Juno 2012 Annual Report Download - page 61

Table of Contents
adverse action or assessment by a regulator, unanticipated competition, a loss of key management or other personnel, significant changes in the manner
of our use of the acquired assets or the strategy for the acquired business or our overall business, significant and sustained decline in market
capitalization, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results
of operations.
The determination of whether or not goodwill and/or indefinite-lived intangible assets are impaired involves a significant level of judgment in the
assumptions underlying the approaches used to determine the estimated fair values of our reporting units. The determination of the fair values of our
reporting units generally includes a study of market comparables, including the selection of appropriate valuation multiples and discounted cash flow
models based on our internal forecasts and projections. The estimated fair value of each of our reporting units is determined using a combination of the
income approach and the market approach.
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We operate in three reportable segments, in accordance with ASC 280, , and we have identified five reporting units—FTD,
Interflora, Classmates, MyPoints, and Communications—for purposes of evaluating goodwill. These reporting units each constitute a business or group
of businesses for which discrete financial information is available and is regularly reviewed by segment management. The goodwill related to our
acquired businesses is specific to each reporting unit and the goodwill amounts are assigned as such.
Testing goodwill for impairment involves a two-step quantitative process. However, prior to performing the two-step quantitative goodwill
impairment test, we have the option to first assess qualitative factors to determine whether or not it is necessary to perform the two-step quantitative
goodwill impairment test for selected reporting units. If we choose that option, we are not required to perform the two-step quantitative goodwill
impairment test unless we have determined, based on the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is
less than its carrying amount. If the two-step quantitative impairment test is required or chosen, the first step of the impairment test involves comparing
the estimated fair value of a reporting unit with its respective carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds
its carrying amount, including goodwill, goodwill is considered not to be impaired and no additional steps are necessary. If, however, the estimated fair
value of a reporting unit is less than its carrying amount, including goodwill, then the carrying amount of the goodwill is compared with its implied fair
value. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the
excess.

We performed the annual quantitative goodwill impairment assessment for all of our reporting units in the fourth quarter of 2012. The first step of
the quantitative goodwill impairment test resulted in the determination that the fair values of FTD, Interflora, Classmates, and Communications exceeded
their carrying amounts, including goodwill. Accordingly, the second step was not required for these reporting units. The estimated fair value
substantially exceeded the carrying amount for the Communications reporting unit.
The determination of whether or not goodwill is impaired involves a significant level of judgment in the assumptions underlying the approaches
used to determine the estimated fair value of our reporting units. We believe our analysis included sufficient tolerance for sensitivity in key assumptions.
The determination of the fair value of our reporting units included a study of market comparables, including the selection of appropriate valuation
multiples and discounted cash flow models based on our internal forecasts and projections. We believe the assumptions and rates used in our
impairment
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