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Gold/Mining/Energy : Shale Natural Gas, Oil and NGLs and ESA
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From: Glenn Petersen12/12/2012 5:23:19 PM
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Item 2.06. Material Impairments

On December 6, 2012, based on the recommendation of senior management the Board of Energy Services of America Corporation concluded that it was required to record a goodwill impairment charge, primarily driven by the continued operating losses of the Company and the terms of the forbearance agreement between Energy Services and its lenders as disclosed on Form 8-k filed with the SEC on November 29, 2012. The goodwill impairment charge of $36.9 million represents the entire amount of goodwill carried on the Company's balance sheet. The goodwill originated from the 2008 acquisitions of C. J. Hughes and its subsidiaries Nitro Electric and Contractors Rental Corp, and S T Pipeline.

The goodwill impairment was measured as part on the annual goodwill impairment testing performed by the company and will be recorded in the Company's fiscal quarter ended September 30, 2012. A step 2 goodwill impairment analysis was performed by an independent third party. That study determined that the fair value of the Company's business assets was slightly in excess of the enterprise value, resulting in no goodwill.

In addition, the Company will record a valuation allowance against its deferred tax asset in the quarter ended September 30, 2012, due to the continued operating losses of the Company. The amount of the valuation allowance is estimated at $6.4 million and is related to the unused net operating loss carryovers of the Company.

These non-cash impairment charges will not impact the Company's cash flows or cash balances and is not expected to result in any material future cash expenditures.

biz.yahoo.com
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