LinkedIn 2013 Annual Report Download - page 84

fluctuations. The Company’s foreign currency derivative contracts, which are not designated as hedging
instruments, are used to reduce the exchange rate risk associated with its foreign currency denominated
monetary assets and liabilities. The Company’s program is not designated for trading or speculative
purposes. The foreign currency derivative contracts that were not settled as of December 31, 2013 and
2012 are recorded at fair value in the consolidated balance sheets. Foreign currency derivative contracts
are marked-to-market at the end of each reporting period and the related gains and losses are recognized
in other income (expense), net of transaction gains or losses related to the hedged items in the
accompanying consolidated statements of operations.
Net realized and unrealized gains and losses were not material for the years ended December 31,
2013, 2012, and 2011. As of December 31, 2013 and 2012, the Company had outstanding foreign currency
derivative contracts with a total notional amount of $94.8 million and $83.5 million, respectively.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is computed using the straight-line method over the estimated useful lives of the assets,
which range from two to five years. Leasehold improvements are amortized over the shorter of the lease
term or expected useful lives of the improvements. Depreciation expense totaled $118.1 million,
$70.0 million and $39.5 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Website and Internal-Use Software Development Costs
The Company capitalizes certain costs to develop its website and internal-use software when
preliminary development efforts are successfully completed, management has authorized and committed
project funding, and it is probable that the project will be completed and the software will be used as
intended. Such costs are amortized on a straight-line basis over the estimated useful life of the related
asset, which approximates two to three years. Costs incurred prior to meeting these criteria, together with
costs incurred for training and maintenance, are expensed as incurred.
The Company capitalized website and internal-use software costs of $39.3 million, $20.0 million and
$10.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. The Company’s
capitalized website and internal-use software amortization is included in depreciation and amortization in
the Company’s consolidated statements of operations, and totaled $15.6 million, $11.2 million and
$5.4 million for the years ended December 31, 2013, 2012 and 2011, respectively. The Company had
unamortized capitalized website and internal-use software of $44.3 million and $20.7 million in the
consolidated balance sheets as of December 31, 2013 and 2012, respectively.
Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments
Goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair
value of the underlying net tangible and intangible assets. Goodwill is evaluated for impairment annually
in the third quarter of the Company’s fiscal year, and whenever events or changes in circumstances
indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate
impairment include, but are not limited to, a significant adverse change in customer demand or business
climate that could affect the value of goodwill or a significant decrease in expected cash flows. Since
inception through December 31, 2013, the Company did not have any goodwill impairment.
Intangible assets. Intangible assets consist of identifiable intangible assets, primarily developed
technology, resulting from the Company’s acquisitions. Acquired intangible assets are recorded at cost, net
of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated
useful lives.
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