Stockholders' Equity

12 Months Ended

Apr. 27, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

11. Stockholders' Equity

Equity Incentive Programs

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

The 1999 Plan — As amended through August 30, 2011, 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 RSUs) under which eligible persons may be granted performance shares or 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. 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 grant date 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% vesting on each 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 the sum of (i) 50% of the awards cancelled and returned to the 1999 Plan and (ii) 50% of the number of shares added to the 1999 Plan after the 2009 Annual Meeting. The 1999 Plan limits the initial value of performance units a participant may receive of not more than $2.0 million. The 1999 Plan expires in August 2019.

In fiscal 2012, the 1999 Plan was amended to increase the shares reserved for issuance under the plan by an additional 7.7 million shares. As of April 27, 2012, 14.8 million shares were available for grant under our equity incentive plans.

Stock Options

A summary of the activity under our stock option plans and agreements is as follows (in millions, except for the exercise price and contractual term):

	Numbers of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
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
Options granted		2.2			50.65
Options exercised		(5.2	)		21.54
Options forfeitures and cancellations		(0.9	)		37.23
Outstanding at April 27, 2012		20.6			29.98		3.81	$	234.2
Options vested and expected to vest as of April 27, 2012		20.0		$	29.58		3.76	$	231.9
Exercisable at April 27, 2012		14.0		$	26.41		3.21	$	189.7

The aggregate intrinsic value represents the pre-tax difference between the exercise price of stock options and the quoted market price of our stock on that day for all in-the-money options. As of April 27, 2012, the total unrecognized compensation expense related to stock options was $70.6 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.0 years.

Additional information related to our stock options is summarized below (in millions, except per share information):

	Year Ended
	April 27, 2012		April 29, 2011		April 30, 2010
Weighted-average fair value per share granted	$	16.70	$	15.83	$	9.74
Weighted-average fair value per share of options assumed in acquisition		N/A	$	21.15		N/A
Intrinsic value of options exercised	$	116.9	$	325.3	$	92.9
Proceeds received from the exercise of stock options	$	111.1	$	301.1	$	165.1
Fair value of options vested	$	71.8	$	96.6	$	165.6

N/A — Not Applicable

The following table summarizes information about outstanding and exercisable stock options under all option plans as of April 27, 2012:

				Options Outstanding						Options Exercisable
Range of Exercise Prices				Number of Shares (in millions)		Weighted- Average Remaining Contractual Term (in years)		Weighted- Average Exercise Price		Number of Shares (in  millions)		Weighted- Average Exercise Price
$	0.55	$	13.56		2.6		3.20	$	12.65		2.0	$	12.39
	13.63		20.69		3.0		3.01		19.09		2.3		18.70
	20.70		23.04		2.1		2.61		22.06		2.1		22.07
	23.33		26.20		2.1		3.51		24.35		1.8		24.32
	26.37		32.50		2.4		2.64		30.41		2.3		30.39
	32.70		33.54		2.1		4.45		33.46		1.1		33.40
	33.73		38.64		2.1		4.77		36.88		1.0		36.46
	39.63		52.67		2.5		5.02		48.17		1.1		45.66
	53.10		58.99		1.7		6.03		53.63		0.3		53.83
$	0.55	$	58.99		20.6		3.81	$	29.98		14.0	$	26.41

Restricted Stock Units

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at April 24, 2009		5.5		$	22.38
RSUs granted		3.1			29.32
RSUs issued in 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 granted		6.5			47.17
RSUs vested		(3.7	)		30.35
RSUs forfeitures and cancellations		(0.9	)		40.91
Outstanding at April 27, 2012		12.0			43.28

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

	Year Ended
	April 27, 2012		April 29, 2011		April 30, 2010
Shares withheld for taxes		1.2		1.0		0.7
Fair value of shares withheld and retired	$	52.0	$	45.9	$	20.8

As of April 27, 2012, the total unrecognized compensation expense related to RSUs was $341.6 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.7 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 a 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 RSUs weighted-average vesting period of 3.5 years.

