Chegg 2014 Annual Report Download - page 111

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Table of Contents
73
The following table summarizes the change in the fair value of our Level 3 liabilities (in thousands):
Level 3
December 31,
2014
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,521
Vesting of put options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Exercise of put options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (460)
Fair value adjustment related to put options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (253)
Total financial liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,079
As of December 31, 2014, we did not have observable inputs for the valuation of our put option liability, which relates
to a previous acquisition, and provides certain employees of the acquired company the right to require us to acquire vested
common shares at a stated contractual price. As shares associated with these put options vest, the liability is recognized as
share-based compensation expense in our consolidated statements of operations and results in a change in our Level 3
liabilities.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or
reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.
Note 5. Long-Lived Assets
Textbook Library, Net
Textbook library, net consisted of the following (in thousands):
December 31,
2014 2013
Textbook library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 169,463 $ 196,742
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,701)(91,634)
Textbook library, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,762 $ 105,108
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
December 31,
2014 2013
Computer and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,083 $ 1,594
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,842 5,088
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,259 2,207
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,153 4,407
Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,262 17,725
33,599 31,021
Less accumulated depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . (15,230)(12,057)
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,369 $ 18,964