Consolidated  Financial  Statements

CareerBuilder, LLC and Subsidiaries

Years Ended December 31, 2015 (Unaudited),

2014 (Unaudited), and 2013 (Audited)

CareerBuilder, LLC and Subsidiaries

Consolidated Financial Statements

Years Ended December 31, 2015 (Unaudited), 2014 (Unaudited),
and 2013 (Audited)

Contents

Report of Independent Auditors

The Board of Directors

CareerBuilder, LLC

We have audited the accompanying consolidated financial statements of CareerBuilder, LLC and Subsidiaries, which comprise the consolidated balance sheet as of December 31, 2013, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for the year then ended, and the related notes to consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of CareerBuilder, LLC and Subsidiaries at December 31, 2013, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

December 31, 2012 and 2011 Financial Statements

The accompanying consolidated balance sheet of CareerBuilder, LLC and Subsidiaries as of December 31, 2012, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for the years ended December 31, 2012 and 2011, were not audited, reviewed, or compiled by us and, accordingly, we do not express an opinion or any other form of assurance on them.

/s/ Ernst & Young LLP

March 3, 2014

CareerBuilder, LLC and Subsidiaries

Consolidated Balance Sheets (unaudited)

(In Thousands)

See accompanying notes.

CareerBuilder, LLC and Subsidiaries

Consolidated Statements of Operations

(In Thousands)

See accompanying notes.

CareerBuilder, LLC and Subsidiaries

Consolidated Statements of Comprehensive Income

(In Thousands)

See accompanying notes.

CareerBuilder, LLC and Subsidiaries

Consolidated Statements of Equity

(In Thousands)

Years Ended December 31, 2015 (Unaudited), 2014 (Unaudited), and 2013 (Audited)

See accompanying notes.

CareerBuilder, LLC and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

See accompanying notes.

December 31, 2015

All 2015 and 2014 amounts included in the Notes to Consolidated Financial Statements are Unaudited.

1. Basis of Presentation

CareerBuilder, LLC, a Delaware limited liability company, and Subsidiaries (the Company), is a privately owned provider of global human capital solutions that helps employers target and attract employees. In addition to operating online career sites, such as CareerBuilder.com, the Company provides employers with recruitment resources ranging from labor market intelligence to talent management software and other recruitment solutions. At December 31, 2015, the Company was owned by TEGNA, Inc., Tribune National Marketing Company, and The McClatchy Company (the Members). The Company operates in the United States, and internationally in Canada, Asia, Europe, the Middle East, Australia and South America through its owned subsidiaries, joint ventures and partnerships.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly and majority-owned subsidiaries after elimination of all significant intercompany transactions and balances. Investments in which the Company does not have a controlling interest, or is not the primary beneficiary, are accounted for under the equity method. Equity method investments are included in other noncurrent assets in the Consolidated Balance Sheets, and the Company’s share of net earnings is included in other expense, net in the Consolidated Statements of Operations.

Cash and Cash Equivalents

Highly liquid investments with an original maturity of three months or less are classified as cash equivalents.

Letters of Credit

As of December 31, 2015 and 2014, the Company had standby unused letters of credit with financial institutions totaling $2,154 and $2,661, respectively.

Marketable Securities

At December 31, 2015 and 2014, the Company’s marketable securities were investments in mutual funds, and classified as trading securities with unrealized holding gains and losses included in the Company’s Consolidated Statements of Operations. These investments are classified as current assets given their short term liquidity.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which range from two to five years. The costs of leasehold improvements are capitalized and amortized using the straight-line method over the shorter of their useful lives or the terms of the respective leases.

Business Acquisitions

The Company accounts for business acquisitions using the purchase method. The Company allocates the purchase price to the assets acquired and the liabilities assumed based on their estimated fair values at the date of acquisition, including identifiable intangible assets.

