LeapFrog 2009 Annual Report Download - page 84

LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
15. Net Loss Per Share
For all periods presented, common share equivalents are 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, 247 and 338 for the years ended
December 31, 2009, 2008, and 2007, respectively.
The following table sets forth the computation of basic and diluted net loss per share for the periods presented.
Years Ended December 31,
2009 2008 2007
(Numerator)
Net loss ........................................................ $(2,688) $(68,354) $(102,476)
(Denominator)
Weighted average shares outstanding during period:
Class A and B—basic and diluted ................................ 63,914 63,641 63,361
Net loss per share:
Class A and B—basic and diluted ................................ $ (0.04) $ (1.07) $ (1.62)
16. Related Party Transactions
Since 2004, the Company has been a majority-owned subsidiary of Mollusk Holdings, LLC, an entity controlled
by Lawrence J. Ellison, the Chief Executive Officer of Oracle Corporation. In 2009 and 2008, the Company
purchased software products and support services totaling $856 and $1,095, respectively, from Oracle
Corporation on terms the Company believes are comparable to those it would obtain in an arm’s-length
agreement. As of December 31, 2009, 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 16.2 million shares of our Class B
common stock, which represents approximately 52.4% of the combined voting power of our Class A common
stock and Class B common stock. For a more complete discussion of Mr. Ellison’s beneficial ownership of our
common stock, see “Security Ownership of Certain Beneficial Owners and Management.”
In 2009 and 2008, the Company paid Pillar Data Systems, Inc. a total of $368 and $261, respectively, in arm’s-
length transactions for equipment fees. Lawrence J. 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.
Following discussions between the parties, the Company and Mounte entered into a written agreement effective
July 9, 2009, settling the dispute. Pursuant to the agreement, Mounte paid LeapFrog $295 in settlement of all
claims by either party under the agreement, including Mounte’s counter-claim for $1,479.
17. Concentrations of Credit Risk and Certain Other Risks
Financial instruments that subject the Company to concentrations of credit risk include cash equivalents, foreign
exchange transactions, long-term investments and trade receivables. Cash and cash equivalents consist
principally of cash and money market funds. Long-term investments consist of auction rate securities, which are
generally illiquid and have experienced significant impairment losses since the fourth quarter of 2007 due to the
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