LeapFrog 2003 Annual Report Download - page 8

customized or are planning to customize many of our products for use in foreign countries. To pursue our
international strategy, we have established sales offices in the United Kingdom, Canada, Mexico and France. We
also have relationships with distributors in Spain, Germany, Korea, Australia and several other countries.
Further, we intend to leverage relationships with strategic partners in various countries, such as our existing
relationships with Benesse Corporation and Sega Toys in Japan. For additional discussion of our three business
segments, including our international segment, see “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Consolidated Financial Statements—Note 23. Segment Reporting.”
In addition to our international expansion, we established our Education and Training group in 1999. Within
this group, our SchoolHouse division focuses on developing supplemental curriculum and assessment programs
for pre-kindergarten to 8th grade classrooms and on the sale of new products incorporating our core technologies
and specially modified versions of our products to schools, teacher supply stores and educational products
catalogs in the United States. LeapFrog SchoolHouse product areas currently include assessment, early literacy,
early childhood, reading, language arts, math, English Language Development, and special education. Our
SchoolHouse products are research-based products that are tied to state standards, and have been adopted or
listed in 13 cities, states and regions, including California, Illinois, New York City and Texas. Through our
SchoolHouse division, we currently offer exclusively for the school market, more than 200 LeapPad and
Quantum Pad books, as well as over 450 interactive skill cards, which represent over 6,000 pages of interactive
content. Our LeapTrack assessment and instruction system is designed to meet the increasing demands for
accountability in schools. The LeapTrack system provides teachers with the ability to instantly assess their
students, personalize student instruction and continuously monitor student progress relative to state standards.
Our Literacy Center program has been adopted and listed as a supplemental early reading curriculum by seven
states and one major metropolitan city. Our comprehensive, research-based pre-kindergarten curriculum, the
Ready, Set, Leap! program, meets Head Start standards and was adopted by the Texas State Board of Education.
We have also developed and introduced our nine-theme, 36-interactive book English language development
program, Language First!, which is designed to build oral language skills for students for whom English is a
second language. In addition to these core programs, our SchoolHouse division offers a library of interactive
books to be used with our LeapPad and Quantum Pad learning platforms, and which are designed to address
challenging issues in classroom instruction
We have grown significantly and consistently by introducing innovative new platforms and other products,
expanding our content offerings and increasing our distribution. From 2001 to 2003, our total net sales increased
from $314.2 million to $680.0 million and our total net income increased from $9.7 million to $72.7 million.
The Educational Foundation of Our Products
We believe that sound educational principles are at the core of the value of our brands and products. All
LeapFrog content and curriculum is based on a proprietary method of learning, created by our in-house
educational experts with the assistance of our Education Advisory Board, that identifies what children learn and
when and how they learn it. Our grade-based content is aligned with state and national education standards, often
mirroring what is learned in the classroom.
The following four educational principles are at the core of our products:
Children Learn Best When Actively Engaged
Our products encourage active participation by asking children questions and requiring them to direct their
own play before continuing with an activity. For example, children using our LeapPad interactive books can
control the information they receive by deciding what to touch with the NearTouch stylus. Even our Learning
Drum, designed for infants, engages them by only continuing with the activity or game after receiving a response
from the child.
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