NOTE 5 – GOODWILL AND INTANGIBLE ASSETS

We do not record amortization expense for goodwill or other intangible assets that have indefinite useful lives. Amortization expense is recorded for intangible assets with definite useful lives. We perform an annual impairment review of goodwill and other intangible assets during the first quarter of each fiscal year. We also perform interim impairment testing, if necessary. We write down any asset deemed to be impaired to its fair value.

The Company's traditional impairment test methodology uses primarily estimated future discounted cash flow models (“DCF Models”). The DCF Models use a number of assumptions including expected future cash flows from the assets, volatility, risk free rate, and the expected life of the assets, the determination of which require significant judgments from management. In determining the assumptions to be used, the Company considers the existing rates on Treasury Bills, yield spreads on assets with comparable expected lives, historical volatility of the Company's common stock and that of comparable companies, and general economic and industry trends, among other considerations. When stock market or other conditions warrant, the Company expands its traditional impairment test methodology to give weight to other methods that provide additional observable market information in order to better reflect the current risk level being incorporated into market prices and in order to corroborate the fair values of each of the Company’s reporting units. Management will place increased reliance on these additional methods in conjunction with its DCF Models in the event that the total market capitalization of its stock drops below its consolidated stockholders’ equity balance for a sustained period.

Considerable management judgment is necessary in reaching a conclusion regarding the reasonableness of fair value estimates, evaluating the most likely impact of a range of possible external conditions, considering the resulting operating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use, and selecting and weighting appropriate comparable market level inputs.

Impairments in the Fourth Quarter of Fiscal Year 2016 – The Company performed certain interim impairment testing in its fourth quarter of fiscal 2016 for certain of its brands as a result of revised growth outlooks. As a result of its testing, the Company recorded a non-cash impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment which was written down to fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year 2016 – The Company performed its annual evaluation of

goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result of our testing of indefinite-lived trademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year 2015 – The Company performed its annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2015. As a result of our testing of indefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $9.00 million ($8.16 million after tax). The charge was related to certain trademarks in our Beauty segment, which were written down to their estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year 2014 – The Company performed its annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2014. As a result of our testing of indefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $12.05 million ($12.03 million after tax). The charge was related to certain trademarks in our Beauty segment, which were written down to their estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

The following tables summarize the changes in our goodwill and intangible assets by operating segment for fiscal years 2016 and 2015:

GOODWILL AND INTANGIBLE ASSETS

(in thousands)


		Balances at										Balances at
	Weighted	February 28, 2015				Year Ended February 29, 2016						February 29, 2016
	Average	Gross		Cumulative						Acquisition		Gross		Cumulative
	Life	Carrying		Goodwill						and Retirement		Carrying		Goodwill		Accumulated		Net Book
Description / Life	(Years)	Amount		Impairments		Additions		Impairments		Adjustments		Amount		Impairments		Amortization		Value

Housewares:
Goodwill		$	166,132	$	-	$	-	$	-	$	-	$	166,132	$	-	$	-	$	166,132
Trademarks - indefinite			75,200		-		-		-		-		75,200		-		-		75,200
Other intangibles - finite	4.0		15,754		-		446		-		(752)		15,448		-		(12,916)		2,532
Subtotal			257,086		-		446		-		(752)		256,780		-		(12,916)		243,864

Health & Home:
Goodwill			251,758		-		32,958		-		197		284,913		-		-		284,913
Trademarks - indefinite			54,000		-		-		-		-		54,000		-		-		54,000
Licenses - finite	1.0		15,300		-		-		-		-		15,300		-		(12,750)		2,550
Licenses - indefinite			-		-		7,400		-		-		7,400		-		-		7,400
Other Intangibles - finite	6.0		113,727		-		2,848		-		-		116,575		-		(54,913)		61,662
Subtotal			434,785		-		43,206		-		197		478,188		-		(67,663)		410,525

Nutritional Supplements:
Goodwill			96,486		-		-		-		123		96,609		-		-		96,609
Brand assets - indefinite			65,500		-		20		-		-		65,520		-		-		65,520
Other intangibles - finite	5.3		43,800		-		380		-		-		44,180		-		(10,431)		33,749
Subtotal			205,786		-		400		-		123		206,309		-		(10,431)		195,878

Beauty:
Goodwill			81,841		(46,490)		-		-		-		81,841		(46,490)		-		35,351
Trademarks - indefinite			54,754		-		-		(6,000)		-		48,754		-		-		48,754
Trademarks - finite	12.6		150		-		-		-		-		150		-		(87)		63
Licenses - indefinite			10,300		-		-		-		-		10,300		-		-		10,300
Licenses - finite	6.8		13,696		-		-		-		-		13,696		-		(11,532)		2,164
Other intangibles - finite	2.2		47,876		-		-		-		(1,474)		46,402		-		(34,545)		11,857
Subtotal			208,617		(46,490)		-		(6,000)		(1,474)		201,143		(46,490)		(46,164)		108,489

