Intangible Assets

9 Months Ended

Jul. 31, 2017

(5) Intangible Assets

Intangible assets consisted of the following as of July 31, 2017 and October 31, 2016:

(In thousands)	2017			2016
Intangible assets:
Developed technology	$	7,878		$	7,802
Customer and distributor relationships		401			373
Trademarks and trade names		268			254
Software		891			849
Capitalized software in progress		3,299			2,841
		12,737			12,119
Less: accumulated amortization		(8,190	)		(7,908	)
	$	4,547		$	4,211

The Company amortizes the intangible assets related to developed technology, patents and trademarks using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Total amortization expense was $74,000 and $322,000 for the three-month periods ended July 31, 2017 and 2016, respectively and $219,000 and $484,000 for the nine-month periods ended July 31, 2017 and 2016, respectively. Of the total, amortization expenses of $32,000 and $270,000 related to software costs are included in the cost of equipment, supplies and accessories revenues for the three-month periods ended July 31, 2017 and 2016, respectively, and $98,000 and $307,000 for the nine-month periods ended July 31, 2017 and 2016, respectively. The Company estimates it will incur the following amortization expense in the balance of fiscal 2017 and in future fiscal years based on the intangible assets the Company expects to have placed in service at the end of fiscal 2017:

(In thousands)	Amortization
Three months ending October 31, 2017	$	154
2018		593
2019		548
2020		525
2021		460
2022		392
Thereafter		1,432
	$	4,104

This table does not include estimated amortization expense of $86,000 for patents included in “Developed technology,” or $357,000 for capitalized software costs the Company expects to place into service after the current fiscal year. The Company capitalized software development costs of $159,000 and $203,000 during the three-month periods ended July 31, 2017 and 2016, respectively, and $500,000 and $569,000 during the nine-month periods ended July 31, 2017 and 2016, respectively. Upon completion of these development projects, the Company expects to amortize the capitalized software costs over a ten year period.

MGC DIAGNOSTICS Corp 10-Q