Stockholders' Equity

12 Months Ended

Apr. 29, 2011

Stockholders' Equity

Stockholders' Equity

11. Stockholders' Equity

Equity Incentive Programs

Acquisition Plans — We have assumed stock incentive plans in connection with our acquisitions. The options granted under these plans generally vest at a rate of 25% on the first anniversary of the vesting commencement date and then ratably over the following 36 months. The restricted stock units generally vest at a rate of 50% on the first and second annual anniversaries of the vesting commencement date.

The 1999 Plan — As amended through July 13, 2010, the 1999 Stock Option Plan ("the 1999 Plan") comprises five separate equity incentive programs: (i) the Discretionary Option Grant Program under which options may be granted to eligible individuals at a fixed price per share; (ii) the Stock Appreciation Rights Program under which eligible persons may be granted stock appreciation rights that allow individuals to receive the appreciation in Fair Market Value of the shares; (iii) the Stock Issuance Program under which eligible individuals may be issued shares of Common Stock directly; (iv) the Performance Share and Performance Unit Program (also known as restricted stock units or RSUs) under which eligible persons may be granted performance shares and performance units which result in payment to the participant only if performance goals or other vesting criteria are achieved; and (v) the Automatic Award Program under which nonemployee board members automatically receive equity grants at designated intervals over their period of board service.

Under the 1999 Plan, the Board of Directors may grant to employees, nonemployee directors, and consultants and other independent advisors options to purchase shares of our common stock during their period of service with us. The exercise price for an incentive stock option and a nonstatutory option cannot be less than 100% of the fair market value of the common stock on the grant date. Options granted under the 1999 Plan generally vest over a four-year period. Options granted prior to April 29, 2006, have a term of no more than 10 years after the date of grant and those granted after April 29, 2006 have a term of no more than seven years, subject to earlier termination upon the occurrence of certain events. The 1999 Plan prohibits the repricing of any outstanding stock option or stock appreciation right after it has been granted or to cancel any outstanding stock option or stock appreciation right and immediately replace it with a new stock option or stock appreciation right with a lower exercise price unless approved by stockholders. RSUs granted under the 1999 Plan generally vest over a four-year period with 25% of the units vesting on each annual anniversary of the grant date. The 1999 Plan limits the number of shares issued under the Stock Issuance Program and the Performance Share and Performance Unit Program to 8.9 million shares plus 50% of the awards cancelled and returned to the 1999 Plan and 50% of the number of shares added to the 1999 Plan after the 2009 Annual Meeting. The 1999 Plan limits the value of performance units a participant may receive during any calendar year to $2.0 million. The 1999 Plan expires in August 2019.

In fiscal 2011, the 1999 Plan was amended to increase the shares reserved for issuance under the plan by an additional 7.0 million. As of April 29, 2011, 14.1 million shares were available for grant under our equity incentive plans.

Stock Options

A summary of the combined activity under our stock option plans and agreements is as follows (in millions, except for per share information and term):

	Numbers of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at April 25, 2008		65.6		$	30.03
Options granted		8.7			17.67
Options exercised		(3.7	)		11.20
Options forfeitures and cancellations		(4.5	)		32.61
Outstanding at April 24, 2009		66.1			29.27
Options granted		7.1			26.95
Options exercised		(8.5	)		19.33
Options cancelled in the Exchange		(24.5	)		39.05
Options forfeitures and cancellations		(5.0	)		39.12
Outstanding at April 30, 2010		35.2			23.02
Options granted		3.9			45.28
Options assumed in acquisition		0.2			16.56
Options exercised		(13.8	)		21.85
Options forfeitures and cancellations		(1.0	)		34.43
Outstanding at April 29, 2011		24.5		$	26.62		4.34	$	626.5
Options vested and expected to vest as of April 29, 2011		23.3		$	26.25		4.27	$	604.2
Exercisable at April 29, 2011		13.9		$	23.81		3.54	$	394.5

The intrinsic value of stock options represents the difference between the exercise price of stock options and the market price of our stock on that day for all in-the-money options. Additional information related to our stock options is summarized below (in millions except per share information):

	Year Ended
	April 29, 2011		April 30, 2010		April 24, 2009
Weighted-average fair value per share granted	$	15.83	$	9.74	$	7.28
Weighted-average fair value per share of options assumed in acquisition	$	21.15		N/A		N/A
Intrinsic value of options exercised	$	325.3	$	92.9	$	30.3
Proceeds received from the exercise of stock options	$	301.1	$	165.1	$	41.1
Fair value of options vested	$	96.6	$	165.6	$	179.8

There was $91.7 million of total unrecognized compensation expense as of April 29, 2011 related to options. The unrecognized compensation expense will be amortized on a straight-line basis over a weighted-average remaining period of 2.3 years.

