What changed in this filing

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Item 1. Financial Statements

2020-07-29 compared with 2020-05-04 · 319 added, 275 removed, 766 unchanged (44% of the section changed)

19 unchanged sentences

Accounts payable

Dividends payable

Accrued liabilities

7 unchanged sentences

Shareholders' Equity:

Common stock, $.10 par value, 160,000,000 shares authorized,112,151,563 and 112,080,262 shares issued as of March 31, 2020 and September 30, 2019, respectively, and 107,418,296 and 108,437,904 shares outstanding as of March 31, 2020 and September 30, 2019, respectively

Common stock, $.10 par value, 160,000,000 shares authorized,112,151,563 and 112,080,262 shares issued as of June 30, 2020 and September 30, 2019, respectively, and 107,471,295 and 108,437,904 shares outstanding as of June 30, 2020 and September 30, 2019, respectively

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

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Accumulated other comprehensive loss

Treasury stock, at cost, 4,733,267 shares and 3,642,358 shares as of March 31, 2020 and September 30, 2019, respectively

Treasury stock, at cost, 4,680,268 shares and 3,642,358 shares as of June 30, 2020 and September 30, 2019, respectively

Total shareholders’ equity

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except per share amounts)

8 unchanged sentences

Asset impairment charge

Restructuring charges

Gain on sale of assets

Operating income from continuing operations

Operating loss from continuing operations

Other income (expense)

3 unchanged sentences

Gain on sale of subsidiary

Income (loss) from continuing operations before income taxes

Income tax provision (benefit)

Income (loss) from continuing operations

Loss from continuing operations before income taxes

Income tax benefit

Loss from continuing operations

Income from discontinued operations before income taxes

Income tax provision

Loss from discontinued operations

Net income (loss)

Basic earnings (loss) per common share:

Income (loss) from continuing operations

Income (loss) from discontinued operations

Basic loss per common share:

Loss from continuing operations

Loss from discontinued operations

Net income (loss)

Diluted earnings (loss) per common share:

Income (loss) from continuing operations

Diluted loss per common share:

Loss from continuing operations

Loss from discontinued operations

Net income (loss)

Weighted average shares outstanding:

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HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

Net income (loss)

Other comprehensive income, net of income taxes:

Minimum pension liability adjustments, net of income taxes of ($0.2) million and ($0.3) million for the three and six months ended March 31, 2020, respectively, and ($0.1) million and ($0.1) million for the three and six months ended March 31, 2019, respectively

Minimum pension liability adjustments, net of income taxes of ($0.3) million and ($0.6) million for the three and nine months ended June 30, 2020, respectively, and ($0.1) million and ($0.2) million for the three and nine months ended June 30, 2019, respectively

Other comprehensive income

Comprehensive income (loss)

Comprehensive loss

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

Three and Six Months Ended March 31, 2020

Three and Nine Months Ended June 30, 2020

(in thousands, except per share amounts)

18 unchanged sentences

Balance, March 31, 2020

Comprehensive income:

Other comprehensive income

Dividends declared ($0.25 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

Vesting of restricted stock awards, net of shares withheld for employee taxes

Stock-based compensation

Balance, June 30, 2020

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

Three and Six Months Ended March 31, 2019

Three and Nine Months Ended June 30, 2019

(in thousands, except per share amounts)

19 unchanged sentences

Balance, March 31, 2019

Comprehensive income:

Other comprehensive income

Dividends declared ($0.71 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

Vesting of restricted stock awards, net of shares withheld for employee taxes

Stock-based compensation

Reclassification of stranded tax effect for adoption of ASU No.

Balance, June 30, 2019

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands)

Cash flows from operating activities:

Net income (loss)

Adjustment for loss from discontinued operations

Income (loss) from continuing operations

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustment for (income) loss from discontinued operations

Loss from continuing operations

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

Asset impairment charges

Restructuring charges

Amortization of debt discount and debt issuance costs

Provision for (recovery of) bad debt

Provision for bad debt

Stock-based compensation

2 unchanged sentences

Gain on sale of subsidiary

Deferred income tax (benefit) expense

Change in assets and liabilities increasing (decreasing) cash:

Deferred income tax benefit

Change in assets and liabilities:

Accounts receivable

25 unchanged sentences

Net cash used in financing activities

Net decrease in cash and cash equivalents and restricted cash

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of period

4 unchanged sentences

Income tax paid, net

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Payments for operating leases

Changes in accounts payable and accrued liabilities related to purchases of property, plant and equipment

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(“H&P,” which, together with its subsidiaries, is identified as the “Company,” “we,” “us,” or “our,” except where stated or the context requires otherwise) through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.

Our operations are organized into the following reportable business segments:

Land, Offshore, International Land and H&P Technologies.

Additionally, during the fourth quarter of fiscal year 2019, we migrated our FlexApp offerings into our H&P Technologies business segment.

The activity of our FlexApps was previously included in our U.S.

Land segment.

All segment disclosures have been restated, as practicable, for these segment changes.

Certain other corporate activities, our real estate operations, our incubator program for new research and development projects and our wholly owned captive insurance companies are included in "Other".

Refer to Note 17—Business Segments and Geographic Information for further details on our reportable segments.

Land operations are primarily located in Colorado, Louisiana, Ohio, Oklahoma, New Mexico, North Dakota, Pennsylvania, Texas, Utah, West Virginia and Wyoming.

Additionally, Offshore operations are conducted in the Gulf of Mexico and our International Land operations have rigs primarily located in four international locations:

During the third quarter of fiscal year 2020, we restructured our operations (see Note 18—Restructuring Charges ) to accommodate scale during an industry downturn and to re-organize our operations to align to new marketing and management strategies.

Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

As a result, beginning with the third quarter of fiscal year 2020, our contract drilling services operations were organized into the following reportable operating business segments:

North America Solutions, Offshore Gulf of Mexico and International Solutions.

All segment disclosures have been recast for these segment changes.

Our real estate operations, our incubator program for new research and development projects and our wholly-owned captive insurance companies are included in "Other." Refer to Note 17—Business Segments and Geographic Information for further details on our reportable segments.

Our North America Solutions operations are primarily located in Colorado, Louisiana, Ohio, Oklahoma, New Mexico, North Dakota, Pennsylvania, Texas, Utah, West Virginia and Wyoming.

Additionally, Offshore Gulf of Mexico operations are conducted in the Gulf of Mexico and our International Solutions operations have rigs primarily located in four international locations:

Argentina, Bahrain, Colombia and United Arab Emirates.

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As a result of the sale, 100 % of TerraVici's outstanding capital stock was transferred to the purchaser in exchange for approximately $ 15.1 million , resulting in a total gain on the sale of TerraVici of approximately $ 15.0 million .

Prior to the sale, TerraVici was a component of the H&P Technologies reportable segment.

Prior to the sale, TerraVici was a component of the H&P Technologies reportable segment, which transitioned to the North America Solutions operating segment.

This transaction does not represent a strategic shift in our operations and will not have a significant effect on our operations and financial results going forward.

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Principles of Consolidation

The unaudited consolidated financial statements include the accounts of Helmerich & Payne, Inc.

The unaudited condensed consolidated financial statements include the accounts of Helmerich & Payne, Inc.

and its domestic and foreign subsidiaries.

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All significant intercompany accounts and transactions have been eliminated in consolidation.

COVID-19 and OPEC+ Production Escalation Impacts

The recent outbreak of a novel strain of coronavirus (“COVID-19”) and its development into a pandemic in March 2020 has resulted in significant economic disruption globally, including in North America and many of the other geographic areas where we operate, or where our customers are located or suppliers or vendors operate.

COVID-19 and OPEC+ Production Impacts

The recent outbreak of a novel strain of coronavirus (“COVID-19”) and its development into a pandemic have resulted in significant global economic disruption, including North America and many of the other geographic areas where we operate, or where our customers are located, or suppliers or vendors operate.

Actions taken to prevent the spread of COVID-19 by governmental authorities around the world, including imposing mandatory closures of all non-essential business facilities, seeking voluntary closures of such facilities and imposing restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions, have significantly reduced global economic activity, thereby resulting in lower demand for crude oil.

