LeapFrog 2012 Annual Report Download - page 4

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LeapFrog stands above others because we put learning first. We have an in-house team of learning experts
with PhDs and other advanced degrees in child development, cognitive development, education, design and
technology. Our learning team is integral to every product we develop, from creation and design to specific
embedded learning experiences and additional teaching tips for parents. Over the years, our learning team
has developed a proprietary scope and sequence that consists of more than 2,600 skills that integrates best
research and practices. Our products are designed specifically for kids, and we know that every child is unique
with different interests, needs and learning styles. We orchestrate play experiences that keep each child
uniquely engaged and challenged, with many of our products auto-leveling to a child’s unique learning pace.
We also partner with parents to understand their needs and provide valuable teaching tips and tools to help
their children on their learning journey. There are 13 million parents connected to our online ecosystem.
With our online tools, parents can see their child’s play and learning progress with our learning solutions,
download learning apps, create personalized learning experiences and get valuable teaching tips. It is our
goal to be the ultimate learning partner for parents…the trusted resource that parents turn to first for learning
solutions, insights and support.
Transformation
LeapFrog has embarked on a significant transformation. We have grown from being solely an educational
toy company to now being an educational entertainment company with a far greater focus on content. Our
line-up includes hundreds of pieces of educational content, spanning games, videos, books, eBooks, creativity
studios, maps, apps, music and more. We opened our platforms to third parties, and we now distribute
content for more than 30 of the best kids’ entertainment companies. Additionally, we are making significant
investments to build an online community with parents as well as improve our online tools to provide parents
with even richer, more personalized insight about their child’s learning progress.
Our world-class team is making this transformation a reality by developing learning solutions that are helping
millions of children achieve their potential while delivering market-leading performance. This extraordinary
team of talented and successful professionals comes from a wide range of disciplines, including child
development and education experts, platform designers, content creators, game designers, marketing
professionals, system engineers and more. We have also brought in new leaders who come with decades of
successful track records in both large companies and entrepreneurial environments.
2012 Performance
The impact of our transformation is reflected in our results. In 2012, in a challenging environment
characterized by a weak economy, a tough consumer market and substantially more competitors, LeapFrog
delivered 28% net sales growth. Global demand for our products was strong, with net sales increasing 24%
in the U.S. segment and 38% in the international segment. Income from operations nearly tripled, and our
operating margin increased nearly six percentage points. We also generated very strong cash flow, and we
ended 2012 with a cash balance of $120 million, which was a 67% increase to the balance at the end of 2011.
Our focus on creating and distributing the best educational entertainment content and content delivery
platforms for children resulted in being recognized with more than 80 independent awards and inclusions on
top toy lists in 2012, including the inaugural “People’s Choice Toy of the Year” award from the Toy Industry
Association for LeapPad2™.
Our Explorer cartridge content was the #1 top-selling toy in the U.S. in 2012, and we had three of the top
four and four of the Top 10 selling toys in the U.S.7 We also had the #1 top-selling toy in the U.K. and two of
the Top 10 selling toys in the U.K.8 Net sales of digital download content from our carefully selected library
of more than 475 titles, including LeapFrog developed content and content from media partners, nearly
quadrupled from 2011 as families took advantage of our 24/7 online App Center.
LeapFrog Annual Report 2012