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Goodwill and Other Intangibles | 9 Months Ended
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Jun. 30, 2020
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangibles | NOTE G – GOODWILL AND OTHER INTANGIBLES Goodwill Ashland tests goodwill and other indefinite-lived intangible assets for impairment annually as of July 1 and when events and circumstances indicate an impairment may have occurred. Ashland tests goodwill and other indefinite-lived intangible assets for impairment by comparing the estimated fair value of the reporting units (for goodwill) and other indefinite-lived intangible assets to the related carrying value. If the carrying amount of a reporting unit or other indefinite-lived intangible asset exceeds its estimated fair value, Ashland records an impairment loss based on the difference between fair value and carrying amount, in the case of reporting units, not to exceed to the associated carrying amount of goodwill. During the second quarter of fiscal 2020, Ashland realigned its operations into five reportable segments which resulted in a reassessment of the Company’s reporting units used to evaluate goodwill impairment. The Company’s reporting units align with its reportable segments. Ashland determined that its reporting units are Life Sciences, Personal Care & Household, Specialty Additives, Performance Adhesives, and Intermediates and Solvents. Prior to the business realignment, the reporting units consisted of Ashland Specialty Ingredients and Intermediates and Solvents. The Ashland Specialty Ingredients reporting unit contained all of Ashland’s reported goodwill at September 30, 2019. In conjunction with the realignment during the second quarter of fiscal 2020, Ashland tested goodwill for impairment for each reporting unit both immediately before and immediately after the business realignment. The fair values of the reporting units were determined using a combination of discounted cash flow models and valuations based on earnings multiples for guideline public companies in each reporting unit’s industry peer group. Significant assumptions inherent in the valuation methodologies include estimates of future projected business results (principally revenue and EBITDA), long-term growth rates, and the weighted-average cost of capital. The goodwill impairment test under the former reporting unit structure concluded that no impairment existed during the second quarter of fiscal 2020. Ashland then allocated goodwill to the new reporting unit structure using a relative fair value approach and re-assessed goodwill for impairment for each of its new reporting units. The impairment test under the new reporting unit structure concluded that the carrying value of the Personal Care & Household and the Specialty Additives reporting units exceeded their fair value, resulting in a non-cash goodwill impairment charge of $530 million, which was recorded within the Goodwill impairment caption within the Statement of Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2020. The Personal Care & Household goodwill impairment charge was due in large part to lower growth and lower margins since the acquisition of the Oral Care and Avoca businesses, which collectively have resulted in reduced cash flow projections. The Specialty Additives goodwill impairment charge was due in large part to lower growth and lower margins within the global construction and energy markets, which collectively have resulted in reduced cash flow projections. There were no indicators of impairment that were identified in the third quarter of fiscal 2020. The following is a progression of goodwill by reportable segment for the nine months ended June 30, 2020.
(In millions) | Life Sciences |  |  | Personal Care & Household |  |  | Specialty Additives |  |  | Performance Adhesives |  |  | Intermediates and Solvents |  | (a) | Total |
Balance at September 30, 2019 | $ | 836 |  |  | $ | 355 |  |  | $ | 609 |  |  | $ | 453 |  |  | $ | — |  |  | $ | 2,253 |
Impairment |  | — |  |  |  | (356 | ) |  |  | (174 | ) |  |  | — |  |  |  | — |  |  |  | (530 | )
Currency translation |  | 6 |  |  |  | 1 |  |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | 11 |
Balance at June 30, 2020 | $ | 842 |  |  | $ | — |  |  | $ | 439 |  |  | $ | 453 |  |  | $ | — |  |  | $ | 1,734 |
| (a) | As of June 30, 2020 and September 30, 2019, there was accumulated impairment of $90 million related to the Intermediates and Solvents reportable segment. |
Other intangible assets Intangible assets principally consist of trademarks and trade names, intellectual property and customer and supplier relationships. Intangible assets classified as finite are amortized on a straight-line basis over their estimated useful lives. The cost of trademarks and trade names is amortized principally over 3 to 25 years, intellectual property over 5 to 25 years, and customer and supplier relationships over 3 to 24 years. Ashland annually reviews, as of July 1, indefinite-lived intangible assets for possible impairment or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. Ashland tested its indefinite-lived intangible assets for impairment during the second quarter of fiscal 2020 as a result of the business realignment. Trademarks and trade names are valued using a “relief-from-royalty” valuation method compared to the carrying value. No impairment was indicated for trademarks and trade names. Intangible assets were comprised of the following as of June 30, 2020 and September 30, 2019.
| June 30, 2020 |
| Gross |  |  |  |  |  |  | Net |
| carrying |  |  | Accumulated |  |  | carrying |
(In millions) | amount |  |  | amortization |  |  | amount |
Definite-lived intangibles |  |  |  |  |  |  |  |  |  |  |
Trademarks and trade names | $ | 66 |  |  | $ | (31 | ) |  | $ | 35 |
Intellectual property |  | 713 |  |  |  | (426 | ) |  |  | 287 |
Customer and supplier relationships |  | 747 |  |  |  | (321 | ) |  |  | 426 |
Total definite-lived intangibles |  | 1,526 |  |  |  | (778 | ) |  |  | 748 |
Indefinite-lived intangibles |  |  |  |  |  |  |  |  |  |  |
Trademarks and trade names |  | 278 |  |  |  | — |  |  |  | 278 |
Total intangible assets | $ | 1,804 |  |  | $ | (778 | ) |  | $ | 1,026 |
| September 30, 2019 |
| Gross |  |  |  |  |  |  | Net |
| carrying |  |  | Accumulated |  |  | carrying |
(In millions) | amount |  |  | amortization |  |  | amount |
Definite-lived intangibles |  |  |  |  |  |  |  |  |  |  |
Trademarks and trade names | $ | 66 |  |  | $ | (29 | ) |  | $ | 37 |
Intellectual property |  | 712 |  |  |  | (391 | ) |  |  | 321 |
Customer and supplier relationships |  | 744 |  |  |  | (292 | ) |  |  | 452 |
Total definite-lived intangibles |  | 1,522 |  |  |  | (712 | ) |  |  | 810 |
Indefinite-lived intangibles |  |  |  |  |  |  |  |  |  |  |
Trademarks and trade names |  | 278 |  |  |  | — |  |  |  | 278 |
Total intangible assets | $ | 1,800 |  |  | $ | (712 | ) |  | $ | 1,088 |
Amortization expense recognized on intangible assets was $21 million and $22 million for the three months ended June 30, 2020 and 2019, respectively, and $63 million and $65 million for the nine months ended June 30, 2020 and 2019, respectively, and is included in the Intangibles Amortization Expense caption of the Statements of Consolidated Comprehensive Income (Loss). Estimated amortization expense for future periods is $85 million in 2020 (includes nine months actual and three months estimated), $85 million in 2021, $84 million in 2022, $84 million in 2023 and $70 million in 2024. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions and divestitures, potential impairment, accelerated amortization, or other events.

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