Goodwill

Goodwill represents the excess of the total purchase price of acquisitions over the fair value of the net identified tangible and intangible acquired assets. Goodwill generally results from the expansion of the Company’s market share, from intangible assets that do not qualify for separate recognition, and from expected synergies from combining operations with the acquired company. Goodwill is not amortized, but is subject to an impairment review annually, and whenever indicators of impairment exist. The Company tests for goodwill impairment at the reporting unit level using a qualitative assessment or a two-step quantitative analysis. The qualitative analysis includes consideration of factors including, but not limited to, macroeconomic conditions, industry and market conditions, cost factors that have an impact on earnings and cash flows, and other relevant entity specific or relevant factors affecting the reporting unit. If after performing the assessment, the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it is required to perform a two-step quantitative test. Otherwise, the two-step test is not required for the reporting units where the qualitative assessment is performed.

In the two-step quantitative analysis, the first step involves a comparison of the estimated fair value of the reporting unit with its carrying value. Fair value of the reporting unit is determined using various techniques, including multiple earnings and discounted cash flow valuation techniques. If the carrying value exceeds the fair value, the second step of the process is necessary. The second step measures the difference between the carrying value and implied fair value of goodwill. If the carrying value exceeds fair value, goodwill is considered impaired, and is reduced to fair value. See Note 8 for additional goodwill disclosures.

Intangible Assets

CareerBuilder has intangible assets including acquired technology, trademarks and customer relationships. Intangible assets acquired in business combinations are recorded at fair value on the date of acquisition and are amortized on a straight line basis over their estimated useful lives, which generally range from two to twelve years. Intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. CareerBuilder does not have any indefinite lived intangible assets other than goodwill.

Valuation of Long-Lived Assets

The Company evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The carrying value of a long-lived asset is considered impaired when the projected undiscounted future cash flows are less than the carrying value of the asset. The Company measures impairment based on the amount by which the carrying value exceeds the fair value. Fair value is determined primarily using projected future cash flows, discounted at a rate commensurate with the risk involved. No impairment losses on long lived assets were incurred in 2015, 2014, and 2013.

Noncontrolling Interest

In July 2015, the Company acquired 60% of Textkernel B.V. (Textkernel).  See Note 4 for additional information on the acquisition.  Shareholders for the remaining 40% of ownership hold put rights that permit them to put their equity interest to the Company.

In March 2013, the Company purchased an 87.5% interest in VON Joint Stock Company (VON). See Note 4 for additional information on the acquisition. The Company entered into a Call and Put Option Agreement, which includes call rights for 12.5% and put rights for 11.5%. In May 2013, the Company exercised a call for 11.5%, and the remaining 1% is recorded as noncontrolling interest at December 31, 2015.

In August 2012, the Company acquired 74% of Economic Modeling, LLC (EMSI).  During 2015, the Company acquired an additional 11.3% for $8,850, bringing the Company’s ownership to 85.3%.  Shareholders for the remaining 14.7% of ownership hold put rights that permit them to put their equity interest to the Company.

Since redemption of the noncontrolling interest for Textkernel and EMSI is outside of the Company’s control, their equity interest is presented on the Consolidated Balance Sheets as redeemable noncontrolling interest. The exercise price of the puts are based on the fair value at the exercise date. The fair value of the redeemable noncontrolling interest is remeasured at the end of each reporting period. A summary of changes in redeemable noncontrolling interest for the years ended December 31, 2015 and 2014, is as follows:

Net income for the years ended December 31, 2015, 2014 and 2013, in the Consolidated Statements of Operations, reflect 100% of Textkernel, VON and EMSI results, since the respective acquisition dates, as the Company holds the controlling interest. Net income is subsequently adjusted to remove the noncontrolling interest to arrive at net income attributable to the Company.

