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Table of Contents
64
CHEGG, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Background and Basis of Presentation
Company and Background
Chegg, Inc. (Chegg, the Company, we, us, or our), headquartered in Santa Clara, California, was incorporated as a
Delaware corporation on July 29, 2005. Chegg is the leading student-first connected learning platform, empowering students to
take control of their education to save time, save money, and get smarter. We help students study more effectively for college
admissions exams, accomplish their goals, get better grades and test scores while in school and find internships that allow them
to gain valuable skills to help them enter the workforce after college. Our connected learning platform offers products and
services that students need throughout the college lifecycle, from choosing a college through graduation and beyond. We strive
to improve the overall return on investment in education.
Basis of Presentation
Our fiscal year ends on December 31 and in this report we refer to the year ended December 31, 2015, December 31,
2014, and December 31, 2013 as 2015, 2014, and 2013, respectively.
Note 2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States
(U.S. GAAP) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets
and liabilities; the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of
revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are used for, but not
limited to: revenue recognition, recoverability of accounts receivable, determination of the useful lives and salvage value
assigned to our textbook library, restructuring charges, share-based compensation expense including estimated forfeitures,
accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization, impairment of
goodwill and long-lived assets, and the valuation of acquired intangible assets. We base our estimates on historical experience,
knowledge of current business conditions and various other factors we believe to be reasonable under the circumstances. These
estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the
future. Actual results could differ from these estimates, and such differences could be material to our financial position and
results of operations.
Principles of Consolidation
The consolidated financial statements include the accounts of Chegg and our wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been
prepared in accordance with U.S. GAAP
Cash and Cash Equivalents and Restricted Cash
We consider all highly liquid investments with an original maturity date of three months or less from the date of purchase
to be cash equivalents. Cash and cash equivalents, which consist of cash, money market accounts, commercial paper, corporate
securities and agency bonds at financial institutions, are stated at cost, which approximates fair
We classify certain restricted cash balances within other current assets and other assets on the accompanying
consolidated balance sheets based upon the term of the remaining
At December 31, 2015 and 2014, we had approximately $0.8 million and $1.8 million, respectively, of restricted cash
that consisted of a deposit pledged as security for our corporate credit cards and a letter of credit pledged as a security deposit
for our headquarters and a sales office. Additionally, as of December 31, 2014, restricted cash consisted of a letter of credit
pledged as a security deposit for our warehouse facilities leases. The deposit pledged as security for our corporate credit cards
of approximately $0.3 million as of December 31, 2015 and 2014, respectively, is classified in other current assets in our
consolidated balance sheets due to the short-term nature of the restriction. The amounts related to the security deposits of