling rigs to their estimated realizable value and $ 3.6 million to reduce the carrying value of certain other facilities to their estimated realizable value.

Also during 2020, the Downhole Technologies segment recognized a non-cash impairment charge of $ 1.6 million to reduce the carrying value of certain of the segment's fixed assets to their estimated realizable value.

During 2021, the Well Site Services segment recognized non-cash impairment charges of $ 1.4 million to reduce the carrying value of certain of the segment's fixed assets to their estimated realizable value.

OIL STATES INTERNATIONAL, INC.

3 unchanged sentences

Deferred compensation plan $ 23,348 $ 22,801

Deferred financing costs 2,674 —

Deferred income taxes 1,878 1,280

3 unchanged sentences

Accrued compensation $ 20,904 $ 18,463

Insurance liabilities 7,694 9,108

Accrued taxes, other than income taxes 5,130 7,307

Insurance liabilities 6,361 7,694

Accrued interest 3,629 2,202

2 unchanged sentences

$ 43,401 $ 44,504

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 $ 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 GEODynamics 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.

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

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.

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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets

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

Changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020 were as follows (in thousands):

Offshore / Manufactured

Products Downhole Technologies Well Site Services Total

Balance as of December 31, 2019

2 unchanged sentences

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

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

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

Foreign currency translation 239 — — 239

4 unchanged sentences

76,489 — — 76,489

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

Foreign currency translation ( 77 ) — — ( 77 )

4 unchanged sentences

$ 76,412 $ — $ — $ 76,412

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.

As further discussed in Note 2, "Summary of 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.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

During the fourth quarter of 2019, U.S.

8 unchanged sentences

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.

4 unchanged sentences

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.

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.

March 2020 Impairments

2 unchanged sentences

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).

1 unchanged sentence

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

OIL STATES INTERNATIONAL, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

December 2020 and 2021 Assessments

As of December 1, 2020 and 2021, the Company had only one reporting unit – Offshore/Manufactured Products – with a goodwill balance of $ 76 million.

The Company performed its annual quantitative assessments 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 impairment was required in either period.

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

The valuation techniques used in these annual assessments 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 and 2021 was 15.3 % and 14.5 %, respectively.

The estimated returns required by market participants decreased in the Company's 2020 and 2021 annual assessments from the assessment as of March 31, 2020 given improvements in the global economy and financial markets.

Other Intangible Assets

The following table presents the gross carrying amount and the related accumulated amortization for major intangible asset classes as of December 31, 2021 and 2020 (in thousands):

Other Intangible Assets Gross

Amount Accumulated

2 unchanged sentences

Amortization Net Carrying Amount

Other intangible assets:

Customer relationships $ 168,284 $ 66,734 $ 101,550 $ 168,288 $ 55,380 $ 112,908

2 unchanged sentences

Tradenames and other 53,708 15,179 38,529 53,708 11,965 41,743

Total other intangible assets $ 313,960 $ 108,211 $ 205,749 $ 325,030 $ 94,939 $ 230,091

$ 300,813 $ 115,064 $ 185,749 $ 313,960 $ 108,211 $ 205,749

Amortization expense was $ 20.6 million, $ 24.9 million and $ 26.8 million in the years ended December 31, 2021, 2020 and 2019, respectively.

The weighted average remaining amortization period for all intangible assets, other than goodwill, was 11.3 years as of December 31, 2021 and 12.4 years as of December 31, 2020.

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.

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

Amortization expense is expected to total approximately $ 20 million in 2022 and $ 17 million in 2023 through 2026.

As of December 31, 2021 and 2020, no impairment of other intangible assets was required.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-term Debt

As of December 31, 2021 and 2020, long-term debt consisted of the following (in thousands):

Revolving credit facility (1)

$ 18,408 $ 50,534

1.50 % convertible senior notes due February 2023 (2)

Revolving credit facilities (1)

2026 Notes (2)

2023 Notes (3)

25,802 143,242

5 unchanged sentences

____________________

(1) Presented net of $ 0.6 million and $ 1.4 million of unamortized debt issuance costs as of December 31, 2020 and 2019, respectively.

(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

(1) Presented net of $ 0.6 million of unamortized deferred financing costs as of December 31, 2020.

