Cincinnati corporations racking up writedowns - Business Courier of Cincinnati:

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The one-time charges againsg earnings – which represent the writedownof acquisition-related goodwill and other assetd on local balance sheets are another painful indicator of how the economic downturn is zapping local wealth. While investors in these firms likely are not surpriser bythe disclosures, the size of the writedowns makez them hard for anyone to ignore: $965M for Fifth Third ’s goodwill impairment charge of $965 or $1.
64 per share, came after the decline in the bank’s stoco price caused a “difference between market capitalizatiohn and book value” of the The company also took $82 million in non-cash impairmenr charges related to securities, bank-owned life insurances policies and indemnification obligations with credit card compan y Visa. $374.5M for Chiquita took a $374.5 million goodwill impairment chargew to write down the valuw ofits $855 million investment in the produce companyu . CEO Fernando Aguirre blamed “economic conditionds and lower category growth for thedownward adjustment.
$110M for Cincinnati Financia ltook $110 million in “other-than-temporary impairment charges” in the fourth quartedr and $510 million in such charges for the year, sayinv the reduced value of equith securities accounted for 65 percentg of the charges. $92M for American Financial recognized $92 millionb in after-tax charges for other-than-temporary impairments on Morethan three-fourths of these were attributables to fixed-maturity securities, which the companh intends to hold until they recover in $161M, much more to come, for Macy’ws In addition to the $161 million in fourth-quarter impairment chargexs announced by , the company told investors that it’s stillk evaluating a charge for goodwill impairment relatef to its 2005 acquisition of the May Departmenr Stores Co.
It “currently estimatez that the amount of goodwilol to be written down in the fourth quarter of 2008 isbetweehn $4.5 billion and $5.5 or $10 to $12.50 per diluted share. Expertx are split over what it means. “To some degreed it’s a destruction of shareholder saidMark Batty, seniorf equity analyst at in Philadelphia. Goodwilll impairment results whencompanies , in admit they overpaid for an acquisition. They take the charge well afterd the acquisition was But it hurts shareholders because it meand management admits it misjudged the values of assetsit purchased.
Even though the currenft environment has caused many asset values to management is supposed toconsider worst-caser scenarios in valuing those assets. “It’se partially a function of the environment, and management being too optimistic on the earningxpower it’s acquiring,” Batty said. But othersw argue that investors are often aware ofa company’s impairex assets long before charges are “They are an after-the-fact acknowledgement,” said Phil an associate professor of finance at .
“The intelligeng investor already knewthat Macy’s overpaidf (for the May Departmenyt Stores chain) and they’re not goingy to realize the extra earnings that’s supposed to bring. They’vre already discounted that into the price of the One way of gauging the impact of Glasgow said, is to follow the stock prices in the days after a disclosure. If shares decline fastet than the broader it could be a sign that investors were surprisex by the severity ofthe writedown. Anothe expert suggests looking for the underlying reasons for theassetg impairment.