Impairment, Restructuring and Other Exit Costs

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

Impairment, Restructuring and Other Exit Costs

Restructuring and Other Exit Costs

During 2019, we initiated a restructuring plan designed to optimize costs and improve operational efficiency. These efforts primarily relate to the rationalization of resources, investments, real estate and overhead across various geographies, as well as the liquidation of certain components of the AMECO business that are being excluded from sale. Our planned restructuring activities were substantially completed by the end of 2020. Restructuring costs totaled $8 million and $240 million during 2020 and 2019, respectively.

Information about our restructuring, which we believe is complete as of December 31, 2020, follows:


(in millions)	Costs Incurred in 2020		Costs Incurred in 2019
Restructuring and other exit costs:
Severance	$	6.6	$	63.9
Asset impairments	0.4		90.4
Entity liquidation costs (including the recognition of cumulative translation adjustments)	—		83.7
Other exit costs	1.0		2.0
Total restructuring and other exit costs	$	8.0	$	240.0

Asset impairment charges included the write down of assets held for sale to fair value less cost to sell and the write down of certain other assets to fair value. The fair value of assets and liabilities held for sale and other impaired assets, primarily construction equipment, was estimated using observable Level 2 inputs for identical assets. See Note 24 for a summary of assets and liabilities classified as held for sale as of December 31, 2020 and 2019. The fair value of the other impaired assets was $25 million as of December 31, 2019. These assets were included in "Property, plant and equipment" and "Other assets". The fair value of these other assets was estimated using observable Level 2 inputs for identical assets.

A reconciliation of restructuring liabilities follow:


(in thousands)	Severance		Lease Exit Costs		Other		Total
Balance as of December 31, 2019	$	46,303	$	570	$	307	$	47,180
Restructuring charges accrued during the period	6,965		334		687		7,986
Cash payments / settlements during the period	(32,292)		(799)		(993)		(34,084)
Currency translation	2,282		1		(1)		2,282
Balance as of December 31, 2020	$	23,258	$	106	$	—	$	23,364

Impairment

Impairment expense is summarized as follows:


	Year Ended December 31,
(in thousands)	2020		2019
Impairment expense:
Goodwill associated with the Diversified Services reporting unit	$	168,568	$	2,125
Intangible customer relationships associated with Stork	26,671		33,657
Equity method investments in the Energy & Chemicals segment	86,096		256,769
Information technology assets	16,269		—
Total impairment expense	$	297,604	$	292,551

2020 Impairment

Our business has been adversely affected by the economic impacts of the outbreak of COVID-19 and the steep decline in oil prices that occurred in the early part of 2020. These events have created significant uncertainty and economic volatility and disruption, which have impacted and may continue to impact our business. We have experienced, and may continue to experience, reductions in demand for certain of our services and the delay or abandonment of ongoing or anticipated projects due to our clients’, suppliers’ and other third parties’ diminished financial condition or financial distress, as well as governmental budget constraints. These impacts are expected to continue or worsen under prolonged stay-at-home, social distancing, travel restrictions and other similar orders or restrictions. Significant uncertainty still exists concerning the magnitude of the impact and duration of these events. Because of these events, we performed interim impairment testing of our goodwill, intangible assets and investments and recognized the above impairment expense during the first quarter of 2020.

As part of our assessment of goodwill, the fair value of the reporting units was determined using an income based approach that utilized unobservable Level 3 inputs, including significant management assumptions such as expected awards, forecasted revenue and operating margins, weighted average cost of capital, working capital assumptions and general market trends and conditions.

The customer relationships' valuation approach utilized unobservable Level 3 inputs including ranges of assumptions of long-term revenue growth from 2% to 5.5% with a weighted average of 2.4%, weighted average cost of capital of 12% and a customer attrition factor of 10%.

The valuation of the equity method investments utilized unobservable Level 3 inputs based on the forecast of anticipated volumes and overhead absorption in a cyclical business.

2019 Impairment

During 2019, we recognized impairment expense on our intangible customer relationships associated with Stork. The fair value of the customer relationships was determined by a third party using an income-based approach that utilized unobservable Level 3 inputs, including significant management assumptions such as forecasted revenue and operating margins, customer attrition and weighted average cost of capital. The net carrying value of the customer relationships was $31 million as of December 31, 2019.

We also evaluated our significant investments and determined that certain of our investments were impaired during 2019. The fair value of these investments were determined using income-based approaches that utilized unobservable Level 3 inputs, including significant management assumptions such as forecasted revenue and operating margins and weighted average cost of capital. The net carrying value of these investments totaled $95 million as of December 31, 2019.