XML 42 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stock-Based Compensation
3 Months Ended
Jun. 30, 2012
Stock-Based Compensation

Note 7. Stock-Based Compensation

The following table summarizes stock-based compensation expense by financial statement line item in the Company’s consolidated statements of operations for the three months ended June 30, 2012 and 2011 (in thousands):

 

     Three Months Ended
June 30,
 
     2012      2011  

Cost of product revenue

   $ 146       $ 76   

Research and development

     563         500   

Selling, general and administrative

     1,970         1,756   
  

 

 

    

 

 

 
   $ 2,679       $ 2,332   
  

 

 

    

 

 

 

The components of stock-based compensation for the three months ended June 30, 2012 and 2011 were as follows (in thousands):

 

     Three Months Ended
June 30,
 
     2012      2011  

Stock options

   $ 970       $ 903   

Restricted stock

     338         1,156   

Restricted stock units

     1,323         256   

Employee stock purchase plan

     48         17   
  

 

 

    

 

 

 
   $ 2,679       $ 2,332   
  

 

 

    

 

 

 

Stock Options

The following table summarizes the stock option activity for the three months ended June 30, 2012:

 

     Shares
Underlying
Options

(in  thousands)
    Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (years)
     Aggregate
Intrinsic
Value

(in  thousands)
 

Outstanding at April 1, 2012

     4,268      $ 10.42         6.03      

Granted

     303        22.44         

Exercised

     (161     7.62         

Cancelled and expired

     (31     9.21         
  

 

 

   

 

 

       

Outstanding at June 30, 2012

     4,379      $ 11.34         6.01       $ 50,278   
  

 

 

   

 

 

       

Exercisable at June 30, 2012

     3,327      $ 10.72         5.29       $ 40,249   
  

 

 

   

 

 

       

Options vested and expected to vest at June 30, 2012

     4,133      $ 11.33         5.89       $ 47,479   
  

 

 

   

 

 

       

The aggregate intrinsic value of options exercised was $2.5 million for the three months ended June 30, 2012. The total fair value of options vested during the three months ended June 30, 2012 was $2.0 million.

The remaining unrecognized stock-based compensation expense for unvested stock option awards at June 30, 2012 was approximately $5.0 million, net of forfeitures, and the weighted-average period over which this cost will be recognized is 2.9 years.

 

The Company estimates the fair value of each stock option granted at the grant date using the Black-Scholes option valuation model. The fair value of options granted during the three months ended June 30, 2012 and 2011 were calculated using the following weighted average assumptions:

 

     Three Months Ended
June 30,
 
     2012     2011  

Risk-free interest rate

     0.78     1.83

Expected option life (years)

     4.33        5.30   

Expected volatility

     56.3     51.6

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a term consistent with the expected life of the stock options. Volatility assumptions are calculated based on the historical volatility of the Company’s stock and adjusted for factors not reflected in historical volatility that may be more indicative of future volatility. The Company estimates the expected term of options based on historical exercise trends and estimates of future exercises of unexercised options.

The calculation of the fair value of the options is net of estimated forfeitures. Forfeitures are estimated based on an analysis of actual option forfeitures, adjusted to the extent historic forfeitures may not be indicative of forfeitures in the future. In addition, an expected dividend yield of zero is used in the option valuation model, because the Company does not pay cash dividends and does not expect to pay any cash dividends in the foreseeable future.

Restricted Stock and Restricted Stock Units

In addition to stock option grants, the Company also has the ability to grant restricted stock and restricted stock units. Similar to stock options, these restricted stock and restricted stock unit grants are subject to certain vesting criteria. The following table summarizes the activity for the three months ended June 30, 2012:

 

     Three Months Ended
June 30, 2012
 
     Number of
Share (in 000’s)
    Weighted Average
Grant Date

Fair Value
 

Outstanding at April 1, 2012

     871      $ 15.76   

Granted

     361        22.40   

Vested

     (209     13.76   

Forfeited

     (18     20.48   
  

 

 

   

 

 

 

Outstanding at June 30, 2012

     1,005      $ 18.47   
  

 

 

   

 

 

 

The remaining unrecognized compensation expense for outstanding restricted stock awards and restricted stock units, including performance-based awards, as of June 30, 2012 was $12.6 million and the weighted-average period over which this cost will be recognized is 2.4 years.

The weighted average grant-date fair value for restricted stock and restricted stock units granted during the three months ended June 30, 2012 and 2011 was $22.40 and $18.49 per share, respectively. The total fair value of restricted stock and restricted stock units vested during the three months ended June 30, 2012 and 2011 was $2.9 million and $1.5 million, respectively.

Performance Based Awards

Included in the restricted stock and restricted stock units activity discussed above are certain awards granted in fiscal years 2012, 2011 and 2010 that vest subject to certain performance-based criteria.

During the three months ended June 30, 2012, performance-based awards of restricted stock units for the potential issuance of 195,188 shares of common stock were issued to certain executive officers and employees, all of which would vest upon achievement of prescribed service milestones by the award recipients and performance milestones by the Company. As of June 30, 2012, the Company believes it is probable that the prescribed performance targets will be met for these awards and the compensation expense is being recognized accordingly.

During the three months ended June 30, 2011, performance-based awards of restricted stock units for the potential issuance of 284,000 shares of common stock were issued to certain executive officers and members of the senior management of the Company, all of which would vest upon achievement of prescribed service milestones by the award recipients and performance milestones by the Company. During the year ended March 31, 2012, the Company determined that it met the prescribed targets for 184,000 shares underlying these awards. As of June 30, 2012, the Company believes it is probable that the prescribed performance targets will be met for the remaining 100,000 shares, and the compensation expense is being recognized accordingly.

In June 2010, 311,000 shares of restricted stock and a performance-based award for the potential issuance of 45,000 shares of common stock were issued to certain executive officers and members of the senior management of the Company, all of which would vest upon achievement of prescribed service milestones by the award recipients and performance milestones by the Company. During the year ended March 31, 2011, the Company determined that it met the prescribed performance targets and a portion of these shares and stock options vested. The remaining shares will vest upon satisfaction of prescribed service conditions by the award recipients.

During the three months ended June 30, 2012, the Company recorded $0.9 million in stock-based compensation expense for equity awards in which the prescribed performance milestones have been achieved or are probable of being achieved. The remaining unrecognized compensation expense related to these equity awards at June 30, 2012 is $6.8 million based on the Company’s current assessment of probability of achieving the performance milestones. The weighted-average period over which this cost will be recognized is 2.4 years.