PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2011

7. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):

	December 31,
	2011			2010
Network equipment	$	121,705		$	113,593
Network equipment under capital lease		1,417			1,426
Furniture and equipment		24,508			13,002
Software		29,625			25,748
Leasehold improvements		231,391			191,915
Buildings under capital lease		36,028			18,668
Property and equipment, gross		444,674			364,352
Less: accumulated depreciation and amortization ($6,353 and $3,267 related to capital leases at December 31, 2011 and 2010, respectively)		(246,305	)		(222,063	)

	$	198,369		$	142,289

On December 30, 2011, we acquired Voxel, as further described in note 3. While Voxel’s products are complementary to our existing IT Infrastructure services, we will not use certain of our assets in the same manner as we would have had the acquisition not taken place. As such, we evaluated our suite of IT Infrastructure services for impairment. The evaluation resulted in an impairment charge of $0.5 million to developed software related to our Cloud portal functionality, included in the data center services segment. We record the impairment in “Restructuring and impairments” on the accompanying statements of operations.

We retired $12.8 million of assets with accumulated depreciation of $12.7 million during the year ended December 31, 2011, $9.0 million of assets with accumulated depreciation of $8.9 million during the year ended December 31, 2010 and $6.4 million of assets with accumulated depreciation of $6.3 million during the year ended December 31, 2009. We capitalized an immaterial amount of interest for each of the three years in the period ended December 31, 2011.

We summarize depreciation and amortization of property and equipment associated with direct costs of network, sales and services and other depreciation expense as follows (in thousands):

	Year ended December 31,
	2011		2010		2009
Direct costs of network, sales and services	$	36,040	$	26,930	$	22,134
Other depreciation and amortization		886		3,228		6,148
Subtotal		36,926		30,158		28,282
Amortization of acquired technologies(1)		3,500		3,811		8,349
Total depreciation and amortization	$	40,426	$	33,969	$	36,631

(1)

Amortization of acquired technologies during the year ended December 31, 2009 included impairment charges of $4.1 million for acquired CDN advertising technology.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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