Unamortized deferred financing costs of $ 2.7 million as of December 31, 2021 are presented in Other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of December 31, 2021.

(3) The outstanding principal amount of the 2023 Notes was $ 26.0 million and $ 157.4 million as of December 31, 2021 and December 31, 2020, respectively.

Scheduled maturities of total debt as of December 31, 2021, are as follows (in thousands):

2021 $ 17,778

Thereafter 1,374

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.

Revolving Credit Facilities

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 "ABL Facility") under which credit availability is subject to a borrowing base calculation.

Concurrent with entering into this facility, the Company's former senior secured revolving credit facility (discussed below) was terminated.

On March 16, 2021, the Company entered into an amendment to the ABL Facility that permitted the Company to incur the indebtedness represented by the 2026 Notes.

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

The ABL 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 discussed below).

The ABL 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

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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

Unamortized discount 12,308 21,544

Unamortized issuance costs 1,819 3,112

Net carrying amount of the liability component $ 143,242 $ 167,594

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.

Borrowings under the ABL Agreement are secured by a pledge of substantially all of the Company's domestic assets (other than real property) and the stock of certain foreign subsidiaries.

Borrowings under the ABL 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.

Quarterly, the Company must also pay a commitment fee of 0.375 % to 0.50 % per annum, based on unused commitments under the ABL Agreement.

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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.

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

The Notes will mature on February 15, 2023, unless earlier repurchased, redeemed or converted.

The ABL 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 2023 Notes and the 2026 Notes), engage in mergers, and other matters, in each case, subject to certain exceptions.

The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of repayment of all amounts then outstanding.

The ABL 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 ABL Agreement is less than the greater of 15 % of the borrowing base and $ 14.1 million;

to complete certain specified transactions;

or if an event of default has occurred and is continuing.

As of December 31, 2021, the Company had $ 16.1 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of December 31, 2021 was $ 48.9 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of December 31, 2021, the Company was in compliance with its debt covenants under the ABL Agreement.

Former Revolving Credit Facility

Until its termination on February 10, 2021, the Company's former senior secured revolving credit facility was governed by a credit agreement which was scheduled to mature on January 30, 2022.

On June 17, 2020, the Company entered into an omnibus amendment to the credit agreement, under which lender commitments were reduced in exchange for the suspension of certain financial covenants through March 30, 2021.

The following provides a summary of the more significant provisions of the Company's former revolving credit facility.

Prior to June 17, 2020 From June 17, 2020 to February 10, 2021

Lender commitments $ 350 million $ 200 million

Interest rate on outstanding borrowings (1) :

LIBOR based borrowings LIBOR plus a margin of 1.75 % to 3.00 %

LIBOR plus a margin of 2.50 % to 3.75 %

Base-rate based borrowings Base rate plus a margin of 0.75 % to 2.00 %

Base rate plus a margin of 1.50 % to 2.75 %

Commitment fees (2)

0.25 % to 0.50 %

0.375 % to 0.50 %

____________________

(1) Based on the ratio of the Company's total net funded debt to consolidated EBITDA.

(2) Based on unused commitments under the credit agreement.

On March 19, 2021, the Company issued $ 135.0 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of March 19, 2021 (the "2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

Net proceeds from the 2026 Notes offering, after deducting issuance costs, totaled $ 130.6 million.

The Company used $ 120.0 million of the cash proceeds to purchase $ 125.0 million principal amount of the outstanding 2023 Notes at a discount, with the balance added to cash on-hand.

The 2026 Notes bear interest at a rate of 4.75 % per year and will mature on April 1, 2026, unless earlier repurchased, redeemed or converted.

Interest is payable semi-annually in arrears on April 1 and October 1 of each year.

Additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture.

The initial conversion rate is 95.3516 shares of the Company's common stock per $1,000 principal amount of 2026 Notes (equivalent to an initial conversion price of approximately $ 10.49 per share of common stock).

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(2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the "measurement period") in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the Company's common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the Indenture;

or (4) if the Company calls the Notes for redemption, or at any time from, and including, November 15, 2022 until the close of business on the second scheduled trading day immediately before the maturity date.

