4.Long-Lived Assets

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

	Useful Lives
	(Years)		2017			2016
Computer equipment	3-5		$	85,902		$	74,640
Leasehold improvements	5-10			15,463			15,013
Operating equipment	3-8			56,170			57,210
Furniture and fixtures		8		10,242			9,119
				167,777			155,982
Less - accumulated depreciation				(123,126	)		(122,866	)
Property and equipment, net			$	44,651		$	33,116

Goodwill. We do not have any intangible assets with indefinite lives other than goodwill. A rollforward of goodwill in 2016 and 2017 is as follows (in thousands):

January 1, 2016 balance	$	219,724
Adjustments related to prior acquisitions		(60	)
Effects of changes in foreign currency exchange rates		(18,570	)
December 31, 2016 balance		201,094
Adjustments related to prior acquisitions		(60	)
Effects of changes in foreign currency exchange rates		9,046
December 31, 2017 balance	$	210,080

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, 2017 and 2016, the carrying values of these assets were as follows (in thousands):

	2017							2016
	Gross							Gross
	Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Amount		Amortization			Amount		Amount		Amortization			Amount
Investments in client contracts (1)	$	26,616	$	(9,782	)	$	16,834	$	37,482	$	(23,265	)	$	14,217
Capitalized costs (2)		26,811		(10,039	)		16,772		16,831		(5,130	)		11,701
Acquired client contracts (3)		87,308		(77,288	)		10,020		83,085		(68,328	)		14,757
Total client contracts	$	140,735	$	(97,109	)	$	43,626	$	137,398	$	(96,723	)	$	40,675

The aggregate amortization related to client contracts included in our operations for 2017, 2016, and 2015, was as follows (in thousands):

	2017		2016		2015
Investments in client contracts (1)	$	7,402	$	6,591	$	5,165
Capitalized costs (2)		5,141		2,755		1,334
Acquired client contracts (3)		5,406		6,683		8,902
Total client contracts	$	17,949	$	16,029	$	15,401

(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, 2017, have termination dates that range from 2019 through 2025. Amortization of the investments in client contracts related to client incentives is reflected as a reduction in cloud and related solutions revenues in our Income Statements.

(2)

Capitalized costs related to client conversion/set-up services related to long-term cloud-based or managed services arrangements are generally amortized proportionately over the contract period that the services are expected to be provided, and are primarily reflected in cost of cloud and related solutions 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 five to ten 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 is categorized in our Income Statements.

The weighted-average remaining amortization period of client contracts as of December 31, 2017 was approximately 31 months. Based on the December 31, 2017 net carrying value of these intangible assets, the estimated amortization for each of the five succeeding fiscal years ending December 31 will be: 2018 – $22.4 million; 2019 – $14.1 million; 2020 – $4.4 million; 2021 – $1.1 million; and 2022 – $0.8 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, 2017 and 2016, the carrying values of these assets were as follows (in thousands):

	2017							2016
	Gross							Gross
	Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Amount		Amortization			Amount		Amount		Amortization			Amount
Acquired software (4)	$	66,100	$	(64,268	)	$	1,832	$	65,500	$	(62,306	)	$	3,194
Internal use software (5)		69,792		(44,718	)		25,074		64,243		(37,010	)		27,233
Total software	$	135,892	$	(108,986	)	$	26,906	$	129,743	$	(99,316	)	$	30,427

The aggregate amortization related to software included in our operations for 2017, 2016, and 2015, was as follows (in thousands):

	2017		2016		2015
Acquired software (4)	$	1,458	$	1,806	$	3,081
Internal use software (5)		7,845		7,510		8,048
Total software	$	9,303	$	9,316	$	11,129

(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, 2017 was approximately 53 months. Based on the December 31, 2017 net carrying value of these intangible assets, the estimated amortization for each of the five succeeding fiscal years ending December 31 will be: 2018 – $8.3 million; 2019 – $6.3 million; 2020 – $4.7 million; 2021 – $3.3 million; and 2022 – $2.6 million.