As per Schlumberger procedure we measure the box Depth from the last scratch of the threads, and that's how it was measured when it was inspected. EXOVA made the measurement after the deformation of the box which can differ from the measurement taken at first time. Also they measured it to the extent of engaged threads.
As Per the report following things went wrong down hole with the tool.
1) Heavy Torque might have been applied on the tool, it could be either down hole in stuck condition or while making the connection before putting it in the hole for drilling.
2) Pin threads found most of the damages as per the report which includes Torn off and scoring which is caused by the overloaded torque which could be either down hole in stuck condition or while making up the connection before using it down hole.
3) Some of the threads were stretched on pin connection. Low Hardness values were also the cause of stretching, torn off threads on the pin.
Un-engaged threads are always the stress/fatigue risers and these stresses can be controlled by removing un-engaged threads by having stress relief surfaces pin connections with SRG and box connections with bore backs.
However it is very difficult to make a decision without knowing the drilling conditions at the time of failure.