EMERYVILLE, Calif., Feb. 9, 2016 /PRNewswire/ -- LeapFrog Enterprises, Inc. (NYSE:LF) today announced financial results for the third quarter fiscal year 2016. The Company's fiscal year covers the twelve-month period ending March 31, 2016.

Summary of financial results for the quarter ended December 31, 2015 compared to the quarter ended December 31, 2014:


    --  Consolidated net sales were $83.1 million, down 43%. U.S. segment net
        sales were down 41%, and international segment net sales were down 46%.
    --  Net loss per basic and diluted share was $0.62 compared to prior year
        net loss per basic and diluted share of $1.77, which included $0.23 per
        share of goodwill impairment, net of the associated tax benefit, and
        $1.29 per share of an additional deferred tax asset valuation allowance.
    --  Total impact of foreign currency exchange rates on net sales was $2.6
        million, or negative 2%.

Third fiscal quarter net sales were $83.1 million, down 43% compared to $144.6 million last year, and included a 2% negative impact from changes in currency exchange rates. In the U.S. segment, net sales were $58.6 million, down 41% compared to $99.2 million last year. In the International segment, net sales were $24.5 million, down 46% compared to $45.4 million last year, and included a 6% negative impact from changes in currency exchange rates.

Operating expenses for the third fiscal quarter were $50.5 million, down 38% compared to $81.6 million last year. Operating expenses, excluding impairments and depreciation were $49.1 million, down 17% compared to $59.1 million in the prior year. The improvements in our expense structure were offset by severance pay and higher professional and legal fees.

Loss from operations was $43.1 million, compared to prior year's loss of $36.5 million due to sales and gross margin declines. Adjusted loss from operations, which excludes impairment and depreciation, was $41.7 million, compared to the prior year's loss of $14.0 million. The losses in the quarter included a series of one-off non-cash charges for lower of cost or market charges to write-down LeapTV to net realizable value and to impair capitalized content for discontinued LeapTV titles.

Net loss for the third fiscal quarter was $44.2 million, or $0.62 per basic and diluted share compared to prior year net loss of $124.2 million, or $1.77 per basic and diluted share. Prior year net loss included non-cash charges of $19.5 million or $0.28 per share for goodwill impairment, associated non-cash tax benefits of $3.8 million or $0.05 per share, and $90.8 million or $1.29 per share for an additional non-cash deferred tax asset valuation allowance.

Adjusted net loss per basic and diluted share(1), which excludes impairment of long-lived assets, goodwill impairment, the tax benefit associated with goodwill impairment and the deferred tax asset valuation allowance adjustment, was $0.61, compared to adjusted net loss per basic and diluted share(1) of $0.25 a year ago.

Non-GAAP adjusted EBITDA(2) for the quarter was negative $34.7 million compared to negative EBITDA of $7.3 million a year ago.

Merger Announcement

On February 5, 2016, the Company entered into an Agreement and Plan of Merger with VTech Holdings Limited. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions described therein, VTech has agreed to commence a tender offer by March 3, 2016, to purchase the outstanding shares of Class A and Class B common stock of the Company at a purchase price per share of US $1.00. More details concerning the terms and conditions of the Merger and the Merger Agreement may be found in the Company's Form 8-K filed with the Securities and Exchange Commission on February 5, 2016.

"We intend to continue a disciplined execution of our strategy as we work to complete the VTech merger," said John Barbour, Chief Executive Officer.

Morrison & Foerster LLP is serving as legal counsel to LeapFrog. Morgan Stanley & Co. LLC is providing financial advisory services to LeapFrog in connection with the transaction.

Conference Call and Webcast

We will not hold a conference call or provide a webcast to discuss third quarter fiscal year 2016 financial results due to the February 5, 2016 announcement that LeapFrog Enterprises, Inc. signed a definitive merger agreement with VTech Holdings Limited.

The Company expects to file its Quarterly Report Form 10-Q for the quarter ended December 31, 2015 with the Securities and Exchange Commission on February 9, 2016 and it can be accessed at LeapFrog's investor relations web site at www.leapfroginvestor.com.