In particular, the travel restrictions in certain countries where we operate, including the closure of their borders to travel into the country, have resulted in an inability to effectively staff or rotate personnel at, and thereby operate, certain of our rigs and could lead to an inability to fulfill our contractual obligations under contracts with customers.

State and local authorities have also implemented multi-step policies with the goal of re-opening.

However, certain jurisdictions have begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases, which has resulted in us experiencing further disruptions to our business operations.

In addition, the perceived risk of infection and health risk associated with COVID-19, and the illness of many individuals across the globe, has and will continue to alter behaviors of consumers, and policies of companies around the world, resulting in many of the same effects intended by such governmental authorities to stop the spread of COVID-19, such as self-imposed or voluntary social distancing and quarantining and remote work policies.

We are complying with local governmental jurisdiction policies and procedures where our operations reside.

In some cases, policies and procedures are more stringent in our foreign operations than in our domestic operations and this has resulted in a complete suspension of all drilling operations in at least one foreign jurisdiction.

In some cases, policies and procedures are more stringent in our foreign operations than in our North America operations and this has resulted in a complete suspension, for a certain period of time, of all drilling operations in at least one foreign jurisdiction.

In addition, a customer in one foreign jurisdiction has claimed force majeure resulting in zero chargeable revenues during the suspension period.

1 unchanged sentence

Consequently, we have seen a significant decrease in customer 2020 capital budgets and a corresponding dramatic decline in the demand for land rigs.

Further, in April 2020, OPEC+ finalized an agreement to cut oil production by 9.7 million barrels per day during May and June 2020.

On June 6, 2020, OPEC+ agreed to extend such production cuts until the end of July 2020.

However, prices in the oil and gas market have remained depressed, as the oversupply and lack of demand in the market persist.

Oil and natural gas prices are expected to continue to be volatile as a result of the near-term production instability and the ongoing COVID-19 outbreaks and as changes in oil and natural gas inventories, industry demand and global and national economic performance are reported.

These events have had, and could continue to have, an adverse impact on numerous aspects of our business, financial condition and results of operations.

and the parts of the world in which we operate and the related impact on the oil and gas industry, all of which are highly uncertain and cannot be predicted with certainty at this time.

The ultimate extent of the impact of COVID-19 and prolonged excess oil supply on our business, financial condition and results of operations will depend largely on future developments, including the duration and spread of the COVID-19 outbreak within the United States and the parts of the world in which we operate and the related impact on the oil and gas industry, all of which are highly uncertain and cannot be predicted with certainty at this time.

From a financial perspective, we believe the Company is operationally and financially well positioned to continue operating even through a more protracted disruption caused by COVID-19, oil oversupply and low oil prices.

At March 31, 2020, the Company had cash and cash equivalents and short-term investments of $ 381.7 million .

At June 30, 2020, the Company had cash and cash equivalents and short-term investments of $ 492.0 million .

The 2018 Credit Facility (as defined within Note 8—Debt ) has $ 750.0 million in aggregate availability with a maximum of $ 75.0 million available for use as letters of credit.

As of March 31, 2020 , there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of June 30, 2020 , there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

We currently do not anticipate the need to draw on the 2018 Credit Facility.

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Our cash, cash equivalents and short-term investments are subject to potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits.

We had restricted cash of $ 44.1 million and $ 34.2 million at March 31, 2020 and 2019 , respectively, and $ 35.0 million and $ 41.8 million at September 30, 2019 and 2018 , respectively.

Of the total at March 31, 2020 and September 30, 2019 , $ 1.9 million and $ 3.0 million , respectively, is related to the acquisition of drilling technology companies, $ 2.0 million as of both fiscal period ends is from the additional capitalization of our wholly-owned captive insurance company, $ 39.1 million and $ 30.0 million , respectively, represents an additional amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies, and $ 1.1 million at March 31, 2020 is for other restricted purposes.

We had restricted cash of $ 50.0 million and $ 34.3 million at June 30, 2020 and 2019 , respectively, and $ 35.0 million and $ 41.8 million at September 30, 2019 and 2018 , respectively.

Of the total at June 30, 2020 and September 30, 2019 , $ 1.9 million and $ 3.0 million , respectively, is related to the acquisition of drilling technology companies, $ 2.0 million as of both fiscal period ends is from the additional capitalization of our wholly-owned captive insurance company, $ 46.1 million and $ 30.0 million , respectively, represents an additional amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies, and $ 0.03 million at June 30, 2020 is for other restricted purposes.

The restricted amounts are primarily invested in federally insured deposit accounts.

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The prospective impact was not material to our unaudited condensed consolidated financial statements and disclosures.

Standards that are not yet adopted as of March 31, 2020

Standards that are not yet adopted as of June 30, 2020

2016-13, Financial Instruments – Credit Losses (Topic 326) and related ASUs issued subsequent

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Changes in those reserves will be reflected in segment earnings as they occur.

We also intend to continue utilizing the Captive to insure the deductibles for our assets under a property insurance program.

We will continue to utilize the Captive to finance the risk of loss to equipment and rig property assets.

The Company and the Captive maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs.

Our operating subsidiaries are paying premiums to the Captive, typically on a monthly basis, for the estimated losses based on the external actuarial analysis.

These premiums are held in a restricted account, resulting in a transfer of risk from our operating subsidiaries to the Captive for the deductible self-insurance retention.

The actuarial estimated underwriting expenses for the three and six months ended March 31, 2020 was approximately $ 6.0 million and $ 14.7 million , respectively, and was recorded within Contract drilling services operating expenses in our Unaudited Condensed Consolidated Statement of Operations.

Intercompany premium revenues and expenses during the three and six months ended March 31, 2020 amounted to $ 10.5 million and $ 18.2 million , respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the U.S.

Land, Offshore, and International Land reportable operating segments and are reflected as intersegment sales within "Other".

The Company previously self-insured employee health plan exposures in excess of employee deductibles.

Starting in the second quarter of fiscal year 2020 , the Captive insurer issued a stop-loss program that will pay for health plan claims that exceed $ 50,000 .

These premiums are currently held in a restricted account, resulting in a transfer of risk from our operating subsidiaries to the Captive.

The actuarial estimated underwriting expenses for the three and nine months ended June 30, 2020 was approximately $ 1.1 million and $ 15.8 million , respectively, and was recorded within contract drilling services operating expenses in our Unaudited Condensed Consolidated Statement of Operations.

Intercompany premium revenues and expenses during the three and nine months ended June 30, 2020 amounted to $ 10.4 million and $ 28.9 million , respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, Offshore Gulf of Mexico, and International Solutions reportable operating segments and are reflected as intersegment sales within "Other." The Company previously self-insured employee health plan exposures in excess of employee deductibles.

Starting in the second quarter of fiscal year 2020 , the Captive insurer issued a stop-loss program that will reimburse the Company's health plan for claims that exceed $ 50,000 .

This program will also be reviewed at the end of each policy year by an outside actuary.

One hundred percent of the stop-loss premium is being set aside by the Captive as reserves.

The stop-loss program does not have a material impact on a consolidated basis.

International Land Drilling Risks

International Land drilling operations may significantly contribute to our revenues and net operating income.

International Solutions Drilling Risks

International Solutions drilling operations may significantly contribute to our revenues and net operating income.

There can be no assurance that we will be able to successfully conduct such operations, and a failure to do so may have an adverse effect on our financial position, results of operations, and cash flows.

Also, the success of our international land operations will be subject to numerous contingencies, some of which are beyond management’s control.

Also, the success of our International Solutions operations will be subject to numerous contingencies, some of which are beyond management’s control.

These contingencies include general and regional economic conditions, fluctuations in currency exchange rates, modified exchange controls, changes in international regulatory requirements and international employment issues, risk of expropriation of real and personal property and the burden of complying with foreign laws.

Additionally, in the event that extended labor strikes occur or a country experiences significant political, economic or social instability, we could experience shortages in labor and/or material and supplies necessary to operate some of our drilling rigs, thereby potentially causing an adverse material effect on our business, financial condition and results of operations.

Many of the countries in which we operate have implemented measures in response to the COVID-19 pandemic.

These measures, including imposing mandatory closures of all non-essential business facilities, seeking voluntary closures of such facilities and imposing restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions, have significantly reduced global economic activity, thereby, resulting in lower demand for crude oil.

