LeapFrog 2004 Annual Report Download - page 38
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Research and Development Expenses
The research and development expenses in dollars for each segment and the related percentage of our total
net sales were as follows:
Year Ended December 31,
2004 2003 Change
Segment $(1)
% of Total
Company
Net Sales $(1)
% of Total
Company
Net Sales $(1) %
U.S. Consumer ...................... $54.3 12.6% $49.1 9.0% $ 5.2 11%
International ........................ 3.7 2.4% 3.7 3.8% — —
Education and Training ............... 3.0 5.4% 4.9 13.0% (1.9) (39)%
Total Company .................... $61.0 9.5% $57.6 8.5% $ 3.4 6%
(1) In millions.
The increase in research and development expenses was due primarily to an increase in research and
development spending in the our U.S. Consumer segment of $5.2 million, primarily due to the development of
our new Fly pentop computer platform, Leapster software, and the production of new video titles. This increase
was partially offset by a decrease in our Education and Training segment primarily due to the timing of the
update of the current generation of platforms. We expect this expense to increase in 2005 as we begin to update
the LeapTrack platform.
Research and development expenses, which we classify into two categories, product development and
content development, were as follows:
Year Ended December 31,
2004 2003 Change
$(1)
%of
Net Sales $(1)
%of
Net Sales $(1) %
Content development ..................... $32.0 5.0% $31.0 4.6% $1.0 3%
Product development ..................... 29.0 4.5% 26.6 3.9% 2.4 9%
Research and development ............... $61.0 9.5% $57.6 8.5% $3.4 6%
(1) In millions.
The increase in content development was primarily due to the development costs of Leapster software and
internal costs associated with the production of new video titles. The increase in product development was
primarily due to the development of our new Fly pentop computer platform.
Advertising Expense
The advertising expenses in dollars for each segment and the related percentage of our total net sales were
as follows:
Year Ended December 31,
2004 2003 Change
Segment $(1)
% of Total
Company
Net Sales $(1)
% of Total
Company
Net Sales $(1) %
U.S. Consumer ...................... $63.2 14.6% $61.9 11.3% $ 1.3 2%
International ........................ 19.6 12.8% 10.2 10.6% 9.4 93%
Education and Training ............... 0.4 0.7% 1.7 4.5% (1.3) (76)%
Total Company ..................... $83.3 13.0% $73.8 10.8% $ 9.5 13%
(1) In millions.
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