NOTE 12—GOODWILL

The following table reflects the carrying amount and the changes in goodwill carrying amount:

(dollar amounts in thousands)
Balance, February 2, 2013	$	46,917
Acquisitions		9,877
Impairments		—

Balance, February 1, 2014		56,794
Acquisitions		—
Impairments(a)		(23,925	)

Balance, January 31, 2015	$	32,869

(a)	Cumulative charge to date of $23.9 million

As described in Note 1—Summary of Significant Accounting Policies, the Company reviews goodwill for impairment annually during its fourth fiscal quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

We determine the fair value of reporting units using a weighting of fair values derived from valuations using both the income approach and the market approach. Using the income approach the Company calculated the fair value of each reporting unit based upon a discounted cash flow analysis, which requires significant management assumptions and estimates regarding industry, economic factors and the future profitability of our businesses. The market approach developed an estimated fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with operating and investment characteristics that were comparable to the operating and investment characteristics of the Reporting Unit.

We established, and continue to evaluate, our reporting units based on our internal reporting structure and define such reporting units at the operating segment level.

The key assumptions used in the discounted cash flow approach include:

•	The reporting unit's projections of financial results, which range from 1 to five years. In general, our reporting units' fair values are most sensitive to our sales growth and operating profit rate assumptions, which represent estimates based on our current and projected sales mix, profit improvement opportunities and market conditions. If the business climate deteriorates, or if we fail to manage our businesses successfully, then actual results may not be consistent with these assumptions and estimates, and our goodwill may become impaired.
•	The projected terminal value for each reporting unit represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal values are most sensitive to our assumptions regarding long-term growth rates, which are based on several factors including macroeconomic variables and future growth plans. While we believe our long-term growth assumptions are reasonable in relation to these factors and our historical results, actual growth rates may be lower than our assumptions due to a variety of potential causes, such as a secular decline in demand for our products and services, unforeseen competition and long-term GDP growth rates in being lower than historical growth rates.
•	The discount rate, used to measure the present value of the projected future cash flows, is set using a weighted-average cost of capital method that considers market and industry data as well as our specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is our estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. The reporting units' weighted-average costs of capital in future periods may be impacted by adverse changes in market and economic conditions, including risk-free interest rates, and are subject to change based on the facts and circumstances that exist at the time of the valuation.

The fair values of all of our reporting units are based on underlying assumptions that represent our best estimates. Many of the factors used in assessing fair value are outside of the control of management and if actual results are not consistent with our assumptions and judgments, we could be exposed to further impairment charges. To validate the reasonableness of our reporting units' estimated fair values, we reconcile the aggregate fair values of our reporting units to our total market capitalization.

The Company's evaluation resulted in fair values for three reporting units being substantially below their respective carrying values and an implied fair value for which resulted in the Company recording a $23.9 million non-cash goodwill impairment charge in fiscal 2014. The primary factor that contributed to the impairment decline in sales and earnings in 2014 combined with the expectation of slower growth in the projection period. The remaining three reporting units had an aggregate goodwill balance of $32.9 million and the fair values substantially exceeded their carrying value.