Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]



11.	Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by segment were as follows:



	September 30, 2016		September 25, 2015
Specialty Brands	$	3,498.3	$	3,442.4
Specialty Generics	207.0		207.0
Total	$	3,705.3	$	3,649.4

During the fiscal year ended September 30, 2016, the gross carrying value of goodwill in the Specialty Brands segment increased by $55.9 million, primarily attributable to $57.3 million from the Stratatech Acquisition. The remaining change in goodwill is a result of the Hemostasis Acquisition, offset by purchase accounting adjustments for the Therakos Acquisition and Ikaria Acquisition primarily attributable to changes in deferred tax balances.

Goodwill Impairment Analysis

As of the fiscal 2016 measurement date, the Company had identified the Specialty Brands, Specialty Generics and Nuclear Imaging businesses as representing the reporting units in our annual goodwill impairment analysis. For purposes of assessing impairment and the recoverability of goodwill for each reporting unit the Company makes various assumptions regarding estimated future cash flows, discount rates and other factors in determining the fair values of each reporting unit using the income approach. The Company's projections of future cash flows were then discounted based on a WACC determined from relevant market comparisons, adjusted upward for specific reporting unit risks (primarily the uncertainty of achieving projected operating cash flows). A terminal value growth rate was applied to the terminal year cash flows, both of which represent the Company's estimate of stable, sustainable growth. The fair value of the reporting unit represents the sum of the discounted cash flows from the discrete period and the terminal year cash flows. The fair values of the reporting units were assessed for reasonableness by aggregating the fair values and comparing this to the Company's market capitalization with a control premium.

The Company's projections in its Specialty Brands reporting unit include long-term revenue and operating income at levels higher than historical levels, which is primarily associated with the Therakos Acquisition, Hemostasis Acquisition and revenue growth for Acthar. The projections also reflect the potential impacts from the future loss of exclusivity related to Ofirmev. The Company utilized a WACC of 12.5%. These assumptions resulted in a fair value of the Specialty Brands reporting unit in excess of its net book value. Should the Specialty Brands reporting unit fail to experience growth in the aforementioned products, revise its long-term projections for these products downward or market conditions dictate utilization of higher discount rates, the Specialty Brands reporting unit could be subject to impairment in future periods.

The Company's projections in its Specialty Generics reporting unit include long-term revenue and operating income at lower than historical levels primarily attributable to increased competition. The Specialty Generics segment has and may continue to experience customer consolidation, which could result in further downward pressure to our long-term revenue and operating income projections. The Company utilized a WACC of 11.0%. These assumptions resulted in a fair value of the Specialty Generics reporting unit in excess of its net book value.

In October 2016, the Company was notified that the FDA was initiating Withdrawal Proceedings on the Company's Methylphenidate ER products, which could result in these products losing their FDA approval. The Specialty Generics segment includes cash flows from the sale of the Company's Methylphenidate ER products. The loss of FDA approval could have a material, negative impact to our Specialty Generics segment. It is possible that if the Specialty Generics segment experiences greater downward pressure than projected or the Company loses FDA approval of its Methylphenidate ER products, or a combination of these factors, it could result in impairment of goodwill and other long-lived assets associated with this segment.

In fiscal 2014, the Company recorded goodwill impairment charges related to its former Global Medical Imaging reporting unit (which included the CMDS and Nuclear Imaging businesses that are now included within discontinued operations). The Company recorded an impairment charge related to goodwill in fiscal 2014 of $219.7 million, which eliminated all goodwill balances related to the Global Medical Imaging reporting unit. In fiscal 2016 and fiscal 2015, the Company announced that it had entered into definitive agreements to sell its Nuclear Imaging and CMDS businesses, respectively, therefore the businesses were each deemed to be held for sale and the financial results of each business are presented as discontinued operations. As a result, the Company reclassified the impairment charge to discontinued operations.

The gross carrying amount and accumulated amortization of intangible assets, excluding held for sale intangible assets, at the end of each period were as follows:



	September 30, 2016				September 25, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable:
Completed technology	$	10,028.8	$	1,446.2	$	9,896.0	$	765.8
Licenses	185.1		112.3		185.1		99.8
Customer relationships	28.6		8.0		28.1		4.4
Trademarks	82.2		10.0		82.1		6.2
Other	6.7		6.7		6.7		6.7
Total	$	10,331.4	$	1,583.2	$	10,198.0	$	882.9
Non-Amortizable:
Trademarks	$	35.0			$	35.0
In-process research and development	399.1				316.2
Total	$	434.1			$	351.2

During fiscal 2016, the Company recorded impairment charges totaling $16.9 million related to certain Specialty Brands in-process research and development intangible assets acquired as part of the CNS Therapeutics acquisition in fiscal 2013. The valuation method used to approximate fair value was based on the estimated discounted cash flows for the respective asset, and the impairment charges resulted from delays in anticipated FDA approval, higher than expected development costs and lower than previously anticipated commercial opportunities.

Finite-lived intangible asset amortization expense within continuing operations was $700.1 million, $550.3 million and $154.8 million in fiscal 2016, 2015 and 2014, respectively. The estimated aggregate amortization expense on intangible assets owned by the Company, excluding held for sale intangible assets, is expected to be as follows:




Fiscal 2017	$	701.4
Fiscal 2018	692.4
Fiscal 2019	692.1
Fiscal 2020	691.9
Fiscal 2021	691.6

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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