About LeapFrog

LeapFrog Enterprises, Inc. is the leader in educational entertainment for children. For 20 years, LeapFrog has created award-winning learning solutions that combine educational expertise, innovative technology and a child's love for fun. With experiences that are personalized to each child's level, LeapFrog helps children achieve their potential through LeapFrog's proprietary learning tablets, its innovative new active video gaming system LeapTV, learn to read and write systems, interactive learning toys and more, all designed or approved by LeapFrog's full-time in-house team of learning experts. LeapFrog's Learning Path, the ultimate guide for parents on early childhood, is designed specifically to help support and guide their child's learning with personalized ideas and feedback, fun activities and expert advice. 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. Learn more at www.leapfrog.com.

TM & © 2016 LeapFrog Enterprises, Inc. All rights reserved.

Use of Non-GAAP Financial Information

This press release includes non-GAAP financial measures, specifically adjusted EBITDA.

Adjusted EBITDA is defined as earnings (or net income (loss)) before interest, income taxes, depreciation and amortization, goodwill impairment, impairment of long-lived assets, other expenses (income) and stock-based compensation. As required by SEC rules, we have provided an attached schedule with a reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income.

Management believes adjusted EBITDA is one of the appropriate measures for evaluating the operating performance of the Company because it reflects the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet and make strategic acquisitions.

However, these non-GAAP measures should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP as more fully discussed in the Company's financial statements and filings with the SEC. Additionally, these non-GAAP measures may not be comparable to similarly-titled measures used by other companies. As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America.

Forward-Looking Statements

This news release contains forward-looking statements that involve risks and uncertainties, including statements regarding our intention to continue a disciplined execution of our strategy as we work to complete the VTech merger. 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, our ability to continue as a going concern, our ability to correctly predict highly changeable consumer preferences and product trends, our ability to continue to develop new products and services, the sufficiency of our liquidity, our ability to maintain adequate inventory levels, our reliance on a small group of retailers for the majority of our gross sales, deterioration of global economic conditions, the effectiveness of our marketing and advertising efforts, our ability to compete effectively with competitors, the completion of our recently announced agreement and plan of merger with VTech Holdings Limited and Bonita Merger Sub, L.L.C. on a timely basis, our ability to attract and retain highly skilled personnel, our ability to maintain or acquire licenses, the impact of potential impairment charges or valuation allowances, the seasonality of our business, significant changes in the cost or availability of our components and raw materials, our reliance on a limited number of manufacturers, system failures in our digital services, our ability to protect or enforce our intellectual property rights, defects in our products, the risks associated with international operations, costs or changes associated with compliance with laws and regulations, negative political developments, changes in trade relations, armed hostilities, terrorism, labor strikes, natural disasters or public health issues, failure to successfully implement new strategic operating initiatives, impacts from acquisitions, mergers or dispositions, continued ownership by a few stockholders of a significant percentage of the voting power in the Company, our ability to regain compliance with NYSE listing requirements 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 most recent Form 10-K and Form 10-Q. All information provided in this release is as of the date hereof, and we undertake no obligation to update this information.

Important Additional Information
The tender offer for the outstanding shares of common stock of LeapFrog has not yet commenced. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares of LeapFrog common stock. The solicitation and the offer to purchase shares of LeapFrog common stock will be made pursuant to an offer to purchase and related materials that VTech and certain of its affiliates intend to file with the U.S. Securities and Exchange Commission (the "SEC").

At the time the tender offer is commenced, the VTech and certain of its affiliates will file a tender offer statement on Schedule TO with the SEC, and LeapFrog will file a solicitation/recommendation statement on Schedule 14D-9 with respect to the Offer. The tender offer statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the solicitation/recommendation statement will contain important information that should be read carefully and considered before any decision is made with respect to the tender offer. Both the tender offer statement and the solicitation/recommendation statement will be mailed to LeapFrog stockholders free of charge. A free copy of the tender offer statement and the solicitation/recommendation statement will be available to all LeapFrog stockholders from a depository to be announced once the tender offer commences. The tender offer statement and solicitation/recommendation statement (including all documents filed with the SEC) are free by accessing the SEC's website at www.sec.gov.

BEFORE MAKING ANY DECISION WITH RESPECT TO THE TENDER OFFER, LEAPFROG STOCKHOLDERS ARE ADVISED TO READ AND CONSIDER CAREFULLY THE SCHEDULE TO (INCLUDING THE OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS), THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9, EACH AS MAY BE AMENDED AND SUPPLEMENTED FROM TIME TO TIME, AND OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THESE DOCUMENTS CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND ITS PARTIES.


