XML 23 R11.htm IDEA: XBRL DOCUMENT
v3.20.2

Asset Impairment | 6 Months Ended
--- | ---
Jun. 30, 2020
Asset Impairment Charges [Abstract] |
Asset Impairment | 4. Asset Impairment The Company tests goodwill for impairment at least annually or more frequently whenever events or circumstances occur indicating that it might be impaired. During the first quarter of 2020, the Company’s market capitalization declined significantly driven by current macroeconomic and geopolitical conditions including the collapse of oil prices caused by both surplus production and supply as well as the decrease in demand caused by the COVID-19 pandemic. In addition, the uncertainty related to oil demand continues to have a significant impact on the investment and operating plans of our primary customers. Based on these events, the Company concluded that it was more likely than not that the fair values of certain of its reporting units were less than their carrying values. Therefore, the Company performed an interim goodwill impairment test. For the three months ended March 31, 2020, goodwill was evaluated for impairment at the reporting unit level. The Company had five reporting units: U.S. Energy, U.S. Supply Chain, U.S. Process Solutions, Canada and International. The Company determined the fair values of three reporting units with goodwill were below their carrying values, resulting in a $230 million goodwill impairment which was included in impairment charges in the consolidated statements of operations. No tax benefit was reported as the goodwill impairment was either nondeductible for tax purposes or was subject to a valuation allowance. Goodwill by reportable segment is shown as follows (in millions):
|  | United States |  |  | Canada |  |  | International |  |  | Total |
Balance at December 31, 2019 (1) |  | $ | 125 |  |  | $ | 67 |  |  | $ | 53 |  |  | $ | 245 |
Impairment |  |  | (125 | ) |  |  | (60 | ) |  |  | (45 | ) |  |  | (230 | )
Foreign currency translation adjustments |  |  | — |  |  |  | (7 | ) |  |  | (8 | ) |  |  | (15 | )
Balance at June 30, 2020 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
| (1) | In the United States, Canada and International segments, net of prior years accumulated impairment of $393 million, $27 million and $54 million, respectively.
10 The Company evaluates the recoverability of long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. During the first quarter of 2020, the results of the Company's test for impairment of goodwill and the other negative market indicators described above were a triggering event that indicated that its long-lived assets were possibly impaired. The Company identified its reporting units as individual asset groups and measured long-lived assets recoverability by a comparison of the carrying amount and the undiscounted cash flows of the reporting unit. The results indicated that long-lived assets associated with three reporting units were not recoverable. Further, the estimated fair value of these assets was determined to be below their carrying value. As a result, for the three months ended March 31, 2020, the Company recognized $90 million of impairments of long-lived assets which were included in impairment charges in the consolidated statements of operations. No triggering events were identified in the second quarter of 2020 to indicate that the remaining carrying value of long-lived assets were not recoverable. The Company recognized a $4 million tax benefit related to the long-lived asset impairments. As of June 30, 2020, the long-lived assets consisted primarily of $109 million in property, plant and equipment, net and $46 million in operating right-of-use assets. The impairment of long-lived assets recognized in the first quarter is shown as follows (in millions):
|  | United States |  |  | International |  |  | Total |
Intangibles, net |  | $ | (62 | ) |  | $ | (22 | ) |  | $ | (84 | )
Property, plant and equipment, net |  |  | — |  |  |  | (4 | ) |  |  | (4 | )
Operating right-of-use assets |  |  | (1 | ) |  |  | (1 | ) |  |  | (2 | )
Total impairment |  | $ | (63 | ) |  | $ | (27 | ) |  | $ | (90 | )
The Company determined the fair value of both long-lived assets and goodwill primarily using the discounted cash flow method and in the case of goodwill, a multiples-based market approach for comparable companies when applicable. Given the current volatile market environment, the Company utilized third-party valuation advisors to assist us with these valuations. These analyses included significant judgment, including management’s short-term and long-term forecast of operating performance, discount rates based on the weighted average cost of capital, revenue growth rates, profitability margins, capital expenditures, the timing of future cash flows based on an eventual recovery of the oil and gas industry, and in the case of long-lived assets, the remaining useful life and service potential of the asset, all of which were classified as level 3 inputs under the fair value hierarchy. These impairment assessments incorporate inherent uncertainties, including projected commodity pricing, supply and demand for the Company’s products and future market conditions, which are difficult to predict in volatile economic environments. Discount rates utilized to value the reporting units were in a range from 11.5% to 12.8%.

X
- References No definition available. + Details
Name: | us-gaap_AssetImpairmentChargesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the details of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. Disclosure may also include a description of the impaired asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired asset is reported. + References No definition available. + Details
Name: | us-gaap_AssetImpairmentChargesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration