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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 001-35504
FORUM ENERGY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware61-1488595
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization)

10344 Sam Houston Park Drive Suite 300HoustonTexas77064
(Address of Principal Executive Offices)(Zip Code)

(281)949-2500
(Registrant’s telephone number, including area code)
______________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockFETNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ
As of November 3, 2020 there were 111,519,107 common shares outstanding.
1



Table of Contents


2


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements

Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
  Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share information)2020201920202019
Revenue$103,606 $239,266 $399,513 $756,756 
Cost of sales90,496 176,632 351,411 560,836 
Gross profit13,110 62,634 48,102 195,920 
Operating expenses
Selling, general and administrative expenses45,989 63,471 154,512 195,320 
Transaction expenses665 254 852 972 
Impairments of goodwill, intangible assets, property and equipment2,962 532,336 20,394 532,336 
Contingent consideration benefit   (4,629)
Loss (gain) on disposal of assets and other541 (107)(180)(71)
Total operating expenses50,157 595,954 175,578 723,928 
Loss from equity investment (39) (318)
Operating loss(37,047)(533,359)(127,476)(528,326)
Other expense (income)
Interest expense8,473 7,766 21,617 24,170 
Foreign exchange and other losses (gains), net3,445 (3,200)(931)(3,069)
Gain realized on previously held equity investment (1,567) (1,567)
Gain on extinguishment of debt(28,734) (72,478) 
Deferred loan costs written off303  2,262  
Total other expense (income), net(16,513)2,999 (49,530)19,534 
Loss before income taxes(20,534)(536,358)(77,946)(547,860)
Income tax expense (benefit)1,017 (3,371)(13,757)6,749 
Net loss(21,551)(532,987)(64,189)(554,609)
Weighted average shares outstanding
Basic111,607 110,295 111,459 109,977 
Diluted111,607 110,295 111,459 109,977 
Loss per share
Basic$(0.19)$(4.83)$(0.58)$(5.04)
Diluted(0.19)(4.83)(0.58)(5.04)
Other comprehensive income (loss), net of tax:
Net loss(21,551)(532,987)(64,189)(554,609)
Change in foreign currency translation, net of tax of $0
5,942 (6,260)(1,004)(2,833)
Loss on pension liability(55)(17)(56)(21)
Comprehensive loss$(15,664)$(539,264)$(65,249)$(557,463)
The accompanying notes are an integral part of these condensed consolidated financial statements.

3


Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share information)September 30, 2020December 31, 2019
Assets
Current assets
Cash and cash equivalents$20,020 $57,911 
Accounts receivable—trade, net of allowances of $9,819 and $9,048
79,811 154,182 
Inventories, net364,655 414,640 
Prepaid expenses and other current assets33,031 33,820 
Accrued revenue1,617 1,260 
Costs and estimated profits in excess of billings6,340 4,104 
Total current assets505,474 665,917 
Property and equipment, net of accumulated depreciation120,266 154,836 
Operating lease assets33,907 48,682 
Deferred financing costs, net374 1,243 
Intangible assets, net247,298 272,300 
Deferred income taxes, net157 654 
Other long-term assets16,545 16,365 
Total assets$924,021 $1,159,997 
Liabilities and equity
Current liabilities
Current portion of long-term debt$1,295 $717 
Accounts payable—trade60,057 98,720 
Accrued liabilities70,143 86,625 
Deferred revenue5,495 4,877 
Billings in excess of costs and profits recognized169 5,911 
Total current liabilities137,159 196,850 
Long-term debt, net of current portion290,019 398,862 
Deferred income taxes, net2,153 2,465 
Operating lease liabilities46,299 49,938 
Other long-term liabilities21,109 25,843 
Total liabilities496,739 673,958 
Commitments and contingencies
Equity
Common stock, $0.01 par value, 296,000,000 shares authorized, 119,614,808 and 118,840,611 shares issued
1,196 1,189 
Additional paid-in capital1,239,539 1,231,650 
Treasury stock at cost, 8,217,553 and 8,211,919 shares
(134,499)(134,493)
Retained deficit(568,956)(503,369)
Accumulated other comprehensive loss(109,998)(108,938)
Total equity427,282 486,039 
Total liabilities and equity$924,021 $1,159,997 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
(in thousands)20202019
Cash flows from operating activities
Net loss$(64,189)$(554,609)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense19,149 22,873 
Amortization of intangible assets19,934 25,621 
Impairments of goodwill, intangible assets, property and equipment20,394 532,336 
Impairments of operating lease assets14,096 2,187 
Inventory write down19,691 5,775 
Stock-based compensation expense7,726 11,923 
Loss from unconsolidated subsidiary 317 
Contingent consideration benefit (4,629)
Gain on extinguishment of debt(72,478) 
Gain realized on previously held equity investment (1,567)
Deferred loan costs written off2,262  
Deferred income taxes87 (1,438)
Noncash losses and other, net3,417 3,751 
Changes in operating assets and liabilities
Accounts receivable—trade70,175 20,515 
Inventories29,572 28,200 
Prepaid expenses and other assets651 237 
Cost and estimated profit in excess of billings(2,471)4,190 
Accounts payable, deferred revenue and other accrued liabilities(60,767)(21,328)
Billings in excess of costs and estimated profits earned(5,548)1,297 
Net cash provided by operating activities$1,701 $75,651 
Cash flows from investing activities
Capital expenditures for property and equipment(2,168)(12,607)
Proceeds from sale of business, property and equipment4,187 39,805 
Net cash provided by investing activities$2,019 $27,198 
Cash flows from financing activities
Borrowings of debt85,000 97,000 
Repayments of debt(113,441)(217,333)
Bond exchange early participation payment(3,500) 
Repurchases of stock(182)(1,050)
Deferred financing costs(9,358) 
Net cash used in financing activities$(41,481)$(121,383)
Effect of exchange rate changes on cash(130)190 
Net decrease in cash, cash equivalents and restricted cash(37,891)(18,344)
Cash, cash equivalents and restricted cash at beginning of period57,911 47,241 
Cash, cash equivalents and restricted cash at end of period$20,020 $28,897 
Noncash activities
Operating lease right of use assets obtained in exchange for lease obligations4,382 9,603 
Finance lease right of use assets obtained in exchange for lease obligations1,401 1,478 
Note receivable related to equity method investment transaction 4,725 


The accompanying notes are an integral part of these condensed consolidated financial statements.
5


Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

Nine Months Ended September 30, 2020
(in thousands)Common stockAdditional paid-in capitalTreasury stockRetained
deficit
Accumulated
other
comprehensive
income / (loss)
Total equity
Balance at December 31, 2019$1,189 $1,231,650 $(134,493)$(503,369)$(108,938)$486,039 
Stock-based compensation expense— 3,223 — — — 3,223 
Restricted stock issuance, net of forfeitures5 (178)— — — (173)
Shares issued in employee stock purchase plan2 344 — — — 346 
Adjustment for adoption of ASU 2016-13
— — — (1,398)— (1,398)
Treasury stock— — (6)— — (6)
Currency translation adjustment— — — — (8,846)(8,846)
Change in pension liability— — — — 21 21 
Net loss— — — (37,144)— (37,144)
Balance at March 31, 2020$1,196 $1,235,039 $(134,499)$(541,911)$(117,763)$442,062 
Stock-based compensation expense— 2,537 — — — 2,537 
Restricted stock issuance, net of forfeitures (2)— — — (2)
Currency translation adjustment— — — — 1,900 1,900 
Change in pension liability— — — — (22)(22)
Net loss— — — (5,494)— (5,494)
Balance at June 30, 2020$1,196 $1,237,574 $(134,499)$(547,405)$(115,885)$440,981 
Stock-based compensation expense$— $1,966 $— $— $— $1,966 
Restricted stock issuance, net of forfeitures$ $(1)$— $— $— $(1)
Currency translation adjustment$— $— $— $— $5,942 $5,942 
Change in pension liability$— $— $— $— $(55)$(55)
Net loss$— $— $— $(21,551)$— $(21,551)
Balance at September 30, 2020$1,196 $1,239,539 $(134,499)$(568,956)$(109,998)$427,282 

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


6


Forum Energy Technologies, Inc. and subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