(3) upon the occurrence of

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

certain corporate events or distributions on the Company's common stock, as described in the 2026 Indenture;

or (4) if the Company calls the 2026 Notes for redemption, or at any time from, and including, January 1, 2026 until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company's election, based on the applicable conversion rate(s).

If the Company elects to deliver cash or a combination of cash and shares of common stock, then the consideration due upon conversion will be based on a defined observation period.

The Notes will be redeemable, in whole or in part, at the Company's option at any time, and from time to time, on or after February 15, 2021, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds 130 % of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

The 2026 Notes will be redeemable, in whole or in part, at the Company's option on or after April 6, 2024, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds 130 % of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

If specified change in control events involving the Company as defined in the 2026 Indenture occur, then noteholders may require the Company to repurchase their 2026 Notes at a cash repurchase price equal to the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest.

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As of December 31, 2021, none of the conditions allowing holders of the 2026 Notes to convert, or requiring the Company to repurchase the 2026 Notes, had been met.

Promissory Note

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.

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."

On January 30, 2018, the Company issued $ 200.0 million aggregate principal amount of the 2023 Notes, pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

The 2023 Notes bear interest at a rate of 1.50 % per year and will mature on February 15, 2023, unless earlier repurchased, redeemed or converted.

The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $ 44.89 per share of common stock).

The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2023 Indenture.

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.

The initial carrying amount of the 2023 Notes recorded in the consolidated balance sheet was less than their principal amount, in accordance with then-applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that did not have a conversion feature.

The Company recorded the value of the conversion feature as a debt discount, which was amortized as interest expense over the term of the 2023 Notes, with a similar amount allocated to additional paid-in capital.

As a result of this amortization (prior to the Company's adoption of ASU 2020-06 effective January 1, 2021), the interest expense recognized on the 2023 Notes for accounting purposes was based on an effective interest rate of approximately 6 %, which was greater than the cash interest the Company is obligated to pay.

See Note 2, "Summary of Significant Accounting Policies," for discussion of ASU 2020-06, which changed the Company's method of accounting for the 2023 Notes upon adoption.

The following table provides details with respect to the carrying amount of the 2023 Notes in the consolidated balance sheets as of December 31, 2021 and 2020 (in thousands):

Principal amount of the liability component $ 25,969 $ 157,369

Unamortized discount — 12,308

Unamortized issuance costs 167 1,819

Net carrying amount of the liability component $ 25,802 $ 143,242

Net carrying amount of the equity component n.a.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a summary of the Company's purchases of outstanding 2023 Notes during the years ended December 31, 2021, 2020 and 2019, with non-cash gains reported within Other income, net (in thousands):

Principal Amount Carrying Value of Liability Cash Paid Non-cash Gains Recognized

2021 $ 131,400 $ 129,974 $ 125,952 $ 4,022

2020 34,881 30,799 20,078 10,721

2019 7,750 6,724 6,724 —

Promissory Note

In connection with the 2018 acquisition of GEODynamics, Inc., (such company, "GEODynamics" and such acquisition, the "GEODynamics Acquisition"), the Company issued a $ 25.0 million promissory note that bears interest at 2.50 % per annum (subject to adjustment) and was scheduled to mature on July 12, 2019.

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

The Company has provided notice to and asserted indemnification claims against the seller of GEODynamics (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 such note.

The Company has incurred settlement costs and expenses of $ 7.5 million related to such indemnification claims, and believes that the maturity date of such note is extended until the resolution of such indemnity claims and that it is permitted to set-off the principal amount owed by the amount of such costs and expenses.

Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.5 million as of December 31, 2021, which is its current best estimate of what is owed after set-off for such indemnification matters.

See Note 14, "Commitments and Contingencies."

Operating Leases

Operating Lease Assets

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

The following table presents the carry value of operating lease assets in the Company's consolidated balance sheets as of December 31, 2021 and 2020 (in thousands):

Operating lease assets, net $ 25,388 $ 33,140

1 unchanged sentence

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, 2021, 2020 and 2019 (in thousands):

2021 2020 2019

Operating lease expense components:

2 unchanged sentences

Total operating lease expense $ 13,644 $ 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.

During 2020, the Downhole Technologies segment closed 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.

