Proctor and Gamble 2015 Annual Report Download - page 55

53 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
During 2015, we determined that the estimated fair value of
our atteries reporting unit was less than its carrying amount,
resulting in a series of impairment charges. The underlying
fair value assessment was initially triggered by an agreement
in September 2014 to sell the China-based battery joint venture
and a related decision to pursue options to exit the remainder
of the atteries business. The agreement to sell the China-
based battery joint venture was at a transaction value that was
below the earnings multiple implied from the prior valuation
of our atteries business, which effectively eliminated our fair
value cushion. As a result, the remaining business unit cash
flows no longer supported the remaining carrying amount of
the atteries business. Due largely to these factors, we recorded
an initial non-cash, before and after-tax impairment charge of
$863 to reduce the carrying amount of goodwill for the
atteries business unit to its estimated fair value. These same
factors resulted in a decline in the fair value of our Duracell
trade name intangible asset below its carrying value. This
resulted in a non-cash, before-tax impairment charge of $110
($69 after tax) to reduce the carrying amount of this asset to
its estimated fair value.
In November 2014, the Company reached an agreement to
divest the atteries business via a split transaction in which
the Company will exchange a recapitalized Duracell Company
for erkshire Hathaway's (H) shares of P&G stock (see Note
13). ased on the terms of the agreement and the value of H's
shares of P&G stock as of the transaction date and changes
thereto through June 30, 2015, the Company recorded
additional non-cash, before and after-tax impairment charges
totaling $1.2 billion. All of the fiscal 2015 impairment charges
in the atteries business are included as part of discontinued
operations. The atteries goodwill is included in Corporate in
the preceding table as of June 30, 2013 and 2014. The
remaining atteries goodwill at June 30, 2015 is reported in
Assets held for sale in the Consolidated alance Sheet. The
remaining change in goodwill during fiscal 2015 was primarily
due to currency translation across all reportable segments.
On July 31, 2014, the Company completed the divestiture of
its Pet Care operations in North America, Latin America and
other selected countries. In December 2014, the Company
completed the divestiture of its Pet Care operations in the other
markets, primarily the European union countries. The Pet Care
business was accounted for as a discontinued operation as of
June 30, 2014. As a result, the Pet Care goodwill is included
in Corporate in the preceding table as of June 30, 2013. Pet
Care goodwill and intangible assets at June 30, 2014 were
reported in Assets held for sale in accordance with the
accounting principles for discontinued operations. The
remaining change in goodwill during fiscal 2014 was primarily
due to currency translation across all reportable segments.
All of the goodwill and indefinite-lived intangible asset
impairment charges that are not reflected in discontinued
operations are included in Corporate for segment reporting.
The goodwill and intangible asset valuations are dependent on
a number of significant estimates and assumptions, including
macroeconomic conditions, overall category growth rates,
competitive activities, cost containment and margin expansion
and Company business plans. e believe these estimates and
assumptions are reasonable and are comparable to those that
would be used by other marketplace participants. However,
actual events and results could differ substantially from those
used in our valuations. To the extent such factors result in a
failure to achieve the level of projected cash flows used to
estimate fair value, we may need to record additional non-cash
impairment charges in the future. e also considered the
structure and value of the divestiture agreement with H in the
impairment testing for atteries. If the value of Hs shares
of the Company declines further before the transaction closing
date, we may need to record additional non-cash impairment
charges as part of discontinued operations in the future.
Identifiable intangible assets were comprised of:
2015 2014
Years ended
une 0
Gross
Carring
Amount
Accumulated
Amortiation
Gross
Carring
Amount
Accumulated
Amortiation
INTANGIBLE ASSETS WITH DETERMINABLE
LIVES
rands  ,  2,200 $ 4,154 $ (2,205)
Patents and
technology 2,2 2,0 2,850 (2,082)
Customer
relationships 1,21 59 2,002 (763)
Other 0 15 355 (164)
TOTAL  ,2  5,051 $ 9,361 $ (5,214)
INTANGIBLE ASSETS WITH INDEFINITE LIVES
rands 2,4 26,696
TOTAL  1,0  5,051 $ 36,057 $ (5,214)
Due to the divestiture of the atteries and Pet Care businesses,
intangible assets specific to the atteries and Pet Care
businesses are reported in Assets held for sale in accordance
with the accounting principles for assets held for sale as of
June 30, 2015 and 2014.
Amortization expense of intangible assets was as follows:
Years ended une 0 2015 2014 201
Intangible asset amortization  45 $ 514 $ 528
Estimated amortization expense over the next five fiscal years
is as follows:
Years ending une 0 201 201 201 2019 2020
Estimated
amortization expense $ 388 $ 350 $ 322 $ 299 $ 271
These estimates do not reflect the impact of future foreign
exchange rate changes.