LeapFrog 2004 Annual Report Download - page 16

We currently have distribution arrangements with distributors in countries such as Spain, Korea, Australia
and New Zealand. In Japan, Benesse Corporation is assisting us in developing the Japanese supplemental
educational materials market by distributing the CoCoPad system to its preschool through 3rd grade level
subscribers. Additionally, Benesse Corporation has developed original educational content in Japanese and
English for interactive books to be used with the CoCoPad system. In Fall 2004, our distributor, Stadlbauer
Marketing + Vertrieb G.m.b.H, began distributing our products in German-language markets in Europe.
Education and Training
Our Education and Training segment’s primary customers represent U.S. pre-kindergarten through 8th grade
classrooms and also include teacher supply stores and catalogs sales by our SchoolHouse division. Using our in-
house sales team as well as independent sales representatives, we sell directly to educational institutions at the
classroom, school and district levels, and to resellers and retail outlets that target the education market. We plan
to grow our sales team significantly over the next few years to provide a greater sales effort and increase our
penetration of the school market. We also publish a catalog that is aimed at and distributed to educators. In 2004,
we began selling our products in Puerto Rico through a local distributor.
Financial Information About Geographic Areas
Our International segment represented 24% of our total consolidated net sales in 2004. For the years ended
December 31, 2004, 2003 and 2002, our net sales to geographic areas were as follows:
Year Ended
December 31,
% of Total
Consolidated Net Sales
2004 2003 2002 2004 2003 2002
(In millions)
United States ........................... $487.1 $583.4 $478.2 76% 86% 90%
All Non-United States Countries ............ 153.2 96.6 53.6 24% 14% 10%
Total Consolidated Net Sales .............. $640.3 $680.0 $531.8 100% 100% 100%
In 2004, we had net sales in the United Kingdom of $67.8 million, which was 10.6% of our total
consolidated net sales for 2004. In 2003 and 2002, we had net sales in the United Kingdom of $39.0 million and
$20.2 million, respectively. No other country accounted for more than 10% of our net sales for 2002 through
2004. We attribute sales to non-United States countries on the basis of sales billed by each of our foreign
subsidiaries to its customers. For example, we attribute sales to the United Kingdom based on the sales billed by
our United Kingdom-based foreign subsidiary, Leap Frog Toys (UK) Limited, to its customers. Additionally, we
attribute sales to non-United States countries if product is shipped from Macau or one of our leased warehouses
in the United States to a distributor in a foreign country.
Our long-lived assets are comprised of net fixed assets, net intangibles, other assets and deferred income taxes.
In 2004, approximately 17% of our long-lived assets were located outside of the United States. For the year ended
December 31, 2004, 2003 and 2002, our long-lived assets in dollars by geographic area were as follows:
Year Ended
December 31,
% of Total
Consolidated
2004 2003 2002 2004 2003 2002
(In millions)
United States ............................... $53.9 $45.4 $48.4 83% 96% 99
All Non-United States Countries ............... 11.0 1.8 0.4 17% 4% 1%
Total Long-lived Assets ..................... $64.9 $47.3 $48.8 100% 100% 100%
The increase in long-lived assets outside of the United States is related to manufacturing tooling held by our
wholly-owned subsidiary located in Macau and to the technology license owned by our wholly-owned subsidiary
located in the Cayman Islands.
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