Supplemental Information (Tables)

9 Months Ended

Sep. 30, 2013

Supplemental Information

Accrued liabilities

	September 30,		December 31,
	2013		2012
	(In thousands)
Accrued compensation	$	165,022	$	158,095
Deferred revenue	183,049		148,165
Other taxes payable	63,504		58,590
Workers’ compensation liabilities	22,645		22,645
Interest payable	19,012		90,878
Warranty accrual	6,172		6,436
Litigation reserves	28,597		26,782
Current liability to discontinued operations	64,278		68,961
Professional fees	3,228		2,989
Current deferred tax liability	12,105		10,721
Other accrued liabilities	11,864		5,118
	$	579,476	$	599,380

Investment income (loss)

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
	2013		2012			2013			2012
	(In thousands)
Interest and dividend income	$	1,107	$	1,160		$	4,225		$	6,110
Gains (losses) on investments, net	122		6,064		(1)	91,246		(2)	26,734		(1)(3)
	$	1,229	$	7,224		$	95,471		$	32,844

(1)  Includes net unrealized gains of $4.2 million and $11.6 million from our trading securities during the three and nine months ended September 30, 2012, respectively.

(2)  Includes realized gains of $88.2 million from available-for-sale debt and equity securities and net realized gains of $2.5 million from our trading securities.

(3)  Includes $14.0 million realized gain related to debt securities in addition to unrealized gains discussed above.

Losses (gains) on sales and disposals of long-lived assets and other expense (income), net

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
	2013			2012		2013		2012
	(In thousands)
Losses (gains) on sales, disposals and involuntary conversions of long-lived assets	$	2,806		$	2,592	$	8,150	$	6,773
Litigation expenses	1,983			3,255		7,642		8,791
Foreign currency transaction losses (gains)	(290		)	2,766		7,017		5,021
Other losses (gains)	(1,233		)	1,603		4,436		1,192
	$	3,266		$	10,216	$	27,245	$	21,777

Schedule of impairments and other charges

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2013		2012		2013			2012
	(In thousands)
Termination of employment contract	$	—	$	—	$	45,000	(1)	$	—
Loss on tendered notes	208,197		—		208,197		(2)	—
Provision for retirement of assets	14,044		—		14,044		(3)	46,264		(5)
Impairment of long-lived assets	20,000		—		20,000		(4)	—
Intangible asset impairment	—		—		—			74,960		(6)
Goodwill impairment	—		—		—			26,279		(7)
	$	242,241	$	—	$	287,241		$	147,503

(1) Represents a one-time stock grant valued at $27 million, which vested immediately, and $18 million in cash awarded and paid to Mr. Petrello in connection with the termination of his prior employment agreement. See Note 9 — Commitments and Contingencies for additional discussion.

(2) Represents the loss related to the extinguishment of debt in connection with the tender offer on the 9.25% senior notes. See Note 6 — Debt for additional discussion.

(3) Represents provision for retirement of long-lived assets in our International operations totaling $14.0 million, which reduced the carrying value of some assets to their salvage value. The retirements were related to assets in Saudi Arabia and included obsolete top-drives, nonworking trucks, generators, engines and other miscellaneous equipment. A continued period of lower oil prices and its potential impact on our utilization and dayrates could result in the recognition of future impairment charges to additional assets if future cash flow estimates, based upon information then available to management, indicate that the carrying value of those assets may not be recoverable.

(4) Represents impairment of $20.0 million to our fleet of coil-tubing units in our Completion & Production Services operating segment.  Intense competition and oversupply of equipment has led to lower utilization and margins for this product line, and we have recently decided to suspend the majority of our operations for these assets. When these factors were considered as part of our annual impairment tests on long-lived assets, the sum of the estimated future cash flows, on an undiscounted basis, was less than the carrying amount of these assets.  The estimated fair values of these assets were calculated using discounted cash flow models involving assumptions based on our utilization of the assets, revenues as well as direct costs, capital expenditures and working capital requirements.  We believe the fair value estimated for purposes of these tests represents a Level 3 fair value measurement.  A prolonged period of slow economic recovery could continue to adversely affect the demand for and prices of our services, which could result in future impairment charges for other reporting units due to the potential impact on our estimate of our future operating results.

(5) Represents a provision for retirement of long-lived assets totaling $46.3 million in multiple operating segments, which reduced the carrying value of some assets to their salvage value. The retirements in our Canada operations included functionally inoperable rigs and other drilling equipment.  In our Completion & Production operations, the retirements related to rigs and vehicles that would require significant repair to return to work and other non-core assets.  A prolonged period of lower natural gas and oil prices and its potential impact on our utilization and dayrates could result in the recognition of future impairment charges to additional assets if future cash flow estimates, based upon information then available to management, indicate that the carrying value of those assets may not be recoverable.

(6) Represents impairment of the Superior trade name. The Superior trade name was initially classified as a ten-year intangible asset at the date of acquisition in September 2010. The impairment is a result of the decision to cease using the Superior trade name to reduce confusion in the marketplace and enhance the Nabors brand.

(7) Represents the impairment of goodwill associated with our U.S. Offshore and International reporting units. The impairments were deemed necessary due to the prolonged uncertainty of utilization of some of our rigs as a result of changes in our customers’ plans for future drilling operations in the Gulf of Mexico as well as our international markets. A prolonged period of lower natural gas prices or changes in laws and regulations could continue to adversely affect the demand for and prices of our services, which could result in future goodwill impairment charges for other reporting units due to the potential impact on our estimate of future operating results.

Schedule of changes in accumulated other comprehensive income (loss)

	Gains (losses) on cash flow hedges			Unrealized gains (losses) on available-for- sale securities			Defined benefit pension plan items			Foreign currency items			Total
	(In thousands (a))
As of January 1, 2013	$	(2,793	)	$	134,229		$	(7,632	)	$	307,791		$	431,595
Other comprehensive income (loss) before reclassifications	—			1,549			—			(36,853		)	(35,304		)
Amounts reclassified from accumulated other comprehensive income (loss)	280			(85,456		)	516			—			(84,660		)
Net other comprehensive income (loss)	280			(83,907		)	516			(36,853		)	(119,964		)
As of September 30, 2013	$	(2,513	)	$	50,322		$	(7,116	)	$	270,938		$	311,631

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

Schedule of line items that were reclassified from net income

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
Line item in consolidated statement of income (loss)	2013			2012		2013		2012
	(In thousands)
Investment income (loss)	$	2		$	1,523	$	88,159	$	14,007
Interest expense	153			166		459		548
General and administrative expenses	280			260		842		780
Total before tax	$	(431	)	$	1,097	$	86,858	$	12,679
Tax expense (benefit)	(168		)	272		2,198		3,856
Reclassification adjustment for (gains)/losses included in net income (loss)	$	(263	)	$	825	$	84,660	$	8,823