The following table summarizes information about stock options outstanding under all option plans as of April 29, 2011 (in millions, except for per share information and life):

				Options Outstanding						Options Exercisable
Range of Exercise Prices				Number Outstanding at April 29, 2011		Weighted Average Remaining Contractual Life (In Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercisable Price
	$  0.55	$	12.17		0.9		2.38	$	9.63		0.8	$	9.40
	12.25		13.56		2.9		4.57		13.50		1.2		13.48
	13.63		20.52		2.5		2.29		17.05		2.3		17.06
	20.61		20.86		2.5		4.73		20.71		1.1		20.73
	20.92		22.93		2.5		3.59		22.10		1.8		22.10
	22.94		24.72		2.6		4.33		24.01		1.5		23.89
	24.98		31.73		2.5		3.93		29.15		2.3		29.20
	31.89		33.54		3.3		4.77		33.22		1.5		32.89
	33.77		39.83		2.5		5.18		37.26		1.2		37.27
	40.30		58.99		2.3		6.41		50.43		0.2		46.34
	$  0.55	$	58.99		24.5		4.34	$	26.62		13.9	$	23.81

The following table summarizes activity related to our RSUs (in millions, except the fair value):

	Numbers of Shares			Weighted Average Grant Date Fair Value
Outstanding at April 25, 2008		4.6		$	26.30
RSUs granted		2.2			17.16
RSUs vested		(0.8	)		28.81
RSUs forfeitures and cancellations		(0.5	)		25.48
Outstanding at April 24, 2009		5.5			22.38
RSUs granted		3.1			29.32
RSUs issued in the Stock Option Exchange		3.2			21.73
RSUs vested		(2.1	)		24.64
RSUs forfeitures and cancellations		(0.7	)		23.39
Outstanding at April 30, 2010		9.0			23.92
RSUs granted		4.7			49.13
RSUs vested		(2.9	)		22.52
RSUs forfeitures and cancellations		(0.7	)		27.57
Outstanding at April 29, 2011		10.1		$	35.79

RSUs are converted into common stock upon vesting. Upon the vesting of restricted stock, we primarily use the net share settlement approach, which withholds a portion of the shares to cover the applicable taxes and decreases the shares issued to the employee by a corresponding value. The number and the value of the shares netted for employee taxes are summarized in the table below (in millions):

	Year Ended
	April 29, 2011		April 30, 2010		April 24, 2009
Shares withheld for taxes		1.0		0.7		0.3
Fair value of shares withheld	$	45.9	$	20.8	$	5.1

As of April 29, 2011, there was $240.5 million of total unrecognized compensation expense related to RSUs. The unrecognized compensation expense will be amortized on a straight-line basis over a weighted-average remaining vesting period of 2.6 years.

Stock Option Exchange

In April 2009, our stockholders approved a stock option exchange program (the Exchange) pursuant to which eligible employees were able to exchange some or all of their outstanding options with an exercise price greater than or equal to $22.00 per share that were granted before June 20, 2008, whether vested or unvested, for new RSUs. In connection with the Exchange, we exchanged options to purchase 24.5 million shares of our common stock for total of 3.2 million RSUs. The fair value of the RSUs issued was measured as the total of the unrecognized compensation cost of the options surrendered and the incremental value of the RSUs issued, measured as the excess of the fair value of the RSUs over the fair value of the options tendered immediately before the exchange. The incremental cost of the RSUs was $5.8 million. The value of the RSUs, totaling $70.1 million, is being amortized over the weighted average vesting period of the RSUs of 3.5 years.

Stock Issuance Program — Under the 1999 Stock Issuance Program, certain eligible persons may be issued shares of common stock directly. No restricted stock awards (RSAs) were issued to employees during fiscal 2011, 2010 and 2009. At April 29, 2011, 7.7 million shares were available for future issuances under this program.