During 2021, the Well Site Services segment recognized non-cash operating lease asset impairment charges of $ 2.8 million associated with the closure of certain leased facilities.

During 2021, the segment also recorded an additional $ 1.9 million charge for other expenses associated with the exit of a leased facility.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating Lease Liabilities

8 unchanged sentences

Weighted-average discount rate 5.0 %

Stockholders' Equity

Common and Preferred Stock

The following table provides details with respect to the changes to the number of shares of common stock, $ 0.01 par value, outstanding during 2021 (in thousands):

Issued Treasury Stock Outstanding

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

Restricted stock awards, net of forfeitures 743 — 743

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

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

Restricted stock awards, net of forfeitures 611 — 611

Shares withheld for taxes on vesting of stock awards — 238 ( 238 )

Shares of common stock outstanding – December 31, 2021 73,900 12,522 61,378

As of December 31, 2021 and December 31, 2020, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, reported as a component of stockholders' equity, primarily relates to fluctuations in currency exchange rates against the U.S.

dollar as used to translate certain of the international operations of the Company's operating segments.

Accumulated other comprehensive loss decreased from $ 71.4 million at December 31, 2020 to $ 66.0 million at December 31, 2021, with the reclassification of $ 9.3 million in historical currency translation adjustments to net loss upon the liquidation of an international operation partially offset by the impact of changes in currency exchange rates during 2021.

For 2021 and 2020, currency translation adjustments recognized as a component of other comprehensive loss due to exchange rate movements were primarily attributable to the United Kingdom and Brazil.

During 2021, the exchange rate for the British pound and the Brazilian real compared to the U.S.

dollar weakened by 1 % and 7 %, respectively, contributing to other comprehensive loss of $ 4.0 million.

During 2020, the exchange rate for the British pound strengthened by 3 % compared to the U.S.

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

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

OIL STATES INTERNATIONAL, INC.

6 unchanged sentences

Total $ ( 73,334 ) $ ( 534,329 ) $ ( 240,727 )

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.

The 2021 foreign losses before income taxes included the reclassification of $ 9.3 million in historical currency translation adjustments upon the liquidation of an international operation, which were not deductible for income tax purposes.

Additionally, 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.

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

Components of income tax benefit for the years ended December 31, 2021, 2020 and 2019 consisted of the following (in thousands):

13 unchanged sentences

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

Release of foreign currency translation adjustments on liquidation of an international operation 2.7 — —

Impairments of goodwill — 12.3 14.4

Effect of CARES Act — ( 3.1 ) —

Effect of Tax Reform Legislation — — ( 26.1 )

Valuation allowance against tax assets 0.3 0.8 14.0

Non-deductible compensation 0.1 0.3 5.7

Other non-deductible expenses 0.1 0.2 12.6

Effect of foreign income taxed at different rates 0.1 0.7 0.5

State income taxes, net of federal benefits ( 1.6 ) ( 1.1 ) ( 0.4 )

Other, net — 1.3 2.5

Effect of foreign income taxed at different rates ( 0.4 ) 0.1 0.7

Valuation allowances against tax assets 3.3 0.3 0.8

Non-deductible compensation 1.1 0.1 0.3

Other non-deductible expenses, net 3.2 0.1 1.5

Effective tax benefit rate ( 12.7 ) % ( 12.3 ) % ( 3.7 ) %

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Employee benefits 5,456 7,353

Inventory 9,696 7,725

Inventories 10,192 9,696

Operating lease liabilities 5,355 6,697

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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 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.

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 $ 98.7 million of U.S.

5 unchanged sentences

As of December 31, 2021, the Company had NOL carryforwards related to certain of its international operations totaling $ 44.6 million, of which $ 15.0 million can be carried forward indefinitely.

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.

As of December 31, 2021 and 2020, the Company had recorded valuation allowances of $ 20.6 million and $ 18.4 million, respectively, primarily 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.

As of December 31, 2021 and 2020, the Company's foreign tax credit carryforwards totaled $ 20.4 million and $ 20.9 million, respectively.

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

As of December 31, 2021 and 2020, the Company had recorded valuation allowances of $ 17.1 million and $ 17.1 million, respectively, with respect to foreign tax credit carryforwards.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company files tax returns in the jurisdictions in which they are required.

