Leapfrog Announces Accelerated Vesting of Stock Options With Exercise Prices in Excess of Current Market Price

EMERYVILLE, Calif., June 2 /PRNewswire-FirstCall/ -- LeapFrog Enterprises, Inc. , a leading developer of innovative technology-based educational products, announced that, in response to the upcoming change in the accounting treatment of stock awards and consistent with the actions of numerous other companies, on June 1, 2005, it accelerated the vesting of certain unvested options awarded to its employees and Board members under its stock option plans. The acceleration applies only to those options with an exercise price of $17.43 per share or higher, and granted on or before October 1, 2004. The closing sale price of LeapFrog's Class A common stock on the New York Stock Exchange on June 1, 2005 was $11.07 per share. As a result of this action, options to purchase approximately 1.61 million shares of LeapFrog's Class A common stock became exercisable on June 1, 2005. This represents approximately 28.5 percent of total outstanding options. The company will reflect all remaining expense associated with these accelerated options in the second quarter of fiscal 2005.

Under the recently issued Financial Accounting Standards Board Statement No. 123R, "Share-Based Payment" ("FAS 123R"), the company will be required to apply the expense recognition provisions under FAS 123R beginning January 1, 2006. The company believes that accelerating the vesting of the identified stock options will reduce its compensation charge in periods subsequent to January 1, 2006.

Consistent with the actions taken by many other companies, LeapFrog has elected to take this action in order to accelerate the recognition of previously estimated costs that are disproportionate to the current fair market value of the options. In taking this action, LeapFrog's Board of Directors decided to include only options that had exercise prices that are well above the current stock price (157 percent of the current price). LeapFrog's Board believes that this action is in the best interests of LeapFrog's stockholders, and will help to motivate its employees to achieve the critical goals that will drive the long-term success of the company.

About LeapFrog

LeapFrog Enterprises, Inc. is a leading designer, developer and marketer of innovative, technology-based learning products and related proprietary content, dedicated to making learning effective and engaging for all ages, at home and in schools, around the world. Emeryville, California-based LeapFrog has developed a family of learning platforms that come to life with more than 100 interactive software titles, covering important subjects such as phonics, reading, math, music, geography, social studies, spelling, vocabulary and science. In addition, the company has created more than 35 stand-alone educational products for ages six months to 16 years.

LeapFrog's award-winning U.S. consumer products are available in six languages at major retailers in more than 25 countries around the world. The LeapFrog SchoolHouse curriculum programs are currently in 80,000 classrooms across the U.S. with more than 200 interactive books and over 450 skill cards representing more than 6,000 pages of educational content.

Forward-Looking Statements

Cautionary Statement Under The Private Securities Litigation Reform Act Of 1995: Except for the historical information contained herein, this news release contains forward-looking statements, including statements regarding expected effects under anticipated changes in accounting rules, such as FAS 123R. These forward-looking statements involve risks and uncertainties, including the delay or change in the applicability or effectiveness of certain rules, regulations or laws, or significant changes in the company's stock prices. These and other risks and uncertainties detailed from time to time in the company's SEC filings, including its 2004 annual report on Form 10-K filed on March 29, 2005, could cause the company's actual results to differ materially from those discussed in this release. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.

Contact: Eileen VanEss Cherie Stewart LeapFrog Enterprises, Inc. LeapFrog Enterprises, Inc. 510-420-5361 510-596-3343 evaness@leapfrog.com cstewart@leapfrog.com