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5. GOODWILL AND OTHER INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill at December 31, 2013 totaled $196.4 million. Goodwill is recorded as a result of business combinations. Activity in goodwill for the years ended December 31, 2011, 2012 and 2013, is provided below (in thousands):

 

Balance as of January 1, 2011   143,353 
Goodwill acquired through the acquisition of Imaging On Call, LLC   3,799 
Goodwill acquired through the acquisition of the imaging practice of Stuart London, MD   600 
Goodwill acquired through the acquisition of certain imaging centers from Diagnostic Health Corp.   2,009 
Goodwill acquired through the acquisition of Hematology-Oncology   1,016 
Adjustments to our preliminary allocation of the purchase price of Image Medical Corp.   2,443 
Adjustments to our preliminary allocation of the purchase price of Progressive Health   1,369 
Adjustments to our preliminary allocation of the purchase price of Presgar Imaging   155 
Goodwill acquired through the acquisition of our controlling interest in Radar, LLC   845 
Goodwill acquired through the acquisition of Raven Holdings U.S., Inc.   3,918 
Balance as of December 31, 2011   159,507 
Goodwill acquired through the acquisition of Camarillo Imaging   86 
Goodwill acquired through the acquisition of West Coast Radiology   5,395 
Goodwill acquired through the acquisition of Advanced Medical Imaging of Stuart   923 
Goodwill acquired through the acquisition of Orthopedic Imaging   302 
Adjustments to our preliminary allocation of the purchase price of Raven Holdings U.S., Inc.   7,895 
Goodwill acquired through the acquisition of our controlling interest in Upper Chesapeake Imaging   1,849 
Goodwill acquired through the acquisition of Vanowen Radiology   386 
Goodwill acquired through the acquisition of our controlling interest in Clinical Radiology   1,838 
Goodwill acquired through the acquisition of Lenox Hill Radiology   15,690 
Balance as of December 31, 2012   193,871 
Goodwill acquired through the acquisition of breast surgery practice in Mission Viejo, CA   185 
Adjustments to our preliminary allocation of the purchase price of Lenox Hill Radiology   (3,219)
Goodwill acquired through the acquisition of Park West   2,047 
Goodwill acquired through the acquisition of imaging center in Brooklyn, NY   4,206 
Goodwill associated with the sale of a wholly owned imaging center in Northfield, NJ   (1,000)
Goodwill acquired through the acquisition of South Valley Med Imaging   305 
Balance as of December 31, 2013  $196,395 

 

The amount of goodwill from these acquisitions that is deductible for tax purposes is $116.0 million.

 

Other intangible assets are primarily related to the value of management service agreements obtained through our acquisition of Radiologix, Inc. in 2006 and are recorded at a cost of $57.5 million less accumulated amortization of $16.4 million at December 31, 2013. Also included in other intangible assets is the value of covenant not to compete contracts associated with our recent facility acquisitions totaling $4.8 million less accumulated amortization of $4.1 million, as well as the value of trade names associated with acquired imaging facilities totaling $9.0 million less accumulated amortization of $1.5 million. Also in connection with our purchase of eRAD and included in other intangible assets is the value of eRAD’s developed technology and its customer relationships. Amortization expense for the year ended December 31, 2013, 2012 and 2011 was $3.1 million, $3.5 million and $3.5 million, respectively. Intangible assets are amortized using the straight-line method. Management service agreements are amortized over 25 years using the straight line method. Developed technology and customer relationships are amortized over 5 years using the straight line method.

 

 

The following table shows annual amortization expense, by asset classes that will be recorded over the next five years (in thousands):

 

   2014   2015   2016   2017   2018   Thereafter   Total   Weighted average amortization period remaining in years
Management Service Contracts  $2,315   $2,315   $2,315   $2,315   $2,315   $29,521   $41,097    17.8 
Covenant not to compete contracts   304    190    123    60    16    –    693    2.9 
Customer relationships   197    184    1    –    –    –    382    1.9 
Developed technology and in-process R&D   189    149    24         –    –    362    2.0 
Trade Names*   –    –    –    –    –    7,508    7,508    – 
Total Annual Amortization  $3,005   $2,838   $2,463   $2,375   $2,331   $37,029   $50,042      

 

 

* These trade name intangibles have an indefinite life