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Note 5 - Intangible Assets | 12 Months Ended
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Jan. 31, 2025
Notes to Financial Statements |
Goodwill and Intangible Assets Disclosure [Text Block] | (5) Intangible Assets Intangible assets consisted of the following (in thousands):
|  | January 31, 2025 |  |  | January 31, 2024 |
|  | Weighted Average Remaining Life |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |  |  | Weighted Average Remaining Life |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Developed software/courseware |  |  | 2.0 |  |  | $ | 365,108 |  |  | $ | 238,941 |  |  | $ | 126,167 |  |  |  | 2.7 |  |  | $ | 355,247 |  |  | $ | 172,578 |  |  | $ | 182,669 |
Customer contracts/relationships |  |  | 8.6 |  |  |  | 267,286 |  |  |  | 96,777 |  |  |  | 170,509 |  |  |  | 9.5 |  |  |  | 269,300 |  |  |  | 59,091 |  |  |  | 210,209 |
Trademarks and trade names |  |  | 11.5 |  |  |  | 52,378 |  |  |  | 10,161 |  |  |  | 42,217 |  |  |  | 12.4 |  |  |  | 52,863 |  |  |  | 6,184 |  |  |  | 46,679 |
Publishing rights |  |  | 1.4 |  |  |  | 41,100 |  |  |  | 29,889 |  |  |  | 11,211 |  |  |  | 2.4 |  |  |  | 41,100 |  |  |  | 21,668 |  |  |  | 19,432 |
Backlog |  |  | 0.9 |  |  |  | 49,700 |  |  |  | 49,128 |  |  |  | 572 |  |  |  | 1.9 |  |  |  | 49,700 |  |  |  | 45,941 |  |  |  | 3,759 |
Skillsoft trademark |  | Indefinite |  |  |  | 76,545 |  |  |  | — |  |  |  | 76,545 |  |  | Indefinite |  |  |  | 76,545 |  |  |  | — |  |  |  | 76,545 |
Total intangible assets |  |  |  |  |  | $ | 852,117 |  |  | $ | 424,896 |  |  | $ | 427,221 |  |  |  |  |  |  | $ | 844,755 |  |  | $ | 305,462 |  |  | $ | 539,293 |
The change in our goodwill balance is as follows (in thousands):
Description |  | TDS |  |  | GK |  |  | Consolidated |
Goodwill January 31, 2023 |  | $ | 417,340 |  |  | $ | 40,404 |  |  | $ | 457,744 |
Foreign currency translation adjustment |  |  | (541 | ) |  |  | 1,605 |  |  |  | 1,064 |
Impairment of goodwill |  |  | (129,149 | ) |  |  | (12,588 | ) |  |  | (141,737 | )
Goodwill January 31, 2024 |  |  | 287,650 |  |  |  | 29,421 |  |  |  | 317,071 |
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |
Impairment of goodwill |  |  | — |  |  |  | — |  |  |  | — |
Goodwill January 31, 2025 |  | $ | 287,650 |  |  | $ | 29,421 |  |  | $ | 317,071 |
Amortization expense related to the existing finite-lived intangible assets is expected to be as follows (in thousands) for the fiscal years ended January 31:
|  | Amortization Expense |
2026 |  | $ | 125,353 |
2027 |  |  | 79,865 |
2028 |  |  | 39,094 |
2029 |  |  | 28,562 |
2030 |  |  | 22,080 |
Thereafter |  |  | 55,722 |
Total future amortization |  | $ | 350,676 |
Amortization expense related to intangible assets in the aggregate was $127.2 million for fiscal 2025, $152.5 million for fiscal 2024, and $170.3 million for fiscal 2023. Impairment Review Requirements and Assumption Uncertainty The Company monitors adverse events, conditions or changes in circumstances that would indicate impairment of intangible assets that are subject to amortization. When such events, conditions or changes in circumstances occur, we assess the recoverability of such assets by comparing the undiscounted future cash flows attributable to the intangible assets to their carrying amount. If the undiscounted future cash flows are less than the carrying amount, an impairment charge based on the excess of the carrying amount over the fair value of the assets is recorded. The Company evaluates impairment for indefinite-lived intangible assets, including goodwill, on an annual impairment test date ( January 1) or more frequently if there are indicators of impairment. In connection with the goodwill and indefinite-lived intangible assets impairment evaluation, the Company may first consider qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount. If the Company fails the qualitative assessment or elects to bypass it, a comparison of the carrying value of the reporting unit or indefinite-lived intangible asset to its fair value is completed. If the carrying value exceeds the fair value, an impairment loss equal to the difference (for goodwill, not to exceed the amount of goodwill allocated to the reporting unit) is recorded. The fair value of our reporting units is determined using a weighted average valuation model of the income approach (discounted cash flow approach) and market approach. The income approach requires management to make certain assumptions based upon information available at the time the valuations are performed. Actual results could differ from these assumptions. Management endeavors to ensure that the assumptions used are reflective of what a market participant would have used in calculating fair value considering the then current economic conditions. This process was followed below during our annual impairment test as of January 1st of each of fiscal 2025, 2024 and 2023. The fair value of our indefinite-lived trademark intangible is determined using an income approach referred to as the relief-from-royalty method. The relief-from-royalty method requires management to estimate the portion of our earnings attributable to this trademark based on a royalty rate we would have paid for the use of the asset if we did not own it. The determination of fair value involves significant estimates and assumptions, including projected revenue growth rates, the royalty savings rate, and the discount rate applied to future cash flows, which are forward-looking and could be affected by future economic and market conditions. This process was followed below during our annual impairment test as of January 1st of each of fiscal 2025, 2024 and 2023. In determining reporting units, the Company first identifies its operating segments, and then assesses whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results. No Impairment for the Fiscal Year Ended January 31, 2025 As of January 1, 2025, we estimated the fair value of the TDS and GK reporting units using the weighted average valuation model discussed in Impairment Review Requirements and Assumption Uncertainty above and, as of such date, the fair value was in excess of the carrying value for each reporting unit. As of January 1, 2025, we estimated the fair value of our indefinite-lived trademark intangible using relief-from-royalty method discussed in Impairment