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Stock-Based Compensation
 9 Months Ended
Dec. 31, 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 nine months ended December 31, 2012 and 2011 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

December 31,

 

 

December 31,

 

 

2012

 

2011

 

 

2012

 

2011

Cost of revenues

$
135 

$
138 

 

$
518 

$
908 

Research and development

 
627 

 
623 

 

 
1,781 

 
1,948 

Selling, general and administrative

 
1,167 

 
1,357 

 

 
3,669 

 
4,841 

Total

$
1,929 

$
2,118 

 

$
5,968 

$
7,697 

 

 

During the nine months ended December 31, 2012, the Company granted approximately 857,000 stock options and awarded 1,758,000 shares of restricted stock shares to employees under the 2007 Stock Incentive Plan. In addition the Company issued 158,000 restricted stock units, each of which represents the right to receive one share of common stock, in connection with a severance agreement entered into with one of our former executive officers, and issued approximately 215,000 immediately vested shares of common stock in-lieu of cash bonuses, 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 $4.6 million as of December 31, 2012. This expense will be recognized over a weighted average expense period of approximately 1.9 years.  The total unrecognized compensation cost for unvested outstanding restricted stock was $5.5 million as of December 31, 2012. This expense will be recognized over a weighted average expense period of approximately 1.5 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, 2012 and 2011 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

December 31,

 

 

December 31,

 

 

2012

 

2011

 

 

2012

 

2011

 

Expected volatility
72.4 

%
79.7 

%

 
72.0 

%
69.7 

%

Risk-free interest rate
1.0 

%
1.1 

%

 
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.