LeapFrog Enterprises Inc NYSE: LF is an educational toy company based in Emeryville, California. LeapFrog designs, develops and markets technology-based learning products and related content for the education of infant through grade school children at home and in schools internationally.
LeapFrog Enterprises Inc. (LeapFrog), incorporated in 1997, designs, develops and markets a family of technology-based learning platforms, related content and learning toys, primarily for infants and for children through age nine, both at home and in schools around the world. The Company has two operating segments: United States and International. The United States segment is responsible for the development, design, sales and marketing of electronic educational hardware products, related software and learning toys sold in the United States. The Company markets and sells its products directly to national and regional mass-market and specialty retailers and other retail stores, distributors, and directly through sales representatives. LeapFrog also sells its products through its online store and other Internet-based channels. The International segment is responsible for the localization, sales and marketing of electronic educational hardware products, related software and learning toys originally developed for the United States that is sold outside of the United States. During the year ended December 31, 2010, the Company terminated its lease in one of the remaining three suites in its Emeryville, California.
The Company markets and sells its products directly to retailers outside the United States. The Company also maintains various distribution and marketing arrangements in countries, such as Australia, Japan, China, Spain, and Germany among others. Its product portfolio consists of learning toys, interactive reading systems, mobile learning systems, and software-based book and game content. The Company has developed a number of learning platforms, including the Leapster family of mobile learning systems, and Tag and Tag Junior reading systems, which support a library of software titles. These and others of its products connect to its online LeapFrog Learning Path (the Learning Path), which provides parents with personalized learning feedback and children with richer interactive learning experiences. The Company has created more than 400 interactive software titles for its platforms, covering subjects, such as phonics, reading, writing, and math. Its products are available in five languages (including Queen’s English) and are sold globally through retailers, distributors, directly to consumers via the leapfrog.com Web-store and directly to schools.
Interactive Reading Systems
Tag reading system is designed for children ages four to eight, is a stylus-based reading system that leverages core technology of optical pattern reading hardware and software. The Tag reading system focuses on fundamental reading skills and offers an extensive library of over 50 interactive software-based books, games and flash cards featuring licensed characters, such as Disney/Pixar’s Toy Story 3, Disney’s Tangled and Nickelodeon’s Dora the Explorer, as well as internally-developed characters and content including its Learn to Read Series. During the year ended December 31, 2010, the Company launched two Tag reading system enabled maps, Tag World Map and Tag United States of America Map. The Tag reading system is Web-enabled and connects to the Learning Path.
Tag Junior reading system is designed for younger children ages two to four and is intended as an introduction to books and reading. The Tag Junior library includes over 20 titles-based on both licensed content, such as Disney Princess and Sesame Street-Big Bird’s First Book of Letters, and internally-developed characters and content, including ABC Animal Orchestra and our Birthday at the Zoo. The Tag Junior reading system is also Web-enabled and connects to the Learning Path.
Mobile Learning Systems:
Mobile learning system products are focused primarily on children ages four to nine years old. These products embed learning skills into action-packed games often featuring well-known licensed content. The Leapster mobile learning system is focused on children four to eight years old. The Leapster platform is a handheld device with a multi-directional control pad and a touch-screen enabled by a built-in stylus. Its second generation of the Leapster platform, Leapster2 is a Web-connected version of Leapster that is integrated with the Learning Path. During 2010, the Company introduced Leapster Explorer, its next-generation handheld mobile learning system. Leapster Explorer is also Web-connected and provides increased functionality with optional attachments, such as a camera, and enables the ability to download a variety of digital content, such as games, e-Books, videos and flash cards. Its library of more than 45 Leapster Explorer software titles includes licensed content, such as Toy Story 3 and Scooby Doo, as well as internally developed characters and content such as Mr. Pencil and Pet Pals.
Learning Toys
Llearning toys are products that help develop fine motor skills and color, sound and letter recognition for infants and children through age five. Its learning toy strategy centers on products that are designed to age up with its child end users. Its Scout collection is a line of learning toys themed around its Scout puppy dog character. The line includes My Pal Scout and My Pal Violet, customizable, interactive plush puppies intended for children as young as six months old that are Web-enabled and connect to the Learning Path. The line also includes Text & Learn, Scribble & Write and Chat & Count for toddlers. In 2010, the Company also introduced plush soother Twinkle Twinkle Little Scout and My Own Leaptop, a Web-enabled customizable laptop.
Fridge Collection is a line of magnetic learning toys that introduce letter names, letter sounds, spelling, and songs to children ages 12 months and up. The line includes Fridge Phonics Magnetic Alphabet, Fridge Words Magnetic Word Builder, Fridge Farm Magnetic Animal Set, and Fridge Wash & Go Magnetic Vehicle Set. Its Learn & Groove Collection features bilingual musical learning toys, including the Learn & Groove Musical Table, Alphabet Drum, Color Play Drum, Music Wand, Counting Maracas and Animal Sounds Guitar. The Company also has a line of products that address basic learning needs and milestones which includes Alphabet Pal, Sing & Spin Alphabet Zoo and Counting Candles Birthday Cake. In 2010, it introduced several new items into this line including My First Book toy books (also compatible with the Tag Junior reading system), Count & Scan Shopper, Cook & Play Potsy, and Fix & Learn Speedy.
Online Capabilities
The Learning Path is a Web-based service. The Learning Path combines its curriculum and technology with the power of the Web to bring new levels of engagement, customization and personalization to LeapFrog products. The Learning Path builds direct one-to-one customer relationships with parents by empowering them with personalized feedback about their children’s learning progress and by suggesting specific LeapFrog products that will further develop their children’s skills. The Learning Path is a key component of its strategy to build direct relationships with parents, keeping them engaged with the Company as their children grow.
The Learning Path is an online tool that helps parents track what their children are learning with its Web-connected products. Parents are able to see the learning and gain personalized insight into their child’s learning progress. The Learning Path gives its consumers access to a variety of downloadable content and to online rewards programs that encourage learning. Many of its products, including the Tag and Tag Junior reading systems, the Leapster2 and Leapster Explorer mobile learning systems, My Pal Scout, My Pal Violet and My Own Leaptop are designed to connect to the Learning Path.
The Company competes with Mattel, Inc., Hasbro, Inc., Vtech Holdings Ltd, Sony, Nintendo and Apple.
Annual sales at LeapFrog reached steadily upward, getting close to $200 million by 2000. The company expanded in many ways, hiring more employees (from 85 in late 1999 to almost 450 by 2001), moving into international markets, and increasing its penetration of the school market through its SchoolHouse division. The company continued to focus on sturdy portable toys even as it evolved products for older children. Perhaps for this reason it did well even as the educational software market fell apart. Educational software that had been selling for $50 plunged to $20 as competitors slashed prices and discount stores offered cheap titles. The industry suffered as investors backed out. But LeapPad seemed unaffected by this and was the stellar player in the educational toy segment. In 2000, the LeapPad garnered a variety of awards. By 2001, with toy sales overall flat, LeapFrog had revenue of more than $300 million, a 95 percent increase over the previous year, and net income of more than $10 million. Its products were now in stores everywhere. Its largest customer was Wal-Mart, which was responsible for 30 percent of the company's sales. Toys 'R' Us was a close second, accounting for 28 percent of sales, and the department store chain Target generated approximately 10 percent of sales. The only sore spot in 2001 was Kmart, which accounted for another 10 percent of LeapFrog's sales in 2001, but filed for bankruptcy and had trouble paying the toy supplier. But LeapFrog Enterprises now had a number of hit toys, including LeapPad, with 35 different titles that could be plugged into it, the LeapStart Learning Table for younger kids, and for older children the Twist and Shout math toy, Turbo Twist Vocabulator, and the iQuest, a palm pilot-like device that gave students quiz questions on a variety of topics from math to social studies. These toys retailed between roughly $40 and $60.
With LeapFrog's products so well known and thriving, the company decided to file for a public stock offering in 2002. LeapFrog hoped to raise $150 million from the offering, which was only for a portion of the company. Knowledge Universe owned 86 percent of LeapFrog by that time. The stock market had been falling since 2001, and the week LeapFrog debuted was particularly turbulent. A sharp decline early in the week led four other companies to delay their public offerings, but LeapFrog went ahead, pricing its stock at what was considered a modest $13 a share. The price rose almost immediately, despite the fact that a competitor filed suit against LeapFrog for patent infringement the following day. The offering went through in July, and as LeapFrog entered its crucial holiday sales period a few months later, it predicted a 30 percent jump over the previous year. LeapFrog's share price rose almost 80 percent between July and December. For the 2002 Christmas season LeapFrog's LeapPad was the fourth best-selling toy in the country, and a collection of electronic books to be read on the LeapPad took the number one spot. "Milken Bumps Barbie," declared Forbes magazine (February 3, 2003), marking LeapFrog's astonishing rise to become the fourth largest toy company in the United States. The Wall Street Journal (January 6, 2003) ranked LeapFrog the best performing initial public offering of 2002, noting that the company had done so well because "Investors knew, and loved, the product."
