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Other. In January 2015, Celtic and Allegheny Health Network closed on the formation of a joint venture to
combine each other’s home health and hospice assets in the western Pennsylvania region. Although Celtic
manages the operations of the joint venture, Celtic holds a 40% interest in the joint venture, so the operating
results of the joint venture are not consolidated and the pro rata operating results are included in the Company’s
equity in earnings of affiliates. Celtic’s revenues from the western Pennsylvania region that are now part of the
joint venture made up 29% of total Celtic revenues in 2014.
The Company’s income from continuing operations excludes Cable ONE, the sold Kaplan China schools,
WPLG, the Publishing Subsidiaries and The Herald, which have been reclassified to discontinued operations (see
Note 3).
8. GOODWILL AND OTHER INTANGIBLE ASSETS
In the third quarter of 2015, as a result of continued declines in student enrollments at KHE and the challenging
industry operating environment, the Company performed an interim impairment review of its goodwill and long-
lived assets at the KHE reporting unit. The KHE reporting unit failed the step one goodwill impairment test. As a
result of the step two analysis, the Company recorded a $248.6 million goodwill impairment charge. The
Company estimated the fair value of the KHE reporting unit utilizing a discounted cash flow model, supported by
a market approach. A substantial portion of the impairment charge is due to the amount of unrecognized
intangible assets identified in the step two analysis.
In addition, in the fourth quarter of 2015, Kaplan recorded intangible asset impairment charges of $0.9 million
related to one of the Kaplan International businesses and $0.5 million related to a KTP business. The fair values
of these intangible assets were estimated using an income approach. In November 2015, the Company announced
that Trove, a digital innovation team included in other businesses, would largely be integrated into SocialCode
and that Trove’s existing offerings would be discontinued. In connection with this action, the Company recorded
a $2.8 million goodwill impairment charge in the fourth quarter of 2015.
In 2014, as a result of regulatory changes impacting Kaplan’s operations in China, Kaplan recorded an intangible
asset impairment charge of $7.8 million, reported in discontinued operations. The Company estimated the fair
value of the student and customer relationships using an income approach. In addition, Kaplan recorded
intangible asset impairment charges of $1.8 million related to a KTP business, $1.1 million related to one of the
Kaplan International businesses and $0.7 million related to KHE. The fair value of these intangible assets were
estimated using an income approach. One of the businesses in the other businesses segment recorded an
intangible asset impairment charge of $0.1 million.
In 2013, as a result of operating losses and restructuring activities at one of the Kaplan International businesses,
Kaplan recorded an intangible and other long-lived assets impairment charge of $3.3 million. The Company
estimated the fair value of the student and customer relationships and database and technology intangible assets
using the excess earnings method, and the fair value of the trade name and trademarks using the relief from
royalty method.
Amortization of intangible assets for the years ended December 31, 2015, 2014 and 2013, was $19.0 million,
$18.2 million and $11.9 million, respectively. Amortization of intangible assets is estimated to be approximately
$23 million in 2016, $19 million in 2017, $17 million in 2018, $16 million in 2019, $14 million in 2020 and $18
million thereafter.
In July 2014, the cable division sold wireless spectrum licenses that were purchased in 2006; a pre-tax non-
operating gain of $75.2 million was recorded in the third quarter of 2014 in connection with these sales. As a
result of the Cable ONE spin-off, this gain is now reported in discontinued operations.
91 GRAHAM HOLDINGS COMPANY