Foreign Currency Translation

The income statements of foreign subsidiaries have been translated to U.S. dollars using the average currency exchange rates in effect during the relevant period. The Consolidated Balance Sheets have been translated using the currency exchange rate as of the end of the accounting period. The impact of currency exchange rate changes on the translation is included in other comprehensive income (loss) and is classified as accumulated other comprehensive income (loss) in Equity.

The Company uses forward foreign exchange rate contracts to manage risks related to non-functional currency contingent payments related to acquisitions. The Company does not engage in speculative derivative activities or derivative trading activities.

The Company recognizes all contracts that meet the definition of a derivative, as either assets or liabilities in the accompanying Consolidated Balance Sheets and measure those derivatives at fair value under accounting standards for derivatives and hedging. Changes to the fair value of the derivatives are recorded in the Consolidated Statements of Operations. The Company does not offset derivative assets and derivative liabilities in the accompanying Consolidated Balance Sheets. See Note 7 for additional information.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, service has been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. Revenue from sales agreements that contain multiple deliverable elements is allocated to each element based on their relative selling price. Deliverables are treated as separate units of accounting if they have value to the customer on a standalone basis.

The sources of revenue include various types of recruitment solutions which consist of advertisements, employment branding services, talent intelligence, other recruitment support, and access to the Company’s online resume database and recruitment software as a service. Generally, recruitment solutions revenue is recognized once delivery has occurred, and revenue related to access to the online resume database and recruitment software as a service is recognized ratably over the subscription period. Amounts billed or collected in excess of revenue recognized are included as deferred revenue.

Cost of Revenue

Costs of revenue primarily include operating costs associated with hosting websites, merchant fees for online transactions, outsourcing fees associated with website operations, and commissions and fees paid to the Company’s members.

Advertising Costs

The Company expenses all advertising costs as incurred. Advertising expense was $64,993, $75,185, and $94,607 for the years ended December 31, 2015, 2014, and 2013, respectively.

Product and Website Development Costs

Development costs include the cost to purchase and develop software for internal use. The Company capitalizes certain costs incurred for software development. Costs incurred during the application-development stage for software developed internally, bought and further customized by outside vendors for the Company’s use, and software developed by a vendor for the Company’s proprietary use, have been capitalized. Development costs that include expenses incurred by the Company for research and development of the Company’s proprietary technology incorporated in the Company’s product offerings are expensed as incurred.

Income Taxes

The Company is a Limited Liability Company (LLC) which elected partnership treatment and, therefore, is not a taxable entity for U.S. federal income tax purposes, and in most states. There are some states that impose an income tax on LLCs, and the Company’s three domestic corporate subsidiaries and its foreign subsidiaries are subject to corporate

income taxes in their respective jurisdictions. The Company accounts for income taxes in accordance with the balance sheet method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributed to temporary differences between the financial statement and income tax basis of assets and liabilities and tax credit and operating loss carryforwards. Valuation allowances are established when management determines it is “more likely than not” that some portion or all of the deferred tax asset may not be realized. The Company considers all positive and negative evidence in evaluating its ability to realize its deferred income tax assets, including its historical operating results, ongoing tax planning, and forecast of future taxable income, on a jurisdiction- by-jurisdiction basis.

During 2015, the Company adopted the provisions of Accounting Standards Update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes. Under the new guidance, deferred taxes will no longer be divided between current and noncurrent amounts, simply presenting all deferred tax items as noncurrent.  The December 31, 2014 deferred taxes have been reclassified to be consistent with the 2015 presentation.

With respect to uncertain tax positions, the Company recognizes in the consolidated financial statements those tax positions determined to be “more likely than not” of being sustained upon examination, based on the technical merits of the positions. The Company records a liability for the difference between the benefit recognized and measured pursuant to the accounting guidance for income taxes and the tax position taken on its tax return. The Company’s policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part of income tax expense. Management has analyzed the Company’s inventory of tax positions taken with respect to all applicable income tax issues (in each respective jurisdiction), and has concluded that no reserve for uncertain tax positions is required in the consolidated financial statements as of December 31, 2015 and 2014.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include asset impairments, reserves established for doubtful accounts, depreciation and amortization, business combinations, valuation allowances, litigation matters, and contingencies.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and accounts receivable. The Company maintains its cash and equivalents balances in the form of deposits with financial institutions. The Company maintains cash deposits with banks that at times exceed applicable insurance limits. The Company reduces its exposure to credit risk by maintaining such deposits with high-quality financial institutions that management believes are creditworthy.

