LeapFrog 2006 Annual Report Download - page 96
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LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share and percent data)
The following table illustrates the effect on net income and net income per common share if the Company
had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation during the
stated period:
Year Ended
December 31,
2005 2004
Net income (loss) as reported ....................................... $17,500 $ (6,528)
Stock-based employee compensation expense included in reported net
income, net of related tax effects .................................. 1,617 886
Total stock-based employee compensation expense determined under
fair value method for all awards, net of related tax effects .......... (5,931) (9,538)
Additional stock based compensation expenses provided by the acceleration
of options, net of related tax effects ................................ (11,636) —
Pro forma net income (loss) ........................................ $ 1,550 $(15,180)
Net income (loss) per common share as reported:
Basic ...................................................... $ 0.28 $ (0.11)
Diluted .................................................... $ 0.28 $ (0.11)
Pro forma net income (loss) per common share:
Basic ...................................................... $ 0.03 $ (0.25)
Diluted .................................................... $ 0.02 $ (0.25)
Stock Options
Stock options to purchase Class A common stock were granted with an exercise price equal to the closing
market price of the Company’s stock on the trading day immediately prior to the date of grant. Each stock option
generally has a vesting period of four years and is generally exercisable for a period of up to ten years from the
date of the grant. The fair value of each stock option granted is estimated on the date of the grant using the
Black-Scholes option-pricing model.
The total stock-based compensation expense for employee stock options recorded during the years ended
December 31, 2006, 2005, and 2004 was $4,254 before tax ($2,564 or $ 0.041 per share after tax), $385 before
tax ($232 or $0.004 per share after tax), and $1,616 before tax ($973 or $0.016 per share after tax), respectively.
As of December 31, 2006, the Company had $24,456 of unrecognized compensation cost related to nonvested
stock options that is expected to be recognized over a weighted-average period of approximately 3.2 years.
F-24