Goodwill and Intangibles

12 Months Ended

Aug. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

The following details changes in the carrying amount of our goodwill by reportable segment during fiscal years 2014 and 2013:



	University of Phoenix		Apollo Global		Other		Total
($ in thousands)	University of Phoenix		Apollo Global		Other		Total
Goodwill as of August 31, 2012	$	71,812	$	14,642	$	16,891	$	103,345
Currency translation adjustment	—		275		—		275
Goodwill as of August 31, 2013	71,812		14,917		16,891		103,620
Acquisitions⁽¹⁾	—		149,883		—		149,883
Currency translation adjustment	—		6,398		—		6,398
Goodwill as of August 31, 2014	$	71,812	$	171,198	$	16,891	$	259,901

⁽¹⁾Represents goodwill acquired in the Milpark Education and Open Colleges acquisitions. Refer to Note 4, Acquisitions.

The following presents the components of the net carrying amount of our goodwill by reportable segment as of August 31, 2014 and 2013:



	University of Phoenix		Apollo Global⁽¹⁾			Other			Total
($ in thousands)	University of Phoenix		Apollo Global⁽¹⁾			Other			Total
Gross carrying amount⁽¹⁾	$	71,812	$	177,068		$	37,096		$	285,976
Accumulated impairments⁽¹⁾	—		(8,712		)	(20,205		)	(28,917		)
Foreign currency translation	—		2,842			—			2,842
Net carrying amount at August 31, 2014	$	71,812	$	171,198		$	16,891		$	259,901



	University of Phoenix		Apollo Global⁽¹⁾			Other			Total
($ in thousands)	University of Phoenix		Apollo Global⁽¹⁾			Other			Total
Gross carrying amount⁽¹⁾	$	71,812	$	27,185		$	37,096		$	136,093
Accumulated impairments⁽¹⁾	—		(8,712		)	(20,205		)	(28,917		)
Foreign currency translation	—		(3,556		)	—			(3,556		)
Net carrying amount at August 31, 2013	$	71,812	$	14,917		$	16,891		$	103,620

⁽¹⁾We have also recorded $366 million of accumulated impairments associated with our BPP and UNIACC reporting units, both of which did not have any goodwill as of August 31, 2014 and 2013.

Intangible assets consist of the following as of August 31:



	2014										2013
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount
Software and technology	$	42,389	$	(25,151	)	$	—		$	17,238	$	42,389	$	(16,673	)	$	—		$	25,716
Accreditations and designations⁽¹⁾	21,628		(3,015		)	1,000			19,613		—		—			—			—
Trademarks⁽¹⁾	17,919		(1,238		)	907			17,588		—		—			—			—
Curriculum⁽¹⁾	16,993		(2,933		)	826			14,886		—		—			—			—
Student and customer relationships⁽¹⁾	15,934		(9,780		)	(1,161		)	4,993		12,026		(7,727		)	(1,363		)	2,936
Other⁽¹⁾	20,891		(19,909		)	(611		)	371		20,891		(18,706		)	(777		)	1,408
Total finite-lived intangibles	135,754		(62,026		)	961			74,689		75,306		(43,106		)	(2,140		)	30,060
Trademarks⁽¹⁾	106,514		—			(68		)	106,446		100,736		—			(5,347		)	95,389
Accreditations and designations⁽¹⁾	8,530		—			(300		)	8,230		7,260		—			(517		)	6,743
Total indefinite-lived intangibles	115,044		—			(368		)	114,676		107,996		—			(5,864		)	102,132
Total intangible assets, net	$	250,798	$	(62,026	)	$	593		$	189,365	$	183,302	$	(43,106	)	$	(8,004	)	$	132,192

⁽¹⁾We acquired certain intangibles during fiscal year 2014 as a result of our acquisitions. Refer to Note 4, Acquisitions.

Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the benefits of the asset are consumed. Amortization expense for intangibles for fiscal years 2014, 2013 and 2012 was $22.4 million, $15.1 million and $20.2 million, respectively. The weighted average original useful life of our finite-lived intangibles as of August 31, 2014 was 5.8 years and the estimated future amortization expense of our finite-lived intangibles is as follows:



($ in thousands)	2015		2016		2017		2018		2019		Thereafter		Total
University of Phoenix	$	8,478	$	8,478	$	282	$	—	$	—	$	—	$	17,238
Apollo Global	14,765		11,923		10,793		7,689		3,327		8,166		56,663
Other	764		24		—		—		—		—		788
Total estimated future amortization expense⁽¹⁾	$	24,007	$	20,425	$	11,075	$	7,689	$	3,327	$	8,166	$	74,689

⁽¹⁾The estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

We completed our fiscal year 2014 annual goodwill and indefinite-lived intangibles impairment tests, as applicable, for our reporting units on the following annual test dates and determined there was no impairment:


•	May 31: University of Phoenix, ULA, UNIACC, Carnegie Learning and Western International University;


•	July 1: Open Colleges, BPP and Milpark Education; and


•	August 31: College for Financial Planning.

During fiscal year 2012, UNIACC was advised by the National Accreditation Commission of Chile that its institutional accreditation would not be renewed and therefore had lapsed. The loss of accreditation reduced new enrollment in UNIACC’s degree programs. Accordingly, we revised our cash flow estimates and UNIACC’s $11.9 million of goodwill and $4.9 million of its intangibles were impaired. We did not record an income tax benefit associated with these charges as UNIACC’s goodwill and other intangibles are not deductible for tax purposes.

- 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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