The Company extends credit to its customers on an unsecured basis in the normal course of business. The Company maintains reserves for credit losses, and such losses have historically been within management’s expectations. The Company evaluates the collectability of its accounts receivable based on the length of time the receivable is past due and the anticipated future write-off based on historical experience. Accounts receivable are written off when all reasonable collection efforts have been exhausted. There are no customers that individually represent more than 10% of the Company’s accounts receivable as of December 31, 2015 or 2014, or more than 10% of revenues for the years ended December 31, 2015, 2014, or 2013.

Changes in the allowance for doubtful accounts are as follows:

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, marketable securities, accounts payable, accrued expenses, and amounts due to related parties. Due to the short-term nature of these items, the carrying values are deemed to approximate their fair values.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, that will supersede virtually all revenue recognition guidance in US generally accepted accounting principles. The core principle contemplated by ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. In July 2015, the FASB approved a one-year deferral of the effective date of the standard to 2018 for public companies, with an option that would permit companies to early adopt the standard in 2017. Early adoption prior to 2017 is not permitted. The new standard may be adopted either retrospectively or on a modified retrospective basis, which recognizes a cumulative catch up adjustment to the operating balance of retained earnings. In addition, the FASB is contemplating making additional changes to certain elements of the new standard. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures.

3. Retirement and Incentive Plans

Defined-Contribution Plan

The Company sponsors a defined-contribution retirement plan available to substantially all U.S.-based employees. The Company has elected to match 50% of the first 6% of contributions made by participants. Participants are fully vested after two years of service. The Company expensed $5,749, $4,504, and $4,298 in matching contributions for the years ended December 31, 2015, 2014, and 2013, respectively.

Deferred Compensation Plan

The Company has established a management incentive plan to attract and retain key personnel. Cash awards are discretionary, and are typically based on the achievement of predetermined Company performance metrics. The awards vest in periods ranging from three to five years. Awards are expensed ratably over the vesting period. The related compensation expense was $5,372, $5,785, and $6,762 for the years ended December 31, 2015, 2014, and 2013, respectively.

4. Acquisitions

Below is a summary of the acquisitions completed from January 1, 2013 to December 31, 2015. The consolidated financial statements of the Company include the financial results of these acquisitions from the date of each acquisition.

2015 Acquisitions

In July 2015, the Company acquired 60% ownership interest in Textkernel, a software company based in the Netherlands that specializes in multilingual semantic search and matching recruitment technology.  In addition to the purchase agreement, the Company and the minority shareholders entered into a Shareholders Agreement which includes call and put rights for the remaining 40% ownership interest. The Company has the ability to call up to 20% of the shares in 2017 and all of the remaining shares in 2018 and 2020 and beyond. The noncontrolling owners have the option to put any of their remaining shares in 2019 and any outstanding noncontrolling interest shares in 2020 and beyond.

The purchase price (less cash acquired) of this acquisition was a cash payment of $16,363. The Company recorded $23,419 of goodwill and $6,044 of intangible assets related to this acquisition.  The Company also recorded the fair value of the redeemable noncontrolling interest of $11,449 related to Textkernel. The fair value was calculated using the estimated enterprise value at the acquisition date. The intangible assets associated with this acquisition consist of non-compete agreements, technology, customer relationships, and trade names which are being amortized on a straight-line basis over a weighted-average period of approximately 6.3 years.  Goodwill related to the purchase of Textkernel is not deductible for income tax purposes in the Netherlands.

