LeapFrog 2010 Annual Report Download - page 68

LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
In 2004, the Company entered into a ten-year license agreement with a third party to use the third party’s
technology in a Company platform and related products. The $6,000 license fee is included in intangible assets
on the balance sheet and is being amortized to operating expense on a straight-line basis over the life of the
contract.
The estimated future amortization expense of the Company’s intangible assets other than goodwill as of
December 31, 2010 is as follows:
Amount
Fiscal Year
2011 .............................................................................. $2,476
2012 .............................................................................. 2,379
2013 .............................................................................. 748
2014 .............................................................................. 50
Total ......................................................................... $5,653
The Company’s goodwill is related to its 1997 acquisition of substantially all the assets and business of its
predecessor, LeapFrog RBT, and its 1998 acquisition of substantially all the assets of Explore Technologies. All
of its goodwill is allocated to the Company’s United States segment.
The Company performed the annual test for impairment as of December 31, 2010 and 2009, and concluded that
its goodwill balance of $19,549 had not been impaired.
8. Accrued Liabilities
The Company’s accrued liabilities as of December 31, 2010 and 2009 were as follows:
December 31,
2010 2009
Advertising and promotion ................................................... $ 9,995 $ 9,549
Royalties payable .......................................................... 9,145 10,581
Employee-related expenses ................................................... 8,251 4,210
Deferred revenue ........................................................... 2,788 1,770
Manufacturing and warehousing ............................................... 2,457 3,968
Marketing, consulting and web-related .......................................... 2,243 2,746
Facilities-related closure costs ................................................ 708 234
One-time termination benefits ................................................. 376 1,587
Other .................................................................... 5,462 5,176
Total ................................................................ $41,425 $39,821
During the fourth quarter of 2008, the Company implemented a company-wide reduction in force resulting in a
significant reduction in employee-related expenses accrued at December 31, 2009. In addition, the bonus accrual
for 2010 was significantly higher than for 2009 as performance targets were not met in 2009.
One-time termination benefits accrued at December 31, 2010 were primarily as a result of the headcount
reduction during the fourth quarter of 2010 in the United States. One-time termination benefits accrued at
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