Stockholders' Equity

9 Months Ended

Jan. 25, 2013

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 as of April 27, 2012		20.6		$	29.98
Options granted		2.4			28.75
Options exercised		(2.0	)		17.43
Options forfeited and expired		(0.7	)		39.64
Outstanding as of January 25, 2013		20.3			30.74		3.53	$	166.1
Options vested and expected to vest as of January 25, 2013		19.7			30.56		3.47		164.1
Exercisable as of January 25, 2013		15.0			28.23		2.88		145.7

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 January 25, 2013, the total unrecognized compensation expense related to stock options was $59.9 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.2 years.

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

	Three Months Ended				Nine Months Ended
	January 25, 2013		January 27, 2012		January 25, 2013		January 27, 2012
Weighted-average fair value per share granted	$	20.53	$	13.26	$	11.54	$	16.88
Intrinsic value of options exercised	$	15.0	$	21.0	$	30.8	$	71.6
Proceeds received from the exercise of stock options	$	15.8	$	19.5	$	35.3	$	62.2
Fair value of options vested	$	14.5	$	18.1	$	44.0	$	56.8

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 as of April 27, 2012		12.0		$	43.28
RSUs granted		5.5			29.45
RSUs vested		(3.5	)		39.38
RSUs forfeited		(0.9	)		41.13
Outstanding as of January 25, 2013		13.1			38.67

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 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				Nine Months Ended
	January 25, 2013		January 27, 2012		January 25, 2013		January 27, 2012
Shares withheld for taxes		0.4		0.4		1.1		1.0
Fair value of shares withheld	$	12.2	$	16.4	$	34.8	$	44.2

As of January 25, 2013, the total unrecognized compensation expense related to RSUs was $351.5 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.7 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):

	Three Months Ended				Nine Months Ended
	January 25, 2013		January 27, 2012		January 25, 2013		January 27, 2012
Weighted-average fair value per right granted	$	10.37	$	12.93	$	10.36	$	13.34
Shares issued under the ESPP		1.9		1.5		3.8		2.6
Weighted-average price per share issued	$	25.02	$	31.03	$	25.16	$	34.53

As of January 25, 2013, the total unrecognized compensation expense related to the ESPP was $58.1 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 1.4 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				Nine Months Ended
	January 25, 2013		January 27, 2012		January 25, 2013		January 27, 2012
Cost of product revenues	$	1.4	$	1.6	$	4.7	$	4.1
Cost of service revenues		4.8		5.7		15.0		13.8
Sales and marketing		31.9		37.5		101.8		96.5
Research and development		20.8		22.8		63.8		57.0
General and administrative		8.4		9.1		26.2		26.4
Total stock-based compensation expense	$	67.3	$	76.7	$	211.5	$	197.8

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

	Three Months Ended				Nine Months Ended
	January 25, 2013		January 27, 2012		January 25, 2013		January 27, 2012
Employee stock options	$	10.9	$	13.8	$	34.6	$	43.0
RSUs		46.3		42.1		134.1		115.4
ESPP		10.1		20.8		42.8		39.4
Total stock-based compensation expense	$	67.3	$	76.7	$	211.5	$	197.8

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

	Nine Months Ended
	January 25, 2013		January 27, 2012
Income tax benefit associated with employee stock transactions	$	35.4	$	74.7

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						Nine Months Ended
	January 25, 2013			January 27, 2012			January 25, 2013			January 27, 2012
Expected term in years		4.5			4.8			4.8			4.8
Risk-free interest rate		0.59	%		0.84	%		0.63	%		1.54	%
Volatility		43	%		43	%		42	%		36	%

	ESPP
	Three Months Ended						Nine Months Ended
	January 25, 2013			January 27, 2012			January 25, 2013			January 27, 2012
Expected term in years		1.2			1.2			1.2			1.2
Risk-free interest rate		0.20	%		0.18	%		0.19	%		0.19	%
Volatility		41	%		45	%		40	%		44	%

Stock Repurchase Program

During the nine months ended January 25, 2013, we repurchased and retired 12.8 million shares of our common stock at an average price of $32.10 per share, for an aggregate purchase price of $410.0 million, of which $122.8 million and $287.2 million was allocated to additional paid-in capital and retained earnings, respectively. Since the May 13, 2003 inception of our stock repurchase program through January 25, 2013, we repurchased a total of 131.7 million shares of our common stock at an average price of $29.89 per share, for an aggregate purchase price of $3.9 billion.

As of January 25, 2013, our Board of Directors had authorized the repurchase of up to $5.5 billion of our common stock under our stock repurchase program, including an increase of $1.5 billion approved by our Board of Directors on November 14, 2012. As of January 25, 2013, the remaining authorized amount for stock repurchases under this program was $1.6 billion with no termination date. 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.