LeapFrog 2007 Annual Report Download - page 62
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Raw materials decreased by $3.1 million reflecting the full implementation of our turnkey arrangements,
which allows our engineering resources to focus on product design and manufacturability while our contract
manufacturers manage the supply of raw materials.
Deferred income taxes
We recorded gross domestic current deferred tax assets of $12.0 million at December 31, 2007 and $15.1
million at December 31, 2006. The year-over-year decrease in our gross current deferred income tax asset was
primarily due to the timing of realizing other deferred tax assets. The 2007 and 2006 gross current deferred tax
assets were offset with valuation allowances of $12.0 million and $15.1 million, respectively.
We recorded gross domestic non-current deferred tax assets of $89.5 million at December 31, 2007 and
$45.3 million at December 31, 2006. The year-over-year increase was primarily due to net operating losses and
additional research and development credits available to be carried forward in future periods. The 2007 and 2006
gross current deferred tax assets were offset with a valuation allowance of $89.5 million and $45.3 million,
respectively. At December 31, 2007 and 2006 current and non-current deferred income taxes totaling $3.6
million and $1.3 million, respectively, reflected on the balance sheet related to our non U.S. jurisdictions.
Other assets
Other assets had balances of $4.2 million at December 31, 2007 and $9.1 million at December 31, 2006,
respectively. The decrease from the previous year was primarily due to an approximately $5.2 million reduction
in long-term other assets related to the write down of prepaid royalties related to our FLY technology.
Accounts payable
Accounts payable was $46.9 million at December 31, 2007 and $46.7 million at December 31, 2006.
Investing activities
Net cash provided by investing activities was $41.0 million in 2007, compared to net cash used by investing
activities of $77.5 million in 2006. The primary components of net cash provided by investing activities for 2007
compared to 2006 were:
• Net sales of short-term investments of $67.6 million in 2007 compared with net purchases of
investments of $57.1 million in 2006.
• Purchases of property and equipment of $26.6 million in 2007 related primarily to computers and
software, capitalized content and leasehold improvements.
Financing activities
Net cash provided by financing activities was $1.9 million in 2007 compared to $4.2 million for the same
period in 2006. The primary component of cash provided by financing activities in both years were proceeds
received from the exercise of stock options and purchases of our common stock pursuant to our employee stock
purchase plan.
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