We have also experienced certain risks related to our Argentine operations.

In Argentina, while our dayrate is denominated in U.S.

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parent has been limited.

As of March 31, 2020 , our cash balance in Argentina was $ 33.7 million .

In the past, the Argentine government has also instituted price controls on crude oil, diesel and gasoline prices and instituted an exchange rate freeze in connection with those prices.

These price controls and an exchange rate freeze could be instituted again in the future.

In addition, in 2020, the Argentine government introduced labor regulations that prohibit employee dismissals or suspensions without just cause, for lack of (or reduction in) work or due to force majeure, subject to certain exceptions that may result in the payment of compensation to suspended employees and/or increased severance costs to the company.

These prohibitions have resulted in significant challenges for our Argentine operations and it remains uncertain for how long they will be in effect.

Further, there are ongoing concerns regarding Argentina's debt burden, as Argentina defaulted on some of its international debt obligations in May 2020.

These concerns could further negatively impact Argentina's economy and adversely affect our Argentine operations.

Argentina’s economy is considered highly inflationary, which is defined as cumulative inflation rates exceeding 100 percent in the most recent three-year period based on inflation data published by the respective governments.

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dollars with gains and losses resulting from foreign currency transactions included in current results of operations.

For the three and six months ended March 31, 2020 , we experienced aggregate foreign currency losses of $ 3.4 million and $ 2.8 million , respectively.

For the three and six months ended March 31, 2019 , we recorded aggregate foreign currency losses of $ 0.7 million and $ 4.6 million , respectively.

For the three and nine months ended June 30, 2020 , we experienced aggregate foreign currency losses of $ 3.2 million and $ 6.0 million , respectively.

For the three and nine months ended June 30, 2019 , we recorded aggregate foreign currency losses of $ 0.1 million and $ 4.6 million , respectively.

In the future, we may incur larger currency devaluations, foreign exchange restrictions or other difficulties repatriating U.S.

dollars from Argentina or elsewhere, which could have a material adverse impact on our business, financial condition and results of operations.

As of June 30, 2020 , our cash balance in Argentina was $ 38.6 million .

Because of the impact of local laws, our future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which we hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities.

While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms acceptable to us.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and six months ended March 31, 2020 , approximately 8.2 percent and 8.0 percent , respectively, of our operating revenues were generated from international locations in our contract drilling business compared to 7.1 percent and 8.1 percent during the three and six months ended March 31, 2019 , respectively.

During the three and six months ended March 31, 2020 , approximately 66.4 percent and 76.2 percent , respectively, of operating revenues from international locations were from operations in South America compared to 93.9 percent and 90.9 percent during the three and six months ended March 31, 2019 , respectively.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and nine months ended June 30, 2020 , approximately 7.3 percent and 7.9 percent , respectively, of our operating revenues were generated from international locations in our contract drilling business compared to 6.8 percent and 7.7 percent during the three and nine months ended June 30, 2019 , respectively.

During the three and nine months ended June 30, 2020 , approximately 33.2 percent and 68.2 percent , respectively, of operating revenues from international locations were from operations in South America compared to 95.1 percent and 92.1 percent during the three and nine months ended June 30, 2019 , respectively.

Substantially all of the South American operating revenues were from Argentina and Colombia.

The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations.

NOTE 3 BUSINESS COMBINATIONS

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DrillScan is a leading provider of proprietary drilling engineering software, well engineering services and training for the oil and gas industry.

The operations of DrillScan are included in the H&P Technologies reportable business segment.

The operations of DrillScan are included in the North America Solutions reportable segment.

The acquisition of DrillScan was accounted for as a business combination in accordance with FASB ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recorded at their acquisition date fair values.

In accordance with GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination.

This acquisition is still within this measurement period, and as a result, the acquisition date fair values we have recorded for the assets acquired and liabilities assumed are subject to change as a result of new information identified.

During the three and six months ended March 31, 2020, as a result of new information identified related to the acquisition of DrillScan, the acquisition date fair value of the contingent consideration and goodwill increased by approximately $ 1.2 million .

During the second quarter of fiscal year 2020, as a result of new information identified related to the acquisition of DrillScan, the acquisition date fair value of the contingent consideration and goodwill increased by approximately $ 1.2 million .

This acquisition's measurement period closed during the quarter ended June 30, 2020 and, as a result, the purchase price accounting was finalized.

On November 1, 2018, we completed an acquisition of an unaffiliated company, Angus Jamieson Consulting (“AJC”), which is now a wholly-owned subsidiary of the Company, for total consideration of approximately $ 3.4 million .

AJC is a software-based training and consultancy company based in Inverness, Scotland and is widely recognized as an industry leader in wellbore positioning.

The operations of AJC are included in the H&P Technologies reportable segment.

The operations of AJC are included in the North America Solutions reportable segment.

The acquisition of AJC has been accounted for as a business combination in accordance with FASB ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recorded at their acquisition date fair values.

The allocation of the purchase price includes goodwill of $ 3.1 million .

The allocation of the purchase price included goodwill of $ 3.1 million .

NOTE 4 DISCONTINUED OPERATIONS

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Expenses incurred for in-country obligations are reported as discontinued operations within our Unaudited Condensed Consolidated Statements of Operations.

The activity for the three and six months ended March 31, 2020 was primarily due to the remeasurement of uncertain tax liabilities as a result of the devaluation of the Venezuela Bolivar.

The activity for the three and nine months ended June 30, 2020 was primarily due to the remeasurement of uncertain tax liabilities as a result of the devaluation of the Venezuela Bolivar.

Early in 2018, the Venezuelan government announced that it changed the existing dual-rate foreign currency exchange system by eliminating its heavily subsidized foreign exchange rate, which was 10 Bolivars per United States dollar, and relaunched an exchange system known as DICOM.

The Venezuela government also established a new currency called the “Sovereign Bolivar,” which was determined by the elimination of five zeros from the old currency.

The DICOM floating rate was approximately 80,946 Bolivars per United States dollar at March 31, 2020 .

The DICOM floating rate was approximately 204,418 Bolivars per United States dollar at June 30, 2020 .

The DICOM floating rate might not reflect the barter market exchange rates.

NOTE 5 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of March 31, 2020 and September 30, 2019 consisted of the following:

Property, plant and equipment as of June 30, 2020 and September 30, 2019 consisted of the following:

(in thousands)

Estimated Useful Lives

March 31, 2020

June 30, 2020

September 30, 2019

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As these various projects are completed, the costs are then classified to their appropriate useful life category.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 130.2 million and $ 141.7 million for the three months ended March 31, 2020 and 2019 , respectively, and $ 258.5 million and $ 281.7 million for the six months ended March 31, 2020 and 2019 , respectively.

Included in depreciation expenses is abandonments of $ 0.9 million and $ 4.4 million for the three months ended March 31, 2020 and 2019 , respectively, and $ 1.7 million and $ 5.4 million for the six months ended March 31, 2020 and 2019 , respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 108.4 million and $ 141.9 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 366.8 million and $ 423.7 million for the nine months ended June 30, 2020 and 2019 , respectively.

Included in depreciation expenses is abandonments of $ 0.9 million and $ 1.4 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 2.6 million and $ 6.8 million for the nine months ended June 30, 2020 and 2019 , respectively.

Gain on Sale of Assets

We had gains on sales of assets of $ 10.3 million and $ 11.5 million for the three months ended March 31, 2020 and 2019 , respectively, and $ 14.6 million and $ 17.1 million for the six months ended March 31, 2020 and 2019 , respectively.

We had gains on sales of assets of $ 4.2 million and $ 10.0 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 18.8 million and $ 27.1 million for the nine months ended June 30, 2020 and 2019 , respectively.

These gains were primarily related to reimbursement for drill pipe damaged or lost in drilling operations.

Consistent with our policy, we evaluate our drilling rigs and related equipment for impairment whenever events or changes in circumstances indicate the carrying value of these assets may exceed the estimated undiscounted future net cash flows.

Our evaluation, among other things, includes a review of external market factors and an assessment on the future marketability of a specific rigs’ asset group.

During the three months ended March 31, 2020, several significant economic events took place that severely impacted the current demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with a decrease in the demand due to the COVID-19 pandemic.

