GOODWILL AND INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table presents the changes in goodwill by segment during each of 2016 and 2015:



	Consumer			Professional			Elizabeth Arden		Other			Total
Balance at January 1, 2015	$	217.9		$	246.2		$	—	$	—		$	464.1
Goodwill acquired ^(a)	1.9			—			—		19.5			21.4
Foreign currency translation adjustment	—			(5.5		)	—		(0.6		)	(6.1		)
Goodwill impairment charge	(9.7		)	—			—		—			(9.7		)
Balance at December 31, 2015	$	210.1		$	240.7		$	—	$	18.9		$	469.7
Goodwill acquired ^(b)	17.4			—			221.7		—			239.1
Foreign currency translation adjustment	—			(0.4		)	—		(2.2		)	(2.6		)
Goodwill impairment charge	—			—			—		(16.7		)	(16.7		)
Balance at December 31, 2016	$	227.5		$	240.3		$	221.7	$	—		$	689.5

Cumulative goodwill impairment charges	$	(9.7	)	$	—		$	—	$	(16.7	)	$	(26.4	)

^(a)The goodwill acquired during 2015 relates to: (i) $19.5 million of goodwill acquired in the CBB Acquisition, which was assigned to the Company's Other segment; and (ii) $1.9 million of goodwill acquired in the Cutex U.S. Acquisition. See Note 2, "Business Combinations," for further discussion of the Cutex U.S. and CBB acquisitions.

^(b)The goodwill acquired during 2016 relates to: (i) $221.7 million of goodwill acquired in the Elizabeth Arden Acquisition; and (ii) $17.4 million of goodwill acquired in the Cutex Acquisitions. See Note 2, "Business Combinations," for further discussion of the Elizabeth Arden Acquisition and Cutex International Acquisition.

For 2016, in assessing whether goodwill was impaired in connection with its annual impairment test performed during the fourth quarter of 2016 using October 1st, 2016 carrying values, the Company performed qualitative assessments to determine whether it would be necessary to perform the two-step process, as prescribed by ASC 350, Intangibles - Goodwill and Other, to assess the Company's indefinite-lived intangible assets for indicators of impairment. In performing the qualitative assessments, the Company considered the results of the step one test performed in 2015 and the financial performance of the Revlon, Almay and Other and Professional reporting units. Based upon such assessment, the Company determined that it is more likely than not that the fair values of these two reporting units exceeded their carrying amounts for 2016.

However, for 2016, the Company determined that it would utilize the two-step process to test the Global Color Brands and Other reporting units for impairment. In the first step of this test, the Company compared the fair values of the GCB and Other reporting units, determined based upon discounted estimated future cash flows, to the carrying amounts of each reporting unit, including goodwill. Where the fair value of such reporting unit exceeded the carrying amounts, no further impairment testing was required and no impairment loss was indicated, which was the result for the GCB step one test. The results of the step one test indicated that impairment indicators may have existed for the Company's Other reporting unit due to the termination of certain fragrance licenses that were not replaced, and accordingly, the Company performed step two of the goodwill impairment test for the Other reporting unit.

In the second step, the Company measured the potential impairment of its Other reporting unit by comparing the implied fair value of the Other reporting unit’s goodwill with the carrying amount of its goodwill at October 1, 2016. The implied fair value of the Other reporting unit's goodwill was determined in the same manner as the amount of goodwill recognized in a business combination, where the estimated fair value of the Other reporting unit was allocated to all the assets and liabilities of that reporting unit (including both recognized and unrecognized intangible assets) as if the Other reporting unit had been acquired in a business combination and the estimated fair value of the Other reporting unit was the purchase price paid. When the carrying amount of the reporting unit's goodwill is greater than the implied fair value of that reporting unit's goodwill, an impairment loss is recognized within operations. The Company determined the fair value of the Other reporting unit using discounted estimated future cash flows. The weighted average cost of capital used in testing the Other reporting unit for impairment was 23.0% with a perpetual growth rate of 2.0%. As a result of this annual impairment test, the Company recognized an aggregate $16.7 million non-cash goodwill impairment charge related to the Other reporting unit in the fourth quarter of 2016. Following the recognition of this non-cash goodwill impairment charge, the Other reporting unit had no remaining goodwill as of December 31, 2016.

For 2015, the Company utilized the two-step process in assessing whether goodwill was impaired for each of the Company's four reporting units. As a result of the annual impairment testing for 2015, the Company recognized a $9.7 million non-cash goodwill impairment charge related to the GCB reporting unit in the fourth quarter of 2015.

The Company did not record any impairment of goodwill during the year ended December 31, 2014 as a result of its annual impairment testing.

Intangible Assets, Net

The following tables present details of the Company's total intangible assets:



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (in Years)
Finite-lived intangible assets:
Trademarks and Licenses	$	177.9	$	(47.9	)	$	130.0	13
Customer relationships	247.6		(30.1		)	217.5		14
Patents and Internally-Developed IP	20.3		(6.1		)	14.2		8
Distribution rights	31.0		(0.5		)	30.5		18
Other	1.3		(0.2		)	1.1		3
Total finite-lived intangible assets	$	478.1	$	(84.8	)	$	393.3

Indefinite-lived intangible assets:
Trade Names	$	243.3	$	—		$	243.3
Total indefinite-lived intangible assets	$	243.3	$	—		$	243.3

Total intangible assets	$	721.4	$	(84.8	)	$	636.6

	December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (in Years)
Finite-lived intangible assets:
Trademarks and Licenses	$	145.0	$	(36.0	)	$	109.0	15
Customer relationships	118.8		(20.5		)	98.3		16
Patents and Internally-Developed IP	16.8		(4.0		)	12.8		10
Distribution rights	3.5		(0.6		)	2.9		5
Total finite-lived intangible assets	$	284.1	$	(61.1	)	$	223.0

Indefinite-lived intangible assets:
Trade Names	$	95.0	$	—		$	95.0
Total indefinite-lived intangible assets	$	95.0	$	—		$	95.0

Total intangible assets	$	379.1	$	(61.1	)	$	318.0

Amortization expense for finite-lived intangible assets was $27.5 million, $22.4 million and $21.3 million for 2016, 2015 and 2014, respectively.

The Company reviews finite-lived intangible assets for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable. This test compares the current carrying values of the intangible assets to the undiscounted pre-tax cash flows expected to result from the use of the assets. Based upon the results of the annual goodwill impairment testing for the Other reporting unit during 2016, the Company performed an impairment review of the finite-lived intangible assets acquired as part of the 2015 CBB Acquisition. As a result of this review, the Company recognized during the fourth quarter of 2016 within the Other reporting unit $4.2 million, $2.0 million and $0.5 million of non-cash impairment charges as a result of the change in the fair value of customer relationships, distribution rights and trade names, respectively, in the aggregate amount of $6.7 million. For the year ended December 31, 2016, no impairment was recognized related to the carrying value of any other finite- or indefinite-lived intangible assets. The Company did not recognize any impairment charges related to the carrying value of identifiable intangible assets in 2015 or 2014.

The following table reflects the estimated future amortization expense, a portion of which is subject to exchange rate fluctuations, for the Company's finite-lived intangible assets as of December 31, 2016:



	Estimated Amortization Expense
2017	$	34.1
2018	33.2
2019	30.6
2020	29.8
2021	28.7
Thereafter	236.9
Total	$	393.3

- 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.

+ References + Details