UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-31396
LeapFrog Enterprises, Inc.
(Exact Name of Registrant, As Specified in its Charter)
| Delaware |
95-4652013 | |
| (State of Incorporation) |
(I.R.S. Employer Identification No.) |
6401 Hollis Street, Suite 150, Emeryville, California 94608-1071
(Address of Principal Executive Offices, Including Zip Code)
Registrant’s Phone Number, Including Area Code: (510) 420-5000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The number of shares of Class A common stock, par value $0.0001, and Class B common stock, par value $0.0001, outstanding as of April 30, 2003, was 24,892,087 and 31,636,962, respectively.
i
FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| March 31, |
December 31, 2002 |
|||||||||||
| 2003 |
2002 |
|||||||||||
| (Unaudited) |
(Note 1) |
|||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ |
113,832 |
|
$ |
1,436 |
|
$ |
73,327 |
| |||
| Short term investments |
|
14,186 |
|
|
— |
|
|
— |
| |||
| Accounts receivable, net of allowances of $9,388, $8,179 and $16,388 at March 31, 2003 and 2002 and December 31, 2002, respectively |
|
57,989 |
|
|
45,564 |
|
|
169,670 |
| |||
| Inventories, net |
|
81,872 |
|
|
43,291 |
|
|
84,460 |
| |||
| Prepaid expenses and other current assets |
|
6,923 |
|
|
2,540 |
|
|
4,065 |
| |||
| Notes receivable due from related parties |
|
— |
|
|
— |
|
|
595 |
| |||
| Deferred income taxes |
|
9,671 |
|
|
8,480 |
|
|
16,783 |
| |||
| Total current assets |
|
284,473 |
|
|
101,311 |
|
|
348,900 |
| |||
| Property and equipment, net |
|
20,541 |
|
|
18,128 |
|
|
20,239 |
| |||
| Other assets |
|
132 |
|
|
93 |
|
|
284 |
| |||
| Notes receivable due from related parties |
|
— |
|
|
694 |
|
|
— |
| |||
| Investments in affiliates and related parties |
|
200 |
|
|
200 |
|
|
200 |
| |||
| Deferred income taxes |
|
10,573 |
|
|
2,649 |
|
|
4,867 |
| |||
| Intangible assets, net |
|
26,031 |
|
|
23,675 |
|
|
23,192 |
| |||
| Total assets |
$ |
341,950 |
|
$ |
146,750 |
|
$ |
397,682 |
| |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ |
23,237 |
|
$ |
19,124 |
|
$ |
58,844 |
| |||
| Accrued liabilities |
|
21,201 |
|
|
12,394 |
|
|
40,533 |
| |||
| Deferred revenue |
|
2,186 |
|
|
2,344 |
|
|
3,006 |
| |||
| Income taxes payable |
|
— |
|
|
138 |
|
|
21,832 |
| |||
| Total current liabilities |
|
46,624 |
|
|
34,000 |
|
|
124,215 |
| |||
| Long term debt |
|
— |
|
|
17,204 |
|
|
— |
| |||
| Deferred rent and other long term liabilities |
|
573 |
|
|
274 |
|
|
550 |
| |||
| Deferred income taxes |
|
3,344 |
|
|
2,193 |
|
|
4,119 |
| |||
| Commitments and contingencies |
||||||||||||
| Redeemable convertible series A preferred stock, $0.0001 par value; 2,000,000 shares authorized at March 31, 2003 and December 31, 2002, and 6,000,000 shares authorized at March 31, 2002; -0- outstanding at March 31, 2003 and December 31, 2002; 2,000,000 issued and outstanding at March 31, 2002, net of $861 of issuance costs. (Liquidation preference of $25,000 at March 31, 2002). |
|
— |
|
|
24,139 |
|
|
— |
| |||
| Stockholders’ equity: |
||||||||||||
| Class A common stock, par value $0.0001; 139,500,000 shares authorized at March 31, 2003 and December 31, 2002, and 70,000,000 shares authorized at March 31, 2002; shares issued and outstanding: 22,118,761, 3,486,577 and 15,700,467 at March 31, 2003 and 2002 and December 31, 2002, respectively |
|
2 |
|
|
— |
|
|
2 |
| |||
| Class B common stock, par value $0.0001; 40,500,000 shares authorized; 33,989,800, 30,487,805 and 38,678,831 shares issued and outstanding at March 31, 2003 and 2002 and December 31, 2002, respectively. |
|
3 |
|
|
3 |
|
|
4 |
| |||
| Treasury stock; -0- at March 31, 2003 and December 31, 2002, and 232,160 shares at March 31, 2002 |
|
— |
|
|
(550 |
) |
|
— |
| |||
| Additional paid-in capital |
|
247,413 |
|
|
76,479 |
|
|
227,020 |
| |||
| Deferred compensation |
|
(4,301 |
) |
|
(3,318 |
) |
|
(4,922 |
) | |||
| Notes receivable from stockholders |
|
— |
|
|
(4,323 |
) |
|
(2,624 |
) | |||
| Accumulated other comprehensive (loss) income |
|
108 |
|
|
(1 |
) |
|
165 |
| |||
| Retained earnings |
|
48,184 |
|
|
650 |
|
|
49,153 |
| |||
| Total stockholders’ equity |
|
291,409 |
|
|
68,940 |
|
|
268,798 |
| |||
| Total liabilities and stockholders’ equity |
$ |
341,950 |
|
$ |
146,750 |
|
$ |
397,682 |
| |||
See accompanying notes.
1
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net sales |
$ |
76,733 |
|
$ |
57,980 |
| ||
| Cost of sales |
|
35,230 |
|
|
30,564 |
| ||
| Gross profit |
|
41,503 |
|
|
27,416 |
| ||
| Operating expenses: |
||||||||
| Selling, general and administrative |
|
21,521 |
|
|
16,170 |
| ||
| Research and development |
|
14,404 |
|
|
12,686 |
| ||
| Advertising |
|
6,355 |
|
|
5,043 |
| ||
| Depreciation and amortization |
|
2,765 |
|
|
1,590 |
| ||
| Total operating expenses |
|
45,045 |
|
|
35,489 |
| ||
| Loss from operations |
|
(3,542 |
) |
|
(8,073 |
) | ||
| Interest expense |
|
(3 |
) |
|
(485 |
) | ||
| Interest income |
|
326 |
|
|
106 |
| ||
| Other income |
|
1,604 |
|
|
24 |
| ||
| Loss before benefit for income taxes |
|
(1,615 |
) |
|
(8,428 |
) | ||
| Benefit for income taxes |
|
(646 |
) |
|
(3,369 |
) | ||
| Net loss |
$ |
(969 |
) |
$ |
(5,059 |
) | ||
| Net loss per common share—basic and diluted |
$ |
(0.02 |
) |
$ |
(0.15 |
) | ||
| Shares used in calculating net loss per common share—basic and diluted |
|
55,161,533 |
|
|
33,694,444 |
| ||
See accompanying notes.
2