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Stock-Based Compensation
 9 Months Ended
Dec. 31, 2011
Stock-Based Compensation [Abstract]  
Stock-Based Compensation

2. Stock-Based Compensation

     The Company accounts for its stock-based compensation at fair value. The following table summarizes stock-based compensation expense by financial statement line item for the three and nine months ended December 31, 2011 and 2010 (in thousands):

    Three months ended     Nine months ended
    December 31,     December 31,
    2011   2010     2011   2010
Cost of revenues $ 138 $ (6 ) $ 908 $ 828
Research and development   623   237     1,948   1,396
Selling, general and administrative   1,357   2,017     4,841   7,849
Total $ 2,118 $ 2,248   $ 7,697 $ 10,073

 

     During the nine months ended December 31, 2011, the Company granted approximately 815,000 and 408,000 shares of stock options and restricted stock, respectively, to employees under the 2007 Stock Incentive Plan. The restricted stock granted during the nine months ended December 31, 2011 includes approximately 109,000 shares of performance-based restricted stock, which will vest upon achievement of certain financial performance measurements. The Company recognizes the fair value of the performance based awards over the estimated period of each award for which the achievement of the performance measures are probable to occur. As of December 31, 2011, the Company has assessed the weighted average probability for these awards as likely to occur and has recorded expenses accordingly. The remaining shares granted vest upon the passage of time, generally three years. For awards that vest upon the passage of time, expense is being recorded over the vesting period.

     The estimated fair value of the Company's stock-based awards, less expected annual forfeitures, is amortized over the awards' service period. The total unrecognized compensation cost for unvested outstanding stock options was $7.4 million as of December 31, 2011. This expense will be recognized over a weighted average expense period of approximately 2.1 years. The total unrecognized compensation cost for unvested outstanding restricted stock was $4.0 million as of December 31, 2011. This expense will be recognized over a weighted average expense period of approximately 1.7 years.

 

     The weighted-average assumptions used in the Black-Scholes valuation model for stock options granted during the three and nine months ended December 31, 2011 and 2010 are as follows:

  Three months ended   Nine months ended  
  December 31,   December 31,  
  2011   2010   2011   2010  
Expected volatility 79.7 % 61.4 % 69.7 % 65.5 %
Risk-free interest rate 1.1 % 2.4 % 1.8 % 2.1 %
Expected life (years) 5.9   6.1   5.9   6.1  
Dividend yield None   None   None   None  

 

     The expected volatility rate was estimated based on an equal weighting of the historical volatility of the Company's common stock and the implied volatility of the Company's traded options. The expected term was estimated based on an analysis of the Company's historical experience of exercise, cancellation, and expiration patterns. The risk-free interest rate is based on the average of the five and seven year U.S. Treasury rates.

     In conjunction with the departure of certain former executive officers, the Company agreed to modify certain vested awards by extending the period over which two former officers would be entitled to exercise stock options and accelerated the vesting of certain other outstanding awards for one former officer. Accordingly, the Company recorded stock-based compensation expense related to these modifications of $0.9 million in the nine months ended December 31, 2011.