Question-and-Answer Session
Operator
Our first question comes from Jeff Blaeser – Morgan Joseph.
Jeff Blaeser – Morgan Joseph
Thank you and good morning. Couple of quick question, one on the goodwill assessment. Can you give us little bit more detail as to the change or the reasoning for the writedown? It looks like it’s probably Boat US acquisitions, previous acquisitions?
Jeff Eisenberg
That’s correct, Jeff. The goodwill is a result of a number of acquisitions that West Marine had done over the years. The two most recent and largest ones were the E&B Marine and then the Boat US acquisition. We do the impairment test for goodwill annually during Q3 and there was no impairment indicator when we last did that test.
However, the change in circumstances which we considered to be a triggering event was the lowering of our guidance in October and then combining with that expectations of lower cash flow and also the market values of our benchmark companies as reflected by their stock price indicated that impairment might exist and so therefore, we were required to retest.
The results of the testing which are still being finalized indicate at this point that we would need to impair the entire amount of goodwill which is the $56.9 million.
Jeff Blaeser – Morgan Joseph
On the core and the maintenance side which you mentioned was a little bit weak, do you think that was more due to boats coming off the docks earlier or competitive pressures or a combination of everything including the environment?
Jeff Eisenberg
A combination of everything, the environment, I would point to that.
Jeff Blaeser – Morgan Joseph
No further update on other anticipated costs associated with the SEC inquiry?
Jeff Eisenberg
Not at this time. The important point is that the status hasn’t changed, it’s still an informal inquiry. We have not received anything that would indicate that the investigation is changing to any other type of level. We are cooperating fully and we don’t have any future view of the total cost at this time.
Operator
Your next question comes from Laura Richardson – BB&T Markets.
Laura Richardson – BB&T Markets
I have a couple of questions tied to this specific release but I just thought since now you have a little bit more time to reflect and strategize for West Marine, I want to get a sense of some things you might do differently in the future? Specifically expense wise, SG&A wise, any thoughts about hunkering down there going forward?
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