LeapFrog 2015 Annual Report Download - page 67

LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
5. Property and Equipment, Net
As of March 31, 2015 and 2014, property and equipment consisted of the following:
March 31,
2015 2014
Tooling, cards, dies and plates ........................... $23,976 $ 24,380
Computers and software ............................... 45,782 70,580
Equipment, furniture and fixtures ......................... 3,769 4,179
Leasehold improvements ............................... 4,002 4,526
77,529 103,665
Less: accumulated depreciation ........................... (75,853) (72,900)
Total ........................................... $ 1,676 $ 30,765
The Company has revised its consolidated balance sheets as of March 31, 2014 to correct the classification of
the capitalized development costs of its proprietary technologies included in certain key products from
property and equipment, to other intangible assets. As compared to previously reported amounts, property and
equipment, net, has been reduced and other intangible assets, net, have been increased by $3,805 as of
March 31, 2014.
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 $3,078, $690, $2,552, and $2,870 for the year ended March 31, 2015, the three months ended
March 31, 2014 and the years ended December 31, 2013 and 2012, respectively.
Depreciation expense related to the remainder of property and equipment included in depreciation and
amortization expense in the statements of operations was $10,669, $2,406, $9,079 and $7,619 for the year
ended March 31, 2015, the three months ended March 31, 2014 and the years ended December 31, 2013 and
2012, respectively.
During the quarter ended March 31, 2015, the Company performed an impairment review of its long-lived
assets, including its property and equipment, capitalized content costs and other intangible assets, and recorded
a permanent non-cash impairment charge of $36,461 against its property and equipment, including primarily
the Company’s recent investments in its internal business systems and the non-content related website systems
costs under its computer and software category. Refer to Note 9 — ‘‘Impairment of Long-lived Assets’’ below
for detailed information on the Company’s impairment testing for its long-lived assets.
6. Capitalized Content Costs, net
The Company’s capitalized content development costs include external costs related to the development of
content for its learning products and external development costs for its Learning Path. The Company’s
capitalized content costs as of March 31, 2015 and 2014 were as follows:
March 31,
2015 2014
Content development costs .............................. $76,105 $ 60,171
Learning Path development costs ......................... 8,646 8,740
Less: accumulated amortization .......................... (62,241) (49,853)
Total ........................................... $22,510 $ 19,058
Amortization expense related to content development is charged to cost of sales in the statement of operations
and totaled $11,727, $2,090, $7,422 and $7,585 for the year ended March 31, 2015, the three months ended
March 31, 2014 and the years ended December 31, 2013 and 2012, respectively. Amortization expense related
to Learning Path development is included in depreciation and amortization expense and totaled $661, $230,
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