GlobeNewswire Inc | Nov 1, 2021 04:40PM EDT

November 01, 2021

-- Total contract drilling revenues were $626million, compared to $656million in the secondquarter of 2021 (total adjusted contract drilling revenues of $683 million, compared to $713million in the second quarter of 2021); -- Revenue efficiency(1) was 98.1%, compared to 98.0% in the prior quarter; -- Operating and maintenance expense was $398million, compared to $434million in the prior quarter; -- Net loss attributable to controlling interest was $130million, $0.20per diluted share, compared to $103million, $0.17per diluted share, in the secondquarter of 2021; -- Adjusted EBITDA was $245million, compared to $255million in the prior quarter; and -- Contract backlog was $7.1billion as of the October2021 Fleet Status Report.

STEINHAUSEN, Switzerland, Nov. 01, 2021 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported a net loss attributable to controlling interest of $130million, $0.20per diluted share, for the three months ended September30, 2021.

Third quarter 2021 results included a net unfavorable item of $8million, or $0.01per diluted share, related to discrete tax items. After consideration of this net unfavorable item, thirdquarter 2021 adjusted net loss was $122million, $0.19per diluted share, compared to $109million, $0.18per diluted share, in the second quarter of 2021.

Contract drilling revenues for the three months ended September30, 2021 decreased sequentially by $30million to $626million, primarily due to reduced activity for two rigs that went idle and one rig that commenced a planned shipyard stay during the third quarter, partially offset by higher revenue efficiency, and one rig that returned to work following a shipyard stay.

A non-cash revenue reduction of $57million was recognized in both the third and second quarter as a result of contract intangible amortization associated with the Songa and Ocean Rig acquisitions in 2018.

Operating and maintenance expense was $398million, compared with $434million in the prior quarter. The sequential decrease was primarily the result of reduced activity due to rigs that became idle and lower COVID-19-related costs, partially offset by shipyard and contract preparation activities.

General and administrative expense was $40million, up from $39million in the second quarter of 2021. The increase was primarily due to legal and professional fees.

Interest expense, net of amounts capitalized, was $110million, compared with $115million in the prior quarter. Interest income was $4million, which is in line with the second quarter of 2021.

The Effective Tax Rate(2) was(26.1)%, down from (4.6)% in the prior quarter. The decrease was primarily due to the discrete tax impact of jurisdictional ownership changes of certain assets, lower earnings before tax and releases of uncertain tax positions related to settlements. The Effective Tax Rate excluding discrete items was (18.1)% compared to (10.2)% in previous quarter.

Cash flows provided by operating activities were $141million, compared to $153million in the prior quarter. The third quarter decrease was primarily due to the timing of interest payments and increased income tax payments, partially offset by annual insurance prepayments made in the second quarter of 2021.

Third quarter 2021 capital expenditures of $37million, compared to $41million in the prior quarter, were primarily related to the companys newbuild drillships under construction.

I would like to thank the entire Transocean team for their continued dedication to delivering safe, reliable, and efficient operations for our customers. We once again produced strong financial results, said President and Chief Executive Officer, Jeremy Thigpen. Notably, our strong uptime performance during the quarter drove an impressive revenue efficiency of 98%, resulting in adjusted revenues of $683million.

Furthermore, during the quarter, we were excited to secure the maiden contract for Deepwater Atlas, solidifying Transoceans position as the undisputed leader in the 20,000psi deepwater drilling market. As you know, Transocean has a history of firsts in the most technically demanding environments; and, we look forward to enhancing that legacy upon delivery of Deepwater Atlas and Deepwater Titan in the coming year.

Further demonstrating our technical leadership, we recently announced our commitment to reduce our greenhouse gas emissions intensity 40 percent by 2030 as compared to 2019. Our industry plays an important role in the ever-growing global demand for energy; and, we are proud to continue to employ our operational and technical expertise to support our customers in the delivery of efficient energy to the world, while simultaneously reducing our impact on the environment.

