Stockholders' Equity

6 Months Ended

Oct. 26, 2012

Stockholders' Equity

10.  Stockholders’ Equity

Stock Options

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

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at April 27, 2012		20.6		$	29.98
Options granted		2.2			30.03
Options exercised		(1.1	)		18.05
Options forfeited and expired		(0.6	)		39.75
Outstanding at October 26, 2012		21.1			30.31		3.66	$	75.3
Options vested and expected to vest as of October 26, 2012		20.5			30.07		3.59		75.2
Exercisable at October 26, 2012		15.0			27.46		2.95		69.3

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 October 26, 2012, the total unrecognized compensation expense related to stock options was $68.6 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.3 years.

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

	Three Months Ended				Six Months Ended
	October 26, 2012		October 28, 2011		October 26, 2012		October 28, 2011
Weighted-average fair value per share granted	$	12.40	$	13.77	$	10.86	$	16.96
Intrinsic value of options exercised	$	10.4	$	6.8	$	15.8	$	50.6
Proceeds received from the exercise of stock options	$	12.8	$	7.7	$	19.5	$	42.7
Fair value of options vested	$	15.1	$	20.3	$	29.5	$	38.7

Restricted Stock Units

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at April 27, 2012		12.0		$	43.28
RSUs granted		5.0			29.31
RSUs vested		(2.3	)		39.74
RSUs forfeited		(0.7	)		41.32
Outstanding at October 26, 2012		14.0			39.01

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):

	Three Months Ended				Six Months Ended
	October 26, 2012		October 28, 2011		October 26, 2012		October 28, 2011
Shares withheld for taxes		0.1		0.1		0.7		0.6
Fair value of shares withheld and retired	$	2.8	$	2.5	$	22.6	$	27.8

As of October 26, 2012, the total unrecognized compensation expense related to RSUs was $379.1 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.8 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan (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. Additional information related to the purchase rights issued under the ESPP is provided below (in millions, except per right and per share information):

	Six Months Ended
	October 26, 2012		October 28, 2011
Weighted-average fair value per right granted	$	10.25	$	15.88
Shares issued under the ESPP		1.9		1.1
Weighted-average price per share issued	$	25.30	$	39.17

As of October 26, 2012, the total unrecognized compensation expense related to the ESPP was $63.5 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 condensed consolidated statements of operations is as follows (in millions):

	Three Months Ended				Six Months Ended
	October 26, 2012		October 28, 2011		October 26, 2012		October 28, 2011
Cost of product revenues	$	1.5	$	1.4	$	3.3	$	2.5
Cost of service revenues		4.6		4.2		10.2		8.1
Sales and marketing		30.9		30.4		69.9		59.0
Research and development		19.3		18.2		43.0		34.2
General and administrative		8.7		8.8		17.8		17.3
Total stock-based compensation expense	$	65.0	$	63.0	$	144.2	$	121.1

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

	Three Months Ended				Six Months Ended
	October 26, 2012		October 28, 2011		October 26, 2012		October 28, 2011
Employee stock options	$	11.7	$	14.7	$	23.7	$	29.2
RSUs		43.3		38.9		87.8		73.3
ESPP		10.0		9.4		32.7		18.6
Total stock-based compensation expense	$	65.0	$	63.0	$	144.2	$	121.1

Total income tax benefit associated with employee stock transactions and recognized in stockholders’ equity was as follows (in millions):

	Six Months Ended
	October 26, 2012		October 28, 2011
Income tax benefit associated with employee stock transactions	$	28.2	$	79.1

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
	Three Months Ended						Six Months Ended
	October 26, 2012			October 28, 2011			October 26, 2012			October 28, 2011
Expected term in years		4.8			4.8			4.8			4.8
Risk-free interest rate		0.62	%		0.97	%		0.63	%		1.55	%
Volatility		43	%		41	%		41	%		36	%

	ESPP
	Six Months Ended
	October 26, 2012			October 28, 2011
Expected term in years		1.2			1.2
Risk-free interest rate		0.18	%		0.25	%
Volatility		38	%		35	%

Stock Repurchase Program

During the six months ended October 26, 2012, we repurchased and retired 10.9 million shares of our common stock at an average price of $31.86 per share, for an aggregate purchase price of $348.3 million, of which $104.6 million and $243.7 million was allocated to additional paid-in capital and retained earnings, respectively. Since the May 13, 2003 inception of our stock repurchase program through October 26, 2012, we repurchased a total of 129.9 million shares of our common stock at an average price of $29.84 per share, for an aggregate purchase price of $3.9 billion.

As of October 26, 2012, our Board of Directors had authorized the repurchase of up to $4.0 billion of our common stock under our stock repurchase program. As of October 26, 2012, the remaining authorized amount for stock repurchases under this program was $0.1 billion with no termination date. On November 14, 2012, our Board of Directors approved an increase of $1.5 billion to our stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through open market and privately negotiated transactions at prices deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time.