Quarterly report pursuant to Section 13 or 15(d)

STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION

v2.3.0.15
STOCK INCENTIVE PLANS AND SHARE-BASED COMPENSATION
 6 Months Ended
Sep. 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 and unvested restricted shares of Quantum common stock, respectively, in accordance with the merger 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 merger 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 merger agreement, the unvested restricted shares became 33,000 unvested restricted shares of Quantum common stock and $200,000 in cash held in escrow. The estimated fair value of unvested Pancetera options, unvested restricted shares and cash held in escrow 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   Six Months Ended
        September 30,
2011 		      September 30,
2010 		      September 30,
2011 		      September 30,
2010
Share-based compensation:                        
       Cost of revenue   $      568   $      444   $      1,023   $      904
       Research and development     1,031     581     1,671     1,330
       Sales and marketing     1,213     720     1,932     1,605
       General and administrative     993     729     2,196     1,677
    $ 3,805   $ 2,474   $ 6,822   $ 5,516
Share-based compensation by type of award:                        
       Stock options   $ 580   $ 931   $ 1,533   $ 2,035
       Restricted stock     2,512     1,240     4,209     2,701
       Stock purchase plan     713     303     1,080     780
    $ 3,805   $ 2,474   $ 6,822   $ 5,516
                         

Stock Options
 
No stock options were granted in the second quarter of fiscal 2012 and 2011. 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 six months of fiscal 2012 and 2011, were based on estimates at the date of grant as follows:
 
    Three and Six Months Ended
        September 30,
2011 		      September 30,
2010
Option 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 were based on estimates at the acquisition date as follows:
 
Option 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 employees. The weighted-average grant date fair values of restricted stock units granted during the second quarter and first six months of fiscal 2012 were $3.25 and $3.19, respectively. The weighted-average grant date fair values of restricted stock units granted during the second quarter and first six months of fiscal 2011 were $1.82 and $1.93, respectively.
 
Stock Purchase Plan
 
Under the Purchase Plan, rights to purchase shares are typically granted during the second and fourth quarter of each fiscal year. The value of rights to purchase shares granted in the second quarter and first six months of fiscal 2012 and fiscal 2011, respectively, was estimated at the date of the grant. The weighted-average grant date fair values and the assumptions used in calculating fair values for the three and six month periods ended September 30, 2011 and 2010 are as follows:
 
    Three and Six Months Ended
        September 30,
2011 		      September 30,
2010
Option life (in years)     0.5     0.5
Risk-free interest rate     0.08%     0.20%
Stock price volatility     56.27%     66.91%
Weighted-average grant date fair value   $      0.54   $      0.48


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   1,619       2.33          
       Exercised   (2,151 )     2.07          
       Forfeited   (853 )     5.13          
       Expired   (52 )     11.79          
Outstanding as of September 30, 2011   20,643     $ 2.32   3.23   $             5,777
Vested and expected to vest at September 30, 2011   20,252     $ 2.33   3.18   $ 5,640
Exercisable as of September 30, 2011   17,004     $ 2.46   2.72   $ 4,018
                       
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 6,306       3.19
       Vested (2,486 )     1.78
       Forfeited (498 )     2.28
Nonvested at September 30, 2011 9,962     $ 2.76