Goodwill and Intangible Assets

12 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Agilysys allocates the cost of its acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the cost over the fair value of the identified net assets acquired is recorded as goodwill.

Goodwill

Agilysys tests goodwill for impairment at the reporting unit level upon identification of impairment indicators, or at least annually. A reporting unit is the operating segment or one level below the operating segment (depending on whether certain criteria are met). Goodwill was allocated to our reporting units that are anticipated to benefit from the synergies of the business combinations generating the underlying goodwill. As discussed in Note 16, Agilysys has two operating segments.

We conducted our annual goodwill impairment test on February 1, 2013 and 2012. As a result of this analysis, we concluded that no impairment indicators existed.

The changes in the carrying amount of goodwill for the years ended March 31, 2013 and 2012 are as follows:



(In thousands)	HSG			RSG			Total
Balance at March 31, 2011	$	135,298		$	24,912		$	160,210
Accumulated impairment losses as of March 31, 2011	(120,087		)	(24,912		)	(144,999		)
	15,211			—			15,211
Impact of foreign currency translation	(13		)	—			(13		)
Balance at March 31, 2012	$	15,198		—			$	15,198
Impact of foreign currency translation	(1,070		)	—			(1,070		)
Balance at March 31, 2013	$	14,128		—			$	14,128

Intangible Assets

The following table summarizes our intangible assets at March 31, 2013, and 2012:



	2013									2012
	Gross						Net			Gross						Net
	carrying			Accumulated			carrying			carrying			Accumulated			carrying
(In thousands)	amount			amortization			amount			amount			amortization			amount
Amortized intangible assets:
Customer relationships	$	12,475		$	(10,880	)	$	1,595		$	12,475		$	(9,979	)	$	2,496
Non-competition agreements	2,910			(2,422		)	488			2,910			(2,162		)	748
Developed technology	19,876			(10,164		)	9,712			19,578			(9,339		)	10,239
Patented technology	80			(80		)	—			80			(80		)	—
Project expenditures not yet in use	5,786			—			5,786			945			—			945
Accumulated impairment	(9,493		)	—			(9,493		)	(9,493		)	—			(9,493		)
	31,634			(23,546		)	8,088			26,495			(21,560		)	4,935
Unamortized intangible assets:
Trade names	10,100			N/A			10,100			10,100			N/A			10,100
Accumulated impairment	(900		)	N/A			(900		)	(900		)	N/A			(900		)
	9,200			N/A			9,200			9,200			N/A			9,200
Total intangible assets	$	40,834		$	(23,546	)	$	17,288		$	35,695		$	(21,560	)	$	14,135

During the fourth quarter of 2012, it was determined that Guest 360™, a property management solution system, would no longer be offered to our customers. As a result, we have impaired the entire remaining assets, $8.1 million of intangibles and $0.5 million of fixed assets, as well as the known costs associated with a transition plan for all of the existing customers off of this platform, of $1.1 million. In fiscal 2013, we recorded in an additional $0.1 million related to the costs associated with this asset impairment. These charges were classified within “Asset impairments and related charges” in the Consolidated Statements of Operations.

During the second quarter of fiscal 2011, we concluded that certain software developed technology within HSG was no longer being sold. As a result we recorded an impairment charge of $0.1 million, which impacted HSG. During the fourth quarter of fiscal 2011, we concluded that it was no longer using certain indefinite-lived intangible assets related to an HSG trade name. Accordingly, we recorded an impairment charge of $0.9 million, which impacted HSG. The total impairment charges recorded with respect to intangible assets during fiscal 2011 of 1.0 million were classified within “Asset impairments and related charges” in our Consolidated Statements of Operations.

Amortization expense relating to intangible assets was $1.2 million for the fiscal years ended March 31, 2013, 2012 and 2011. Amortization expense relating to developed technology software intangible assets, including Guest 360™ for the fiscal years ended March 31, 2013, 2012 and 2011 was $0.8 million, $1.7 million and $1.8 million, respectively, and is included in Products cost of goods sold.

The following table summarizes our remaining estimated amortization expense relating to intangible assets.



	Estimated
	Amortization
(In thousands)	Expense
Fiscal year ending March 31,
2014	$	1,161
2015	982
2016	60
2017	60
2018	39
Total	$	2,302

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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