GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

12 Months Ended

Mar. 31, 2011

GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS [Abstract]

GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

8. GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

Changes in the carrying amounts of goodwill for the years ended March 31, 2011 and 2010 were as follows (in thousands):

				Web
				Performance			Professional		Application
	Products			Services			Services		Services		Total

Goodwill at April 1, 2009	$	187,166		$	-		$	140,436	$	11,532	$	339,134
Gomez acquisition (see Note 2)		32,653			218,523							251,176
Effect of foreign currency translation		570						990				1,560
Goodwill at March 31, 2010		220,389			218,523			141,426		11,532		591,870
BEZ & DocSite acquisitions (see Note 2)					1,944					13,853		15,797
Gomez adjustment		(140	)		(940	)						(1,080	)
Effect of foreign currency translation		806						372				1,178
Goodwill at March 31, 2011	$	221,055		$	219,527		$	141,798	$	25,385	$	607,765

The components of the Company's capitalized software and other intangible assets were as follows (in thousands):

	March 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Unamortized intangible assets:
Trademarks	$	4,467				$	4,467

Amortizable intangible assets:
Capitalized software:
Internally developed	$	194,770	$	(161,671	)	$	33,099
Purchased		136,469		(125,118	)		11,351
Customer relationship agreements		48,813		(16,729	)		32,084
Other		11,162		(9,162	)		2,000
Total amortized intangible assets	$	391,214	$	(312,680	)	$	78,534

	March 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Unamortized intangible assets:
Trademarks	$	4,429				$	4,429

Amortizable intangible assets:
Capitalized software:
Internally developed	$	179,215	$	(150,419	)	$	28,796
Purchased		133,294		(120,138	)		13,156
Customer relationship agreements		46,772		(12,051	)		34,721
Other		10,896		(7,243	)		3,653
Total amortized intangible assets	$	370,177	$	(289,851	)	$	80,326

Unamortized trademarks were acquired as part of the Covisint and Changepoint acquisitions in fiscal 2004 and fiscal 2005. These trademarks are deemed to have an indefinite life and therefore are not being amortized.

Capitalized software includes the costs of internally developed software technology (“capitalized internal software cost”) and software technology purchased through acquisitions (“purchased software”).

Customer relationship agreements were acquired as part of recent acquisitions. The customer relationship agreements are being amortized over periods of up to ten years.

Other amortizable intangible assets include amortizable trademarks and patents associated with recent acquisitions and are being amortized over periods of up to three years.

Amortization of intangible assets

Amortization expense of intangible assets for the years ended March 31, 2011, 2010 and 2009 was $22.4 million, $18.5 million and $26.1 million, respectively, of which $11.2 million, $11.0 million and $15.9 million, respectively, relates to capitalized internal software cost amortization and was primarily reported as “cost of software license fees” in the consolidated statements of operations.

Estimated future amortization expense, based on identified intangible assets at March 31, 2011, is expected to be as follows (in thousands):

	Year Ended March 31,
	2012		2013		2014		2015		2016		Thereafter

Capitalized software	$	16,089	$	12,767	$	9,248	$	4,212	$	2,094	$	40
Customer relationships		4,212		3,835		3,789		3,788		3,788		12,672
Other intangibles		1,473		487		40
Total	$	21,774	$	17,089	$	13,077	$	8,000	$	5,882	$	12,712

Impairment evaluation

The Company evaluated its goodwill and other intangible assets for all reporting units as of March 31, 2011 and 2010. There were no impairments recorded during fiscal 2011. The March 31, 2010 evaluation resulted in a $1.6 million charge to reduce the book value of our Changepoint trademark to its fair value of $4.1 million as of March 31, 2010 (fair value as of March 31, 2011 was $10.0 million). The $1.6 million impairment was recorded to “administrative and general” in the consolidated statements of operations. The Company used the “relief from royalty” income approach in determining the fair value of the trademark which estimates the portion of a company's earnings attributable to a trademark based upon the royalty rate the company would have paid for the use of the trademark if it did not own it. This measurement is considered a level 3 input under the fair value hierarchy (see note 4).

When performing the goodwill impairment evaluation, the Company determined the fair value of each reporting unit using a discounted cash flow analysis supported by market multiples of revenue. The evaluation resulted in a fair value that exceeded each reporting unit's carrying value as of March 31, 2011 and 2010.

Reclassification

As of March 31, 2011, capitalized software, customer relationships, trademarks and other intangible assets are reported as "capitalized software and other intangible assets, net" in the consolidated balance sheets. In order to conform the March 31, 2010 balance sheet to the current presentation, the Company has reclassified certain intangible assets totaling $42.8 million (reported as non-current "other assets" in the March 31, 2010 consolidated balance sheets) to "capitalized software and other intangible assets, net".

- Definition

Discloses 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 or 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. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

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