Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

In 2014, as a result of regulatory changes impacting Kaplan’s operations in China, Kaplan recorded an intangible asset impairment charge of $7.8 million, reported in discontinued operations. The Company estimated the fair value of the student and customer relationships using an income approach. In addition, Kaplan recorded intangible asset impairment charges of $1.8 million related to a KTP business, $1.1 million related to one of the Kaplan International businesses and $0.7 million related to KHE. The fair value of these intangible assets were estimated using an income approach. One of the businesses in the other businesses segment recorded an intangible asset impairment charge of $0.1 million.

In 2013, as a result of operating losses and restructuring activities at one of the Kaplan International businesses, Kaplan recorded an intangible and other long-lived assets impairment charge of $3.3 million. The Company estimated the fair value of the student and customer relationships and database and technology intangible assets using the excess earnings method, and the fair value of the trade name and trademarks using the relief from royalty method.

As part of the Company’s annual impairment review in 2012, the KTP reporting unit failed the step one goodwill impairment test, and, therefore, a step two analysis was performed. As a result of the step two analysis, the Company recorded a goodwill and other long-lived asset impairment charge of $111.6 million. The Company estimated the fair value utilizing a discounted cash flow model, supported by a market approach. The impairment charge was the result of a slowdown in enrollment growth at KTP, operating losses for the preceding three years and other factors. A substantial portion of the impairment charge was due to the amount of unrecognized intangible assets identified in the step two analysis.

Amortization of intangible assets for the years ended December 31, 2014, 2013 and 2012, was $18.4 million, $12.1 million and $19.5 million, respectively. Amortization of intangible assets is estimated to be approximately $19 million in 2015, $18 million in 2016, $14 million in 2017, $13 million in 2018, $12 million in 2019 and $21 million thereafter.

In July 2014, the cable division sold wireless spectrum licenses that were purchased in 2006; a pre-tax non-operating gain of $75.2 million was recorded in the third quarter of 2014 in connection with these sales.

The changes in the carrying amount of goodwill, by segment, were as follows:



(in thousands)	Education			Cable		Newspaper Publishing			Television Broadcasting			Other Businesses			Total
As of December 31, 2012
Goodwill	$	1,097,058		$	85,488	$	81,183		$	203,165		$	19,052		$	1,485,946
Accumulated impairment losses	(102,259		)	—		(65,772		)	—			—			(168,031		)
	994,799			85,488		15,411			203,165			19,052			1,317,915
Reallocation, net	—			—		(1,809		)	—			1,809			—
Acquisitions	—			—		—			—			7,934			7,934
Dispositions	—			—		(13,602		)	—			—			(13,602		)
Foreign currency exchange rate changes	(23,625		)	—		—			—			—			(23,625		)
As of December 31, 2013
Goodwill	1,073,433			85,488		—			203,165			34,877			1,396,963
Accumulated impairment losses	(102,259		)	—		—			—			(6,082		)	(108,341		)
	971,174			85,488		—			203,165			28,795			1,288,622
Acquisitions	14,963			—		—			2,841			111,115			128,919
Dispositions	(2,422		)	—		—			(37,661		)	—			(40,083		)
Reclassification to discontinued operations	(810		)	—		—			—			—			(810		)
Foreign currency exchange rate changes	(27,938		)	—		—			—			—			(27,938		)
As of December 31, 2014
Goodwill	1,057,226			85,488		—			168,345			145,992			1,457,051
Accumulated impairment losses	(102,259		)	—		—			—			(6,082		)	(108,341		)
	$	954,967		$	85,488	$	—		$	168,345		$	139,910		$	1,348,710

The changes in carrying amount of goodwill at the Company’s education division were as follows:



(in thousands)	Higher Education			Test Preparation			Kaplan International			Total
As of December 31, 2012
Goodwill	$	409,184		$	152,187		$	535,687		$	1,097,058
Accumulated impairment losses	—			(102,259		)	—			(102,259		)
	409,184			49,928			535,687			994,799
Foreign currency exchange rate changes	(168		)	—			(23,457		)	(23,625		)
As of December 31, 2013
Goodwill	409,016			152,187			512,230			1,073,433
Accumulated impairment losses	—			(102,259		)	—			(102,259		)
	409,016			49,928			512,230			971,174
Acquisitions	1,052			13,911			—			14,963
Dispositions	—			—			(2,422		)	(2,422		)
Reclassification to discontinued operations	—			—			(810		)	(810		)
Foreign currency exchange rate changes	(184		)	—			(27,754		)	(27,938		)
As of December 31, 2014
Goodwill	409,884			166,098			481,244			1,057,226
Accumulated impairment losses	—			(102,259		)	—			(102,259		)
	$	409,884		$	63,839		$	481,244		$	954,967

Other intangible assets consist of the following:



		As of December 31, 2014						As of December 31, 2013
(in thousands)	Useful Life Range	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets
Noncompete agreements	2–5 years	$	2,500	$	1,590	$	910	$	13,540	$	12,622	$	918
Student and customer relationships	2–10 years	104,685		47,539		57,146		72,050		45,718		26,332
Databases and technology	3–5 years	10,501		8,827		1,674		10,790		6,991		3,799
Trade names and trademarks	2–10 years	55,452		19,724		35,728		22,327		16,052		6,275
Other	1–25 years	8,969		7,480		1,489		9,836		7,572		2,264
		$	182,107	$	85,160	$	96,947	$	128,543	$	88,955	$	39,588
Indefinite-Lived Intangible Assets
Franchise agreements		$	496,321					$	496,321
Wireless licenses		—						22,150
Licensure and accreditation		6,781						7,171
Other		13,651						15,636
		$	516,753					$	541,278

- 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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