Our evaluation, among other things, includes a review of external market factors and an assessment on the future marketability of specific rigs’ asset group.

During the second quarter of fiscal year 2020, several significant economic events took place that severely impacted the current demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with the decrease in the demand due to the COVID-19 pandemic.

To maintain a competitive edge in a challenging market, the Company’s management introduced a new strategy focused on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet.

This resulted in grouping the super-spec rigs of our legacy Domestic FlexRig3 asset group with our FlexRig5 asset group creating a new "Domestic super-spec FlexRig" asset group, while combining the legacy Domestic conventional asset group, FlexRig4 asset group and FlexRig3 non-super-spec rigs into one asset group (Domestic non-super-spec asset group) (See Note 18—Subsequent Events ).

Given the current and projected low utilization for our Domestic non-super-spec asset group and all International asset groups, we considered these economic factors to be indicators that these asset groups may be impaired.

At March 31, 2020, we performed impairment testing on our Domestic non-super-spec and International conventional, FlexRig3, and FlexRig4 asset groups which had an aggregate net book value of $ 605.8 million .

We concluded that the net book value of each asset group is not recoverable through estimated undiscounted cash flows and recorded a non-cash impairment charge of $ 441.4 million in the Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2020.

Of the $ 441.4 million total impairment charge recorded, $ 292.4 million and $ 149.0 million was recorded in the U.S.

Land and International Land segment, respectively.

As a result of these indicators, we performed impairment testing at March 31, 2020 on each of our Domestic non super-spec and International conventional, FlexRig3, and FlexRig4 asset groups which had an aggregate net book value of $ 605.8 million .

Of the $ 441.4 million total impairment charge recorded, $ 292.4 million and $ 149.0 million was recorded in the North America Solutions and International Solutions segments, respectively.

No further impairments were recognized in the third quarter of fiscal year 2020.

Impairment was measured as the amount by which the net book value of each asset group exceeds its fair value.

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The significant assumptions in the valuation are based on those of a market participant and are classified as Level 2 and Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures.

The Company also recorded an additional non-cash impairment charge related to in-progress drilling equipment and rotational inventory of $ 44.9 million and $ 38.6 million , respectively, which had aggregate book values of $ 68.4 million and $ 38.6 million , respectively, in the Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2020.

Of the $ 83.5 million total impairment charge recorded for in-progress drilling equipment and rotational inventory, $ 75.8 million and $ 7.7 million was recorded in the U.S.

Land and International Land segment, respectively.

As of March 31, 2020, the Company also recorded an additional non-cash impairment charge related to in-progress drilling equipment and rotational inventory of $ 44.9 million and $ 38.6 million , respectively, which had aggregate book values of $ 68.4 million and $ 38.6 million , respectively, in the Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2020.

Of the $ 83.5 million total impairment charge recorded for in-progress drilling equipment and rotational inventory, $ 75.8 million and $ 7.7 million was recorded in the North America Solutions and International Solutions segments, respectively.

Decommissioning

While the crude oil market imbalance is a global phenomenon, it has more acutely impacted the U.S.

market as a result of storage limitations during the three months ended June 30, 2020.

The abruptness of and the overall size of the decrease in demand for refined products, such as gasoline and diesel, has created an abundance of supply for such products which has caused the inventory levels of crude oil and its related refined products to become greatly elevated, reaching the high end of storage capabilities.

This has greatly reduced the need, or in some cases, entirely eliminated the ability of refineries to use crude oil as a feedstock.

As such, E&P companies, our customers, may have limited opportunities to offload their production and even then, the selling price could be at very low, uneconomical prices.

Consequently, some E&P companies have chosen to shut-in and stop production, not complete additional wells drilled and/or not drill any more wells until the market imbalance corrects and it is economical to resume production and drilling wells.

During the three months ended June 30, 2020, we decommissioned two rigs and 35 rigs from our legacy Domestic Conventional asset group and FlexRig3 asset group, respectively.

The decommissioned rigs were impaired as of March 31, 2020.

NOTE 6 LEASES

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The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening balance sheet on October 1, 2019.

Upon adoption of ASC 842, we recognized lease liabilities in relation to leases that had previously been classified as operating leases under the principles of ASC 840.

Upon the adoption of ASC 842, we recognized lease liabilities in relation to leases that had previously been classified as operating leases under the principles of ASC 840.

These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of October 1, 2019, as most of our contracts do not provide an implicit rate.

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Noncurrent Liabilities:

As of March 31, 2020 , segment assets and liabilities have all increased from September 30, 2019 as a result of the change in accounting policy.

As of June 30, 2020 , segment assets and liabilities have all increased from September 30, 2019 as a result of the change in accounting policy.

All reportable segments were affected by the change in policy.

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The lessor practical expedient is limited to circumstances in which the lease, if accounted for separately, would be classified as an operating lease under ASC 842.

With respect to our drilling service contracts that commenced or were amended during the six months ended March 31, 2020 , we concluded that our drilling contracts contain a lease component and that the non-lease component is the predominant element of the combined component of such contracts.

With respect to our drilling service contracts that commenced or were amended during the nine months ended June 30, 2020 , we concluded that our drilling contracts contain a lease component and that the non-lease component is the predominant element of the combined component of such contracts.

As such, we elected to apply the practical expedient to not separate the lease and non-lease components and account for the combined component under ASC 606.

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October 1, 2019

March 31, 2020

June 30, 2020

Operating lease commitments disclosed

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October 1, 2019

March 31, 2020

June 30, 2020

Total right-of-use assets

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Three Months Ended

March 31, 2020

Six Months Ended

March 31, 2020

June 30, 2020

Nine Months Ended

June 30, 2020

Operating lease cost

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Lease Terms and Discount Rates

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases as of March 31, 2020 .

March 31, 2020

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases as of June 30, 2020 .

June 30, 2020

Weighted average remaining lease term

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Lease Obligations

Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at March 31, 2020 (in thousands) are as follows:

Total rent expense was $ 4.7 million and $ 4.0 million for the three months ended March 31, 2020 and 2019 , respectively, and $ 9.6 million and $ 7.7 million for the six months ended March 31, 2020 and 2019 , respectively.

Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at June 30, 2020 (in thousands) are as follows:

Total rent expense was $ 4.3 million and $ 3.9 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 13.9 million and $ 11.6 million for the nine months ended June 30, 2020 and 2019 , respectively.

The future minimum lease payments for our Tulsa corporate office and our Tulsa industrial facility represent a material portion of the amounts shown in the table above.

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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 H&P Technologies reportable segment.

All of our goodwill is within our North America Solutions reportable segment.

The following is a summary of changes in goodwill (in thousands):

Balance at September 30, 2019

Balance at March 31, 2020

During the three and six months ended March 31, 2020 , as a result of new information identified related to the acquisition of DrillScan, the acquisition date fair value of the contingent consideration and goodwill increased by approximately $ 1.2 million .

Balance at June 30, 2020

Intangible Assets

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.

All of our intangible assets are within our H&P Technologies reportable segment.

All of our intangible assets are within our North America Solutions reportable segment.

Intangible assets consisted of the following:

March 31, 2020

June 30, 2020

September 30, 2019

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Customer relationships

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million and $ 1.4 million for the three months ended March 31, 2020 and 2019 , respectively, and $ 3.7 million and $ 2.8 million for six months ended March 31, 2020 and 2019 , respectively.

I ntangible amortization is estimated to be approximately $ 3.6 million for the remainder of

fiscal year 2020 , approximately $ 7.2 million for fiscal years 2021 and 2022 , approximately $ 6.5 million for fiscal year 2023 and approximately $ 6.4 million for fiscal year 2024 .

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million and $ 1.4 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 5.5 million and $ 4.2 million for nine months ended June 30, 2020 and 2019 , respectively.

I ntangible amortization is estimated to be approximately $ 1.8 million for the remainder of fiscal year 2020 , approximately $ 7.2 million for fiscal years 2021 and 2022 , approximately $ 6.5 million for fiscal year 2023 and approximately $ 6.4 million for fiscal year 2024 .

Consistent with our policy, we test goodwill annually for impairment in the fourth quarter of our fiscal year, or more frequently if there are indicators that goodwill might be impaired.