Thigpen concluded, We grow increasingly encouraged as we observe continuously improving market fundamentals and the resulting strength exhibited in oil prices. With tightening utilization for high-specification ultra-deepwater and harsh environment assets, and longer tender durations across multiple markets, dayrates are steadily increasing, which bodes well for the offshore drilling industry, and Transocean.

Non-GAAP Financial Measures

We present our operating results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe certain financial measures, such as Adjusted Contract Drilling Revenues, EBITDA, Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the companys website at: www.deepwater.com.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services and believes that it operates one of the most versatile offshore drilling fleets in the world.

Transocean owns or has partial ownership interests in and operates a fleet of 37mobile offshore drilling units consisting of 27ultra-deepwater floaters and 10harsh environment floaters. In addition, Transocean is constructing twoultra-deepwater drillships.

For more information about Transocean, please visit: www.deepwater.com.

Conference Call Information

Transocean will conduct a teleconference starting at 9a.m. EDT, 2p.m. CET, on Tuesday, November2, 2021, to discuss the results. To participate, dial +1 323-994-2093 and refer to conference code2585978 approximately 15minutes prior to the scheduled start time.

The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.

A replay of the conference call will be available after 12p.m. EDT, 5p.m. CET, on Tuesday, November2, 2021. The replay, which will be archived for approximately 30days, can be accessed at +1 719-457-0820, passcode2585978, pin4459. The replay will also be available on the companys website.

Forward-Looking Statements

The statements described herein that are not historical facts are forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements could contain words such as "possible," "intend," "will," "if," "expect," or other similar expressions. Forward-looking statements are based on managements current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the companys newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the fluctuation of current and future prices of oil and gas, the global and regional supply and demand for oil and gas, the intention to scrap certain drilling rigs, the success of our business following prior acquisitions, the effects of the spread of and mitigation efforts by governments, businesses and individuals related to contagious illnesses, such as COVID-19, and other factors, including those and other risks discussed in the company's most recent Annual Report on Form10-K for the year ended December31, 2020, and in the company's other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the companys website at: www.deepwater.com.

This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of the Swiss Financial Services Act (FinSA) or advertising within the meaning of the FinSA. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.

Notes

Revenue efficiency is defined as actual contract drilling revenues, excluding revenues for contract terminations and reimbursements, for the measurement period divided by the maximum revenue calculated for the(1) measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding revenues for incentive provisions, reimbursements and contract terminations. See the accompanying schedule entitled ?Revenue Efficiency.? (2) Effective Tax Rate is defined as income tax expense divided by income before income taxes. See the accompanying schedule entitled ?Supplemental Effective Tax Rate Analysis.?

Analyst Contact:Alison Johnson+1 713-232-7214

Media Contact:Pam Easton+1 713-232-7647

TRANSOCEAN LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Inmillions, except per share data)(Unaudited)

Three months ended Nine months ended September30, September30, 2021 2020 2021 2020 Contract drilling revenues $ 626 $ 773 $ 1,935 $ 2,462 Costs and expenses Operating and maintenance 398 470 1,267 1,535 Depreciation and 185 190 558 592 amortizationGeneral and administrative 40 45 118 133 623 705 1,943 2,260 Loss on impairment ? ? ? (597 ) Loss on disposal of (3 ) (64 ) (61 ) (64 ) assets, netOperating income (loss) ? 4 (69 ) (459 ) Other income (expense), netInterest income 4 6 11 19 Interest expense, net of (110 ) (145 ) (340 ) (458 ) amounts capitalizedGain on restructuring and ? 449 51 396 retirement of debtOther, net 3 21 26 (23 ) (103 ) 331 (252 ) (66 ) Income (loss) beforeincome tax expense (103 ) 335 (321 ) (525 ) (benefit)Income tax expense 27 (24 ) 10 4 (benefit) Net income (loss) (130 ) 359 (331 ) (529 ) Net income attributable to ? ? 1 1 noncontrolling interestNet income (loss)attributable to $ (130 ) $ 359 $ (332 ) $ (530 ) controlling interest Earnings (loss) per share Basic $ (0.20 ) $ 0.58 $ (0.53 ) $ (0.86 ) Diluted $ (0.20 ) $ 0.51 $ (0.53 ) $ (0.86 ) Weighted-average shares outstandingBasic 653 616 630 615 Diluted 653 702 630 615

