LeapFrog 2006 Annual Report Download - page 98

LEAPFROG ENTERPRISES, INC.
NOTES TO THE 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, 2006.
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
$5.00 – $8.62 419 5.41 $ 5.59 351 $ 5.00
$9.33 – $9.33 1,018 9.84 $ 9.33 — $ —
$9.64 – $10.14 563 7.59 $10.03 277 $10.01
$10.30 – $10.30 1,200 9.51 $10.30 — $ —
$10.33 – $12.12 915 8.47 $11.28 365 $11.39
$12.20 – $12.50 1,089 8.12 $12.45 460 $12.48
$12.90 – $12.90 25 8.81 $12.90 7 $12.90
$13.33 – $13.33 950 9.51 $13.33 — $ —
$13.50 – $16.67 1,181 9.42 $15.66 92 $13.56
$17.43 – $44.60 1,770 7.03 $25.27 1,765 $25.29
$5.00 – $44.60 9,130 8.48 $14.23 3,317 $18.21
The intrinsic value of stock options is defined as the difference between the current market value and the
exercise price, which is equal to the market value at the time of the grant. As of December 31, 2006, the total
intrinsic value of the stock options outstanding and exercisable was $1,986. Cash received from stock options
exercised during the year was $3,594.
In July 2006, the Company granted an aggregate of 2,650 shares of Class A common stock options to its
new President and Chief Executive Officer, resulting in an increase in the number of shares issued under stock
option awards outstanding. Of these awards, options to purchase 2,000 shares were granted under the Company’s
2002 Equity Incentive Plan and options to purchase 650 shares were granted as an “inducement” grant outside of
the Company’s existing equity plans.
Restricted stock awards and restricted stock units
Restricted stock awards and restricted stock units generally vest over three and four years, respectively. The
shares are valued using the closing market price of the Company’s stock on the trading day immediately prior to
the grant date and expense is recognized on a straight-line basis over the applicable vesting period. Effective
June 16, 2006, any stock awards or restricted stock units granted reduce shares available for future issuance on a
2 for 1 basis.
Restricted stock awards and stock units are payable in shares of Class A common stock. Employees can
elect to pay withholding taxes due upon vesting with shares vested. Effective June 16, 2006, any resulting shares
are returned to the pool of shares reserved for future issuance.
The Company had previously recorded additional paid in capital and deferred compensation in stockholders’
equity for the unamortized portion of restricted stock awards and restricted stock units. These amounts were
reversed on January 1, 2006 in accordance with the provisions of SFAS 123(R). Of the total stock-based
compensation expense for the years ended December 31, 2006, 2005 and 2004, $2,302 before tax ($1,388 or $0.02
per share after tax), $2,257 before tax ($1,359 or $0.02 per share after tax), $74 before tax ($45 or $0.001 per share
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