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INTANGIBLE ASSETS | 3 Months Ended
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Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract] |
INTANGIBLE ASSETS | NOTE 8: INTANGIBLE ASSETS Intangible assets relate mainly to acquired business operations. These assets consist of the acquisition fair value of certain identifiable intangible assets acquired and goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Intangible assets consist of the following (in thousands):
|  | As of September 30, 2016 |  |  |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Weighted Average Amortization Period
Amortizable Intangible Assets: |  |  |  |  |  |  |  |  |  |
Student Relationships |  | $ | 14,333 |  |  | $ | (8,107 | ) |  | 5 Years
Customer Relationships |  |  | 42,900 |  |  |  | (1,367 | ) |  | 10 Years
Non-compete Agreements |  |  | 1,640 |  |  |  | (1,012 | ) |  | 3 Years
Curriculum/Software |  |  | 8,151 |  |  |  | (1,635 | ) |  | 4 Years
Franchise Contracts |  |  | 10,818 |  |  |  | (1,002 | ) |  | 18 Years
Clinical Agreements |  |  | 401 |  |  |  | (87 | ) |  | 15 Years
Trade Names |  |  | 1,167 |  |  |  | (875 | ) |  | 10 Years
Proprietary Technology |  |  | 500 |  |  |  | (31 | ) |  | 4 Years
Total |  | $ | 79,910 |  |  | $ | (14,116 | ) |  |
Indefinite-lived Intangible Assets: |  |  |  |  |  |  |  |  |  |
Trade Names |  | $ | 110,162 |  |  |  |  |  |  |
Trademarks |  |  | 1,645 |  |  |  |  |  |  |
Ross Title IV Eligibility and Accreditations |  |  | 14,100 |  |  |  |  |  |  |
Intellectual Property |  |  | 13,940 |  |  |  |  |  |  |
Chamberlain Title IV Eligibility and Accreditations |  |  | 1,200 |  |  |  |  |  |  |
Carrington Title IV Eligibility and Accreditations |  |  | 20,200 |  |  |  |  |  |  |
AUC Title IV Eligibility and Accreditations |  |  | 100,000 |  |  |  |  |  |  |
DeVry Brasil Accreditation |  |  | 99,048 |  |  |  |  |  |  |
Total |  | $ | 360,295 |  |  |  |  |  |  |
|  | As of September 30, 2015 |  |  |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  |
Amortizable Intangible Assets: |  |  |  |  |  |  |  |  |  |
Student Relationships |  | $ | 6,111 |  |  | $ | (3,360 | ) |  |
Customer Relationships |  |  | 400 |  |  |  | (140 | ) |  |
Test Prep Relationships |  |  | 808 |  |  |  | (539 | ) |  |
Non-compete Agreements |  |  | 940 |  |  |  | (658 | ) |  |
Curriculum/Software |  |  | 1,922 |  |  |  | (1,506 | ) |  |
Outplacement Relationships |  |  | 3,900 |  |  |  | (1,829 | ) |  |
Franchise Contracts |  |  | 8,864 |  |  |  | (328 | ) |  |
Clinical Agreements |  |  | 328 |  |  |  | (49 | ) |  |
Trade Names |  |  | 957 |  |  |  | (622 | ) |  |
Total |  | $ | 24,230 |  |  | $ | (9,031 | ) |  |
Indefinite-lived Intangible Assets: |  |  |  |  |  |  |  |  |  |
Trade Names |  | $ | 45,566 |  |  |  |  |  |  |
Trademarks |  |  | 1,645 |  |  |  |  |  |  |
Ross Title IV Eligibility and Accreditations |  |  | 14,100 |  |  |  |  |  |  |
Intellectual Property |  |  | 13,940 |  |  |  |  |  |  |
Chamberlain Title IV Eligibility and Accreditations |  |  | 1,200 |  |  |  |  |  |  |
Carrington Title IV Eligibility and Accreditations |  |  | 67,200 |  |  |  |  |  |  |
AUC Title IV Eligibility and Accreditations |  |  | 100,000 |  |  |  |  |  |  |
DeVry Brasil Accreditation |  |  | 45,291 |  |  |  |  |  |  |
Total |  | $ | 288,942 |  |  |  |  |  |  |
Amortization expense for amortized intangible assets was $3.3 million and $1.2 million for the three months ended September 30, 2016 and 2015, respectively. Estimated amortization expense for amortizable intangible assets for the next five fiscal years ending June 30 and in the aggregate, by reporting unit, is as follows (in thousands):
Fiscal Year |  | DeVry Brasil |  |  | Becker |  |  | Total |
2017 |  | $ | 4,704 |  |  | $ | 7,482 |  |  | $ | 12,186 |
2018 |  |  | 3,281 |  |  |  | 6,501 |  |  |  | 9,782 |
2019 |  |  | 2,259 |  |  |  | 6,422 |  |  |  | 8,681 |
2020 |  |  | 1,529 |  |  |  | 4,671 |  |  |  | 6,200 |
