LeapFrog 2007 Annual Report Download - page 59
Download and view the complete annual report
Please find page 59 of the 2007 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.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49 -
50 -
51 -
52 -
53 -
54 -
55 -
56 -
57 -
58 -
59 -
60 -
61 -
62 -
63 -
64 -
65 -
66 -
67 -
68 -
69 -
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
-
175
-
176
-
177
-
178
-
179
-
180
-
181
-
182
-
183
-
184
 |
 |
During the first quarter, our net loss increased from $23.6 million in 2006 to $30.4 million in 2007. The
higher net loss was primarily attributable to:
• 8% lower net sales,
• Partially offset by gross margin improvement of 3.2 percentage points driven by lower sales discounts
and allowances and lower freight expense.
During the second quarter, our net loss increased from $25.7 million in 2006 to $28.0 million in 2007. The
higher net loss was primarily attributable to:
• 18% lower net sales,
• Partially offset by gross margin improvement of 11.1 percentage points driven by lower promotional
allowances, and lower reserve requirements for inventory and defective products, and lower operating
expenses.
During the third quarter, our net loss decreased from $49.7 million in 2006 to $10.3 million in 2007. The
lower net loss was primarily attributable to:
• Gross margin improvement of 15.6 percentage points driven by lower charges for excess and obsolete
inventory, and lower purchase order cancellations, and
• Lower tax expense due to the recording of a valuation allowance of $43.2 million for the first time in the
third quarter of 2006,
• Partially offset by 22% lower net sales.
During the fourth quarter, our net loss decreased from $46.0 million in 2006 to $32.6 million in 2007. The
lower net loss was primarily attributable to:
• Gross margin improvement of 6.7 percentage points driven by improved product mix, and lower charges
for excess and obsolete inventory, partially offset by FLY Fusion related asset write-downs, and
• Lower operating expense,
• Partially offset by the $2.5 million impairment of short-term investments and 1% lower net sales.
Liquidity and Capital Resources
In 2007, highlights of our cash flow included:
• Operating losses of $101.3 million in 2007 were partially offset by inventory reductions of $20.6
million.
• Gross fixed assets increased $8.7 million from the $108.0 million at the end of 2006 to the $116.7
million at the end of 2007. Effectively all of the $8.9 million change was due to the capitalization of
costs for content for our existing and new products.
Cash, cash equivalents, and short-term investments
LeapFrog’s primary source of cash during 2007 was cash received from the collection of accounts
receivable balances generated from sales in the second half of 2007 and the sale of marketable securities,
partially offset by operating losses.
51