LeapFrog 2011 Annual Report Download - page 38

INCOME TAXES
Our provision for (benefit from) income taxes and effective tax rates were as follows:
2011 2010 2009
(Dollars in millions)
Provision for (benefit from) income taxes ................. $(1.1) $ 1.0 $ (7.2)
Income (loss) before income taxes...................... 18.8 6.0 (9.9)
Effective tax rate ................................. (6.1)% 17.2% 72.8%
Our tax rate is affected by recurring items, such as tax expense relative to the amount of income earned in our
foreign jurisdictions. Our tax rate is also affected by discrete items, such as tax benefits attributable to the
recognition of previously unrecognized tax benefits, that may occur in any given year, but are not consistent
from year to year. Calculation of the effective tax rate for all periods included a non-cash valuation allowance
recorded against our domestic deferred tax assets. Accordingly, no federal or state tax expense or benefit was
recorded on our domestic operating income or loss for all periods presented.
The tax benefit for 2011 included a $2.9 million benefit associated with the recognition of previously
unrecognized tax benefits due to the expiration of statutes of limitation in some of our foreign jurisdictions,
offset by foreign tax expense and certain discrete tax items including amortization of goodwill for tax
purposes and an accrual for potential interest and penalties on certain tax positions. In addition, we utilized
$8.8 million of previously unrecognized income tax benefit attributable to our domestic net operating loss and
tax credit carryforwards.
The income tax expense for 2010 was primarily attributable to our foreign operations and certain discrete
items such as amortization of goodwill for tax purposes. In addition, we utilized $2.0 million of previously
unrecognized income tax benefit attributable to our domestic net operating loss and tax credit carryforwards.
The income tax benefit for 2009 was primarily attributable to the recognition of previously unrecognized tax
benefits due to expiration of statutes of limitation in the amount of $7.8 million.
SUMMARY OF RESULTS BY SEGMENT FOR FISCAL YEARS ENDED DECEMBER 31, 2011, 2010
AND 2009
We organize, operate and assess our business in two primary operating segments: U.S. and International. This
presentation is consistent with how our chief operating decision maker reviews performance, allocates
resources and manages the business.
The net sales, gross margin, total operating expenses and operating loss amounts in this section are presented
on a basis consistent with accounting principles generally accepted in the U.S. (‘‘GAAP’’) and on an
operating segment basis consistent with our internal management reporting structure.
28