LeapFrog 2009 Annual Report Download - page 60

LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
stock-based compensation assumptions. These estimates involve the consideration of complex factors and require
management to make judgments. The analysis of historical and future trends can require extended periods of time
to resolve, and are subject to change from period to period. The actual results experienced may differ from
management’s estimates.
Reclassifications
Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year’s
presentation.
Revisions to Prior Years
Subsequent to the issuance of our September 30, 2009 unaudited consolidated financial statements, the Company
determined there was an error in the way its stock plan management and reporting software was calculating
stock-based compensation expense. The Company became aware of the error as a result of an upgrade to a newer
version of the software, which calculated stock-based compensation expense amounts for prior periods that were
different from those calculated using the older version. Specifically, the older software version we had been
using calculated stock-based compensation expense by incorrectly applying a weighted average forfeiture rate to
the vested portion of stock option awards until the grant’s final vest date, rather than calculating stock-based
compensation expense based upon the actual vested portion of the grant date fair value. As a result, stock-based
compensation expense was understated for fiscal years ended December 31, 2008, 2007 and 2006. These
understatements had the following affect on the Company’s previously issued financial statements for the years
ended December 31, 2008, 2007 and 2006:
As of and for the year ended December 31, 2008
Consolidated Balance Sheet: Accumulated deficit was increased by $2,141 from $(182,498) to $(184,639) and
additional paid-in capital increased by $2,141 from $364,657 to $366,798.
Consolidated Statement of Operation: The following financial statement captions were revised by $98: Selling,
general and administrative from $114,713 to $114,811, total operating expenses from $241,591 to $241,689, loss
from operations from $(60,106) to $(60,204), loss before income taxes from $(66,382) to $(66,480) and, net loss
from $(68,256) to $(68,354). Net loss per share was unaffected by the error.
Consolidated Statement of Cash Flows: Adjustments to reconcile net loss to net cash provided by operating
activities for stock-based compensation expense was increased by $98 from $11,011 to $11,109, which was
offset by a corresponding increase in net loss as indicated above under Consolidated Statement of Operation.
As of and for the year ended December 31, 2007
Consolidated Balance Sheet: Accumulated deficit was increased by $2,043 from $(114,242) to $(116,285) and
additional paid-in capital increased by $2,043 from $353,857 to $355,900.
Consolidated Statement of Operation: The following financial statement captions were revised by $1,161:
Selling, general and administrative from $141,628 to $142,789, total operating expenses from $274,476 to
$275,637, loss from operations from $(101,170) to $(102,331), loss before income taxes from $(97,592) to
$(98,753) and, net loss from $(101,315) to $(102,476). Net loss per share was revised from $(1.60) to $(1.62).
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