Review Requirements and Assumption Uncertainty above and, as of such date, the fair value was in excess of the carrying value. However, the excess was not significant and changes in the key assumptions, discussed in Impairment Review Requirements and Assumption Uncertainty above, could materially affect the estimated fair value of the indefinite-lived trademark intangible asset and result in future impairment charges. Impairment for the Fiscal Year Ended January 31, 2024 During the fourth quarter of fiscal 2024, we identified triggering events for impairment primarily attributable to the impact of the observed prolonged and substantial decline in the Company’s stock price and market capitalization, industry analysis and observable industry multiples, which increased our discount rate assumption. In addition, the estimated future cash flows for our two reporting units declined. These declines when comparing fiscal 2024 to fiscal 2023 were due primarily to: (i) increased competition that drove down the growth experience and expectations for the industry in which the TDS reporting unit operates; and (ii) our GK reporting unit experiencing continued declines in bookings and GAAP revenues. For the reasons discussed above, for our identifiable intangibles subject to amortization, management believed there were unfavorable changes to assumptions and factors that occurred during fiscal 2024 that would indicate impairment or a change in the remaining useful life. Our estimated undiscounted future cash flows attributable to the amortizable intangibles were projected to be less than the carrying values for the GK reporting unit. Therefore, we updated the fair values for all of our identifiable intangibles, including the indefinite-lived intangible in our TDS reporting unit, that are fair valued using the income approach, as of January 1, 2024. We compared the fair values to their carrying values, which resulted in aggregate impairment losses of $60.5 million during the fourth quarter of fiscal 2024. Management next estimated the fair value of the TDS and GK reporting units using the weighted average valuation model discussed in Impairment Review Requirements and Assumption Uncertainty above. For the reasons discussed, the discount rate applied to the analysis increased from the prior year, which drove a lower fair value of our reporting units, resulting in goodwill being impaired for the TDS and GK reporting units as of January 1, 2024, as the fair values fell below their respective carrying values. As such, the Company recorded goodwill impairment of $129.1 million for the TDS reporting unit and $12.6 million for the GK reporting unit during the fourth quarter of fiscal 2024. Impairment for the Fiscal Year Ended January 31, 2023 During the second quarter of fiscal 2023, we identified triggering events for impairment in the GK reporting unit due primarily to a significant decline in bookings and GAAP revenue. Management believed the poor performance was due to a variety of factors, including: (i) reduced corporate spending as customers braced for the potential of a recessionary environment; (ii) difficulty maintaining adequate sales capacity in a challenging labor market for employers; and (iii) evolving customer preferences with respect to training in a post-COVID environment. For the GK reporting unit, as of July 31, 2022, the estimated undiscounted future cash flows attributable to the amortizable intangibles were greater than the carrying values. In addition, the fair values for indefinite-lived intangibles, were also greater than their carrying values. Therefore, during the second quarter of fiscal 2023, management concluded there was no impairment of identifiable intangibles. Management next estimated the fair value of the GK reporting unit as of July 31, 2022, using the weighted average valuation model discussed in Impairment Review Requirements and Assumption Uncertainty above. For the reasons described, the estimated future cash flows declined, and when applied to the analysis drove a lower fair value of the GK reporting unit. As a result, the Company recorded a $70.5 million goodwill impairment for the three months ended July 31, 2022. During the third quarter of fiscal 2023, we identified triggering events for impairment attributable primarily to deterioration in the equity markets evidenced by sustained declines in the Company’s stock price, those of its peers, and major market indices. In addition, interest rates had risen, which increased our discount rate assumption. Furthermore, the Company lowered its projected operating results primarily due to underperformance of the GK reporting unit and macroeconomic uncertainty. As of October 31, 2022, the estimated undiscounted future cash flows attributable to the amortizable intangibles were greater than the carrying values. In addition, the fair value for indefinite-lived intangible, was also greater than the carrying value. Therefore, during the third quarter of fiscal 2023 there was no impairment of identifiable intangibles. Management next estimated the fair value of the TDS and GK reporting units as of October 31, 2022, using the weighted average valuation model discussed in Impairment Review Requirements and Assumption Uncertainty above. For the reasons discussed, the valuation results indicated that for each of the TDS and GK reporting units, the fair value fell below their respective carrying values. Therefore, the Company recorded a $569.3 million goodwill impairment for the TDS reporting unit and an additional $1.6 million goodwill impairment for the GK reporting unit during the three months ended October 31, 2022. As of January 1, 2023, the estimated undiscounted future cash flows attributable to the amortizable intangibles appeared to be greater than the carrying values. In addition, the fair values for indefinite-lived intangibles, were also greater than the carrying values. We performed our annual quantitative goodwill impairment test for our reporting units as of January 1, 2023, using the weighted average valuation model discussed in Impairment Review Requirements and Assumption Uncertainty above and, as of such date, the fair value was in excess of each reporting unit's carrying value. Therefore, no intangible or goodwill impairment was recognized during the fourth quarter of fiscal 2023.

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