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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

4.	PROPERTY AND EQUIPMENT

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


	December 31,
	2012			2011
Network equipment	$	129,168		$	121,477
Network equipment under capital lease		6,386			5,662
Furniture and equipment		17,955			11,387
Software		45,011			38,417
Leasehold improvements		279,219			231,701
Buildings under capital lease		43,325			36,030
Property and equipment, gross		521,064			444,674
Less: accumulated depreciation and amortization ($11,351 and $6,353 related to capital leases at December 31, 2012 and 2011, respectively)		(272,969	)		(246,305	)

	$	248,095		$	198,369

During 2012 and 2011, we determined that we would not use certain items and recorded an impairment charge of $0.4 million and $0.5 million, respectively, to developed software related to products and product support software primarily in our data center services segment. We include the impairment charge in “Exit activities, restructuring and impairments” on the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2012.

During January 2012, we reassessed the estimated useful lives of certain assets included in our property and equipment, as we determined we were generally using these assets longer than originally anticipated. As a result, the estimated useful lives of these assets were affected as follows:

	Estimated Useful Life (in years)
	Original		Revised
Network equipment		3		5
C Capitalized software		3		5
Leasehold improvements		7		10-25

Effective January 1, 2012, we accounted for the change in estimated useful lives as a change in accounting estimate on a prospective basis. For the year ended December 31, 2012, depreciation and amortization expense was $15.4 million less than it would have been under the previous estimated useful lives. The per share effect of this change was $0.30 for the year ended December 31, 2012.

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,
	2012		2011		2010
Direct costs of network, sales and services	$	33,019	$	36,040	$	26,930
Other depreciation and amortization		3,128		886		3,228
Subtotal		36,147		36,926		30,158
Amortization of acquired technologies		4,718		3,500		3,811
Total depreciation and amortization	$	40,865	$	40,426	$	33,969

We retired $8.5 million of assets with accumulated depreciation of $8.5 million during the year ended December 31, 2012, $12.8 million of assets with accumulated depreciation of $12.7 million during the year ended December 31, 2011 and $9.0 million of assets with accumulated depreciation of $8.9 million during the year ended December 31, 2010. We capitalized an immaterial amount of interest for each of the three years in the period ended December 31, 2012.

- 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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