    Contact Information


    Investors:                                   Media:

    Nancy Lee                                    Katie Zeiser

    Investor Relations                           Public Relations

    (510) 420-5150                               (510) 420-5331

    ir@leapfrog.com                              kzeiser@leapfrog.com

(1) Adjusted net loss per basic and diluted share is a non-GAAP financial measure. It is described below and reconciled to its comparable GAAP measure in the accompanying financial tables.
(2) Adjusted EBITDA is a non-GAAP financial measure. It is described below and reconciled to its comparable GAAP measure in the accompanying financial tables.


                                                                                           LEAPFROG ENTERPRISES, INC.

                                                                                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                      (In thousands, except per share data)

                                                                                                   (Unaudited)


                                                  Three Months Ended                    Nine Months Ended December
                                                       December 31,                                   31,
                                                 -------------------                   ---------------------------

                                                                     2015                                      2014                          2015                    2014
                                                                     ----                                      ----                          ----                    ----


    Net sales                                                               $83,093                                         $144,598                $189,013                $305,220

                       Cost of sales                                 75,685                                    99,464                       168,115                 214,243

                       Gross profit                                   7,408                                    45,134                        20,898                  90,977


    Operating expenses:

                        Selling, general
                        and
                        administrative                               21,878                                    23,338                        66,831                  64,703

                        Research and
                        development                                   9,912                                     8,993                        26,450                  23,967

                       Advertising                                   17,298                                    26,773                        25,409                  39,531

                        Goodwill
                        impairment                                        -                                   19,549                             -                 19,549

                        Impairment of
                        long-lived
                        assets                                        1,086                                         -                        4,970                       -

                        Depreciation and
                        amortization                                    318                                     2,971                         1,404                   8,571

                        Total operating
                        expenses                                     50,492                                    81,624                       125,064                 156,321

                                             Loss from operations             (43,084)                                        (36,490)              (104,166)               (65,344)


    Other income (expense):

                       Interest income                                   11                                        10                            74                      71

                       Interest expense                                (67)                                     (16)                         (69)                   (16)

                       Other, net                                     (237)                                    (516)                        (654)                  (746)

                        Total other
                        income
                        (expense), net                                (293)                                    (522)                        (649)                  (691)

                                             Loss before income taxes         (43,377)                                        (37,012)              (104,815)               (66,035)

    Provision for (benefit from) income
     taxes                                                                      848                                           87,200                     801                  76,571

                       Net loss                                   $(44,225)                               $(124,212)                   $(105,616)             $(142,606)
                                                                   ========                                 =========                     =========               =========


    Net loss per share:

                        Class A and B -
                         basic and diluted                          $(0.62)                                  $(1.77)                      $(1.49)                $(2.04)


    Weighted average shares used to calculate net loss per share:

                        Class A and B -
                         basic and diluted                           70,967                                    70,169                        70,810                  69,997


                                                             LEAPFROG ENTERPRISES, INC.

                                                            CONSOLIDATED BALANCE SHEETS

                                                       (In thousands, except per share data)

                                                                    (Unaudited)


                                                                             December 31,           March 31,
                                                                          ------------           ---------

                                                                                          2015                  2014        2015
                                                                                          ----                  ----        ----

    ASSETS

    Current assets:

               Cash and cash equivalents                                                 $52,846               $94,020    $127,176

                Accounts receivable, net of allowances for
                doubtful accounts of $1,492, $818 and $854,
                respectively                                                              63,200               100,810      19,618

               Inventories                                                                38,526                77,796      71,927

               Prepaid expenses and other current assets                                   8,837                10,449      10,012

               Deferred income taxes                                                         450                   661         553

                    Total current assets                                                 163,859               283,736     229,286

    Deferred income taxes                                                                  683                 1,498       1,792

    Property and equipment, net                                                            429                38,191       1,676

    Capitalized content costs, net                                                      17,470                23,191      22,510

    Other intangible assets, net                                                         2,326                 3,836       3,453

    Other assets                                                                           700                 1,337       1,475

                    Total assets                                                        $185,467              $351,789    $260,192
                                                                                      ========


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

               Accounts payable                                                          $16,412               $23,440     $16,578

