Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

As a result of these policies, we have deferred revenue and costs at December 31, 2016 and 2015 consisting of the following (in thousands):



	2016		2015
Deferred equipment revenue⁽¹⁾	$	2,718	$	753
Deferred fixed-priced support or maintenance contract revenue	4,527		3,811
Other deferred revenue⁽²⁾	16,246		10,083
Total deferred revenue	23,491		14,647
Less current portion included in other accrued liabilities	21,400		14,647
Long-term portion of deferred revenue included in other liabilities	$	2,091	$	—
Current portion of deferred costs included in prepaid expenses and other	$	784	$	1,172
Long-term portion of deferred costs included in other assets	1,297		(72		)
Total deferred costs⁽³⁾	$	2,081	$	1,100

____________________________


⁽¹⁾	Represents amounts received for sales arrangements that include equipment, hardware, software and services.


⁽²⁾	Represents amounts received in advance for services.


⁽³⁾	Represents costs related to warranties, equipment and hardware included in deferred equipment revenue.

Property and Equipment Estimated Useful Lives

Depreciation and amortization are recognized on the straight-line method over the following estimated useful lives:



Buildings and improvements	5 to 40 years
Leasehold improvements	Lesser of lease term or 15 years
Furniture and equipment	3 to 10 years
Software	3 to 10 years
Equipment held under capital leases	5 to 10 years

Property and Equipment

Property and equipment at December 31, 2016 and 2015 consisted of (in thousands):



	2016			2015
Land	$	72,526		$	72,651
Building and improvements	173,214			156,417
Leasehold improvements	247,470			213,272
Furniture and equipment	380,771			325,244
Software	51,792			46,366
Buildings held under capital leases	72,004			58,984
Equipment held under capital leases	62			55
Construction in progress	54,745			22,230
Total property and equipment	1,052,584			895,219
Less — accumulated depreciation and amortization	(439,360		)	(387,466		)
Total property and equipment, net	$	613,224		$	507,753

Other Intangible Assets

In addition to goodwill, we have amortizable intangible assets at December 31, 2016 and 2015, as follows (in thousands):



	2016							2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Non-contractual customer relationships	$	218,847	$	(62,331	)	$	156,516	$	116,082	$	(48,821	)	$	67,261
Covenants not-to-compete	23,990		(7,580		)	16,410		12,435		(4,779		)	7,656
Favorable lease assets	9,451		(5,855		)	3,596		9,441		(5,440		)	4,001
Technology	1,377		(795		)	582		1,377		(589		)	788
Trademarks	30,144		(7,713		)	22,431		11,591		(4,086		)	7,505
Client lists	10		(1		)	9		—		—			—
Franchise rights	11,730		(2,737		)	8,993		11,730		(1,564		)	10,166
Total	$	295,549	$	(87,012	)	$	208,537	$	162,656	$	(65,279	)	$	97,377

Amortization of Intangible Assets Estimated Useful Lives

Amortization is recognized on the straight-line method over the following estimated useful lives:



Non-contractual hospital customer relationships		5 to 7 years
Non-contractual laboratory customer relationships		10 to 25 years
All other non-contractual customer relationships		5 years
Covenants not-to-compete		3 to 25 years
Favorable lease assets		8 to 27 years
Technology		4 to 10 years
Trademarks		2 to 10 years
Client list		3 years
Franchise rights		10 years

Aggregate Amortization Expense

The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):



	For the Years Ended December 31,
	2016		2015		2014
Aggregate amortization expense	$	37,782	$	23,395	$	21,039

Estimated Amortization Expense Related to Intangible Assets

The estimated amortization expense related to intangible assets for each of the five succeeding years and thereafter at December 31, 2016 is as follows (in thousands):



Definite-lived intangible assets:
2017	$	43,068
2018	39,454
2019	36,407
2020	31,475
2021	21,209
Thereafter	36,924
Total	$	208,537
Indefinite-lived intangible assets:
Trademarks	4,040
Total intangible assets	$	212,577

Calculation of Basic and Diluted Earnings per Share

Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):



	For Years Ended December 31,
	2016		2015		2014
Net income attributable to VCA Inc.	$	209,196	$	211,049	$	135,438
Weighted average common shares outstanding:
Basic	80,926		81,443		86,656
Effect of dilutive potential common stock:
Stock options	270		330		302
Non-vested shares and units	529		641		867
Diluted	81,725		82,414		87,825
Basic earnings per common share	$	2.59	$	2.59	$	1.56
Diluted earnings per common share	$	2.56	$	2.56	$	1.54