GOODWILL AND INTANGIBLE ASSETS

Goodwill

A summary of changes in goodwill is as follows:



	Careers - North America			Careers - International			Total
Balance as of December 31, 2015:
Goodwill	$	774,765		$	310,184		$	1,084,949
Accumulated impairment losses	(325,800		)	(262,650		)	(588,450		)
Net goodwill as of December 31, 2015	448,965			47,534			496,499
Acquisition activity⁽¹⁾	10,845			—			10,845
Impairment	(142,002		)	—			(142,002		)
Translation and other adjustments, net	—			(141		)	(141		)
Balance as of June 30, 2016:
Goodwill	785,610			310,043			1,095,653
Accumulated impairment losses	(467,802		)	(262,650		)	(730,452		)
Net goodwill as of June 30, 2016	$	317,808		$	47,393		$	365,201

⁽¹⁾See Note 5 - Business Combination.

The Company tests the recorded amount of goodwill for recovery on an annual basis in the fourth quarter of each fiscal year, or more frequently when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. The Company has two reporting units which are equivalent to our two operating segments: Careers-North America and Careers-International.

In determining if goodwill is impaired, we estimate the fair value of the reporting unit and compare it to the carrying value of the assets and liabilities of that reporting unit. The Company determines the fair value of its reporting units using a weighting of fair values derived from the income approach and the market approach, depending on the availability of relevant market comparable information. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. Under the market approach, the Company estimates the fair value based on market multiples of cash flows and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit and considering a reasonable control premium. The weighting of the fair value derived from the market approach differs for each reporting unit depending on the level of comparability of these publicly-traded companies to the reporting unit. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.

For the annual goodwill impairment test performed in the fourth quarter of 2015, the Careers-International reporting unit's fair value substantially exceeded its carrying value. For the Careers-North America reporting unit, the Company calculated, using a combination of an income and market approach, that the fair value would have to be at least 15% less than the computed amount to result in any goodwill impairment charges.

As a corroborative source of information, the Company reconciles the estimated aggregate fair values of its reporting units within a reasonable range of its market capitalization, which includes an estimated control premium (an adjustment reflecting an estimated fair value on a control basis) to verify reasonableness of the fair value of its reporting units obtained using the aforementioned methods. The control premium is estimated based upon control premiums observed in comparable market transactions. As none of our reporting units are publicly-traded, individual reporting unit fair value determinations do not directly correlate to the Company’s stock price. We monitor changes in our share price to ensure our reconciled market capitalization continues to exceed or is not significantly below the carrying value of our net assets. In the event our market capitalization does decline below its book value, we consider the length and severity of the decline and the reason for the decline when assessing whether potential goodwill impairment exists. Further, if a reporting unit does not appear to be achieving it’s the projected growth plan used in determining its fair value, we will reevaluate the reporting unit for potential goodwill impairment based on revised projections, as available.

On August 8, 2016, the Company entered into a merger agreement that provides for the Company to be merged with a subsidiary of another company in a transaction in which the Company’s shareholders will receive approximately $329,000 for all of the equity interests in the Company, subject to customary closing conditions. The sale is expected to be finalized in the fourth quarter of 2016 (see Note 19 - Subsequent Events for further details). In consideration of the recent decline in the Company’s market capitalization, recent operating results, and the implications the agreed-upon sales price had on the valuation of goodwill, the Company recognized an estimated pre-tax impairment charge of $142,002 during the second quarter of 2016. Due to the significance of the goodwill balance in the Careers-North America reporting unit, and the results of the annual impairment analysis performed in the fourth quarter of 2015, the Company recognized the estimated impairment charge to the Careers-North America reporting unit. This charge does not impact our liquidity, cash flows from operations, future operations, or compliance with debt covenants.

Due to the limited time period from the indication of the impairment to the date of this filing, and the complexities involved in estimating the fair value of certain assets and liabilities, the Company has not finalized its impairment analysis as of August 9, 2016. The Company will complete a formal impairment analysis in accordance with ASC 350, Intangibles - Goodwill and Other, during the third quarter of 2016 and recognize any adjustments to the estimated impairment charge at that time. We believe that our preliminary estimate is reasonable and represents the Company’s best estimate of the goodwill impairment loss to be incurred, however, it is possible that the completion of the formal analysis may result in a material adjustment to this preliminary estimate in the third quarter of 2016.

Indefinite lived intangibles

Indefinite-lived intangible assets are primarily evaluated on an annual basis, generally in conjunction with the Company’s evaluation of goodwill balances, unless impairment indicators exist between annual impairment tests. In assessing fair value, we generally utilize a relief from royalty method. If the carrying value of the indefinite-lived intangible assets exceeds the fair value of the asset, the carrying value is written down to fair value in the period identified. During the second quarter of 2016, the Company performed an impairment analysis on two indefinite lived intangible assets. The analysis resulted in an impairment charge of $3,400 being recognized in the second quarter of 2016.