Chegg 2014 Annual Report Download - page 124

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Table of Contents
86
We are under examination by the tax authorities in India for the fiscal filing period 2010/11 for which we have
received a notice of proposed adjustment relating to our transfer pricing between the US and our Indian subsidiary. It is
reasonably possible that we will reach resolution of this audit within the next 12 months. This settlement may or may not result
in changes to our contingencies related to position on tax filings in years through 2014. The range of possible outcomes for the
Indian tax audit is zero to $0.1 million for the year assessed excluding interest and penalties.
We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. During
2014, 2013 and 2012, we recognized $0.1 million, $0.1 million and $0.1 million of interest and penalties, respectively. Accrued
interest and penalties as of December 31, 2014 and 2013 were approximately $0.5 million and $0.4 million, respectively.
We file tax returns in U.S. federal, state, and certain foreign jurisdictions with varying statutes of limitations. Due to
net operating loss and credit carryforwards, all of the years since inception through the 2014 tax year remain subject to
examination by the federal, state, and foreign tax authorities.
A reconciliation of the beginning and ending balances of the total amount of unrecognized tax benefits, excluding
accrued interest and penalties, is as follows (in thousands):
Year Ended December 31,
2014 2013 2012
Balance at December 31, 2013. . . . . . . . . . . . . . . . . . . . . . . . $ 2,994 $ 1,942 $ 565
Increase in tax positions for prior years. . . . . . . . . . . . . . . . 406 318 1,090
Decrease in tax positions for prior years . . . . . . . . . . . . . . . (284)(2)(258)
Decrease in tax positions for prior year settlement . . . . . . . —(16) —
Increase in tax positions for current year. . . . . . . . . . . . . . . 1,172 742 495
Change due to translation of foreign currencies . . . . . . . . . (16) 10 50
Balance at December 31, 2014. . . . . . . . . . . . . . . . . . . . . . . . $ 4,272 $ 2,994 $ 1,942
Note 16. Related-Party Transactions
During the year ended December 31, 2014 and 2013 we purchased products totaling $0.9 million and $0.4 million,
respectively from Adobe Systems (Adobe). Our Chief Executive Officer is a member of the Board of Directors of Adobe. We
also had $1.0 million and $0.2 million in revenues in the years ended December 31, 2014 and 2012, respectively from Adobe.
As of December 31, 2014, we had $0.1 million in payables to Adobe.
During the year ended December 31, 2014, one of our board members was appointed to the Board of Directors of
Cengage Learning (Cengage). During the year ended December 31, 2014, we had purchases of $12.4 million of products from
Cengage. As of December 31, 2014, we had $0.1 million in outstanding accounting receivable and accounts payable of $0.1
million to Cengage.
In addition, during 2012, we purchased $0.1 million of products and services from Jive Software. One of our directors
is also a member of the Board of Directors of Jive Software.
The terms of our contracts with the above related parties are consistent with our contracts with other independent
parties.
Note 17. Employee Benefit Plan
We sponsor a 401(k) savings plan for eligible employees and their beneficiaries. Contributions by us are discretionary.
Participants may contribute, on a pretax basis, a percentage of their annual compensation, but not to exceed a maximum
contribution amount pursuant to Section 401(k) of the Internal Revenue Code. During 2014, 2013 and 2012, our matching
contributions totaled approximately $0.8 million, $0.3 million and $0.3 million, respectively.
Note 18. Segment Information
Our chief operating decision-maker is our Chief Executive Officer who reviews financial information presented on a
consolidated basis. There are no segment managers who are held accountable by the chief operating decision-maker, or anyone