LeapFrog 2007 Annual Report Download - page 49
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Research and development expense increased by $4.9 million for 2007 compared to 2006, due to costs
associated with extensive new product introductions in 2008 and 2009.
Research and development expenses are expected to decline in 2008.
Advertising Expense
The advertising expense in dollars for each segment and the related percentage of the segment’s net sales
was as follows:
Year Ended December 31,
2007 2006 Change
Segment $(1)
%of
Segment’s
Sales $(1)
%of
Segment’s
Sales $(1) %
U.S. Consumer .................................... $49.0 15.7% $57.1 16.3% $ (8.1) (14)%
International ...................................... 14.4 13.9% 17.6 15.4% (3.2) (18)%
School .......................................... 0.6 2.3% 0.7 1.9% (0.1) (14)%
Total Company .................................. $64.0 14.5% $75.4 15.0% $(11.4) (15)%
(1) In millions
Our advertising expense for 2007 was $64.0 million compared to $75.4 million in 2006. The decline in
advertising expense in 2007 was primarily due to lower sales and promotion allowances. In 2006, we used
marketing dollars to drive reductions in inventory levels for both ourselves and our retailers.
Advertising expense is expected to increase in 2008 to promote our new products.
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 decreased by $0.3 million, or 4%, from $9.8 million in 2006, to
$9.5 million in 2007. As a percentage of net sales, depreciation and amortization expense increased from 2.0% in
2006 to 2.1% in 2007.
Income (Loss) From Operations
Income (loss) from operations in dollars for each segment and the related percentage of the segment’s net
sales were as follows:
Year Ended December 31,
2007 2006 Change
Segment $(1)
%of
Segment’s
Sales $(1)
%of
Segment’s
Sales $(1) %
U.S. Consumer ................................. $(103.1) (32.9)% $(110.4) (31.5)% $ 7.3 7%
International ................................... (1.4) (1.4)% (9.3) (8.1)% 7.9 85%
School ....................................... 3.3 12.7% (5.0) (13.5)% 8.3 166%
Total Company ............................... $(101.2) (22.9)% $(124.7) (24.8)% $23.5 19%
(1) In millions
41