Due to the market conditions described in Note 5—Property, Plant and Equipment , we concluded that goodwill and intangible assets might be impaired and tested the H&P Technologies reporting unit, where the goodwill balance is allocated and the intangible assets are recorded, for recoverability.

This resulted in a goodwill only non-cash impairment charge of $ 38.3 million recorded in Asset Impairment Charge on the Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2020 .

The recoverable amount of the H&P Technologies segment as a reporting unit is determined based on a fair value calculation which uses cash flow projections based on the Company’s financial budgets approved by the board of directors covering a five-year period, and a discount rate of 14 percent .

Due to the market conditions described in Note 5—Property, Plant and Equipment , during the second quarter of fiscal year 2020, we concluded that goodwill might be impaired and tested the H&P Technologies reporting unit, where the goodwill balance is allocated, for recoverability.

This resulted in a non-cash impairment charge of $ 38.3 million recorded in the Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2020 .

The recoverable amount of the H&P Technologies reporting unit is determined based on a fair value calculation which uses cash flow projections based on the Company’s financial projections presented to the board of directors covering a five-year period, and a discount rate of 14 percent .

Cash flows beyond that five-year period have been extrapolated using the fifth-year data with no implied growth factor.

The recoverable amount of the intangible assets tested for impairment within the H&P Technologies reporting unit is determined based on undiscounted cash flow projections using the Company’s financial budgets approved by the board of directors covering a five-year period, and extrapolated for the remaining weighted average useful lives of the intangible assets.

The reporting unit level is defined as an operating segment or one level below an operating segment.

The recoverable amount of the intangible assets tested for impairment within the H&P Technologies reporting unit is determined based on undiscounted cash flow projections using the Company’s financial projections presented to the board of directors covering a five-year period, and extrapolated for the remaining weighted average useful lives of the intangible assets.

The most significant assumptions used in our cash flow model include timing on awards of future contracts, commercial pricing terms, utilization, discount rate, and the terminal value.

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We had the following unsecured long-term debt outstanding with maturities shown in the following table:

March 31, 2020

June 30, 2020

September 30, 2019

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The 2018 Credit Facility contains additional terms, conditions, restrictions and covenants that we believe are usual and customary in unsecured debt arrangements for companies of similar size and credit quality, including a limitation that priority debt (as defined in the credit agreement) may not exceed 17.5 percent of the net worth of the Company.

As of March 31, 2020 , there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of March 31, 2020 , we had two outstanding letters of credit with banks, in the amounts of $ 24.8 million and $ 2.1 million , respectively.

As of March 31, 2020 , we also had a $ 20.0 million unsecured standalone line of credit facility, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

Of the $ 20.0 million , $ 14.3 million of financial guarantees were outstanding as of March 31, 2020 .

As of June 30, 2020 , there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of June 30, 2020 , we had two outstanding letters of credit with banks, in the amounts of $ 24.8 million and $ 2.1 million , respectively.

As of June 30, 2020 , we also had a $ 20.0 million unsecured standalone line of credit facility, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

Of the $ 20.0 million , $ 14.3 million of financial guarantees were outstanding as of June 30, 2020 .

The applicable agreements for all unsecured debt contain additional terms, conditions and restrictions that we believe are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality.

At March 31, 2020 , we were in compliance with all debt covenants .

At June 30, 2020 , we were in compliance with all debt covenants .

NOTE 9 INCOME TAXES

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") became law.

The CARES Act, among other things, includes certain income tax provisions for corporations;

however, as of March 31, 2020, we are not anticipating any of the benefits to impact the Company’s current tax provision.

however, as of June 30, 2020, we are not anticipating any of the benefits to significantly impact the Company’s income tax provision.

We use an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods.

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Adjustments to the effective tax rate and estimates will occur as information and assumptions change.

Our income tax (benefit) provision from continuing operations for the three months ended March 31, 2020 and 2019 was $( 113.4 ) million and $ 25.1 million , respectively, resulting in effective tax rates of 21.2 percent and 25.9 percent , respectively.

Our income tax provision (benefit) from continuing operations for the six months ended March 31, 2020 and 2019 was $( 99.3 ) million and $ 26.4 million , respectively, resulting in effective tax rates of 20.3 percent and 24.8 percent , respectively.

The income tax benefit for the three and six months ended March 31, 2020 includes an estimated deferred tax benefit that is primarily due to the significant reduction in the GAAP basis of property as a result of the asset impairments.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three and six months ended March 31, 2020 and 2019 primarily due to state and foreign income taxes, permanent non-deductible items and discrete adjustments.

The Company made $ 43.5 million in income tax payments during the six months ended March 31, 2020 of which approximately $ 21.5 million relate to fiscal year 2019.

As of March 31, 2020 , $ 17.8 million of the payments have been classified as prepaid income tax to be applied to future income tax liabilities.

Our income tax benefit from continuing operations for the three months ended June 30, 2020 and 2019 was $ 17.6 million and $ 32.0 million , respectively, resulting in effective tax rates of 27.6 percent and 17.2 percent , respectively.

Our income tax benefit from continuing operations for the nine months ended June 30, 2020 and 2019 was $ 116.9 million and $ 5.6 million , respectively, resulting in effective tax rates of 21.1 percent and 7.0 percent , respectively.

The discrete adjustments for the three and nine months ended June 30, 2020 and 2019 relate to decreases in our deferred state income tax rate, return to provision adjustments, and reversals of uncertain tax liabilities.

For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax positions associated with our U.S.

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The repurchases may be made using our cash and cash equivalents or other available sources.

During the three and six months ended March 31, 2020 , we purchased 1.5 million common shares at an aggregate cost of $ 28.5 million , which are held as treasury shares.

We had no purchases of common shares during the six months ended March 31, 2019 .

A cash dividend of $ 0.71 per share was declared on September 4, 2019 for shareholders of record on November 11, 2019 and was paid on December 2, 2019, and a cash dividend of $ 0.71 per share was declared on December 13, 2019 for shareholders of record on February 10, 2020 and was paid on March 2, 2020 .

An additional cash dividend of $ 0.71 per share was declared on March 4, 2020 for shareholders of record on May 11, 2020, payable on June 1, 2020.

As a result, we recorded a dividend payable of $ 77.3 million within Accounts Payable on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2020 .

We had no purchases of common shares during the three months ended June 30, 2020 .

During the nine months ended June 30, 2020 , we purchased 1.5 million common shares at an aggregate cost of $ 28.5 million , which are held as treasury shares.

We had no purchases of common shares during the three and nine months ended June 30, 2019 .

A cash dividend of $ 0.71 per share was declared on March 4, 2020 for shareholders of record on May 11, 2020 and was paid on June 1, 2020.

An additional cash dividend of $ 0.25 per share was declared on June 3, 2020 for shareholders of record on August 17, 2020, payable on August 31, 2020.

As a result, we recorded a dividend payable of $ 27.2 million within Dividends Payable on our Unaudited Condensed Consolidated Balance Sheets as of June 30, 2020 .

Components of accumulated other comprehensive loss were as follows:

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Unrealized actuarial loss

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three and six months ended March 31, 2020 :

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three and nine months ended June 30, 2020 :

(in thousands)

Three Months Ended March 31, 2020

Six Months Ended March 31, 2020

Three Months Ended June 30, 2020

Nine Months Ended June 30, 2020

Balance at beginning of period

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Net current-period other comprehensive income

Balance at March 31, 2020

Balance at June 30, 2020

NOTE 11 REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract Drilling Services Revenue

Due to the continued decline in the price of oil, our customers have reduced their drilling activity and we have received rig release notifications for rigs under term and well-to-well contracts.

Due to the sharp decline in the price of oil during the second quarter of fiscal year 2020, our customers have reduced their drilling activity and we have received rig release notifications for rigs under term and well-to-well contracts.

The releases for rigs under term contracts result in early termination compensation owed to us, while releases for rigs under well-to-well contracts given outside the notification window per the contract result in notification fees owed to us.

During the three months ended March 31, 2020 and 2019 , early termination revenue associated with term contracts was approximately $ 8.2 million and $ 1.2 million , respectively, and $ 8.3 million for both the six months ended March 31, 2020 and 2019 .

During the three months ended March 31, 2020 and 2019 , notification fee revenue related to well-to-well contracts was approximately $ 2.2 million and $ 0.3 million , respectively, and $ 2.1 million and $ 0.3 million for the six months ended March 31, 2020 and 2019 , respectively.

Subsequent to March 31, 2020, we have received additional rig release notifications, which will result in additional early termination and notification fee revenue.

Refer to Note 18—Subsequent Events .

During the three months ended June 30, 2020 and 2019 , early termination revenue associated with term contracts was approximately $ 49.5 million and $ 0.8 million , respectively, and $ 57.8 million and $ 9.1 million , respectively, for the nine months ended June 30, 2020 and 2019 .

During the three months ended June 30, 2020 and 2019 , notification fee revenue related to well-to-well contracts was approximately $ 0.9 million and $ 0.8 million , respectively, and $ 3.0 million and $ 1.0 million for the nine months ended June 30, 2020 and 2019 , respectively.

As a result of the depressed market conditions and negative outlook for the near term, certain of our customers have opted to renegotiate existing drilling contracts.

During the three months ended March 31, 2020, we agreed to certain price concessions on some of our existing drilling contracts;

however, the total impact on current and future periods is not significant.

During the second quarter of fiscal year 2020, we agreed to certain price concessions on some of our existing drilling contracts;

however, the total impact on current and future periods is not material.

Contract Costs

We had capitalized fulfillment costs of $ 9.9 million and $ 13.9 million as of March 31, 2020 and September 30, 2019 , respectively.

We had capitalized fulfillment costs of $ 6.3 million and $ 13.9 million as of June 30, 2020 and September 30, 2019 , respectively.

Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of March 31, 2020 was approximately $ 837.6 million , of which approximately $ 413.1 million is expected to be recognized during the remainder of fiscal year 2020 , approximately $ 312.1 million during fiscal year 2021 , and approximately $ 112.4 million in fiscal year 2022 and thereafter.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of June 30, 2020 was approximately $ 650.7 million , of which approximately $ 173.3 million is expected to be recognized during the remainder of fiscal year 2020 , approximately $ 331.8 million during fiscal year 2021 , and approximately $ 145.6 million during fiscal year 2022 and thereafter.

These amounts do not include anticipated contract renewals.

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however, due to the level of capital deployed by our customers on underlying projects, we have not been materially adversely affected by contract cancellations or modifications in the past.

We do not have material long-term contracts related to our H&P Technologies segment.

However, the impact of the COVID-19 pandemic is inherently uncertain, and, as a result, the Company is unable to reasonably estimate the duration and ultimate impacts of the pandemic, including the effect it may have on our contractual obligations with our customers.

Contract Assets and Liabilities

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(in thousands)

March 31, 2020

June 30, 2020

September 30, 2019

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(in thousands)

March 31, 2020

June 30, 2020

Contract liabilities balance at September 30, 2019

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Revenue recognized during the period

Contract liabilities balance at March 31, 2020

Contract liabilities balance at June 30, 2020

NOTE 12 STOCK-BASED COMPENSATION

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Beginning with fiscal year 2019, we replaced stock options with performance share units as a component of our executives’ long-term equity incentive compensation.

As a result, there were no new non-qualified stock options granted during the six months ended March 31, 2020 .

As a result, there were no new non-qualified stock options granted during the nine months ended June 30, 2020 .

We have also eliminated stock options as an element of our non-employee director compensation program.

The Board has determined to award stock-based compensation to non-employee directors solely in the form of restricted stock.

During the six months ended March 31, 2020 , 727,009 shares of restricted stock awards and 258,857 performance share units were granted under the 2016 Plan and 54,118 shares of restricted stock awards were granted under the 2020 Plan.

During the nine months ended June 30, 2020 , 727,009 shares of restricted stock awards and 258,857 performance share units were granted under the 2016 Plan and 54,118 shares of restricted stock awards were granted under the 2020 Plan.

A summary of compensation cost for stock-based payment arrangements recognized in contract drilling services operating expense and selling, general and administrative expense is as follows:

Three Months Ended March 31,

Six Months Ended March 31,

Three Months Ended June 30,

Nine Months Ended June 30,

(in thousands)

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Performance share units

Of the total stock-based compensation expense, for the three and six months ended March 31, 2020 , $ 2.9 million and $ 5.3 million , respectively, was recorded in contract drilling services operating expenses on our Unaudited Condensed Consolidated Statements of Operations.

For the three and six months ended March 31, 2019 , $ 1.8 million and $ 3.4 million , respectively, was recorded in contract drilling services operating expenses.

Of the total stock-based compensation expense, for the three and six months ended March 31, 2020 , $ 7.9 million and $ 15.7 million , respectively, was recorded in selling, general and administrative expense on our Unaudited Condensed Consolidated Statements of Operations.

For the three and six months ended March 31, 2019 , $ 7.6 million and $ 13.2 million , respectively, was recorded in selling, general and administrative expense.

Stock-based compensation benefit included in restructuring charges

Of the total stock-based compensation expense, for the three and nine months ended June 30, 2020 , $ 2.4 million and $ 7.6 million , respectively, was recorded in contract drilling services operating expenses on our Unaudited Condensed Consolidated Statements of Operations.

For the three and nine months ended June 30, 2019 , $ 1.9 million and $ 5.4 million , respectively, was recorded in contract drilling services operating expenses.

Of the total stock-based compensation expense, for the three and nine months ended June 30, 2020 , $ 8.7 million and $ 24.5 million , respectively, was recorded in selling, general and administrative expense on our Unaudited Condensed

Consolidated Statements of Operations.

For the three and nine months ended June 30, 2019 , $ 6.9 million and $ 20.1 million , respectively, was recorded in selling, general and administrative expense.

Stock Options

A summary of stock option activity under all existing long-term incentive plans for the three and six months ended March 31, 2020 is presented in the following tables:

Three Months Ended March 31, 2020

A summary of stock option activity under all existing long-term incentive plans for the three and nine months ended June 30, 2020 is presented in the following tables:

Three Months Ended June 30, 2020

(in thousands, except per share amounts and years)

Term in Years

Outstanding at December 31, 2019

Forfeited/Expired

Outstanding at March 31, 2020

Vested and expected to vest at March 31, 2020

Exercisable at March 31, 2020

Six Months Ended March 31, 2020

Forfeited/Expired

Outstanding at June 30, 2020

Vested and expected to vest at June 30, 2020

Exercisable at June 30, 2020

Nine Months Ended June 30, 2020

(in thousands, except per share amounts and years)

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Forfeited/Expired

Outstanding at March 31, 2020

The total intrinsic value of options exercised during the three months ended March 31, 2019 was $ 0.1 million , and $ 0.3 million and $ 7.7 million during the six months ended March 31, 2020 and 2019 , respectively.

As of March 31, 2020 , the unrecognized compensation cost related to stock options was $ 2.3 million , which is expected to be recognized over a weighted-average period of 1.6 years.

Outstanding at June 30, 2020

No options were exercised during the three months ended June 30, 2020.

The total intrinsic value of options exercised during the three months ended June 30, 2019 was $ 0.3 million .

The total intrinsic value of options exercised during the nine months ended June 30, 2020 and 2019 was $ 0.3 million and $ 7.9 million , respectively.

As of June 30, 2020 , the unrecognized compensation cost related to stock options was $ 1.6 million , which is expected to be recognized over a weighted-average period of 1.4 years .

Restricted Stock

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The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date.

As of March 31, 2020 , there was $ 49.7 million of total unrecognized compensation cost related to unvested restricted stock awards.

As of June 30, 2020 , there was $ 38.8 million of total unrecognized compensation cost related to unvested restricted stock awards.

That cost is expected to be recognized over a weighted-average period of 2.5 years.

A summary of the status of our restricted stock awards as of March 31, 2020 and changes in non-vested restricted stock outstanding during the six months then ended is presented below:

Six Months Ended March 31, 2020

A summary of the status of our restricted stock awards as of June 30, 2020 and changes in non-vested restricted stock outstanding during the nine months then ended is presented below:

Nine Months Ended June 30, 2020

(in thousands, except per share amounts)

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Non-vested restricted stock outstanding at September 30, 2019

Non-vested restricted stock outstanding at March 31, 2020

Non-vested restricted stock outstanding at June 30, 2020

The number of restricted stock awards granted includes phantom shares that confer the benefits of owning company stock without the actual ownership or transfer of any shares.