2021 |  |  | 933 |  |  |  | 4,440 |  |  |  | 5,373 |
Thereafter |  |  | 7,149 |  |  |  | 19,686 |  |  |  | 26,835 |
All amortizable intangible assets except student relationships and customer relationships are being amortized on a straight-line basis. The amount being amortized for student relationships is based on the estimated progression of the students through the respective Faculdade Boa Viagem (“FBV”), Centro Universitário Vale do Ipojuca (“Unifavip”), Damásio Educacional (“Damasio”) and Grupo Ibmec programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. The amount being amortized for customer relationships related to ACAMS is based on the estimated retention of the customers, giving consideration to the revenue and cash flow associated with these existing customers. Indefinite-lived intangible assets related to trademarks, trade names, Title IV eligibility, accreditations and intellectual property are not amortized, as there are no legal, regulatory, contractual, economic or other factors that limit the useful life of these intangible assets to the reporting entity. In accordance with GAAP, goodwill and indefinite-lived intangibles arising from a business combination are not amortized and charged to expense over time. Instead, these assets must be reviewed annually for impairment or more frequently if circumstances arise indicating potential impairment. DeVry Group’s annual impairment review was most recently completed during the fourth quarter of fiscal year 2016, at which time there were impairment losses recorded related to Carrington goodwill and the Carrington Accreditation and Title IV Eligibility indefinite-lived intangible asset totaling $48.2 million. No impairment loss associated with recorded goodwill or indefinite-lived intangible assets for any other reporting unit was realized as estimated fair values exceeded carrying amounts. DeVry Group had six reporting units which contained goodwill as of the first quarter of fiscal year 2017. These reporting units constitute components for which discrete financial information is available and regularly reviewed by segment management. If the carrying amount of a reporting unit containing the goodwill exceeds the fair value of that reporting unit, an impairment loss is recognized to the extent the “implied fair value” of the reporting unit goodwill is less than the carrying amount of the goodwill. In analyzing the results of operations and business conditions of all six reporting units as of September 30, 2016, it was determined that no triggering event had occurred that would indicate the carrying value of a reporting unit had exceeded its fair value. For indefinite-lived intangible assets, management first analyzes qualitative factors including results of operations and business conditions of the seven reporting units that contained indefinite-lived intangible assets, significant changes in cash flows at the individual indefinite-lived intangible asset level, if applicable, as well as how much previously calculated fair values exceed carrying values to determine if it is more likely than not that the intangible assets associated with these reporting units have been impaired. Based on its analysis, management has determined that, as of September 2016, no triggering event had occurred that would indicate the carrying value of an indefinite-lived intangible asset had exceeded its fair value. These interim triggering event conclusions were based on the fact that the qualitative analysis of DeVry Group’s reporting units and indefinite-lived intangible assets resulted in no impairment indicators as of the end of fiscal year 2016, except at the Carrington and DeVry University reporting units, and that no interim events or deviations from planned operating results occurred as of September 30, 2016, that would cause management to reassess these conclusions. In regards to Carrington, first quarter of fiscal year 