Summary
Caterpillar Inc. (CAT) filed an 8-K on January 18, 2013, disclosing a material impairment charge. The company's Audit Committee determined that goodwill associated with the acquisition of ERA Mining Machinery Limited (including its subsidiary Siwei) was impaired. This resulted in a non-cash goodwill impairment charge of approximately $580 million, or $0.87 per share, to be recorded in the fourth quarter of 2012. The impairment is attributed to accounting misconduct by senior managers at Siwei for several years leading up to Caterpillar's acquisition in mid-2012. Caterpillar's investigation into this matter is ongoing, and investors should note that this charge does not involve future cash expenditures. This announcement provides an update on a significant event impacting the company's reported financials.
Key Highlights
- 1Caterpillar Inc. recorded a non-cash goodwill impairment charge of approximately $580 million.
- 2The impairment charge is equivalent to $0.87 per share.
- 3The charge relates to the acquisition of ERA Mining Machinery Limited (Siwei).
- 4The impairment stems from alleged accounting misconduct by Siwei's senior managers prior to the acquisition.
- 5Caterpillar's investigation into the accounting misconduct is ongoing.
- 6The impairment charge will be recognized in the fourth quarter of 2012.
- 7The disclosed impairment charge does not involve future cash expenditures.