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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
____________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

Commission file number: 001-16337

OIL STATES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware76-0476605
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
Three Allen Center, 333 Clay Street
Suite 462077002
Houston, Texas(Zip Code)
(Address of principal executive offices)
(713) 652-0582
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareOISNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
As of April 23, 2021, the number of shares of common stock outstanding was 61,281,095.



OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 Page
Part I – FINANCIAL INFORMATION 
  
Item 1. Financial Statements: 
  
Condensed Consolidated Financial Statements 
Unaudited Consolidated Statements of Operations
Unaudited Consolidated Statements of Comprehensive Loss
Consolidated Balance Sheets
Unaudited Consolidated Statements of Stockholders' Equity
Unaudited Consolidated Statements of Cash Flows
Notes to Unaudited Condensed Consolidated Financial Statements23
  
Cautionary Statement Regarding Forward-Looking Statements
  
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
Item 4. Controls and Procedures
  
Part II – OTHER INFORMATION 
  
Item 1. Legal Proceedings
  
Item 1A. Risk Factors
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
Item 3. Defaults Upon Senior Securities
  
Item 4. Mine Safety Disclosures
  
Item 5. Other Information
  
Item 6. Exhibits
  
Signature Page
2


PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended March 31,
20212020
Revenues:
Products$61,445 $102,980 
Services64,144 116,714 
125,589 219,694 
Costs and expenses:
Product costs49,463 89,746 
Service costs52,847 107,856 
Cost of revenues (exclusive of depreciation and amortization expense presented below)102,310 197,602 
Selling, general and administrative expense21,225 26,124 
Depreciation and amortization expense21,520 26,409 
Impairments of goodwill 406,056 
Impairments of fixed assets650 5,198 
Other operating (income) expense, net(354)107 
145,351 661,496 
Operating loss(19,762)(441,802)
Interest expense, net(2,325)(3,504)
Other income, net3,960 774 
Loss before income taxes(18,127)(444,532)
Income tax benefit2,317 39,491 
Net loss$(15,810)$(405,041)
Net loss per share:
Basic$(0.26)$(6.79)
Diluted(0.26)(6.79)
Weighted average number of common shares outstanding:
Basic60,098 59,654 
Diluted60,098 59,654 
The accompanying notes are an integral part of these financial statements.
3


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands)
Three Months Ended March 31,
20212020
Net loss$(15,810)$(405,041)
Other comprehensive loss:
Currency translation adjustments(1,529)(14,791)
Comprehensive loss$(17,339)$(419,832)
The accompanying notes are an integral part of these financial statements.
4


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
March 31,
2021
December 31, 2020
(Unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$54,513 $72,011 
Accounts receivable, net173,512 163,135 
Inventories, net174,314 170,376 
Prepaid expenses and other current assets17,167 18,071 
Total current assets419,506 423,593 
Property, plant, and equipment, net365,605 383,562 
Operating lease assets, net32,122 33,140 
Goodwill, net76,550 76,489 
Other intangible assets, net200,685 205,749 
Other noncurrent assets29,951 29,727 
Total assets$1,124,419 $1,152,260 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt$17,789 $17,778 
Accounts payable50,010 46,433 
Accrued liabilities40,552 44,504 
Current operating lease liabilities7,162 7,620 
Income taxes payable2,398 2,413 
Deferred revenue43,207 43,384 
Total current liabilities161,118 162,132 
Long-term debt170,119 165,759 
Long-term operating lease liabilities28,565 29,166 
Deferred income taxes8,882 14,263 
Other noncurrent liabilities23,573 23,309 
Total liabilities392,257 394,629 
Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 73,790,059 shares and 73,288,976 shares issued, respectively
738 733 
Additional paid-in capital1,100,077 1,122,945 
Retained earnings329,750 329,327 
Accumulated other comprehensive loss(72,914)(71,385)
Treasury stock, at cost, 12,508,964 and 12,283,817 shares, respectively
(625,489)(623,989)
Total stockholders' equity732,162 757,631 
Total liabilities and stockholders' equity$1,124,419 $1,152,260 
The accompanying notes are an integral part of these financial statements.
5