In connection with the purchase of EMSI in 2012, the Company had the ability to call an additional 6.5% of the units in 2014 and all of the remaining units in 2015. The noncontrolling owners have the option to put any of their remaining units in 2016 and the Company has the option to call any outstanding noncontrolling interest units in 2017 and beyond. During 2015, the Company exercised call options to acquire an additional 11% for $8,624 and an additional .3% from other shareholders for $226, bringing the Company’s ownership to 85.3%.  In January of 2016, the Company revised the EMSI operating agreement.  The noncontrolling owners no longer have the option to put any of their shares to the Company in 2016 and can only put the shares in 2018.  In addition, the Company can no longer call shares in 2017 and 2018 and can only call shares in 2019 and beyond.  

2014 Acquisitions

In March 2014, the Company acquired all of the ownership interest in Broadbean Technology Limited (a UK entity), Broadbean Technology PTY (an Australian entity) and Broadbean Incorporated (a US entity), collectively “Broadbean.”  Broadbean is a leader in job distribution, candidate sourcing and big data analytics software.

The purchase price (less cash acquired) was a cash payment of $55,960. The Company recorded $37,841 of goodwill and $19,688 of intangible assets related to this acquisition. The intangible assets associated with this acquisition consist of noncompete agreements, technology, customer relationships, and trade names which are being amortized on a straight-line basis over a weighted-average period of approximately 5.3 years.  Goodwill related to the purchase of Broadbean Incorporated is deductible for domestic income tax purposes.  Goodwill related to Broadbean Technology Limited and Broadbean Technology PTY is not deductible for income tax purposes in their respective countries.

2013 Acquisitions

In March 2013, the Company purchased an 87.5% interest in VON Joint Stock Company, which operates as KiemViec.com, a leading careersite in Vietnam, and HR Vietnam, which specializes in recruitment and human resource

solutions for employers. In connection with the purchase, the Company entered into a Call and Put Option Agreement, which included call rights for 12.5% and put rights for 11.5%. In May 2013, the Company exercised a call for 11.5%, and the remaining 1% is recorded as noncontrolling interest at December 31, 2015.

In April 2013, the Company purchased all of the outstanding capital of Oil and Gas Job Search.com Limited, an online niche career site located in the United Kingdom.

The aggregate purchase price (less cash acquired) of these acquisitions was approximately $34,042, of which $17,383 was paid in cash, and $16,659 was recorded as a liability for the fair value of future payments related to contingent arrangements with the former owners of the businesses. The payments are contingent upon the businesses meeting certain earnings and revenue-based targets (see Note 7 for additional information). The Company recorded $28,121 of goodwill and $9,383 of intangible assets related to these acquisitions. The intangible assets associated with these acquisitions consist of noncompete agreements, technology, customer relationships, and trade names which are being amortized on a straight-line basis over a weighted-average period of approximately 6.2 years.

Goodwill from these acquisitions is not deductible for income tax purposes in their respective countries.

Other Acquisition Information

During the year ended December 31, 2015, the Company paid $5,510 and $1,778 in connection with the achievement of contingent consideration targets related to acquisitions made in 2013 and 2012 respectively. During the year ended December 31, 2014, the Company paid $10,101 and $3,217, and $2,235 in connection with the achievement of contingent consideration targets related to acquisitions made in 2013, 2012, and 2011 respectively. During the year ended December 31, 2013, the Company paid $2,407 and $3,098 in connection with the achievement of contingent consideration targets related to acquisitions made in 2012 and 2011, respectively. 

5. Property and Equipment

Property and equipment consisted of the following:

Depreciation expense of property and equipment was $20,501, $18,031 and $16,725 for the years ended December 31, 2015, 2014, and 2013, respectively.

