LeapFrog Jumps Into the Red: Fool by Numbers

On Nov. 2, LeapFrog Enterprises (NYSE: LF) released second-quarter earnings for the period ended Sept. 30.

• Revenues and EPS were well below expectations, causing management to implement "significant changes" to the business.
  
• Margins got crushed from excess reserves and obsolete inventory.
  
• Read a Foolish take on the quarter's results.

(Figures in millions, except per-share data)

Income Statement Highlights

	Avg. Est.	Q3 2006	Q3 2005	Change
Sales	$218	$185	$243	(23.9%)
Net Profit	--	($50)	$33	N/A
EPS	$0.34	($0.79)	$0.52	N/A
Diluted Shares	--	63	63	0.4%

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2006	Q3 2005	Change*
Gross Margin	26.63%	44.77%	(18.14)
Operating Margin	(7.94%)	19.18%	(27.12)
Net Margin	(26.93%)	13.50%	(40.43)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2006	Q3 2005	Change
Cash + ST Invest.	$135	$74	82.0%
Accounts Rec.	$153	$220	(30.5%)
Inventory	$154	$212	(27.1%)

Liabilities	Q3 2006	Q3 2005	Change
Accounts Payable	$84	$121	(30.4%)
Long-Term Debt	$0	$0	N/A

Learn the ways of the balance sheet.

Cash Flow Highlights

	YTD 2006	YTD 2005	Change
Cash From Ops.	$72	($21)	N/A
Capital Expenditures	$12	$10	28.6%
Free Cash Flow	$60	($30)	N/A

Find out why Fools always follow the money.

Related Companies:

• RC2 (Nasdaq: RCRC)
• JAKKS Pacific (Nasdaq: JAKK)
• Russ Berrie (NYSE: RUS)
• Mattel (NYSE: MAT)

Related Foolishness:

• LeapFrog Comes Up for Air
• LeapFrog Stinks at Frogger
• Mattel's Radica Move

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.