Classmates.com 2005 Annual Report Download - page 94

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Goodwill and Intangible Assets
The changes in goodwill for the years ended December 31, 2004 and 2005 were as follows (in thousands):
The adjustment to Classmates’ goodwill is primarily due to an increase in deferred tax assets for tax benefits associated with expense
deductions and a reduction in deferred tax liabilities due to an adjustment in the state income tax rate expected to apply to future reversals of
acquired book/tax basis differences.
Intangible assets consist of the following (in thousands):
The Company recorded a reduction in intangible assets of approximately $11.2 million during the December 2004 quarter in connection
with the release of the deferred tax valuation allowance.
Amortization expense for the years ended December 31, 2005 and 2004, the six months ended December 31, 2003 and the year ended
June 30, 2003 was $21.8 million, $20.4 million, $7.9 million and $16.4 million, respectively.
F- 25
Balance at December 31, 2003
$
9,541
Goodwill recorded in connection with acquisitions
76,458
Recognition of acquired deferred tax assets
(9,541
)
Balance at December 31, 2004
76,458
Adjustments to Classmates
’
goodwill
(1,697
)
Goodwill recorded in connection with PhotoSite acquisition
5,738
Balance at December 31, 2005
$
80,499
December 31, 2005
Cost
Accumulated
Amortization
Net
Pay accounts and free accounts
$
98,732
$
(66,103
)
$
32,629
Trademarks and trade names
21,952
(4,254
)
17,698
Advertising contracts and related relationships
7,200
(3,871
)
3,329
Software and technology
9,280
(4,691
)
4,589
Patents, domain names and other
3,247
(2,154
)
1,093
Total
$
140,411
$
(81,073
)
$
59,338
December 31, 2004
Cost
Accumulated
Amortization
Net
Pay accounts and free accounts
$
98,402
$
(51,736
)
$
46,666
Trademarks and trade names
15,952
(1,879
)
14,073
Advertising contracts and related relationships
7,200
(527
)
6,673
Software and technology
4,970
(3,285
)
1,685
Patents, domain names and other
3,309
(1,848
)
1,461
Total
$
129,833
$
(59,275
)
$
70,558