Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets [Text Block]

8. GOODWILL AND OTHER INTANGIBLE ASSETS

The education division made several changes to its operating and reporting structure in the first quarter of 2011 and 2010, changing the composition of the reporting units within KTP, Kaplan Ventures and KHE (see Note 18). The changes resulted in the reassignment of the assets and liabilities to the reporting units affected. The goodwill was allocated to the reporting units affected using the relative fair value approach.

As a result of continued challenges in the lead generation industry, in both the third quarters of 2011 and 2010, the Company performed interim reviews of the carrying value of goodwill and other intangible asset at its online lead generation business, which is included within the other businesses segment. The business failed the step one goodwill impairment tests and the Company performed a step two analysis, resulting in an $11.9 million and a $27.5 million goodwill and other intangible assets impairment charge in the third quarters of 2011 and 2010, respectively. The Company estimated the fair value utilizing a discounted cash flow model.

The education division reorganized its operations in the third quarter of 2009 into the following four operating segments for the purpose of making operating decisions and assessing performance: KHE, KTP, Kaplan International and Kaplan Ventures. The reorganization changed the composition of the reporting units within the education division and resulted in the reassignment of the assets and liabilities. The goodwill was allocated to the reporting units using the relative fair value approach. As a result of the reassignment and allocation, the Company performed an interim review of the carrying value of goodwill at the education division for possible impairment on both a prereorganization and postreorganization basis. No impairment of goodwill was indicated at the prereorganization reporting units. On a postreorganization basis, the Company failed the step one goodwill impairment test at Kaplan EduNeering and KCS and performed a step two analysis. The Company recorded a goodwill and other long-lived asset impairment charge of $25.4 million related to these two reporting units in 2009. The fair value of Kaplan EduNeering was determined utilizing a discounted cash flow model; the fair value of KCS was determined using a cost approach. Of the $25.4 million goodwill and other long-lived asset impairment charge, $16.9 million related to KCS and is included in “Loss from discontinued operation, net of tax” in the Company's Consolidated Statements of Operations.

Amortization of intangible assets is estimated to be approximately $15 million in 2012, $12 million in 2013, $9 million in 2014, $8 million in 2015, $5 million in 2016 and $6 million thereafter.

The changes in the carrying amount of goodwill related to continuing operations, by segment, during 2011 and 2010 were as follows:


				Cable		Newspaper		Television		Other
(in thousands)		Education		Television		Publishing		Broadcasting		Businesses		Total
Balance as of January 3, 2010
	Goodwill	$	1,073,852	$	85,488	$	81,186	$	203,165	$	97,342	$	1,541,033
	Accumulated impairment losses		(15,529)		―		(65,772)		―		(60,785)		(142,086)
			1,058,323		85,488		15,414		203,165		36,557		1,398,947
Acquisitions			4,200		―		―		―		2,810		7,010
Impairment			―		―		―		―		(24,634)		(24,634)
Dispositions			(19,851)		―		―		―		―		(19,851)
Foreign currency exchange rate changes and other			14,888		―		(3)		―		―		14,885
Balance as of January 2, 2011
	Goodwill		1,073,089		85,488		81,183		203,165		100,152		1,543,077
	Accumulated impairment losses		(15,529)		―		(65,772)		―		(85,419)		(166,720)
			1,057,560		85,488		15,411		203,165		14,733		1,376,357
Acquisitions			78,643		―		―		―		―		78,643
Impairment			―		―		―		―		(11,923)		(11,923)
Dispositions			(21,144)		―		―		―		―		(21,144)
Foreign currency exchange rate changes and other			(6,936)		―		―		―		―		(6,936)
Balance as of December 31, 2011
	Goodwill		1,116,615		85,488		81,183		203,165		100,152		1,586,603
	Accumulated impairment losses		(8,492)		―		(65,772)		―		(97,342)		(171,606)
		$	1,108,123	$	85,488	$	15,411	$	203,165	$	2,810	$	1,414,997

The changes in carrying amount of goodwill at the Company's education division for 2011 and 2010 were as follows:


		Higher		Test		Kaplan		Kaplan
(in thousands)		Education		Preparation		International		Ventures		Total
Balance as of January 3, 2010
	Goodwill	$	335,226	$	236,779	$	432,973	$	68,874	$	1,073,852
	Accumulated impairment losses		―		―		―		(15,529)		(15,529)
			335,226		236,779		432,973		53,345		1,058,323
Reallocation, net			―		(14,534)		―		14,534		―
Acquisitions			―		―		201		3,999		4,200
Dispositions			―		―		―		(19,851)		(19,851)
Foreign currency exchange rate changes and other			―		204		11,766		2,918		14,888
Balance as of January 2, 2011
	Goodwill		335,226		229,486		444,940		63,437		1,073,089
	Accumulated impairment losses		―		(7,037)		―		(8,492)		(15,529)
			335,226		222,449		444,940		54,945		1,057,560
Reallocation, net			91,043		(70,262)		―		(20,781)		―
Acquisitions			422		―		74,803		3,418		78,643
Dispositions			(17,479)		―		―		(3,665)		(21,144)
Foreign currency exchange rate changes and other			(84)		―		(3,807)		(3,045)		(6,936)
Balance as of December 31, 2011
	Goodwill		409,128		152,187		515,936		39,364		1,116,615
	Accumulated impairment losses		―		―		―		(8,492)		(8,492)
		$	409,128	$	152,187	$	515,936	$	30,872	$	1,108,123

Other intangible assets consist of the following:


			As of December 31, 2011						As of January 2, 2011
			Gross				Net		Gross				Net
		Useful Life	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
(in thousands)		Range	Amount		Amortization		Amount		Amount		Amortization		Amount
Amortized intangible assets
	Noncompete agreements	2 – 5 years	$	14,493	$	10,764	$	3,729	$	43,940	$	33,570	$	10,370
	Student and customer relationships	2 – 10 years		75,734		47,888		27,846		66,510		41,958		24,552
	Databases and technology	3 – 5 years		10,514		8,159		2,355		10,514		2,921		7,593
	Trade names and trademarks	2 – 10 years		36,222		18,936		17,286		29,053		15,330		13,723
	Other	1 – 25 years		9,971		6,565		3,406		11,502		6,498		5,004
			$	146,934	$	92,312	$	54,622	$	161,519	$	100,277	$	61,242
Indefinite-lived intangible assets
	Franchise agreements		$	496,321					$	496,166
	Wireless licenses			22,150						22,150
	Licensure and accreditation			7,862						7,877
	Other			4,308						4,623
			$	530,641					$	530,816

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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