Goodwill and Intangible Assets

9 Months Ended

Sep. 28, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

Goodwill

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



	December 31, 2018		Business Acquisitions		Business Divestitures			Currency Translation Adjustments			September 28, 2019
CSCA	$	1,713.7	$	269.8	$	(42.2	)	$	2.4		$	1,943.7
CSCI⁽¹⁾	1,151.3		57.6		—			(51.9		)	1,157.0
RX	1,114.8		—		—			7.4			1,122.2
Total goodwill	$	3,979.8	327.4		$	(42.2	)	$	(42.1	)	$	4,222.9

(1) We had accumulated goodwill impairments of $868.4 million as of September 29, 2018 and September 28, 2019.

Intangible Assets

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



	September 28, 2019				December 31, 2018
	Gross		Accumulated Amortization		Gross		Accumulated Amortization
Indefinite-lived intangibles:
Trademarks, trade names, and brands	$	17.5	$	—	$	18.1	$	—
In-process research and development	29.3		—		31.2		—
Total indefinite-lived intangibles	$	46.8	$	—	$	49.3	$	—
Definite-lived intangibles:
Distribution and license agreements and supply agreements	$	183.6	$	107.1	$	178.6	$	99.0
Developed product technology, formulations, and product rights	1,373.4		717.9		1,318.8		654.6
Customer relationships and distribution networks	1,762.9		628.6		1,586.6		566.5
Trademarks, trade names, and brands	1,260.8		228.4		1,282.4		188.5
Non-compete agreements	6.4		5.8		12.9		11.8
Total definite-lived intangibles	$	4,587.1	$	1,687.8	$	4,379.3	$	1,520.4
Total intangible assets	$	4,633.9	$	1,687.8	$	4,428.6	$	1,520.4

We recorded amortization expense of $78.7 million and $227.7 million for the three and nine months ended September 28, 2019, respectively, and $84.3 million and $256.8 million for the three and nine months ended September 29, 2018, respectively.

Evamist branded product

During the three months ended September 28, 2019, we identified impairment indicators related to our Evamist branded product, which is a definite-lived intangible asset in our RX segment. The indicators related to a decline in sales volume and a corresponding reduction in our long-range revenue forecast. We determined the asset was impaired by $10.8 million (refer to Note 6).

RX U.S. reporting unit

During the three months ended June 29, 2019, our RX U.S. reporting unit had an indication of potential impairment which was driven by a combination of industry and market factors and uncertainty related to the timing and associated cash flows of the projected generic ProAir launch. We prepared an impairment test as of June 29, 2019 and determined that the fair value of the RX U.S. reporting unit continued to exceed net book value by approximately 10%. The excess was lower than our annual impairment test as of October 1, 2018, in which fair

value exceeded carrying value by more than 25%. While no impairment was recorded as of June 29, 2019, future developments such as deterioration in business performance or market multiples could reduce the fair value of this reporting unit and lead to impairment in a future period. Goodwill remaining in this reporting unit was $1.1 billion as of September 28, 2019.

In conjunction with the test performed during the three months ended June 29, 2019, we early adopted ASU 2017-04 which removes the Step 2 requirement in instances when the carrying value of a reporting unit exceeds its fair value. Prospectively, if a reporting unit’s carrying value exceeds its fair value, we will record an impairment charge in the amount of the difference, limited to the amount of goodwill attributed to that reporting unit.

Generic product

During the three months ended June 29, 2019, we identified impairment indicators for a certain definite-lived asset related to changes in pricing and competition in the market, which lowered the projected cash flows we expect to generate from the asset. We determined the asset was impaired by $27.8 million in our RX segment (refer Note 3 to Note 6).

In-process R&D ("IPR&D")

We recorded impairment charges of $4.3 million and $8.5 million on certain IPR&D assets in the CSCA and RX segments during the nine months ended September 28, 2019 and September 29, 2018, respectively, due to changes in projected development and regulatory timelines.

Animal health

During the three months ended September 29, 2018, the animal health reporting unit continued to experience declines in its year-to-date financial results and had additional indications of potential impairment due to changes in channel dynamics, a strategic decision to re-prioritize our brands, and a decline in the forecasted outlook of the reporting unit. Step one of the goodwill impairment test indicated that the fair value of the animal health reporting unit was below its net book value. We also performed a recoverability test of the definite-lived intangibles and determined a significant asset group was not recoverable and determined the fair value of the indefinite-lived intangible asset had fallen below its net book value. Based on our evaluation, we recorded a $213.3 million impairment charge in the third quarter of 2018 in our CSCA segment comprised of a goodwill impairment of $136.7 million, a brand indefinite-lived intangible asset impairment charge of $27.7 million, a developed product technology and distribution agreement definite-lived intangible asset impairment of $41.6 million, a supply agreement definite-lived intangible asset impairment of $2.8 million, and a trade name and trademark definite-lived intangible asset impairment of $4.5 million (refer to Note 6).

As a result of the strategic decision to re-prioritize a brand within the indefinite-lived asset, we reassessed the useful life of the indefinite-lived intangible asset and reclassified a $5.4 million indefinite-lived intangible asset to a definite-lived asset within the CSCA segment as of September 29, 2018. Subsequently, during the three months ended September 28, 2019, we completed the sale of our animal health business to PetlQ (refer to Note 3).