Balance Sheet Components

Intellectual Property Prepaid Royalties

Total amortization for these license agreements in 2012 and 2011 were $946,000 and $761,000, respectively. As of December 31, 2012, the Company had a balance of $3.6 million in unamortized prepaid royalties. Amortization of these licenses is estimated as follows (in thousands):



Year Ending:
2013	1,008
2014	771
2015	498
2016	389
2017	334
Thereafter	645
	$	3,645

Prepaid Expenses and Other Current Assets



	December 31,
	2012		2011
	(in thousands)
Prepaid service contracts – current portion	$	5,771	$	4,727
Deferred costs	3,278		717
Prepaid income taxes	—		1,952
Other prepaid expenses and current assets	6,219		6,474
	$	15,268	$	13,870

Property and Equipment



	December 31,
	2012			2011
	(in thousands)
Computer and other equipment	$	135,181		$	102,061
Software	17,342			12,579
Leasehold improvements	11,009			9,559
Building construction-in-progress	6,372			—
Furniture and fixtures	4,075			3,762
Capitalized software and website development costs	49,013			35,842
	222,992			163,803
Less: Accumulated depreciation and amortization	(130,325		)	(109,680		)
Net property and equipment	$	92,667		$	54,123

Building construction-in-progress value of $6.4 million represents the estimated fair market value of a building under a build-to-suit lease of which the Company is the "deemed owner" for accounting purposes only. See "Note 5 - Commitments and Contingencies."

Depreciation and amortization expense totaled $29,424,000, $22,316,000, and $23,429,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Total capitalized software and website development costs, net of accumulated amortization totaled $21,857,000 and $16,923,000 at December 31, 2012 and 2011, respectively. Amortization of capitalized costs totaled approximately $8,352,000, $5,371,000 and $4,207,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Intangible Assets

Intangible assets are comprised of the following at December 31:



	Weighted Average Useful Life	December 31,
	Weighted Average Useful Life	2012			2011
		(in thousands)
Purchased technology	10 years	$	99,003		$	76,843
Less: accumulated amortization		(23,153		)	(12,771		)
		75,850			64,072

Customer relationships	6 years	60,066			35,235
Less: accumulated amortization		(13,902		)	(4,742		)
		46,164			30,493

Licenses and other	3 years	871			871
Less: accumulated amortization		(616		)	(420		)
		255			451

Total		$	122,269		$	95,016

Purchased technology is amortized over a period ranging from two to sixteen years. Customer relationships are amortized over a period ranging from two to seven years. Licenses and other is amortized over a period ranging from two to five years.

Intangible asset amortization expense for the years ended December 31, 2012, 2011 and 2010 was $19,739,000, $11,375,000 and $1,849,000, respectively. Amortization of existing intangible assets is estimated to be as follows (in thousands):



Year Ending:
2013	$	23,911
2014	22,980
2015	20,191
2016	14,019
2017	11,530
Thereafter	29,638
	$	122,269

Goodwill

Changes in the carrying amount of goodwill are as follows (in thousands):



Balance, December 31, 2010	$	11,163
Acquisition of business	329,245
Goodwill adjustments	—
Balance, December 31, 2011	340,408
Acquisition of business	17,941
Goodwill adjustments	—
Balance, December 31, 2012	$	358,349

The increase in goodwill for the year ended December 31, 2012 was a result of the acquisitions of Photoccino, Ltd., Penguin Digital, Inc., and ThisLife.com, Inc.

The increase in goodwill for the year ended December 31, 2011 was a result of the acquisition of Tiny Prints in April 2011.

Accrued Liabilities



	December 31,
	2012		2011
	(in thousands)
Accrued production costs	$	22,534	$	16,939
Accrued marketing expenses	21,371		19,072
Accrued income and sales tax	15,002		11,106
Accrued compensation	13,904		5,485
Accrued consulting	4,200		2,347
Accrued purchases	3,685		871
Accrued fixed assets	1,554		633
Accrued other	6,222		2,818
	$	88,472	$	59,271