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)
Three Months Ended March 31, 2021Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders'
Equity
Balance, December 31, 2020$733 $1,122,945 $329,327 $(71,385)$(623,989)$757,631 
Net loss— — (15,810)— — (15,810)
Currency translation adjustments (excluding intercompany advances)— — — 1,068 — 1,068 
Currency translation adjustments on intercompany advances— — — (2,597)— (2,597)
Stock-based compensation expense:
Restricted stock5 2,815 — — — 2,820 
Surrender of stock to settle taxes on restricted stock awards— — — — (1,500)(1,500)
Adoption of ASU 2020-06— (25,683)16,233 — — (9,450)
Balance, March 31, 2021$738 $1,100,077 $329,750 $(72,914)$(625,489)$732,162 

Three Months Ended March 31, 2020Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Stockholders' Equity
Balance, December 31, 2019$726 $1,114,521 $797,710 $(67,746)$(621,244)$1,223,967 
Net loss— — (405,041)— — (405,041)
Currency translation adjustments (excluding intercompany advances)— — — (8,706)— (8,706)
Currency translation adjustments on intercompany advances— — — (6,085)— (6,085)
Stock-based compensation expense:
Restricted stock6 1,156 — — — 1,162 
Surrender of stock to settle taxes on restricted stock awards— — — — (2,665)(2,665)
Balance, March 31, 2020$732 $1,115,677 $392,669 $(82,537)$(623,909)$802,632 
The accompanying notes are an integral part of these financial statements.
6


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended March 31,
20212020
Cash flows from operating activities:
Net loss$(15,810)$(405,041)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense21,520 26,409 
Impairments of goodwill 406,056 
Impairments of inventories 25,230 
Impairments of fixed assets650 5,198 
Stock-based compensation expense2,820 1,162 
Amortization of debt discount and deferred financing costs895 1,681 
Deferred income tax benefit(2,710)(40,832)
Gains on extinguishment of 1.50% convertible senior notes
(3,637) 
Gains on disposals of assets(307)(513)
Other, net285 771 
Changes in operating assets and liabilities:
Accounts receivable(10,701)4,617 
Inventories(3,890)(15,332)
Accounts payable and accrued liabilities1,648 (8,625)
Income taxes payable (1,100)
Deferred revenue(206)3,118 
Other operating assets and liabilities, net1,026 2,650 
Net cash flows provided by (used in) operating activities(8,417)5,449 
Cash flows from investing activities:
Capital expenditures(4,120)(5,881)
Proceeds from disposition of property, plant and equipment1,851 4,092 
Other, net(95)(256)
Net cash flows used in investing activities(2,364)(2,045)
Cash flows from financing activities:
Revolving credit facility borrowings12,220 72,173 
Revolving credit facility repayments(24,220)(52,404)
Issuance of 4.75% convertible senior notes
135,000  
Purchases of 1.50% convertible senior notes
(120,000)(4,737)
Other debt and finance lease activity, net(145)35 
Payment of financing costs(7,961) 
Shares added to treasury stock as a result of net share settlements
due to vesting of stock awards
(1,500)(2,665)
Net cash flows provided by (used in) financing activities(6,606)12,402 
Effect of exchange rate changes on cash and cash equivalents(111)9 
Net change in cash and cash equivalents(17,498)15,815 
Cash and cash equivalents, beginning of period72,011 8,493 
Cash and cash equivalents, end of period$54,513 $24,308 
Cash paid for:
Interest$1,842 $2,436 
Income taxes, net 577 2,499 
The accompanying notes are an integral part of these financial statements.
7

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

1.    Organization and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its subsidiaries (referred to in this report as "we" or the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission") pertaining to interim financial information. Certain information in footnote disclosures normally included with financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair statement of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year. Certain prior-year amounts in the Company's unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.
As further discussed in Note 13, "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 and the first quarter of 2021, the Company recorded asset impairments, severance and facility closure 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 condensed consolidated financial statements in conformity with GAAP 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 condensed 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.
The financial statements included in this report should be read in conjunction with the Company's audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2020.
2.    Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB"), which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.
In 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 an $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 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.
8