               Accrued liabilities                                                        28,897                32,137      21,582

               Deferred revenue                                                           11,631                12,526      11,921

               Short-term borrowings                                                      20,000                     -          -

               Deferred income taxes                                                         530                 1,290       1,630

               Income taxes payable                                                          269                   431         267

                    Total current liabilities                                             77,739                69,824      51,978

    Long-term deferred income taxes                                                        452                     -        323

    Other long-term liabilities                                                            823                   198       1,365
                                                                                           ---                   ---       -----

                    Total liabilities                                                     79,014                70,022      53,666

    Stockholders' equity:

                Class A Common Stock, par value $0.0001;
                Authorized -139,500 shares; Outstanding: 66,590,
                65,803 and 66,084, respectively                                                7                     7           7

                Class B Common Stock, par value $0.0001;
                Authorized -40,500 shares; Outstanding: 4,394,
                4,394 and 4,394, respectively                                                  -                    -          -

               Treasury stock                                                              (185)                (185)      (185)

               Additional paid-in capital                                                441,860               431,806     434,728

               Accumulated other comprehensive loss                                      (7,039)              (3,453)    (5,450)

               Accumulated deficit                                                     (328,190)            (146,408)  (222,574)
                                                                                     ---------

                    Total stockholders' equity                                           106,453               281,767     206,526
                                                                                       -------

                    Total liabilities and stockholders' equity                          $185,467              $351,789    $260,192
                                                                                      ========


                                                                       LEAPFROG ENTERPRISES, INC.

                                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                             (In thousands)

                                                                              (Unaudited)


                                                                                                                Three Months Ended                   Nine Months Ended December
                                                                                                                       December 31,                                31,
                                                                                                              -------------------                 ---------------------------

                                                                                 2015                      2014                       2015                                        2014
                                                                                 ----                      ----                       ----                                        ----

    Operating activities:

                                                          Net loss                        $(44,225)                $(124,212)              $(105,616)                                  $(142,606)

    Adjustments to reconcile net loss to net cash used in
     operating activities:

                                                           Depreciation
                                                           and
                                                           amortization                       5,130                      6,636                   13,133                                       19,869

                                                           Goodwill
                                                           impairment                             -                    19,549                        -                                      19,549

                                                           Impairment of
                                                           long-lived
                                                           assets                             1,086                          -                   4,970                                            -

                                                           Deferred
                                                           income taxes                         577                     86,371                      198                                       75,531

                                                           Stock-based
                                                           compensation
                                                           expense                            2,209                      2,996                    7,325                                        8,676

                                                           Allowance for
                                                           doubtful
                                                           accounts                             162                        436                      659                                          954

    Other changes in operating assets and liabilities:

                                                           Accounts
                                                           receivable,
                                                           net                              (3,225)                   (2,956)                (44,860)                                    (73,546)

                                                          Inventories                        37,066                     29,660                   33,331                                     (27,804)

                                                           Prepaid
                                                           expenses and
                                                           other current
                                                           assets                               628                      1,692                    1,146                                        (520)

                                                          Other assets                           49                         26                      770                                          129

                                                           Accounts
                                                           payable                         (21,040)                  (32,628)                     725                                        6,942

                                                           Accrued
                                                           liabilities                        4,144                      7,078                    8,302                                        9,182

                                                           Deferred
                                                           revenue                              187                        207                    (225)                                       (134)

                                                           Other long-
                                                           term
                                                           liabilities                          379                      (260)                     742                                        (910)

                                                           Income taxes
                                                           payable                            (195)                       167                        -                                       (220)

                                                           Net cash used in operating
                                                           activities                      (17,068)                   (5,238)                (79,400)                                   (104,908)
                                                                                            -------                     ------                  -------                                     --------

    Investing activities:

                                                          Purchases of
                                                           property and
                                                           equipment and
                                                           other
                                                           intangible
                                                           assets                             (964)                   (6,019)                 (6,158)                                    (21,085)

                                                          Capitalization
                                                           of content and
                                                           website
                                                           development
                                                           costs                              (853)                   (4,905)                 (7,398)                                    (13,069)

                                                           Net cash used in investing
                                                           activities                       (1,817)                  (10,924)                (13,556)                                    (34,154)
                                                                                             ------                    -------                  -------                                      -------

    Financing activities:

                                                          Proceeds from
                                                           stock option
                                                           exercises and
                                                           employee
                                                           stock
                                                           purchase plan                          -                        33                      146                                        1,512

                                                          Cash paid for
                                                           payroll taxes
                                                           on restricted
                                                           stock unit
                                                           releases                             (8)                      (99)                   (325)                                       (940)

                                                           Common stock
                                                           repurchased                            -                         -                       -                                        (38)

                                                           Excess tax
                                                           benefits from
                                                           stock-based
                                                           compensation                           -                         -                       -                                          11

                                                           Borrowing on
                                                           line of
                                                           credit                            20,000                          -                  20,000                                            -

                                                           Paydown on
                                                           line of
                                                           credit                                 -                         -                       -                                           -

                                                           Net cash provided by (used
                                                           in) financing activities          19,992                       (66)                  19,821                                          545
                                                                                             ------                        ---                   ------                                          ---

    Effect of exchange rate
     changes on cash                                                            (865)                  (1,096)                   (1,195)                                        549

    Net change in cash and cash
     equivalents                                                                  242                  (17,324)                   (74,330)                                   (137,968)

    Cash and cash equivalents,
     beginning of period                                                       52,604                   111,344                    127,176                                     231,988

    Cash and cash equivalents,
     end of period                                                            $52,846                   $94,020                    $52,846                                     $94,020
                                                                              =======                   =======                    =======                                     =======


                                                                                               LEAPFROG ENTERPRISES, INC.

                                                                                           SUPPLEMENTAL FINANCIAL INFORMATION

                                                                                                     (In thousands)

                                                                                                       (Unaudited)


                                                                              Three Months Ended                       Nine Months Ended December
                                                                                  December 31,                                     31,
                                                                             -------------------                      ---------------------------

                                                                                                2015                                           2014                     2015                      2014
                                                                                                ----                                           ----                     ----                      ----


    Net sales                                                                             $83,093                                       $144,598                 $189,013                  $305,220

                             Cost of sales (1)                        75,685                                99,464                                       168,115                   214,243

                             Gross profit                              7,408                                45,134                                        20,898                    90,977


    Operating expenses: (2)

                              Selling, general
                              and
                              administrative                          21,878                                23,338                                        66,831                    64,703

                              Research and
                              development                              9,912                                 8,993                                        26,450                    23,967

                             Advertising                              17,298                                26,773                                        25,409                    39,531

                              Goodwill
                              impairment                                   -                               19,549                                             -                   19,549

                              Impairment of
                              long-lived
                              assets                                   1,086                                     -                                        4,970                         -

                              Depreciation and
                              amortization                               318                                 2,971                                         1,404                     8,571

                              Total operating
                              expenses                                50,492                                81,624                                       125,064                   156,321

                                               Loss from operations                         (43,084)                                      (36,490)               (104,166)                 (65,344)


    Other income (expense):

                             Interest income                              11                                    10                                            74                        71

                             Interest expense                           (67)                                 (16)                                         (69)                     (16)

                             Other, net                                (237)                                (516)                                        (654)                    (746)

                              Total other
                              income
                              (expense), net                           (293)                                (522)                                        (649)                    (691)

                                               Loss before income taxes                     (43,377)                                      (37,012)               (104,815)                 (66,035)

    Provision for (benefit from) income taxes                                                 848                                         87,200                      801                    76,571

                             Net Loss                              $(44,225)                           $(124,212)                                   $(105,616)               $(142,606)
                                                                    ========                             =========                                     =========                 =========


                      (1)    Includes
                              depreciation and
                              amortization                             4,813                                 3,665                                        11,730                    11,298


                      (2)    Includes stock-
                              based
                              compensation as
                              follows:

                              Selling, general
                              and
                              administrative                           2,029                                 2,619                                         6,472                     7,547

                              Research and
                              development                                180                                   377                                           853                     1,129


    Segment data:

    Net sales:

                             U.S. segment                             58,560                                99,183                                       132,018                   207,449

                              International
                              segment                                 24,533                                45,415                                        56,995                    97,771


    Income (loss) from operations*:

                             U.S. segment                           (38,650)                             (39,822)                                    (101,751)                 (73,977)

                              International
                              segment                                (4,434)                                3,332                                       (2,415)                    8,633


    *            Certain
                 corporate-
                 level
                 operating
                 expenses
                 associated
                 with sales
                 and
                 marketing,
                 product
                 support,
                 human
                 resources,
                 legal,
                 finance,
                 information
                 technology,
                 corporate
                 development,
                 procurement
                 activities,
                 research and
                 development,
                 legal
                 settlements
                 and other
                 corporate
                 costs are
                 charged
                 entirely to
                 our U.S.
                 segment,
                 rather than
                 being
                 allocated
                 between the
                 U.S. and
                 International
                 segments.