4 unchanged sentences

Foreign subsidiary federal tax returns subsequent to 2012 are subject to audit by various foreign tax authorities.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The amount recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The total amount of unrecognized tax benefits as of December 31, 2020 and 2019 was nil .

The Company accrues interest and penalties related to unrecognized tax benefits as a component of the Company's provision for income taxes.

As of December 31, 2020 and 2019, the Company had no accrued interest expense or penalties.

Stockholders' Equity

Common and Preferred Stock

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).

Issued Treasury Stock Outstanding

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

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

Restricted stock awards, net of forfeitures 743 — 743

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

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 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.

Accumulated Other Comprehensive Loss

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.

dollar as used to translate certain international operations.

For 2020 and 2019, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil.

During the year ended December 31, 2020, the exchange rate of the British pound strengthened by 3 % compared to the U.S.

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

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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total amount of unrecognized tax benefits as of December 31, 2021 and 2020 was nil .

The Company accrues interest and penalties related to unrecognized tax benefits as a component of the Company's provision for income taxes.

As of December 31, 2021 and 2020, the Company had no accrued interest expense or penalties.

Net Loss Per Share

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Diluted ( 1.06 ) ( 7.83 ) ( 3.90 )

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 excluded for the years ended December 31, 2020, 2019 and 2018, due to their antidilutive effect.

Long-Term Incentive and Deferred Compensation Plans

The calculation of diluted net loss per share for the years ended December 31, 2021, 2020 and 2019 excluded 430 thousand shares, 582 thousand shares and 659 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

Additionally, shares issuable upon conversion of both the 2023 Notes and the 2026 Notes were excluded due to, among other factors, their antidilutive effect.

Long-Term Incentive Compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

The fair value of service-based restricted stock awards is determined by the quoted market price of the Company's common stock on the date of grant.

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 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.

Stock-based compensation pre-tax expense recognized in the years ended December 31, 2020, 2019 and 2018 totaled $ 8.4 million, $ 16.8 million and $ 22.6 million, respectively.

Stock-based compensation expense recognized during the years ended December 31, 2021, 2020 and 2019 totaled $ 7.9 million, $ 8.4 million and $ 16.8 million, respectively.

Restricted Stock Awards

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The number of performance-based restricted shares ultimately issued under the program is dependent upon achievement of predefined specific performance objectives generally measured over a three-year period.

The performance objective for performance-based awards granted in 2021 is the Company's cumulative EBITDA over a three-year period.

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

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.

Conversely, if actual performance falls below the predefined target, the number of shares vested is reduced.

If the actual performance falls below the threshold performance level, no restricted shares will vest.

Service-based restricted stock awards generally vest on a straight-line basis over their term, which is generally three to four years .

Conversely, if actual performance falls below the predefined target, the number of

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shares vested is reduced.

If the actual performance falls below the threshold performance level, no restricted shares will vest.

Service-based restricted stock awards generally vest on a straight-line basis over a three-year term.

The following table presents changes in restricted stock awards and related information for the year ended December 31, 2021 (shares in thousands):

Service-based Restricted Stock Performance-based Restricted Stock

Number of Shares Weighted Average Grant Date Fair Value

Total Number of Restricted Shares

Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Total Number of Restricted Shares

Unvested, December 31, 2020 1,087 $ 14.07 287 $ 12.13 1,374

Granted 601 6.77 245 6.84 846

Performance adjustment (1)

Vested ( 636 ) 14.69 ( 70 ) 6.55 ( 705 )

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Unvested, December 31, 2021 993 $ 9.29 358 $ 8.49 1,350

____________________

(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 2021, 2020 and 2019 was $ 9.3 million, $ 14.5 million and $ 18.2 million, respectively.

As of December 31, 2021, there was $ 5.8 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 1.4 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.

On May 11, 2021, the Company’s stockholders approved the Amended and Restated Equity Participation Plan of Oil States International, Inc.

(the "Plan"), which provided for a 4.5 million increase in the number of shares authorized for issuance under the plan.

As of December 31, 2021, approximately 5.0 million shares were available for future grant under the Plan.

Stock Options

The Company has not awarded stock options since 2015.