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
3.    Asset Impairments and Other Restructuring Items
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 in an effort to protect market share. 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. Consistent with 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.
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 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. While crude oil prices have recovered significantly since reaching record low levels in April 2020, with crude oil inventory levels moderating, there remains some uncertainty around the timing of demand recovery to pre-COVID-19 levels. These conditions have and may continue to result in adverse impacts on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and in certain instances, non-payment of amounts owed.
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, the Company recorded the following charges during the first quarter of 2020 (in thousands):
Offshore/
Manufactured Products
Downhole TechnologiesWell Site ServicesCorporatePre-tax TotalTaxAfter-tax Total
Impairments of:
Goodwill
$86,500 $192,502 $127,054 $ $406,056 $19,600 $386,456 
Fixed assets  5,198  5,198 1,092 4,106 
Inventories (Note 4)
16,249  8,981  25,230 4,736 20,494 
Severance and restructuring charges112  548  660 139 521 
During the first quarter of 2021, the Company further reduced its workforce, closed additional facilities in the United States and continued to assess the carrying value of its assets based on the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):
Offshore/ Manufactured ProductsDownhole TechnologiesWell Site ServicesCorporatePre-tax TotalTaxAfter-tax Total
Impairments of fixed assets$ $ $650 $ $650 $137 $513 
Severance and restructuring charges282 275 1,306 1,555 3,418 717 2,701 
Additionally, during the first quarter of 2021, the Company recognized an aggregate $4.8 million reduction of 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. The Company continues to evaluate additional benefits potentially available to it under the CARES Act.
9

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Goodwill
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. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded. The Company had three reporting units – Offshore/Manufactured Products, Downhole Technologies and Well Site Services – whose goodwill balances totaled $482.3 million as of December 31, 2019. Given the significance of the March 2020 events described above, the Company performed a quantitative assessment of goodwill for impairment as of March 31, 2020. This interim assessment indicated that the fair value of each of the reporting units was less than their respective carrying amounts due to, among other factors, the significant decline in the Company's stock price (and that of its peers) and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic. In addition, the estimated returns required by market participants increased materially in the Company's March 31, 2020 assessment from the assessment performed as of December 1, 2019, resulting in higher discount rates used in the discounted cash flow analysis.
Management utilizes, depending on circumstances, a combination of valuation methodologies including a market approach and an income approach, as well as guideline public company comparables. The fair values of the Company's reporting units were determined using significant unobservable inputs (Level 3 fair value measurements).
Based on this quantitative assessment as of March 31, 2020, the Company concluded that goodwill recorded in the Downhole Technologies and Well Site Services segments was fully impaired while goodwill recorded in the Offshore/Manufactured Products segment 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 Company performed its annual quantitative assessment of goodwill as of December 1, 2020, which indicated that the fair value of the Offshore/Manufactured Products segment was greater than its carrying amount and no additional provision for impairment was required. The Company's remaining goodwill within the segment totaled approximately $76.5 million as of March 31, 2021 and December 31, 2020.
Long-lived Assets
The Company also assesses the carrying value of long-lived assets, including property, plant and equipment, operating lease assets and other intangible assets held by each of its segments (reporting units). As a result of the March 2020 assessment, the Company concluded that certain drilling-related property and equipment held by the Well Site Services segment was impaired and recognized a non-cash fixed asset impairment charge of $5.2 million in the first quarter of 2020.
During the first quarter of 2021, the Well Site Services segment recognized non-cash fixed asset impairment charges of $0.7 million associated with the closure of additional facilities and other management actions.
Should, among other events and circumstances, global economic and industry conditions deteriorate, the COVID-19 pandemic business and market disruptions worsen, the outlook for future operating results and cash flow for any of the Company's reporting units decline, income tax rates increase or 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.
10

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
4.    Details of Selected Balance Sheet Accounts
Additional information regarding selected balance sheet accounts as of March 31, 2021 and December 31, 2020 is presented below (in thousands):
March 31,
2021
December 31,
2020
Accounts receivable, net:
Trade$123,129 $109,294 
Unbilled revenue21,262 23,173 
Contract assets29,975 35,870 
Other7,691 3,102 
Total accounts receivable182,057 171,439 
Allowance for doubtful accounts(8,545)(8,304)
$173,512 $163,135 
Allowance for doubtful accounts as a percentage of total accounts receivable5 %5 %
March 31,
2021
December 31,
2020
Deferred revenue (contract liabilities)$43,207 $43,384 
For the three months ended March 31, 2021, the $5.9 million net decrease in contract assets was primarily attributable to $16.8 million transferred to accounts receivable, which was partially offset by $10.9 million in revenue recognized during the period. Deferred revenue (contract liabilities) decreased by $0.2 million in the first quarter of 2021, primarily reflecting the recognition of $3.0 million of revenue that was deferred at the beginning of the period, substantially offset by $2.8 million in new customer billings which were not recognized as revenue during the period.
As of March 31, 2021, accounts receivable, net in the United States and the United Kingdom represented 70% and 18%, respectively, of the total. No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of March 31, 2021.
The following provides a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2021 and 2020 (in thousands):
Three Months Ended March 31,
20212020
Allowance for doubtful accounts – January 1$8,304 $8,745 
Provisions214 589 
Write-offs(116)(1,785)
Other143 1,137 
Allowance for doubtful accounts – March 31$8,545 $8,686 
March 31,
2021
December 31,
2020
Inventories, net:
Finished goods and purchased products$90,664 $88,634 
Work in process31,222 27,063 
Raw materials92,137 95,410 
Total inventories214,023 211,107 
Allowance for excess or obsolete inventory(39,709)(40,731)
$174,314 $170,376 
The Company recorded impairment charges totaling $25.2 million in the first quarter of 2020 to reduce the carrying value of inventories to their estimated net realizable value following the March 2020 decline in crude oil prices, which reduced the near-term utility of certain goods within the Offshore/Manufactured Products and Well Site Services segments.
11

