LeapFrog 2006 Annual Report Download - page 103

LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share and percent data)
The U.S. Consumer segment includes the design, production and marketing of electronic educational toys
and books, sold primarily through the retail channels. For the International segment, the Company designs,
markets and sells products primarily in the non-U.S. consumer product market. The SchoolHouse segment
includes the design, production and marketing of educational books and toys sold primarily to school systems.
Net Sales
Income
(Loss) from
Operations
Total
Assets
2006
U.S. Consumer ...................................... $350,710 $(110,401) $396,447
International ........................................ 114,631 (9,278) 39,474
SchoolHouse ........................................ 36,914 (4,984) 14,520
Total .............................................. $502,255 $(124,663) $450,441
2005
U.S. Consumer ...................................... $478,179 $ (4,854) $487,281
International ........................................ 131,231 24,880 101,818
SchoolHouse ........................................ 40,347 927 16,730
Total .............................................. $649,757 $ 20,953 $605,829
2004
U.S. Consumer ...................................... $431,861 $ (49,886) $435,255
International ........................................ 153,193 24,956 107,372
SchoolHouse ........................................ 55,235 10,947 17,167
Total .............................................. $640,289 $ (13,983) $559,794
In December 2006, the Company restructured SchoolHouse segment to focus its sales and product
development resources on reading curriculum for core grade levels and to better align it with its consumer
strategy. This restructuring led to termination of 59 full-time employees. As a result, the Company recorded a
related expense in selling, general and administration expense of approximately $1,068. In addition, the
Company recorded an allowance for excess and obsolete inventories of $1,239 in cost of sales to reflect the
anticipated reduction in sales in 2007.
In 2006, no single country other than the United States accounted for 10% or more of the Company’s
consolidated net sales. In 2005 and 2004, the Company had net sales in the United Kingdom of $57,062 and $67,
807, respectively. No other country accounted for more than 10% of the Company’s net sales for 2005 and 2004.
The Company attributes sales to non-United States countries on the basis of sales billed by each of its foreign
subsidiaries to its customers. For example, the Company attributes sales to the United Kingdom based on the
sales billed by the Company’s United Kingdom-based foreign subsidiary, Leap Frog Toys (UK) Limited, to its
customers. Additionally, the Company attributes sales to non-United States countries if product is shipped from
Macau or one of the Company’s leased warehouses in the United States to a distributor in a foreign country.
The Company’s long-lived assets are comprised of net fixed assets, net intangibles, and other assets. As of
December 31, 2006, 2005 and 2004, long-lived assets located in foreign countries were $6,579, $6,421 and
$10,973, respectively. The majority of long-lived assets outside of the United States relate to manufacturing
tooling held by the Company’s wholly-owned subsidiary located in Macau.
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