Stock-Based Compensation

3 Months Ended

Jun. 30, 2012

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

Stock-Based Compensation

Stock-based Compensation

We measure the cost of employee services received in exchange for restricted stock and restricted stock unit (RSU) awards based on the fair value of our common stock on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award restricted stock and RSUs as the principal equity incentive awards, including certain performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.

Our equity incentive plans are described more fully in Note K to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

Restricted stock activity for the nine months ended June 30, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock September 30, 2011	90		$	21.30
Granted	57		$	25.27
Vested	(70	)	$	21.27
Balance of outstanding restricted stock June 30, 2012	77		$	24.24
Restricted stock unit activity for the nine months ended June 30, 2012	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units September 30, 2011	5,490		$	17.75
Granted	2,778		$	20.05
Vested	(2,731	)	$	15.71
Forfeited or not earned	(346	)	$	18.79
Balance of outstanding restricted stock units June 30, 2012	5,191		$	19.98

Restricted stock and restricted stock unit grants in the first nine months of 2012

	Restricted Stock		Restricted Stock Units
Grant Period	Performance-based	Time-based (1)	Performance-based (2)	Time-based (3)
	(in thousands)
	(Number of Shares)		(Number of Units)
First nine months of 2012	—	57	780	1,998

_________________

(1) Of the time-based shares of restricted stock, 9,402 were issued to a non-employee director in connection with a consulting contract we entered into with him. The restrictions on these shares lapse in two substantially equal annual installments from the date of grant. The remaining 47,177 were issued to non-employee directors. The restrictions on these shares lapse one year from the date of grant.

(2) Of these performance-based RSUs, 11,899 will be eligible to vest on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which the performance criteria have been achieved and 425,698 will be eligible to vest in three substantially equal installments on the later of November 15, 2012 and the date the Compensation Committee determines the extent to which performance criteria have been achieved, November 15, 2013 and November 15, 2014; and 309,976 are eligible to vest in two substantially equal installments on the later of each of November 15, 2013 and November 15, 2014 and the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved (RSUs not earned for 2013 may be earned for 2014 to the extent the cumulative performance criteria are achieved). The remaining 32,508 have been forfeited.

(3) The time-based RSUs were issued to employees, including some of our executive officers. Of these time-based RSUs, 1,146,577 will vest in three substantially equal annual installments in November 2012, 2013 and 2014 and 851,671 will vest in three substantially equal installments in May 2013, 2014, and 2015.

Compensation expense recorded for our stock-based awards was classified in our consolidated statements of operations as follows:

	Three months ended				Nine months ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
	(in thousands)				(in thousands)
Cost of license revenue	$	4	$	4	$	16	$	10
Cost of service revenue	2,050		1,857		6,734		5,577
Sales and marketing	3,334		3,062		10,368		7,841
Research and development	1,886		2,010		6,675		6,152
General and administrative	6,057		4,627		15,612		12,878
Total stock-based compensation expense	$	13,331	$	11,560	$	39,405	$	32,458