EnPro Industries (USA; NYSE: 5251R9N7) announced it has zeroed the goodwill valuation of GGB Bearing Technology division, in one stroke wiping out nearly USD $109 million of GGB Bearing's value. The charge was taken in EnPro's second quarter.

GGB Bearing Technology is the former Glacier Garlock Bearings division of Goodrich; EnPro was created in 2002 from the spinoff of Goodrich Engineered Industrial Products division.

Goodwill is the intangible value of an asset, beyond its hard assets and liabilities -- essentially the added value of its market position, trade name, and other intangible values. In essence, goodwill is the extra that EnPro paid for GGB Bearing, beyond the book value of GGB's assets and liabilities. Goodwill impairment is not a cash expense; essentially EnPro is writing off whatever extra it paid for GGB Bearing. Because GGB was part of the initial EnPro spinoff, there are often significant revisions taken later, but the initial spinoff assets are rarely written down to zero goodwill.

EnPro said it is taking the charge because the near-term outlook for GGB Bearing has been severely weakened due to the continued global economic downturn.

GGB remains the world's largest manufacturer of prelubricated and self-lubricating metal-polymer plain bearings. GGB has production facilities in the United States, Germany, France, Slovakia, Brazil and India, along with operating units in two dozen other countries.

eBearing consulted an analyst who believes that by taking the writedown, EnPro is positioning itself and the GGB division for an easier and more attractive sale. GGB becomes easier for a potential acquirer to value on its own books, and EnPro can better bottom-line what it gets for the division. But, he pointed out, this would have to play out over the longer term since there are few potential acquirers in the market now.

Steve Macadam, EnPro's President and CEO, said: "The impairment of goodwill in no way changes our view of these businesses. We continue to believe they are fundamentally sound, and we are confident they will generate strong returns in the future."