                                                                    LEAPFROG ENTERPRISES, INC.

                                                 SUPPLEMENTAL DISCLOSURE REGARDING NON-GAAP FINANCIAL INFORMATION

                                             RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

                                                               (In thousands, except per share data)

                                                                            (Unaudited)


    The following table presents a reconciliation of net loss, a GAAP measure, to adjusted net loss, a non-GAAP measure, where available. Adjusted net loss is defined as net loss
     before goodwill impairment, tax benefit associated with goodwill impairment, impairment of long-lived assets and deferred tax valuation allowance adjustment. Adjusted net loss
     per share is calculated as adjusted net loss divided by weighted-average basic or diluted shares outstanding, as applicable.


                                                                                                     Three Months Ended                    Nine Months Ended December
                                                                                                          December 31,                                 31,
                                                                                                    -------------------                   ---------------------------

                                                                                                         2015                         2014                        2015                      2014
                                                                                                         ----                         ----                        ----                      ----


    Net loss - GAAP                                                                               $(44,225)                  $(124,212)                 $(105,616)               $(142,606)

    Exclude:

                                                  Goodwill
                                                  impairment                        -                    19,549                            -                     19,549

                                                  Tax benefit
                                                  associated with
                                                  goodwill
                                                  impairment                        -                   (3,812)                           -                    (3,812)

                                                  Impairment of
                                                  long-lived
                                                  assets                        1,086                                     -                      4,970                         -

                                                  Deferred tax
                                                  valuation
                                                  allowance
                                                  adjustment                        -                    90,769                            -                     90,769

    Adjusted net loss - Non-GAAP                                  $(43,139)             $(17,706)                 $(100,646)                  $(36,100)
                                                                   ========               ========                   =========                    ========


    Net loss per share - GAAP:

       Class A and B -basic and diluted                             $(0.62)               $(1.77)                    $(1.49)                    $(2.04)


    Adjusted net loss per share - Non-GAAP:

       Class A and B -basic and diluted                             $(0.61)               $(0.25)                    $(1.42)                    $(0.52)


    Weighted-average shares used to calculate

    net loss per share:

       Class A and B -basic and diluted                                                              70,967                       70,169                      70,810                    69,997


    The following table presents a reconciliation of net loss, a GAAP measure, to adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as earnings before interest,
     taxes, depreciation and amortization, impairment of long-lived assets, other expenses (income), and stock-based compensation.


                                                                                                     Three Months Ended                    Nine Months Ended December
                                                                                                          December 31,                                 31,
                                                                                                    -------------------                   ---------------------------

                                                                                                         2015                         2014                        2015                      2014
                                                                                                         ----                         ----                        ----                      ----


    Net loss - GAAP                                                                               $(44,225)                  $(124,212)                 $(105,616)               $(142,606)

    (Less) add:

                                                 Interest income                 (11)                      (10)                        (74)                       (71)

                                                 Interest expense                  67                         16                           69                          16

                                                  Provision for (benefit
                                                  from) income taxes                                        848                       87,200                         801                    76,571

                                                  Depreciation and
                                                  amortization                  5,131                      6,636                       13,134                      19,869

                                                  Goodwill
                                                  impairment                        -                    19,549                            -                     19,549

                                                  Impairment of
                                                  long-lived
                                                  assets                        1,086                                     -                      4,970                         -

                                                  Other expense
                                                  (income), net                   237                        516                          654                         746

                                                  Stock-based
                                                  compensation                  2,209                      2,996                        7,325                       8,676
                                                 -----------

    Adjusted EBITDA - Non-GAAP                                    $(34,658)              $(7,309)                  $(78,737)                  $(17,250)
                                                                   ========                =======                    ========                    ========

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SOURCE LeapFrog Enterprises, Inc.