	International			North America			IT Outsourcing			Total

	(In thousands)
Balance at January 1, 2010	$	140,583		$	209,815		$	26,077		$	376,475
Goodwill impairment		—			(82,000	)		—			(82,000	)
Acquisition		7,144			—			—			7,144
Adjustments on prior acquisition		372			—			—			372
Effect of foreign exchange rate changes		(7,347	)		—			—			(7,347	)

Balance at December 31, 2010		140,752			127,815			26,077			294,644

Goodwill impairment		—			—			(16,300	)		(16,300	)
Adjustments on prior acquisition		135			—			—			135
Effect of foreign exchange rate changes		(2,975	)		—			—			(2,975	)

Balance at December 31, 2011	$	137,912		$	127,815		$	9,777		$	275,504

As a result of the changes to our reportable segments effective January 1, 2011, $8.7 million of the goodwill previously attributable to our former U.S. ERP division was allocated to our IT Outsourcing division and the balance of $45.6 million was allocated to our North America division.

In December 2011, the Federal division met the conditions required to be reported as a discontinued operation, and on January 21, 2012, we entered into an agreement to sell substantially all of the assets of our Federal division to CRGT, Inc. As a result, the associated goodwill balance of the Federal division is now included in "long-term assets of discontinued operations" on our Consolidated Balance Sheets. The changes in the carrying amount of goodwill of discontinued operations are as follows:

	Discontinued Operations

	(In thousands)
Balance at January 1, 2010	$	74,264
Goodwill impairment		(30,000	)

Balance at December 31, 2010		44,264

Goodwill impairment		(27,400	)

Balance at December 31, 2011	$	16,864

We perform our annual impairment analysis of goodwill as of June 30 each year, or more often if there are indicators of impairment present. We test each of our reporting units for goodwill impairment. Our reporting units are the same as our operating divisions and reporting segments. The goodwill impairment test requires a two-step process. The first step consists of comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, then it is not considered impaired and no further analysis is required. If step one indicates that the estimated fair value of a reporting unit is less than its carrying value, then impairment potentially exists and the second step is performed to measure the amount of goodwill impairment. Goodwill impairment exists when the estimated implied fair value of a reporting unit's goodwill is less than its carrying value.

We compared the carrying value of each of our reporting units to its estimated fair value at June 30, 2011. We estimated the fair value of each of our reporting units based on a weighting of both the income approach and the market approach. The discounted cash flows for each reporting unit that served as the primary basis for the income approach were based on discrete financial forecasts developed by management. Cash flows beyond the discrete forecast period of five years were estimated using the perpetuity growth method calculation. The annual average revenue growth rates forecasted for each reporting unit for the first five years of our projections ranged between 5% and 8%, with an overall weighted average of 6%. We have projected operating profit margin improvement as we expect to obtain margin benefits from a number of internal initiatives. The terminal value was calculated assuming projected growth rates of 3% after five years, which reflects our estimate of minimum long-term growth in IT spending. The income approach valuations also included reporting unit cash flow discount rates, which represented each reporting unit's estimated weighted average cost of capital and ranged from 13% to 15%. The market approach applied pricing multiples derived from publicly-traded companies that are comparable to the respective reporting unit to determine its value. We utilized enterprise value/revenue multiples ranging from 0.3 to 0.5 and enterprise value/EBITDA multiples ranging from 3.5 to 6.4 in order to value each of our reporting units under the market approach. Also, the fair value under the market approach included a control premium of 37%. The control premium was determined based on a review of comparative market transactions. Publicly-available information regarding our market capitalization was also considered in assessing the reasonableness of the cumulative fair values of our reporting units.

As a result of the first step of our goodwill impairment test as of June 30, 2011, we estimated that the fair values for our International, North America and Federal reporting units exceeded their carrying amounts by 58%, 32% and 19%, respectively, thus no impairment was indicated. We also determined that the estimated fair value of our IT Outsourcing reporting unit was less than its respective carrying amount by 24%, indicating impairment may exist for this division.

Because indicators of impairment existed for our IT Outsourcing reporting unit, we performed the second step of the test to determine the implied fair value of goodwill for that reporting unit. The estimated implied fair value of goodwill was determined in a consistent manner utilized to estimate the amount of goodwill recognized in a business combination. As a result, we calculated the estimated fair value of certain non-recorded assets, including customer relationships and trade name. The implied fair value of goodwill was measured as the excess of the estimated fair value of the reporting unit over the amounts assigned to its assets and liabilities. The impairment loss for the reporting unit was measured by the amount that the carrying value of goodwill exceeded the implied fair value of the goodwill. Based on this assessment, we recorded an impairment charge of $16.3 million in 2011, which represented 63% of the goodwill of the IT Outsourcing reporting unit prior to the impairment charge. The impairment charge in our IT Outsourcing division was primarily a result of the decreased operating performance of the division, including a lag in new sales and our inability to achieve operational efficiencies.

We adjusted our forecasted cash flows and the other assumptions used to calculate the estimated fair value of our reporting units to account for our beliefs and expectations of the current business environment. While we believe our estimates are appropriate based on our view of current business trends, no assurance can be provided that additional impairment charges will not be required in the future.

For the quarter ended September 30, 2011, we reviewed for indicators of impairment and believed that the market decline in the government services industry, which was based on concerns about defense budget cuts and funding uncertainty, warranted an interim test for goodwill impairment in our Federal reporting unit. There were no other events or circumstances that would more likely than not reduce the fair value below carrying amount for any of our other reporting units. Accordingly, we performed the step one goodwill impairment test for our Federal reporting unit as of September 30, 2011. We used current estimates of forecasted cash flows, current pricing multiples derived from publicly-traded companies that are comparable to the Federal reporting unit, and other assumptions to determine fair value. Based on the results of our step one goodwill impairment test, which utilized a consistent methodology as described above, we estimated that the fair value exceeded the carrying amount although by a lesser amount than at June 30, 2011; however, no impairment was indicated and no further analysis was required.

During the quarter ended December 31, 2011, the government services market continued to decline due to further funding uncertainty and downside risk for the sector. Long-term federal IT spending forecasts decreased significantly in the overall market, and we noted a continued market capitalization decline in the publicly-traded companies in our comparable group. In addition to such factors, we were also required to perform an impairment evaluation of goodwill upon meeting the criteria to classify the Federal division as held for sale, as the negotiated sales price was below the carrying value of the related net assets. We performed step two of the goodwill impairment test as of December 31, 2011, and adjusted the carrying value of goodwill to its implied fair value, which was based on our estimate of net sales proceeds to result from our January 2012 agreement to sell substantially all of the assets of the Federal division. For purposes of the goodwill impairment test, the net assets of the Federal division included an estimate for unrecorded customer-related intangible assets. During the quarter ended December 31, 2011, we recorded a goodwill impairment charge of $27.4 million to write-down the Federal division's goodwill to estimated fair value, which represents 62% of the goodwill prior to the impairment charge.

During our annual impairment test in 2010, and as a result of the impact that the depressed economic environment had on overall equity values and its negative impact on our operations and forecasted cash flows, as well as the sustained decline in our market capitalization, we also recorded an impairment of goodwill of $82.0 million and $30.0 million for our former Custom Solutions division (now part of our North America division) and our Federal division, respectively.