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Praxair Discloses Goodwill Impairment
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Business New Haven
6/24/2002
By: BNH
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DANBURY - Praxair Inc. (NYSE: PX) announced that it will take a non-cash after-tax provision of $139 million for the adoption of SFAS 142, “Goodwill and Other Intangible Assets.” The charge will be recorded as a cumulative effect of an accounting charge, retroactive to January 1 in accordance with the new rule.
SFAS 142 requires an initial impairment test of the carrying value of goodwill in the year of adoption. Praxair has completed this initial impairment test and has concluded that consolidated goodwill in the amount of $144 million and $2 million related to an equity investment ($139 million after-tax) should be written down in accordance with the provisions of the rule.
Implementation of the rule also requires that Praxair no longer amortize goodwill against earnings. The effect of this change is to increase Praxair's reported income by an estimated $38 million on a pre-tax basis ($33 million after-tax) in 2002 versus 2001.
In other news, Praxair has received an Advanced Technology Program grant of $2 million from the U.S. Department of Commerce, which will partially fund the development of a new, unconventional refrigeration technology. Working with the Los Alamos National Laboratory, Praxair will design, build and test the first one-megawatt thermo-acoustic Stirling heat engine. The engine will run one of the world's largest pulse-tube refrigerators. The project is expected to take three years and, initially, the technology is expected to be used to liquefy natural gas as a fuel for heavy fleet vehicles.
Praxair is the largest industrial gases company in the Americas, and one of the largest worldwide, with 2001 sales of $5.1 billion.
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