Stock-Based Compensation

6 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation activity using the modified prospective method. This method requires companies to estimate 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, for which the Company uses the fair market value of our common stock. The Black-Scholes 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 term 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 and employee stock purchase rights granted is estimated as of the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	ESPP
	Three months ended September 30,
	2013			2012
Expected life (years)	0.5			0.5
Risk-free interest rate	0.1		%	0.2		%
Volatility	57		%	50		%
Dividend yield	—		%	—		%
Weighted average fair value	$	3.67		$	1.50

The Company did not grant options during the three months ended September 30, 2013 and 2012.

	Six Months Ended September 30,
	Employee Stock Options						ESPP
	2013			2012			2013			2012
Expected life (years)	4.4			4.5			0.5			0.5
Risk-free interest rate	0.6		%	0.7		%	0.1		%	0.2		%
Volatility	49		%	54		%	57		%	50		%
Dividend yield	—		%	—		%	—		%	—		%
Weighted average fair value	$	2.95		$	2.47		$	3.67		$	1.50

The weighted average grant-date fair value per share of the restricted stock units awarded was $11.97 and $8.00 during the three and six months ended September 30, 2013, respectively, compared to $5.75 and $5.52 during the three and six months ended September 30, 2012, 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, 2013, the Company revised its estimated forfeiture rate used in determining the amount of stock-based compensation from 6.6% to 6.7% as a result of an increased 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 RSUs (in thousands):

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Stock-based compensation expense by type of award
Stock options	$	737		$	601	$	1,339		$	2,089
Restricted stock units	3,099			7,031		6,223			13,151
Total stock-based compensation	3,836			7,632		7,562			15,240
Stock-based compensation (capitalized to) expensed from inventory	(2		)	2		(14		)	83
Total stock-based compensation expense	$	3,834		$	7,634	$	7,548		$	15,323

The following table summarizes stock-based compensation expense as it relates to the Company’s Condensed Consolidated Statement of Operations (in thousands):

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Stock-based compensation expense by cost centers
Cost of revenues	$	127		$	175	$	235		$	355
Research and development	1,524			3,714		3,322			7,919
Selling, general and administrative	2,185			3,743		4,005			6,966
Total stock-based compensation	$	3,836		$	7,632	$	7,562		$	15,240
Stock-based compensation (capitalized to) expensed from inventory	(2		)	2		(14		)	83
Total stock-based compensation expense	$	3,834		$	7,634	$	7,548		$	15,323

The amount of unrecognized stock-based compensation cost currently estimated to be expensed from now through fiscal 2018, including time and performance based awards that are expected to vest, at September 30, 2013 is $17.9 million which will be recognized over a weighted-average period of 1.7 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.

The stock based compensation expense of approximately $15.3 million for the six months ended September 30, 2012 does not include approximately $1.3 million of expense related to the acceleration of Veloce warrants. See Note 4, Veloce, to the Condensed Consolidated Financial Statements for further details relating to the Veloce warrants.