Hasbro 2006 Annual Report Download - page 35

with the Company’s management reporting. See notes 1 and 15 to the consolidated financial statements for
further details.
2006
%
Change 2005
%
Change 2004
Net Revenues
North America ................ $2,130,290 4% $2,038,556 4% $1,956,031
International .................. $ 959,319 (3)% $ 988,591 1% $ 977,128
Operating Profit
North America ................ $ 275,959 67% $ 165,676 1% $ 163,786
International .................. $ 90,893 (15)% $ 106,435 13% $ 94,487
North America
North American segment net revenues for the year ended December 31, 2006 increased 4% to $2,130,290
from $2,038,556 in 2005. The impact of foreign currency translation on North American segment net revenues
in 2006 was favorable and increased net revenues by approximately $3,200. Anticipated decreased revenues of
STAR WARS products were more than offset primarily by increased sales of LITTLEST PET SHOP,
PLAYSKOOL, NERF, I-DOG and MONOPOLY products, as well as revenues from the successful reintroduc-
tion of BABY ALIVE. 2006 revenues were also positively impacted, to a lesser extent, by increased sales of
PLAY-DOH and TRANSFORMERS products. STAR WARS revenues were significant in 2005 due to the
theatrical and DVD releases of STAR WARS EPISODE III: REVENGE OF THE SITH and remained strong
in 2006. In 2007, the Company will introduce products related to two anticipated major motion picture
releases, SPIDER-MAN 3 in May of 2007 and TRANSFORMERS in July of 2007.
North American operating profit increased to $275,959 in 2006 from $165,676 in 2005. The increase in
operating profit is primarily due to increased gross profit as a result of the increased sales in 2006 as well as
decreases in royalty and amortization expense principally due to the decrease in sales of STAR WARS
products. Operating profit for the North American segment was negatively impacted by higher research and
product development costs due to higher investments in the PLAYSKOOL line and costs related to MARVEL
products expected to be introduced in 2007. North American operating profit was negatively impacted in 2005
by a loss of approximately $23,000 in the electronic games category, which included charges associated with
inventory obsolescence and customer allowances related to plug and play games.
North American segment net revenues for the year ended December 25, 2005 increased 4% to $2,038,556
from $1,956,031 in 2004. North American revenues were positively impacted in 2005 by currency translation
by approximately $11,300 due to the stronger Mexican Peso and Canadian Dollar. The increase in volume was
predominantly due to increased revenues from STAR WARS related products as the result of the theatrical and
DVD release of STAR WARS EPISODE III: REVENGE OF THE SITH in 2005. In addition to the increase
from STAR WARS related products, North American net revenues were also positively impacted by the
reintroduction of LITTLEST PET SHOP products as well as increased sales of NERF products. These
increases were partially offset by decreased games sales in 2005, primarily MAGIC: THE GATHERING and
DUEL MASTERS trading card games. Net revenues in 2005 were also negatively impacted by decreased sales
of VIDEONOW and FURREAL FRIENDS products as well as the continued decline in BEYBLADE
products.
North American segment operating profit increased slightly to $165,676 in 2005 from $163,786 in 2004.
Increased gross profit primarily resulting from higher net revenues was partially offset by higher royalty and
amortization expense associated with higher sales of STAR WARS products. 2005 operating profit was also
positively impacted by decreased advertising expense due to the high percentage of net revenues that
represented STAR WARS products, which do not require as much advertising and promotion to raise
awareness as an internally-developed product would. North American operating profit was negatively impacted
in 2005 by a loss of approximately $23,000 in the electronic games category, which included charges
associated with inventory obsolescence and customer allowances related to plug and play games. Currency
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