Natus Medical Incorporated Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets

Intangible Assets

9 Months Ended

Sep. 30, 2014

Intangible Assets / Goodwill [Abstract]

Intangible Assets

5 – Intangible Assets

The following table summarizes the components of gross and net intangible asset balances (in thousands):

	September 30, 2014							December 31, 2013
	Gross Carrying Amount		Accumulated Impairment	Accumulated Amortization		Net Book Value			Gross Carrying Amount	Accumulated Impairment	Accumulated Amortization			Net Book Value
Intangible assets with definite lives:
Technology		$64,949	--		$(27,566)		$37,383		$65,904	--		$(25,519)	$40,385
Customer related		31,480	--		(11,245)		20,235		31,231	--		(9,763)	21,468
Internally developed software		13,663	--		(6,126)		7,537		11,069	--		(5,107)	5,962
Patents		2,851	--		(2,162)		689		2,724	--		(2,094)	630
Backlog		720	--		(720)		--		722	--		(722)	--
Definite-lived intangible assets		113,664			(47,819)		65,844		111,650	--		(43,205)	68,445
Intangible assets with indefinite lives:
Tradenames		32,638	(2,967)		--		29,671		33,435	(3,060)		--	30,375
Total Intangibles		$146,302	$(2,967)		$(47,819)		$95,515		$145,085	$(3,060)		$(43,205)	$98,820

Definite-lived intangible assets are amortized over their weighted average lives of 15 years for technology, 11 years for customer related intangibles, 7 years for internally developed software, and 14 years for patents. Intangible assets with indefinite lives are not subject to amortization.

Internally developed software consists of $12.2 million relating to costs incurred for development of internal use computer software and $1.5 million for development of software to be sold.

Amortization expense related to intangible assets with definite lives was as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013

Technology	$1,057	$1,095	$2,985	$3,260
Customer related	294	678	1,247	2,000
Internally developed software	321	262	1,049	771
Patents	17	30	83	91
Total amortization	$1,689	$2,065	$5,364	$6,122

During the second quarter 2014 we identified an inaccuracy related to intangibles amortization. Amortization expense was being recorded on a straight line basis in USD for foreign entities when the expense should have been recorded on a straight line basis in the entities’ functional currency. As a result there was a $1.1 million adjustment to reduce amortization expense in the second quarter 2014 related to prior periods.

Expected amortization expense related to amortizable intangible assets is as follows (in thousands):
Three months ending December 31, 2014	$	1,827
2015		7,777
2016		7,028
2017		6,741
2018		6,511
2019		5,538
Thereafter		30,422
Total expected amortization expense	$	65,844