Goodwill and Other Intangible Assets

12 Months Ended

Jun. 27, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill, by reportable segment, were as follows (in millions):



	CHC			BCH		Rx Pharma- ceuticals			Specialty Sciences			Other			Total
Balance at June 29, 2013	$	611.6		$	—	$	385.4		$	—		$	92.2		$	1,089.2
Business acquisitions	1,297.2			—		851.0			201.8			—			2,350.0
Currency translation adjustment	7.6			—		21.9			—			5.4			34.9
Balance at June 28, 2014	1,916.4			—		1,258.3			201.8			97.6			3,474.1
Business acquisitions	4.8			1,513.1		—			—			—			1,517.9
Impairments	(6.8		)	—		—			—			—			(6.8		)
Currency translation adjustment	(9.7		)	38.8		(20.0		)	—			(9.4		)	(0.3		)
Purchase accounting adjustments	(7.2		)	—		(4.7		)	(1.1		)	—			(13.0		)
Balance at June 27, 2015	$	1,897.5		$	1,551.9	$	1,233.6		$	200.7		$	88.2		$	4,971.9

The increase in goodwill in fiscal year 2015 was due primarily to the Omega acquisition. Additionally we recorded $4.8 million of goodwill in the CHC segment due to the Gelcaps acquisition. The increase in goodwill in fiscal year 2014 was due primarily to the acquisition of Elan, which contributed $2.3 billion of goodwill. We allocated $2.1 billion of goodwill to the reporting units that are expected to benefit from the synergies related to the Elan transaction. See Note 2 for additional information. We also recorded $4.6 million of goodwill to the CHC segment due to the acquisition of the Aspen product portfolio.

Step one of our fiscal year 2015 annual goodwill impairment testing indicated that our CHC Mexico reporting unit's goodwill fair value was below its net book value as of March 28, 2015. As a result, we initiated the second step of the goodwill impairment test to measure the amount of impairment. Refer to Note 1 for our impairment process. We concluded that the goodwill was fully impaired and recorded an impairment of $6.8 million in our CHC segment during the quarter ended June 27, 2015 in Other expense, net. No other segments were affected by this impairment charges. No impairment charge was recorded as a result of the annual goodwill impairment testing during fiscal years 2014 or 2013.

During the third quarter we identified indicators of potential impairment of our Animal Health reporting unit's intangible assets, which include goodwill, indefinite-lived intangible assets, and definite-lived intangible assets. We performed impairment testing for all of our Animal Health intangible assets as of March 29, 2015, and none were determined to be impaired. Additionally, goodwill and indefinite-lived intangible assets were tested again in conjunction with our annual fourth quarter testing and resulted in no impairment. We will continue to monitor and assess our Animal Health intangible assets for potential impairment should further impairment indicators arise and test at least annually as applicable.

Intangible Assets

Other intangible assets and the related accumulated amortization consisted of the following (in millions):



	June 27, 2015				June 28, 2014
	Gross		Accumulated Amortization		Gross		Accumulated Amortization
Amortizable intangibles:
Distribution and license agreements	$	6,029.9	$	502.3	$	6,027.3	$	192.1
Developed product technology/formulation and product rights	1,025.3		383.1		931.7		302.5
Customer relationships and distribution networks	1,749.9		146.2		372.0		97.5
Trademarks, trade names and brands	340.8		11.5		47.8		5.6
Non-compete agreements	14.7		11.9		15.3		9.4
Total amortizable intangibles	$	9,160.6	$	1,055.0	$	7,394.1	$	607.1
Non-amortizable intangibles:
Trademarks, trade names and brands	$	2,257.3	$	—	$	59.5	$	—
In-process research and development	5.8		—		10.2		—
Total non-amortizable intangibles	2,263.1		—		69.7		—
Total other intangible assets	$	11,423.7	$	1,055.0	$	7,463.8	$	607.1

Certain intangible assets are denominated in currencies other than the U.S. dollars; therefore, their gross and net carrying values are subject to foreign currency movements.

The increase in gross amortizable intangible assets during fiscal year 2015 was due primarily to the Omega acquisition, as discussed in Note 2. No material impairment charges were recorded as a result of the annual intangible asset impairment testing during fiscal years 2015, 2014 or 2013. We did record an impairment charge on certain IPR&D assets during fiscal years 2014 and 2013 due to changes in the projected development and regulatory timelines for various projects. These impairments totaled $6.0 million and $9.0 million for fiscal years 2014 and 2013, respectively.

During fiscal year 2014, the remaining $13.0 million of IPR&D assets acquired as part of the Paddock acquisition was reclassified to a definite-lived developed product technology intangible asset and is being amortized on a proportionate basis consistent with the economic benefits derived therefrom over an estimated useful life of 12 years.

The weighted-average useful life for our amortizable intangible assets by asset class at June 27, 2015 was as follows:



Amortizable Intangible Asset Category		Weighted-Average Useful Life (Years)
Distribution and license agreements		20
Developed product technology/formulation and product rights		12
Customer relationships and distribution networks		20
Trademarks, trade names and brands		19
Non-compete agreements		2

We recorded amortization expense of $464.5 million, $281.0 million and $94.0 million during fiscal years 2015, 2014, and 2013, respectively. The increase in amortization expense in fiscal year 2015 was due primarily to the incremental amortization expense incurred on the amortizable intangible assets acquired from Elan as well the inclusion of one quarter of amortization expense related to the intangible assets acquired from Omega.

Estimated future amortization expense includes the additional amortization related to recently acquired intangible assets subject to amortization. Our estimated future amortization expense is as follows (in millions):



Time Period	Amount
< 1 year	$	589.1
1-2 years	582.7
2-3 years	569.3
3-4 years	551.8
4-5 years	521.6
> 5 years	5,291.1

- 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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