Chegg 2013 Annual Report Download - page 101

General and Administrative
General and administrative expenses in 2013 increased $15.4 million, or 61%, compared to 2012. General
and administrative expenses as a percentage of net revenues increased to 16% during 2013 compared to 12% of
net revenues during 2012. The increase in absolute dollars and as a percentage of net revenues was due to an
increase in stock-based compensation expense of $14.6 million primarily due to the grant of vested RSUs and the
vesting of previously outstanding RSUs to officers and consultants, which resulted in stock-based compensation
expense upon the completion of our IPO. In addition, employee-related and benefit expenses increased by $1.5
million driven by the expansion of our capabilities in our organization to support public company readiness.
These increases were partially offset by lease termination expenses in 2012 as we exited our prior headquarters
of $0.6 million compared to none in 2013 and lower bad debt expenses of $0.3 million primarily due to our
collection efforts.
General and administrative expenses in 2012 increased $4.8 million, or 24%, compared to 2011. The
increase in absolute dollars and as a percentage of net revenues was primarily due to an increase in employee
related compensation and benefits of $2.1 million driven by the expansion of capabilities in our organization to
support public company readiness. In addition, expenses of $0.7 million were incurred due to liabilities resulting
from the Cramster acquisition, and depreciation expenses increased by $0.6 million. Outside accounting and
professional fees increased $0.6 million due to valuation services and public company readiness initiatives, and
bad debt expenses increased by $0.5 million.
Loss (Gain) on Liquidation of Textbooks
In 2013, we had a net gain on liquidations of $1.2 million, resulting from proceeds received from liquidation
of previously rented print textbooks on our website and through various other liquidation channels. The number
of textbooks liquidated in 2013 increased compared to the volumes in 2012 however the amounts recovered
decreased in 2013 compared to 2012 due to more liquidation volumes through various other liquidation channels
as compared to our website.
In 2012, we had a net gain on liquidations of $2.6 million resulting from proceeds received from liquidation
of previously rented print textbooks on our website and through various other liquidation channels. The number
of textbooks liquidated in 2012 was comparable to those liquidated in 2011; however the amounts recovered
were higher in 2012 than in 2011 due to more liquidation volumes through our website, where the recovery
proceeds are greater than through wholesalers or other channels.
Interest and Other Income (Expense), Net
The following table sets forth our interest and other income (expense), net, for the periods shown (dollars in
thousands):
Year Ended December 31, Change in 2013 Change in 2012
2013 2012 2011 $ % $ %
Interest expense, net ....................... $(3,818) $(4,393) $(3,558) $ 575 (13)% $ (835) 23%
Other income (expense), net ................. (359) 634 1,855 (993) (157) (1,221) (66)
Total interest and other expense, net ....... $(4,177) $(3,759) $(1,703) $(418) 11% $(2,056) 121%
Interest expense, net decreased by $0.6 million during 2013 primarily due to lower average outstanding loan
balances and a lower effective interest rate.
Other expense, net was a net expense during 2013 resulting from an increase in the fair value of our
preferred stock warrants compared to the value during 2012, prior to their conversion into common stock
warrants.
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