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Equity Compensation | 12 Months Ended
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Mar. 31, 2012
Equity Compensation [Abstract] |
Equity Compensation | 8. Equity Compensation Stock Compensation Expense The Company is currently granting equity awards from the 2006 Stock Incentive Plan (the “Plan”), which was approved by stockholders in July 2006. The Plan provides for granting of stock options, restricted stock awards, restricted stock units, performance awards, phantom stock awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted stock options, restricted stock awards, and restricted stock units under the Plan. Stock options generally vest between zero and four years, and are exercisable for a period of ten years from the date of grant. Generally, restricted stock awards are subject to vesting schedules up to four years. Restricted stock units are generally subject to vesting from one to three years, depending upon the terms of the grant. The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income (loss), and net income after taxes for options granted under the Company’s equity incentive plans (in thousands, except per share amounts):
| Fiscal Years Ended
| March 31, 2012 | March 26, 2011 | March 27, 2010 |
Cost of sales................................................................................................ | $ 398 | $ 243 | $ 212 |
Research and development...................................................................... | 5,590 | 2,641 | 1,882 |
Sales, general and administrative............................................................ | 6,190 | 5,257 | 3,224 |
Effect on pre-tax income .................................................................. | 12,178 | 8,141 | 5,318 |
Income Tax Benefit.................................................................................. | — | — | — |
Total share based compensation expense (net of taxes)............ | $ 12,178 | $ 8,141 | $ 5,318 |
Share based compensation effects on basic earnings (loss) per share .. | $ 0.19 | $ 0.12 | $ 0.08
Share based compensation effects on diluted earnings (loss) per share | $ 0.18 | $ 0.11 | $ 0.08
Share based compensation effects on operating activities cash flow.... | 12,178 | 8,141 | 5,318
Share based compensation effects on financing activities cash flow.... | — | — | —
The total share based compensation expense included in the table above and which is attributable to restricted stock awards and restricted stock units was $6.3 million, $1.1 million, and $0.1 million for fiscal years 2012, 2011, and 2010, respectively. As of March 31, 2012, there was $24.7 million of compensation costs related to non-vested stock options, restricted stock awards, and restricted stock units granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.03 years for stock options, 0.37 years for restricted stock awards, and 1.94 years for restricted stock units. Stock Option Awards We estimated the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model using a dividend yield of zero and the following additional assumptions:
| Year Ended
| March 31, 2012 | March 26, 2011 | March 27, 2010
Expected stock price volatility............................... | 59.25-66.11% | 52.03-67.11% | 50.71-56.59%
Risk-free interest rate............................................... | 0.27-1.43% | 1.19-2.06% | 1.80-2.25%
Expected term (in years) ......................................... | 2.32-3.82 | 3.83-4.34 | 4.33-4.64
The Black-Scholes valuation calculation requires us to estimate key assumptions such as stock price volatility, expected term, risk-free interest rate and dividend yield. The expected stock price volatility is based upon implied volatility from traded options on our stock in the marketplace. The expected term of options granted is derived from an analysis of historical exercises and remaining contractual life of stock options, and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate reflects the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption. Finally, we have never paid cash dividends, do not currently intend to pay cash dividends, and thus have assumed a zero percent dividend yield. Using the Black-Scholes option valuation model, the weighted average estimated fair values of employee stock options granted in fiscal years 2012, 2011, and 2010, were $7.58, $9.61, and $2.89, respectively. During fiscal year 2012, 2011, and 2010, we received a net $4.1 million, $31.0 million, and $2.0 million, respectively, from the exercise of 0.6 million 4.7 million, and 0.4 million, respectively, stock options granted under the Company’s stock Plan. The total intrinsic value of stock options exercised during fiscal year 2012, 2011, and 2010 was $7.6 million, $50.4 million, and $0.8 million, respectively. Intrinsic value represents the difference between the market value of the Company’s common stock at the time of exercise and the strike price of the stock option. As of March 31, 2012, approximately 12.2 million shares of common stock were reserved for issuance under the stock option Plan. Additional information with respect to stock option activity is as follows (in thousands, except per share amounts):
|  | Outstanding Options
| Options Available for Grant | Number | Weighted Average Exercise Price
Balance, March 28, 2009............................................................................ | 12,104 | 9,063 | $ 7.45
Option plans terminated........................................................................ | (477) | — | —
Options granted....................................................................................... | (2,471) | 2,471 | 5.53
Options exercised.................................................................................... | — | (401) | 5.01
Options forfeited..................................................................................... | 774 | (264) | 5.44
Options expired....................................................................................... | — | (490) | 9.63
Balance, March 27, 2010............................................................................ | 9,930 | 10,379 | $ 6.74
Option plans terminated........................................................................ | (300) | — | —
Options granted....................................................................................... | (1,927) | 977 | 16.75
Options exercised.................................................................................... | — | (4,718) | 6.57
Options forfeited..................................................................................... | 472 | (153) | 5.90
Options expired....................................................................................... | — | (304) | 23.68
Balance, March 26, 2011............................................................................ | 8,175 | 6,181 | $ 7.63
Option plans terminated........................................................................ | (34) | — | —
Options granted....................................................................................... | (2,049) | 450 | 15.63