The fair value of historical option grants were estimated on the date of grant using a Black Scholes Merton option pricing model.

No options were exercised in 2020, 2019 or 2018.

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 $ —

Forfeited/Expired ( 105 ) 49.52

Outstanding Options, December 31, 2020 530 48.67 2.3 —

____________________

(1) Exercise prices ranged from $ 41.60 to $ 58.54 as of December 31, 2020.

No options were awarded or exercised in 2021, 2020 or 2019.

As of December 31, 2021, the Company had 388 thousand stock options outstanding and exercisable, with exercise prices ranging from $ 42.29 to $ 58.54 and a weighted-average contractual life of 1.4 years.

Long-Term Cash Incentive Awards

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.

During 2021 and 2020, the Company issued conditional long-term cash incentive awards ("Cash Awards") of $ 1.5 million and $ 2.0 million (adjusted for forfeitures), respectively, with the ultimate dollar amount to be awarded ranging from zero to a maximum of $ 3.1 million for the 2021 Cash Award and from zero to a maximum of $ 4.0 million for the 2020 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 2021 and 2020 Cash Awards is limited to their targeted award value ($ 1.5 million and $ 2.0 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.

Deferred Compensation Plan

The Company maintains a nonqualified deferred compensation plan (the "Deferred Compensation Plan") that permits eligible employees and directors to elect to defer the receipt of all or a portion of their directors' fees and/or salary and annual bonuses.

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 plan, this

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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.

The Deferred Compensation Plan does not have dollar limits on tax-deferred contributions.

The assets of the Deferred Compensation Plan are held in a Rabbi Trust (the "Trust") and, therefore, are available to satisfy the claims of the Company's creditors in the event of bankruptcy or insolvency of the Company.

Participants have the ability to direct the Plan Administrator to invest the assets in their individual accounts, including any discretionary contributions by the Company, in over 30 preapproved mutual funds held by the Trust which cover a variety of securities and mutual funds.

In addition, participants currently have the right to request that the Plan Administrator re-allocate the portfolio of investments (i.e.

cash or mutual funds) in the participants' individual accounts within the Trust.

Company contributions are in the form of cash.

Distributions from the plan are generally made upon the participants' termination as a director and/or employee, as applicable, of the Company.

Participants receive payments from the Deferred Compensation Plan in cash.

As of December 31, 2020, Trust assets totaled $ 22.8 million, the majority of which is classified as "Other noncurrent assets" in the Company's consolidated balance sheet.

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 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.

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 the Trust and invested.

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.

Increases or decreases in the fair value of the deferred compensation liability, including the shares of common stock of the Company held by the Trust, while recorded as treasury stock, are also included as compensation adjustments in the consolidated statements of operations.

The obligations, if any, related to the Cash Awards are classified as liabilities and recognized over the vesting period.

Retirement Plans

The Company sponsors defined contribution plans.

Defined Contribution Plans

The Company sponsors defined contribution plans, including a 401(k) retirement savings plan (the "401(k) Plan").

Participation in these plans is available to substantially all employees.

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

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

The Company recognized expenses of $ 0.8 million, $ 3.4 million and $ 9.5 million primarily related to matching contributions under its various defined contribution plans during the years ended December 31, 2021, 2020 and 2019, respectively.

Effective January 1, 2022, the Company resumed matching contributions to the Company's 401(k) Plan and Deferred Compensation Plan (defined below) – which were suspended in 2020 in response to the significant decline in industry activity levels due to the COVID-19 pandemic.

Deferred Compensation Plan

The Company also maintains a nonqualified deferred compensation plan (the "Deferred Compensation Plan") that permits eligible directors and employees to elect to defer the receipt of all or a portion of their directors' fees or salary and annual

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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.

The Deferred Compensation Plan permits the Company to make discretionary contributions to an employee's account.

Since inception of the plan, this discretionary contribution provision has been limited to a matching of the employee's contributions on a basis equivalent to matching permitted under the Company's 401(k) Plan but are not subject to the IRS limitations on match-eligible compensation.

The vesting of Company contributions to participant accounts is equivalent to the vesting requirements of the Company's 401(k) Plan.

