Estee Lauder 2009 Annual Report Download - page 131

130 THE EST{E LAUDER COMPANIES INC.
care product category and in the Europe, the Middle East
& Africa region. Due to the same factors, the Company
recorded other goodwill impairment charges of $1.8 mil-
lion, primarily in the skin care product category and in the
Americas region.
Other Intangible Assets
Other intangible assets include trademarks and patents,
as well as license agreements and other intangible assets
resulting from or related to businesses and assets pur-
chased by the Company. Indefi nite-lived intangible assets
(e.g., trademarks) are not subject to amortization and are
assessed at least annually for impairment during the fi scal
fourth quarter, or more frequently if certain events or
circumstances warrant. Other intangible assets (e.g.,
non-compete agreements, customer lists) are amortized
on a straight-line basis over their expected period of ben-
efi t, approximately 5 years to 14 years. Intangible assets
related to license agreements are amortized on a straight-
line basis over their useful lives based on the term of the
respective agreement, currently approximately 10 years.
Other intangible assets consist of the following:
During the third quarter of fi scal 2009, the Company
concluded that the Darphin reporting unit met certain
indicators triggering an interim impairment review of
goodwill and trademarks. Those indicators included a
decline in recent operating activities, restructuring
activities, revisions in internal forecasts and an application
of the Company’s continued decline in market capitaliza-
tion to this reporting unit. The Company performed an
interim impairment test for goodwill and trademarks as of
March 31, 2009 on this reporting unit. After adjusting
the carrying value of the trademark (see below), the
Company completed step one of the impairment test
for goodwill and concluded that the fair value of the
Darphin reporting unit was in excess of its carrying value
including goodwill.
During the fourth quarter of fi scal 2009, the Company
completed its annual goodwill impairment test and, due
to a continued decline in operating results during the
fourth quarter and additional revisions to internal fore-
casts, recorded a goodwill impairment charge related to
the Darphin reporting unit of $12.5 million at the
exchange rate in effect at that time, primarily in the skin
Goodwill
The Company assigns goodwill of a reporting unit to the product category in which that reporting unit predominantly
operates at the time of its acquisition. The change in the carrying amount of goodwill is as follows:
YEAR ENDED OR AT JUNE 30
2007 Additions Impairments Translation 2008 Additions Impairments Translation 2009
(In millions)
Skin Care $ 14.3 $ 5.7 $ — $2.4 $ 22.4 $42.6 $(14.3) $(1.5) $ 49.2
Makeup 245.8 5.9 — 0.7 252.4 6.1 — (0.4) 258.1
Fragrance 54.5 — — 0.4 54.9 0.1 — (0.3) 54.7
Hair Care 336.7 41.3 — 1.2 379.2 26.2 — (7.5) 397.9
Total $651.3 $52.9 $ — $4.7 $708.9 $75.0 $(14.3) $(9.7) $759.9
JUNE 30, 2009 JUNE 30, 2008
Gross Accumulated Total Net Gross Accumulated Total Net
Carrying Value Amortization Book Value Carrying Value Amortization Book Value
(In millions)
Amortizable intangible assets:
Customer lists and other $199.2 $115.9 $ 83.3 $184.5 $102.8 $ 81.7
License agreements 43.2 43.0 0.2 43.2 28.1 15.1
242.4 158.9 83.5 227.7 130.9 96.8
Non-amortizable intangible assets:
Trademarks and other 73.4 6.8 66.6 99.7 4.6 95.1
Total intangible assets $315.8 $165.7 $150.1 $327.4 $135.5 $191.9