Goodwill and Intangible Assets

12 Months Ended

Apr. 30, 2020

Goodwill and Intangible Assets [Abstract]

Note 11 – Goodwill and Intangible Assets

Goodwill

The following table summarizes the activity in goodwill by segment as of April 30:

	2019		Acquisitions ⁽¹⁾		Impairment			Foreign Translation Adjustment			2020
Research Publishing & Platforms	$	438,511	$	19,356	$	—		$	(9,737	)	$	448,130
Academic & Professional Learning		458,145		45,410		—			(2,464	)		501,091
Education Services		199,010		82,561		(110,000	)		(4,002	)		167,569
Total	$	1,095,666	$	147,327	$	(110,000	)	$	(16,203	)	$	1,116,790

⁽¹⁾	Refer to Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements for more information related to the acquisitions that occurred in the year ended April 30, 2020.

Change in Segment Reporting Structure

As previously announced, we have changed our segment reporting structure to align with our strategic focus areas. See Note 20, “Segment Information,” for more details. Due to this reorganization, we have reallocated goodwill as of April 30, 2019 to our reporting units using a relative fair value approach. We tested goodwill for impairment immediately before and after the reorganization, and we concluded that the fair values of the reporting units were above their carrying values and, therefore, there was no indication of impairment.

Annual Goodwill Impairment Test as of February 1, 2020

As of February 1, 2020, we completed our annual goodwill impairment test for our reporting units. We concluded that the fair values of our Research Publishing & Platforms and Academic & Professional Learning reporting units were above their carrying values and, therefore, there was no indication of impairment.

During our annual goodwill impairment test initiated on February 1, 2020 we identified indicators that the goodwill of the Education Services business was impaired due to underperformance as compared with our acquisition case projections for revenue growth and operating cash flow. Subsequently, during the fourth quarter of fiscal year 2020, we determined that our updated revenue and operating cash flow projections would be further impacted by anticipated near-term headwinds due to COVID-19, including adverse impacts on new student starts and student re-enrollment. Therefore, we updated the impairment test as of March 31, 2020 to reflect this change in circumstances. As a result, we concluded that the carrying value was above the fair value which resulted in a pre-tax non-cash goodwill impairment of $110.0 million. This charge is reflected in Impairment of Goodwill and Intangible Assets in the Consolidated Statements of (Loss) Income.

Prior to performing the goodwill impairment test for Education Services, we also evaluated the recoverability of long-lived assets of the reporting unit. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the Education Services reporting unit exceeded the carrying value. Therefore, there was no impairment.

We estimated the fair value of these reporting units using a weighting of fair values derived from an income and a market approach. Under the income approach, we determined the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on our best estimates of forecasted economic and market conditions over the period including growth rates, expected changes in operating cash flows and cash expenditures. The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market approach estimates fair value based on market multiples of current and forward 12-month revenue or EBITDA, as applicable, derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

As noted above, the fair value determined as part of the annual goodwill impairment test completed in the fourth quarter of 2020 exceeded the carrying value for the Research Publishing & Platforms and Academic & Professional Learning reporting units. Therefore, there was no impairment of goodwill. However, if the fair value of the Research Publishing & Platforms and Academic & Professional Learning reporting units decrease in future periods, we could potentially have an impairment. For the Education Services reporting unit there was an impairment. If the Education Services reporting unit fair value decreases further in future periods, we could potentially have an additional impairment. The future occurrence of a potential indicator of impairment, such as a decrease in expected net earnings, changes in assumptions, including the impact of COVID-19, adverse equity market conditions, a decline in current market multiples, a decline in our common stock price, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual assessment.

Intangible Assets

Intangible assets, net as of April 30 were as follows:

	2020										2019
	Cost		Accumulated Amortization			Accumulated Impairment			Net		Cost		Accumulated Amortization			Accumulated Impairment			Net
Intangible Assets with Definite Lives, net
Content and Publishing Rights	$	806,862	$	(444,756	)	$	—		$	362,106	$	806,628	$	(417,456	)	$	—		$	389,172
Customer Relationships		377,652		(87,234	)		—			290,418		310,977		(65,147	)		—			245,830
Developed Technology		19,225		(3,273	)		(2,841	)		13,111		—		—			—			—
Brands and Trademarks		42,877		(22,689	)		—			20,188		32,802		(19,809	)		—			12,993
Covenants not to Compete		1,675		(1,429	)		—			246		1,681		(1,236	)		—			445
Total ⁽¹⁾		1,248,291		(559,381	)		(2,841	)		686,069		1,152,088		(503,648	)		—			648,440
Intangible Assets with Indefinite Lives
Brands and Trademarks		130,107		—			(93,107	)		37,000		134,509		—			(3,600	)		130,909
Publishing Rights		84,336		—			—			84,336		86,223		—			—			86,223
Total		214,443		—			(93,107	)		121,336		220,732		—			(3,600	)		217,132
Total Intangible Assets, Net	$	1,462,734	$	(559,381	)	$	(95,948	)	$	807,405	$	1,372,820	$	(503,648	)	$	(3,600	)	$	865,572

⁽¹⁾	Refer to Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements for more information related to the acquisitions that occurred in 2020 and 2019.

Based on the current amount of intangible assets subject to amortization and assuming current foreign exchange rates, the estimated amortization expense for the following years are as follows:

Fiscal Year	Amount
2021	$	65,570
2022		59,748
2023		53,796
2024		50,554
2025		46,364
Thereafter		410,037
Total	$	686,069

Fiscal Year 2020 Impairment

Annual Indefinite Lived Intangibles Impairment Test as of February 1, 2020

We also review our indefinite-lived intangible assets for impairment annually, which consists of brands and trademarks and certain acquired publishing rights. During the fourth quarter of 2020, we completed our annual impairment test related to the indefinite lived intangible assets. We concluded that the fair values of these indefinite-lived intangible assets were above their carrying values and, therefore, there was no indication of impairment, except for the Blackwell indefinite-lived trademark.

For the year ended April 30, 2020, we recorded a pre-tax non-cash impairment charge of $89.5 million for our Blackwell trademark, which was acquired in 2007 and carried as an indefinite-lived intangible asset primarily related to our Research Publishing & Platforms segment. The impairment reflects our decision to simplify Wiley’s brand portfolio and unify our research journal content under one Wiley brand, which will sharply limit the use of the Blackwell trade name. This impairment resulted in writing off substantially all of the carrying value of the intangible trademark asset. This charge is reflected in Impairment of Goodwill and Intangible Assets in the Consolidated Statements of (Loss) Income. The resulting non-cash impairment charge is entirely unrelated to COVID-19 or the expected future financial performance of the Research Publishing & Platforms segment.

Intangible Assets with Definite Lives

As a result of our decision to discontinue the use of certain technology offerings within the Research Publishing & Platforms segment, we recorded a pre-tax non-cash impairment charge of $2.8 million related to a certain developed technology intangible. This charge was included in Impairment of Goodwill and Intangible Assets on the Consolidated Statements of (Loss) Income.

Fiscal Year 2018 Impairment

In conjunction with a business review performed in the Academic & Professional Learning segment associated with the restructuring activities in the first quarter of the year ended April 30, 2018 we identified an indefinite-lived brand with forecasted cash flows that did not exceed its carrying value. As a result, a pre-tax impairment charge of $3.6 million was recorded in the first quarter of the year ended April 30, 2018 to reduce the carrying value of the brand to its fair value of $1.2 million, which will now be amortized over an estimated useful life of 5 years. This impairment charge was included in Impairment of Goodwill and Intangible Assets on the Consolidated Statements of (Loss) Income.