GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

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



	CHCA			CHCI			RX			Specialty Sciences			Other			Total
Balance at June 28, 2014 (restated)	$	1,827.9		$	248.2		$	1,098.7		$	200.7		$	97.6		$	3,473.1
Business acquisitions	4.8			1,269.6			—			—			—			1,274.4
Impairments	(6.8		)	—			—			—			—			(6.8		)
Currency translation adjustment	(1.5		)	12.4			(8.0		)	—			(9.4		)	(6.5		)
Purchase accounting adjustments	(7.2		)	—			(4.7		)	(1.1		)	—			(13.0		)
Balance at June 27, 2015 (restated)	1,817.2			1,530.2			1,086.0			199.6			88.2			4,721.2
Business acquisitions	9.7			87.4			—			—			—			97.1
Changes in assets held for sale	(13.0		)	—			—			—			(14.6		)	(27.6		)
Currency translation adjustment	(0.8		)	(53.3		)	(1.9		)	—			(2.1		)	(58.1		)
Purchase accounting adjustments	1.2			418.9			—			—			—			420.1
Balance at December 31, 2015 (restated)	1,814.3			1,983.2			1,084.1			199.6			71.5			5,152.7
Business acquisitions	—			—			1.7			—			—			1.7
Purchase accounting adjustments	17.2			(16.5		)	—			—			—			0.7
Impairments	(24.5		)	(868.4		)	—			(199.6		)	—			(1,092.5		)
Changes in assets held for sale	4.5			—			—			—			9.0			13.5
Currency translation adjustment	(0.9		)	(27.5		)	0.8			—			0.9			(26.7		)
Balance at December 31, 2016	$	1,810.6		$	1,070.8		$	1,086.6		$	—		$	81.4		$	4,049.4

The decrease in goodwill in the year ended December 31, 2016 was due primarily to impairment charges recorded in the CHCI and Specialty Sciences segments as discussed below. The increase in goodwill in the six months ended December 31, 2015 was due primarily to purchase accounting adjustments to the Omega acquisition recorded in the CHCI segment as described in Note 2, as well as the Naturwohl and GSK acquisitions. The increase in goodwill in the year ended June 27, 2015 was due primarily to the Omega acquisition recorded in the CHCI segment, as described in Note 2. We had accumulated goodwill impairments for the year ended June 27, 2015, six months ended December 31, 2015, and year ended December 31, 2016 of $6.8 million, 6.8 million and $1.1 billion, respectively. Refer to Note 6 for additional information on fair value disclosures related to the goodwill impairments.

In connection with the preparation of our financial statements for the three-month periods ending April 2, 2016 and October 2, 2016, we identified indicators of goodwill impairment for certain of our reporting units, which required us to complete interim goodwill impairment testing. Refer to Note 1 for our impairment process. Step one of the goodwill impairment test involves determining the fair value of the reporting unit using a discounted cash flow technique and comparing it to the reporting unit’s carrying value. The main assumptions supporting the cash flow projections used to determine the reporting units’ fair value include revenue growth based on product line extensions, product life cycle strategies, and geographical expansion within the markets in which the reporting unit distributes products, gross margins consistent with historical trends, and advertising and promotion investments largely consistent with the reporting unit's growth plans. If a reporting unit does not pass step one of the goodwill impairment test, step two is completed. The second step of the goodwill impairment test requires that we determine the implied fair value of the reporting unit’s goodwill, which involves determining the value of the reporting unit’s individual assets and liabilities. If the reporting unit’s carrying value exceeds its book value, an impairment charge is recorded.

In connection with the preparation of our financial statements for the three months ended April 2, 2016, we identified indicators of impairment for our Branded Consumer Healthcare - Rest of World ("BCH-ROW") reporting unit, which comprises primarily operations attributable to the Omega acquisition in all geographic regions except for Belgium. The primary impairment indicators included the decline in our 2016 performance expectations and a reduction in our long-range revenue growth forecast. BCH-ROW did not pass step one of goodwill impairment testing. The change in fair value from previous estimates was due primarily to the changes in the market and performance of the brands such that the evaluation of brand prioritization and product extensions or launches in new regions are being more focused to maximize the potential of all brands in the segment's portfolio. Based on our evaluation and initial estimates of the fair values of the assets and liabilities and the deficit of the fair value when compared to the related book value, we recorded $130.5 million in impairment charges for the three months ended April 2, 2016 within our CHCI segment.

