SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Sep. 30, 2019

(2) SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company's significant accounting policies as described in the 2019 Annual Report, except as described below.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which increases transparency and comparability by requiring the recognition of lease assets and lease liabilities on the balance sheet, as well as requiring the disclosure of key information about leasing arrangements. The Company adopted ASU No. 2016-02, Leases (ASC Topic 842), on July 1, 2019 on a modified retrospective basis under the optional transition method. Therefore, comparative periods are presented in accordance with ASC Topic 840. Additionally, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward (1) historical lease classification and assessments for expired and existing leases, and (2) historical accounting for initial direct costs for existing leases. The Company elected not to recognize any operating lease right-of-use assets or operating lease liabilities for any lease whose term is 12 months or less and does not include a purchase option that the Company is reasonably certain to exercise. The Company also elected to account for the non-lease components within its leases as part of the single lease component to which they are related. Refer to "Adoption of Topic 842" for additional information on the impact of the adoption of ASC 842.

Recently Issued Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU 2018-15, Intangibles- Goodwill and Other- Internal Use Software (Topic 350): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted including adoption in any interim periods. The Company does not believe this guidance will have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement, which improves the effectiveness of fair value measurement disclosures by eliminating, adding and modifying certain disclosure requirements for fair value measurements as part of its disclosure framework project. More specifically, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.

Adoption of Topic 842

As a result of adopting Topic 842, the Company's accounting policies and condensed consolidated financial statements were updated as follows:

The Company enters into lease contracts in which the Company is the lessee, substantially all of which are related to office space leased in various buildings used for general corporate purposes. The terms of these non-cancelable operating leases typically require the Company to pay rent and a share of operating expenses and real estate taxes, generally with an inflation-based rent increase included. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term beginning at the commencement date. Operating lease right-of-use assets are adjusted for lease incentives, deferred rent and initial direct costs, if incurred. The Company's leases generally do not include an implicit rate; therefore, the Company determined the present value of future minimum lease payments using an incremental borrowing rate based on information available as of July 1, 2019, the transition date. The related lease expense is recognized on a straight-line basis over the lease term.

The following tables summarize the impacts of adopting Topic 842 on the Condensed Consolidated Balance Sheets (in thousands). See Note 16 - Commitments and Contingencies for further information.



	June 30, 2019 As presented			Impact of Topic 842			July 1, 2019 Adjusted
Intangible assets, net^(a)	$	270,722		$	(8,474	)	$	262,248
Deferred income tax assets	$	422,014		$	302		$	422,316
Operating lease right-of-use assets	$	—		$	62,642		$	62,642
Total assets	$	2,569,567		$	54,470		$	2,624,037

Other current liabilities	$	7,113		$	7,661		$	14,774
Current liabilities of discontinued operations	$	11,797		$	1,200		$	12,997
Operating lease liabilities	$	—		$	58,596		$	58,596
Other long-term liabilities	$	67,683		$	(12,088	)	$	55,595
Total liabilities	$	908,547		$	55,369		$	963,916

Accumulated deficit^(b)	$	(775,674	)	$	(899	)	$	(776,573	)
Total liabilities and equity	$	2,569,567		$	54,470		$	2,624,037


(a)	The Company reclassified a favorable lease commitment, which was recorded within intangible assets, net in the Condensed Consolidated Balance Sheets as of June 30, 2019, to operating lease right-of-use assets as part of the adoption of Topic 842.

(b)

The Company recognized a non-cash impairment charge of $1.2 million ($0.9 million net of deferred tax impact), which was recorded as an adjustment to the opening balance of equity at July 1, 2019. The impairment charge was related to operating lease right-of-use assets of the specialty pharmacy business, which is classified as a discontinued operation.