BIO-TECHNE CorpTECH

BIO-TECHNE Corp Goodwill & Intangibles Disclosure

10-KFiled Aug 29, 20163 min read
Note 6.     Intangible Assets and Goodwill:
 
Intangible assets and goodwill consist of (in thousands):
 
 
 
 
  
 
 
 
June 30,
 
 
 
Useful Life
(years)
 
 
201
6
 
 
201
5
 
                           
Developed technology
   8 - 15     $ 120,611     $ 108,887  
Trade names
   5 - 16       63,706       63,867  
Customer relationships
   8 - 16       191,118       167,494  
Non-compete agreement
   3 - 5       3,284       3,298  
                378,719       343,546  
Accumulated amortization
               (75,595
)
     (50,707
)
Total amortizeable intagibles             $ 303,124     $ 292,839  
In process research and development                 7,400       0   
Total intangible assets               310,524       292,839  
                           
Goodwill
             $ 430,882     $ 390,638  
 
 
Changes to the carrying amount of goodwill consists of (in thousands):
 
 
 
Year Ended June 30,
 
 
 
201
6
 
 
201
5
 
                 
Beginning balance
   $ 390,638     $ 151,473  
Acquisitions
     49,648       254,140  
Currency translation
     (9,404
)
     (14,975 ) 
Ending balance
   $ 430,882     $ 390,638  
 
 
Changes to the carrying amount of net intangible assets consists of (in thousands):
 
 
 
Year Ended June 30,
 
 
 
201
6
 
 
201
5
 
                 
Beginning balance
   $ 292,839     $ 108,776  
Acquisitions
     53,500       222,710  
Amortization expense
     (29,395
)
     (26,170
)
Currency translation
     (6,420
)
     (12,777
)
Ending balance
   $ 310,524     $ 292,839  
 
Amortization expense related to technologies included in cost of sales was $11.1 million $9.5 million, and $4.2 million in fiscal 2016, 2015, and 2014, respectively. Amortization expense related to trade names, customer relationships, and the non-compete agreement included in selling, general and administrative expense was $18.3 million, $16.7 million, and $6.1 million, in fiscal 2016, 2015, and 2014 respectively.
 
The estimated future amortization expense for intangible assets as of June 30, 2016 is as follows (in thousands):
 
Year Ending June 30:
 
 
 
 
2017
     28,326  
2018
     28,140  
2019
     27,527  
2020
     26,898  
2021
     26,534  
Thereafter
     165,699  
    $ 303,124  

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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