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
March 31,
2021
December 31,
2020
Property, plant and equipment, net:
Land$33,913 $34,968 
Buildings and leasehold improvements264,513 267,072 
Machinery and equipment241,734 239,986 
Completion-related rental equipment505,521 507,755 
Office furniture and equipment32,260 35,767 
Vehicles80,751 81,607 
Construction in progress4,352 7,207 
Total property, plant and equipment1,163,044 1,174,362 
Accumulated depreciation(797,439)(790,800)
$365,605 $383,562 
For the three months ended March 31, 2021 and 2020, depreciation expense was $16.4 million and $20.1 million, respectively.
March 31, 2021December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying AmountGross
Carrying
Amount
Accumulated
Amortization
Net Carrying Amount
Other intangible assets:
Customer relationships$168,290 $58,158 $110,132 $168,288 $55,380 $112,908 
Patents/Technology/Know-how78,293 28,832 49,461 75,920 26,124 49,796 
Noncompete agreements   16,044 14,742 1,302 
Tradenames and other53,708 12,616 41,092 53,708 11,965 41,743 
$300,291 $99,606 $200,685 $313,960 $108,211 $205,749 
For the three months ended March 31, 2021 and 2020, amortization expense was $5.2 million and $6.3 million, respectively.
March 31,
2021
December 31,
2020
Other noncurrent assets:
Deferred compensation plan$23,053 $22,801 
Deferred income taxes1,359 1,280 
Other5,539 5,646 
$29,951 $29,727 
March 31,
2021
December 31,
2020
Accrued liabilities:
Accrued compensation$14,066 $18,463 
Insurance liabilities6,579 7,694 
Accrued taxes, other than income taxes9,685 7,307 
Accrued interest1,788 2,202 
Accrued commissions1,333 1,416 
Other7,101 7,422 
$40,552 $44,504 
12

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
5.    Net Loss Per Share
The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the three months ended March 31, 2021 and 2020 (in thousands, except per share amounts):
Three Months Ended
March 31,
20212020
Numerators:
Net loss$(15,810)$(405,041)
Less: Income attributable to unvested restricted stock awards  
Numerator for basic net loss per share(15,810)(405,041)
Effect of dilutive securities:
Unvested restricted stock awards  
Numerator for diluted net loss per share$(15,810)$(405,041)
Denominators:
Weighted average number of common shares outstanding61,169 60,770 
Less: Weighted average number of unvested restricted stock awards outstanding(1,071)(1,116)
Denominator for basic and diluted net loss per share60,098 59,654 
Net loss per share:
Basic$(0.26)$(6.79)
Diluted(0.26)(6.79)
The calculation of diluted net loss per share for the three months ended March 31, 2021 and 2020 excluded 500 thousand shares and 629 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.
6.    Long-term Debt
As of March 31, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):
March 31,
2021
December 31,
2020
Revolving credit facilities(1)
$3,807 $18,408 
2023 Notes(2)
32,022 143,242 
2026 Notes(3)
130,336  
Promissory note17,095 17,095 
Other debt and finance lease obligations4,648 4,792 
Total debt187,908 183,537 
Less: Current portion(17,789)(17,778)
Total long-term debt$170,119 $165,759 
____________________
(1)Presented net of $3.2 million and $0.6 million of unamortized debt issuance costs as of March 31, 2021 and December 31, 2020, respectively.
(2)The outstanding principal amount of the 2023 Notes was $32.4 million and $157.4 million as of March 31, 2021 and December 31, 2020, respectively.
(3)The outstanding principal amount of the 2026 Notes was $135.0 million as of March 31, 2021.
13

