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GOODWILL AND OTHER INTANGIBLE ASSETS, NET
 12 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS, NET GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Assessment for Impairments
The Company tests goodwill and indefinite-lived other intangible assets for impairment at least annually as of May 1, or more frequently, if certain events or circumstances warrant. There were no impairments of goodwill at the Company’s reporting units or of indefinite-lived other intangible assets in fiscal 2018 and 2017.
During fiscal 2019, the Company recorded total goodwill impairments of $3,391.1 and total impairments on indefinite-lived other intangible assets of $429.1. Additionally, the Company recorded impairments of $19.7 on finite-lived other intangible assets during fiscal 2019. The asset impairment charges were a result of the following impairment tests:
In the course of evaluating the results for the second quarter of fiscal 2019, the Company noted the cash flows associated with its Consumer Beauty reporting unit were adversely impacted by negative category trends and market share losses in the color cosmetics, hair color and mass fragrance categories mainly impacting the CoverGirl, Rimmel, Max Factor, Bourjois and Clairol trademarks; additional shelf-spaces losses for CoverGirl, Clairol, and Max Factor; expected increased costs in the short-term to offset the lower service levels caused by supply chain disruptions; and lower than expected net revenues and profitability for Younique. Additionally, the Company included the impact of a 75 basis point increase in the discount rate in the valuation model, due to changes in the market assumptions, which adversely affected the fair values of the reporting unit and trademarks. As a result, in the second quarter of fiscal 2019, the Company recognized asset impairment charges of $930.3, of which $832.5 related to goodwill, $90.8 related to indefinite-lived other intangible assets (mainly related to the CoverGirl and Clairol trademarks) and $7.0 related to finite-lived other intangible assets, as described below and recorded in Asset impairment charges in the Consolidated Statements of Operations.
Also, in the second quarter of fiscal 2019, the Company identified indicators of impairment related to the philosophy trademark that is part of the Luxury reporting unit and recorded an asset impairment charge of $22.8 for the second quarter of fiscal 2019. In addition to the impact of a 75 basis point increase in the discount rate for the trademark, the Company considered the impact of the business indicators of lower than expected net revenue growth in the U.S. and a decrease in the level of expected profitability of the trademark.
In the fourth quarter of fiscal 2019, as a result of the annual impairment test, the Company recorded asset impairment charges of $2,558.6 related to goodwill of the Consumer Beauty reporting unit and $201.7 related to indefinite-lived other intangible assets (mainly CoverGirl, Max Factor, Bourjois, Sally Hansen and Clairol trademarks) that are part of the Consumer Beauty reporting unit. The charges are recorded in Asset impairment charges in the Consolidated Statements of Operations. The Company considered several factors that developed during the fourth quarter of fiscal 2019 that led to the conclusion that the fair values of the Consumer Beauty reporting unit and certain indefinite-lived other intangible assets were below their carrying amounts. These factors included fourth quarter net revenue results and market share trends that were below expectations, continued net revenue and profitability declines for Younique in excess of management’s expectations, and the development of
the Company’s Turnaround Plan to stabilize operations and improve profitability. The Turnaround Plan impacted the projected cash flows associated with the Consumer Beauty reporting unit by lowering revenue growth and, in the near term, margin expectations. Such changes in the Company’s estimated forecasts were based on a top down review of the business which resulted in decisions to simplify the product range as well as identify priority brand-country combinations and invest behind such combinations at scale, which will initially lower net revenues and profits. The Turnaround Plan also considered the latest market data including continued negative category trends in the color cosmetics, hair color and mass fragrance categories that were below expectations and indicated a longer required recovery period. Overall, these factors negatively impacted the cash flows of the Consumer Beauty reporting unit and indefinite-lived other intangible assets and resulted in a decrease in management’s assumed terminal growth rates, which also adversely affected their fair values. Additionally, the Company included the impact of an additional 25 basis point increase in the discount rate in the valuation model for its trademarks, which adversely affected the fair values of the trademarks.
Based on the results of the annual impairment test, the Company also recorded an asset impairment charge of $86.8 in Asset impairment charges in the Consolidated Statements of Operations related to the philosophy trademark that is part of the Luxury reporting unit. The cash flows related to the philosophy trademark decreased mainly due to updated projections as a result of a revised strategy for the business developed as part of the Turnaround Plan in the fourth quarter of fiscal 2019 to simplify the product range. The fair value of the philosophy trademark was also adversely affected by a 25 basis point increase in the discount rate for trademarks since the second quarter of fiscal 2019.
Further, the Company recorded an asset impairment charge of $27.0 in Asset impairment charges in the Consolidated Statements of Operations for fiscal 2019 related to the professional product line of Wella trademark that is part of the Professional Beauty reporting unit. In addition to the impact of a 100 basis point increase in the discount rate for the trademark since the fiscal 2018 annual impairment test, the Company considered the adverse impact of lower than expected revenue in the U.S. on the cash flows associated with the professional product line of Wella trademark due to additional customer destocking activities as well as the impact of the strategy change to simplify the product range.
Goodwill
Goodwill as of June 30, 2019, 2018 and 2017 is presented below:
 