In connection with the preparation of our financial statements for the three months ended October 1, 2016, we identified additional indicators of goodwill impairment in both our BCH-ROW and our Branded Consumer Healthcare - Belgium ("BCH-Belgium") reporting units. With respect to both reporting units, the primary impairment indicators included an additional decline in our 2016 performance expectations for the remainder of the year and a reduction in our long-range revenue growth and margin forecasts due to the factors outlined below. Neither the BCH-ROW nor the BCH-Belgium reporting units passed step one of goodwill impairment testing.

As it relates to the BCH-ROW reporting unit, the changes in fair value from previous estimates were due primarily to (1) changes in the market and performance of certain brands due to moderated new product launch assumptions, (2) execution of certain key product strategies falling short of expectations causing a reduction to baseline forecast models in France, Germany and Italy and (3) certain macro-economic factors continuing to impact the business more than expected in France, Russia and Turkey in addition to unfavorable foreign currency impacts experienced (primarily in the UK related to Brexit.) As it relates to the BCH-Belgium reporting unit, the changes in fair value from previous estimates were due to changes in the forecasts as a result of a reduction in volume with a major wholesaler due to factors consistent with those outlined for the BCH-ROW reporting unit.

Based on our estimates of the fair values of the assets and liabilities and the deficit of the fair value when compared to the related book value, we recorded an impairment charge of $675.6 million related to the BCH-ROW reporting unit and $62.3 million related to the BCH-Belgium reporting unit for the three months ended October 1, 2016. We continue to monitor the changes in the market and performance of certain brands, the execution of certain key product strategies, certain macro-economic factors, and unfavorable foreign currency impacts and assess the reporting unit for potential impairment should impairment indicators arise, as applicable, and at least annually during our fourth quarter impairment testing.

During the three months ended December 31, 2016, we identified indicators of goodwill impairment in the BCH-Belgium reporting unit related to the early termination of a distribution agreement. We prepared a goodwill impairment test as of December 3, 2016, which was the end of the month in which the impairment indicator occurred. Step one of the goodwill impairment test indicated that the fair value of the BCH-Belgium reporting unit as greater than its net book value. As a result, we did not perform the second step of the goodwill impairment test.

During the three months ended December 31, 2016, we identified indicators of goodwill impairment in the Animal Health reporting unit related to changes in the market and performance of certain brands. We prepared a goodwill impairment test as of October 2, 2016 as part of our annual goodwill impairment testing process. Step one of the goodwill impairment test indicated that the fair value of the Animal Health reporting unit was below its net book value. As a result, we performed the second step of the goodwill impairment test to measure the amount of impairment. We concluded that Animal Health goodwill was impaired by $24.5 million, which we recorded in Impairment charges on the Consolidated Statement of Operations within our CHCA segment.

During the three months ended December 31, 2016, we identified indicators of goodwill impairment in the Specialty Sciences reporting unit related to our decision to review strategic alternatives for the rights to the royalty stream from sales of the multiple sclerosis drug, Tysabri^®. As a result of the impairment indicators, we prepared a goodwill impairment test as of December 31, 2016. Step one of the goodwill impairment test indicated that the fair value of the Specialty Sciences reporting unit was below its net book value. As a result, we initiated the second step of the goodwill impairment test to measure the amount of impairment. We concluded that the goodwill was fully impaired and recorded an impairment of $199.6 million during the year ended December 31, 2016 in Impairment charges on the Consolidated Statement of Operations within our Specialty Sciences segment.

In addition, because the fair values of the BCH-Belgium, BCH-ROW, and Animal Health reporting units were determined to be less than their respective net book values during the three months ended October 1, 2016 and December 31, 2016, respectively, these reporting units are inherently at risk for future impairments if they experience further deterioration in business performance or market multiples, or increases in discount rates. The reporting units had the following remaining goodwill balances as of December 31, 2016:



Reporting Unit	Goodwill Remaining in Reporting Unit		Segment
Animal Health	$	178.9	CHCA
BCH-Belgium	$	63.2	CHCI
BCH-ROW	$	816.5	CHCI

The discounted cash flow forecasts used for these reporting units in goodwill impairment testing include assumptions about the expected future impacts of the reduced activity levels and the anticipated future recovery of activity levels in the longer-term. If the duration of the recovery is slower than expected, we may experience further deterioration in our cash flow forecasts that may indicate goodwill in the reporting units may be impaired in future impairment tests. We continue to monitor the progress and assess the reporting units for potential impairment should impairment indicators arise, as applicable, and at least annually during our fourth quarter impairment testing.