Unamortized computer software development costs for the years ended December 31, 2015, 2014 and 2013 were $7,712, $3,965 and $1,314, respectively and are included in computer software and hardware.  For the years ended December 31, 2015, 2014 and 2013 total amortization of capitalized computer software development costs was $2,710, $1,457 and $641, respectively and is included in depreciation and amortization on the Consolidated Statement of Operations.

6. Investments in Marketable Securities

The Company’s investments at December 31, 2015 and 2014 are mutual funds held in conjunction with the Company’s deferred compensation plan (see Note 3 for additional information), which are classified as trading securities.

For the year ending December 31, 2015, a net loss of $375 was recorded related to trading securities in the Consolidated Statement of Operations, of which $875 were realized gains. For the year ending December 31, 2014, a net gain of $250 was recorded related to trading securities in the Consolidated Statement of Operations, of which $843 were realized. For the year ending December 31, 2013, $2,502 of gains related to trading securities were recorded in the Consolidated Statement of Operations, of which $630 were realized.

7. Fair Value Measurement

The Company values its financial assets and liabilities based on the fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. The hierarchy consists of three levels:

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable.

Level 3 – Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use.

Financial assets and liabilities measured at fair value at December 31, 2015 and 2014 based on the fair value hierarchy are as follows:

The mutual funds are valued using quoted prices in the market.

The foreign exchange forwards are valued using pricing models that use observable inputs and, therefore, are classified as Level 2. As of December 31, 2015 and 2014, the fair value of derivative instruments were as follows:

The corresponding unrealized gains (losses) were ($582), $1,966 and ($399), which are included in other expense, net in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. Realized gains (losses) of $1,358, ($362) and ($145) were also included in other expense, net in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014, and 2013 respectively.

As part of certain acquisitions, the Company has agreed to pay the sellers earn-outs based on the financial performance of the acquired businesses. The acquisition-related contingency in the table below represents the estimated fair value of future amounts payable under such agreements. The fair value of the contingent payments is measured based on the present value of the consideration expected to be transferred. The discount rate is a significant unobservable input in such present value computations.  The discount rate is 23.8% based on the risk associated with the cash flows. Changes in the acquisition-related contingencies for the years ended December 31, 2015 and 2014, are as follows:

Certain assets and liabilities are measured at fair value on a nonrecurring basis, and therefore, not included in the tables above. These assets include goodwill and intangible assets and result as acquisitions occur. The amounts assigned to intangible assets and goodwill as they relate to the Company’s acquisitions are based on the Company’s best estimate of the fair value. The Company uses an independent valuation specialist to assist in determining the fair value of the identified intangible assets at acquisition. The fair value of the significant identified intangible assets is generally estimated by performing a discounted cash flow analysis using the “income” approach, which represents a Level 3 fair value measurement. The income approach includes a forecast of direct revenues and costs associated with the respective intangible assets and charges for economic returns on tangible and intangible assets utilized in cash flow generation. Net cash flows attributable to the identified intangible assets are discounted to their present value at a rate commensurate with the perceived risk.

8. Goodwill

A summary of changes in goodwill for the years ended December 31, 2015 and 2014, is as follows:

In 2015, Management has determined the Company has two reporting units – North America and International. In 2014, there were three reporting units - North America, EMEA, and APAC. As of January 1, 2015, due to certain internal restructurings, the EMEA and APAC were combined into the International reporting unit.

The Company performs the required annual impairment assessment of the goodwill at the reporting unit level on October 1. Due to the economic challenges primarily in Europe the International reporting unit did not pass the first-step of the quantitative analysis. In the second step, the carrying value of the goodwill exceeded the implied fair value of the goodwill by $50,012. Therefore, an impairment of $50,012 associated with the International reporting unit was recorded in the Consolidated Statement of Operations for the year ended December 31, 2015. There was no impairment in the North America reporting unit in 2015. Management noted no impairment in any of the reporting units in 2014 or 2013.

9. Intangible Assets

A summary of intangible assets by type is as follows: