Long-Lived Assets

12 Months Ended

Dec. 31, 2012

Long-Lived Assets [Abstract]

Long-Lived Assets

5. Long-Lived Assets

Property and Equipment. Property and equipment at December 31 consisted of the following (in thousands, except years):

	Useful Lives  (years)		2012			2011
Computer equipment		3-5	$	76,924		$	63,102
Leasehold improvements		5-10		14,415			17,315
Operating equipment		3-5		58,684			60,233
Furniture and equipment		3-8		9,990			14,241
Capital projects in process		—		59			2,388
				160,072			157,279
Less—accumulated depreciation				(120,643	)		(116,125	)
Property and equipment, net			$	39,429		$	41,154

Goodwill. We do not have any intangible assets with indefinite lives other than goodwill. A rollforward of goodwill in 2012 and 2011 is as follows (in thousands):

January 1, 2011 balance	$	209,164
Revisions related to prior acquisitions		11,929
Effects of changes in foreign currency exchange rates		(1,080	)
December 31, 2011 balance		220,013
Goodwill acquired during period		8,955
Revisions related to prior acquisitions		(59	)
Effects of changes in foreign currency exchange rates		4,456
December 31, 2012 balance	$	233,365

The goodwill acquired in 2012 is related to the Ascade Acquisition discussed in Note 3. The revisions related to prior acquisitions made in 2011 relate to the finalization of our purchase accounting for the Intec Acquisition.

Other Intangible Assets. Our intangible assets subject to ongoing amortization consist of client contracts and software.

Client Contracts

Client contracts consist of the following: (i) investments in client contracts; (ii) direct and incremental costs that we have capitalized related to contractual arrangements where we have deferred revenues to convert or set-up client customers onto our outsourced solutions; and (iii) client contracts acquired in business combinations. As of December 31, 2012 and 2011, the carrying values of these assets were as follows (in thousands):

	2012							2011
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Investments in client contracts (1)	$	135,659	$	(129,411	)	$	6,248	$	135,855	$	(122,896	)	$	12,959
Capitalized costs (2)		19,955		(13,635	)		6,320		22,388		(10,527	)		11,861
Acquired client contracts (3)		105,537		(41,717	)		63,820		99,385		(25,802	)		73,583
Total client contracts	$	261,151	$	(184,763	)	$	76,388	$	257,628	$	(159,225	)	$	98,403

The aggregate amortization related to client contracts included in our operations for 2012, 2011, and 2010, was as follows (in thousands):

	2012		2011		2010
Investments in client contracts (1)	$	7,591	$	7,521	$	6,715
Capitalized costs (2)		4,172		3,296		2,660
Acquired client contracts (3)		17,017		17,126		3,920
Total client contracts	$	28,780	$	27,943	$	13,295

(1) Investments in client contracts consist principally of incentives provided to new or existing clients to convert their customer accounts to, or retain their customer’s accounts on, our customer care and billing systems. Investments in client contracts related to client incentives are amortized ratably over the lives of the respective client contracts, which as of December 31, 2012, have termination dates that range from 2013 through 2016. Amortization of the investments in client contracts related to client incentives is reflected as a reduction in processing and related services revenues in our Income Statements.

(2) Capitalized costs related to the deferral of conversion/set-up services costs are amortized proportionately over the same period that the deferred conversion/set-up services revenues are recognized, and are primarily reflected in cost of processing and related services in our Income Statements.

(3) Acquired client contracts represent assets acquired in our prior business acquisitions. Acquired client contracts are being amortized over their estimated useful lives ranging from two to fifteen years based on the approximate pattern in which the economic benefits of the intangible assets are expected to be realized. Classification of the amortization of acquired client contracts generally follows where the acquired business’ cost of revenues are categorized in our Income Statements.

The weighted-average remaining amortization period of client contracts as of December 31, 2012 was approximately 80 months. Based on the December 31, 2012 net carrying value of these intangible assets, the estimated amortization for each of the five succeeding fiscal years ending December 31 will be: 2013 – $22.1 million; 2014 – $17.3 million; 2015 – $10.4 million; 2016 – $7.9 million; and 2017 – $6.3 million.

Software

Software consists of: (i) software and similar intellectual property rights from various business combinations; and (ii) internal use software. As of December 31, 2012 and 2011, the carrying values of these assets were as follows (in thousands):

	2012							2011
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Acquired software (4)	$	67,104	$	(51,741	)	$	15,363	$	63,125	$	(45,986	)	$	17,139
Internal use software (5)		38,138		(16,772	)		21,366		23,362		(10,535	)		12,827
Total software	$	105,242	$	(68,513	)	$	36,729	$	86,487	$	(56,521	)	$	29,966

The aggregate amortization related to software included in our operations for 2012, 2011, and 2010, was as follows (in thousands):

	2012		2011		2010
Acquired software (4)	$	5,700	$	5,595	$	2,286
Internal use software (5)		6,985		5,637		3,101
Total software	$	12,685	$	11,232	$	5,387

(4) Acquired software represents the software intangible assets acquired in our prior business acquisitions, which are being amortized over their estimated useful lives ranging from five to ten years.

(5) Internal use software represents: (i) third-party software licenses; and (ii) the internal and external costs related to the implementation of the third-party software licenses. Internal use software is amortized over its estimated useful life ranging from twelve months to ten years.

The weighted-average remaining amortization period of the software intangible assets as of December 31, 2012 was approximately 66 months. Based on the December 31, 2012 net carrying value of these intangible assets, the estimated amortization for each of the five succeeding fiscal years ending December 31 will be: 2013 – $10.1 million; 2014 – $7.2 million; 2015 – $5.0 million; 2016 – $3.5 million; and 2017 – $2.7 million.