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5. GOODWILL AND OTHER INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill at December 31, 2014 totaled $200.3 million. Goodwill is recorded as a result of business combinations. Activity in goodwill for the years ended December 31, 2012, 2013 and 2014, is provided below (in thousands):

 

Balance as of January 1, 2012  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 
Goodwill acquired through the acquisition of Corinthian  310 
Goodwill acquired through the acquisition of Westchester Imaging  231 
Goodwill acquired through the acquisition of Garden State Radiology  50 
Goodwill acquired through the acquisition of Medical Imaging of Manhattan  1,433 
Goodwill acquired through the acquisition of Liberty Pacific  1,288 
Goodwill acquired through the acquisition of Moreno Valley  362 
Goodwill acquired through the acquisition of Hematology-Oncology  235 
Balance as of December 31, 2014 $200,304 

 

The amount of goodwill from these acquisitions that is deductible for tax purposes as of December 31, 2014 is $120.0 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 $18.7 million at December 31, 2014. Also included in other intangible assets is the value of covenant not to compete contracts associated with our facility acquisitions totaling $5.6 million less accumulated amortization of $4.6 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.

 

Total amortization expense for the years ended December 31, 2014, 2013 and 2012 was $3.1 million, $3.1 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):

 

  2015  2016  2017  2018  2019  Thereafter  Total  Weighted average amortization period remaining in years 
Management Service Contracts $2,315  $2,315  $2,315  $2,315  $2,315  $27,205  $38,781   16.8 
Covenant not to compete contracts  320   254   191   148   64   –   977   3.7 
Customer relationships  184   1   –   –   –   –   185   0.9 
Developed technology and in-process R&D  149   24   –   –   –   –   173   1.3 
Trade Names*  –   –   –   –   –   7,508   7,508   – 
Total Annual Amortization $2,968  $2,594  $2,506  $2,463  $2,379  $34,713  $47,624     

 

* These trade name intangibles have an indefinite life