Participants have the ability to direct the plan administrator to invest the assets in their individual accounts, including any discretionary contributions by the Company, in a selection of funds consistent with those in the Company's 401(k) Plan.

Distributions from the plan are generally made in cash upon the participants' termination as a director or employee of the Company.

As of December 31, 2021, Trust assets and amounts payable to plan participants totaled $ 23.3 million, which are classified as "Other noncurrent assets" and "Other noncurrent liabilities" in the Company's consolidated balance sheet.

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

Segments and Related Information

3 unchanged sentences

Accounting policies of the segments are the same as those described in the summary of significant accounting policies.

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.

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.

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.

The Offshore/Manufactured Products segment designs, manufactures and markets capital equipment utilized on floating production systems, subsea pipeline infrastructure, and offshore drilling rigs and vessels, along with short-cycle and other products.

3 unchanged sentences

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.

The Downhole Technologies segment, comprised of the GEODynamics business acquired in 2018, provides oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations.

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, downhole and extended reach activity, well testing and flowback operations, sand control and land drilling.

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.

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Financial information by business segment for each of the three years ended December 31, 2021, 2020 and 2019, is summarized in the following table (in thousands).

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

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

Offshore/Manufactured Products $ 298,729 $ 22,190 $ 15,447 $ 4,628 $ 541,346

Downhole Technologies (1)

103,492 17,591 ( 13,470 ) 901 267,468

Offshore/Manufactured Products (4)

Well Site Services (2)

170,940 40,152 ( 34,511 ) 10,977 200,874

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Total $ 573,161 $ 80,741 $ ( 64,792 ) $ 17,517 $ 1,085,748

Well Site Services -

Completion Services $ 390,748 $ 68,440 $ ( 11,621 ) $ 30,806 $ 459,078

Drilling Services (5)

Offshore/Manufactured Products (3)

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

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

Downhole Technologies (4)

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

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

Well Site Services (5)

199,839 53,240 ( 193,388 ) 6,937 244,932

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

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

Well Site Services -

Completion Services $ 411,019 $ 66,415 $ ( 7,647 ) $ 50,423 $ 523,235

Drilling Services 69,235 14,354 ( 9,363 ) 6,591 64,661

Total Well Site Services 480,254 80,769 ( 17,010 ) 57,014 587,896

Downhole Technologies 213,813 18,649 26,705 16,167 691,874

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

Downhole Technologies (6)

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

Well Site Services (7)

432,094 78,413 ( 55,040 ) 33,470 478,249

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

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

(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.

________________

(1) Operating loss included a non-cash inventory impairment charge of $ 2.1 million.

(2) Operating loss included non-cash inventory and fixed and operating lease asset impairment charges of $ 1.5 million and $ 4.2 million, respectively.

(3) Operating loss included non-cash goodwill and inventory impairment charges of $ 86.5 million and $ 16.2 million, respectively.

(4) Operating loss included non-cash goodwill, inventory and fixed and operating lease impairment charges of $ 192.5 million, $ 5.9 million and $ 3.6 million, respectively.

(5) Operating loss included non-cash goodwill, inventory and fixed asset impairment charges of $ 127.1 million, $ 9.0 million and $ 8.8 million, respectively.

(6) Operating loss included a non-cash goodwill impairment charge of $ 165.0 million.

(7) Operating loss included a non-cash fixed asset impairment charge of $ 33.7 million.

See Note 3, "Asset Impairments and Other Restructuring Items," and Note 4, "Details of Selected Balance Sheet Accounts," for further discussion of these and other charges and benefits.

No customer individually accounted for greater than 10% of the Company's 2021, 2020 or 2019 consolidated revenues or individually accounted for greater than 10% of the Company's consolidated accounts receivable at December 31, 2021.

The Company's Offshore/Manufactured Products segment has numerous facilities around the world that generate both product and service revenues, and it is common for the segment to provide both installation and other services for products it manufactures.

While substantially all depreciation and amortization expense for the Offshore/Manufactured Products segment relates to cost of revenues, it does not segregate or capture depreciation or amortization expense between product and service cost.

For the Downhole Technologies segment, substantially all depreciation and amortization expense relates to cost of products while substantially all depreciation and amortization expense for the Well Site Services segment relates to cost of services.

