LeapFrog 2004 Annual Report Download - page 103

LEAPFROG ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share and percent data)
The following table summarizes information concerning outstanding and exercisable options as of
December 31, 2004:
Class A Options Outstanding Class A Options Exercisable
Range of Exercise Price
Number
Outstanding
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price
Number
Exercisable
Weighted-
Average
Exercise
Price
$2.37 79 2.00 $ 2.37 79 $ 2.37
5.00 1,307 6.37 5.00 1,257 5.00
7.50 – 12.05 1,166 7.59 10.33 606 9.88
12.20 – 14.00 1,049 7.62 12.65 603 12.50
17.43 – 20.60 1,010 8.94 19.72 216 20.03
21.37 – 29.30 1,333 9.05 25.42 315 25.72
29.74 – 44.60 883 8.85 32.47 216 34.12
$ 2.37 – 44.60 6,827 7.94 $16.77 3,292 $12.09
The number of Class A options exercisable at December 31, 2003 and 2002, were 2,886 and 5,158 shares,
respectively.
During the years ended December 31, 2004, 2003 and 2002, the Company granted options to consultants to
purchase 2, 14, and 125 shares of Class A common stock at average exercise prices of $12.05, $21.77, and $9.89
per share, respectively. These options were granted in exchange for consulting services performed. The Company
determined the fair value of these options using the Black-Scholes valuation model. Compensation expense
related to options to consultants was $426, $1,093, and $349 for the years ended December 31, 2004, 2003 and
2002, respectively. Included in the 125 options granted to consultants in 2002 are 40 options issued in connection
with the conversion of stock appreciation rights that were originally issued in prior years. Excluding these
converted rights, 85 options at an average price of $12.20 were issued to consultants in 2002.
During the years ended December 31, 2004, 2003 and 2002, in connection with the grant of certain stock
options to employees, the Company recorded deferred stock compensation for financial statement reporting
purposes of $-0-, $127, and $5,034 respectively.
In addition, in connection with the grant of 115 stock awards in November 2004, the Company recorded
deferred compensation of $1,523. Deferred stock compensation is included as a component of stockholders’
equity and is being amortized to expense on a straight-line basis over the vesting periods of the options. The
Company recorded $1,691, $2,203, and $1,752 of stock-based compensation for the years ended December 31,
2004, 2003 and 2002, respectively.
During the year ended December 31, 2004, the Company granted 387 performance based stock awards. The
shares are eligible to vest over a three year period based on the attainment of performance goals as set by the
Board of Directors for such period. As of December 31, 2004, no shares have vested and 138 of the 387 shares
granted have been cancelled due to 2004 annual performance goals not being achieved and employee
terminations.
Employee Stock Purchase Plan
In July 2002, the Company’s stockholders adopted the 2002 Employee Stock Purchase Plan, under which
2,000 shares of Class A common stock have been reserved. During the years ended December 31, 2004 and
2003, 121 and 156 shares, respectively, were issued under this plan. No shares were issued prior to 2003.
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