LeapFrog 2012 Annual Report Download - page 37

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Net cash provided by financing activities for 2012 increased $0.3 million as compared to 2011, primarily due
to an increase in employee stock purchase plan activity, partially offset by higher payroll taxes related to an
increase in employee restricted stock units released in 2012 as compared to 2011.
Fiscal Year 2011 Compared to Fiscal Year 2010
Cash flow provided by operations for 2011 increased $92.8 million compared to 2010, primarily due to
significantly lower inventory purchases during the period as a result of higher than desired inventory levels at
the end of 2010. In addition, in 2011 our accounts payable payments were timely, while in 2010, we caught
up on delinquent accounts payable from 2009, which resulted in extra operating cash usage. The increase in
net income and improved accounts receivable collection efforts also contributed to the increase in cash flow
provided by operations for 2011.
Net cash used in investing activities for 2011 decreased $1.3 million compared to 2010, primarily due to a
$5.3 million purchase of intangible assets in 2010, partially offset by an increase in hardware and software
purchases in 2011 as well as the cash generated from sales of investments in 2010, of which there were none
in 2011.
Net cash provided by financing activities for 2011 increased $0.6 million as compared to 2010, primarily due
to an increase in employee option exercises, partially offset by higher payroll taxes related to an increase in
employee restricted stock units released in 2011 as compared to 2010.
Seasonal Patterns of Cash Provided by (Used in) Operations
The table below shows our seasonal patterns of cash flow provided by (used in) operations by quarter for the
fiscal years ended December 31, 2012, 2011 and 2010.
2012 2011 2010
(Dollars in millions)
1
st
quarter ............................................ $66.0 $ 64.6 $ 34.5
2
nd
quarter ........................................... (4.7) (16.6) (27.2)
3
rd
quarter ........................................... (72.8) (27.4) (30.3)
4
th
quarter ........................................... 79.4 49.6 0.4
Total ............................................. $67.9 $ 70.2 $(22.6)
Historically, our cash flow from operations has been highest in the first quarter of each year when we collect a
majority of our accounts receivable booked in the fourth quarter of the prior year. In the current year, an
increase in credit card-based sales through our App Center in the fourth quarter resulted in higher cash flow
from operations than the first quarter, a deviation from our historical norm that may continue in future years,
given the increasing sales from our App Center. Cash flow used in operations tends to be highest in our third
quarter, as collections from prior accounts receivable taper off and we invest heavily in inventory in
preparation for the fourth quarter holiday season. Historically, cash flow generally turns positive again in the
fourth quarter as we begin to collect on the accounts receivable associated with the holiday season. Based on
the shift in ordering patterns by retailers beginning in 2009, which resulted in orders being placed significantly
later in the year, cash flows from operations in the fourth quarter of 2010 were significantly lower than has
historically been the case in the fourth quarter of our fiscal year. As a result, cash flows from operations in the
first quarter of 2011 were higher than in previous years. Earlier demand in 2012 resulted in significantly
higher inventory purchases during the third quarter and higher collections in the fourth quarter.
These seasonal patterns may vary depending upon general economic conditions and other factors.
Line of Credit and Borrowing Availability
See Note 11 — ‘‘Borrowings under Credit Agreements’’ in our Consolidated Financial Statements included in
this Annual Report on Form 10-K.
Contractual Obligations and Commitments
See information under the heading ‘‘Contractual Obligations and Commitments’’ in Note 19
— ‘‘Commitments and Contingencies’’ in our Consolidated Financial Statements included in this Annual
Report on Form 10-K.
29