Long-Lived Assets

12 Months Ended

Dec. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Long-Lived Assets

4.Long-Lived Assets

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

	Useful Lives
	(Years)		2020			2019
Computer equipment	3-6		$	87,289		$	88,701
Leasehold improvements	5-10			25,442			25,778
Operating equipment	3-8			67,097			59,864
Furniture and fixtures		8		7,004			8,115
				186,832			182,458
Less - accumulated depreciation				(105,073	)		(98,029	)
Property and equipment, net			$	81,759		$	84,429

Goodwill. We do not have any intangible assets with indefinite lives other than goodwill.  A rollforward of goodwill for 2019 and 2020 is as follows (in thousands):

January 1, 2019 balance	$	255,816
Adjustments related to prior acquisitions		640
Effects of changes in foreign currency exchange rates		2,708
December 31, 2019 balance		259,164
Tekzenit, Inc. acquisition		9,083
Adjustments related to prior acquisitions		(60	)
Effects of changes in foreign currency exchange rates		4,135
December 31, 2020 balance	$	272,322

See Note 7 for discussion of the Tekzenit, Inc. acquisition.

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

Acquired Customer Contracts.  As of December 31, 2020 and 2019, the carrying values of our acquired customer contracts were as follows (in thousands):  

	December 31, 2020							December 31, 2019
	Gross							Gross
	Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Amount		Amortization			Amount		Amount		Amortization			Amount
Acquired customer contracts	$	153,790	$	(105,778	)	$	48,012	$	148,872	$	(93,767	)	$	55,105

Acquired customer contracts as of December 31, 2020 include assets acquired in the Tekzenit, Inc. acquisition (see Note 7).

The aggregate amortization related to customer contracts included in our operations for 2020, 2019, and 2018 was as follows (in thousands):

	2020		2019		2018
Acquired customer contracts amortization (1)	$	9,963	$	10,374	$	7,898

(1) Acquired customer contracts represent assets acquired in our prior business acquisitions.  Acquired customer contracts are amortized over their estimated useful lives ranging from three to twenty years based on the approximate pattern in which the economic benefits of the intangible assets are expected to be realized, with the amortization expense included as cost of revenue in our Income Statements.

The remaining weighted-average amortization period of the acquired customer contract as of December 31, 2020 was approximately 100 months.  Based on the net carrying value of these acquired customer contracts, the estimated amortization for each of the five succeeding fiscal years ending December 31 will be:  2021 – $7.2 million;  2022 – $7.0 million; 2023 – $5.8 million; 2024 – $5.6 million; and 2025 – $5.6 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, 2020 and 2019, the carrying values of our software assets were as follows (in thousands):

	2020							2019
	Gross							Gross
	Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Amount		Amortization			Amount		Amount		Amortization			Amount
Acquired software (2)	$	75,602	$	(70,242	)	$	5,360	$	75,370	$	(68,157	)	$	7,213
Internal use software (3)		90,687		(69,594	)		21,093		82,593		(57,280	)		25,313
Total software	$	166,289	$	(139,836	)	$	26,453	$	157,963	$	(125,437	)	$	32,526

The aggregate amortization related to software included in our operations for 2020, 2019, and 2018 was as follows (in thousands):

	2020		2019		2018
Acquired software amortization (2)	$	1,853	$	2,229	$	1,801
Internal use software amortization (3)		13,216		10,641		9,517
Total software amortization	$	15,069	$	12,870	$	11,318

(2) Acquired software represents software intangible assets acquired in our prior business acquisitions, which are amortized over their estimated useful lives ranging from four to eight years.   The amortization of acquired software is reflected as a cost of revenue in our Income Statements.

(3) 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 one to ten years.

The remaining weighted-average amortization period of the software intangible assets as of December 31, 2020 was approximately 36 months.  Based on the net carrying value of these intangible assets, the estimated amortization for each of the five succeeding fiscal years ending December 31 will be:  2021– $11.7 million;  2022 – $7.2 million; 2023 – $4.6 million; 2024 – $1.5 million; and 2025 – $0.9 million.  

Customer Contract Costs.  As of December 31, 2020 and 2019, the carrying values of our customer contract cost assets, related to those contracts with a contractual term greater than one year, were as follows (in thousands):

	December 31, 2020							December 31, 2019
	Gross							Gross
	Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Amount		Amortization			Amount		Amount		Amortization			Amount
Customer contract incentives (4)	$	4,626	$	(2,320	)	$	2,306	$	4,626	$	(1,612	)	$	3,014
Capitalized costs (5)		70,214		(33,104	)		37,110		68,085		(26,482	)		41,603
Capitalized commission fees (6)		12,291		(4,469	)		7,822		9,561		(3,432	)		6,129
Total customer contact costs	$	87,131	$	(39,893	)	$	47,238	$	82,272	$	(31,526	)	$	50,746

During 2020, we recorded an impairment charge of $10.3 million for the write-off of capitalized customer contract costs related to a discontinued project implementation.  This non-cash impairment charge is primarily included in cost of revenue in our Income Statement.

The aggregate amortization related to our customer contract costs included in our operations for 2020 and 2019 was as follows (in thousands):

	2020		2019		2018
Customer contract incentives amortization (4)	$	708	$	6,018	$	11,052
Capitalized costs amortization (5)		13,803		12,625		10,304
Capitalized commission fees amortization (6)		2,679		2,136		2,025
Total customer contract costs amortization	$	17,190	$	20,779	$	23,381

(4) Customer contract incentives consist principally of incentives provided to new or existing customers to convert their customer accounts to, or retain their customer’s account on, our outsourced solutions and are amortized ratably over the contract period to include renewal periods, if applicable, which as of December 31, 2020, have termination dates that range from 2023 to 2025.  The amortization of customer contract incentives is reflected as a reduction of revenue in our Income Statements.

(5) Capitalized costs are related to customer conversion/set-up activities and direct material costs to fulfill long-term cloud-based or managed services arrangements.  These costs are amortized over the contract period, which as of December 31, 2020, range from 2021 to 2028, based on the transfer of goods or services to which the assets relate, and are included in cost of revenue in our Income Statements.

(6) Capitalized commission fees are incremental commissions paid as a result of obtaining a customer contract.  These fees are amortized over the contract period based on the transfer of goods or services to which the assets relate, which as of December 31, 2020, range from 2021 to 2026, and are included in selling, general and administrative (“SG&A”) expenses in our Income Statements.  Incremental commission fees incurred as a result of obtaining a customer contract are expensed when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less (a practical expedient allowed under ASC 606).