Stock-based Compensation

9 Months Ended

Dec. 30, 2011

Stock-based Compensation [Abstract]

Stock-based Compensation

Note 8.  Stock-based Compensation

Stock Option and Award Plans:  The Company grants options to purchase shares of its common stock and is authorized to award restricted shares of common stock pursuant to the terms of its 2008 Equity Incentive Plan, its 1993 Stock Option Plan and its 1997 Stock Option Program. Upon stockholder approval of the 2008 Equity Incentive Plan in August 2008, the 1993 Stock Option Plan and the 1997 Stock Option Program were terminated, and all shares available for future grants of awards under the 1993 Stock Option Plan and the 1997 Stock Option Program were terminated.

Stock options generally become exercisable ratably over a four-year period and expire after seven to ten years. Options may be granted to officers, employees, directors and independent contractors to purchase common stock at a price not less than 100% of the fair market value at the date of grant. There were no stock option exercises in the three and nine months ended December 30, 2011. Stock option exercises were none and 10,041 shares, respectively, in the comparable periods ended December 24, 2010.

Restricted stock awards (“RSAs”) granted under the equity plans are independent of option grants and are subject to restrictions. RSAs, which have been issued since fiscal 2007, are subject to forfeiture if employment or services are terminated prior to the release of restrictions, which generally occurs on a ratable basis over one to two years from the date of grant. Until the restriction is released, the shares cannot be transferred. These shares are considered as issued and outstanding at the time of grant, as the stock award holders are entitled to many of the rights of a stockholder, including  cash dividend and voting rights. The cost of the awards, determined to be the fair market value of the shares at the date of grant, is expensed ratably over the period the restrictions lapse.

Restricted stock unit awards (“RSUs”) granted under the 2008 Equity Incentive Plan are also independent of option grants and are subject to restrictions. RSUs are subject to forfeiture if employment or services are terminated prior to the release of restrictions, which generally occurs on a ratable basis over periods ranging from one day to two years from the date of grant. Until the restriction is released, the shares cannot be transferred. These shares are not considered as issued and outstanding until the release of restrictions. The cost of the awards, determined to be the fair market value of the shares at the date of grant, is expensed ratably over the period the restrictions lapse.

Upon the release of restriction, a portion of the released shares are repurchased from employees by the Company to satisfy withholding-tax obligations arising from the vesting of restricted stock awards. The Company repurchased 29,803 shares from employees in the three months ended December 30, 2011 for a total price of $60,000. For the nine months ended December 30, 2011, the Company repurchased 101,129 shares from employees for a total price of $251,000.

Stock Compensation Expense: Stock-based compensation expense for the three and nine months ended December 30, 2011 and December 24, 2010, was as follows:

(in thousands)	Three Months Ended				Nine Months Ended
	December 30, 2011		December 24, 2010		December 30, 2011		December 24, 2010
Cost of revenue	$	133	$	220	$	398	$	622
Sales and marketing		179		473		623		1,270
Research and development		230		562		846		1,566
General and administrative		172		336		587		1,046
	$	714	$	1,591	$	2,454	$	4,504

The fair value of the Company's stock option awards granted to employees was estimated using the following weighted-average assumptions:

	Three Months Ended						Nine Months Ended
	December 30, 2011			December 24, 2010			December 30, 2011			December 24, 2010
Expected term, in years		4.97			4.94			4.97			4.94
Expected volatility		79.67	%		75.99	%		77.68	%		73.31	%
Risk-free interest rate		0.83	%		2.09	%		1.07	%		1.80	%
Expected dividends		-			-			-			-
Weighted-average fair value	$	1.20		$	2.28		$	1.61		$	2.73

At December 30, 2011, the total compensation cost related to unvested stock-based awards not yet recognized, net of estimated forfeitures, was approximately, $3.5 million, which will be adjusted for subsequent changes in estimated forfeitures. The weighted-average period during which the cost will be amortized was approximately 2.0 years.