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Revolving Credit Facilities
ABL 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 "ABL Facility") under which credit availability is subject to a borrowing base calculation. Concurrent with entering into this facility, the Former 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 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. The Company must also pay a quarterly commitment fee of 0.375% to 0.50% per annum, based on unused commitments under the ABL Agreement.
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 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 or if an event of default has occurred and is continuing.
As of March 31, 2021, the Company had $7.0 million of borrowings outstanding under the ABL Agreement and $19.0 million of outstanding letters of credit. The total amount available to be drawn as of March 31, 2021 was $40.6 million, calculated based on the current borrowing base less outstanding borrowings and letters of credit.
As of March 31, 2021, the Company was in compliance with its debt covenants under the ABL Agreement.
Former Facility
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.
14

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
The following provides a summary of the more significant provisions of the Company's former revolving credit facility.
Prior to June 17, 2020From 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.
2026 Notes
On March 19, 2021, the Company issued $135 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 $130.3 million. The Company used $120.0 million of the cash proceeds to purchase $125.0 million principal amount of the outstanding 2023 Notes, with the balance added to cash on-hand.
The 2026 Notes bear interest at a rate of 4.75% per year until maturity. Interest is payable semi-annually in arrears on April 1 and October 1 of each year. In addition, additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture. The 2026 Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted. 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). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2026 Indenture. The Company's intent is to repay the principal amount of the 2026 Notes in cash and settle the conversion feature in shares of the Company's common stock.
Noteholders may convert their 2026 Notes, at their option, only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (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 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 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. Additionally, the 2026 Indenture contains certain events of default,
15