Operating income (loss) excludes equity in net income of unconsolidated affiliates, which is immaterial and not reported separately herein.

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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.

For the Company's Well Site Services segment, substantially all depreciation and amortization expense relates to cost of services while substantially all depreciation and amortization expense for the Downhole Technologies segment relates to cost of products.

The Offshore/Manufactured Products segment has numerous facilities around the world that generate both product and service revenues, and it is common for the segment to provide both installation and other services for products manufactured by this segment.

Operating income (loss) excludes equity in net income of unconsolidated affiliates, which is immaterial and not reported separately herein.

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

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Offshore/Manufactured Products Downhole Technologies Well Site Services

2021 2020 2019 2021 2020 2019 2021 2020 2019

7 unchanged sentences

$ 298,729 $ 340,300 $ 402,946 $ 103,492 $ 97,936 $ 182,314 $ 170,940 $ 199,839 $ 432,094

Financial information by geographic location for each of the three years ended December 31, 2020, 2019 and 2018, is summarized below (in thousands).

Financial information by geographic location for the years ended December 31, 2021, 2020 and 2019, is summarized below (in thousands).

Revenues are attributable to countries based on the location of the entity selling the products or performing the services and include export sales.

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

Kingdom Singapore Other Total

United States United Kingdom Singapore Other Total

Revenues from unaffiliated customers $ 447,002 $ 59,352 $ 35,886 $ 30,921 $ 573,161

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Related Party Transactions

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 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.

Commitments and Contingencies

During 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded.

However, the effects of the COVID-19 pandemic and related economic, business and market disruptions continue and the macro outlook remains uncertain.

The most direct impacts that the Company continues to experience are decreased pricing for its products and services due to the timing and rate of activity increases, the demand for crude oil, market pressures driving increased capital discipline by its customers and, to a lesser extent, supply chain disruptions.

While the prices of and demand for crude oil have recovered from the lows seen in the initial stages of the pandemic, further outbreaks or the emergence of new strains of the COVID-19 virus, such as the Omicron variant, could result in the reimposition of domestic and international regulations directing individuals to stay at home, limiting travel, requiring facility closures and imposing quarantines.

Widespread implementation of these or similar restrictions could result in commodity price volatility, reduced demand for the Company's products and services, as well as delays in or inability of the Company to fulfill its contractual obligations to customers, logistic constraints, increases in the Company's costs and workforce and raw material shortages.

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

The ultimate duration of the COVID-19 pandemic, along with resulting governmental restrictions and related impacts on the prices of and demand for crude oil, the global economy and capital markets remains uncertain.

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, 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.

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 settlements and related costs of $ 7.5 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 such note is extended until the resolution of such claims.

Accordingly, the Company reduced the carrying amount of such note in its consolidated balance sheet to $ 17.5 million as of December 31, 2021, which is the Company's current best estimate of what is owed after set-off for such indemnification matters, but without considering the outcome of the counterclaim described below.

Additionally, the Seller alleged that it was entitled to approximately $ 19.0 million in U.S.

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

On February 15, 2021, following the federal magistrate's report and recommendation that the federal district court dismiss the Seller's lawsuit for lack of federal jurisdiction, the Seller dismissed the federal lawsuit without prejudice and refiled its lawsuit in state court.

On September 20, 2021, the state court denied the Seller's motion for partial summary judgement.

In December 2021, the Company filed a counterclaim against the Seller alleging material misrepresentations and breaches of warranties by the Seller with respect to GEODynamics' liability for anti-dumping and countervailing duties.

The Company denies the validity of the breach of contract claims asserted by the Seller and is vigorously defending against this lawsuit.

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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 End of Period

Balance at Beginning of Period Charged to Costs and Expenses Deductions (net of recoveries) Translation and Other, Net Balance at End of Period

Year Ended December 31, 2021:

10 unchanged sentences

Valuation allowance on deferred tax assets 33,762 2,558 — ( 492 ) 35,828

____________________

(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.

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Quarterly Financial Information (Unaudited)

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)

19,452 24,872 31,431 16,508

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 )

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(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.

Amounts are calculated independently for each of the quarters presented.

Therefore, the sum of the quarterly amounts may not equal the total calculated for the year.

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