Halliburton 2015 Annual Report Download - page 71

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Baker Hughes acquisition is terminated, and therefore these businesses are no longer considered held for sale, we would
reclassify the assets as held and used at the lower of fair value or carrying value less ceased depreciation and amortization
expense as of that date. Additionally, we recorded $103 million of capitalized divestiture costs within "Other current assets" on
our consolidated balance sheets as of December 31, 2015, which we would record as an expense in our statement of operations
if the acquisition is not consummated.
When an asset is classified as held for sale, the asset’s book value is evaluated and adjusted to the lower of its carrying
amount or fair value less cost to sell. As of December 31, 2015, we determined the fair value less cost to sell exceeded the
carrying amount of our assets held for sale.
A summary of the carrying amounts of assets and liabilities held for sale on our consolidated balance sheet as of
December 31, 2015 related to the anticipated divestitures discussed above is detailed below.
Millions of dollars December 31,
2015
Assets
Property, plant, and equipment $ 1,206
Inventories 576
Goodwill 276
Patents and other intangibles 57
Total assets $ 2,115
Liabilities
Employee benefit liabilities (a) $ 46
Total liabilities $ 46
(a) Liabilities held for sale are classified within “Other current liabilities” on our consolidated
balance sheet as of December 31, 2015.
In the third quarter of 2015, we announced that we also intended to divest our expandable liner hangers business in
connection with the pending Baker Hughes acquisition, but the anticipated divestiture did not meet all of the requirements for
classification as assets held for sale. We have recently proposed a revised and enhanced divestiture package to the DOJ, which
no longer includes our expandable liner hangers business.
The final sale of each of the businesses described above, as well as any other businesses disposed of in connection
with the Baker Hughes acquisition, will be subject to the ability to negotiate acceptable terms and conditions, each company's
Board of Directors approval, as applicable, and final approval of the Baker Hughes acquisition by competition authorities. We
anticipate that each company would complete the sale of divested businesses concurrent with the closing of the Baker Hughes
acquisition.
Note 3. Impairments and Other Charges
We carry a variety of long-lived assets on our balance sheet including property, plant and equipment, goodwill, and
other intangibles. We conduct impairment tests on long-lived assets at least annually, and more frequently whenever events or
changes in circumstances indicate that the carrying value may not be recoverable. We review the recoverability of the carrying
value of our assets based upon estimated future cash flows while taking into consideration assumptions and estimates including
the future use of the asset, remaining useful life of the asset, and service potential of the asset. Additionally, inventories are
valued at the lower of cost or market.
During the year ended December 31, 2015, as a result of the downturn in the energy market and its corresponding
impact on our business outlook, we determined the carrying amount of a number of our long-lived assets exceeded their
respective fair values due to projected declines in asset utilization, and that the cost of some of our inventory exceeded its
market value; therefore, we recorded corresponding impairments and other charges. Additionally, we initiated a company-wide
reduction in workforce by approximately 25% during 2015 intended to reduce costs and better align our workforce with
anticipated activity levels in the near-term, which resulted in us recording severance costs relating to termination benefits. We
also recorded a write-off of our operations in both Libya and Yemen during the first quarter of 2015 due to our decision to exit
our operations in these countries. As part of the anticipated divestitures of certain businesses included in our Drilling and
Evaluation operating segment, we are incurring certain non-capitalizable costs, which we have included within "other matters"
in the table below.
Primarily as a result of the events described above, we recorded charges of approximately $2.2 billion and $129
million during the years ended December 31, 2015 and 2014, respectively, which consisted of equipment write-offs, asset
impairments, expenses and write-downs related to idle equipment, inventory write-downs, impairments of intangible assets,
severance costs, country and facility closures, and other items. We also recorded a $199 million foreign currency exchange loss
in Venezuela during the first quarter of 2015 as discussed in further detail below.