Oshkosh Corp., a leading manufacturer of specialty vehicles and vehicle bodies, and the parent company to JLG Industries, last week announced that it anticipates recording non-cash impairment charges of $1.2 to $1.5 billion for the write-down of goodwill and other indefinite-lived intangible assets in the second quarter of fiscal 2009. The company expects the impairment charges to be largely non-deductible for income tax purposes.
“While the impairment charges are being driven by the short-term economic environment, we believe the long-term prospects remain promising for our market-leading businesses,” said Robert Bohn, Oshkosh Corp. chairman and CEO. “The impairment charges are entirely non-cash. Oshkosh remains a strong company and continues to have sufficient liquidity.”
Under the Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, the company is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate an impairment may have occurred. In connection with its second-quarter close process, the company determined that indicators of potential impairment under the accounting requirements of SFAS No. 142 were present as a result of the sustained decline in the price of the company’s common stock subsequent to its previous fiscal year-end when its share price approximated book value, as well as the further deteriorating macro-economic environment, particularly in construction markets in the United States and Europe.
Accordingly, with the assistance of a third-party valuation firm, the company began an assessment of the fair values of its reporting units. The preliminary results indicate that impairments will be recognized in several of the company’s reporting units, with the largest charge occurring in the access equipment segment. The company plans to complete the impairment analysis prior to the release of its second fiscal quarter results. These non-cash charges will have no direct impact on the company’s cash flows or liquidity, and they are excluded from the calculations of the company’s financial covenant ratios contained in its amended credit agreement.
Headquartered in Oshkosh, Wis., Oshkosh Corp. is a designer, manufacturer and marketer of a broad range of specialty access equipment, military, commercial and fire and emergency vehicles and vehicle bodies.