LeapFrog 2006 Annual Report Download - page 51
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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,
2005 2004 Change
Segment $ (1)
%of
Total
Segment’s
Net Sales $ (1)
%of
Total
Segment’s
Net Sales $ (1) %
U.S. Consumer ...................... $52.5 11.0% $63.2 14.6% $(10.7) (17)%
International ........................ 17.0 13.0% 19.6 12.8% (2.6) (13)%
SchoolHouse ....................... 0.5 1.1% 0.4 0.7% 0.1 25%
Total Company .................... $70.0 10.8% $83.2 13.0% $(13.2) (16)%
(1) In millions.
The $13.2 million decrease in year-over-year advertising expense was primarily related to:
• Cost containment efforts.
• Reduced spending in our U.S. Consumer segment on in-store display units and merchandising, and the
elimination of our mail-order catalog costs.
Depreciation and Amortization Expenses (excluding depreciation of tooling and amortization of content
development costs, which are included in cost of sales)
Depreciation and amortization expenses increased year-over-year by $2.2 million, or 27%, from $8.0
million in 2004, to $10.1 million in 2005. As a percentage of net sales, depreciation and amortization expense
increased from 1.2% in 2004 to 1.6% in 2005. The increase in depreciation and amortization expense was
primarily due to higher depreciation expense for computers, capitalized software and leasehold improvements.
Income (Loss) From Operations
Income (loss) from operations in dollars and the related percentage of segment net sales were as follows:
Year Ended December 31,
2005 2004 Change
Segment $(1)
%of
Segment’s
Net Sales $(1)
%of
Segment’s
Net Sales $(1) %
U.S. Consumer ..................... $(4.9) (1.0)% $(49.8) (11.5)% $ 44.9 90%
International ....................... 24.9 19.0% 24.9 16.3% 0.0 0%
SchoolHouse ...................... 0.9 2.3% 10.9 19.8% (10.0) (92)%
Total Company ................... $20.9 3.2% $(14.0) (2.2)% $ 34.9 249%
(1) In millions.
We record indirect expenses in our U.S. Consumer segment and do not allocate these expenses to our
International and SchoolHouse segments.
U.S. Consumer. The lower year-over-year loss from operations in our U.S. Consumer segment was
primarily due to higher sales and stronger gross margins, as well as lower operating expenses.
International. The year-over-year operating income increase in our International segment was primarily due
to lower operating expenses, partially offset by reduced sales.
44