SHARE-BASED COMPENSATION

3 Months Ended

Jun. 29, 2012

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

3.  SHARE-BASED COMPENSATION

The following table summarizes the Company’s share-based compensation expense:

	Three-Month Periods Ended
	June 29, 2012		July 1, 2011
	(In thousands)
Cost of sales	$	1,457	$	2,014
Selling, general and administrative expenses	8,361		10,263
Total stock-based compensation expense	$	9,818	$	12,277

Total unrecognized compensation expense related to share options is $3.0 million, net of estimated forfeitures, and will be recognized over a weighted average remaining vesting period of 2.0 years. As of June 29, 2012, the number of options outstanding and exercisable was 41.7 million and 40.0 million, respectively, at weighted average exercise prices of $7.87 and $7.92 per share, respectively.

During the three-month period ended June 29, 2012, the Company granted 8.2 million unvested share bonus awards at an average grant date price of $6.80 per share, under its 2010 Equity Incentive Plan.  Of this amount, approximately 2.2 million represents the target amount of grants made to certain key employees whereby vesting is contingent on a certain market condition.  The number of shares that ultimately will vest are based on a measurement of Flextronics’s total shareholder return against the Standard and Poor’s (“S&P”) 500 Composite Index and will cliff vest after a period of three years. The number of shares issued can range from zero to 4.4 million.  The average grant-date fair value of these awards was estimated to be $7.64 per share and was calculated using a Monte Carlo simulation.  As of June 29, 2012, approximately 22.8 million of unvested share bonus awards were outstanding, of which vesting for 4.4 million is contingent on meeting the certain market condition above. The number of shares issued can range from zero to 7.7 million.

As of June 29, 2012, total unrecognized compensation expense related to unvested share bonus awards is $89.5 million, net of estimated forfeitures, and will be recognized over a weighted average remaining vesting period of 2.9 years. Approximately $13.4 million of the total unrecognized compensation cost, net of estimated forfeitures, is related to awards whereby vesting is contingent on meeting a certain market condition, as discussed above.