LeapFrog 2006 Annual Report Download - page 47

Other
Net Interest Income and Other Income (Expense), Net. Net interest income increased by $3.8 million from
$3.4 million in 2005 to $7.2 million in 2006. This increase was due to higher market interest rates and from
increasing the percentage of investments in higher-rate taxable interest securities in 2006, compared to
tax-exempt securities in 2005.
Tax Rate. Our effective tax rate for the year ended December 31, 2006 was (22.5) % as compared to 26.5%
in 2005. The negative tax rate for 2006 is currently affected by a $60.4 million non-cash valuation allowance
recorded against our domestic deferred tax assets, of which $24.9 million relates to pre-2006 deferred tax assets
and earnings being lower or losses being higher than anticipated in countries, where we have tax rates that are
lower than the U.S. statutory rate. See “Critical Accounting Policies, Judgments and Estimates” for further
details on the increase in the valuation allowance.
Net Income (Loss)
Our net loss for the year ended December 31, 2006 was $145.1 million as compared to a net income of
$17.5 million in 2005 as a result of the factors described above.
Twelve Months Ended December 31, 2005 Compared To Twelve Months Ended December 31, 2004
Net Sales
Net sales increased by $9.5 million, or 1.5%, from $640.3 million in 2004 to $649.8 million in 2005. On a
constant currency basis, which assumes that foreign currency exchange rates were the same in 2005 as 2004, total
Company net sales increased 1.5% from 2004 to 2005.
Net sales for each segment and its percentage of total Company net sales were as follows:
Year Ended December 31,
2005 2004 Change
Segment $(1)
%of
Total
Company
Net Sales $(1)
%of
Total
Company
Net Sales $(1) %
U.S. Consumer .................... $478.3 74% $431.9 67% $ 46.4 11%
International ...................... 131.2 20% 153.2 24% (22.0) (14)%
SchoolHouse ...................... 40.3 6% 55.2 9% (14.9) (27)%
Total Company ................... $649.8 100% $640.3 100% $ 9.5 1.5%
(1) In millions.
U.S. Consumer. Our U.S. Consumer segment’s net sales increased by $46.4 million, or 11%, from $431.9
million in 2004 to $478.3 million in 2005. In our U.S. Consumer segment, net sales of platform, software and
stand-alone products in dollars and as a percentage of the segment’s total net sales were as follows:
Net Sales % of Total
Year Ended
December 31, Change
Year Ended
December 31,
2005(1) 2004(1) $(1) %2005 2004
Platform ................................ $196.2 $173.7 $22.5 13.1% 41.0% 40.2%
Software ............................... 145.7 128.9 16.8 13.1% 30.5% 29.9%
Stand-alone ............................. 136.4 129.3 7.1 5.6% 28.5% 29.9%
Total U.S. Consumer Net Sales ............ $478.3 $431.9 $46.4 10.8% 100% 100%
(1) In millions.
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