Luxury
 
Consumer Beauty
 
Professional Beauty
 
Total
Gross balance at June 30, 2017
$
3,496.8

 
$
4,732.0

 
$
967.5

 
$
9,196.3

Accumulated impairments
(403.7
)
 
(237.1
)
 
—

 
(640.8
)
Net balance at June 30, 2017
$
3,093.1

 
$
4,494.9

 
$
967.5

 
$
8,555.5

 
 
 
 
 
 
 
 
Changes during the year ended June 30, 2018
 
 
 
 
 
 
 
Acquisitions
68.2

 
—

 
2.6

 
70.8

Measurement period adjustments
(185.0
)
 
228.8

 
(17.3
)
 
26.5

Foreign currency translation
(10.3
)
 
(24.1
)
 
1.0

 
(33.4
)
Dispositions
(3.1
)
 
(9.2
)
 
—

 
(12.3
)
 
 
 
 
 
 
 
 
Gross balance at June 30, 2018
$
3,366.6

 
$
4,927.5

 
$
953.8

 
$
9,247.9

Accumulated impairments
(403.7
)
 
(237.1
)
 
—

 
(640.8
)
Net balance at June 30, 2018
$
2,962.9

 
$
4,690.4

 
$
953.8

 
$
8,607.1

 
 
 
 
 
 
 
 
Changes during the year ended June 30, 2019
 
 
 
 
 
 
 
Impairment charges
—

 
(3,391.1
)
 
—

 
(3,391.1
)
Measurement period adjustments (a)
(10.5
)
 
0.6

 
0.5

 
(9.4
)
Foreign currency translation
(30.7
)
 
(83.5
)
 
(18.6
)
 
(132.8
)
 
 
 
 
 
 
 
 
Gross balance at June 30, 2019
$
3,325.4

 
$
4,844.6

 
$
935.7

 
$
9,105.7

Accumulated impairments
(403.7
)
 
(3,628.2
)
 
—

 
(4,031.9
)
Net balance at June 30, 2019
$
2,921.7

 
$
1,216.4

 
$
935.7

 
$
5,073.8

 
 

(a) Includes measurement period adjustments during the twelve month period ended June 30, 2019 in connection with the Burberry Beauty Business acquisition (Refer to Note 3—Business Combinations).
Other Intangible Assets, net
Other intangible assets, net as of June 30, 2019 and 2018 are presented below:
 
June 30,
2019
 
June 30,
2018
Indefinite-lived other intangible assets
$
2,729.8

 
$
3,186.2

Finite-lived other intangible assets, net
4,692.5

 
5,098.2

Total Other intangible assets, net
$
7,422.3

 
$
8,284.4


The changes in the carrying amount of indefinite-lived other intangible assets are presented below:
 
Luxury
 
Consumer Beauty
 
Professional Beauty
 
Total
Gross balance at June 30, 2017
409.8

 
1,696.4

 
1,278.5

 
3,384.7

Accumulated impairments
(118.8
)
 
(75.9
)
 
(3.1
)
 
(197.8
)
Net balance at June 30, 2017
291.0

 
1,620.5

 
1,275.4

 
3,186.9

 
 
 
 
 
 
 
 
Changes during the year ended June 30, 2018
 
 
 
 
 
 
 
Measurement period adjustments
—

 
—

 
(14.8
)
 
(14.8
)
Foreign currency translation
4.8

 
6.7

 
2.6

 
14.1

 
 
 
 
 
 
 
 
Gross balance at June 30, 2018
$
414.6

 
$
1,703.1

 
$
1,266.3

 
$
3,384.0

Accumulated impairments
(118.8
)
 
(75.9
)
 
(3.1
)
 
(197.8
)
Net balance at June 30, 2018
295.8

 
1,627.2

 
1,263.2

 
3,186.2

 
 
 
 
 
 
 
 
Changes during the year ended June 30, 2019
 
 
 
 
 
 
 
Impairment charges
(109.6
)
 
(292.5
)
 
(27.0
)
 
(429.1
)
Foreign currency translation
(8.8
)
 
(10.0
)
 
(8.5
)
 
(27.3
)
 
 
 
 
 
 
 
 
Gross balance at June 30, 2019
405.8

 
1,693.1

 
1,257.8

 
3,356.7

Accumulated impairments
(228.4
)
 
(368.4
)
 
(30.1
)
 
(626.9
)
Net balance at June 30, 2019
$
177.4

 
$
1,324.7

 
$
1,227.7

 
$
2,729.8


Intangible assets subject to amortization are presented below:
 
Cost
 
Accumulated Amortization
 
Accumulated Impairment
 
Net
June 30, 2018
 
 
 
 
 
 
 
License agreements
$
3,362.7

 
$
(792.9
)
 
$
—

 
$
2,569.8

Customer relationships
1,960.5

 
(508.7
)
 
(5.5
)
 
1,446.3

Trademarks
1,002.1

 
(185.5
)
 
(0.4
)
 
816.2

Product formulations and technology
361.2

 
(95.3
)
 
—

 
265.9

Total
$
6,686.5

 
$
(1,582.4
)
 
$
(5.9
)
 
$
5,098.2

June 30, 2019
 
 
 
 
 
 
 
License agreements (a)
$
3,245.3

 
$
(874.5
)
 
$
(19.6
)
 
$
2,351.2

Customer relationships (a)
1,951.6

 
(642.0
)
 
(5.5
)
 
1,304.1

Trademarks (b)
1,039.5

 
(229.4
)
 
(0.5
)
 
809.6

Product formulations and technology
354.1

 
(126.5
)
 
—

 
227.6

Total
$
6,590.5

 
$
(1,872.4
)
 
$
(25.6
)
 
$
4,692.5

 
 

(a) Includes measurement period adjustments during the twelve month period ended June 30, 2019 in connection with the Burberry Beauty Business acquisition (Refer to Note 3—Business Combinations).
(b) Includes acquired trademark of $40.8.
During fiscal 2019, the Company acquired a trademark associated with a preexisting license. As a result of the acquisition, the preexisting license was effectively terminated, and accordingly the Company recorded $12.6 of Asset impairment charges in the Consolidated Statement of Operations related to the license agreement that is part of the Luxury reporting unit.
During fiscal 2018, the Company sold assets related to the Playboy and Cerruti brands (including related licenses of $26.2 and goodwill of $12.3) for proceeds of $33.0, resulting in a noncash loss of $28.6. During fiscal 2017, the Company sold assets related to the J.Lo brand for a total disposal price of $10.5. The Company allocated $2.4 of goodwill to the brand as part of the
sale. The Company recorded losses (gains) of $28.6 and $(3.1), which are reflected in Loss (gain) on sale of assets in the Consolidated Statements of Operations for the fiscal years ended June 30, 2018 and 2017, respectively.
Amortization expense totaled $353.5, $352.8 and $275.1 for the fiscal years ended June 30, 2019, 2018 and 2017, respectively.
Intangible assets subject to amortization are amortized principally using the straight-line method and have the following weighted-average remaining lives:
Description
 
License agreements
24.0 years
Customer relationships
15.4 years
Trademarks
21.1 years
Product formulations and technology
9.8 years

As of June 30, 2019, the remaining weighted-average life of all intangible assets subject to amortization is 20.4 years.
The estimated aggregate amortization expense for each of the following fiscal years ending June 30 is presented below:
2020
$
345.8

2021
340.3

2022
322.8

2023
314.4

2024
274.3


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 brand licenses provide for automatic extensions ranging from 2 to 10 year terms, at the Company’s discretion.