KKR & Co. Inc.KKR

KKR & Co. Inc. Goodwill & Intangibles Disclosure

10-KFiled Feb 23, 20182 min read
GOODWILL AND INTANGIBLE ASSETS
 
Goodwill
 
As of December 31, 2016, the carrying value of goodwill was $89.0 million, which was allocated to Public Markets and Principal Activities in the amounts of $59.0 million and $30.0 million, respectively. As part of the PAAMCO Prisma transaction that occurred on June 1, 2017, goodwill of $5.5 million was included in determining the gain on the contribution of Prisma Capital Partners LP and its affiliates to PAAMCO Prisma Holdings LLC. In accordance with ASC 350, the amount of goodwill included in the gain calculation was based on the relative fair values of Prisma Capital Partners LP and its affiliates, which was integrated in Public Markets, and the remaining portion of Public Markets. Subsequent to this transaction the remaining carrying value of goodwill in Public Markets and Principal Activities is $53.5 million and $30.0 million, respectively, as of December 31, 2017.

Goodwill is recorded in Other Assets in the consolidated statements of financial condition. All of the goodwill is currently expected to be deductible for tax purposes. See Note 8 "Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities."
 
Intangible Assets
 
Intangible Assets, Net consists of the following:
 
December 31, 2017
 
December 31, 2016
Finite-Lived Intangible Assets
$
190,526

 
$
251,768

Accumulated Amortization
(61,348
)
 
(116,744
)
Intangible Assets, Net
$
129,178

 
$
135,024


 
Changes in Intangible Assets, Net consists of the following: 
 
For the Years Ended December 31,
 
2017
 
2016
Balance, Beginning of Period
$
135,024

 
$
176,987

Amortization Expense
(17,811
)
 
(26,387
)
Foreign Exchange
2,173

 
(160
)
Additions(1)
115,425

 
—

Write-Offs (2)
—

 
(15,416
)
Other (3)
(105,633
)
 
—

Balance, End of Period
$
129,178

 
$
135,024

 
 
 
 
(1) Represents acquired investment management contractual rights.
 
 
(2) Represents the write-off of certain investment management contractual rights.
 
 
(3) Represents the removal of intangible assets in connection with the PAAMCO Prisma transaction.
 
 


Amortization expense including foreign exchange relating to intangible assets held at December 31, 2017 is expected to be as follows:
2018
 
$
16,401

2019
 
13,328

2020
 
13,160

2021
 
12,590

2022
 
12,475

2023 and thereafter
 
61,224

 
 
$
129,178



The intangible assets as of December 31, 2017 are expected to amortize over a weighted‑average period of 9.6 years.
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Historical Timeline

Fiscal YearFiled
2017Feb 23, 2018Showing above
2016Feb 24, 2017
2015Feb 26, 2016

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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