GOODWILL AND OTHER INTANGIBLE ASSETS
The Company performs its annual goodwill and indefinite-lived intangible assets impairment testing for all of its reporting units as of the beginning of the fourth quarter of the fiscal year. The current and prior year goodwill impairment testing resulted in no impairment charges being recorded. In the fourth quarter of fiscal 2013, the Company recorded a $9.0 million impairment charge related to the IPR&D assets acquired as part of the Paddock acquisition in fiscal 2012 due to changes in the projected development and regulatory timelines for various projects. The impairment charge was recorded in the Rx Pharmaceuticals segment as a write-off of IPR&D. Additionally, in the fourth quarter of fiscal 2013, $10.0 million was reclassified from IPR&D to a definite-lived developed product technology intangible asset and is being amortized on a straight-line basis over an estimated useful life of 12 years.
There were additions to goodwill in the Consumer Healthcare segment related to the Sergeant's and Velcera acquisitions in the second and fourth quarters of fiscal 2013 and in the Rx Pharmaceuticals segment related to the Cobrek, Rosemont, and Fera acquisitions in the second, third and fourth quarters of fiscal 2013, respectively. During fiscal 2012, there were additions to goodwill in the Consumer Healthcare and Rx Pharmaceuticals segments related to the acquisitions of CanAm and Paddock, respectively. Changes in the carrying amount of goodwill, by reportable segment, were as follows (in millions):
|
| | | | | | | | | | | | | | | | | | | |
| Consumer Healthcare | | Nutritionals | | Rx Pharma- ceuticals | | API | | Total |
Balance as of June 25, 2011 | $ | 126.3 |
| | $ | 331.7 |
| | $ | 81.6 |
| | $ | 98.4 |
| | $ | 638.0 |
|
Business acquisitions | 15.0 |
| | — |
| | 148.9 |
| | — |
| | 163.9 |
|
Currency translation adjustment | (2.4 | ) | | — |
| | (9.7 | ) | | (12.0 | ) | | (24.2 | ) |
Balance as of June 30, 2012 | 138.9 |
| | 331.7 |
| | 220.8 |
| | 86.3 |
| | 777.8 |
|
Business acquisitions | 144.7 |
| | — |
| | 163.9 |
| | — |
| | 308.6 |
|
Currency translation adjustment | (3.7 | ) | | — |
| | 0.7 |
| | 5.9 |
| | 2.9 |
|
Balance as of June 29, 2013 | $ | 279.9 |
| | $ | 331.7 |
| | $ | 385.4 |
| | $ | 92.2 |
| | $ | 1,089.3 |
|
Other intangible assets and related accumulated amortization consisted of the following (in millions):
|
| | | | | | | | | | | | | | | |
| June 29, 2013 | | June 30, 2012 |
| Gross | | Accumulated Amortization | | Gross | | Accumulated Amortization |
Amortizable intangibles: | | | | | | | |
Developed product technology/formulation and product rights | $ | 896.8 |
| | $ | 204.6 |
| | $ | 542.1 |
| | $ | 140.5 |
|
Customer relationships | 358.2 |
| | 72.4 |
| | 341.4 |
| | 50.8 |
|
Distribution and license agreements | 192.7 |
| | 28.9 |
| | 52.6 |
| | 23.7 |
|
Non-compete agreements | 13.3 |
| | 6.0 |
| | 7.8 |
| | 3.8 |
|
Trademarks | 12.7 |
| | 4.2 |
| | 4.8 |
| | 0.7 |
|
Total | 1,473.7 |
| | 316.1 |
| | 948.7 |
| | 219.4 |
|
Non-amortizable intangibles: | | | | | | | |
In-process research and development | 27.8 |
| | — |
| | 35.0 |
| | — |
|
Trade names and trademarks | 57.0 |
| | — |
| | 7.4 |
| | — |
|
Total other intangible assets | $ | 1,558.5 |
| | $ | 316.1 |
| | $ | 991.1 |
| | $ | 219.4 |
|
As of June 29, 2013, other intangible assets included additions made during fiscal 2013 that were attributable to the acquisitions of Rosemont, Sergeant's, Velcera, Fera and Cobrek, as discussed in Note 2. Certain intangible assets are denominated in currencies other than the U.S. dollar; therefore, their gross and net carrying values are subject to foreign currency movements.
The Company recorded a charge for amortization expense of $94.0 million, $74.8 million and $46.8 million for fiscal 2013, 2012 and 2011, respectively, for intangible assets subject to amortization. The increase in amortization expense in fiscal 2013 was due primarily to the incremental amortization expense incurred on the intangible assets acquired as part of the aforementioned acquisitions.
Estimated future amortization expense includes the additional amortization related to recently acquired intangible assets subject to amortization. No estimate of future amortization expense related to the subsequent Elan transaction has been included in the table below (see Note 20 - Subsequent Events). The estimated amortization expense for each of the following five years is as follows (in millions):
|
| | | | |
Fiscal Year | | Amount |
2014 | | $ | 118.8 |
|
2015 | | 128.7 |
|
2016 | | 132.3 |
|
2017 | | 134.8 |
|
2018 | | 128.1 |
|
