Leapfrog returns to profitability

Firm's preliminary results show strong year, but expects to miss previous forecasts.
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LeapFrog has provided preliminary, unaudited financial results for the year ended December 31st, 2010.

The firm expects income per share to be between three and six cents, which is an improvement of between seven and ten cents per share, compared to 2009.

The expected income will fall short of Leapfrog's previous guidance of between 20 and 30 cents.

LeapFrog expects to report an increase in net sales of 13-14 per cent compared to 2009, which represents the company's highest net sales growth rate in seven years.

The preliminary results indicate that net sales growth was 12 per cent in the US and 20 per cent internationally.

Retail point-of-sale, or POS, dollars were up seven per cent in the US for the year, which compares to six per cent POS growth in the first nine months of the year, and the five per cent growth generated in 2009.

Bill Chiasson, chief executive officer, commented: "Solid top-line growth coupled with our disciplined cost management enabled a return to profitability in 2010. Strong demand for Leapster Explorer, our leading-edge handheld gaming system, fueled growth in the mobile learning business.

"Our interactive reading business exhibited continued growth at retail, and Scout is now firmly established as a strong character franchise in our learning toy line.

"Additionally, the Learning Path ecosystem is expected to have over six million connected consumers by the end of January, compared to three million a year ago."

"While we are encouraged by our return to profitability, our full year results are below our previously announced outlook. After a solid start to the holiday season, demand softened late in the quarter relative to our expectations.

"While sales of interactive reading products continued to grow at retail, the growth was less than we had forecasted and contributed to lower earnings growth than expected."

LeapFrog will report its 2010 fourth quarter and full year financial results in more detail and provide an outlook for 2011 on Thursday, February 10th, 2011.


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