LeapFrog 2006 Annual Report Download - page 97
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LEAPFROG ENTERPRISES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share and percent data)
The table below presents the weighted-average assumptions used in the model for the years ended
December 31, 2006, 2005 and 2004. The expected life of the options represent the period of time the options are
expected to be outstanding and is based on the guidance provided in SEC Staff Accounting Bulletin No. 107 on
Share-Based Payment. Expected stock price volatility is based on consideration of historical and current implied
volatilities of the Company’s stock, as well as the historical volatilities of other entities in the Company’s
industry. The risk–free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and
that has a term equal to the expected life.
Weighted-average assumptions
Year Ended December 31,
2006 2005 2004
Expected life (years) ......................................... 6.25 4.0 4.0
Risk-free interest rate ........................................ 4.9% 4.0% 3.1%
Volatility factor ............................................ 40.03% 39.38% 61.00%
Dividend yield ............................................. 0% 0% 0%
A summary of the stock option activities for the years ended December 31, 2006, 2005 and 2004 is as
follows:
Optioned Class A Shares
Number
of Shares Price per Share
Weighted-
Average
Exercise
Price
Balances, December 31, 2003 ......................... 6,469 $2.37-$19.71 $11.84
Options granted ..................................... 2,690 20.60-44.60 22.21
Options exercised ................................... (1,638) 2.37-24.69 6.50
Options canceled .................................... (694) 5.00-24.69 16.07
Balances, December 31, 2004 ......................... 6,827 2.37-44.60 16.77
Options granted ..................................... 1,266 12.05-29.74 11.68
Options exercised ................................... (1,256) 2.37-24.69 7.26
Options canceled .................................... (1,315) 5.00-44.60 22.40
Balances, December 31, 2005 ......................... 5,522 2.37-44.60 16.34
Options granted ..................................... 5,450 8.62-16.67 11.92
Options exercised ................................... (505) 2.37-11.04 7.12
Options canceled .................................... (1,337) 9.33-38.00 16.18
Balances, December 31, 2006 ......................... 9,130 $ 5.00-44.60 $14.23
The weighted-average grant-date fair value of options granted during the years ended December 31, 2006
and 2005 and 2004 was $4.28, $4.22 and $10.86, respectively.
F-25