Employee Stock Purchase Plan

Under the ESPP, employees who elect to participate are granted options that include a purchase price adjustment provision under which the employees may purchase common stock at a 15% discount from the market value of the common stock at certain specified dates within a two-year offering period. In fiscal 2012, the ESPP was amended to increase the shares reserved for issuance by an additional 3.5 million shares of common stock. Of the 38.7 million shares authorized to be issued under the ESPP, 4.9 million shares were available for issuance as of April 27, 2012. Additional information related to the purchase rights issued under the ESPP is provided below (in millions, except per share information):

	Year Ended
	April 27, 2012		April 29, 2011		April 30, 2010
Weighted-average fair value per right granted	$	12.87	$	15.86	$	8.86
Shares issued under the ESPP		2.6		6.0		5.1
Weighted-average price per share issued	$	34.53	$	11.50	$	10.49

As of April 27, 2012, the total unrecognized compensation expense related to the ESPP was $59.8 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 1.6 years.

Stock-Based Compensation Expense

Stock-based compensation expense included in the consolidated statements of operations is as follows (in millions):

	Year Ended
	April 27, 2012		April 29, 2011		April 30, 2010
Cost of product revenues	$	5.4	$	3.6	$	4.0
Cost of service revenues		17.8		14.4		14.3
Sales and marketing		126.0		81.5		73.7
Research and development		74.1		44.5		38.5
General and administrative		34.3		31.2		29.3
Total stock-based compensation expense	$	257.6	$	175.2	$	159.8

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

	Year Ended
	April 27, 2012		April 29, 2011		April 30, 2010
Employee stock options	$	55.4	$	53.7	$	61.1
RSU's		153.9		88.9		64.1
ESPP		48.3		32.6		34.3
Change in amounts capitalized in inventory		0.0		0.0		0.3
Total stock-based compensation expense	$	257.6	$	175.2	$	159.8

Stock-based compensation for the year ended April 27, 2012 includes a charge of $10.9 million related to the purchase price adjustment provision under the ESPP.

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

	Year Ended
	April 27, 2012		April 29, 2011		April 30, 2010
Income tax benefits (charges) associated with employee stock transactions	$	107.5	$	128.5	$	(0.9	)

Valuation Assumptions

The fair value of each award is estimated on the grant date 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 27, 2012			April 29, 2011			April 30, 2010			April 27, 2012			April 29, 2011			April 30, 2010
Expected term in years		4.8			4.8			4.5			1.2			1.2			1.3
Risk-free interest rate		1.50	%		2.01	%		2.27	%		0.19	%		0.37	%		0.39	%
Volatility		36	%		37	%		41	%		44	%		39	%		39	%

Stock Repurchase Program

In fiscal year 2012, we repurchased 14.6 million shares of our common stock as described below. Since the May 13, 2003 inception of our stock repurchase program through April 27, 2012, we repurchased a total of 119.0 million shares of our common stock at an average price of $29.65 per share, for an aggregate purchase price of $3.5 billion. As of April 27, 2012, our Board of Directors had authorized the repurchase of up to $4.0 billion of our common stock under this stock repurchase program. As of April 27, 2012, the remaining authorized amount for stock repurchases under this program was $0.5 billion with no termination date. 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.

Accelerated Share Repurchase Agreements

On July 8, 2011, we entered into a collared accelerated share repurchase agreement (ASR) with Bank of America, N.A, under which we prepaid $200.0 million to purchase shares of our common stock. The aggregate number of shares ultimately purchased was determined based on the volume weighted-average share price of our common stock over a specified period of time. The contract was settled in August 2011. The total number of shares repurchased and retired under this ASR was 4.1 million shares at a price of $48.30 per share.

On August 19, 2011, we entered into an ASR with Wells Fargo Bank, National Association, under which we prepaid $400.0 million to purchase shares of our common stock. The aggregate number of shares ultimately purchased was determined based on the volume weighted-average share price of our common stock over a specified period of time. The contract was settled in November 2011. The total number of shares repurchased and retired under this ASR was 10.5 million shares at a price of $38.08 per share.

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.