LeapFrog looked to increase its sales in Japan over the next few years. Beginning in 2002 it had partnered with Sega Toys Ltd. and the Benesse Corp. to introduce Japanese versions of its LeapPad product line. By 2003 the company's products were sold in more than 25 countries. LeapFrog hoped to maintain interest at home in its product line by offering updated titles to be read with its LeapPad base, and to develop more sophisticated toys for older children as well. The company had scarcely stumbled since its inception, and was exceedingly successful even during a recessionary economy and a generally flat toy market in the early 2000s. It remained to be seen whether LeapFrog could maintain its remarkable momentum, but its future seemed quite promising.
Principal Divisions: LeapFrog SchoolHouse.
Principal Competitors: Educational Insights, Inc.; Vtech Industries, L.L.C.
OVERALL
Beta: 2.24
Market Cap (Mil.): $284.29
Shares Outstanding (Mil.): 65.05
Annual Dividend: --
Yield (%): --
FINANCIALS
LF Industry Sector
P/E (TTM): 50.67 24.19 18.17
EPS (TTM): 648.61 -- --
ROI: 3.25 4.83 1.56
ROE: 3.53 5.12 2.40
Statistics:
Public Company (Majority Owned by Knowledge Universe, Inc.)
Incorporated: 1995
Employees: 500
Sales: $640 million (2002 est.)
Stock Exchanges: New York
Ticker Symbol: LF
NAIC: 339932 Game, Toy, and Children's Vehicle Manufacturing
Key Dates:
1995: Company is founded by Michael Wood.
1997: Knowledge Universe buys a stake in LeapFrog.
2002: A public stock offering is made.
Name Age Since Current Position
Chiasson, William 58 2011 Chairman of the Board
Barbour, John 51 2011 Chief Executive Officer, Director
Dodd, Michael 51 2010 President, Chief Operating Officer
Kalinske, Thomas 66 2006 Independent Vice Chairman of the Board
Etnyre, Mark 43 2010 Chief Financial Officer
Campbell, William 49 2011 President - Sales, Americas
Chai, Michael 48 2010 Executive Vice President - Product Development and Engineering
Maron, Stanley 62 1997 Independent Director
McKee, E. Stanton 66 2009 Independent Director
Wang, Caden 58 2005 Independent Director
Nagel, David 66 2005 Independent Director
Simon, Philip 58 2010 Independent Director
Marinelli, Paul 43 2009 Independent Director
Address:
6401 Hollis Street, Suite 150
Emeryville, California 94608
U.S.A.
LeapFrog Enterprises Inc. (LeapFrog), incorporated in 1997, designs, develops and markets a family of technology-based learning platforms, related content and learning toys, primarily for infants and for children through age nine, both at home and in schools around the world. The Company has two operating segments: United States and International. The United States segment is responsible for the development, design, sales and marketing of electronic educational hardware products, related software and learning toys sold in the United States. The Company markets and sells its products directly to national and regional mass-market and specialty retailers and other retail stores, distributors, and directly through sales representatives. LeapFrog also sells its products through its online store and other Internet-based channels. The International segment is responsible for the localization, sales and marketing of electronic educational hardware products, related software and learning toys originally developed for the United States that is sold outside of the United States. During the year ended December 31, 2010, the Company terminated its lease in one of the remaining three suites in its Emeryville, California.
The Company markets and sells its products directly to retailers outside the United States. The Company also maintains various distribution and marketing arrangements in countries, such as Australia, Japan, China, Spain, and Germany among others. Its product portfolio consists of learning toys, interactive reading systems, mobile learning systems, and software-based book and game content. The Company has developed a number of learning platforms, including the Leapster family of mobile learning systems, and Tag and Tag Junior reading systems, which support a library of software titles. These and others of its products connect to its online LeapFrog Learning Path (the Learning Path), which provides parents with personalized learning feedback and children with richer interactive learning experiences. The Company has created more than 400 interactive software titles for its platforms, covering subjects, such as phonics, reading, writing, and math. Its products are available in five languages (including Queen’s English) and are sold globally through retailers, distributors, directly to consumers via the leapfrog.com Web-store and directly to schools.
Interactive Reading Systems
Tag reading system is designed for children ages four to eight, is a stylus-based reading system that leverages core technology of optical pattern reading hardware and software. The Tag reading system focuses on fundamental reading skills and offers an extensive library of over 50 interactive software-based books, games and flash cards featuring licensed characters, such as Disney/Pixar’s Toy Story 3, Disney’s Tangled and Nickelodeon’s Dora the Explorer, as well as internally-developed characters and content including its Learn to Read Series. During the year ended December 31, 2010, the Company launched two Tag reading system enabled maps, Tag World Map and Tag United States of America Map. The Tag reading system is Web-enabled and connects to the Learning Path.
