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LMI Aerospace, Inc. Announces Non-Cash Goodwill Impairment Charge, Management Changes
Under generally accepted accounting principles (GAAP), companies are required to conduct an annual goodwill impairment test for each of their reporting units. Goodwill is considered impaired when its carrying amount exceeds its implied fair value. As a result of its annual impairment test, LMI determined that a write down of its Engineering Services reporting unit goodwill was required, with the bulk of the impairment attributable to a sustained decline in sales and lower overall demand for engineering services.
Demand for aerospace structural design engineering has slowed as a result of a decrease in the number of new development programs currently in process. Further, competition from lower cost competitors and customers choosing to keep design work in house rather than outsourcing has also contributed to reduced demand as well as lower profitability for such services.
The Company is in the process of finalizing the actual amount of the impairment charge, which will be completed prior to reporting its fourth quarter and full-year 2014 financial results.
In response to the challenges facing the Engineering Services business, LMI also announced that, effective immediately, it has appointed
"The Engineering Services business needs to focus heavily on revenue generation and business development in the coming year," said
Olsen is a seven year veteran of LMI and has held leadership positions in both operations and contracts. In addition to his work at LMI, Brian has spent approximately 20 years in the maintenance repair and overhaul business, as a General Manager for BF Goodrich and as President of Empire Aero Center, an
Cautionary Statements Regarding Forward-Looking Statements
This news release includes forward-looking statements, including statements related to LMI's outlook for 2015 and beyond, and other statements based on current management expectations, estimates and projections. Such forward-looking statements are not guarantees and are inherently subject to various risks and uncertainties that could cause actual results and events differ materially from the forward-looking statements. These risks and uncertainties include those Risk Factors detailed in the company's Annual Report on Form 10-K for the year ended
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