11. Stockholders’ Equity

Equity Incentive Programs

The 1999 Plan — As most recently amended on September 5, 2014, the 1999 Stock Option Plan (the 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. The Plan expires in August 2019.

Under the Plan, the Board of Directors may grant to employees, nonemployee directors, consultants and 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 Plan generally vest over a four-year period. Options granted generally have a term of seven years after the grant date, subject to earlier termination upon the occurrence of certain events. The 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 Plan generally vest over a four-year period with 25% vesting on each anniversary of the grant date. The Compensation Committee of the Board of Directors has the discretion to use different vesting schedules.

Under the Plan, the number of shares reserved for issuance is reduced by two shares for every share subject to a full value award, which are specified to be grants that are in the form of performance shares and/or performance unit awards, stock, restricted stock, restricted stock units. The Plan (i) limits the number of shares that may be granted pursuant to awards under the Stock Issuance Program to a participant in any calendar year to 1 million, (ii) limits the initial value of performance units a participant may receive to not more than $5 million and (iii) limits the number of performance shares a participant may receive in a calendar year to 1 million.

During fiscal 2015, the shares reserved for issuance under the plan were increased by 7.5 million shares. As of April 24, 2015, 12.7 million shares were available for grant under our equity incentive plans.

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 at April 27, 2012		20.6		$	29.98
Granted		2.4		$	28.87
Exercised		(3.0	)	$	18.37
Forfeited and expired		(0.8	)	$	40.11
Outstanding at April 26, 2013		19.2		$	31.27
Granted		2.9		$	38.26
Exercised		(6.3	)	$	25.83
Forfeited and expired		(1.3	)	$	42.47
Outstanding as of April 25, 2014		14.5		$	34.10
Granted		2.2		$	36.64
Exercised		(4.6	)	$	25.25
Forfeited and expired		(0.6	)	$	42.42
Outstanding as of April 24, 2015		11.5		$	37.74		3.70	$	29.8
Vested and expected to vest as of April 24, 2015		11.1		$	37.78		3.63	$	29.5
Exercisable as of April 24, 2015		7.9		$	38.32		2.89	$	26.1

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):

	Year Ended
	April 24, 2015		April 25, 2014		April 26, 2013
Intrinsic value of exercises	$	69.9	$	90.7	$	46.1
Proceeds received from exercises	$	116.6	$	163.7	$	56.5
Fair value of options vested	$	33.4	$	45.3	$	55.9

Restricted Stock Units

The following table summarizes activity related to our 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
Granted		6.0		$	29.94
Vested		(4.0	)	$	39.83
Forfeited		(1.2	)	$	40.95
Outstanding at April 26, 2013		12.8		$	38.36
Granted		6.5		$	38.61
Vested		(4.5	)	$	38.48
Forfeited		(1.6	)	$	39.08
Outstanding as of April 25, 2014		13.2		$	38.35
Granted		6.5		$	35.80
Vested		(4.7	)	$	40.14
Forfeited		(1.7	)	$	37.48
Outstanding as of April 24, 2015		13.3		$	36.58

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):

	Year Ended
	April 24, 2015		April 25, 2014		April 26, 2013
Shares withheld for taxes		1.5		1.5		1.3
Fair value of shares withheld	$	56.8	$	57.7	$	40.9

Employee Stock Purchase Plan

Eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited number of shares of the Company’s stock at a discount of up to 15% of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period. On September 5, 2014, the ESPP was amended to increase the shares reserved for issuance by 5.0 million shares of common stock. As of April 24, 2015, 8.9 million shares were available for issuance. The following table summarizes activity related to the purchase rights issued under the ESPP (in millions):

	Year Ended
	April 24, 2015		April 25, 2014		April 26, 2013
Shares issued under the ESPP		3.4		3.8		3.8
Proceeds from issuance of shares	$	97.1	$	95.5	$	95.0

Stock-Based Compensation Expense

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

	Year Ended
	April 24, 2015		April 25, 2014		April 26, 2013
Cost of product revenues	$	5.8	$	5.6	$	6.1
Cost of hardware maintenance and other services revenues		16.0		16.7		19.4
Sales and marketing		116.5		125.0		132.2
Research and development		84.1		87.7		84.1
General and administrative		36.9		38.0		34.8
Total stock-based compensation expense	$	259.3	$	273.0	$	276.6

As of April 24, 2015, total unrecognized compensation expense related to our equity awards was $358.7 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.2 years.

