NetSpend 2012 Annual Report Download - page 46

software development costs was $23.3 million, $24.4
million and $23.1 million for the years ended
December 31, 2012, 2011 and 2010, respectively.
Amortization expense related to acquisition
technology intangibles was $9.7 million, $10.3 million
and $9.9 million for the years ended December 31,
2012, 2011 and 2010, respectively.
During the year ended December 31, 2011, the
Company recognized an impairment loss of $960,000
related to the Japan Retail Gift program.
The weighted average useful life for each component
of computer software, and in total, at December 31,
2012, is as follows:
Weighted
Average
Amortization
Period (Yrs)
Licensed computer software ......... 5.5
Software development costs ........ 5.9
Acquisition technology intangibles . . . 6.6
Total ............................ 5.8
Estimated future amortization expense of licensed
computer software, software development costs and
acquisition technology intangibles as of
December 31, 2012 for the next five years is:
(in thousands)
Licensed
Computer
Software
Software
Development
Costs
Acquisition
Technology
Intangibles
2013 ...... $35,676 25,345 10,306
2014 ...... 31,020 19,025 8,471
2015 ...... 24,521 13,331 5,426
2016 ...... 15,911 9,028 3,958
2017 ...... 11,153 4,734 2,474
NOTE 9 Contract Acquisition Costs, net
Significant components of contract acquisition
costs at December 31 are summarized as
follows:
(in thousands) 2012 2011
Conversion costs, net ....... $ 85,402 88,765
Payments for processing
rights, net ............... 75,865 74,222
Total ..................... $161,267 162,987
Amortization related to payments for processing
rights, which is recorded as a reduction of revenues,
was $13.3 million, $15.9 million and $17.7 million for
2012, 2011 and 2010, respectively.
Amortization expense related to conversion costs was
$24.1 million, $18.8 million and $17.5 million for
2012, 2011 and 2010, respectively.
During the year ended December 31, 2011, the
Company recognized an impairment loss related to
payments for processing rights of $750,000 and an
impairment loss related to conversion costs of
$49,000.
The weighted average useful life for each component
of contract acquisition costs, and in total, at
December 31, 2012 is as follows:
Weighted
Average
Amortization
Period (Yrs)
Payments for processing rights ....... 12.6
Conversion costs .................. 9.4
Total ............................ 11.0
Estimated future amortization expense on payments
for processing rights and conversion costs as of
December 31, 2012 for the next five years is:
(in thousands) Conversion Costs Payments for Processing Rights
2013 ............. $17,769 14,622
2014 ............. 16,699 13,460
2015 ............. 15,715 11,552
2016 ............. 13,059 9,181
2017 ............. 9,316 7,240
NOTE 10 Goodwill
During 2012, the Company allocated $162.1 million
to goodwill due to the acquisitions of ProPay and
CPAY. During 2011, the Company allocated $28.9
million to goodwill due to the acquisition of TermNet.
In May 2011, TSYS made a payment of $6.0 million of
contingent merger consideration in connection with
the purchase of Infonox on the Web (Infonox), which
was recorded as goodwill.
Refer to Note 24 for more information on
acquisitions.
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