Impairments and Other Charges

9 Months Ended

Sep. 30, 2019

Impairments and Other Charges

Impairments and Other Charges

Note 10 Impairments and Other Charges

The components of impairments and other charges are provided below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(In thousands)
Goodwill & Intangible Assets:
Goodwill impairments		—		—		93,634		—
Intangible asset impairment		—		—		5,235		—
Subtotal		—		—		98,869		—
Other Charges:
Divestiture of International assets		—		—		—		63,726
Severance and transaction related costs		2,911		1,753		5,386		12,526
Tangible asset impairments		—		1,541		—		3,706
Loss (gain) on early extinguishment of debt		718		10,476		1,752		10,476
Total	$	3,629	$	13,770	$	106,007	$	90,434

For the three and nine months ended September 30, 2019

Goodwill impairments

During the nine months ended September 30, 2019, we recognized goodwill impairment charges of $93.6 million. As part of our annual goodwill impairment test, we determined the carrying value of some of our reporting units exceeded their fair value. As such, we recognized an impairment of $75.6 million for the remaining goodwill balance attributable to our International Drilling operating segment and $18.0 million for a partial impairment to our goodwill balance related to the acquisition of 2TD in 2014, reported within our Rig Technologies operating segment. These non-cash pre-tax impairment charges were primarily the result of a sustained decline in our market capitalization and lower future cash flow projections due to expectations for future commodity prices and the resulting impact on the demand for our products and services within these reporting units.

Intangible impairments

Additionally, we determined the fair value of one of our intangible assets was less than the current book value. As such, we recognized a partial impairment of $5.2 million to write down the intangible asset to its fair value. This intangible asset relates to in-process research and development associated with our rotary steerable tools purchased as part of the 2TD acquisition. Based on our updated projections of future cash flows, the carrying value did not support the current fair value and thus an impairment charge was recognized.

Severance and transaction related costs

During the three and nine months ended September 30, 2019, we recognized charges of $2.9 million and $5.4 million, respectively, due to severance and other related costs incurred to right-size our cost structure.

Loss (gain) on early extinguishment of debt

During the three and nine months ended September 30, 2019, we repurchased $16.6 million and $378.1 million, respectively, aggregate principal amount of our senior notes and recognized a loss of $0.7 million and $1.8 million, respectively, as part of the debt extinguishment. See Note 6—Debt for additional discussion.

Three and nine months ended September 30, 2018

Divestiture of International assets

During the nine months ended September 30, 2018, we recognized a loss of $63.7 million on the sale of three offshore drilling rigs within our International Drilling operating segment.

Severance and transaction related costs

During the three and nine months ended September 30, 2018, we incurred $1.8 million and $12.5 million, respectively, in transaction related costs, including professional fees, severances, facility closure costs and other cost rationalization items, primarily in connection with the acquisition of Tesco.

Loss (gain) on early extinguishment of debt

During the three and nine months ended September 30, 2018, we repurchased $460.8 million aggregate principal amount of our senior notes and recognized a loss of $10.5 million as part of the debt extinguishment.

Tangible asset impairments

During the three and nine months ended September 30, 2018, we recognized impairment charges of $1.5 million and $3.7 million, respectively, primarily due to obsolete inventory within our Rig Technologies reportable segment.