Total		$	1,106,274	$	(46,490)	$	44,052	$	(6,000)	$	(1,906)	$	1,142,420	$	(46,490)	$	(137,174)	$	958,756

GOODWILL AND INTANGIBLE ASSETS

(in thousands)


		Balances at										Balances at
	Weighted	February 28, 2014				Year Ended February 28, 2015						February 28, 2015
	Average	Gross		Cumulative						Acquisition		Gross		Cumulative
	Life	Carrying		Goodwill						and Retirement		Carrying		Goodwill		Accumulated		Net Book
Description / Life	(Years)	Amount		Impairments		Additions		Impairments		Adjustments		Amount		Impairments		Amortization		Value

Housewares:
Goodwill		$	166,132	$	-	$	-	$	-	$	-	$	166,132	$	-	$	-	$	166,132
Trademarks - indefinite			75,200		-		-		-		-		75,200		-		-		75,200
Other intangibles - finite	1.7		15,693		-		244		-		(183)		15,754		-		(12,331)		3,423
Subtotal			257,025		-		244		-		(183)		257,086		-		(12,331)		244,755

Health & Home:
Goodwill			251,758		-		-		-		-		251,758		-		-		251,758
Trademarks - indefinite			54,000		-		-		-		-		54,000		-		-		54,000
Licenses - finite	2.0		15,300		-		-		-		-		15,300		-		(9,377)		5,923
Other Intangibles - finite	6.7		114,490		-		912		-		(1,675)		113,727		-		(43,848)		69,879
Subtotal			435,548		-		912		-		(1,675)		434,785		-		(53,225)		381,560

Nutritional Supplements:
Goodwill			-		-		95,308		-		1,178		96,486		-		-		96,486
Brand assets - indefinite			-		-		65,500		-		-		65,500		-		-		65,500
Other intangibles - finite	6.3		-		-		43,800		-		-		43,800		-		(4,171)		39,629
Subtotal			-		-		204,608		-		1,178		205,786		-		(4,171)		201,615

Beauty:
Goodwill			81,841		(46,490)		-		-		-		81,841		(46,490)		-		35,351
Trademarks - indefinite			63,754		-		-		(9,000)		-		54,754		-		-		54,754
Trademarks - finite	13.6		150		-		-		-		-		150		-		(82)		68
Licenses - indefinite			10,300		-		-		-		-		10,300		-		-		10,300
Licenses - finite	7.8		18,683		-		-		-		(4,987)		13,696		-		(11,216)		2,480
Other intangibles - finite	3.2		49,437		-		-		-		(1,561)		47,876		-		(30,602)		17,274
Subtotal			224,165		(46,490)		-		(9,000)		(6,548)		208,617		(46,490)		(41,900)		120,227

Total		$	916,738	$	(46,490)	$	205,764	$	(9,000)	$	(7,228)	$	1,106,274	$	(46,490)	$	(111,627)	$	948,157

In fiscal year 2015, we amended the terms of our trademark licensing agreement with Honeywell International Inc. to relinquish the rights to market Honeywell branded portable air purifiers after December 31, 2015 in twelve selected developing countries, including China. In exchange for the amendment, we received a one‐time cash payment of $7 million ($6.98 million after tax), which was recorded as a gain in SG&A. For fiscal years 2015 and 2014, sales into the relinquished countries accounted for approximately 0.3 and 0.2 percent, respectively, of the Health & Home segment’s total net sales. We plan to market portable air purifiers in the relinquished markets under non‐Honeywell branded trademarks and retained the rights to market Honeywell portable air purifiers in other countries, including the United States, Canada and all European countries. For categories such as portable fans, portable heaters and portable humidifiers, we remain the Honeywell global licensee under the same material terms as our previous agreement.

The following table summarizes the amortization expense attributable to intangible assets for the fiscal years 2016, 2015 and 2014, as well as estimated amortization expense for the fiscal years 2017 through 2021:

AMORTIZATION OF INTANGIBLE ASSETS

(in thousands)


Aggregate Amortization Expense
For the fiscal years ended
February 2016	$	27,773
February 2015	$	25,328
February 2014	$	21,612


Estimated Amortization Expense
For the fiscal years ended
February 2017	$	26,537
February 2018	$	23,246
February 2019	$	18,631
February 2020	$	17,309
February 2021	$	14,788

Many of the license agreements under which we sell or intend to sell products with trademarks owned by third parties require that we pay minimum royalties. Some license agreements also require that we make minimum levels of advertising expenditures. For fiscal year 2017, estimated minimum royalties due and minimum advertising expenditures under these license agreements total $12.73 and $5.90 million, respectively.