Nine Months Ended September 30, 2019
(in thousands)Common stockAdditional paid-in capitalTreasury stockRetained
earnings (deficit)
Accumulated
other
comprehensive
income / (loss)
Total equity
Balance at December 31, 2018$1,174 $1,214,928 $(134,434)$63,688 $(115,230)$1,030,126 
Stock-based compensation expense— 3,910 — — — 3,910 
Restricted stock issuance, net of forfeitures6 (931)— — — (925)
Shares issued in employee stock purchase plan2 682 — — — 684 
Contingent shares issued for acquisition of Cooper Valves1 374 — — — 375 
Treasury stock— — (48)— — (48)
Currency translation adjustment— — — — 4,834 4,834 
Change in pension liability— — — — (9)(9)
Net loss— — — (7,888)— (7,888)
Balance at March 31, 2019$1,183 $1,218,963 $(134,482)$55,800 $(110,405)$1,031,059 
Stock-based compensation expense— 4,352 — — — 4,352 
Restricted stock issuance, net of forfeitures (64)— — — (64)
Currency translation adjustment— — — — (1,407)(1,407)
Change in pension liability— — — — 5 5 
Net loss— — — (13,734)— (13,734)
Balance at June 30, 2019$1,183 $1,223,251 $(134,482)$42,066 $(111,807)$1,020,211 
Stock-based compensation expense$— $3,661 $— $— $— $3,661 
Restricted stock issuance, net of forfeitures$ $(8)$— $— $— $(8)
Shares issued in employee stock purchase plan$3 $864 $— $— $— $867 
Treasury stock$— $— $(5)$— $— $(5)
Currency translation adjustment$— $— $— $— $(6,260)$(6,260)
Change in pension liability$— $— $— $— $(17)$(17)
Net loss— — — (532,987)— (532,987)
Balance at September 30, 2019$1,186 $1,227,768 $(134,487)$(490,921)$(118,084)$485,462 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)

