Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

The change in the net carrying amount of Goodwill from December 31, 2019 through December 31, 2021 was composed of the following items:


	Mexico		Peru		Total


Balance at December 31, 2019	$	525,256	$	81,227	$	606,483





Currency translation adjustments	(25,006)		(6,645)		(31,651)

Balance at December 31, 2020	$	500,250	$	74,582	$	574,832




Currency translation adjustments	(21,027)		(7,010)		(28,037)

Balance at December 31, 2021	$	479,223	$	67,572	$	546,795

Tradenames and Other Intangible Assets

Amortization expense for intangible assets includes only the finite-lived tradename, as all other intangible assets subject to amortization were fully amortized as of December 31, 2021 and 2020. Amortization expense was $23,069, $7,583 and $0 for the years ended December 31, 2021, 2020 and 2019, respectively. The finite-lived tradename was fully amortized as of December 31, 2021. As such, the estimated future amortization expense for the finite-lived tradename for the years ending December 31, 2022 and beyond is $0.

The following table summarizes our identifiable intangible assets as of December 31, 2021:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period (Yrs)
Tradenames
Finite-lived tradename	$	30,652	$	(30,652)	$	—	—
Indefinite-lived tradenames	142,848		—		142,848		—
Total tradenames	173,500		(30,652)		142,848

Other intangible assets
Student rosters	19,231		(19,231)		—		—
Other	1,616		(1,616)		—		—
Total	$	194,347	$	(51,499)	$	142,848

The following table summarizes our identifiable intangible assets as of December 31, 2020:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period (Yrs)
Tradenames
Finite-lived tradename	$	82,088	$	(7,583)	$	74,505	4.8
Indefinite-lived tradenames	151,068		—		151,068		—
Total tradenames	233,156		(7,583)		225,573

Other intangible assets
Student rosters	20,239		(20,239)		—		—
Other	1,699		(1,699)		—		—
Total	$	255,094	$	(29,521)	$	225,573

Impairment Tests

The following table summarizes the Loss on impairment of assets:


For the years ended December 31,	2021		2020		2019







Impairments of Tradenames	$	51,437	$	320,000	$	—







Impairments of Goodwill	—		—		—
Impairments of long-lived assets and deferred costs	21,051		31,971		248
Total	$	72,488	$	351,971	$	248

We perform annual impairment tests of our non-amortizable intangible assets, which consist of goodwill and indefinite-lived tradenames, in the fourth quarter of each year. The impairment charges discussed below were recorded to reduce the assets' carrying values to fair value.

For the purposes of our annual impairment testing of the Company's goodwill, fair value measurements are determined primarily using the income approach, based largely on inputs that are not observable to active markets, which would be deemed “Level 3” fair value measurements as defined in Note 18, Fair Value Measurement. These inputs include our expectations about future revenue growth and profitability, marginal income tax rates by jurisdiction, and the discount rate. Where a market approach is used, the inputs also include publicly available data about our competitors' financial ratios and transactions.

For purposes of our annual impairment testing of the Company’s indefinite-lived tradenames, fair value measurements were determined using the income approach, based largely on inputs that are not observable to active markets, which would be

deemed “Level 3” fair value measurements as defined in Note 18, Fair Value Measurement. These inputs include our expectations about future revenue growth, marginal income tax rates by jurisdiction, the discount rate and the estimated royalty rate. We use publicly available information and proprietary third-party arm’s length agreements that Laureate has entered into with various licensors in determining certain assumptions to assist us in estimating fair value using market participant assumptions.

2021 Loss on Impairment of Assets

Impairment of Finite-Lived Tradename (Laureate Tradename)

During the first quarter of 2021, the Company recognized an impairment charge of approximately $51,400 on the Laureate tradename, a finite-lived intangible asset. In March 2021, the Company decided that, during 2021, it would wind down certain support functions related to the Laureate network and would no longer invest in and support the Laureate tradename beyond 2021. As a result, the Company tested the asset for impairment and estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated remaining useful life of the asset.

As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $51,400 and recorded an impairment charge for that amount. The significant assumptions used in estimating the fair value included: (1) the revenue growth rates and (2) the estimated royalty rates. The inputs used were not observable to active markets and are therefore deemed “Level 3” inputs in the fair value hierarchy. The decrease in the fair value of the tradename was attributable to the shortened duration of the estimated future revenues. The remaining carrying value of the tradename asset was fully amortized as of December 31, 2021.

2020 Loss on Impairment of Assets

Impairment of Finite-Lived Tradename (Laureate Tradename)

During the third quarter of 2020, the Company recognized an impairment charge of $320,000 on the Laureate tradename, an intangible asset. As described in Note 1, Description of Business, the Company had previously announced that it would explore strategic alternatives for each of its businesses, and, during the third quarter of 2020, the Company announced that it had completed a sale of its operations in Chile and that it had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University. Because of these events, the Company determined that the useful life of the Laureate tradename asset was no longer indefinite, and, in accordance with ASC 350-30-35-17, the Company tested the asset for impairment. The Company estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated period that each business would remain part of the Laureate network.

As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $320,000 and recorded an impairment charge for that amount. The significant assumptions used in estimating the fair value included: (1) the estimates of revenue projections, including the period of those projections; (2) the discount rates; and (3) the estimated royalty rate. The inputs used were not observable to active markets and are therefore deemed “Level 3” inputs in the fair value hierarchy. The decrease in the fair value of the tradename was primarily caused by the shortened duration of the estimated future revenues. As of December 31, 2020, the finite-lived Laureate tradename had a net carrying amount of $74,505 and was being amortized over five years.

Impairment of Brazil E2G Software Assets

As part of a transformation initiative for the enrollment to graduation cycle (E2G) that started several years ago, the Company began developing a solution to standardize the information systems and processes in Brazil. During development, those costs that qualified for capitalization as internal-use software were classified within Construction in-progress on our Consolidated Balance Sheets. In addition, a portion of the Brazil E2G project costs were deemed to be implementation costs of a hosting arrangement and were capitalized within Other assets on our Consolidated Balance Sheets. These capitalized costs were recorded on our Brazil and Corporate segments, as most of the Brazil E2G expenditures were made by Corporate. During the second quarter of 2020, the Company determined that it was no longer probable that the Brazil E2G project would be completed and placed into service, and that the likelihood that a potential buyer of the Brazil business would utilize this system was low due to its cost and associated complexities. As stated in ASC 350-40-35-3, there is a presumption that uncompleted software has a fair value of $0. Accordingly, during the second quarter of 2020, the Company recorded an impairment charge to fully write off the Brazil E2G project assets. Approximately $23,800 of the impairment charge was related to assets recorded on the Corporate segment and was therefore included in Continuing Operations. The remaining portion of the impairment charge, approximately $3,300, related to assets recorded on the Brazil segment and was therefore included in Discontinued Operations.