Employee Stock Purchase Plan — Under the Employee Stock Purchase Plan (ESPP), employees are entitled to purchase shares of our common stock at 85% of the fair market value at certain specified dates over a two-year period. In fiscal 2011, 2010 and 2009, the plan was amended to increase the share reserved by an additional 5.0 million, 6.7 million and 2.9 million shares of common stock, respectively. Of the 35.2 million shares authorized to be issued under this plan, 4.0 million shares were available for issuance at April 29, 2011. Additional information related to our purchase rights issued under the ESPP is summarized below (in millions, except per share information):

	Year Ended
	April 29, 2011		April 30, 2010		April 24, 2009
Weighted-average fair value per right granted	$	15.86	$	8.86	$	6.17
Shares issued under the ESPP		6.0		5.1		3.3
Weighted average price of shares issued	$	11.50	$	10.49	$	14.96

Stock-Based Compensation Expense

Stock-based compensation expenses included in the consolidated statements of operations for fiscal 2011, 2010 and 2009, respectively, are as follows (in millions):

	Year Ended
	April 29, 2011		April 30, 2010		April 24, 2009
Cost of product revenues	$	3.6	$	4.0	$	3.3
Cost of service revenues		14.4		14.3		12.3
Sales and marketing		81.5		73.7		65.1
Research and development		44.5		38.5		37.9
General and administrative		31.2		29.3		22.2
Total stock-based compensation expense	$	175.2	$	159.8	$	140.8

The following table summarizes stock-based compensation associated with each type of award (in millions):

	Year Ended
	April 29, 2011		April 30, 2010		April 24, 2009
Employee stock options	$	53.7	$	61.1	$	80.5
RSU's and restricted stock awards		88.9		64.1		32.9
ESPP		32.6		34.3		27.4
Change in amounts capitalized in inventory		0.0		0.3		0.0
Total stock-based compensation expense	$	175.2	$	159.8	$	140.8

Total income tax benefits (charges) associated with employee stock transactions and recognized in stockholders' equity were as follows (in millions):

	Year Ended
	April 29, 2011		April 30, 2010			April 24, 2009
Income tax benefits (charges) associated with employee stock transactions	$	128.5	$	(0.9	)	$	45.4

Valuation Assumptions

The fair value of each award is estimated on the date of grant using the Black-Scholes option pricing model, assuming no expected dividends and the following weighted average assumptions:

	Stock Options Year Ended									ESPP Year Ended
	April 29, 2011			April 30, 2010			April 24, 2009			April 29, 2011			April 30, 2010			April 24, 2009
Expected term in years		4.8			4.5			4.0			1.2			1.3			1.3
Risk-free interest rate		2.01	%		2.27	%		2.11	%		0.37	%		0.39	%		1.16	%
Volatility		37	%		41	%		54	%		39	%		39	%		73	%

Stock Repurchase Program

Since the May 13, 2003 inception of our stock repurchase program through April 29, 2011, we have repurchased a total of 104.3 million shares of our common stock at an average price of $28.06 per share, for an aggregate purchase price of $2.9 billion. As of April 29, 2011, our Board of Directors had authorized the repurchase of up to $4.0 billion of common stock under this stock repurchase program, and $1.1 billion remains available under these authorizations. The stock repurchase program may be suspended or discontinued at any time.

During fiscal years 2011 and 2010, we did not repurchase any shares of our common stock under the stock repurchase program. During fiscal 2009, we repurchased 17.0 million shares of our common stock at an aggregate cost of $400.0 million, or a weighted average price of $23.58 per share. The repurchases were recorded as treasury stock and resulted in a reduction of stockholders' equity.

Preferred Stock

Our Board of Directors has the authority to issue up to 5.0 million shares of preferred stock and to determine the price, rights, preferences, privileges, and restrictions, including voting rights, of those shares without any further vote or action by the stockholders.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other comprehensive income (OCI), which is a separate component of stockholders' equity and is disclosed within the consolidated statements of stockholders' equity and comprehensive income. OCI includes foreign currency translation adjustments, unrealized gains and losses on derivatives and unrealized gains and losses on our available-for-sale securities, which includes a cumulative temporary impairment charge of $4.5 million, $3.3 million and $7.0 million in fiscal 2011, 2010 and 2009, respectively, associated with our auction rate securities.

The components of accumulated other comprehensive income (loss), net of related tax effects, at the end of each fiscal year, were as follows (in millions):

	April 29, 2011			April 30, 2010		April 24, 2009
Accumulated translation adjustments	$	11.6		$	1.2	$	(0.3	)
Accumulated unrealized gain (loss) on available-for-sale investments		3.4			0.9		(4.4	)
Accumulated unrealized gain (loss) on derivatives qualifying as cash flow hedges		(2.2	)		0.7		(0.5	)
Total accumulated other comprehensive income (loss)	$	12.8		$	2.8	$	(5.2	)