Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

11.

Goodwill and Other Intangibles

We recognized goodwill and certain other intangible assets on our consolidated balance sheet as a result of the acquisition of:

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certain assets and liabilities of CompetenC Solutions, Inc and Great Equalizer, Inc. on January 31, 2014;

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the membership interests of Cable Holdings, Inc. on August 1, 2013; and

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all the assets and certain liabilities of Daniel Webster College on June 10, 2009.

The acquired intangible assets consist of certain identifiable intangible assets that are amortized over the asset’s estimated life, and other indefinite-lived intangible assets, including goodwill. Goodwill represents the excess of the consideration paid over the estimated fair value of identifiable net assets acquired.

The following tables set forth the carrying value of our acquired intangible assets that are included in Other assets on our Consolidated Balance Sheets as of the dates indicated:


	As of December 31, 2014
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Amorti- zation Period (months)
Amortizable intangible assets:
Customer relationships	$	2,500	$	(578	)	$	1,922		60
Non-compete agreements		1,120		(280	)		840		60
Training materials		440		(178	)		262		42
Accreditation		210		(165	)		45		84

	$	4,270	$	(1,201	)	$	3,069


	As of December 31, 2013
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Amorti- zation Period (months)
Amortizable intangible assets:
Customer relationships	$	1,200	$	(100	)	$	1,100		60
Non-compete agreements		750		(63	)		687		60
Training materials		440		(52	)		388		42
Accreditation		210		(135	)		75		84

	$	2,600	$	(350	)	$	2,250

All amortizable intangible assets are being amortized on a straight-line basis. Amortization expense for amortized intangible assets was:

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$851 in the year ended December 31, 2014;

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$245 in the year ended December 31, 2013; and

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$30 in the year ended December 31, 2012.

The following table sets forth our estimate of the amortization expense for our amortizable intangible assets in each of the next five fiscal years:


Fiscal Year Ending December 31,	Estimated Amortization Expense
2015	$	880
2016		865
2017		734
2018		562
2019		28

	$	3,069

The following tables set forth the carrying value of our indefinite-lived intangible assets that are included in Other assets on our Consolidated Balance Sheets as of the dates indicated.


	As of December 31, 2014
	Gross Carrying Value		Impairment Charge			New Carrying Value
Indefinite-lived intangible assets:
Goodwill	$	7,290	$	(2,044	)	$	5,246
Trademark		660		(410	)		250

	$	7,950	$	(2,454	)	$	5,496


	As of December 31, 2013
	Gross Carrying Value		Impairment Charge		New Carrying Value
Indefinite-lived intangible assets:
Goodwill	$	3,958	$	0	$	3,958
Trademark		660		0		660

	$	4,618	$	0	$	4,618

Indefinite-lived intangible assets include trademarks and goodwill, which are not amortized, since there are no legal, regulatory, contractual, economic or other factors that limit the useful life of those intangible assets by us.

Intangible assets that are not subject to amortization are required to be tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. We perform our impairment evaluation annually, during the fourth quarter, or more frequently if facts and circumstances warrant. All of our goodwill relates to one reporting unit, which is defined as one level below an operating segment.

We performed our annual impairment test as of October 1, 2014 and determined that certain of our indefinite-lived intangible assets were impaired, because the carrying values of those assets exceeded their estimated fair value. In the fourth quarter of 2014, we recorded a $2,044 charge for the impairment of goodwill associated with the acquisitions of Cable Holdings and Ascolta and a $410 charge for the impairment of the trademark associated with the acquisition of Daniel Webster College. The amount of each impairment charge equaled the difference between the estimated fair value and the carrying value of the applicable assets. The goodwill impairment was due to a decrease in the fair value of the forecasted cash flows, primarily resulting from lower projected revenue and margins. The impairment of the trademark was due to a decrease in projected revenue.

To calculate the amount of the goodwill impairment charge, we estimated the fair value of the reporting unit using a discounted cash flow method. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and discounting these after-tax cash flows to a present value using a risk-adjusted discount rate. In applying this methodology to calculate the fair value of the reporting unit, we used assumptions about future revenue and costs. In addition, the application of the discounted cash flow method requires judgment in determining a risk-adjusted discount rate. We considered the report of a third-party valuation firm in determining the risk-adjusted discount rate used for the valuation. The estimated fair value of the reporting unit is allocated to all of its assets and liabilities, including certain unrecognized intangible assets, in order to determine the implied fair value of the goodwill. This allocation process required judgment and the use of additional valuation assumptions in determining the individual fair values of the assets and liabilities of the reporting unit. To calculate the amount of the trademark impairment charge, we estimated the fair value of the trademark using a discounted cash flow method. In applying this methodology, we made certain assumptions about future revenue, royalty rates and the risk-adjusted discount rate.

The assumptions and estimates underlying the fair value calculations used in our annual impairment test are uncertain by their nature and can vary significantly from actual results. Therefore, as circumstances and assumptions change, we may be required to recognize additional impairment charges for goodwill and other intangible assets in future periods.

- 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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