NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The changes in the carrying amount of the goodwill by reporting unit for the years ended June 30, 2002 and 2003 were as follows (in thousands): The pro forma effect on prior year earnings of excluding goodwill and acquired assembled workforce amortization expense, net of tax, is as follows: The Company issues stock options to its employees and outside directors and provides employees the right to purchase stock pursuant to stockholder approved stock option and employee stock purchase plans, which are described more fully in Note 10. The Company accounts for these plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations. No material stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation. For pro forma (p) Fair Value of Stock Options (o) Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is disclosed in the accompanying consolidated statements of stockholders' equity. The components of accumulated other comprehensive income (loss) as of June 30, 2002 and 2003 are as follows (in thousands): Reporting Unit Maintenance Consulting and Asset Class License Services Training Total Carrying amount as of June 30, 2001 $21,078 $ 944 $ 2,330 $24,352 Goodwill acquired during fiscal 2002 46,590 4,341 8,692 59,623 Effect of exchange rates used for translation 245 11 27 283 Carrying amount as of June 30, 2002 67,913 5,296 11,049 84,258 Purchase price adjustment — Hyprotech acquisition 1,407 88 264 1,759 Impairment charge (69,323) (5,392) — (74,715) Goodwill acquired during fiscal 2003 2,358 147 442 2,947 Effect of exchange rates used for translation 3 8 73 84 Carrying amount as of June 30, 2003 $ 2,358 $ 147 $11,828 $14,333 2001 Reported net income (loss) attributable to common shareholders $(20,375) Add: Goodwill and acquired assembled workforce amortization 1,840 Adjusted net income (loss) $(18,535) Basic and diluted income per common share Reported net income (loss) $ (0.68) Goodwill and acquired assembled workforce amortization 0.06 Adjusted net income (loss) $ (0.62) 2002 2003 Unrealized gain (loss) on investments, net of tax $ 127 $ — Cumulative translation adjustment (2,809) (1,445) Total accumulated other comprehensive income (loss) $(2,682) $(1,445) 42