GOODWILL, TRADEMARK AND OTHER ASSETS IMPAIRMENTS

9 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS

GOODWILL, TRADEMARK AND OTHER ASSETS IMPAIRMENTS

During the third quarter of fiscal 2021, as a result of lower than expected actual and projected net sales growth and operating performance for the Vitamins, Minerals and Supplements (VMS) strategic business unit (SBU), a strategic review was initiated by management that resulted in updated financial and operational plans. These events were considered a triggering event requiring interim impairment assessments to be performed on the VMS reporting unit, indefinite-lived trademarks and other assets. Based on the outcome of these assessments, the following pre-tax impairment charges were recorded:

	Impairment Charge
Goodwill	$	228
Trademarks, net	86
Other intangible assets, net	14
Property, plant and equipment, net	1
Total	$	329

In connection with recognizing these impairment charges, the Company recognized tax benefits related to the impairments of $62 due to the partial tax deductibility of these charges.

The impairment charges are a result of a higher level of competitive activity than originally assumed, accelerated declines in the channel where the business is over-developed, and higher than anticipated investments to grow the business, which have adversely affected the assumptions used to determine the fair value of the respective assets held by the VMS reporting unit for growth and the estimates of expenses necessary to achieve that growth. These impairment charges are based on the Company’s current estimates regarding the future financial performance of the VMS SBU and macroeconomic factors.

To determine the fair value of the VMS reporting unit, the Company used a DCF method under the income approach. Under this approach, the Company estimated the future cash flows of the VMS reporting unit and discounted these cash flows at a rate of return that reflects its relative risk. The other key estimates and factors used in the DCF method include, but are not limited to, net sales and expense growth rates, and a terminal growth rate.

Changes in the carrying amount of Goodwill as of March 31, 2021 from June 30, 2020, were as follows:

	Goodwill
	Health and Wellness		Household		Lifestyle		International		Total
Balance as of June 30, 2020	$	857	$	85	$	244	$	391	$	1,577
Acquisitions	—		—		—		212		212
Translation adjustments and other	—		—		—		4		4
Balance as of September 30, 2020	857		85		244		607		1,793
Translation adjustments and other (1)	—		—		—		10		10
Balance as of December 31, 2020	857		85		244		617		1,803
Goodwill impairment	(228)		—		—		—		(228)
Translation adjustments and other	—		—		—		(1)		(1)
Balance as of March 31, 2021	$	629	$	85	$	244	$	616	$	1,574

(1) Includes $(4) purchase price allocation adjustment related to the Saudi joint venture acquisition. Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements.

To determine the estimated fair values of the VMS related indefinite-lived trademarks, which were included within the Health and Wellness reportable segment, the Company used the income approach. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount rates applied to those cash flows to determine fair value. In addition, the useful lives of the impaired trademarks, with a remaining net carrying value of $13 as of March 31, 2021, were changed from indefinite to definite beginning on April 1, 2021, which reflects the remaining expected useful lives of the trademarks based on the most recent financial and operational plans. The weighted-average estimated useful life of these trademarks is 16 years.

The following table summarizes the carrying amount of trademarks and other intangible assets as of March 31, 2021 and as of June 30, 2020: 

	As of March 31, 2021						As of June 30, 2020
	Gross carrying amount		Accumulated amortization / Impairments		Net carrying amount		Gross carrying amount		Accumulated amortization / Impairments		Net carrying amount
Trademarks not subject to amortization	$	769	$	86	$	683	$	766	$	—	$	766
Trademarks subject to amortization	47		36		11		47		28		19
Other intangible assets	583		337		246		424		315		109
Total	$	1,399	$	459	$	940	$	1,237	$	343	$	894

Amortization expense relating to the Company’s intangible assets was $8 and $23 for the three and nine months ended March 31, 2021, respectively, and $3 and $10 for the three and nine months ended March 31, 2020, respectively. Estimated amortization expense for these intangible assets is $8, $32, $30, $29 and $28 for the remainder of fiscal year 2021 and fiscal years 2022, 2023, 2024 and 2025, respectively.