2017 revenue and operating income was better than those projected in the fiscal year 2017 operating plan which was used in the May 31, 2016 impairment analysis; thus, management believes that no indicator of further impairment currently exists with this reporting unit. Should declines in student enrollment at Carrington result in financial performance that is significantly below management expectations, the carrying value of this reporting unit may exceed its fair value and indefinite-lived intangible assets could be impaired. This could require a write-off of up to $20.2 million. Although the DeVry University reporting unit experienced a 24.2% decline in revenue as compared to the year-ago quarter and generated an operating loss (as planned) in the first quarter of fiscal year 2017, this reporting unit is expected to meet planned positive operating results for fiscal year 2017. As a result, management did not believe business conditions had deteriorated such that it was more likely than not that the fair value of DeVry University was below carrying value for this reporting unit or its associated indefinite-lived intangible assets as of September 30, 2016. Based on the May 31, 2016 impairment review, DeVry University’s current and forecasted profitability is sufficient to maintain a fair value greater than its carrying value. The fair value of this reporting unit exceeded its carrying value by 6% as of the May 31, 2016 valuation date. DeVry University has been able to adjust operating expenses to offset in excess of 90% of the revenue declines experienced over the last two years. This has resulted in positive cash flows sufficient to produce a fair value in excess of the carrying value of this reporting unit. Management monitors enrollment and financial performance of the reporting unit. Should management not be able to adjust costs to offset future declines in student enrollment and revenue, resulting in financial performance that is significantly below management expectations, the carrying value of this reporting unit may exceed its fair value, and goodwill and indefinite-lived intangible assets could be impaired. Also, regulatory changes and the outcome of legal or regulatory actions could have a material adverse effect on the financial condition, results of operations and cash flows of DeVry University and impose significant restrictions on the ability of DeVry University to operate. These scenarios could require a write-off of up to $23.8 million of indefinite-lived intangible assets and goodwill. Operating income and cash flows at all other reporting units in the first quarter of fiscal year 2017 was not materially different from the budgeted amounts used in the impairment analysis as of May 31, 2016; thus, management does not believe any of the reporting units or their associated indefinite-lived intangible assets fair values would have declined enough to fall below the carrying values as of September 30, 2016. Determining the fair value of a reporting unit or an intangible asset involves the use of significant estimates and assumptions. Management bases its fair value estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates which could lead to additional impairments of intangible assets. At September 30, 2016, intangible assets from business combinations totaled $426.1 million and goodwill totaled $854.2 million. Together, these assets equaled approximately 55% of total assets as of such date, and any impairment could significantly affect future results of operations. The table below summarizes goodwill balances by reporting unit as of September 30, 2016 (in thousands):
Reporting Unit |  | As of September 30, 2016 |
American University of the Caribbean School of Medicine |  | $ | 68,321 |
Ross University School of Medicine and Ross University School of Veterinary Medicine |  |  | 237,173 |
Chamberlain College of Nursing |  |  | 4,716 |
DeVry Brasil |  |  | 215,140 |
