8. Stockholders’ Equity

Stock Options

The following table summarizes activity related to our stock options (in millions, except for exercise price and contractual term):


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of April 25, 2014		14.5		$	34.10
Granted		2.0			36.29
Exercised		(0.5	)		23.60
Forfeited and expired		(0.2	)		41.43

Outstanding as of July 25, 2014		15.8			34.68		3.75	$	93.1


Vested and expected to vest as of July 25, 2014		15.0			34.58		3.63		91.6

Exercisable as of July 25, 2014		10.4			33.33		2.63		81.1

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.

Additional information related to our stock options is summarized below (in millions):


	Three Months Ended
	July 25, 2014		July 26, 2013
Intrinsic value of exercises	$	7.2	$	27.4
Proceeds received from exercises	$	13.4	$	56.8
Fair value of options vested	$	8.7	$	12.0

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 25, 2014		13.2		$	38.35
Granted		5.3			34.93
Vested		(2.9	)		38.79
Forfeited		(0.7	)		38.14

Outstanding as of July 25, 2014		14.9			37.06

RSUs are converted into common stock upon vesting. We primarily use the net share settlement approach upon vesting, 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
	July 25, 2014		July 26, 2013
Shares withheld for taxes		0.9		0.9
Fair value of shares withheld	$	33.9	$	35.3

Employee Stock Purchase Plan

The following table summarizes activity related to the purchase rights issued under the Employee Stock Purchase Plan (ESPP) (in millions):


	Three Months Ended
	July 25, 2014		July 26, 2013
Shares issued under the ESPP		1.9		2.0
Proceeds from issuance of shares	$	48.9	$	49.9

Stock-Based Compensation Expense

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


	Three Months Ended
	July 25, 2014		July 26, 2013
Cost of product revenues	$	1.5	$	1.3
Cost of service revenues		4.4		4.0
Sales and marketing		27.0		30.5
Research and development		21.5		21.4
General and administrative		7.9		9.1

Total stock-based compensation expense	$	62.3	$	66.3

As of July 25, 2014, total unrecognized compensation expense related to our equity awards was $507.8 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.7 years.

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


	Three Months Ended
	July 25, 2014		July 26, 2013
Income tax benefit associated with employee stock transactions	$	43.4	$	8.0

Valuation Assumptions

The fair value of stock options and ESPP purchase rights is estimated on the grant date using the Black-Scholes option pricing model and the following underlying weighted-average assumptions:


	Stock Options
	Three Months Ended
	July 25, 2014			July 26, 2013
Expected term in years		4.8			4.8
Risk-free interest rate		1.6	%		1.0	%
Volatility		29	%		34	%
Dividend yield		1.8	%		1.6	%
Weighted-average fair value per share granted	$	8.19		$	9.78


	ESPP
	Three Months Ended
	July 25, 2014			July 26, 2013
Expected term in years		1.3			1.2
Risk-free interest rate		0.2	%		0.2	%
Volatility		27	%		32	%
Dividend yield		1.8	%		1.6	%
Weighted-average fair value per right granted	$	9.71		$	10.53

The weighted-average assumptions used to value RSUs are summarized as follows:


	Three Months Ended
	July 25, 2014			July 26, 2013
Grant date fair value per share	$	34.93		$	38.16
Expected dividend		1.8	%		1.6	%

Stock Repurchase Program

As of July 25, 2014, our Board of Directors has authorized the repurchase of up to $7.1 billion of our common stock. Under this program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through open market and privately negotiated transactions at prices deemed appropriate by our management.

The following table summarizes activity related to this program for the three months ended July 25, 2014 (in millions, except per share information):


Number of shares repurchased		3.4
Average price per share	$	34.82
Aggregate purchase price	$	118.9
Remaining authorization at end of period	$	1,005.9

The aggregate purchase price of our stock repurchases for the three months ended July 25, 2014 consisted of $118.9 million of open market purchases, which was allocated to additional paid-in capital.

Dividends

The following is a summary of our activities related to dividends on our common stock (in millions, except per share amounts):


	Three Months Ended
	July 25, 2014		July 26, 2013
Dividends per share declared and paid	$	0.165	$	0.150

Dividend payments allocated to retained earnings	$	53.4	$	51.4

On August 13, 2014, we declared a cash dividend of $0.165 per share of common stock, payable on October 22, 2014 to holders of record as of the close of business on October 10, 2014. The timing and amount of future dividends will depend on market conditions, corporate business and financial considerations and regulatory requirements. All dividends declared have been determined by the Company to be legally authorized under the laws of the state in which we are incorporated.

Retained Earnings

A reconciliation of retained earnings for the three months ended July 25, 2014 is as follows (in millions):


Balance as of April 25, 2014	$	1.1
Net income		88.4
Dividends		(53.4	)

Balance as of July 25, 2014	$	36.1

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income (AOCI) by component, net of tax, for the three months ended July 25, 2014 are summarized below (in millions):


	Foreign Currency Translation Adjustments			Defined Benefit Obligation Adjustments			Unrealized Gains on Available- for-Sale Securities			Unrealized Gains on Derivative Instruments			Total
Balance as of April 25, 2014	$	5.5		$	(4.8	)	$	8.9		$	(0.5	)	$	9.1

Other comprehensive income (loss) (OCI) before reclassifications		(0.8	)		1.0			(1.6	)		(0.6	)		(2.0	)
Amounts reclassified from AOCI, net of tax		0.0			0.1			0.2			1.7			2.0

Net OCI		(0.8	)		1.1			(1.4	)		1.1			0.0

Balance as of July 25, 2014	$	4.7		$	(3.7	)	$	7.5		$	0.6		$	9.1

The amounts reclassified out of AOCI are as follows (in millions):


	Three Months Ended
	July 25, 2014		July 26, 2013
OCI Components	Amounts Reclassified from AOCI					Statements of Operations Location
Recognized losses on defined benefit obligations	$	0.1	$	0.0			Operating expenses
Realized (gains) losses on available-for-sale securities		0.2		(0.1	)		Other expense, net
Realized (gains) losses on cash flow hedges		1.7		(1.0	)		Net revenues

Total reclassifications	$	2.0	$	(1.1	)