Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

In the fourth quarter of 2016, as a result of the challenging industry operating environment and operating losses, one of the businesses in the other businesses segment recorded a goodwill impairment charge of $1.6 million.

In the third quarter of 2015, as a result of continued declines in student enrollments at KHE and the challenging industry operating environment, the Company performed an interim impairment review of its goodwill and long-lived assets at the KHE reporting unit. The KHE reporting unit failed the step one goodwill impairment test. As a result of the step two analysis, the Company recorded a $248.6 million goodwill impairment charge. The Company estimated the fair value of the KHE reporting unit utilizing a discounted cash flow model, supported by a market approach. A substantial portion of the impairment charge is due to the amount of unrecognized intangible assets identified in the step two analysis.

In addition, in the fourth quarter of 2015, Kaplan recorded intangible asset impairment charges of $0.9 million related to one of the Kaplan International businesses and $0.5 million related to a KTP business. The fair values of these intangible assets were estimated using an income approach. In November 2015, the Company announced that Trove, a digital innovation team included in other businesses, would largely be integrated into SocialCode and that Trove’s existing offerings would be discontinued. In connection with this action, the Company recorded a $2.8 million goodwill impairment charge in the fourth quarter of 2015.

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.

Amortization of intangible assets for the years ended December 31, 2016, 2015 and 2014, was $26.7 million, $19.0 million and $18.2 million, respectively. Amortization of intangible assets is estimated to be approximately $24 million in 2017, $21 million in 2018, $20 million in 2019, $16 million in 2020, $12 million in 2021 and $15 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. As a result of the Cable ONE spin-off, this gain is now reported in discontinued operations.

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



(in thousands)	Education			Cable			Television Broadcasting		Other Businesses			Total
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
Measurement period adjustment	—			—			—		4,570			4,570
Acquisitions	11,515			—			—		60,071			71,586
Impairment	(248,591		)	—			—		(2,810		)	(251,401		)
Dispositions	(33,502		)	(85,488		)	—		(7,819		)	(126,809		)
Foreign currency exchange rate changes	(29,143		)	—			—		—			(29,143		)
As of December 31, 2015
Goodwill	1,006,096			—			168,345		202,814			1,377,255
Accumulated impairment losses	(350,850		)	—			—		(8,892		)	(359,742		)
	655,246			—			168,345		193,922			1,017,513
Measurement period adjustment	(2,781		)	—			—		(17,243		)	(20,024		)
Acquisitions	161,938			—			—		22,180			184,118
Impairment	—			—			—		(1,603		)	(1,603		)
Dispositions	—			—			—		(2,800		)	(2,800		)
Foreign currency exchange rate changes	(54,250		)	—			—		—			(54,250		)
As of December 31, 2016
Goodwill	1,111,003			—			168,345		202,141			1,481,489
Accumulated impairment losses	(350,850		)	—			—		(7,685		)	(358,535		)
	$	760,153		$	—		$	168,345	$	194,456		$	1,122,954

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, 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
Acquisitions	11,515			—			—			11,515
Impairment	(248,591		)	—			—			(248,591		)
Dispositions	(28,738		)	—			(4,764		)	(33,502		)
Foreign currency exchange rate changes	(204		)	—			(28,939		)	(29,143		)
As of December 31, 2015
Goodwill	392,457			166,098			447,541			1,006,096
Accumulated impairment losses	(248,591		)	(102,259		)	—			(350,850		)
	143,866			63,839			447,541			655,246
Measurement period adjustment	(2,781		)	—			—			(2,781		)
Acquisitions	—			—			161,938			161,938
Foreign currency exchange rate changes	44			—			(54,294		)	(54,250		)
As of December 31, 2016
Goodwill	389,720			166,098			555,185			1,111,003
Accumulated impairment losses	(248,591		)	(102,259		)	—			(350,850		)
	$	141,129		$	63,839		$	555,185		$	760,153

Other intangible assets consist of the following:



		As of December 31, 2016						As of December 31, 2015
(in thousands)	Useful Life Range	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets
Student and customer relationships	2–10 years	$	129,616	$	55,863	$	73,753	$	108,806	$	40,280	$	68,526
Trade names and trademarks	2–10 years	55,240		29,670		25,570		53,848		23,941		29,907
Databases and technology	3–5 years	5,601		4,368		1,233		4,617		4,114		503
Noncompete agreements	2–5 years	1,730		1,404		326		1,381		1,012		369
Other	1–8 years	12,030		4,973		7,057		10,095		2,209		7,886
		$	204,217	$	96,278	$	107,939	$	178,747	$	71,556	$	107,191
Indefinite-Lived Intangible Assets
Trade names and trademarks		$	65,192					$	21,051
Licensure and accreditation		834						834
		$	66,026					$	21,885

- 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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