LeapFrog 2011 Annual Report Download - page 81

LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
16. Net Income (Loss) Per Share
The following table sets forth the computation of basic and diluted net loss per share for the periods
presented.
Years Ended December 31,
2011 2010 2009
(Numerator)
Net income (loss)................................. $19,902 $ 4,945 $ (2,688)
(Denominator)
Weighted average shares outstanding during period:
Class A and B − basic ............................ 65,406 64,368 63,914
Common stock equivalents ......................... 926 1,259 —
Class A and B − diluted ........................... 66,332 65,627 63,914
Net income (loss) per share:
Class A and B − basic and diluted .................... $ 0.30 $ 0.08 $ (0.04)
For 2009, common share equivalents were excluded from the calculations of net loss per share, as their effect
on net loss per share would be antidilutive. Outstanding weighted average common stock equivalents of
Class A common stock excluded from the calculations were 168 for the year ended December 31, 2009.
17. Related Party Transactions
Mollusk Holdings, LLC, an entity controlled by Lawrence J. Ellison, CEO of Oracle Corporation, is the
Company’s largest stockholder. As of December 31, 2011, Mr. Ellison may be deemed to have or share the
power to direct the voting and disposition, and therefore to have beneficial ownership, of approximately
6.7 million shares of the Company’s Class B common stock and 3.8 million shares of the Company’s Class A
common stock, which represents approximately 42.7% of the combined voting power of the Company’s
Class A common stock and Class B common stock.
In 2011, 2010 and 2009, the Company purchased software products and support services totaling $2,680,
$1,138 and $856, respectively, from Oracle Corporation on terms the Company believes are comparable to
those it would obtain in an arm’s-length agreement.
In 2010 and 2009, the Company paid Pillar Data Systems, Inc. a total of $61 and $368, respectively, in
arm’s-length transactions for equipment fees. Mr. Ellison is the majority stockholder of Pillar Data
Systems, Inc.
The Company was previously involved in a dispute with Mounte LLC arising out of a 2002 tax sharing
agreement between the Company and Knowledge Universe, Inc., the predecessor in interest of Mounte LLC.
At the time, Mounte LLC was indirectly controlled by Michael R. Milken, Lowell J. Milken and Lawrence J.
Ellison, who also beneficially own shares which represented, and continue to represent, a majority of the
voting interest in our stock. Following discussions between the parties, the Company and Mounte LLC entered
into a written agreement effective July 9, 2009, settling the dispute. Pursuant to the agreement, Mounte LLC
paid LeapFrog $295 in 2009, in settlement of all claims by either party under the agreement, including
Mounte LLC’s counter-claim for $1,479.
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