TRANSOCEAN LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Inmillions, except share data)(Unaudited)

September December 30, 31, 2021 2020 Assets Cash and cash equivalents $ 900 $ 1,154 Accounts receivable, net of allowance of $2 at 507 583 September 30, 2021 and December 31, 2020Materials and supplies, net of allowance of $148and $143 at September 30, 2021 and December 31, 433 434 2020, respectivelyRestricted cash and cash equivalents 576 406 Other current assets 165 163 Total current assets 2,581 2,740 Property and equipment 23,102 23,040 Less accumulated depreciation (5,886 ) (5,373 ) Property and equipment, net 17,216 17,667 Contract intangible assets 223 393 Deferred income taxes, net 9 9 Other assets 947 995 Total assets $ 20,976 $ 21,804 Liabilities and equity Accounts payable $ 215 $ 194 Accrued income taxes 10 28 Debt due within oneyear 575 505 Other current liabilities 551 659 Total current liabilities 1,351 1,386 Long-term debt 6,773 7,302 Deferred income taxes, net 358 315 Other long-term liabilities 1,227 1,366 Total long-term liabilities 8,358 8,983 Commitments and contingencies Shares, CHF 0.10 par value, 891,379,306 authorized,142,363,356 conditionally authorized, 685,676,456issuedand 651,155,650 outstanding at September 30, 63 60 2021, and 824,650,660 authorized, 142,363,647conditionallyauthorized, 639,676,165 issued and615,140,276 outstanding at December 31, 2020Additional paid-in capital 13,659 13,501 Accumulated deficit (2,198 ) (1,866 ) Accumulated other comprehensive loss (261 ) (263 ) Total controlling interest shareholders? equity 11,263 11,432 Noncontrolling interest 4 3 Total equity 11,267 11,435 Total liabilities and equity $ 20,976 $ 21,804

TRANSOCEAN LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Inmillions)(Unaudited)

Nine months ended September30, 2021 2020 Cash flows from operating activities Net loss $ (331 ) $ (529 ) Adjustments to reconcile to net cash provided by operating activities:Contract intangible asset amortization 170 158 Depreciation and amortization 558 592 Share-based compensation expense 21 24 Loss on impairment ? 597 Loss on impairment of investment in ? 59 unconsolidated affiliateLoss on disposal of assets, net 61 64 Gain on restructuring and retirement of debt (51 ) (396 ) Deferred income tax expense 43 28 Other, net 29 42 Changes in deferred revenues, net (87 ) (45 ) Changes in deferred costs, net 8 10 Changes in other operating assets and (31 ) (484 ) liabilities, netNet cash provided by operating activities 390 120 Cash flows from investing activities Capital expenditures (137 ) (218 ) Proceeds from disposal of assets, net 8 15 Investment in loans to unconsolidated affiliate (33 ) ? Investments in unconsolidated affiliates ? (17 ) Net cash used in investing activities (162 ) (220 ) Cash flows from financing activities Repayments of debt (423 ) (1,135 ) Proceeds from issuance of shares, net of issue 141 ? costsProceeds from issuance of debt, net of issue ? 743 costsOther, net (30 ) (27 ) Net cash used in financing activities (312 ) (419 ) Net decrease in unrestricted and restricted cash (84 ) (519 ) and cash equivalentsUnrestricted and restricted cash and cash 1,560 2,349 equivalents, beginning of periodUnrestricted and restricted cash and cash $ 1,476 $ 1,830 equivalents, end of period