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

Year Ended

April 24,

2015

April 25,

2014

April 26,

2013

Income tax benefit associated with employee stock transactions

56.9

40.5

53.8

Valuation Assumptions

The valuation of stock options, RSUs and ESPP purchase rights and the underlying weighted-average assumptions are summarized as follows:

	Year Ended
	April 24, 2015			April 25, 2014			April 26, 2013
Stock options:
Expected term in years		4.8			4.8			4.8
Risk-free interest rate		1.6	%		1.1	%		0.6	%
Expected volatility		29	%		34	%		41	%
Expected dividend yield		1.8	%		1.6	%		—	%
Weighted-average fair value per share granted	$	8.24		$	9.85		$	11.52

RSUs:
Risk-free interest rate		0.6	%		0.5	%	N/A
Expected dividend yield		1.8	%		1.6	%		—	%
Weighted-average fair value per share granted	$	35.80		$	38.61		$	29.94

ESPP:
Expected term in years		1.3			1.2			1.2
Risk-free interest rate		0.2	%		0.2	%		0.2	%
Expected volatility		27	%		31	%		40	%
Expected dividend yield		1.8	%		1.6	%		—	%
Weighted-average fair value per right granted	$	9.81		$	10.83		$	10.36

N/A - Not Applicable

Stock Repurchase Program

As of April 24, 2015, our Board of Directors has authorized the repurchase of up to $9.6 billion of our common stock, including a $2.5 billion increase approved by our Board of Directors in fiscal 2015. 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 (in millions, except per share information):

	Year Ended
	April 24, 2015		April 25, 2014		April 26, 2013
Number of shares repurchased		29.6		47.3		18.1
Average price per share	$	39.30	$	39.78	$	32.68
Aggregate purchase price	$	1,165.2	$	1,881.5	$	590.0
Remaining authorization at end of period	$	2,459.5	$	1,124.8	$	1,406.3

The aggregate purchase price of our stock repurchases for fiscal 2015 consisted of $1,165.2 million of open market purchases, of which, $812.8 million and $352.4 million was allocated to additional paid-in capital and retained earnings, respectively.

Since the May 13, 2003 inception of our stock repurchase program through April 24, 2015, we repurchased a total of 214.0 million shares of our common stock at an average price of $33.48 per share, for an aggregate purchase price of $7.2 billion.

Accelerated Share Repurchase Agreement

In fiscal 2014, we entered into a collared Accelerated Share Repurchase (ASR) with a third party under which we prepaid $750.0 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. This contract settled in fiscal 2014, resulting in the repurchase of 19.2 million shares, at an average price per share of $39.13. The value of the ASR forward contract was determined to be $13.9 million, which was recorded as additional paid-in capital.

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. No shares of preferred stock were issued or outstanding in any period presented.

Dividends

The following is a summary of our fiscal 2015 and 2014 activities related to dividends on our common stock (in millions, except per share amounts). No dividends were declared or paid in fiscal 2013.

	Year Ended
	April 24, 2015		April 25, 2014
Dividends per share declared	$	0.66	$	0.60
Dividend payments allocated to additional paid-in capital	$	52.0	$	50.4
Dividend payments allocated to retained earnings	$	155.4	$	151.9

On May 20, 2015, we declared a cash dividend of $0.18 per share of common stock, payable on July 23, 2015 to holders of record as of the close of business on July 10, 2015. 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.

Accumulated Other Comprehensive Income (Loss)

Changes in AOCI by component, net of tax, are summarized below (in millions):

	Foreign Currency Translation Adjustments			Defined Benefit Obligation Adjustments			Unrealized Gains on Available- for-Sale Securities			Unrealized Gains (Losses) on Derivatives Instruments			Total
Balance as of April 26, 2013	$	2.0		$	(5.7	)	$	11.4		$	1.0		$	8.7
OCI before reclassifications, net of tax		3.5			0.5			(1.2	)		(3.5	)		(0.7	)
Amounts reclassified from AOCI, net of tax		—			0.4			(1.3	)		2.0			1.1
Total OCI		3.5			0.9			(2.5	)		(1.5	)		0.4
Balance as of April 25, 2014		5.5			(4.8	)		8.9			(0.5	)		9.1
OCI before reclassifications, net of tax		(28.3	)		(7.8	)		2.3			15.5			(18.3	)
Amounts reclassified from AOCI, net of tax		—			0.2			(0.3	)		(14.4	)		(14.5	)
Total OCI		(28.3	)		(7.6	)		2.0			1.1			(32.8	)
Balance as of April 24, 2015	$	(22.8	)	$	(12.4	)	$	10.9		$	0.6		$	(23.7	)

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

	Year Ended
	April 24, 2015			April 25, 2014			April 26, 2013
	Amounts Reclassified from AOCI									Statements of Operations Location
Recognized losses on defined benefit obligations	$	0.2		$	0.4		$	—		Operating expenses
Realized gains on available-for-sale securities		(0.3	)		(1.3	)		(0.6	)	Other income (expense), net
Realized (gains) losses on cash flow hedges		(14.4	)		2.0			(2.2	)	Net revenues
Total reclassifications	$	(14.5	)	$	1.1		$	(2.8	)