Tag Junior reading system is designed for younger children ages two to four and is intended as an introduction to books and reading. The Tag Junior library includes over 20 titles-based on both licensed content, such as Disney Princess and Sesame Street-Big Bird’s First Book of Letters, and internally-developed characters and content, including ABC Animal Orchestra and our Birthday at the Zoo. The Tag Junior reading system is also Web-enabled and connects to the Learning Path.
Mobile Learning Systems:
Mobile learning system products are focused primarily on children ages four to nine years old. These products embed learning skills into action-packed games often featuring well-known licensed content. The Leapster mobile learning system is focused on children four to eight years old. The Leapster platform is a handheld device with a multi-directional control pad and a touch-screen enabled by a built-in stylus. Its second generation of the Leapster platform, Leapster2 is a Web-connected version of Leapster that is integrated with the Learning Path. During 2010, the Company introduced Leapster Explorer, its next-generation handheld mobile learning system. Leapster Explorer is also Web-connected and provides increased functionality with optional attachments, such as a camera, and enables the ability to download a variety of digital content, such as games, e-Books, videos and flash cards. Its library of more than 45 Leapster Explorer software titles includes licensed content, such as Toy Story 3 and Scooby Doo, as well as internally developed characters and content such as Mr. Pencil and Pet Pals.
Learning Toys
Llearning toys are products that help develop fine motor skills and color, sound and letter recognition for infants and children through age five. Its learning toy strategy centers on products that are designed to age up with its child end users. Its Scout collection is a line of learning toys themed around its Scout puppy dog character. The line includes My Pal Scout and My Pal Violet, customizable, interactive plush puppies intended for children as young as six months old that are Web-enabled and connect to the Learning Path. The line also includes Text & Learn, Scribble & Write and Chat & Count for toddlers. In 2010, the Company also introduced plush soother Twinkle Twinkle Little Scout and My Own Leaptop, a Web-enabled customizable laptop.
Fridge Collection is a line of magnetic learning toys that introduce letter names, letter sounds, spelling, and songs to children ages 12 months and up. The line includes Fridge Phonics Magnetic Alphabet, Fridge Words Magnetic Word Builder, Fridge Farm Magnetic Animal Set, and Fridge Wash & Go Magnetic Vehicle Set. Its Learn & Groove Collection features bilingual musical learning toys, including the Learn & Groove Musical Table, Alphabet Drum, Color Play Drum, Music Wand, Counting Maracas and Animal Sounds Guitar. The Company also has a line of products that address basic learning needs and milestones which includes Alphabet Pal, Sing & Spin Alphabet Zoo and Counting Candles Birthday Cake. In 2010, it introduced several new items into this line including My First Book toy books (also compatible with the Tag Junior reading system), Count & Scan Shopper, Cook & Play Potsy, and Fix & Learn Speedy.
Online Capabilities
The Learning Path is a Web-based service. The Learning Path combines its curriculum and technology with the power of the Web to bring new levels of engagement, customization and personalization to LeapFrog products. The Learning Path builds direct one-to-one customer relationships with parents by empowering them with personalized feedback about their children’s learning progress and by suggesting specific LeapFrog products that will further develop their children’s skills. The Learning Path is a key component of its strategy to build direct relationships with parents, keeping them engaged with the Company as their children grow.
The Learning Path is an online tool that helps parents track what their children are learning with its Web-connected products. Parents are able to see the learning and gain personalized insight into their child’s learning progress. The Learning Path gives its consumers access to a variety of downloadable content and to online rewards programs that encourage learning. Many of its products, including the Tag and Tag Junior reading systems, the Leapster2 and Leapster Explorer mobile learning systems, My Pal Scout, My Pal Violet and My Own Leaptop are designed to connect to the Learning Path.
The Company competes with Mattel, Inc., Hasbro, Inc., Vtech Holdings Ltd, Sony, Nintendo and Apple.