Becker Professional Education |  |  | 306,642 |
DeVry University |  |  | 22,196 |
Total |  | $ | 854,188 |
The table below summarizes goodwill balances by reporting segment as of September 30, 2016 (in thousands):
Reporting Segment |  | As of September 30, 2016 |
Medical and Healthcare |  | $ | 310,210 |
International and Professional Education |  |  | 521,782 |
Business, Technology and Management |  |  | 22,196 |
Total |  | $ | 854,188 |
The table below summarizes the changes in the carrying amount of goodwill by segment as of September 30, 2016 (in thousands):
|  | Medical and Healthcare |  |  | International |  |  | Business, |  |  |  |
|  |  |  |  | Accumulated |  |  | and |  |  | Technology |  |  |  |
|  |  |  |  | Impairment |  |  | Professional |  |  | and |  |  |  |
|  | Gross |  |  | Losses |  |  | Education |  |  | Management |  |  | Total |
Balance at June 30, 2014 |  | $ | 495,927 |  |  | $ | (86,933 | ) |  | $ | 88,689 |  |  | $ | 22,196 |  |  | $ | 519,879 |
Acquisitions |  |  | - |  |  |  | - |  |  |  | 55,915 |  |  |  | - |  |  |  | 55,915 |
Foreign currency exchange rate changes |  |  | - |  |  |  | - |  |  |  | (23,465 | ) |  |  | - |  |  |  | (23,465 | )
Balance at June 30, 2015 |  |  | 495,927 |  |  |  | (86,933 | ) |  |  | 121,139 |  |  |  | 22,196 |  |  |  | 552,329 |
Foreign currency exchange rate changes |  |  | - |  |  |  | - |  |  |  | (19,150 | ) |  |  | - |  |  |  | (19,150 | )
Balance at September 30, 2015 |  |  | 495,927 |  |  |  | (86,933 | ) |  |  | 101,989 |  |  |  | 22,196 |  |  |  | 533,179 |
Purchase Accounting Adjustment |  |  | - |  |  |  | - |  |  |  | 4,575 |  |  |  | - |  |  |  | 4,575 |
Acquisitions |  |  | - |  |  |  | - |  |  |  | 116,007 |  |  |  | - |  |  |  | 116,007 |
Impairments |  |  | - |  |  |  | (98,784 | ) |  |  | - |  |  |  | - |  |  |  | (98,784 | )
Foreign currency exchange rate changes |  |  | - |  |  |  | - |  |  |  | 33,030 |  |  |  | - |  |  |  | 33,030 |
Balance at June 30, 2016 |  |  | 495,927 |  |  |  | (185,717 | ) |  |  | 255,601 |  |  |  | 22,196 |  |  |  | 588,007 |
Purchase Accounting Adjustment |  |  | - |  |  |  | - |  |  |  | (4,481 | ) |  |  | - |  |  |  | (4,481 | )
Acquisitions |  |  | - |  |  |  | - |  |  |  | 274,672 |  |  |  | - |  |  |  | 274,672 |
Foreign currency exchange rate changes |  |  | - |  |  |  | - |  |  |  | (4,010 | ) |  |  | - |  |  |  | (4,010 | )
Balance at September 30, 2016 |  | $ | 495,927 |  |  | $ | (185,717 | ) |  | $ | 521,782 |  |  | $ | 22,196 |  |  | $ | 854,188 |
The increase in the goodwill balance from June 30, 2016 in the International and Professional Education segment is the result of the addition of $274.7 million with the acquisition of ACAMS. The increase was partially offset by a change in the value of the Brazilian Real as compared to the U.S. dollar. Since DeVry Brasil goodwill is recorded in local currency, fluctuations in the respective local currency’s value in relation to the U.S. dollar will cause changes in the balance of this asset. The table below summarizes the indefinite-lived intangible asset balances by reporting segment as of September 30, 2016 (in thousands):
Reporting Segment |  | As of September 30, 2016 |
Medical and Healthcare |  | $ | 157,700 |
International and Professional Educational |  |  | 200,950 |
Business, Technology and Management |  |  | 1,645 |
Total |  | $ | 360,295 |
Total indefinite-lived intangible assets increased by $38.1 million from June 30, 2016. The increase is the result of the addition of $39.9 million with the acquisition of ACAMS. This increase was partially offset by a change in the value of the Brazilian Real as compared to the U.S. dollar. Since DeVry Brasil intangible assets are recorded in the local Brazilian currency, fluctuations in the value of the Brazilian Real in relation to the U.S. dollar will cause changes in the balance of these assets.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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