KENNAMETAL INCKMT

KENNAMETAL INC Goodwill & Intangibles Disclosure

10-KFiled Aug 9, 20232 min read
NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS
As of June 30, 2023, $269.6 million of goodwill was allocated to the Metal Cutting reporting unit. We completed an annual quantitative test of goodwill impairment and determined that the fair value of the reporting unit substantially exceeded the carrying value and, therefore, no impairment was recorded during 2023. Further, an indefinite-lived trademark intangible asset of $10.8 million in the Metal Cutting reporting unit had a fair value that approximated its carrying value as of the date of the annual impairment test and, therefore, no impairment was recorded during 2023.
A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such, is as follows:
(in thousands)Metal CuttingInfrastructureTotal
Gross goodwill$455,276 $633,211 $1,088,487 
Accumulated impairment losses(177,661)(633,211)(810,872)
Balance as of June 30, 2021$277,615 $— $277,615 
Activity for the year ended June 30, 2022:
Change in gross goodwill due to translation(13,385)— (13,385)
Gross goodwill441,891 633,211 1,075,102 
Accumulated impairment losses(177,661)(633,211)(810,872)
Balance as of June 30, 2022$264,230 $— $264,230 
Activity for the year ended June 30, 2023:
Change in gross goodwill due to translation5,321 — 5,321 
Gross goodwill447,212 633,211 1,080,423 
Accumulated impairment losses(177,661)(633,211)(810,872)
Balance as of June 30, 2023$269,551 $— $269,551 
The components of our other intangible assets were as follows: 
 Estimated
Useful Life
(in years)		June 30, 2023June 30, 2022
(in thousands)Gross Carrying
Amount		Accumulated
Amortization		Gross Carrying
Amount		Accumulated
Amortization
Technology-based and other
4 to 20
$31,872 $(23,838)$31,592 $(22,734)
Customer-related
10 to 21
179,889 (112,890)180,263 (104,698)
Unpatented technology
10 to 30
31,487 (25,177)31,807 (22,950)
Trademarks
5 to 20
12,426 (11,441)12,403 (10,317)
TrademarksIndefinite10,836 — 10,359 — 
Total$266,510 $(173,346)$266,424 $(160,699)
Amortization expense for intangible assets was $12.6 million, $13.0 million and $14.0 million for 2023, 2022 and 2021, respectively. Estimated amortization expense for 2024 through 2028 is $10.9 million, $9.7 million, $9.3 million, $7.8 million, and $6.8 million, respectively.

Historical Timeline

Fiscal YearFiled
2023Aug 9, 2023Showing above
2022Aug 10, 2022
2020Aug 20, 2020
2019Aug 13, 2019
2018Aug 10, 2018
2017Aug 14, 2017
2016Aug 11, 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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