APPLIED INDUSTRIAL TECHNOLOGIES INCAIT

APPLIED INDUSTRIAL TECHNOLOGIES INC Goodwill & Intangibles Disclosure

10-KFiled Aug 15, 20253 min read
GOODWILL AND INTANGIBLES
The changes in the carrying amount of goodwill for both the Service Center segment and the Engineered Solutions segment for the years ended June 30, 2025 and 2024 are as follows:
Service CenterEngineered SolutionsTotal
Balance at July 1, 2023$211,231 $367,187 $578,418 
Goodwill acquired during the year9,712 32,634 42,346 
Other, primarily currency translation(1,369)— (1,369)
Balance at June 30, 2024219,574 399,821 619,395 
Goodwill acquired during the year2,262 77,847 80,109 
Other, primarily currency translation(130)— (130)
Balance at June 30, 2025$221,706 $477,668 $699,374 
During fiscal 2025, the Company recorded purchase accounting working capital adjustments related to the Kopar acquisition, which increased the purchase price by $645, decreased the fair value of net tangible assets acquired by $1,219, and increased goodwill by $1,864. Also, during fiscal 2025, the Company recorded working capital adjustments related to the TMS acquisition, which decreased the purchase price by $475, increased the fair value of net tangible assets acquired by $91, and decreased goodwill by $566. Further, during fiscal 2025, the Company recorded purchase accounting and working capital adjustments related to the Hydradyne acquisition, which increased the purchase price by $6,045, increased the fair value of net tangible assets acquired by $1,593, increased net intangible assets by $410, and increased goodwill by $4,042.
The Company has eight (8) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2025.  Based on the assessment performed, the Company concluded that the fair value of all of the reporting units exceeded their carrying amount as of January 1, 2025, therefore no impairment exists.
At June 30, 2025 and 2024, accumulated goodwill impairment losses subsequent to fiscal 2002 totaled $64,794 related to the Service Center segment and $167,605 related to the Engineered Solutions segment.
The Company's identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:
June 30, 2025AmountAccumulated
Amortization		Net
Book Value
Finite-Lived Intangibles:
Customer relationships$510,834 $233,392 $277,442 
Trade names108,344 41,585 66,759 
Other6,902 2,503 4,399 
Total Intangibles$626,080 $277,480 $348,600 
June 30, 2024AmountAccumulated
Amortization		Net
Book Value
Finite-Lived Intangibles:
Customer relationships$394,114 $205,422 $188,692 
Trade names88,848 34,891 53,957 
Other4,946 1,725 3,221 
Total Intangibles$487,908 $242,038 $245,870 
Amounts include the impact of foreign currency translation. Fully amortized finite-lived identifiable intangible assets are written off in the period when they become fully amortized.
During fiscal 2025, the Company acquired identifiable intangible assets with an acquisition cost allocation and weighted-average life as follows:
Acquisition Cost AllocationWeighted-Average Life
Customer relationships$116,778 20.0
Trade names19,500 15.0
Other 2,045 13.4
Total Finite-Lived Intangibles Acquired$138,323 19.2
Identifiable intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable.
Amortization of identifiable intangibles totaled $35,581, $28,923, and $30,805 in fiscal 2025, 2024, and 2023, respectively, and is included in selling, distribution, and administrative expense in the statements of consolidated income. Future amortization expense based on the Company’s identifiable intangible assets as of June 30, 2025 is estimated to be $39,600 for 2026, $37,000 for 2027, $34,500 for 2028, $32,500 for 2029, and $30,500 for 2030.

Historical Timeline

Fiscal YearFiled
2025Aug 15, 2025Showing above
2024Aug 16, 2024
2023Aug 11, 2023
2022Aug 12, 2022
2021Aug 17, 2021
2020Aug 14, 2020
2019Aug 16, 2019
2018Aug 17, 2018
2017Aug 18, 2017

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

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