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John P. Gavin, CFA, is the founder and CEO of Disclosure Insight®, an independent publisher of investment research. Mr. Gavin has spent his entire career of over 25 years in the financial services industry. Prior to starting “DI” in 2000, he worked as an equity analyst and portfolio manager... More
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  • Impairment Charge for Baker Hughes Stands Out Versus the Prior 5 years 0 comments
    Dec 21, 2011 4:31 PM | about stocks: BHI

    In an 8-K filed after the close Tuesday, Baker Hughes Incorporated (NYSE: BHI) disclosed that it will record a $301 million impairment charge to the value of its “BJ Services Company” trade name as a result of its decision to phase out and minimize the use of the trade name in connection with a new overall branding strategy. Up to this point, BHI has not recorded any noteworthy one-time charges over the last 5 years.

    While BHI disclosed that it does not expect to incur any significant current or future cash expenditures as a result of this impairment, shareholders should remain aware of the potential for additional charges arising from this branding strategy shift.

    BJ Services, a provider of pressure pumping and other oilfield services, was acquired by BHI in Apr-10 for $6.9 billion, $4.4 billion of which was allocated to goodwill. BHI disclosed that the $301 million charge would leave the fair value of the trade name at approximately $61 million, with the remaining amount amortized over the next three years. The trade name was originally recorded with an indefinite life. BJ services is just one of several companies acquired by BHI in the past 5 years, and if this new branding shift requires further initiatives, additional charges and write-offs related to this and other acquisitions could arise in the future.

    Here is the 8-K reporting the impairment.

    Stocks: BHI
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