TRANSOCEAN LTD. AND SUBSIDIARIES FLEET OPERATING STATISTICS Three months ended Nine months ended September30, June September30, September30, September30, 30,ContractDrilling 2021 2021 2020 2021 2020 Revenues (inmillions)Contractdrilling revenuesUltra-deepwater $ 428 $ 424 $ 490 $ 1,288 $ 1,654 floatersHarshenvironment 198 232 283 647 796 floatersMidwater ? ? ? ? 12 floatersTotal contractdrilling $ 626 $ 656 $ 773 $ 1,935 $ 2,462 revenues

Three months ended Nine months ended September30, June 30, September30, September30, September30, Average Daily 2021 2021 2020 2021 2020 Revenue ^(1)Ultra-deepwater $ 351,900 $ 363,500 $ 329,300 $ 362,100 $ 319,500 floatersHarshenvironment 401,600 379,900 372,500 385,700 334,400 floatersMidwater ? ? ? ? 111,400 floatersTotal fleetaverage daily $ 367,100 369,400 $ 343,500 $ 370,100 $ 321,800 revenue

Three months ended Nine months ended September30, June September30, September30, September30, 30,Utilization ^ 2021 2021 2020 2021 2020 (2)Ultra-deepwater 50 % 48 % 60 % 49 % 61 % floatersHarshenvironment 60 % 73 % 75 % 66 % 72 % floatersMidwater ? % ? % ? % ? % 37 % floatersTotal fleetaverage rig 53 % 55 % 65 % 53 % 64 % utilization

Three months ended Nine months ended September30, June September30, September30, September30, 30,Revenue Efficiency ^(3) 2021 2021 2020 2021 2020Ultra-deepwater floaters 96 % 98 % 97 % 97 % 97 %Harsh environment floaters 103 % 98 % 96 % 100 % 94 %Midwater floaters ? % ? % ? % ? % 86 %Total fleet average revenue 98 % 98 % 97 % 98 % 96 %efficiency ^(1) Average daily revenue is defined as contract drilling revenues, excludingrevenues for contract terminations, reimbursements and contract intangibleamortization, earned per operating day. An operating day is defined as acalendar day during which a rig is contracted to earn a dayrate during the firmcontract period after commencement of operations. ^(2) Rig utilization is defined as the total number of operating days dividedby the total number of rig calendar days in the measurement period, expressedas a percentage. ^(3) Revenue efficiency is defined as actual contract drilling revenues,excluding revenues for contract terminations and reimbursements, for themeasurement period divided by the maximum revenue calculated for themeasurement period, expressed as a percentage. Maximum revenue is defined asthe greatest amount of contract drilling revenues the drilling unit could earnfor the measurement period, excluding revenues for incentive provisions,reimbursements and contract terminations.



TRANSOCEAN LTD. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE (In millions, except per share data) YTD QTD YTD QTD YTD 09/30/21 09/30/21 06/30/21 06/30/21 03/31/21 Adjusted Net Loss Net lossattributable tocontrolling $ (332 ) $ (130 ) $ (202 ) $ (103 ) $ (99 ) interest, asreportedLoss on disposal 60 ? 60 ? 60 of assets, netGain on retirement (51 ) ? (51 ) ? (51 ) of debtDiscrete tax items (25 ) 8 (33 ) (6 ) (27 ) Net loss, as $ (348 ) $ (122 ) $ (226 ) $ (109 ) $ (117 ) adjusted Adjusted Diluted Loss Per Share:Diluted loss per $ (0.53 ) $ (0.20 ) $ (0.33 ) $ (0.17 ) $ (0.16 ) share, as reportedLoss on disposal 0.10 ? 0.10 ? 0.10 of assets, netGain on retirement (0.08 ) ? (0.08 ) ? (0.08 ) of debtDiscrete tax items (0.04 ) 0.01 (0.06 ) (0.01 ) (0.05 ) Diluted loss per $ (0.55 ) $ (0.19 ) $ (0.37 ) $ (0.18 ) $ (0.19 ) share, as adjusted