Annual sales at LeapFrog reached steadily upward, getting close to $200 million by 2000. The company expanded in many ways, hiring more employees (from 85 in late 1999 to almost 450 by 2001), moving into international markets, and increasing its penetration of the school market through its SchoolHouse division. The company continued to focus on sturdy portable toys even as it evolved products for older children. Perhaps for this reason it did well even as the educational software market fell apart. Educational software that had been selling for $50 plunged to $20 as competitors slashed prices and discount stores offered cheap titles. The industry suffered as investors backed out. But LeapPad seemed unaffected by this and was the stellar player in the educational toy segment. In 2000, the LeapPad garnered a variety of awards. By 2001, with toy sales overall flat, LeapFrog had revenue of more than $300 million, a 95 percent increase over the previous year, and net income of more than $10 million. Its products were now in stores everywhere. Its largest customer was Wal-Mart, which was responsible for 30 percent of the company's sales. Toys 'R' Us was a close second, accounting for 28 percent of sales, and the department store chain Target generated approximately 10 percent of sales. The only sore spot in 2001 was Kmart, which accounted for another 10 percent of LeapFrog's sales in 2001, but filed for bankruptcy and had trouble paying the toy supplier. But LeapFrog Enterprises now had a number of hit toys, including LeapPad, with 35 different titles that could be plugged into it, the LeapStart Learning Table for younger kids, and for older children the Twist and Shout math toy, Turbo Twist Vocabulator, and the iQuest, a palm pilot-like device that gave students quiz questions on a variety of topics from math to social studies. These toys retailed between roughly $40 and $60.
With LeapFrog's products so well known and thriving, the company decided to file for a public stock offering in 2002. LeapFrog hoped to raise $150 million from the offering, which was only for a portion of the company. Knowledge Universe owned 86 percent of LeapFrog by that time. The stock market had been falling since 2001, and the week LeapFrog debuted was particularly turbulent. A sharp decline early in the week led four other companies to delay their public offerings, but LeapFrog went ahead, pricing its stock at what was considered a modest $13 a share. The price rose almost immediately, despite the fact that a competitor filed suit against LeapFrog for patent infringement the following day. The offering went through in July, and as LeapFrog entered its crucial holiday sales period a few months later, it predicted a 30 percent jump over the previous year. LeapFrog's share price rose almost 80 percent between July and December. For the 2002 Christmas season LeapFrog's LeapPad was the fourth best-selling toy in the country, and a collection of electronic books to be read on the LeapPad took the number one spot. "Milken Bumps Barbie," declared Forbes magazine (February 3, 2003), marking LeapFrog's astonishing rise to become the fourth largest toy company in the United States. The Wall Street Journal (January 6, 2003) ranked LeapFrog the best performing initial public offering of 2002, noting that the company had done so well because "Investors knew, and loved, the product."
LeapFrog looked to increase its sales in Japan over the next few years. Beginning in 2002 it had partnered with Sega Toys Ltd. and the Benesse Corp. to introduce Japanese versions of its LeapPad product line. By 2003 the company's products were sold in more than 25 countries. LeapFrog hoped to maintain interest at home in its product line by offering updated titles to be read with its LeapPad base, and to develop more sophisticated toys for older children as well. The company had scarcely stumbled since its inception, and was exceedingly successful even during a recessionary economy and a generally flat toy market in the early 2000s. It remained to be seen whether LeapFrog could maintain its remarkable momentum, but its future seemed quite promising.
Principal Divisions: LeapFrog SchoolHouse.
Principal Competitors: Educational Insights, Inc.; Vtech Industries, L.L.C.
OVERALL
Beta: 2.24
Market Cap (Mil.): $284.29
Shares Outstanding (Mil.): 65.05
Annual Dividend: --
Yield (%): --
FINANCIALS
LF Industry Sector
P/E (TTM): 50.67 24.19 18.17
EPS (TTM): 648.61 -- --
ROI: 3.25 4.83 1.56
ROE: 3.53 5.12 2.40
Statistics:
Public Company (Majority Owned by Knowledge Universe, Inc.)
Incorporated: 1995
Employees: 500
Sales: $640 million (2002 est.)
Stock Exchanges: New York
Ticker Symbol: LF
NAIC: 339932 Game, Toy, and Children's Vehicle Manufacturing
Key Dates:
1995: Company is founded by Michael Wood.
1997: Knowledge Universe buys a stake in LeapFrog.
2002: A public stock offering is made.
Name Age Since Current Position
Chiasson, William 58 2011 Chairman of the Board
Barbour, John 51 2011 Chief Executive Officer, Director
Dodd, Michael 51 2010 President, Chief Operating Officer
Kalinske, Thomas 66 2006 Independent Vice Chairman of the Board
Etnyre, Mark 43 2010 Chief Financial Officer
Campbell, William 49 2011 President - Sales, Americas
Chai, Michael 48 2010 Executive Vice President - Product Development and Engineering
Maron, Stanley 62 1997 Independent Director
McKee, E. Stanton 66 2009 Independent Director
Wang, Caden 58 2005 Independent Director
Nagel, David 66 2005 Independent Director
Simon, Philip 58 2010 Independent Director
Marinelli, Paul 43 2009 Independent Director
Address:
6401 Hollis Street, Suite 150
Emeryville, California 94608
U.S.A.