Chegg 2013 Annual Report Download - page 88

ITEM 3. LEGAL PROCEEDINGS
From time to time, third parties may assert patent infringement claims against us in the form of letters,
litigation, or other forms of communication. In addition, from time to time, we may be subject to other legal
proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks,
copyrights, and other intellectual property rights; employment claims; and general contract or other claims. We
may, from time to time, also be subject to various legal or government claims, disputes, or investigations. Such
matters may include, but not be limited to, claims, disputes, or investigations related to warranty, refund, breach of
contract, employment, intellectual property, government regulation, or compliance or other matters.
In July 2010, the Kentucky Tax Authority issued a property tax assessment of approximately $1.0 million
related to our textbook library located in our Kentucky warehouse for the 2009 and 2010 tax years under audit. In
March 2011, we filed a protest with the Kentucky Board of Tax Appeals that was rejected in March 2012. In
September 2012, we filed a complaint seeking declaratory rights against the Commonwealth of Kentucky in the
Bullitt Circuit Court of Kentucky, and that case was subsequently dismissed in favor of administration remedies
with the Kentucky Tax Authority. We received a final Notice of Tax due in October 2012 from the Kentucky Tax
Authority and we appealed this notice in November 2012 with the Kentucky Board of Tax Appeals. In May
2013, we presented an Offer in Judgment to the Tax Authority of approximately $150,000, excluding tax and
penalties, an amount that we have accrued using similar rates for the two years under audit. We appealed to the
Commonwealth of Kentucky Board of Tax Appeals on July 23, 2013 and the Board issued a ruling in favor of the
Kentucky Department of Revenue on January 13, 2014. On February 7, 2014, we filed an appeal to the Franklin
Circuit Court in Kentucky. Due to the preliminary status and uncertainties related to this matter, we are unable to
evaluate the likelihood of either a favorable or unfavorable outcome. We believe that it is reasonably possible
that we will incur a loss; however, we cannot currently estimate a range of any possible losses we may
experience in connection with this case. Accordingly, we are unable at this time to estimate the effects of this
matter on our financial condition, results of operations, or cash flows.
We are not aware of any other pending legal matters or claims, individually or in the aggregate, that are
expected to have a material adverse impact on our consolidated financial position, results of operations, or cash
flows. However, our analysis of whether a claim may proceed to litigation cannot be predicted with certainty, nor
can the results of litigation be predicted with certainty. Nevertheless, defending any of these actions, regardless
of the outcome, may be costly, time consuming, distract management personnel, and have a negative effect on
our business. An adverse outcome in any of these actions, including a judgment or settlement, may cause a
material adverse effect on our future business, operating results, and/or financial condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock has been listed on the New York Stock Exchange under the symbol “CHGG” since
November 13, 2013, the date of our IPO.
The following table sets forth for the indicated periods the high and low closing sales prices of our common
stock as reported by the New York Stock Exchange.
High Low
Year ended December 31, 2013
Fourth quarter (from November 13, 2013) .............. $9.68 $7.49
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