LeapFrog 2012 Annual Report Download - page 57
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LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
4. Inventories
The Company’s inventories, stated on a first-in, first-out basis at the lower of cost or market as of
December 31, 2012 and 2011, were as follows:
December 31,
2012 2011
Raw materials ........................................ $ 1,243 $ 3,444
Finished goods ....................................... 39,068 30,844
Total .............................................. $40,311 $34,288
During 2012, 2011 and 2010, the Company recorded net sales of inventory written down in the previous year
resulting in a benefit to gross margin of $1,814, $547 and $1,997, respectively.
5. Property and Equipment
As of December 31, 2012 and 2011, property and equipment consisted of the following:
December 31,
2012 2011
Tooling, cards, dies and plates ............................ $20,668 $ 18,769
Computers and software ................................. 57,482 45,280
Equipment, furniture and fixtures ........................... 3,996 3,663
Leasehold improvements ................................ 4,418 4,296
86,564 72,008
Less: accumulated depreciation ............................ (62,841) (54,127)
Total ............................................ $23,723 $ 17,881
Depreciation expense for tooling cards, dies and plates is charged to cost of sales in the statement of
operations as the expense relates directly to the product manufacturing process. The expense charged to cost
of sales was $2,870, $2,277 and $2,238 for the years ended December 31, 2012, 2011 and 2010, respectively.
Depreciation expense related to the remainder of property and equipment included in depreciation and
amortization expense in the statements of operations was $7,619, $6,555 and $6,401 for the years ended
December 31, 2012, 2011 and 2010, respectively.
6. Capitalized Product Costs
The Company’s capitalized product costs include external costs related to the development of content for its
learning products and external website development costs for its website. The Company’s capitalized product
costs as of December 31, 2012 and 2011 were as follows:
December 31,
2012 2011
Content costs ........................................ $43,626 $ 36,759
Website development costs ............................... 7,895 9,835
Less: accumulated amortization ............................ (39,412) (34,083)
Total ............................................ $12,109 $ 12,511
Amortization expense related to content development is charged to cost of sales in the statement of operations
and totaled $7,585, $6,557 and $6,916 for the years ended December 31, 2012, 2011 and 2010, respectively.
Amortization expense related to website development is included in depreciation and amortization expense and
totaled $1,610, $2,238 and $2,434 for the years ended December 31, 2012, 2011 and 2010, respectively.
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