XML 152 R8.htm IDEA: XBRL DOCUMENT
v3.22.4

GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended
--- | ---
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The following table presents goodwill by product category and the related change in the carrying amount:
(In millions) |  | Skin Care |  | Makeup |  | Fragrance |  | Hair Care |  | Total
Balance as of June 30, 2022 |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 1,702 |  |  | $ | 1,116 |  |  | $ | 249 |  |  | $ | 353 |  |  | $ | 3,420 |
Accumulated impairments |  | (138) |  |  | (732) |  |  | (29) |  |  | — |  |  | (899) |
|  | 1,564 |  |  | 384 |  |  | 220 |  |  | 353 |  |  | 2,521 |
Translation and other adjustments, goodwill |  | (50) |  |  | — |  |  | 3 |  |  | — |  |  | (47) |
Translation and other adjustments, accumulated impairments |  | — |  |  | — |  |  | (1) |  |  | — |  |  | (1) |
|  | (50) |  |  | — |  |  | 2 |  |  | — |  |  | (48) |
Balance as of December 31, 2022 |  |  |  |  |  |  |  |  |  |
Goodwill |  | 1,652 |  |  | 1,116 |  |  | 252 |  |  | 353 |  |  | 3,373 |
Accumulated impairments |  | (138) |  |  | (732) |  |  | (30) |  |  | — |  |  | (900) |
|  | $ | 1,514 |  |  | $ | 384 |  |  | $ | 222 |  |  | $ | 353 |  |  | $ | 2,473 |
Other Intangible Assets Other intangible assets consist of the following:
|  | December 31, 2022 |  | June 30, 2022
(In millions) |  | Gross Carrying Value |  | Accumulated Amortization |  | Total Net Book Value |  | Gross Carrying Value |  | Accumulated Amortization |  | Total Net Book Value
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Customer lists, license agreements and other |  | $ | 2,057 |  |  | $ | 702 |  |  | $ | 1,355 |  |  | $ | 2,064 |  |  | $ | 628 |  |  | $ | 1,436 |
Non-amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Trademarks and other |  |  |  |  |  | 1,742 |  |  |  |  |  |  | 1,992 |
Total intangible assets |  |  |  |  |  | $ | 3,097 |  |  |  |  |  |  | $ | 3,428 |
The aggregate amortization expense related to amortizable intangible assets was $37 million and $39 million for the three months ended December 31, 2022 and 2021, respectively, and $73 million and $84 million for the six months ended December 31, 2022 and 2021, respectively. The estimated aggregate amortization expense for the remainder of fiscal 2023 and for each of the next four fiscal years is as follows:
|  | Fiscal
(In millions) |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027
Estimated aggregate amortization expense |  | $ | 75 |  |  | $ | 147 |  |  | $ | 147 |  |  | $ | 147 |  |  | $ | 130 |
Impairment Testing During the Six Months Ended December 31, 2022 During the fiscal 2023 second quarter, given the lower-than-expected results in the overall business, the Company made revisions to the internal forecasts relating to its Smashbox reporting unit. The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset. The remaining carrying value of the trademark intangible asset was not recoverable and the Company recorded an impairment charge of $21 million reducing the carrying value to zero. During the fiscal 2023 second quarter, the Dr.Jart+ reporting unit experienced lower-than-expected growth within key geographic regions and channels that continue to be impacted by the spread of COVID-19 variants, resurgence in cases, and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the reporting unit. In addition, due to macro-economic factors, Dr.Jart+ has experienced lower-than-expected growth within key geographic regions. The Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels coupled with delays in future international expansion to areas that continue to be impacted by COVID-19. As a result, the Company made revisions to the internal forecasts relating to its Dr.Jart+ and Too Faced reporting units. Additionally, there were increases in the weighted average cost of capital for both reporting units as compared to the prior year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2022. The Company concluded that the changes in circumstances in the reporting units, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of their trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of November 30, 2022. The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method to determine discounted projected future cash flows and recorded an impairment charge of $100 million for Dr.Jart+ and $86 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets were recoverable. After adjusting the carrying values of the trademarks, the Company completed interim quantitative impairment tests for goodwill. As the estimated fair value of the Dr.Jart+ and Too Faced reporting units were in excess of their carrying values, the Company concluded that the carrying amounts of the goodwill were recoverable and did not record a goodwill impairment charge related to these reporting units. The fair values of these reporting units were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates for trademarks. The most significant unobservable input used to estimate the fair values of the Dr.Jart+ and Too Faced trademark intangible assets was the weighted-average cost of capital, which was 11% and 13%, respectively. A summary of the impairment charges for the three and six months ended December 31, 2022 and the remaining trademark and goodwill carrying values as of December 31, 2022, for each reporting unit, are as follows:
|  |  |  | Impairment Charge |  | Carrying Value
(In millions) |  |  |  | Three and Six Months Ended December 31, 2022 |  | As of December 31, 2022
Reporting Unit: |  | Geographic Region |  | Trademarks |  | Goodwill |  | Trademarks |  | Goodwill
Smashbox |  | The Americas |  | $ | 21 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Dr. Jart+ |  | Asia/Pacific |  | 100 |  |  | — |  |  | 339 |  |  | 318 |
Too Faced |  | The Americas |  | 86 |  |  | — |  |  | 186 |  |  | 13 |
Total |  |  |  | $ | 207 |  |  | $ | — |  |  | $ | 525 |  |  | $ | 331 |
The impairment charges for the three and six months ended December 31, 2022 were reflected in the skin care product category for Dr.Jart+ and the makeup product category for Smashbox and Too Faced.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI https://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration