LIMERICK, Pa. – Teleflex Inc. has signed a definitive agreement to sell its Power Systems business to Fuel Systems Solutions, Inc., it reported in a statement yesterday. Teleflex will receive cash proceeds of $14.5 million. This news comes only five months after Teleflex sold its gauge division to Veethree.
The company said that the transaction is subject to certain customary closing conditions and is expected to be completed in the quarter ended Sept. 27, at which time the division will be reflected in the company’s future consolidated financial statements as a discontinued operation.
The final sales price for Power Systems is below the carrying value on the company’s balance sheet as of June 28, according to Teleflex. Therefore, the company will recognize a non-cash, non-tax deductible goodwill impairment charge of approximately $25 million to adjust the carrying value of these operations to their estimated fair value.
Goodwill charges to be recorded against marine biz
In addition, due to the continuing uncertainty in the global economic climate, the company periodically evaluates the carrying value of the goodwill and intangible assets of its various reporting units.
“Considering the market conditions impacting our Aerospace Cargo Container and Marine operations, the company determined that $6.7 million of non-tax deductible goodwill in the Cargo Container operations and $2.3 million of indefinite lived tradenames in the Marine operations were impaired,” Teleflex reported. “The goodwill charges to be recorded represent 100 percent and 61 percent of the Aerospace and Commercial Segments’ goodwill, respectively.”
These non-cash special charges, totaling approximately $34 million, will be recorded in the quarter ended June 28 and will reduce reported results under U.S. Generally Accepted Accounting Principles (GAAP), but will have no impact on liquidity or compliance with debt covenants, Teleflex reported.