1. Organization and Basis of Presentation
Forum Energy Technologies, Inc. (the “Company,” “we,” “our,” or “us”), a Delaware corporation, is a global oilfield products company, serving the drilling, downhole, subsea, completions and production sectors of the oil and natural gas industry. The Company's products include highly engineered capital equipment as well as products that are consumed in the drilling, well construction, production and transportation of oil and natural gas. Forum is headquartered in Houston, TX with manufacturing and distribution facilities strategically located around the globe.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated in consolidation. Certain reclassifications have been made to prior year amounts to conform with the current year presentation.
Prior to the sale of our aggregate 40% interest in the third quarter of 2019, our investment in Ashtead Technology (”Ashtead”) was accounted for using the equity method of accounting as we had the ability to exert significant influence, but did not control operating and financial policies. Prior to the sale, our share of the net income (loss) from Ashtead was reported in “Loss from equity investment” in the condensed consolidated statements of comprehensive loss and the investment was included in “Investment in unconsolidated subsidiary” in the condensed consolidated balance sheets. Our share of equity earnings were reported within operating loss, as the investee’s operations were integral to the operations of the Company. See Note 4 Dispositions for further information related to the sale of our aggregate 40% interest in Ashtead.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other interim period.
These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, which are included in the Company’s 2019 Annual Report on Form 10-K filed with the SEC on February 25, 2020.
COVID-19 Impacts
On March 11, 2020, the World Health Organization declared the current COVID-19 outbreak to be a global pandemic, and on March 13, 2020, the United States declared a national emergency. In response to these declarations and the continued spread of COVID-19, federal, state and local governments imposed varying degrees of restrictions on business and social activities, including quarantine and “stay-at-home” orders. As a result of the imposition of these government orders, there was an adverse impact on the level of oil and natural gas demand and many companies have sought protection under Chapter 11 of the U.S. Bankruptcy Code. The full impacts of the COVID-19 outbreak will ultimately depend on future developments, including the consequences of governmental and other measures designed to prevent the spread of the virus, the establishment of effective treatments, the duration of the outbreak, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which economic and operating conditions resume. We have experienced resulting disruptions to our business operations, as these restrictions have significantly impacted many sectors of the economy, with businesses curtailing or ceasing normal operations. While we cannot estimate with any degree of certainty the full impact of the COVID-19 outbreak on our liquidity, financial condition and future results of operations, the adverse impacts on our financial results from COVID-19 will continue in future quarters.
2. Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), which we adopt as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Accounting Standards Adopted in 2020
Financial Instruments—Credit Losses. In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments—Credit Losses (Topic 326), which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. It requires an entity to estimate credit losses expected over the life of an exposure based on historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. We adopted this new standard as of January 1, 2020. The adoption of this standard resulted in a noncash cumulative effect adjustment to increase our allowance for doubtful accounts and increase our retained deficit by $1.4 million. The new standard did not materially affect our unaudited Condensed Consolidated Statement of Comprehensive Loss for the nine months ended September 30, 2020.
Accounting for Implementation Costs Related to a Cloud Computing Arrangement. In August 2018, the FASB issued ASU No. 2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This new guidance aligns the requirements for capitalizing implementation costs incurred by an entity related to a cloud computing arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, this guidance requires an entity to capitalize certain implementation costs incurred and then amortize them over the term of the cloud hosting arrangement. Furthermore, this guidance also requires an entity to present the expense, cash flows, and capitalized implementation costs in the same financial statement line items as the associated hosting service. We adopted this new standard as of January 1, 2020. The adoption of this new standard did not have a material impact on our unaudited condensed consolidated financial statements.
Fair Value Measurement Disclosure. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement. This new guidance eliminated, modified and added certain disclosure requirements related to fair value measurements. We adopted this new standard as of January 1, 2020. This new standard did not have a material impact on our unaudited condensed consolidated financial statements.
Subsidiary Guarantees. In March 2020, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in Rule 3-10 of Regulation S-X. The amended rule focuses on providing material, relevant and decision-useful information regarding guarantees and other credit enhancements, while eliminating certain prescriptive requirements. We adopted these amendments as of June 30, 2020. Accordingly, combined summarized financial information has been presented only for the issuers and guarantors of our registered securities for the most recent fiscal year and the year-to-date interim period. In addition, the previous disclosures have been removed from the Notes to Condensed Consolidated Financial Statements and the new required disclosures are included in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Accounting Standards Issued But Not Yet Adopted
Income Tax. In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740) - Disclosure Framework - Simplifying the Accounting for Income Taxes, which simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740 and clarifying and amending existing guidance. This guidance will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact of this new guidance. However, we currently expect that the adoption of this guidance will not have a material impact on our consolidated financial statements.
Convertible Debt. In August 2020, the FASB issued ASU No. 2020-06 Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This update reduces the number of accounting models for convertible debt instruments resulting in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in-capital. In addition, this update also makes targeted changes to the disclosures for convertible instruments and earnings-per-
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
share guidance. This guidance may be adopted through either a modified retrospective or fully retrospective method of transition and will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and must be adopted as of the beginning of the Company's fiscal year. We are currently evaluating the impact of this new guidance. However, we currently expect that the adoption of this guidance will not have a material impact on our consolidated financial statements.
3. Revenue
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. For a detailed discussion of our revenue recognition policies, refer to the Company’s 2019 Annual Report on Form 10-K.
Disaggregated Revenue
Refer to Note 11 Business Segments for disaggregated revenue by product line and geography.
Contract Balances
Contract balances are determined on a contract by contract basis. Contract assets represent revenue recognized for goods and services provided to our customers when payment is conditioned on something other than the passage of time. Similarly, we record a contract liability when we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract. Such contract liabilities typically result from billings in excess of costs incurred on construction contracts and advance payments received on product sales.
The following table reflects the changes in our contract assets and contract liabilities balances for the nine months ended September 30, 2020 (in thousands):
September 30, 2020December 31, 2019Increase / (Decrease)
$%
Accrued revenue$1,617 $1,260 
Costs and estimated profits in excess of billings6,340 4,104 
Contract assets$7,957 $5,364 $2,593 48 %
Deferred revenue$5,495 $4,877 
Billings in excess of costs and profits recognized169 5,911 
Contract liabilities$5,664 $10,788 $(5,124)(47)%
During the nine months ended September 30, 2020, our contract assets increased by $2.6 million and our contract liabilities decreased by $5.1 million due to the timing of billings for significant projects within our Subsea product line.
During the nine months ended September 30, 2020, we recognized revenue of $9.5 million that was included in the contract liability balance at the beginning of the period.
As all of our contracts are less than one year in duration, we have elected to apply the practical expedient which allows an entity to exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.
4. Dispositions
2019 Disposition of Cooper Alloy®
On December 4, 2019, we sold certain assets of our Cooper Alloy® brand of valve products for total consideration of $4.0 million and recognized a gain on disposition totaling $2.3 million. Pro forma results of operations for this disposition have not been presented because the effects were not material to the unaudited condensed consolidated financial statements.
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
2019 Disposition of Equity Interest in Ashtead Technology
On September 3, 2019, we sold our aggregate 40% interest in Ashtead to the majority owners of Ashtead. Total consideration for Forum’s 40% interest and the settlement of a £3.0 million British Pounds note receivable from Ashtead was $47.7 million. Forum received $39.3 million in cash proceeds and a new £6.9 million British Pounds note receivable with a three year maturity. In the third quarter of 2019, we recognized a gain of $1.6 million as a result of this transaction. Pro forma results of operations for this transaction have not been presented because the effects were not material to the unaudited condensed consolidated financial statements.
5. Inventories
Our significant components of inventory at September 30, 2020 and December 31, 2019 were as follows (in thousands):
September 30, 2020December 31, 2019
Raw materials and parts$166,817 $172,082 
Work in process15,838 29,972 
Finished goods252,346 278,661 
Gross inventories435,001 480,715 
Inventory reserve(70,346)(66,075)
Inventories$364,655 $414,640 

