Note 11 Employee Equity Incentive Plans

9 Months Ended

Dec. 31, 2012

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

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

11. Employee Equity Incentive Plans

Stock Purchase and Stock Option Plans

The 2011 Equity Incentive Plan and the 2009 Equity Incentive Plan

On September 10, 2009, our stockholders approved the 2009 Equity Incentive Plan, or the 2009 Plan, under which 900,000 shares of our common stock are reserved for the grant of stock options and other equity incentives. OnSeptember 16, 2011, our stockholders approved the 2011 Equity Incentive Plan, or the 2011 Plan, under which 600,000 shares of our common stock are reserved for the grant of stock options and other equity incentives.The 2009 Plan and the 2011 Plan are referred to as the Plans.

Stock Options

Under the Plans, nonqualified and incentive stock options may be granted to employees, consultants and non-employee directors. Generally, the per share exercise price shall not be less than 100% of the fair market value of a share on the grant date. The Board of Directors has the full power to determine the provisions of each option issued under the Plans. While we may grant options that become exercisable at different times or within different periods, we have primarily granted options that vest over four years. The options, once granted, expire ten years from the date of grant.

Restricted Stock

Restricted stock awards may be granted to any employee, director or consultant under the Plans. Pursuant to a restricted stock award, we will issue shares of common stock that will be released from restriction if certain requirements, including continued performance of services, are met.

Stock Appreciation Rights

Awards of stock appreciation rights, or SARs, may be granted to employees, consultants and nonemployee directors pursuant to the Plans. A SAR is payable on the difference between the market price at the time of exercise and the exercise price at the date of grant. In any event, the exercise price of a SAR shall not be less than 100% of the fair market value of a share on the grant date and shall expire no later than ten years from the grant date. Upon exercise, the holder of a SAR shall be entitled to receive payment either in cash or a number of shares by dividing such cash amount by the fair market value of a share on the exercise date.

Restricted Stock Units

Restricted stock units, denominated performance units in the 2009 Plan, may be granted to employees, consultants and nonemployee directors under the Plans. Each restricted stock unit shall have a value equal to the fair market value of one share. After the applicable performance period has ended, the holder will be entitled to receive a payment, either in cash or in the form of shares, based on the number of restricted stock units earned over the performance period, to be determined as a function of the extent to which the corresponding performance goals or other vesting provisions have been achieved.

Zilog 2004 Omnibus Stock Incentive Plan

The Zilog 2004 Omnibus Stock Incentive Plan, or the Zilog 2004 Plan, was approved by the stockholders of Zilog in 2004, and was amended and approved by the stockholders of Zilog in 2007. In connection with the acquisition of Zilog, our Board of Directors approved assumption of the Zilog 2004 Plan. Employees of Zilog and persons first employed by our company after the closing of the acquisition of Zilog may receive grants under the Zilog 2004 Plan. Under the 2004 Plan, incentive stock options, non-statutory stock options, or restricted shares may be granted. At the time of the assumption of the Zilog 2004 Plan by our company, up to 652,963 shares of our common stock were available for grant under the plan.

Employee Stock Purchase Plan

In May 1999, the Board of Directors approved the 1999 Employee Stock Purchase Plan, or the Purchase Plan, and reserved 500,000 shares of common stock for issuance under the Purchase Plan. Under the Purchase Plan, all eligible employees may purchase our common stock at a price equal to 85% of the lower of the fair market value at the beginning of the offer period or the semi-annual purchase date. Stock purchases are limited to 15% of an employee's eligible compensation. On July 31, 2007 and July 9, 2010, the Board of Directors amended the Purchase Plan and on each occasion reserved an additional 350,000 shares of common stock for issuance under the Purchase Plan. During the nine months ended December 31, 2012, there were 115,516 shares purchased under the Purchase Plan, leaving approximately 186,355 shares available for purchase under the plan in the future.

Stock-Based Compensation

The following table summarizes the effects of stock-based compensation charges (in thousands):

		Three Months Ended December 31,				Nine Months Ended December 31,
Statement of Operations Classifications			2012		2011		2012		2011
		(unaudited)				(unaudited)
Selling, general and administrative expenses		$	726	$	1,131	$	2,857	$	2,713
Stock-based compensation effect in income before taxes			726		1,131		2,857		2,713
Provision for income taxes (1)			254		339		1,000		814
Net stock-based compensation effects in net income		$	472	$	792	$	1,857	$	1,899
________________
(1)	Estimated at a statutory income tax rate of 35% in fiscal year 2013 and 30% in fiscal year 2012.

During the nine months endedDecember 31,2012, the unaudited condensed consolidated statements of operations and cash flows do not reflect any tax benefit for the tax deduction from option exercises and other awards. As of December 31, 2012, approximately $5.4 million in stock-based compensation is to be recognized for unvested stock options granted under our equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.7 years.

The Black-Scholes option pricing model is used to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our stock purchase plan. The weighted average estimated fair values of employee stock option grants and rights granted under the 1999 Employee Stock Purchase Plan, as well as the weighted average assumptions that were used in calculating such values during the nine months ended December 31, 2012 and 2011, were based on estimates at the date of grant as follows:

		Stock Options								Purchase Plan
		Three Months				Nine Months				Three Months				Nine Months
		Ended December 31,				Ended December 31,				Ended December 31,				Ended December 31,
			2012 (1)		2011		2012		2011		2012		2011		2012		2011
Weighted average estimated fair
	value of grant per share		na	$	6.36	$	5.21	$	6.43	$	2.81	$	3.88	$	3.22	$	3.14
Risk-free interest rate			na		1.1%		1.0%		1.4%		0.1%		0.1%		0.2%		0.2%
Expected term in years			na		6.0		6.3		5.8		0.5		0.5		0.5		0.5
Volatility			na		56.4%		55.4%		55.7%		46.0%		59.4%		46.4%		51.6%
Dividend yield			na		-		-		-		-		-		-		-
(1)	No stock options were granted during the quarter ended December 31, 2012.

Activity with respect to outstanding stock options for the nine months endedDecember 31, 2012 was as follows:

			Weighted Average
		Number of	Exercise Price			Intrinsic Value (1)
		Shares	Per Share
						(000)
Balance at March 31, 2012		5,472,004	$	9.75
	Options granted	205,000	$	9.85
	Options exercised	(102,969)	$	6.94	$	305
	Options cancelled	(39,925)	$	7.29
	Options expired	(378,975)	$	7.31
Balance at December 31, 2012		5,155,135	$	10.01
Exercisable at December 31, 2012		4,080,635	$	9.71
Exercisable at March 31, 2012		3,833,879	$	9.42
(1)	Represents the difference between the exercise price and the value of our common stock at the time of exercise.