Equity Incentive Plans

12 Months Ended

Mar. 31, 2011

Notes to Financial Statements [Abstract]

18.	EQUITY INCENTIVE PLANS

The Company's 2004 Equity Incentive Plan, as amended and restated (the 2004 Plan), is shareholder approved and permits the grant of stock options and restricted stock units (RSUs) to employees, non-employee members of the Board of Directors and consultants. At March 31, 2011, 6.7 million shares remained available for future grant under the 2004 Plan. Stock options and RSUs are designed to reward employees for their long-term contributions to the Company and to provide incentive for them to remain employed with the Company. The Company believes that such awards better align the interests of its employees with those of its shareholders.

The Board of Directors or the plan administrator determines eligibility, vesting schedules and exercise prices for equity incentives granted under the plans. Equity incentives granted generally have a term of 10 years. Equity incentives granted in the case of newly hired employees generally vest and become exercisable at the rate of 25% after one year of service and ratably on a monthly or quarterly basis over a period of 36 months thereafter. Subsequent equity incentive grants to existing employees generally vest and become exercisable ratably on a monthly or quarterly basis over a period starting in 48 months and ending in 60 months after the date of grant. Beginning in fiscal 2008, the Company converted its equity granting practices to a quarterly process instead of an annual process. The quarterly grants generally vest 48 months from the date of grant.

Under the plans, 106,215,611 shares of common stock have been reserved for issuance since the inception of the plans.

Share-Based Compensation Expense

The following table presents details of share-based compensation expense (amounts in thousands):

	Year Ended March 31,
	2011			2010			2009
Cost of sales (1)	$	6,825		$	7,054		$	5,845
Research and development		12,874			12,194			10,866
Selling, general and administrative		17,113			17,530			15,770
Pre-tax effect of share-based compensation		36,812			36,778			32,481
Income tax benefit		(4,493	)		(4,563	)		(5,277	)
Net income effect of share-based compensation	$	32,319		$	32,215		$	27,204

(1) During the year ended March 31, 2011, $7.1 million was capitalized to inventory, and $6.8 million of capitalized inventory was sold. During the year ended March 31, 2010, $7.0 million was capitalized to inventory and $7.1 million of capitalized inventory was sold. During the year ended March 31, 2009, $6.7 million was capitalized to inventory and $5.8 million of capitalized inventory was sold.

The amount of unearned share-based compensation currently estimated to be expensed in fiscal 2012 through fiscal 2015 related to unvested share-based payment awards at March 31, 2011 is $62.2 million. The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 2.20 years.

Combined Incentive Plan Information

RSU share activity under the 2004 Plan is set forth below:

	Number of Shares
Nonvested shares at March 31, 2008		2,464,565
Granted		1,876,738
Forfeited/expired		(293,573	)
Vested		(445,958	)
Nonvested shares at March 31, 2009		3,601,772
Granted		1,846,241
Forfeited/expired		(120,198	)
Vested		(689,867	)
Nonvested shares at March 31, 2010		4,637,948
Granted		1,766,257
Forfeited/expired		(171,967	)
Vested		(990,932	)
Nonvested shares at March 31, 2011		5,241,306

The total intrinsic value of RSUs which vested during the years ended March 31, 2011, 2010 and 2009 was $32.6 million, $17.5 million and $12.4 million, respectively. The aggregate intrinsic value of RSUs outstanding at March 31, 2011 was $199.2 million calculated based on the closing price of the Company's common stock of $38.01 on March 31, 2011.

The weighted average fair values per share of the RSUs awarded are calculated based on the fair market value of the Company's common stock on the respective grant dates discounted for the Company's expected dividend yield. The weighted average fair values per share of RSUs awarded in the years ended March 31, 2011, 2010 and 2009 was $26.05, $20.75 and $22.11, respectively. At March 31, 2011, the weighted average remaining expense recognition period was 2.25 years.

Option activity under the Company's stock incentive plans in the three years ended March 31, 2011 is set forth below:

	Number of Shares			Weighted Average Exercise Price per Share
Outstanding at March 31, 2008		11,732,385			23.14
Granted		24,000			33.90
Exercised		(1,573,183	)		16.33
Canceled		(101,669	)		26.27
Outstanding at March 31, 2009		10,081,533			24.20
Granted		12,000			27.03
Exercised		(1,492,866	)		22.03
Canceled		(140,888	)		27.79
Outstanding at March 31, 2010		8,459,779			24.52
Granted		---			---
Exercised		(2,885,365	)		23.09
Canceled		(77,490	)		29.39
Outstanding at March 31, 2011		5,496,924			25.21

The total intrinsic value of options exercised during the years ended March 31, 2011, 2010 and 2009 was $29.8 million, $7.6 million and $22.3 million, respectively. This intrinsic value represents the difference between the fair market value of the Company's common stock on the date of exercise and the exercise price of each equity award.

The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2011was $70.4 million. The aggregate intrinsic value was calculated based on the closing price of the Company's common stock of $38.01 per share on March 31, 2011.

At March 31, 2011 and 2010, the number of option shares exercisable was 5,491,363 and 8,433,445, respectively, and the weighted average exercise price per share of these options was $25.20 and $24.49, respectively.

The weighted average fair values per share of stock options granted in the years ended March 31, 2010, and 2009 was $5.90 and $10.39, respectively. There were no stock options granted in the year ended March 31, 2011. The fair values per share of stock options granted were estimated utilizing the following assumptions:

	Year Ended March 31,
	2010			2009
Expected term (in years)		6.50			6.50
Volatility		36	%		43	%
Risk-free interest rate		2.57	%		3.14	%
Dividend yield		5.00	%		4.00	%