Rosetta Stone 2014 Annual Report Download - page 75

Table of Contents
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
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
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

Land
$ 950
$ 390
Buildings and improvements
12,477
8,170
Leasehold improvements
1,408
1,657
Computer equipment
16,400
17,077
Software
31,240
24,594
Furniture and equipment
3,457
4,190
65,932
56,078
Less: accumulated depreciation and amortization
(40,655)
(38,312)
Property and equipment, net
$ 25,277
$ 17,766
The Company leases certain computer equipment, software, buildings, and machinery under capital lease agreements. As of December 31, 2014 and
2013, assets under capital lease included in property and equipment above was $5.6 million and $0.7 million, respectively. As of December 31, 2014 and
2013, accumulated depreciation and amortization relating to property and equipment under capital lease arrangements totaled $1.0 million and $0.2 million,
respectively.
The Company recorded total depreciation and amortization expense for its property and equipment for the years ended December 31, 2014, 2013 and
2012 in the amount of $7.6 million, $7.8 million and $8.0 million, respectively. Depreciation and amortization expense related to property and equipment
includes depreciation related to its physical assets and amortization expense related to amounts capitalized in the development of internal-use software.
During 2014, the Company recorded a $0.2 million impairment expense related to the abandonment of a previously capitalized internal-use software
project. There were no impairment charges for the years ended December 31, 2013 and 2012.
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In January 2014, the Company acquired Vivity Labs, Inc. and Tell Me More S.A. The Company acquired Livemocha Inc. and Lexia Learning Systems
Inc. in April and August of 2013, respectively. Under the acquisition method of accounting, the total purchase price was allocated to the tangible and
intangible assets acquired on the basis of their respective estimated fair values at the date of acquisition. The valuation of the identifiable intangible assets
and their useful lives acquired reflects management's estimates.
Livemocha, Inc.
On April 1, 2013, the Company completed its acquisition of Livemocha, Inc. (the “Livemocha Merger” and "Livemocha"). Livemocha is one of the
world’s largest online language-learning communities with over 16 million registered members. The acquisition of Livemocha's technology platform has
accelerated the Company’s transition to cloud-based learning solutions and reinforced its leadership position in the competitive language-learning industry.
The aggregate amount of consideration paid by the Company was $8.4 million in cash.
The acquisition of Livemocha resulted in goodwill of approximately $5.2 million, none of which is deductible for tax purposes. This amount represents
the residual amount of the total purchase price after allocation to the assets acquired and liabilities assumed.
All expenditures incurred in connection with the Livemocha Merger were expensed and are included in general and administrative expenses.
Transaction costs incurred in connection with the Livemocha Merger were $0.4 million during the year ended December 31, 2013. The results of operations
for Livemocha have been included in the consolidated results of operations since April 1, 2013.
The Company allocated the purchase price based on current estimates of the fair values of assets acquired and liabilities assumed in connection with the
Livemocha Merger. The table below summarizes the estimates of fair value of the Livemocha assets acquired, liabilities assumed and related deferred income
taxes as of the acquisition date.
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