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Basis of Presentation | 3 Months Ended
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Dec. 31, 2017
Basis of Presentation |
Basis of Presentation | HELMERICH & PAYNE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1.Basis of Presentation Unless the context otherwise requires, the use of the terms “the Company”, “we”, “us” and “our” in these Notes to Consolidated Condensed Financial Statements refers to Helmerich & Payne, Inc. and its consolidated subsidiaries. The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “Commission”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our 2017 Annual Report on Form 10-K and other current filings with the Commission. In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included. The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year. On October 1, 2017, we adopted Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which changes certain aspects of accounting for share-based payments to employees. The standard requires that all excess tax benefits and deficiencies previously recorded as additional paid-in capital be prospectively recorded in income tax expense. The adoption of this ASU could cause volatility in the effective tax rate on a quarter by quarter basis due primarily to fluctuations in the Company's stock price and the timing of stock option exercises and vesting of restricted share grants. The standard requires excess tax benefits to be presented as an operating activity on the statement of cash flows rather than as a financing activity. Excess tax benefits and deficiencies are recorded within the provision for income taxes within the Consolidated Condensed Statements of Operations on a prospective basis as required by the standard; however, we elected to present changes to the statement of cash flows on a retrospective basis as allowed by the standard in order to maintain comparability between fiscal years. As such, prior period cash flows from operations for three months ended December 30, 2016 has been adjusted to reflect an increase of $3.7 million, with a corresponding decrease to cash flows used in financing activities, compared to amounts previously reported. The standard also requires taxes paid for employee withholdings to be presented as a financing activity on the statement of cash flows but this requirement had no impact on our total financing activities as this has been the practice historically. We also elected to account for forfeitures of awards as they occur, instead of estimating a forfeiture amount. We recorded a $0.3 million cumulative-effect adjustment to retained earnings for the differential between the amount of compensation cost previously recorded and the amount that would have been recorded without assuming forfeitures. In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This update simplifies the subsequent measurement of inventory. It replaces the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted ASU No. 2015-11 on October 1, 2017 with no impact on our consolidated financial statements. As more fully described in our 2017 Annual Report on Form 10-K, our contract drilling revenues are comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed. For contracts that are terminated by customers prior to the expirations of their fixed terms, contractual provisions customarily require early termination amounts to be paid to us. Revenues from early terminated contracts are recognized when all contractual requirements have been met. During the three months ended December 31, 2017, early termination revenue was approximately $4.3 million compared to approximately $13.5 million for the three months ended December 31, 2016. Depreciation in the Consolidated Condensed Statements of Operations includes abandonments of $7.3 million for the three months ended December 31, 2017 and $0.8 million for the three months ended December 31, 2016. The functional currency for all our foreign operations is the U.S. dollar. Nonmonetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the period. Income statement accounts are translated at average rates for the period presented. Aggregate foreign currency gains and losses from remeasurement of foreign currency financial statements and foreign currency translations into U.S. dollars are included in direct operating costs and totaled losses of $1.5 million and $1.4 million for the three months ended December 31, 2017 and December 31, 2016, respectively. Goodwill represents the excess of cost over the net amounts assigned to assets acquired and liabilities assumed in business combinations. Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis, or when indications of potential impairment exist. All of our goodwill is within our other non-reportable business segment. Intangible assets with indefinite lives are tested for impairment at least annually in the fourth fiscal quarter and if events occur or circumstances change that would indicate that the value of the assets may be impaired. Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows and are evaluated for impairment in accordance with our policies for valuation of long-lived assets. The following is a summary of our finite-lived and indefinite-lived intangible assets other than goodwill at December 31, 2017 and September 30, 2017:
|  | December 31, 2017 |  | September 30, 2017 |
|  | Gross |  |  |  | Gross |  |  |
|  | Carrying |  | Accumulated |  | Carrying |  | Accumulated |
|  | Amount |  | Amortization |  | Amount |  | Amortization |
|  | (in thousands) |
Finite-lived intangible asset: |  |  |  |  |  |  |  |  |  |  |  |  |
Developed technology |  | $ | 70,000 |  | $ | 1,983 |  | $ | 51,000 |  | $ | 1,134 |
Trade name |  |  | 5,700 |  |  | — |  |  | — |  |  | — |
Customer relationships |  |  | 4,000 |  |  | — |  |  | — |  |  | — |
|  | $ | 79,700 |  | $ | 1,983 |  | $ | 51,000 |  | $ | 1,134 |
Indefinite-lived intangible asset: |  |  |  |  |  |  |  |  |  |  |  |  |
Trademark |  | $ | 919 |  |  |  |  | $ | 919 |  |  |  |
Amortization expense was $0.8 million for the three months ended December 31, 2017 and is estimated to be approximately $5.3 million for fiscal 2018. Estimated intangible amortization is estimated to be approximately $5.8 million for fiscal years 2019-2022 and approximately $5.1 million for fiscal 2023.

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