Goodwill and Intangible Assets

9 Months Ended

Nov. 30, 2016

Note 8 – Goodwill and Intangible Assets

Our annual impairment testing for goodwill and indefinite lived intangible assets has historically occurred in the first quarter of our fiscal year. In December 2016, we elected to change our annual impairment testing to the fourth quarter of our fiscal year. Accordingly, we will perform annual impairment testing and report the results concurrent with the reporting of our fiscal year 2017 results, which will be in addition to the impairment tests described below.

Annual Impairment Testing in the First Quarter of Fiscal Year 2017 - We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2017. As a result of our testing of indefinite-lived trademarks, we recorded non-cash asset impairment charges of $7.40 million ($5.10 million after tax). The charges were related to certain brand assets and trademarks in our Beauty and Nutritional Supplements segments, which were written down to their estimated fair values, determined on the basis of our estimated future discounted cash flows using the relief from royalty valuation method.

Impairments in the Fourth Quarter of Fiscal Year 2016 – We performed certain interim impairment testing in the fourth quarter of fiscal year 2016 for certain of our brands as a result of revised growth outlooks. As a result of our testing, we recorded a non-cash impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment, which was written down to fair value, determined on the basis of our estimated future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year 2016 - We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result of our testing of indefinite-lived trademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of our estimated future discounted cash flows using the relief from royalty valuation method.

A summary of the carrying amounts and associated accumulated amortization for all intangible assets by operating segment follows:

GOODWILL AND INTANGIBLE ASSETS

(in thousands)


	November 30, 2016								February 29, 2016
	Gross		Cumulative						Gross		Cumulative
	Carrying		Goodwill		Accumulated		Net Book		Carrying		Goodwill		Accumulated		Net Book
	Amount		Impairments		Amortization		Value		Amount		Impairments		Amortization		Value
Housewares:
Goodwill (1)	$	282,065	$	-	$	-	$	282,065	$	166,132	$	-	$	-	$	166,132
Trademarks - indefinite (1)		134,200		-		-		134,200		75,200		-		-		75,200
Other intangibles - finite (1)		40,251		-		(14,826)		25,425		15,448		-		(12,916)		2,532
Total Housewares		456,516		-		(14,826)		441,690		256,780		-		(12,916)		243,864

Health & Home:
Goodwill		284,913		-		-		284,913		284,913		-		-		284,913
Trademarks - indefinite		54,000		-		-		54,000		54,000		-		-		54,000
Licenses - finite		15,300		-		(15,045)		255		15,300		-		(12,750)		2,550
Licenses - indefinite		7,400		-		-		7,400		7,400		-		-		7,400
Other intangibles - finite		116,862		-		(63,244)		53,618		116,575		-		(54,913)		61,662
Total Health & Home		478,475		-		(78,289)		400,186		478,188		-		(67,663)		410,525

Nutritional Supplements:
Goodwill		96,609		-		-		96,609		96,609		-		-		96,609
Brand assets - indefinite		60,520		-		-		60,520		65,520		-		-		65,520
Other intangibles - finite		44,180		-		(15,144)		29,036		44,180		-		(10,431)		33,749
Total Nutritional Supplements		201,309		-		(15,144)		186,165		206,309		-		(10,431)		195,878

Beauty:
Goodwill		81,841		(46,490)		-		35,351		81,841		(46,490)		-		35,351
Trademarks - indefinite		46,354		-		-		46,354		48,754		-		-		48,754
Trademarks - finite		150		-		(91)		59		150		-		(87)		63
Licenses - finite		13,696		-		(11,770)		1,926		13,696		-		(11,532)		2,164
Licenses - indefinite		10,300		-		-		10,300		10,300		-		-		10,300
Other intangibles - finite		46,402		-		(38,593)		7,809		46,402		-		(34,545)		11,857
Total Beauty		198,743		(46,490)		(50,454)		101,799		201,143		(46,490)		(46,164)		108,489
Total goodwill and intangible assets	$	1,335,043	$	(46,490)	$	(158,713)	$	1,129,840	$	1,142,420	$	(46,490)	$	(137,174)	$	958,756

(1)

Includes goodwill of $115.93 million, trade names of $59.00 million, and other finite lived intangible assets totaling $24.50 million from the acquisition of Hydro Flask on March 18, 2016. See Note 9 to these consolidated condensed financial statements for further information regarding the acquisition.

The following table summarizes the amortization expense attributable to intangible assets for the periods covered in this quarterly report, as well as our estimated amortization expense for the fiscal years 2017 through 2022.

AMORTIZATION OF INTANGIBLE ASSETS

(in thousands)


Aggregate Amortization Expense
For the three months ended
November 30, 2016	$	7,199
November 30, 2015	$	6,861

Aggregate Amortization Expense
For the nine months ended
November 30, 2016	$	21,625
November 30, 2015	$	20,883


Estimated Amortization Expense
For the fiscal years ended
February 2017	$	28,289
February 2018	$	24,972
February 2019	$	20,398
February 2020	$	19,083
February 2021	$	16,501
February 2022	$	6,007

- 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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