LeapFrog 2013 Annual Report Download - page 31
Download and view the complete annual report
Please find page 31 of the 2013 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.Fiscal Year 2012 Compared to Fiscal Year 2011
SG&A expenses for 2012 increased 15% as compared to 2011, but declined as a percentage of net sales by
two percentage points. The increase was primarily driven by higher employee compensation expenses related
to increased headcount, greater achievement against overall company performance targets set as a part of our
incentive compensation programs, as well as bad debt expense of $3.1 million related to an isolated customer
bankruptcy.
Research and Development Expenses
R&D expenses consist primarily of salaries and employee benefits, including stock-based compensation
expense and other headcount-related expenses, associated with content development, product development,
product engineering, third-party development and programming, and localization costs to translate and adapt
content for international markets. We capitalize external third-party costs related to content development,
which are subsequently amortized into cost of sales in the statements of operations.
2013 2012 2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
(Dollars in millions)
R&D expenses .............. $35.9 $36.6 $33.8 (2)% 8%
As a percent of net sales ........ 6% 6% 7% —* (1)*
* Percentage point change
Fiscal Year 2013 Compared to Fiscal Year 2012
R&D expenses for 2013 decreased 2% as compared to 2012, and remained flat as a percentage of net sales.
The decrease was primarily due to a decrease in the provision for incentive compensation expense, partially
offset by higher expenses due to an increase in headcount to support our strategic initiatives.
Fiscal Year 2012 Compared to Fiscal Year 2011
R&D expenses for 2012 increased 8% as compared to 2011, but declined as a percentage of net sales by one
percentage point. The increase was primarily due to increased headcount and higher employee compensation
expenses resulting from exceeding the overall company performance targets set as a part of our incentive
compensation programs.
Advertising Expenses
Advertising expense consists of costs associated with marketing, advertising and promoting our products,
including customer-related discounts and promotional allowances.
2013 2012 2011
% Change
2013 vs. 2012
% Change
2012 vs. 2011
(Dollars in millions)
Advertising expenses .......... $48.3 $43.0 $39.5 12% 9%
As a percent of net sales ........ 9% 7% 9% 2* (2)*
* Percentage point change
Fiscal Year 2013 Compared to Fiscal Year 2012
Advertising expense for 2013 increased 12% as compared to 2012, and increased as a percentage of net sales
by two percentage points. The increase was primarily due to an increase in cooperative print advertising to
drive higher retail sales, and increases in marketing materials, and social and search advertising spending. The
increases were partially offset by a planned reduction in television commercial spending, lower online
advertising, and a one-time settlement of a dispute with a supplier of our point-of-purchase displays.
23