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LeapFrog Reports Third Quarter 2012 Net Sales Increased 28%
Income from Operations Increased 48%
By: PR Newswire
Nov. 5, 2012 04:01 PM
EMERYVILLE, Calif., Nov. 5, 2012 /PRNewswire/ -- LeapFrog Enterprises, Inc. (NYSE: LF) today announced financial results for the third quarter ended September 30, 2012.
Highlights of third quarter 2012 results compared to third quarter 2011 results:
Highlights of nine month 2012 results compared to nine month 2011 results:
"The quality of execution from the LeapFrog team has been exceptional this year. We are making terrific progress in the transformation of our business while delivering market-leading financial growth," said John Barbour, Chief Executive Officer. "This summer, we introduced LeapPad2, the next generation of the #1 kids' learning tablet. In a very competitive tablet market, LeapPad2 has already won many accolades, been featured on every major top holiday toy list and is a top-selling product in key retail layaway programs.
"Our 17 years of experience in creating revolutionary products that improve children's lives through delivering fun, engaging and compelling entertainment that's filled with rich learning nutrition has helped us create the best learning tablet for children and a content library that is filled with hundreds of games, books, videos, music and apps that have all been created or selected by qualified child development and education experts. Together, our platforms and content provide a winning proposition that helps children achieve their potential while also creating significant value for our shareholders and our business partners."
Financial Overview for the Third Quarter 2012 Compared to the Third Quarter 2011
Third quarter 2012 net sales were $193.1 million, up 28% compared to $150.8 million last year, and included a 1% negative impact from changes in currency exchange rates. Net sales growth was primarily driven by the introduction of new products, continued high consumer demand for the LeapPad line, and strong content sales. In the U.S. segment, net sales were $145.7 million, up 26% compared to $116.0 million last year. In the International segment, net sales were $47.4 million, up 36% compared to $34.9 million last year, and included a 3% negative impact from changes in currency exchange rates.
Income from operations was $36.9 million for the third quarter of 2012, up 48% compared to $24.9 million a year ago. Net income was $41.7 million, up 81% compared to $23.0 million a year ago. Net income included non-recurring tax benefits of $6.4 million in the third quarter of 2012 and $2.9 million in the third quarter of 2011.
Net income per diluted share was $0.60 for the third quarter of 2012, up 71% or $0.25 per share compared to $0.35 a year ago. Excluding the impact of non-recurring tax benefits, net income per diluted share increased $0.20 per share compared to the prior year.
"We delivered a great third quarter performance with strong sales and earnings growth," said Ray Arthur, Chief Financial Officer. "Consumer demand for our educational entertainment continued to be robust. Early retail sales of LeapPads through retailer layaway programs have been very strong, although it is likely that these programs pulled forward some demand into the third quarter from the fourth quarter. Improvements in our supply chain have helped us build higher retail inventory of LeapPads as we head into the all-important holiday season."
"We have good momentum heading into the holidays. Given the strength of our third quarter results, retail point-of-sale trends and inventory position, we are raising our full year 2012 guidance," continued Mr. Arthur. "Our guidance is based on our best view as of today, but keep in mind that our full year 2012 results will be highly dependent on the economy and consumer sales during the holiday season. In addition, please note that we expect our advertising expenditures to increase by approximately 20% to 25% in the fourth quarter compared to a year ago, as we concentrate our advertising during the key holiday weeks when consumers are shopping for gifts. Our results for the year will ultimately depend on holiday sell-through of our products."
For the full year 2012, we now expect:
Conference Call and Webcast
LeapFrog will hold a conference call to discuss third quarter 2012 financial results on November 5, 2012, at 2:00 p.m. Pacific Standard Time (5:00 p.m. Eastern Standard Time). The conference call will be webcast live and can be accessed at LeapFrog's investor relations web site at www.leapfroginvestor.com. An archive of the webcast will be available on the web site approximately three hours following completion of the call. In addition, more information about LeapFrog, including this press release and other financial and investor information, is also available on the investor relations web site.
To participate in the call, please dial (706) 634-0183 and request conference ID 47975795. A telephonic replay of the call will be available for one month. To access the replay, please dial (404) 537-3406 and use conference ID 47975795.
LeapFrog Enterprises, Inc. is the leader in educational entertainment for children. LeapFrog's award-winning product portfolio helps millions of children achieve their potential by delivering best-in-class curriculum through engaging content, fun multimedia learning platforms and toys. The Learning Path, LeapFrog's proprietary online destination for parents and extended family, provides personalized feedback on a child's learning progress and offers recommendations to enhance each child's learning experience. Through the power of play, LeapFrog's products and curriculum help children of all ages prepare for school and life success. LeapFrog's products are available in more than 45 countries and have been used by teachers in more than 100,000 U.S. classrooms. LeapFrog is based in Emeryville, California, and was founded in 1995 by a father who revolutionized technology-based learning solutions to help his child learn how to read. Come see the learning at www.leapfrog.com.
TM & © 2012 LeapFrog Enterprises, Inc. All rights reserved.
This news release contains forward-looking statements that involve risks and uncertainties, including statements regarding anticipated financial results. Our actual results may differ materially from those expressed or implied by such forward-looking statements. The risks that could cause our results to differ include, without limitation, deterioration of global economic conditions, our ability to correctly predict highly changeable consumer preferences and product trends, our ability to continue to develop new products and services, our reliance on a small group of retailers for the majority of our gross sales, our dependence on our suppliers for our components and raw materials, the seasonality of our business, our growing focus on online products and services, system failures in our online services or web store, our reliance on a limited number of manufacturers, our ability to maintain sufficient inventory levels, our ability to compete effectively with competitors, our ability to maintain or acquire licenses, third parties who claim we are infringing on their intellectual property rights, errors or defects in our products, privacy concerns about our Internet-connected products, the sufficiency of our liquidity, the risk associated with international operations, continued compliance and associated costs with and/or changes in laws and regulations, negative political developments, natural disasters, armed hostilities, terrorism, labor strikes or public health issues, the loss of members of our executive management team, continued ownership by a few stockholders of a majority of voting power in us, and the volatility of our stock price. These risks and others are discussed under "Risk Factors" in our filings with the U.S. Securities and Exchange Commission, including our 2011 annual report on Form 10-K filed on February 29, 2012. All information provided in this release is as of the date hereof, and we undertake no obligation to update this information.
SOURCE LeapFrog Enterprises, Inc.
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