No impairment charges were recorded as a result of the annual goodwill impairment testing during the six months ended December 31, 2015. During the year ended June 27, 2015, we performed our annual goodwill impairment testing, which indicated that our CHCA 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. We concluded that the goodwill was fully impaired and recorded an impairment of $6.8 million in the CHCA segment during the year ended June 27, 2015 in Impairment charges. No other segments were affected by this impairment charge. No impairment charge was recorded as a result of the annual goodwill impairment testing during the year ended June 28, 2014.

Intangible Assets

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



	December 31, 2016				December 31, 2015				June 27, 2015
	Gross		Accumulated Amortization		Gross		Accumulated Amortization		Gross		Accumulated Amortization
					Restated		Restated		Restated		Restated
Definite-lived intangibles:
Distribution and license agreements, supply agreements	$	305.6	$	120.4	$	242.4	$	77.7	$	218.9	$	58.4
Developed product technology, formulations, and product rights	1,418.1		526.0		1,387.6		426.0		1,029.6		383.1
Customer relationships and distribution networks	1,489.9		307.5		1,520.7		193.0		1,750.0		146.3
Trademarks, trade names, and brands	1,189.3		55.3		539.4		22.8		340.8		11.5
Non-compete agreements	14.3		11.2		15.2		12.7		14.7		11.9
Total definite-lived intangibles	$	4,417.2	$	1,020.4	$	3,705.3	$	732.2	$	3,354.0	$	611.2
Indefinite-lived intangibles:
Trademarks, trade names, and brands	$	50.5	$	—	$	1,868.1	$	—	$	2,257.3	$	—
In-process research and development	64.0		—		48.2		—		5.8		—
Total indefinite-lived intangibles	114.5		—		1,916.3		—		2,263.1		—
Total other intangible assets	$	4,531.7	$	1,020.4	$	5,621.6	$	732.2	$	5,617.1	$	611.2

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 decrease in gross amortizable intangible assets during the year ended December 31, 2016 was due to the reclassification of Omega indefinite-lived assets to definite-lived assets as described below, offset by current year impairments taken as described below. The increase during the six months ended December 31, 2015 was due to the Entocort^®, GSK, Naturwohl, and ScarAway^® acquisitions, offset partially by purchase price adjustments to the Omega intangible assets discussed in Note 2. The increase during the year ended June 27, 2015 was due primarily to the Omega acquisition.

Intangible asset impairments taken are as follows (in millions):



	Year Ended						Six Months Ended		Year Ended
	December 31, 2016						December 31, 2015		June 28, 2014
($ in millions)	Indefinite-Lived Intangible Assets		Definite-Lived Intangible Assets		IPR&D		Indefinite-Lived Intangible Assets		IPR&D
CHCA	$	0.4	$	—	$	—	$	—	$	—
CHCI	849.1		321.4		3.5		185.1		—
RX	—		342.2		—		—		6.0
Other	—		2.0		—		—		—
	$	849.5	$	665.6	$	3.5	$	185.1	$	6.0

During our impairment testing for the six months ended December 31, 2015, we identified an impairment of certain indefinite-lived intangible assets based on management’s expectations of the prospects for future revenues, profits, and cash flows associated with these assets. The indefinite-lived intangible assets were purchased in conjunction with the Omega acquisition and are included in the CHCI segment. The assessment utilized the excess earnings method to determine fair value and resulted in an impairment charge of $185.1 million, which represents the difference between the carrying amount of the intangible assets and their estimated fair value. The amount was recorded in Impairment charges on the Consolidated Statements of Operations within the CHCI segment. The primary assumptions supporting the fair value of these assets and cash flow projections assume modest revenue growth based on product line extensions, product life cycle strategies, and geographical expansion within the markets in which the CHCI segment currently distributes products, and gross margins and advertising and promotion investments largely consistent with historical trends.

