LeapFrog 2002 Annual Report Download - page 83

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LEAPFROG ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except share, per share and percent data)
assets was $630, $260 and $217 for the years ended December 31, 2002, 2001, and 2000, respectively. The
estimated future amortization expense related to these intangible assets is as follows:
Year Ended
December 31,
2003 ........................................................... $ 644
2004 ........................................................... 644
2005 ........................................................... 491
2006 ........................................................... 434
2007 ........................................................... 217
Thereafter ....................................................... 1,213
$3,643
7. Investments in Affiliate and Related Parties
Knowledge Kids Media Group, a subsidiary of Knowledge Universe, L.L.C., was formed on May 6, 1999.
The Company invested $1,990 in Knowledge Kids Media Group in August 1999 and holds a 19.9% interest. The
investment is accounted for using the equity method due to the influence of the Company and its majority
stockholder. Because the Company’s pro rata share of Knowledge Kids Media Group’s losses in 2000 exceeded
the carrying value of its investment, the Company fully wrote off its investment during the year ended December
31, 2000. The Company is not obligated, nor does it intend, to make any additional equity investments in
Knowledge Kids Media Group. No funding was made in 2002 or 2001.
Summary financial information for Knowledge Kids Media Group, Inc. accounted for by the equity method
as of December 31, is as follows:
Year Ended
December 31,
2000
Loss from Operations .............................................. $(10,912)
NetLoss ........................................................ $(10,520)
In 2000, the Company entered into partnership agreements with two employees of the Company for the
purchase of real estate to be used as the executives’ primary residences. Under the terms of the agreements, the
Company invested $500 and in exchange is entitled to participate in any potential gains and losses attributable to
the properties. In 2001, one of the employees terminated employment with the Company. The property related to
this employee was sold for a loss of $16 which was recorded by the Company in 2001. The Company’s interest
in the partnerships is accounted for using the equity method. The remaining investment balance is $200 at
December 31, 2002 and 2001.
8. Related Party Transactions
In 2000, the Company extended loans to four of its executive officers for the purpose of purchasing stock
from the Company and paying associated expenses. See Note 17 (Notes Receivable From Stockholders).
In August 1999, the Company purchased a 19.9% ownership interest in Knowledge Kids Media Group, Inc.,
an affiliate of Knowledge Universe, for $2.0 million. Knowledge Universe indirectly owns 80.1% of Knowledge
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