LeapFrog 2004 Annual Report Download - page 49
Download and view the complete annual report
Please find page 49 of the 2004 LeapFrog annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39 -
40 -
41 -
42 -
43 -
44 -
45 -
46 -
47 -
48 -
49 -
50 -
51 -
52 -
53 -
54 -
55 -
56 -
57 -
58 -
59 -
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
 |
 |
Inventory
Inventory increased to $131.2 million at December 31, 2004 from $90.9 million at December 31, 2003. The
reasons for this increase include:
• Our inability to forecast shipment levels rapidly enough to respond by adjusting production flow.
Production was based on significantly higher forecasted sales volumes than those actually achieved.
• During 2004, we continued to experience significant operational difficulties associated with our supply
chain operations, including inventory planning and logistics.
• Additionally, we experienced significant difficulties associated with the opening of our new Fontana,
California distribution facility. This facility, which is operated by a third party logistics firm, began
shipping products in August 2004.
Inventories consisted of the following:
December 31,
2004 (1) 2003 (1) Change (1)
Raw materials ............................................ $ 39.7 $29.3 $ 11.7
Work in process .......................................... 6.1 — 6.1
Finished goods ........................................... 102.8 64.9 36.6
Reserves ................................................ (17.4) (3.3) (14.1)
Inventories, net ........................................... $131.2 $90.9 $ 40.3
(1) In millions.
The $40.3 million increase in inventory from December 31, 2003 to December 31, 2004 consisted of the
following:
• $22.1 million increase in finished goods consisting primarily of Leapster platforms and related software
and certain stand-alone products;
• $14.5 million increase in finished goods in the International segment;
• $11.7 million increase in raw materials due to longer lead times in our manufacturing process and new
product components primarily related to Leapster platform products; and
• $6.1 million increase in work in process relating to our assumption of all risks and benefits of
component parts and materials under the manufacturing agreements that we entered into with our
contract manufacturers.
These increases in inventory were partially offset by $14.1 million increase in obsolete and excess inventory
reserves.
Accounts payable
Accounts payable decreased to $62.8 million at December 31, 2004 from $86.2 million at December 31,
2003. The decrease in accounts payable was primarily due to timing of accounts payable payments and decreased
inventory purchases in the fourth quarter of 2004. Inventory purchases were lowered due to the slowdown in
sales in the third and fourth quarters of 2004.
Accrued liabilities
Accrued liabilities increased to $53.9 million at December 31, 2004 from $44.6 million at December 31,
2003. The increase in accrued liabilities consisted primarily of a $4.9 million increase in accrued cooperative
advertising, higher legal expenses, and an overall increase in operating expenses in the fourth quarter of 2004.
42