LeapFrog 2006 Annual Report Download - page 30

acquisition of our Company. Delaware law also imposes some restrictions on mergers and other business
combinations between us and any holder of 15% or more of our outstanding voting stock. Although we believe
these provisions provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate
with our board of directors, these provisions apply even if the offer may be considered beneficial by some
stockholders. In addition, under the terms of our credit agreement, we may need to seek the written consent of
our lenders of the acquisition of our Company.
Our stockholders may experience significant additional dilution upon the exercise of options or issuance of
stock awards.
As of December 31, 2006, there were outstanding awards under our equity incentive plans that could result
in the issuance of approximately 9.7 million shares of Class A common stock. To the extent we issue shares upon
the exercise of any of options, performance-based stock awards or other equity incentive awards issued under our
2002 Equity Incentive Plan, investors in our Class A common stock will experience additional dilution.
Our stock price could become more volatile and your investment could lose value.
All the factors discussed in this section could affect our stock price. The timing of announcements in the
public markets regarding new products, product enhancements by us or our competitors or any other material
announcements could affect our stock price. Speculation in the media and analyst community, changes in
recommendations or earnings estimates by financial analysts, changes in investors’ or analysts’ valuation
measures for our stock and market trends unrelated to our stock can cause the price of our stock to change. A
significant drop in the price of our stock could also expose us to the risk of securities class action lawsuits, which
could result in substantial costs and divert management’s attention and resources, which could adversely affect
our business.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
The table below identifies a list of material property locations that we currently hold. In addition to these
properties, we have leased properties for administration, sales and operations in Arkansas, Canada, England,
France, Mexico and China, each of which is less than 10,000 square feet of space, respectively.
Location Use Square Feet Type of Possession
Lease
Expiration Date
Fontana, California Distribution Center 600,000 Lease 2010
Emeryville, California Headquarters-operations for our
three business segments 137,200 Lease 2016
Fontana, California Distribution Center 126,672 Lease 2006
Ontario, California Distribution Center 109,000 Lease 2008
Los Gatos, California Engineering, research and
development 19,300 Lease 2007
Beijing, China Administration and Logistics for
China operations 14,531 Lease 2009
Shenzhen, China Technology Research &
Development 13,262 Lease 2009
Hong Kong, China Asian administration and logistics 12,877 Lease 2007
Austin, Texas SchoolHouse Segment operations 10,000 Lease 2008
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