In connection with the preparation of our financial statements for the three-month period ended April 2, 2016, we identified additional indicators of impairment associated with certain indefinite-lived intangible assets acquired in conjunction with the Omega acquisition. The primary impairment indicators included the decline in our 2016 performance expectations and a reduction in our long-range revenue growth forecast. The assessment utilized the excess earnings method to determine fair value and resulted in an impairment charge of $273.4 million in Impairment charges on the Consolidated Statements of Operations within our CHCI segment, which represented the difference between the carrying amount of the intangible assets and their estimated fair value. The change in fair value from previous estimates was due primarily to the changes in the market and performance of the brands such that the evaluation of brand prioritization and product extensions or launches in new regions are being more focused to maximize the potential of all brands in the segment's portfolio. The main assumptions supporting the fair value of these assets and cash flow projections included revenue growth based on product line extensions, product life cycle strategies, and geographical expansion within the markets in which the CHCI segment distributes products, gross margins consistent with historical trends, and advertising and promotion investments largely consistent with the segment's growth plans.

In connection with the preparation of our financial statements for the three months ended October 1, 2016, we identified additional indicators of impairment associated with certain indefinite-lived and definite-lived intangible brand category assets acquired in conjunction with the Omega acquisition. The primary impairment indicators are discussed above in goodwill. The assessment of the indefinite-lived assets utilized the excess earnings method to determine fair value and resulted in an impairment charge of $575.7 million for the three months ended October 1, 2016. With regards to definite-lived assets, it was determined that the carrying value of one asset group was not recoverable based on an assessment of the undiscounted future cash flows expected to be generated by the asset group. Given this, the excess earnings method was utilized to determine fair value of the definite-lived asset and resulted in an impairment charge of $290.9 million for the three months ended October 1, 2016. Both charges, which represented the difference between the carrying amount of the intangible assets and their estimated fair value, were recorded in Impairment charges on the Consolidated Statements of Operations within our CHCI segment. The main assumptions supporting the fair value of these assets and cash flow projections are included in the goodwill discussions above.

During the three months ended December 31, 2016, we identified impairment indicators in our Entocort^® product assets which related to the entrance of new market competition and resulting negative impacts on sales volume and pricing. Utilizing a multi-period excess earnings method, we determined that the Entocort^® product assets were impaired by $342.2 million. We recorded this impairment in Impairment charges on the Consolidated Statement of Operations within our RX segment.

During the three months ended December 31, 2016, we identified impairment indicators in certain definite-lived intangible assets in our Consumer Healthcare International reporting unit, including trademarks and trade names related to our Herron products that we originally acquired through the acquisition of Aspen. After determining the assets were impaired, we utilized the relief from royalty method to quantify the impairment, resulting in a $30.5 million impairment. We recorded these impairments in Impairment charges on the Consolidated Statement of Operations within our CHCI segment.

No material impairment charges were recorded as a result of the annual intangible asset impairment testing during the years ended June 27, 2015 and June 28, 2014. We recorded an impairment charge of $3.5 million and $6.0 million on certain IPR&D assets during the years ended December 31, 2016 and June 28, 2014, respectively, due to changes in the projected development and regulatory timelines for various projects.

In addition, due to reprioritization of certain brands in the CHCI segment and change in performance expectations for the cough/cold/allergy, anti-parasite, personal care, lifestyle, and natural health brands, we reclassified $364.5 million and $674.2 million of indefinite-lived assets to definite-lived assets with a useful life of 20 years on April 3, 2016 and October 2, 2016, respectively. We began amortizing the assets in the second quarter of 2016 and fourth quarter of 2016, respectively.

The remaining weighted-average useful life for our amortizable intangible assets by asset class at December 31, 2016 was as follows:



Amortizable Intangible Asset Category		Remaining Weighted-Average Useful Life (Years)
Distribution and license agreements, supply agreements		7
Developed product technology, formulations, and product rights		12
Customer relationships and distribution networks		18
Trademarks, trade names, and brands		20
Non-compete agreements		3

We recorded amortization expense of $356.8 million, $128.6 million, $174.5 million, and $128.2 million during the year ended December 31, 2016, the six months ended December 31, 2015, and the years ended June 27, 2015, and June 28, 2014, respectively. The increase in amortization expense in the year ended December 31, 2016 was due primarily to the incremental amortization expense incurred on the definite-lived intangible assets acquired from the Omega, Entocort^®,and Tretinoin Products acquisitions. In addition, we incurred additional amortization in 2016 due to the previously indefinite-lived Omega brands changing classification to definite-lived during the year. The increase in amortization expense in the six months ended December 31, 2015 was due primarily to definite-lived assets acquired from Omega. The increase in amortization expense in the year ended June 27, 2015 was due primarily to 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):



Year	Amount
2017	$	339.5
2018	324.6
2019	299.7
2020	266.0
2021	237.5
Thereafter	1,929.5