Goodwill and Other Intangible Assets, Net |
Footnote 9 — Goodwill and Other Intangible
Assets, Net
Goodwill activity for the nine months ended September 30, 2018
is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
Segment
|
|
Net Book
Value at
December 31,
2017 |
|
|
Other
Adjustments |
|
|
Impairment
Charges (1) |
|
|
Foreign
Exchange |
|
|
Gross
Carrying
Amount |
|
|
Accumulated
Impairment
Charges |
|
|
Net Book
Value |
|
Food and Appliances
|
|
$ |
1,990.0 |
|
|
$ |
— |
|
|
$ |
(1,766.9 |
) |
|
$ |
(14.2 |
) |
|
$ |
2,095.1 |
|
|
$ |
(1,886.2 |
) |
|
$ |
208.9 |
|
Home and Outdoor Living
|
|
|
2,148.0 |
|
|
|
— |
|
|
|
(1,985.0 |
) |
|
|
(2.0 |
) |
|
|
2,146.0 |
|
|
|
(1,985.0 |
) |
|
|
161.0 |
|
Learning and Development
|
|
|
2,735.0 |
|
|
|
— |
|
|
|
(105.3 |
) |
|
|
(26.0 |
) |
|
|
3,449.7 |
|
|
|
(846.0 |
) |
|
|
2,603.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,873.0 |
|
|
$ |
— |
|
|
$ |
(3,857.2 |
) |
|
$ |
(42.2 |
) |
|
$ |
7,690.8 |
|
|
$ |
(4,717.2 |
) |
|
$ |
2,973.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The impairment charge was recorded as a result of the
Company’s annual impairment testing, and resulted primarily
from a decrease in the future forecasted cash flows, and a decrease
in the Company’s market capitalization during the three
months ended September 30, 2018. In the Food and Appliances
segment, the impairment charge of $1.3 billion and
$420 million was recorded within the Food and Appliances and
Cookware reporting units, respectively. In the Home and Outdoor
Living segment, the impairment charge of $875 million,
$787 million and $323 million was recorded within the
Home Fragrance, Outdoor and Recreation and Connected Home and
Security reporting units, respectively. In the Learning and
Development segment, the impairment charge was attributable to the
Baby reporting unit.
|
Other intangible assets, net are comprised of the following as of
the dates indicated (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
|
December 31, 2017 |
|
|
|
|
|
|
Gross
Carrying
Amount |
|
|
Accumulated
Amortization |
|
|
Net Book
Value |
|
|
Gross
Carrying
Amount |
|
|
Accumulated
Amortization |
|
|
Net Book
Value |
|
|
Amortization
Periods
(in years) |
|
Trade names — indefinite life
|
|
$ |
4,252.2 |
|
|
$ |
— |
|
|
$ |
4,252.2 |
|
|
$ |
8,563.6 |
|
|
$ |
— |
|
|
$ |
8,563.6 |
|
|
|
N/A |
|
Trade names — other
|
|
|
169.6 |
|
|
|
(32.8 |
) |
|
|
136.8 |
|
|
|
190.7 |
|
|
|
(35.7 |
) |
|
|
155.0 |
|
|
|
2–15 |
|
Capitalized software
|
|
|
510.0 |
|
|
|
(336.2 |
) |
|
|
173.8 |
|
|
|
485.8 |
|
|
|
(302.9 |
) |
|
|
182.9 |
|
|
|
3–12 |
|
Patents and intellectual property
|
|
|
136.4 |
|
|
|
(72.8 |
) |
|
|
63.6 |
|
|
|
152.0 |
|
|
|
(81.4 |
) |
|
|
70.6 |
|
|
|
3–14 |
|
Customer relationships and distributor channels
|
|
|
1,268.5 |
|
|
|
(165.1 |
) |
|
|
1,103.4 |
|
|
|
1,324.7 |
|
|
|
(159.6 |
) |
|
|
1,165.1 |
|
|
|
3–30 |
|
Other
|
|
|
109.0 |
|
|
|
(67.4 |
) |
|
|
41.6 |
|
|
|
112.8 |
|
|
|
(50.4 |
) |
|
|
62.4 |
|
|
|
3–5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,445.7 |
|
|
$ |
(674.3 |
) |
|
$ |
5,771.4 |
|
|
$ |
10,829.6 |
|
|
$ |
(630.0 |
) |
|
$ |
10,199.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for intangible assets for continuing
operations was $41.7 million and $44.2 million for the
three months ended September 30, 2018 and 2017, respectively,
and $140 million and $149 million for the nine months
ended September 30, 2018 and 2017, respectively. Amortization
expense for intangible assets for discontinued operations was
$3.1 million and $39.8 million for the three months ended
September 30, 2018 and 2017, respectively, and
$44.6 million and $116 million for the nine months ended
September 30, 2018 and 2017, respectively. Amortization
expense for the nine months ended September 30, 2017 includes
a measurement period expense adjustment of $13.6 million
related to the valuation of non-compete agreements
within other intangible assets.
During the third quarter management performs its annual goodwill
and intangible impairment testing. The Company’s testing date
is July 1st, however, the Company concluded that a triggering event
had occurred as of September 30, as a result of (1) the decline in
the Company’s stock price during the third quarter such that
the Company’s market capitalization was well below book value
(net shareholders’ equity) and (2) updated cash flow
projections for its businesses.
During the three and nine months ended September 30, 2018, as
a result of the Company’s impairment testing, the Company
recorded impairment charges to reflect impairment of intangible
assets related to certain of the Company’s tradenames. The
impairment charges were allocated to the Company’s reporting
segments as follows (in millions):
|
|
|
|
|
|
|
Three and Nine
Months Ended
September 30, 2018 |
|
Impairment of intangibles (1)
|
|
|
|
|
Food and Appliances
|
|
$ |
1,639.7 |
|
Home and Outdoor Living
|
|
|
2,385.1 |
|
Learning and Development
|
|
|
246.0 |
|
|
|
|
|
|
|
|
$ |
4,270.8 |
|
|
|
|
|
|
(1) |
In the Food and Appliances segment, impairment charges
of $1.2 billion and $455 million were recorded within the
Appliances and Cookware and Food reporting units, respectively. In
the Home and Outdoor Living segment, impairment charges of
$1.7 billion, $630 million and $75 million were
recorded within the Home Fragrance, Outdoor and Recreation and
Connected Home and Security reporting units, respectively. In the
Learning and Development segment, the impairment charge recorded
was attributable to the Baby reporting unit. These impairment
charges were recorded as a result of the Company’s impairment
testing, and resulted primarily from a decrease in the
Company’s market capitalization during the three months ended
September 30, 2018 and a deterioration of expected future
revenues and margins related to certain tradenames within these
segments.
|
|