LeapFrog 2004 Annual Report Download - page 2

Fellow Stockholders:
LeapFrog is, fi rst and foremost, an educational products company.
We are driven by our passion to be the most effective brand for
quality, technology-based educational products in the home,
school and work for all ages around the world. This mission
permeates the entire company and clearly distinguishes us from
the toy, entertainment and publishing companies that do not
have proven educational pedagogy at the heart of all of their
products.
Sound educational principles are at the core of our values. All
of our content and curriculum is based on a proprietary method
of learning, created by our in-house educational experts with
the assistance of our prestigious Education Advisory Board. This method identifi es what children need to
learn and when and how they best learn it. Our content is aligned with state and national education standards,
often mirroring what needs to be learned in the classroom at the different grade levels. This is true for all
of our products, whether it is school curriculum and supplemental materials distributed through the school
market, or our consumer products distributed at retail.
While 2004 was a diffi cult and challenging year, we also made signifi cant progress toward fulfi lling our mission.
In 2005, we celebrate our 10th anniversary, and we have already established our brands and products as
the premier educational products company focused on children from birth through grade school:
• We continue to be the innovation leader in the educational products market. For example,
in 2005, we will introduce our groundbreaking Fly pentop computer and will expand
our presence in the screen-based learning fi eld with our new Leapster L-Max platform.
• The effi cacy of our product has been validated by education professionals, and our
SchoolHouse products are now in use by over 60,000 teachers in the United States.
Our SchoolHouse division achieved over $55 million in net sales in 2004 from virtually
nothing fi ve years ago, produced an operating profi t, and is the fastest growing supple-
mental education company in the market.1
• We have enjoyed incredible growth around the world. Our international consumer
business, which was only 6% of our total sales in 2000, is now a $153 million business,
representing 24% of our total net sales. We have products in six languages in over 25
countries around the world. In the United Kingdom our net sales grew 74% and we
have been recognized as “Toy Company of the Year.” In Canada, 18 of the 20 best-selling
preschool electronic learning products carry the LeapFrog name.2
• Our LeapPad learning system is loved by millions. With the over three million LeapPad
platforms sold in 2004, we now have an installed base of approximately 17 million
platforms and over 50 million books in schools and homes around the world. The
LeapPad family of products continues to be an important product line to our retailer
partners.
• Parents and grandparents immediately recognize our ability to create high quality,
proven educational products. This is why we have a 63% market share of the Electronic
Learning segment of the market.3 We also have great brand recognition, with 98% and
79% aided and unaided brand awareness4 among parents of 0 to 11 year-old children.
We take equal satisfaction from the enthusiastic comments we receive every day from parents, grandparents,
and children. The affection for our products goes beyond a simple recognition for what we create, and
instead refl ects a real appreciation for how we help young children learn and grow. We make it a point to
talk to our consumers and we continually receive e-mails and letters from parents that share their feelings with
us. For example:
1 GEMOS report
2 Source: ACNielsen, ToyTrack, Item Rank based on ACNielsen Releasable Items, National Total Infant Toys IPS, Latest 52 Weeks Ending
Dec. 25, 2004, Shared to: TL Infant Toys IPS
3 NPD Toy Industry Insights - Annual 2004
4 January 2005 Company survey
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