Intangible Assets

A reconciliation of the activity affecting intangible assets, net for each of 2015, 2016, and 2017 is as follows:



	Year Ended March 31, 2015
(In thousands)	Indefinite Lived Trademarks			Finite Lived Trademarks and Customer Relationships			Totals
Gross Amount
Balance – March 31, 2014	$	1,273,878		$	204,740		$	1,478,618
Additions	673,180			124,774			797,954
Reclassifications	(46,506		)	46,506			—
Reductions	(9,548		)	(17,674		)	(27,222		)
Effects of foreign currency exchange rates	(17,600		)	(280		)	(17,880		)
Balance – March 31, 2015	$	1,873,404		$	358,066		$	2,231,470

Accumulated Amortization
Balance – March 31, 2014	$	—		$	83,801		$	83,801
Additions	—			12,995			12,995
Effects of foreign currency exchange rates	—			(26		)	(26		)
Balance – March 31, 2015	$	—		$	96,770		$	96,770

Intangibles, net – March 31, 2015	$	1,873,404		$	261,296		$	2,134,700

Intangible Assets, net by Reportable Segment:
North American OTC Healthcare	$	1,676,991		$	235,642		$	1,912,633
International OTC Healthcare	86,141			1,231			87,372
Household Cleaning	110,272			24,423			134,695
Intangible assets, net – March 31, 2015	$	1,873,404		$	261,296		$	2,134,700



	Year Ended March 31, 2016
(In thousands)	Indefinite Lived Trademarks			Finite Lived Trademarks and Customer Relationships			Totals
Gross Amount
Balance – March 31, 2015	$	1,873,404		$	358,066		$	2,231,470
Additions	179,800			26,900			206,700
Reclassifications	(32,918		)	32,918			—
Effects of foreign currency exchange rates	(240		)	(4		)	(244		)
Balance – March 31, 2016	$	2,020,046		$	417,880		$	2,437,926

Accumulated Amortization
Balance – March 31, 2015	$	—		$	96,770		$	96,770
Additions	—			18,430			18,430
Effects of foreign currency exchange rates	—			3			3
Balance – March 31, 2016	$	—		$	115,203		$	115,203

Intangibles, net – March 31, 2016	$	2,020,046		$	302,677		$	2,322,723

Intangible Assets, net by Reportable Segment:
North American OTC Healthcare	$	1,823,873		$	277,762		$	2,101,635
International OTC Healthcare	85,901			2,237			88,138
Household Cleaning	110,272			22,678			132,950
Intangible assets, net – March 31, 2016	$	2,020,046		$	302,677		$	2,322,723



	Year Ended March 31, 2017
(In thousands)	Indefinite Lived Trademarks			Finite Lived Trademarks and Customer Relationships			Totals
Gross Amount
Balance – March 31, 2016	$	2,020,046		$	417,880		$	2,437,926
Additions	648,700			98,900			747,600
Reclassifications	(2,064		)	2,064			—
Reductions	(77,248		)	(76,903		)	(154,151		)
Effects of foreign currency exchange rates	(279		)	(140		)	(419		)
Balance – March 31, 2017	$	2,589,155		$	441,801		$	3,030,956

Accumulated Amortization
Balance – March 31, 2016	$	—		$	115,203		$	115,203
Additions	—			19,753			19,753
Reductions	—			(7,610		)	(7,610		)
Effects of foreign currency exchange rates	—			(3		)	(3		)
Balance – March 31, 2017	$	—		$	127,343		$	127,343

Intangibles, net – March 31, 2017	$	2,589,155		$	314,458		$	2,903,613

Intangible Assets, net by Reportable Segment:
North American OTC Healthcare	$	2,404,336		$	287,056		$	2,691,392
International OTC Healthcare	83,558			6,468			90,026
Household Cleaning	101,261			20,934			122,195
Intangible assets, net – March 31, 2017	$	2,589,155		$	314,458		$	2,903,613

As discussed in Note 2, we completed two acquisitions during the year ended March 31, 2015. On September 3, 2014, we completed the acquisition of Insight and allocated $724.4 million to intangible assets based on our analysis. Additionally, on April 30, 2014, we completed the acquisition of the Hydralyte brand and allocated $73.6 million to intangible assets based on our analysis. Furthermore, on September 3, 2014, we sold one of the brands that we acquired from Insight, for which we had allocated $17.7 million to intangible assets.

As discussed in Note 2, on February 5, 2016, we completed the acquisition of DenTek. In connection with this acquisition, we allocated $206.7 million to intangible assets based on our analysis.

As discussed in Note 2, on January 26, 2017, we completed the acquisition of Fleet. In connection with this acquisition, we allocated $747.6 million to intangible assets based on our analysis.

On July 7, 2016, we completed the sale of the Pediacare, New Skin and Fiber Choice (see Note 3 above for further details) brands for $40.0 million plus the cost of inventory and received $40.1 million including the cost of preliminary inventory, less certain immaterial holdbacks, and reduced our indefinite and finite-lived trademarks by $37.2 million and $54.0 million, respectively. During the year ended March 31, 2017, we recorded a preliminary pre-tax loss of $56.2 million on the sale of these brands. In addition, as discussed in Note 3, in connection with this sale, the buyer exercised its option to purchase the Dermoplast brand. The sale of Dermoplast was completed on December 30, 2016, and we received $48.4 million. As a result, we reduced intangible assets by $31.0 million.

Historically, we received royalty income from the licensing of the names of certain of our brands in geographic areas or markets in which we do not directly compete. We have had royalty agreements for our Comet brand for several years, which included options on behalf of the licensee to purchase license rights in certain geographic areas and markets in perpetuity. In December 2014, we amended these agreements and we sold rights to use of the Comet brand in certain Eastern European countries to a third-party licensee in exchange for $10.0 million as a partial early buyout of the license. The amended agreement provided that we would continue to receive royalty payments of $1.0 million per quarter for the remaining geographic areas and also granted the licensee an option to acquire the license rights in the remaining geographic areas anytime after June 30, 2016. In July 2016, the licensee elected to exercise its option. In August 2016, we received $11.0 million for the purchase of the remaining license rights and, as a result, we recorded a pre-tax gain of $1.2 million and reduced our indefinite-lived trademarks by $9.0 million. Furthermore, the licensee is no longer required to make additional royalty payments to us, and as a result, our future royalty income will be reduced accordingly.

In December 2016, we also completed the sale of the e.p.t brand and, as a result, we reduced intangible assets by $14.8 million.

Under accounting guidelines, indefinite-lived assets are not amortized, but must be tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below the carrying amount. Additionally, at each reporting period, an evaluation must be made to determine whether events and circumstances continue to support an indefinite useful life. Intangible assets with finite lives are amortized over their respective estimated useful lives and are also tested for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable and exceeds its fair value.

During the fourth quarter of each fiscal year, we perform our annual impairment analysis. We utilized the discounted cash flow method to estimate the fair value of our reporting units as part of the goodwill impairment test and the excess earnings method to estimate the fair value of our individual indefinite-lived intangible assets. The discount rate utilized in the analyses, as well as future cash flows, may be influenced by such factors as changes in interest rates and rates of inflation. Additionally, should the related fair values of goodwill and intangible assets be adversely affected as a result of declining sales or margins caused by competition, changing consumer preferences, technological advances or reductions in advertising and promotional expenses, we may be required to record impairment charges in the future. In addition, we considered our market capitalization at February 28, 2017, which was the date of our annual review, as compared to the aggregate fair values of our reporting units, to assess the reasonableness of our estimates pursuant to the discounted cash flow methodology. As a result of our analysis, we determined that the fair values exceeded the carrying values and as such, no impairment charge was recorded in 2017.

The aggregate fair value of the indefinite-lived intangible assets, including indefinite-lived intangible assets of the recently acquired Fleet business which was recently fair valued, exceeded the carrying value by 40.8%. Two of the individual indefinite-lived trade names exceeded their carrying values by less than 10%. The fair values of Beano and Comet exceed their carrying values of $78.4 million and $101.3 million, respectively, by 9.0% each.

After several periods of contraction and given the competitive landscape, including private label, Beano experienced growth in the latter part of the current fiscal year in response to strategic initiatives that we put in place. We expect these trends to continue and have factored this into our projections. The significant assumptions supporting the fair value of Beano include a discount rate of 9.5%, and returning to revenue growth as previously noted, coupled with investments in advertising and promotion that are in line with historical performance. If we are unable to meet our projections, the carrying value of Beano may exceed its fair value, which would result in an impairment charge. For example, a decrease in the annual cash flow of approximately 8.3% compared to the projected cash flow utilized in our analysis, or an increase in the discount rate of approximately 0.6% would result in an impairment charge.

Comet sales have performed in line with our expectations. The significant assumptions supporting the fair value of Comet include a discount rate of 9.5%, coupled with modest revenue growth, and advertising and promotion investments that are in line with historical performance. Revenue declines or changes in assumptions utilized in our quantitative indefinite-lived asset impairment analysis may result in the fair value no longer exceeding the carrying value. For example, a decrease in the annual cash flow of approximately 8.2% for Comet, compared to the projected cash flow utilized in our analysis, or an increase in the discount rate of approximately 0.7% could result in the carrying value of our trade name exceeding its fair value, which would result in an impairment charge. We will continue to review our results against forecasts and assess our assumptions to ensure they continue to be appropriate.

In Australia, all medications that contain Codeine will no longer be available to be sold over-the-counter and will only be sold behind the counter effective February 2018. One of our Australian brands, Painstop, contains Codeine and therefore will be subject to this market change. As a result of this market change, we have determined that an indefinite life is no longer appropriate for Painstop. Based upon our initial assessment of the changes and uncertainty in the market and the competitive landscape of established sellers of Codeine behind the counter, we have significantly reduced our revenue projections and determined that a 10 year life would be appropriate. As such, we have reclassified $2.1 million from an indefinite-lived to a finite-lived intangible asset. At the time of this change in useful life, the fair value exceeded its carrying value.

Additionally, certain of our North American OTC Healthcare and Household Cleaning brands have experienced recent declines in revenues and profitability. While the fair value of these indefinite-lived trade names exceed their respective carrying value by more than 10%, if we experience future declines in revenue or performance not in line with our expectations, the carrying value may no longer be recoverable, in which case a non-cash impairment charge may be recorded in future periods.

The weighted average remaining life for finite-lived intangible assets at March 31, 2017 was approximately 13.4 years, and the amortization expense for the year ended March 31, 2017 was $19.8 million. At March 31, 2017, finite-lived intangible assets are expected to be amortized over their estimated useful life, which ranges from a period of 10 to 30 years, and the estimated amortization expense for each of the five succeeding years and periods thereafter is as follows (in thousands):



Year Ending March 31,
2018	$	23,356
2019	23,356
2020	23,356
2021	22,933
2022	22,510
Thereafter	198,947
	$	314,458