GOODWILL AND OTHER INTANGIBLE ASSETS, NET

9 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Assessment for Impairments

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. There were no impairments of goodwill at the Company’s reporting units as of March 31, 2020.

During the third quarter of fiscal 2020, the Company was adversely impacted by the COVID-19 global pandemic. This drove a decrease in net revenue, impacting all product categories across the Company, due to the closure of retail malls, professional salons, travel retail channels and certain mass channels. Management concluded that this adverse factor

represented an indicator of impairment that warranted an interim impairment test for goodwill and certain other intangible assets.

As a result, in the three and nine months ended March 31, 2020, the Company recognized asset impairment charges of $40.4, relating to indefinite-lived other intangible assets (related to the CoverGirl, Max Factor and Bourjois trademarks). These impairments are recorded as Asset impairment charges in the Condensed Consolidated Statements of Operations.

Goodwill

Goodwill as of March 31, 2020 and June 30, 2019 is presented below:


	Americas		EMEA		APAC		Professional Beauty		Total
Gross balance at June 30, 2019	$	3,184.4	$	3,798.7	$	1,300.7	$	821.9	$	9,105.7
Accumulated impairments	(1,835.1)		(1,780.7)		(416.1)		—		(4,031.9)
Net balance at June 30, 2019	$	1,349.3	$	2,018.0	$	884.6	$	821.9	$	5,073.8

Changes during the period ended March 31, 2020
Acquisitions^(a)	$	127.4	$	—	$	—	$	—	$	127.4
Disposition of business	(11.2)		(10.2)		(2.0)		—		(23.4)
Foreign currency translation	(85.3)		(103.9)		(36.5)		(30.0)		(255.7)


Gross balance at March 31, 2020	$	3,215.3	$	3,684.6	$	1,262.2	$	791.9	$	8,954.0
Accumulated impairments	(1,835.1)		(1,780.7)		(416.1)		—		(4,031.9)
Net balance at March 31, 2020	$	1,380.2	$	1,903.9	$	846.1	$	791.9	$	4,922.1

^(a)Includes goodwill resulting from the King Kylie Transaction on January 6, 2020 (Refer to Note 5—Business Combinations, Asset Acquisitions and Divestitures).

As described in Note 4—Segment Reporting, the Company changed its segments during the third quarter ended March 31, 2020. As a result, the Company allocated goodwill to the new segments using a relative fair value approach. In addition, the Company completed an assessment of any potential goodwill impairment for all reporting units immediately prior to the reallocation and determined that no impairment existed.

Other Intangible Assets, net

Other intangible assets, net as of March 31, 2020 and June 30, 2019 are presented below:


	March 31, 2020		June 30, 2019
Indefinite-lived other intangible assets	$	2,667.3	$	2,729.8
Finite-lived other intangible assets, net	4,774.9		4,692.5
Total Other intangible assets, net	$	7,442.2	$	7,422.3

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


	Trademarks		Total
Gross balance at June 30, 2019	$	3,356.7	3,356.7
Accumulated impairments	(626.9)		(626.9)
Net balance at June 30, 2019	$	2,729.8	2,729.8

Changes during the period ended March 31, 2020

Foreign currency translation	$	(22.1)	(22.1)
Impairment charges	(40.4)		(40.4)

Gross balance at March 31, 2020	$	3,334.6	3,334.6
Accumulated impairments	(667.3)		(667.3)
Net balance at March 31, 2020	$	2,667.3	2,667.3

Intangible assets subject to amortization are presented below:


	Cost		Accumulated Amortization		Accumulated Impairment		Net
June 30, 2019
License agreements	$	3,245.3	$	(874.5)	$	(19.6)	$	2,351.2
Customer relationships	1,951.6		(642.0)		(5.5)		1,304.1
Trademarks	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
March 31, 2020
License agreements^(a)	$	3,815.7	$	(972.4)	$	(19.6)	$	2,823.7
Customer relationships^(a)	1,728.4		(639.8)		(5.5)		1,083.1
Trademarks	911.7		(241.4)		(0.5)		669.8
Product formulations and technology	340.5		(142.2)		—		198.3
Total	$	6,796.3	$	(1,995.8)	$	(25.6)	$	4,774.9

^(a)Includes License agreements and Customer relationships of $649.0 and $27.0, respectively, resulting from the King Kylie Transaction on January 6, 2020 (Refer to Note 5—Business Combinations, Asset Acquisitions and Divestitures).

In July 2018, 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 Condensed Consolidated Statement of Operations related to the license agreement.

In September 2019, the Company divested all of its membership interest in Foundation, which held the net assets of Younique (including goodwill of $23.4 and other intangible assets of $228.6). Refer to Note 5—Business Combinations, Asset Acquisitions and Divestitures.

Amortization expense was $87.6 and $86.7 for the three months ended March 31, 2020 and 2019, respectively and $248.7 and $267.7 for the nine months ended March 31, 2020 and 2019, respectively.