XML 28 R14.htm IDEA: XBRL DOCUMENT v3.6.0.2
Goodwill and intangible assets
 12 Months Ended
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and intangible assets
Goodwill and intangible assets
Goodwill
The changes in the carrying amount of goodwill from January 1, 2015 to December 31, 2016, were as follows (in thousands):
 
Drilling &
Subsea
Completions
Production & Infrastructure
Total
 
2016
2015
2016
2015
2016
2015
2016
2015
Goodwill Balance at January 1, net
$
334,595

$
472,891

$
316,914

$
307,448

$
17,527

$
18,142

$
669,036

$
798,481

Acquisitions, net of dispositions
—

—

—

13,977

—

—

—

13,977

Impairment
—

(123,200
)
—

—

—

—

—

(123,200
)
Impact of non-U.S. local currency translation
(17,189
)
(15,096
)
779

(4,511
)
117

(615
)
(16,293
)
(20,222
)
Goodwill Balance at December 31, net
$
317,406

$
334,595

$
317,693

$
316,914

$
17,644

$
17,527

$
652,743

$
669,036


Goodwill and intangible assets with indefinite lives are assessed for impairment annually or whenever an event indicating impairment may have occurred. During the year ended December 31, 2015, the Company elected to change the date of the Company's annual assessments of goodwill and indefinite lived intangible assets impairment from December 31 to October 1. This was a change in method of applying an accounting principle, which management believed was a preferable alternative as it better aligned the timing of the assessment with our planning and forecasting process and alleviated constraints on accounting resources during our annual reporting process. The change in the assessment date did not delay, accelerate, or avoid a potential impairment charge.
At October 1, 2016, the Company performed its annual impairment test on each of the reporting units and concluded that there had been no impairment because the estimated fair values of each of those reporting units exceeded its carrying value. Relevant events and circumstances which could have a negative impact on goodwill include: macroeconomic conditions; industry and market conditions, such as commodity prices; operating cost factors; overall financial performance; the impact of dispositions and acquisitions; and other entity-specific events. Further declines in commodity prices or sustained lower valuation for the Company's common stock could indicate a reduction in the estimate of reporting unit fair value which, in turn, could lead to an impairment of reporting unit goodwill.
After October 1, 2015, the Company continued to monitor events and circumstances which could have a negative impact on estimates of reporting unit fair value. Commodity prices had remained at low levels and the active rig count had continued to decline resulting in a significant decline in the Company’s market capitalization. While the Company incorporated a downturn into its forecasts in this October 1 annual test, several factors occurred late in the fourth quarter of 2015 that indicated an occurrence of further declines in market activity.  These factors included: 1) the OPEC confirmed that its members would not reduce production even in the face of low commodity prices and excess global oil supply; 2) oil prices declined further; 3) a consensus expectation developed that oil prices would stay lower for longer than previously expected; 4) exploration and production companies significantly decreased their budgets as the demand for oil and natural gas was lower and production was significantly less economical for them; and 5) macroeconomic concerns developed regarding a slowdown in the global economy. Due to this further deterioration of market conditions for our products, the Company performed an impairment test on all six reporting units. The Company identified and recorded an impairment charge of $123.2 million for its Subsea reporting unit for the year ended December 31, 2015. Following the impairment charge, at December 31, 2015, our Subsea reporting unit had a remaining balance of $73 million in goodwill.
The fair values were determined using the net present value of the expected future cash flows for each reporting unit. During the Company’s goodwill impairment analysis, the Company determines the fair value of each of its reporting units as a whole using a discounted cash flow analysis, which requires significant assumptions and estimates about the future operations of each reporting unit. The assumptions about future cash flows and growth rates are based on our current budget for 2017 and for future periods, as well as our strategic plans and management’s beliefs about future activity levels. The discount rate we used for future periods could change substantially if the cost of debt or equity were to significantly increase or decrease, or if we were to choose different comparable companies in determining the appropriate discount rate for our reporting units. Forecasted cash flows in future periods were estimated using a terminal value calculation, which considered long-term earnings growth rates. Accumulated impairment losses on goodwill were $168.8 million, $168.8 million and $45.6 million as of December 31, 2016, 2015, and 2014, respectively. There was no impairment of goodwill during the year ended December 31, 2016 and 2014, respectively.
Intangible assets
At December 31, 2016 and 2015, intangible assets consisted of the following, respectively (in thousands):
  
December 31, 2016
 
Gross carrying
amount
 
Accumulated
amortization
 
Net amortizable
intangibles
 
Amortization
period (in years)
Customer relationships
$
270,586

 
$
(115,381
)
 
$
155,205

 
4-15
Patents and technology
33,936

 
(12,225
)
 
21,711

 
5-17
Non-compete agreements
6,230

 
(5,594
)
 
636

 
3-6
Trade names
44,494

 
(17,944
)
 
26,550

 
10-15
Distributor relationships
22,160

 
(15,074
)
 
7,086

 
8-15
Trademark
5,230

 
—

 
5,230

 
Indefinite
Intangible Assets Total
$
382,636

 
$
(166,218
)
 
$
216,418

 
 

  
December 31, 2015
 
Gross carrying
amount
 
Accumulated
amortization
 
Net amortizable
intangibles
 
Amortization
period (in years)
Customer relationships
$
280,297

 
$
(101,636
)
 
$
178,661

 
4-15
Patents and technology
34,140

 
(10,264
)
 
23,876

 
5-17
Non-compete agreements
7,269

 
(6,292
)
 
977

 
3-6
Trade names
45,446

 
(15,890
)
 
29,556

 
10-15
Distributor relationships
22,160

 
(13,810
)
 
8,350

 
8-15
Trademark
5,230

 
—

 
5,230

 
Indefinite
Intangible Assets Total
$
394,542

 
$
(147,892
)
 
$
246,650

 
 

Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. During the year ended December 31, 2015, an impairment loss of $1.9 million was recorded on certain intangible assets within the Drilling and Subsea segment. The impaired intangible assets included trade names that were no longer in use and is recorded under "Impairment of intangible assets and goodwill" in the consolidated statement of comprehensive income (loss). No indicators of intangible asset impairment occurred during the years ended December 31, 2016 and 2014.
Amortization expense was $26.1 million, $27.3 million and $27.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. The total weighted average amortization period is 14 years and the estimated future amortization expense for the next five years is as follows (in thousands):
Year ending December 31,
 
 
2017
 
$
26,647

2018
 
26,556

2019
 
26,207

2020
 
24,295

2021
 
23,730