The number of phantom shares granted for the nine months ended June 30, 2020 was 20,616 .

The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.

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The valuation model assumes dividends are immediately reinvested.

As of March 31, 2020 , there was $ 11.6 million of unrecognized compensation cost related to unvested performance share units.

That cost is expected to be recognized over a weighted-average period of two years .

A summary of the status of our performance share units as of March 31, 2020 and changes in non-vested performance share units outstanding during the six months then ended is presented below:

Six Months Ended March 31, 2020

As of June 30, 2020 , there was $ 8.5 million of unrecognized compensation cost related to unvested performance share units.

That cost is expected to be recognized over a weighted-average period of 1.9 years .

A summary of the status of our performance share units as of June 30, 2020 and changes in non-vested performance share units outstanding during the nine months then ended is presented below:

Nine Months Ended June 30, 2020

(in thousands, except per share amounts)

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Non-vested performance share units outstanding at September 30, 2019

Non-vested performance share units outstanding at March 31, 2020

The weighted-average fair value calculation for performance share units granted during the six months ended March 31, 2020 is based on the following weighted-average assumptions set forth in the table below.

Six Months Ended March 31, 2020

Non-vested performance share units outstanding at June 30, 2020

The weighted-average fair value calculation for performance share units granted during the nine months ended June 30, 2020 is based on the following weighted-average assumptions set forth in the table below.

Nine Months Ended June 30, 2020

Risk-free interest rate (1)

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Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, non-vested restricted stock and performance share units.

Under the two-class method of calculating earnings per share,

dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities.

The following table sets forth the computation of basic and diluted earnings (loss) per share:

Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities.

The following table sets forth the computation of basic and diluted loss per share:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except per share amounts)

Income (loss) from continuing operations

Loss from discontinued operations

Net income (loss)

Adjustment for basic earnings per share

Earnings allocated to unvested shareholders

Numerator for basic earnings (loss) per share:

Loss from continuing operations

Income (loss) from discontinued operations

Adjustment for basic loss per share

Loss allocated to unvested shareholders

Numerator for basic loss per share:

From continuing operations

From discontinued operations

Adjustment for diluted earnings (loss) per share:

Adjustment for diluted loss per share:

Effect of reallocating undistributed earnings of unvested shareholders

Numerator for diluted earnings (loss) per share:

Numerator for diluted loss per share:

From continuing operations

From discontinued operations

Denominator for basic earnings per share - weighted-average shares

Denominator for basic loss per share - weighted-average shares

Effect of dilutive shares from stock options, restricted stock and performance share units

Denominator for diluted earnings per share - adjusted weighted-average shares

Basic earnings (loss) per common share:

Income (loss) from continuing operations

Denominator for diluted loss per share - adjusted weighted-average shares

Basic loss per common share:

Loss from continuing operations

Loss from discontinued operations

Net income (loss)

Diluted earnings (loss) per common share:

Income (loss) from continuing operations

Diluted loss per common share:

Loss from continuing operations

Loss from discontinued operations

Net income (loss)

We had a net loss for three and six months ended March 31, 2020 .

We had a net loss for the three and nine months ended June 30, 2020 and 2019.

Accordingly, our diluted earnings per share calculation this period was equivalent to our basic earnings per share calculation since diluted earnings per share excluded any assumed exercise of equity awards.

These were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable period.

The following average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive:

The following average shares attributable to outstanding equity awards were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except per share amounts)

Shares excluded from calculation of diluted earnings (loss) per share

Shares excluded from calculation of diluted loss per share

Weighted-average price per share

9 unchanged sentences

This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The assets held in a Non-Qualified Supplemental Savings Plan are carried at fair value, which totaled $ 13.7 million at March 31, 2020 and $ 15.7 million at September 30, 2019 .

The assets held in a Non-Qualified Supplemental Savings Plan are carried at fair value, which totaled $ 16.3 million at June 30, 2020 and $ 15.7 million at September 30, 2019 .

The assets are comprised of mutual funds that are measured using Level 1 inputs.

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The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S.

Government and in federally insured deposit accounts.

The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those investments.

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at March 31, 2020 and September 30, 2019 .

The following table summarizes our assets and liabilities measured at fair value presented in our Unaudited Condensed Consolidated Balance Sheet as of March 31, 2020 :

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at June 30, 2020 and September 30, 2019 .

The following table summarizes our assets and liabilities measured at fair value presented in our Unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 :

(in thousands)

9 unchanged sentences

Contingent earnout liability

At March 31, 2020 , our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S.

At June 30, 2020 , our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S.

Agency issued debt securities, equity securities with active markets and money market funds that are classified as restricted assets.

1 unchanged sentence

For these items, quoted current market prices are readily available.

At March 31, 2020 , assets measured at fair value using Level 2 inputs include certificates of deposit, municipal bonds and corporate bonds measured using broker quotations that utilize observable market inputs.

At June 30, 2020 , assets measured at fair value using Level 2 inputs include certificates of deposit, municipal bonds and corporate bonds measured using broker quotations that utilize observable market inputs.

Our financial instruments measured using Level 3 unobservable inputs consist of potential earnout payments primarily associated with our business acquisitions in fiscal year 2019.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

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Settlements (1)

Net liabilities at March 31,

Net liabilities at June 30,

Settlements represent earnout payments that have been paid or earned during the period.

The following table provides quantitative information (in thousands) about our Level 3 unobservable inputs at March 31, 2020 :

The following table provides quantitative information (in thousands) about our Level 3 unobservable inputs at June 30, 2020 :

Valuation Technique

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It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.

The following information presents the supplemental fair value information about long-term fixed-rate debt at March 31, 2020 and September 30, 2019 :

The following information presents the supplemental fair value information about long-term fixed-rate debt at June 30, 2020 and September 30, 2019 :

(in millions)

March 31, 2020

June 30, 2020

September 30, 2019

4 unchanged sentences

The estimated fair value of our investments, reflected on our Unaudited Condensed Consolidated Balance Sheets as Investments, is based on Level 1 inputs.

As a result of the change in the fair value of our investments, we recorded a loss of $ 12.4 million and a loss of $ 9.6 million for the three and six months ended March 31, 2020 , respectively.

As a result of the change in the fair value of our investments, we recorded a gain of $ 2.3 million and a loss of $ 7.3 million for the three and nine months ended June 30, 2020 , respectively.

NOTE 15 EMPLOYEE BENEFIT PLANS

Components of Net Periodic Benefit Cost

The following provides information at March 31, 2020 and 2019 , related to the Company-sponsored domestic defined benefit pension plan, the Helmerich & Payne, Inc.

The following provides information at June 30, 2020 and 2019 , related to the Company-sponsored domestic defined benefit pension plan, the Helmerich & Payne, Inc.

Employee Retirement Plan (the “Pension Plan”):

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

3 unchanged sentences

Net pension expense

According to ASC 715, Compensation—Retirement Benefits, if the lump sum distributions made during a plan year exceed the total of the projected service cost and interest cost for the plan year, settlement accounting is required.

Lump sum payments exceeded this threshold during both the three and nine months ended June 30, 2019 and three and nine months ended June 30, 2020.

Accordingly, we recognized settlement expense of $ 1.5 million for the three and nine months ended June 30, 2019, and settlement expense of $ 1.8 million for the three and nine months ended June 30, 2020 in other expense within our Condensed Consolidated Statements of Operations.

Employer Contributions

We did no t contribute to the Pension Plan during the six months ended March 31, 2020 .

We did no t contribute to the Pension Plan during the nine months ended June 30, 2020 .

For the remainder of fiscal year 2020 , we do not expect minimum contributions required by law to be needed;

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Equipment, parts and supplies are ordered in advance to promote efficient construction and capital improvement progress.

At March 31, 2020 , we had purchase commitments for equipment, parts and supplies of approximately $ 12.7 million .

At June 30, 2020 , we had purchase commitments for equipment, parts and supplies of approximately $ 11.2 million .

Lease Obligations

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In October 2017, an employee of HPIDC suffered personal injury and subsequently brought a lawsuit against the operator.

Pursuant to the terms of the drilling contract between HPIDC and the operator, HPIDC indemnified the operator in the lawsuit, subject to certain limitations.

Pursuant to the terms of the drilling contract between HPIDC and the operator, HPIDC indemnified the operator in the lawsuit,

subject to certain limitations.

A settlement agreement was reached with the operator.

As of September 30, 2019, we accrued $ 9.5 million for this lawsuit, which was subsequently paid out during the six months ended March 31, 2020 .

As of September 30, 2019, we accrued $ 9.5 million for this lawsuit, which was subsequently paid out during the nine months ended June 30, 2020 .

The Company and its subsidiaries are parties to various other pending legal actions arising in the ordinary course of our business.

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We believe we are the recognized industry leader in drilling as well as technological innovation.

As of March 31, 2020 , our contract drilling services business includes the following reportable operating segments:

Land, Offshore, International Land and H&P Technologies.

This is consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources.

Additionally, during the fourth quarter of fiscal year 2019, we migrated our FlexApp offerings into our H&P Technologies segment.

The activity of our FlexApps was previously included in our U.S.

Land segment.

All segment disclosures have been restated, as practicable, for these segment changes.

Our real estate operations, our incubator program for new research and development projects, and our wholly owned captive insurance companies are included in "Other".

Consolidated revenues and expenses reflect the elimination of intercompany transactions.

During the third quarter of fiscal year 2020, as part of our restructuring efforts (see Note 18—Restructuring Charges ) and consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources we implemented organizational changes.

We are moving from a product-based offering, such as a rig or separate technology package, to an integrated solution-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations.

Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

As a result, beginning with the third quarter of fiscal year 2020, our contract drilling services operations are organized into the following reportable operating business segments:

North America Solutions, Offshore Gulf of Mexico and International Solutions.

All segment disclosures have been recast for these segment changes.

Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." Consolidated revenues and expenses reflect the elimination of intercompany transactions.

Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions.

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Segment Performance

We evaluate segment performance based on income or loss from continuing operations (segment operating income) before income taxes which includes:

We evaluate segment performance based on income or loss from continuing operations (segment operating income (loss)) before income taxes which includes:

Revenues from external and internal customers

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Asset impairment charges

but excludes gain on sale of assets and corporate selling, general and administrative costs and corporate depreciation.

Restructuring charges

but excludes gain on sale of assets and corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges.

General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which we believe to be a reasonable reflection of the utilization of services provided.

Summarized financial information of our reportable segments for the three months ended March 31, 2020 and 2019 is shown in the following tables:

Three Months Ended March 31, 2020

Summarized financial information of our reportable segments for the three months ended June 30, 2020 and 2019 is shown in the following tables:

Three Months Ended June 30, 2020

(in thousands)

North America Solutions

Offshore Gulf of Mexico

International

1 unchanged sentence

Segment Operating Income (Loss)

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

(in thousands)

North America Solutions (1)

Offshore Gulf of Mexico

International

Technologies (1)

External Sales

Segment Operating Income (Loss)

Prior period information has been restated to reflect the transfer of FlexApp revenue and the related costs from U.S.

Land to H&P Technologies.

Certain FlexApp revenue not separately priced in drilling contracts, and recorded in the U.S.

Land segment, was impracticable to retrospectively quantify, and as such was not restated.

Summarized financial information of our reportable segments for the six months ended March 31, 2020 and 2019 is shown in the following tables:

Six Months Ended March 31, 2020

Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment.

Summarized financial information of our reportable segments for the nine months ended June 30, 2020 and 2019 is shown in the following tables:

Nine Months Ended June 30, 2020

(in thousands)

North America Solutions

Offshore Gulf of Mexico

International

1 unchanged sentence

Segment Operating Income (Loss)

Six Months Ended March 31, 2019

Nine Months Ended June 30, 2019

(in thousands)

North America Solutions (1)

Offshore Gulf of Mexico

International

Technologies (1)

External Sales

Segment Operating Income (Loss)

Prior period information has been restated to reflect the transfer of FlexApp revenue and the related costs from U.S.

Land to H&P Technologies.

Certain FlexApp revenue not separately priced in drilling contracts, and recorded in the U.S.

Land segment, was impracticable to retrospectively quantify, and as such was not restated.

The following table reconciles segment operating income per the tables above to income from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

Three Months Ended March 31,

Six Months Ended March 31,

(in thousands)

Segment Operating Income

Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment.

The following table reconciles segment operating income (loss) per the tables above to income (loss) from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

Three Months Ended June 30,

Nine Months Ended June 30,

(in thousands)

Segment operating income (loss)

Gain on sale of assets

Corporate selling, general and administrative costs and corporate depreciation

Operating income (loss) from continuing operations

Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges

Operating loss from continuing operations

Other income (expense)

4 unchanged sentences

Total unallocated amounts

Income (loss) from continuing operations before income taxes

Loss from continuing operations before income taxes

The following table presents total assets by reportable segment:

2 unchanged sentences

Total assets (1)

International Land

H&P Technologies

North America Solutions (2)

Offshore Gulf of Mexico

International Solutions

Investments and corporate operations

2 unchanged sentences

Assets by segment exclude investments in subsidiaries and intersegment activity.

Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment.

The following table presents revenues from external customers by country based on the location of service provided:

Three Months Ended March 31,

Six Months Ended March 31,

Three Months Ended June 30,

Nine Months Ended June 30,

(in thousands)

4 unchanged sentences

Refer to Note 11—Revenue from Contracts with Customers for additional information regarding the recognition of revenue upon adoption of ASC 606.

NOTE 18 SUBSEQUENT EVENTS

Subsequent to March 31, 2020, we decommissioned two rigs and 35 rigs from our legacy Domestic Conventional asset group and FlexRig3 asset group, respectively.

The decommissioned rigs were impaired as of March 31, 2020 (Refer to Note 5—Property, Plant and Equipment ).

While the crude oil market imbalance is a global phenomenon, it has more acutely impacted the U.S.

market as a result of storage limitations subsequent to March 31, 2020.

The abruptness of and the overall size of the decrease in demand for refined products, such as gasoline and diesel, has created an abundance of supply for such products causing the inventory levels of crude oil and its related refined products to become greatly elevated reaching the high end of storage capabilities.

This has greatly reduced the need, or in some cases, entirely eliminated the ability of refineries to use crude oil as a feedstock.

As such, E&P companies, our customers, may have limited opportunities to offload their production and even then, the selling price could be at very low, uneconomical prices.

Consequently, some E&P companies have chosen to shut-in and stop production, not complete additional wells drilled and/or even drill any more wells until the market imbalance corrects and it is economical to once again resume production and drilling wells.

Subsequent to March 31, 2020, we have received additional rig release notifications, which will result in additional early termination and notification fee revenue.

The total impact of the early termination revenue and notification fee revenue related to these rig release notifications received subsequent to March 31, 2020 on future periods is approximately $ 27.0 million .

NOTE 18 RESTRUCTURING CHARGES

Beginning in the third quarter of fiscal year 2020, we implemented cost controls and began evaluating further measures to respond to the combination of weakened commodity prices, uncertainties related to the COVID-19 pandemic, and the resulting market volatility.

We restructured our operations to accommodate scale during an industry downturn and to re-organize our operations to align to new marketing and management strategies.

We commenced a number of restructuring efforts as a result of this evaluation, which included, among other things a reduction in our capital allocation plans, changes to our organizational structure, and a reduction of staffing levels.

Costs incurred, as of June 30, 2020 , in connection with the restructuring are comprised of one-time severance benefits to employees who are voluntarily or involuntarily terminated, benefits related to forfeitures and costs related to modification of stock-based compensation awards.

The following table summarizes the Company's restructuring charges incurred during the nine months ended June 30, 2020 :

(in thousands)

North America Solutions

Offshore Gulf of Mexico

International Solutions

Corporate G&A

Employee termination benefits

Stock-based compensation benefit

Total restructuring charges

The following table summarizes the Company's accrual for restructuring charges for the nine months ended June 30, 2020 :

(in thousands)

Employee Termination Benefits

Accrued restructuring charges at September 30, 2019

Cash payments

Accrued restructuring charges at June 30, 2020

These expenses are recorded within restructuring charges on our Unaudited Condensed Consolidated Statements of Operations and the related liability is recorded within accounts payable on our Unaudited Condensed Consolidated Balance Sheets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements