Intangible Assets

A reconciliation of the activity affecting intangible assets, net for each of 2018 and 2017 is as follows:



	Year Ended March 31, 2018
(In thousands)	Indefinite Lived Tradenames			Finite Lived Tradenames and Customer Relationships			Totals
Gross Amount
Balance – March 31, 2017	$	2,589,155		$	441,801		$	3,030,956
Tradename impairment	(99,300		)	(624		)	(99,924		)
Effects of foreign currency exchange rates	448			137			585
Balance – March 31, 2018	$	2,490,303		$	441,314		$	2,931,617

Accumulated Amortization
Balance – March 31, 2017	$	—		$	127,343		$	127,343
Additions	—			23,349			23,349
Effects of foreign currency exchange rates	—			9			9
Balance – March 31, 2018	$	—		$	150,701		$	150,701

Intangible assets, net – March 31, 2018	$	2,490,303		$	290,613		$	2,780,916

Intangible Assets, net by Reportable Segment:
North American OTC Healthcare	$	2,375,736		$	265,356		$	2,641,092
International OTC Healthcare	84,006			6,068			90,074
Household Cleaning	30,561			19,189			49,750
Intangible assets, net – March 31, 2018	$	2,490,303		$	290,613		$	2,780,916



	Year Ended March 31, 2017
(In thousands)	Indefinite Lived Tradenames			Finite Lived Tradenames 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

Intangible assets, 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, 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, and reduced our indefinite and finite-lived tradenames by $37.2 million and $54.0 million, respectively. During the year ended March 31, 2017, we recorded a 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 any time 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 tradenames by $9.0 million. Furthermore, the licensee is no longer required to make additional royalty payments to us, and as a result, our royalty income was 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 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 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.

As a result of our analysis at February 28, 2018, two of our indefinite-lived intangible assets, Beano and Comet, did not exceed the carrying values and as such, impairment charges of $28.6 million and $70.7 million, respectively, were recorded in 2018 relating to these two tradenames, bringing Beano’s indefinite-lived tradename carrying value to $49.8 million and Comet’s indefinite-lived tradename carrying value to $30.6 million.

In addition, we recorded an impairment charge on our Massengill finite-lived intangible tradename of $0.6 million bringing its carrying value to zero. The impairment charges were the result of our reassessment of the long-term sales projections for these brands during our annual planning cycle. In addition, we performed a sensitivity analysis of our weighted average cost of capital and we determined that a 50 basis point increase in the weighted average cost of capital would have resulted in an additional impairment of Beano and Comet totaling $4.2 million. Additionally, a 50 basis point decrease in the terminal growth rate used for each of the Beano and Comet tradenames would have resulted in an additional impairment of $2.3 million.

Beano and Massengill are part of our North American OTC Healthcare segment and Comet is part of our Household Cleaning segment.

The weighted average remaining life for finite-lived intangible assets at March 31, 2018 was approximately 12.5 years, and the amortization expense for the year ended March 31, 2018 was $23.3 million. At March 31, 2018, 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):



(In thousands)
Year Ending March 31,	Amount
2019	23,234
2020	23,234
2021	22,812
2022	22,389
2023	22,389
Thereafter	176,555
	$	290,613