GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The Company tests goodwill and indefinite lived intangible assets for impairment at least annually as of May 1, or more frequently, if certain events or circumstances warrant. In the first half of fiscal 2014, the Company anticipated realizing significant improvements in cash flows in its Beauty - Skin & Body Care Reporting Units China operations beginning in the third quarter due to the reorganization of the management team and distribution network in China and the launch of new product offerings. In the course of evaluating the results for the third quarter and the preparation of third quarter financial statements, the Company noted the net cash outflows associated with the TJOY Holdings Co., Ltd. (“TJoy”) mass channel business in China were significantly in excess of previous expectations and management concluded that the results in China represented an indicator of impairment that warranted an interim impairment test for goodwill and certain other intangible assets in the Beauty - Skin & Body Care Reporting Unit of $316.9, of which $256.4 related to goodwill and $60.5 to other long lived assets, as described below and recorded in Asset impairment charges in the Consolidated Statements of Operations.

In step one of the goodwill impairment test, the Company identified that the carrying value of the reporting unit exceeded its fair value based on a re-evaluation of discounted cash flows and confirmed by using a market approach to value the reporting units. The main drivers of the decline were a decrease in average net sales growth rates for the reporting unit from high-single digits to mid-single digits and an increase in weighted average cost of capital, based on management's recent estimates.

In step two of the test, the implied fair value of goodwill was determined by comparing the fair value of the other assets in the reporting unit to the fair value of the reporting unit. Predominantly as a result of the fair value of the adidas license, the implied fair value of goodwill was determined to be nil. As a result, goodwill for the Beauty - Skin & Body Care reporting unit was fully impaired, resulting in a reduction in fair value of the Beauty - Skin & Body Care reporting unit of 43.4% from the May 1, 2013 fair value and a total non-cash impairment charge of $316.9, of which $256.4 related to goodwill and $60.5 to other assets.

The Company believes the assumptions used in calculating the estimated fair values of the other reporting units are reasonable and attainable. However, the Company can provide no assurances that it will achieve such projected results. Further, the Company can provide no assurances that it will not have to recognize additional impairment of goodwill in the future due to other market conditions or changes in interest rates in these other reporting units. Recognition of additional impairment of a significant portion of the Company’s goodwill would negatively affect the Company’s reported results of operations and total capitalization.

Goodwill as of June 30, 2014 and June 30, 2013 is presented below:



	Fragrances		Color Cosmetics		Skin & Body Care			Total
Gross balance at June 30, 2013	$	711.0	$	529.8	$	686.8		$	1,927.6
Accumulated impairments ^(a)	—		—		(384.4		)	(384.4		)
Net balance at June 30, 2013	$	711.0	$	529.8	$	302.4		$	1,543.2

Changes during the year ended June 30, 2014:
Acquisition contingent payment ^(b)	$	30.0	$	—	$	—		$	30.0
Acquisitions ^(c)	3.8		2.6		7.0			13.4
Foreign currency translation	7.1		5.8		(0.3		)	12.6
Impairment charges	—		—		(256.4		)	(256.4		)

Gross balance at June 30, 2014	$	751.9	$	538.2	$	693.5		$	1,983.6
Accumulated impairments	—		—		(640.8		)	(640.8		)
Net balance at June 30, 2014	$	751.9	$	538.2	$	52.7		$	1,342.8

^(a) In fiscal 2012, the Company recorded pre-tax non-cash impairment at the Prestige—Skin & Body Care reporting unit of $384.4 in Asset impairment charges in the Consolidated Statements of Operations, reducing goodwill at this reporting unit from $437.1 to $52.7.

^(b)Pursuant to the Company's fiscal 2006 acquisition of Unilever Cosmetics International, the Company is contractually obligated to make future annual contingent purchase price consideration payments for a 10-year period following the acquisition to the seller. Payments are based on contractually agreed upon sales targets and can range up to $30.0 per year. The Company paid $30.0 during the third quarter of both fiscal 2014 and 2013 for such contingent consideration.

^(c)During the year ended June 30, 2014, the Company acquired 100% of the shares of StarAsia and Lena White. These transactions were accounted for as business combinations (See Note 4).

Other Intangible Assets

Other intangible assets, net as of June 30, 2014 and June 30, 2013 are presented below:



	June 30, 2014		June 30, 2013
Indefinite-lived other intangible assets ^(a)	$	1,167.8	$	1,171.9
Finite-lived other intangible assets, net ^(b)	669.3		784.7
Total Other intangible assets, net	$	1,837.1	$	1,956.6

^(a)Net of accumulated impairments of $188.6 as of June 30, 2014 and June 30, 2013.

^(b)Net of accumulated impairments of $21.0 and $33.5 related to the TJoy trademark and customer relationships, respectively, recorded in fiscal 2014.

The changes in the carrying amount of indefinite-lived other intangible assets are presented below:



	Fragrances			Color Cosmetics			Skin & Body Care			Total
Gross balance at June 30, 2013	30.8			885.0			453.9			1,369.7
Accumulated impairments ^(a)	—			(9.2		)	(188.6		)	(197.8		)
Balance—June 30, 2013	30.8			875.8			265.3			1,171.9

Changes during the period ended June 30, 2014
Foreign currency translation	1.2			1.5			—			2.7
Reclassification to definite-lived trademark	(6.8		)	—			—			(6.8		)

Gross balance at June 30, 2014	25.2			886.5			453.9			1,365.6
Accumulated impairments	—			(9.2		)	(188.6		)	(197.8		)
Net balance at June 30, 2014	$	25.2		$	877.3		$	265.3		$	1,167.8

^(a) Impairment charges of $188.6 were recorded in fiscal 2012 as discussed above. Impairment of $9.2 was recorded prior to June 30, 2011.

Intangible assets subject to amortization are presented below:



	Cost		Accumulated Amortization			Accumulated Impairment			Net
June 30, 2013
License agreements	$	827.0	$	(451.6	)	$	—		$	375.4
Customer relationships	543.3		(173.1		)	—			370.2
Trademarks	145.9		(112.5		)	—			33.4
Product formulations	31.8		(26.1		)	—			5.7
Total	$	1,548.0	$	(763.3	)	$	—		$	784.7
June 30, 2014
License agreements	$	835.0	$	(490.8	)	$	—		$	344.2
Customer relationships	510.8		(169.4		)	(33.5		)	307.9
Trademarks	125.8		(90.1		)	(21.0		)	14.7
Product formulations	31.8		(29.3		)	—			2.5
Total	$	1,503.4	$	(779.6	)	$	(54.5	)	$	669.3

Concurrently with the evaluation of future cash flows of the reporting unit, the Company also re-evaluated future cash flows from other long lived assets in China, consisting of the TJoy trademark, customer relationships and a manufacturing facility, with a total carrying value of $69.1. It was determined that the carrying value of this asset group exceeded its fair value resulting in an impairment charge of $60.5. The TJoy trademark and customer relationships of $21.0 and $33.5, respectively, were fully impaired and the remaining $6.0 impairment charge was attributable to the reduction of the carrying value of a manufacturing facility.

Intangible assets subject to amortization are amortized principally using the straight-line method and have the following weighted-average remaining lives:



Description
License agreements	11.0 years
Customer relationships	8.5 years
Trademarks	12.2 years
Product formulations	3.5 years

As of June 30, 2014, the remaining weighted-average life of all intangible assets subject to amortization is 9.8 years.

Amortization expense totaled $85.7, $90.2 and $93.2 for the fiscal years ended June 30, 2014, 2013 and 2012, respectively. The estimated aggregate amortization expense for each of the following fiscal years ending June 30 is presented below:



2015	$	76.3
2016	74.5
2017	74.1
2018	73.7
2019	73.0

License Agreements

The Company records assets for license agreements (“licenses”) acquired in transactions accounted for as business combinations. These licenses provide the Company with the exclusive right to manufacture and market on a worldwide and/or regional basis, certain of the Company’s products which comprise a significant portion of the Company’s revenues. These licenses have initial terms covering various periods. Certain licenses provide for automatic extensions ranging from 5 to 10-year terms, contingent upon attaining specified sales levels. Based on the current sales and the time until renewal, management cannot determine whether specified sales levels will be attained, which will permit extensions.

There were no licenses acquired during fiscal 2014. During fiscal 2013, the Company acquired one new license with rights to manufacture and distribute fragrance products under certain trademarks. During fiscal 2013, the Company received $25.0 related to the termination of one of its licenses by mutual agreement with the original licensor. The license had a net book value of $5.7 and, therefore, the Company recorded a gain of $19.3 in the Consolidated Statements of Operations, which was included in “Corporate” in Note 3.