Stock-Based Compensation

9 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

6. STOCK-BASED COMPENSATION

The Company estimates the fair value of stock-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholes model to value stock-based compensation, excluding RSUs, which we use the fair market value of our common stock on the date of grant. The Black-Scholes option-pricing model determines the fair value of share-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company's stock price, volatility over the expected life of the awards and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

The fair value of the options granted and shares issued under the Employee Stock Purchase Plans is estimated as of the grant or issuance date using the Black-Scholes option-pricing model assuming the weighted-average assumptions listed in the following tables:

	Three Months Ended December 31,
	Employee Stock Options						Employee Stock Purchase Plans
	2011*			2010			2011			2010
Expected life (years)		—			3.8			—			—
Risk-free interest rate		—	%		0.8	%		—	%		—	%
Volatility		—	%		57	%		—	%		—	%
Dividend yield		—	%		—	%		—	%		—	%
Weighted average fair value	$	—		$	4.24		$	—		$	—

	Nine Months Ended December 31,
	Employee Stock Options						Employee Stock Purchase Plans
	2011			2010			2011			2010
Expected life (years)		3.8			3.9			0.5			0.5
Risk-free interest rate		1.4	%		1.6	%		0.2	%		0.2	%
Volatility		48	%		51	%		55	%		57	%
Dividend yield		—	%		—	%		—	%		—	%
Weighted average fair value	$	3.83		$	4.85		$	1.92		$	3.70

* The Company did not grant options during the three months ended December 31, 2011.

The weighted average grant-date fair value per share of the restricted stock units awarded was $8.02 and $9.21 during the three and nine months ended December 31, 2011, respectively, compared to $10.67 and $10.44 during the three and nine months ended December 31, 2010, respectively. The weighted average fair value per share was calculated based on the fair market value of the Company's common stock on the respective grant dates.

Effective April 1, 2011, the Company revised its estimated forfeiture rate used in determining the amount of stock-based compensation from 6.6% to 6.8% as a result of an increasing rate of forfeitures in recent periods, which the Company believes is indicative of the rate it will experience during the remaining vesting period of currently outstanding unvested grants.

The following table summarizes stock-based compensation expense related to stock options and restricted stock units (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2011			2010			2011			2010
Stock-based compensation expense by type of award
Stock options and warrants	$	1,646		$	1,988		$	4,207		$	4,071
Restricted stock units		2,824			3,105			7,533			8,859
Total stock-based compensation		4,470			5,093			11,740			12,930
Stock-based compensation capitalized to inventory		(37	)		(4	)		(5	)		(20	)
Total stock-based compensation expense	$	4,433		$	5,089		$	11,735		$	12,910

The following table summarizes stock-based compensation expense as it relates to the Company's statement of operations (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2011			2010			2011			2010
Stock-based compensation expense by cost centers
Cost of revenues	$	120		$	168		$	297		$	516
Research and development		2,647			2,809			6,761			6,712
Selling, general and administrative		1,703			2,116			4,682			5,702
Total stock-based compensation		4,470			5,093			11,740			12,930
Stock-based compensation expensed from (capitalized to) inventory		(37	)		(4	)		(5	)		(20	)
Total stock-based compensation expense	$	4,433		$	5,089		$	11,735		$	12,910

Stock-based compensation expense will continue to have a significant adverse impact on the Company's reported results of operations, although it will have no impact on its overall financial position. The amount of unearned stock-based compensation currently estimated to be expensed from now through fiscal 2016 related to unvested share-based payment awards at December 31, 2011 is $28.9 million, which includes stock-based compensation for Veloce, the Company's VIE. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is approximately 2.0 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional equity awards or assumes unvested equity awards in connection with acquisitions.