Goodwill and Intangible Assets

12 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets [Abstract]

GOODWILL AND INTANGIBLE ASSETS

6.

GOODWILL AND INTANGIBLE ASSETS

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, Business Segments, Agilysys has two operating segments.

We conducted our annual goodwill impairment test on February 1, 2012, 2011 and 2010. 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, 2012 and 2011 are as follows:

(In thousands)	HSG			RSG			Total
Balance at March 31, 2010	$	135,097		$	24,912		$	160,009
Accumulated impairment losses as of March 31, 2010		(120,087	)		(24,912	)		(144,999	)
		15,010			—			15,010
Impact of foreign currency translation		201			—			201
Balance at March 31, 2011	$	15,211		$	—		$	15,211
Impact of foreign currency translation		(13	)		—			(13	)
Balance at March 31, 2012	$	15,198		$	—		$	15,198

Intangible Assets

The following table summarizes our intangible assets at March 31, 2012, and 2011:

	2012									2011
(In thousands)	Gross carrying amount			Accumulated amortization			Net carrying amount			Gross carrying amount			Accumulated amortization			Net carrying amount
Amortized intangible assets:
Customer relationships	$	12,475		$	(9,979	)	$	2,496		$	12,475		$	(9,060	)	$	3,415
Non-competition agreements		2,910			(2,162	)		748			2,910			(1,901	)		1,009
Developed technology		19,578			(10,683	)		8,895			16,312			(9,027	)		7,285
Patented technology		80			(80	)		—			80			(80	)		—
Project expenditures not yet in use		945			—			945			1,685			—			1,685
Accumulated impairment		(9,493	)		1,344			(8,149	)		(59	)		—			(59	)
		26,495			(21,560	)		4,935			33,403			(20,068	)		13,335
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	$	35,695		$	(21,560	)	$	14,135		$	42,603		$	(20,068	)	$	22,535

During the fourth quarter of 2012, it was determined that certain developed technologies would no longer be offered for sale. As a result, we have impaired the entire remaining assets of $8.6 million, including $0.5 million of tangible assets, and accrued the estimated costs associated with a transition plan for all of the existing customers off of this platform of $1.1 million. 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 asset impairments and related charges during fiscal 2012, 2011, and 2010 of $9.7 million, $1.0 million and $0.2 million, respectively, 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, 2012 and 2011 and $1.4 million for the fiscal year ended March 31, 2010. Amortization expense relating to developed technology software intangible assets was $1.7 million for the fiscal years ended March 31, 2012 and 2011, respectively, and $1.3 million for the fiscal year ended March 31, 2010, and is classified in Products cost of goods sold.

The remaining estimated amortization expense relating to intangible assets is $1.9 million, $1.2 million and $0.9 million for fiscal 2013, 2014 and 2015, respectively. There is currently no amortization expense relating to intangibles for fiscal 2016 and 2017. Project expenditures not yet in use are not amortized until the underlying project is completed.