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Stock-Based Compensation
 6 Months Ended
Sep. 30, 2012
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 six months ended September 30, 2012 and 2011 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

September 30,

 

 

September 30,

 

 

2012

 

2011

 

 

2012

 

2011

Cost of revenues

$
213 

$
440 

 

$
383 

$
769 

Research and development

 
591 

 
665 

 

 
1,154 

 
1,325 

Selling, general and administrative

 
1,240 

 
1,008 

 

 
2,502 

 
3,485 

Total

$
2,044 

$
2,113 

 

$
4,039 

$
5,579 

 

 

During the six months ended September 30, 2012, the Company granted approximately 852,000 stock options, and 287,000 restricted stock awards, as well as issued approximately 215,000 shares of common stock in-lieu of cash bonuses, which vested immediately, to employees under the 2007 Stock Incentive Plan. The Company recorded the issuance of stock in-lieu of cash bonuses as a non-cash issuance of stock to settle liabilities in the unaudited consolidated condensed statement of cash flows. The options granted vest upon the passage of time, generally 3 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 $6.1 million for the six months ended September 30, 2012. 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 $3.9 million for the six months ended September 30, 2012. This expense will be recognized over a weighted average expense period of approximately 1.2 years.

 

The weighted-average assumptions used in the Black-Scholes valuation model for stock options granted during the three and six months ended September 30, 2012 and 2011 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

September 30,

 

 

September 30,

 

 

2012

 

2011

 

 

2012

 

2011

 

Expected volatility
71.9 

%
77.6 

%

 
71.9 

%
69.3 

%

Risk-free interest rate
0.8 

%
1.2 

%

 
0.9 

%
1.8 

%

Expected life (years)
5.9 

 
5.9 

 

 
5.9 

 
5.9 

 

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 United States Treasury rates.