10. Goodwill

TheCompany tests the recorded amount of goodwill for recovery on an annual basis in the fourth quarter of each fiscal year. Goodwill is tested more frequently if indicators of impairment exist. The goodwill impairment test is performed at the reporting unit level. The Company has four reporting units which are the equivalent to our four operating segments: Careers-North America, Careers-International, Careers-China and Internet Advertising & Fees. 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. These estimates and assumptions primarily include, but are not limited to, the discount rate, terminal growth rates, earnings before depreciation and amortization, and capital expenditures forecasts. 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 2011, each of the Careers-North America, Careers-International and Internet Advertising & Fees reporting units had a fair value that substantially exceeded its carrying value. For the Careers-China reporting unit, the Company calculated a fair value that was within approximately 10% of the carrying value, using a discount rate of 13.5% and a terminal growth rate of 5%.

During the three months ended September 30, 2012, the Company performed a qualitative analysis for the Careers-China reporting unit and it was determined that the Careers-China reporting unit was more likely than not to have a fair value less than the unit’s carrying amount. The conclusion was based on the recent financial performance of Careers-China compared to previously forecasted results, updated projections of future profitability as well as indicative offers from potential buyers of the Careers-China business (see Note 11, Discontinued Operations).

Accordingly, the Company performed a step one fair value evaluation of Careers-China utilizing both a discounted cash flow analysis and the indicative offers from potential buyers of the Careers-China business. The result of this fair value analysis was that the fair value of the reporting unit was less than the carrying value and a step two analysis was required to determine the amount of goodwill impairment, if any. The Company performed the step two evaluation and determined that the goodwill for the Careers-China reporting unit was impaired. Therefore in the third quarter of 2012, we recorded a goodwill impairment charge for Careers-China of $216,221.

A summary of changes in goodwill by reportable segment are as follows:


	Careers- North America		Careers- International			Internet Advertising & Fees		Total
Balance as of December 30, 2011	$	594,094	$	386,477		$	151,590	$	1,132,161
Impairment		—		(216,221	)		—		(216,221	)
Reclassification to assets of business held for sale		—		(45,958	)		—		(45,958	)
Translation and other adjustments, net		—		8,707			—		8,707

Balance as of September 30, 2012	$	594,094	$	133,005		$	151,590	$	878,689

As disclosed in Note 11, Discontinued Operations, the Company has classified Careers-China as a business held for sale and, accordingly, $45,958 of goodwill has been reclassified from the Careers-International segment to assets of business held for sale.