Options exercised.................................................................................... | — | (593) | 6.88
Options forfeited..................................................................................... | 165 | (67) | 7.70
Options expired....................................................................................... | — | (67) | 15.68
Balance, March 31, 2012............................................................................ | 6,257 | 5,904 | $ 8.23
Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 31, 2012 is as follows (in thousands, except per share amounts):
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value
Vested and expected to vest.................................................. | 5,703 | $ 8.09 | 6.64 | $ 89,617
Exercisable................................................................................ | 3,836 | $ 7.08 | 5.99 | $ 64,121
In accordance with U.S. GAAP, stock options outstanding that are expected to vest are presented net of estimated future option forfeitures, which are estimated as compensation costs are recognized. Options with a fair value of $6.3 million, $6.0 million, and $4.0 million, became vested during fiscal years 2012, 2011, and 2010, respectively. The following table summarizes information regarding outstanding and exercisable options as of March 31, 2012 (in thousands, except per share amounts):
| Options Outstanding | Options Exercisable
Range of Exercise Prices | Number | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price
$ 1.83 - $ 5.25............................... | 1,332 | 5.85 | $ 4.94 | 1,039 | $ 4.93
$ 5.27 - $ 5.53............................... | 91 | 7.21 | 5.49 | 48 | 5.48
$ 5.55 - $ 5.55............................... | 1,515 | 7.50 | 5.55 | 798 | 5.55
$ 5.66 - $ 7.26…………………. | 1,100 | 5.27 | 6.54 | 1,045 | 6.53
$ 7.32 - $ 15.41………………... | 1,141 | 7.03 | 11.38 | 604 | 8.42
$ 16.21 - $ 23.33.......................... | 725 | 8.18 | 17.77 | 302 | 18.05
| 5,904 | 6.70 | $ 8.23 | 3,836 | $ 7.08
As of March 31, 2012 and March 26, 2011, the number of options exercisable was 3.8 million and 2.9 million, respectively. Restricted Stock Awards The Company periodically grants restricted stock awards (“RSA’s”) to select employees. The grant date for these awards is equal to the measurement date and the awards are valued as of the measurement date and amortized over the requisite vesting period. Generally, the current unreleased RSA awards vest 100 percent on the fourth anniversary of the grant date. Each full value award, including RSA’s, reduces the total shares available for grant under the Plan at a rate of 1.5 shares per RSA granted. As of March 31, 2012, approximately 0.1 million shares attributable to RSA awards were reserved for issuance under the Plan. A summary of the activity for RSA’s in fiscal year 2012, 2011, and 2010 is presented below (in thousands, except per share amounts):
| Number of Shares | Weighted Average Grant Date Fair Value (per share) | Aggregate Intrinsic value (1)
March 28, 2009............................................................................................. | 73 | $ 6.86 |
Granted..................................................................................................... | — | — |
Vested........................................................................................................ | (11) | 6.98 | 55
Forfeited.................................................................................................... | (13) | 6.05 |
March 27, 2010............................................................................................. | 49 | $ 6.20 |
Granted..................................................................................................... | 5 | 17.28 |
Vested........................................................................................................ | (7) | 7.35 | 134
Forfeited.................................................................................................... | (2) | 7.35 |
March 26, 2011............................................................................................. | 45 | $ 7.21 |
Granted..................................................................................................... | 49 | 15.31 |
Vested........................................................................................................ | (54) | 14.57 | 826
Forfeited.................................................................................................... | - | - |
March 31, 2012............................................................................................. | 40 | $ 7.19 |
(1) | Represents the value of Cirrus stock on the date that the restricted stock vested.
The weighted average remaining recognition period for RSA’s outstanding as of March 31, 2012 was 0.37 years. RSA’s with a fair value of $637 thousand, $37 thousand, and $37 thousand became vested during fiscal years 2012, 2011, and 2010, respectively. Restricted Stock Units Commencing in fiscal year 2011, the Company began granting restricted stock units (“RSU’s”) to select employees. These awards are valued as of the grant date and amortized over the requisite vesting period. Generally, RSU’s vest 100 percent on the first to third anniversary of the grant date depending on the vesting specifications. Each full value award, including RSU’s, reduces the total shares available for grant under the 2006 option plan at a rate of 1.5 shares per RSU granted. As of March 31, 2012, approximately 2.4 million shares attributable to RSU awards were reserved for issuance under the Plan, which includes the additional shares associated with this full value award multiplier. A summary of the activity for RSU’s in fiscal year 2012 and 2011 is presented below (in thousands, except per share amounts):
| Shares | Weighted Average Fair Value | Weighted Average Remaining Contractual Term (years)
March 27, 2010 | — | — | —
Granted | 628 | $ 16.41 | —
Vested | — | — | —
Forfeited | (8) | — | —
March 26, 2011.......................................................................... | 620 | $ 16.41 | 2.54
Granted................................................................................... | 1,017 | 16.59 | —
Vested..................................................................................... | — | — | —
Forfeited.................................................................................. | (21) | — | —
March 31, 2012.......................................................................... | 1,616 | $ 16.52 | 1.94
Additional information with regards to outstanding restricted stock units that are vesting or expected to vest as of March 31, 2012, is as follows (in thousands, except year reference):
| Shares | Weighted Average Fair Value | Weighted Average Remaining Contractual Term (years)
Vested and expected to vest.............................. | 1,440 | $16.52 | 1.94
RSU’s outstanding that are expected to vest are presented net of estimated future forfeitures, which are estimated as compensation costs are recognized. No RSU’s became vested during fiscal year 2012.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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