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63
In 2002, we acquired ValuSoft, Inc. for a total cost of $14.2 million, which was paid primarily in cash. In
addition, we have since paid the former shareholders of ValuSoft additional consideration in the amount
of $7.4 million because ValuSoft reached certain pre-tax income targets in the three years subsequent to
the acquisition. They are still eligible for additional consideration in the amount of $3.6 million, which may
be paid by us in cash or stock, if they reach certain pre-tax income targets over the next two years. Any
additional consideration determined to be payable will increase goodwill in the period such pre-tax income
targets are reached. Goodwill recognized in the original transaction and in the payments of the additional
consideration has amounted to $19.4 million and is expected to be deductible for income tax purposes.
6. Goodwill
The changes in the carrying amount of goodwill for the fiscal years ended March 31, 2006 and 2005 were as
follows (in thousands):
Balance at March 31,2004 ........................................... $59,399
Goodwill acquired ................................................ 18,168
Additional consideration paid for ValuSoft........................... 2,300
Reclassification of initial investment in Minick ....................... 1,959
Effect of foreign currency exchange rates ............................ 1,614
Balance at March 31,2005 ........................................... $83,440
Goodwill acquired ................................................ 4,801
Additional consideration paid for Val uSoft. .......................... 2,800
Effect of foreign currency exchange rates and other................... (169)
Balance at March 31,2006 ........................................... $90,872
7. Other Intangible Assets
Intangible assets include licenses, software development and other intangible assets. Intangible assets are
included in other long-term assets, net, except licenses and software development, which are reported
separately in the consolidated balance sheets. Other intangible assets are as follows (in thousands):
March 31, 2006March 31, 2005
Useful
Lives
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amount
Software technology .. 2-3 years $ 3,055 $ (2,085) $ 970 $ 2,988 $ (894 ) $ 2,094
Trade secrets. ....... 5 years 1,800 (1,530) 270 1,800 (1,170 ) 630
Customer list ........ 4-5 years 1,414 (550) 864 1,523 (254 ) 1,269
Trade names ........ 3-10 years 3,196 (739) 2,457 3,055 (298 ) 2,757
Non-compete /
Employment
contracts ......... 3-6.5 years 1,055 (656) 399 967 (435 ) 532
Total. .............. $ 10,520 $ (5,560) $ 4,960 $ 10,333 $ (3,051 ) $ 7,282
Amortization of other intangible assets for the fiscal years ended March 31, 2006, 2005 and 2004 was $2.6
million, $2.0million and $1.2 million, respectively. Finite-lived other intangible assets are amortized using
the straight-line method over the lesser of their estimated useful lives or the agreement terms, typically
from two to ten years and are assessed for impairment under SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets.”