YTD QTD YTD QTD YTD QTD YTD 12/31/20 12/31/20 09/30/20 09/30/20 06/30/20 06/30/20 03/31/20 Adjusted Net LossNet income(loss)attributable $ (567 ) $ (37 ) $ (530 ) $ 359 $ (889 ) $ (497 ) $ (392 ) to controllinginterest, asreportedRestructuring 5 (1 ) 6 5 1 1 ? costsLoss onimpairment of 597 ? 597 ? 597 430 167 assetsLoss ondisposal of 61 ? 61 61 ? ? ? assets, netLoss onimpairment ofinvestment in 62 3 59 ? 59 59 ? unconsolidatedaffiliates(Gain) loss onrestructuring (533 ) (137 ) (396 ) (449 ) 53 (4 ) 57 and retirementof debtDiscrete tax (91 ) (37 ) (54 ) (45 ) (9 ) 10 (19 ) itemsNet loss, as $ (466 ) $ (209 ) $ (257 ) $ (69 ) $ (188 ) $ (1 ) $ (187 ) adjusted AdjustedDiluted Loss Per Share:Dilutedearnings(loss) per $ (0.92 ) $ (0.06 ) $ (0.86 ) $ 0.51 $ (1.45 ) $ (0.81 ) $ (0.64 ) share, asreportedRestructuring 0.01 ? 0.01 0.01 ? ? ? costsLoss onimpairment of 0.97 ? 0.97 ? 0.97 0.70 0.28 assetsLoss ondisposal of 0.10 ? 0.10 0.09 ? ? ? assets, netLoss onimpairment ofinvestment in 0.10 ? 0.10 ? 0.10 0.10 ? unconsolidatedaffiliates(Gain) loss onrestructuring (0.87 ) (0.22 ) (0.65 ) (0.65 ) 0.09 (0.01 ) 0.09 and retirementof debtDiscrete tax (0.15 ) (0.06 ) (0.09 ) (0.07 ) (0.02 ) 0.02 (0.03 ) itemsDiluted lossper share, as $ (0.76 ) $ (0.34 ) $ (0.42 ) $ (0.11 ) $ (0.31 ) $ ? $ (0.30 ) adjusted

TRANSOCEAN LTD. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS ADJUSTED CONTRACT DRILLING REVENUES EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION AND RELATED MARGINS(In millions, except percentages) YTD QTD YTD QTD YTD 09/30/21 09/30/21 06/30/21 06/30/21 03/31/21 Contract drilling $ 1,935 $ 626 $ 1,309 $ 656 $ 653 revenuesContractintangible asset 170 57 113 57 56 amortizationAdjusted Contract $ 2,105 $ 683 $ 1,422 $ 713 $ 709 Drilling Revenues Net loss $ (331 ) $ (130 ) $ (201 ) $ (103 ) $ (98 ) Interest expense,net of interest 329 106 223 111 112 incomeIncome tax expense 10 27 (17 ) 4 (21 ) (benefit)Depreciation and 558 185 373 186 187 amortizationContractintangible asset 170 57 113 57 56 amortizationEBITDA 736 245 491 255 236 Loss on disposal 60 ? 60 ? 60 of assets, netGain on retirement (51 ) ? (51 ) ? (51 ) of debtAdjusted EBITDA $ 745 $ 245 $ 500 $ 255 $ 245 EBITDA margin 35 % 36 % 35 % 36 % 33 % Adjusted EBITDA 35 % 36 % 35 % 36 % 35 % margin

YTD QTD YTD QTD YTD QTD YTD 12/31/20 12/31/20 09/30/20 09/30/20 06/30/20 06/30/20 03/31/20 Contractdrilling $ 3,152 $ 690 $ 2,462 $ 773 $ 1,689 $ 930 $ 759 revenuesContractintangible 215 57 158 57 101 53 48 assetamortizationAdjustedContract $ 3,367 $ 747 $ 2,620 $ 830 $ 1,790 $ 983 $ 807 DrillingRevenues Net income $ (568 ) $ (39 ) $ (529 ) $ 359 $ (888 ) $ (497 ) $ (391 ) (loss)Interestexpense, net 554 115 439 139 300 149 151 of interestincomeIncome taxexpense 27 23 4 (24 ) 28 32 (4 ) (benefit)Depreciationand 781 189 592 190 402 196 206 amortizationContractintangible 215 57 158 57 101 53 48 assetamortizationEBITDA 1,009 345 664 721 (57 ) (67 ) 10 Restructuring 5 (1 ) 6 5 1 1 ? costsLoss onimpairment of 597 ? 597 ? 597 429 168 assetsLoss ondisposal of 61 ? 61 61 ? ? ? assets, net(Gain) loss onrestructuring (533 ) (137 ) (396 ) (449 ) 53 (4 ) 57 and retirementof debtLoss onimpairment ofinvestment in 62 3 59 ? 59 59 ? unconsolidatedaffiliatesAdjusted $ 1,201 $ 210 $ 991 $ 338 $ 653 $ 418 $ 235 EBITDA EBITDA margin 30 % 46 % 25 % 87 % (3 ) (7 ) 1 % % %Adjusted 36 % 28 % 38 % 41 % 36 % 43 % 29 % EBITDA margin

TRANSOCEAN LTD. AND SUBSIDIARIES SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS (In millions, except tax rates) Three months ended Nine months ended September30, June 30, September30, September30, September30, 2021 2021 2020 2021 2020 Income (loss)before income $ (103 ) $ (99 ) $ 335 $ (321 ) $ (525 ) taxesRestructuring ? ? 5 ? 6 costsLoss onimpairment of ? ? ? ? 597 assetsLoss ondisposal of ? ? 61 60 61 assets, netLoss onimpairment ofinvestment in ? ? ? ? 59 unconsolidatedaffiliateGain onrestructuring ? ? (449 ) (51 ) (396 ) and retirementof debtAdjusted lossbefore income $ (103 ) $ (99 ) (48 ) $ (312 ) (198 ) taxes Revenuesrecognized for ? (157 ) the settlementof disputesAdjusted lossbefore incometaxes for $ (48 ) $ (355 ) determiningeffective taxrate Income taxexpense $ 27 $ 4 $ (24 ) $ 10 $ 4 (benefit)Restructuring ? ? ? ? ? costsLoss onimpairment of ? ? ? ? ? assetsLoss ondisposal of ? ? ? ? ? assets, netLoss onimpairment ofinvestment in ? ? ? ? ? unconsolidatedaffiliateGain onrestructuring ? ? ? ? ? and retirementof debtChanges in (8 ) 6 43 25 54 estimates (1)Revenuesrecognized for ? ? 2 ? ? the settlementof disputesAdjustedincome tax $ 19 $ 10 $ 21 $ 35 $ 58 expense (2) Effective Tax (26.1 )% (4.6 ) (7.0 )% (3.2 )% (0.8 )% Rate (3) % Effective TaxRate, )excluding (18.1 )% (10.2 % (45.6 )% (11.2 )% (16.4 )% discrete items(4) (1) Our estimates change as we file tax returns, settle disputes with taxauthorities, or become aware of changes in laws and other events that have an effect on our (a) deferred taxes, (b) valuation allowances on deferred taxesand (c) other tax liabilities. (2) The three months ended September 30, 2021 included $7 million of additionaltax expense, reflecting the cumulative effect of an increase in the annual effective tax rate from the previous quarter estimate. (3) Our effective tax rate is calculated as income tax expense divided by income before income taxes. (4) Our effective tax rate, excluding discrete items, is calculated as incometax expense, excluding various discrete items (such as changes in estimates andtax on items excluded from income before income taxes), divided by income before income tax expense, excluding gains and losses on sales and similaritems pursuant to the accounting standards for income taxes related toestimating the annual effective tax rate.