6. Intangible Assets
Intangible assets consisted of the following as of September 30, 2020 and December 31, 2019, respectively (in thousands):
September 30, 2020
Gross Carrying AmountAccumulated AmortizationNet IntangiblesAmortization Period (In Years)
Customer relationships$270,005 $(115,283)$154,722 
10 - 15
Patents and technology90,868 (24,424)66,444 
5 - 19
Non-compete agreements190 (127)63 
2 - 6
Trade names42,433 (21,930)20,503 
7 - 19
Distributor relationships14,120 (12,625)1,495 
15 - 22
Trademarks5,089 (1,018)4,071 
15
Intangible Assets Total$422,705 $(175,407)$247,298 

December 31, 2019
Gross Carrying AmountAccumulated AmortizationNet IntangiblesAmortization Period (In Years)
Customer relationships$281,052 $(110,410)$170,642 
10 - 15
Patents and technology92,498 (20,819)71,679 
5 - 19
Non-compete agreements190 (100)90 
2 - 6
Trade names43,284 (21,015)22,269 
7 - 19
Distributor relationships22,160 (18,866)3,294 
15 - 22
Trademarks5,089 (763)4,326 
15
Intangible Assets Total$444,273 $(171,973)$272,300 

11

Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
7. Impairments of Goodwill and Long-Lived Assets
During the third quarter of 2019, there was a significant decline in the quoted market prices of our common stock and a continued decline in U.S. onshore drilling and completions activity, which led us to evaluate all of our reporting units for a triggering event as of September 30, 2019. Upon evaluation, we considered these developments to be a triggering event that required us to update our goodwill impairment evaluation and review long-lived assets for all reporting units as of September 30, 2019.
As a result, and in connection with the preparation of our financial statements, we determined that certain long-lived assets were impaired as their carrying values exceeded their fair values. The amount of the impairment charges were measured as the difference between the carrying value and the estimated fair value of the assets. In addition, we determined that the remaining carrying value of our goodwill was fully impaired in the third quarter of 2019. The fair values used in each goodwill impairment analysis were determined using the net present value of the expected future cash flows for each reporting unit (classified within level 3 of the fair value hierarchy). We determined the fair value of each reporting unit using a combination of discounted cash flow and guideline public company methodologies, which required significant assumptions and estimates about the future operations of each reporting unit. The assumptions about future cash flows and growth rates were based on our strategic plans and management’s estimates for future activity levels. Forecasted cash flows in future periods were estimated using a terminal value calculation, which considered long-term earnings growth rates.
During the nine months ended September 30, 2020, the COVID-19 pandemic and associated preventative actions taken around the world to mitigate its spread caused oil demand to deteriorate and economic activity to decrease. As a result, oil prices declined significantly during the period and created an extremely challenging market for all sub-sectors of the oil and natural gas industry. In addition, responses to the spread of COVID-19, including significant government restrictions on movement, have driven sharp declines in global economic activity.
As a result, during the nine months ended September 30, 2020, we determined that certain long-lived assets were impaired as their carrying values exceeded their fair values. The amount of the impairment charges were measured as the difference between the carrying value and the estimated fair value of the assets. The fair value was determined either through analysis of discounted future cash flows or, for certain real estate, based on a third party's sales price estimate (classified within level 3 of the fair value hierarchy).
Following is a summary of impairment charges recognized (in thousands) in our Drilling & Downhole (“D&D”), Completions (“C”), Production (“P”), and Corporate (“Corp”) segments:
Nine Months Ended September 30, 2020Nine Months Ended September 30, 2019
Impairments of:D&DCPCorpTotalD&DCPTotal
Goodwill (1)
$ $ $ $ $ $191,485 $260,238 $19,287 $471,010 
Intangible assets (1)
5,257    5,257  48,241 5,230 53,471 
Property and equipment (1)
1,069 9,608 4,460  15,137 5,200 2,655  7,855 
Operating lease right of use assets (2)
4,544 6,140 1,914 1,498 14,096 1,450 582 155 2,187 
Total impairments$10,870 $15,748 $6,374 $1,498 $34,490 $198,135 $311,716 $24,672 $534,523 

Three Months Ended September 30, 2020Three Months Ended September 30, 2019
Impairments of:D&DCPCorpTotalD&DCPTotal
Goodwill (1)
$ $ $ $ $ $191,485 $260,238 $19,287 $471,010 
Intangible assets (1)
      48,241 5,230 53,471 
Property and equipment (1)
  2,962  2,962 5,200 2,655  7,855 
Operating lease right of use assets (2)
3,259   1,498