Quarterly report pursuant to Section 13 or 15(d)

STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION

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STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION
 3 Months Ended
Jun. 30, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE 9: STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION

Overview

Our stock incentive plans (“Plans”) are broad-based, long-term retention programs that are intended to attract and retain talented employees and align stockholder and employee interests. The Plans provide for the issuance of stock options, stock appreciation rights, stock purchase rights and long-term performance awards to our employees, officers and affiliates. We also have an employee stock purchase plan (“Purchase Plan”) that allows for the purchase of stock at 85% of fair market value at the date of grant or the exercise date, whichever value is less.

During the first quarter of fiscal 2012, we assumed outstanding unvested options and unvested restricted shares of Pancetera which were exchanged into options to purchase Quantum common stock and unvested restricted shares of Quantum common stock in accordance with the purchase agreement. As of June 13, 2011, Pancetera had approximately 0.8 million unvested stock options and 0.5 million unvested restricted shares outstanding. Based on the exchange ratio of 0.2403 calculated in accordance with the formula in the purchase agreement, we assumed the outstanding unvested options, which are exercisable for an aggregate of 194,000 shares of Quantum common stock. Based on the relative cash and stock consideration for Pancetera shares per the purchase agreement, the unvested restricted shares became 33,000 unvested restricted shares of Quantum common stock and $200,000 in unvested cash. The estimated fair value of unvested Pancetera options, unvested restricted shares and unvested cash related to future service is being recognized over the remaining service period.

The Black-Scholes option pricing model is used to estimate the fair value of options granted under our Plans, options assumed and rights to acquire stock granted under our Purchase Plan.

Share-Based Compensation

The following table summarizes share-based compensation (in thousands):

Three Months Ended
June 30, 2011 June 30, 2010
Share-based compensation:
Cost of revenue $ 455 $ 460
Research and development 640 749
Sales and marketing 719 885
General and administrative 1,203 948
$ 3,017 $ 3,042
Share-based compensation by type of award:
Stock options $ 953 $ 1,104
Restricted stock 1,697 1,461
Stock purchase plan 367 477
$ 3,017 $ 3,042

Stock Options

The weighted-average grant date fair values of employee stock option grants, as well as the weighted-average assumptions used in calculating these values for the first quarter of fiscal 2012 and 2011 were based on estimates at the date of grant as follows:

Three Months Ended
June 30, 2011 June 30, 2010
Options life (in years) 4.0 4.2
Risk-free interest rate 1.57% 2.02%
Stock price volatility 112.33% 106.75%
Weighted-average grant date fair value $ 1.91 $ 1.96

The weighted-average fair value of stock options assumed from Pancetera, as well as the weighted-average assumptions used in calculating these values for the first quarter of fiscal 2012 were based on estimates at the acquisition date as follows:

Three Months
Ended
June 30, 2011
Options life (in years) 5.2
Risk-free interest rate 1.65%
Stock price volatility 100.93%
Weighted-average grant date fair value $ 2.67

The assumed options have a 10 year contractual life from the original grant date.

Restricted Stock

The fair value of the restricted stock units granted is the intrinsic value as of the respective grant date since the restricted stock units are granted at no cost to the employee. The weighted-average grant date fair values of restricted stock units granted during the first quarter of fiscal 2012 and 2011 were $2.79 and $2.86, respectively.

The fair value of restricted stock assumed from Pancetera is the intrinsic value as of the assumption date since the related restricted stock was granted at a value of approximately $0.01 per Quantum common share. The weighted-average fair value of assumed restricted stock was $2.94.

Stock Purchase Plan

Under the Purchase Plan, rights to purchase shares are typically granted during the second and fourth quarter of each fiscal year. No rights to purchase shares were granted during the first quarter of fiscal 2012 or 2011.

Stock Activity

Stock Options

A summary of activity relating to our stock options follows (options and aggregate intrinsic value in thousands):

Options Weighted-
Average
Exercise Price		 Weighted-
Average
Remaining
Contractual Term		 Aggregate
Intrinsic Value
Outstanding as of March 31, 2011 22,080 $ 2.43
Granted and assumed
1,618 2.33
Exercised
(1,464 ) 2.35
Forfeited
(139 ) 1.49
Expired
(72 ) 9.39
Outstanding as of June 30, 2011 22,023 $ 2.41 3.39 $ 25,835
Vested and expected to vest at June 30, 2011 21,565 $ 2.42 3.33 $ 25,209
Exercisable as of June 30, 2011 14,525 $ 2.97 2.42 $ 11,026

Restricted Stock

A summary of activity relating to our restricted stock follows (shares in thousands):

Shares Weighted-Average
Grant Date
Fair Value
Nonvested at March 31, 2011 6,640 $ 1.95
Granted and assumed 854 2.79
Vested (515 ) 1.88
Forfeited (269 ) 2.39
Nonvested at June 30, 2011 6,710 $ 2.05