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
including certain defaults by the Company with respect to other indebtedness of at least $40.0 million. As of March 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.
2023 Notes
On January 30, 2018, the Company issued $200 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.
During the three months ended March 31, 2021, the Company purchased $125.0 million principal amount ($123.6 million net carrying amount) of the outstanding 2023 Notes for $120.0 million in cash. In connection with extinguishment of a portion of the 2023 Notes, the Company recognized non-cash gains totaling $3.6 million during the first quarter of 2021, which is included as other income, net.
During the three months ended March 31, 2020, the Company purchased $5.7 million principal amount of the outstanding 2023 Notes for $4.7 million in cash, which approximated the net carrying amount of the related liability.
Since December 31, 2018, the Company has purchased a cumulative $167.6 million principal amount of the outstanding 2023 Notes for $146.8 million.
The initial carrying amount of the 2023 Notes recorded in the consolidated balance sheet was less than their $200 million 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.
The following table presents the carrying amount of the 2023 Notes in the consolidated balance sheets as of March 31, 2021 and December 31, 2020 (in thousands):
March 31,
2021
December 31,
2020
Principal amount of the liability component$32,369 $157,369 
Less: Unamortized discount 12,308 
Less: Unamortized issuance costs347 1,819 
Net carrying amount of the liability component$32,022 $143,242 
Net carrying amount of the equity componentn.a.$25,683 
See Note 2, "Recent Accounting Pronouncement," for discussion of the recent revision to accounting guidance for convertible instruments, which changed the Company's method of accounting for the 2023 Notes upon its adoption of the standard effective January 1, 2021.
The 2023 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 2023 Notes under certain circumstances as described in the 2023 Indenture. The 2023 Notes 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 2023 Notes in cash and settle the conversion feature in shares of the Company's common stock.
Noteholders may convert their 2023 Notes, at their option, only in the following circumstances: (1) if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for each of at least 20 trading days
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (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 2023 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 2023 Indenture; or (4) if the Company calls the 2023 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. 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 2023 Notes are redeemable, in whole or in part, at the Company's option at a cash redemption price equal to the principal amount of the 2023 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 2023 Indenture occur, then noteholders may require the Company to repurchase their 2023 Notes at a cash repurchase price equal to the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest. Additionally, the 2023 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $40.0 million. As of March 31, 2021, none of the conditions allowing holders of the 2023 Notes to convert, or requiring the Company to repurchase the 2023 Notes, had been met.
Promissory Note
In connection with the 2018 acquisition of GEODynamics (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 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 $7.9 million related to such indemnification claims, and believes that the maturity date of such 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 March 31, 2021 and December 31, 2020, which is its current best estimate of what is owed after set-off for such indemnification matters. See Note 13, "Commitments and Contingencies."
7.    Fair Value Measurements
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 and 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values. The estimated fair value of the 2023 Notes as of March 31, 2021 was $27.3 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $32.4 million. The estimated fair value of the 2026 Notes as of March 31, 2021 was $128.4 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $135.0 million.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
8.    Stockholders' Equity
The following table provides details with respect to the changes to the number of shares of common stock, $0.01 par value, outstanding during the first three months of 2021 (in thousands):
Shares of common stock outstanding – December 31, 202061,005 
Restricted stock awards, net of forfeitures501 
Shares withheld for taxes on vesting of stock awards and transferred to treasury(225)
Shares of common stock outstanding – March 31, 202161,281 
As of March 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.
9.    Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, reported as a component of stockholders' equity, increased from $71.4 million at December 31, 2020 to $72.9 million at March 31, 2021, due to changes in currency exchange rates. Accumulated other comprehensive loss is primarily related to fluctuations in the currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of the Company's operating segments. For the three months ended March 31, 2021 and 2020, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil. As of March 31, 2021, the exchange rate for the British pound compared to the U.S. dollar strengthened by 1% while the exchange rate for the Brazilian real compared to the U.S. dollar weakened by 8% compared to the exchange rates at December 31, 2020, contributing to other comprehensive loss of $1.5 million reported for the three months ended March 31, 2021.
10.    Long-Term Incentive Compensation
The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the three months ended March 31, 2021 (in thousands):
Stock OptionsService-based Restricted StockPerformance-based Stock Units
Outstanding – December 31, 2020530 1,087 287 
Granted 446 245 
Vested (506)(70)
Forfeited(80)(15)(42)
Outstanding – March 31, 2021450 1,012 420 
Weighted average grant date fair value (2021 awards)$ $6.87 $6.84 
The restricted stock program consists of a combination of service-based restricted stock and performance-based stock units. Service-based restricted stock awards generally vest on a straight-line basis over their term, which is generally three years. Performance-based restricted stock awards generally vest at the end of a three-year period, with the number of shares ultimately issued under the program dependent upon achievement of predefined specific performance measures.
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. The performance measure for outstanding awards granted in 2019 and 2020 is the Company's EBITDA growth rate over a three-year period. The performance measure for outstanding awards granted in 2021 is the Company's cumulative EBITDA over a three-year period.
During the first quarters of 2021 and 2020, the Company issued conditional long-term cash incentive awards ("Cash Awards") of $1.5 million and $1.5 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 $3.0 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
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Awards is limited to their targeted award value ($1.5 million) if the Company's total stockholder return is negative over the performance period. The obligations, if any, related to the Cash Awards are classified as liabilities and recognized over the vesting period.
Stock-based compensation expense recognized during the three months ended March 31, 2021 and 2020 totaled $2.8 million and $1.2 million, respectively. As of March 31, 2021, there was $10.4 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.
11.    Income Taxes
For the three months ended March 31, 2021, the Company's income tax benefit was $2.3 million on a pre-tax loss of $18.1 million, which included certain non-deductible expenses and discrete tax items. This compares to an income tax benefit of $39.5 million on a pre-tax loss of $444.5 million, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax purposes, for the three months ended March 31, 2020. The impact of these non-deductible expenses was partially offset by a $14.8 million discrete tax benefit related to the carryback of U.S. net operating losses under the CARES Act.
12.    Segments and Related Information
The Company operates through three operating segments: Offshore/Manufactured Products, Downhole Technologies and Well Site Services.
Financial information by operating segment for the three months ended March 31, 2021 and 2020 is summarized in the following tables (in thousands).
RevenuesDepreciation and amortizationOperating income (loss)Capital expendituresTotal assets
Three Months Ended March 31, 2021
Offshore/Manufactured Products$60,609 $5,469 $1,071 $463 $534,819 
Downhole Technologies25,430 4,389 (1,615)83 280,320 
Well Site Services(1)
39,550 11,468 (9,853)3,330 229,968 
Corporate 194 (9,365)244 79,312 
Total$125,589 $21,520 $(19,762)$4,120 $1,124,419 
RevenuesDepreciation and amortizationOperating income (loss)Capital expendituresTotal assets
Three Months Ended March 31, 2020
Offshore/Manufactured Products(2)
$91,172 $5,628 $(95,496)$1,065 $562,179 
Downhole Technologies(3)
41,065 5,584 (192,691)1,649 333,518 
Well Site Services(4)
87,457 15,036 (144,954)3,052 320,855 
Corporate 161 (8,661)115 95,458 
Total$219,694 $26,409 $(441,802)$5,881 $1,312,010 
________________
(1)Operating loss included a non-cash fixed asset impairment charge of $0.7 million.
(2)Operating loss included non-cash goodwill and inventory impairment charges of $