10. Stockholders’ Equity

Equity Incentive Awards

As of January 29, 2016, we have outstanding certain equity incentive awards (awards), which include stock options, restricted stock units (RSUs), including time-based RSUs and performance-based RSUs (PBRSUs), and Employee Stock Purchase Plan (ESPP) awards.

Stock Options

The following table summarizes information related to our stock options (in millions, except 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 24, 2015		12		$	37.74
Exercised		(1	)	$	21.15
Forfeited and expired		(3	)	$	39.11
Outstanding as of January 29, 2016		8		$	39.68		2.64	$	1
Vested and expected to vest as of January 29, 2016		8		$	39.73		2.55	$	1
Exercisable as of January 29, 2016		7		$	40.29		2.17	$	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):

	Nine Months Ended
	January 29, 2016		January 23, 2015
Intrinsic value of exercises	$	12	$	61
Proceeds received from exercises	$	24	$	100
Fair value of options vested	$	10	$	26

Restricted Stock Units

In the nine months ended January 29, 2016, we granted PBRSUs to certain of our executives. Each PBRSU has performance-based vesting criteria (in addition to the service based vesting criteria) such that the PBRSU cliff-vests at the end of either an approximate two year or three year performance period, which began on the date specified in the grant agreement and ends the last day of fiscal 2017 or 2018, respectively. The number of shares of common stock that will be issued to settle the PBRSUs at the end of the applicable performance and service period will range from 0% to 200% of a target number of shares originally granted, and will depend upon our Total Stockholder Return (TSR) as compared to an index TSR (each expressed as a growth rate percentage) calculated as of the applicable period end date. The fair values of the PBRSUs were fixed at grant date using a Monte Carlo simulation model and the related aggregate compensation cost of $20 million is being recognized, adjusted for forfeitures, over the shorter of the remaining applicable performance or service periods.

RSUs are converted into common stock upon vesting. Time-based RSUs generally vest with only service-based criteria at 25% annually over four years, except for the PBRSUs described above and 4 million time-based RSUs granted in the nine months ended January 29, 2016, which will vest at 50% annually over two years.

The following table summarizes information related to RSUs, including PBRSUs, (in millions, except for fair value):

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding as of April 24, 2015		13		$	36.58
Granted		6		$	30.49
Vested		(5	)	$	37.67
Forfeited		(2	)	$	35.08
Outstanding as of January 29, 2016		12		$	33.46

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):

	Nine Months Ended
	January 29, 2016		January 23, 2015
Shares withheld for taxes		2		1
Fair value of shares withheld	$	47	$	51

Employee Stock Purchase Plan

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

	Nine Months Ended
	January 29, 2016		January 23, 2015
Shares issued under the ESPP		3		3
Proceeds from issuance of shares	$	93	$	97

Stock-Based Compensation Expense

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

	Three Months Ended				Nine Months Ended
	January 29, 2016		January 23, 2015		January 29, 2016		January 23, 2015
Cost of product revenues	$	1	$	2	$	4	$	5
Cost of hardware maintenance and other services revenues		5		4		15		12
Sales and marketing		27		30		84		87
Research and development		20		21		64		64
General and administrative		10		9		32		28
Total stock-based compensation expense	$	63	$	66	$	199	$	196

As of January 29, 2016, total unrecognized compensation expense related to our equity awards was $341 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 1.9 years.

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

Nine Months Ended

January 29,

2016

January 23,

2015

Income tax benefit associated with employee stock transactions

Stock Repurchase Program

As of January 29, 2016, our Board of Directors has authorized the repurchase of up to $9.6 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 nine months ended January 29, 2016 (in millions, except per share amounts):

Number of shares repurchased		23
Average price per share	$	30.75
Aggregate purchase price	$	698
Remaining authorization at end of period	$	1,762

The aggregate purchase price of our stock repurchases for the nine months ended January 29, 2016 consisted of $698 million of open market purchases, of which $534 million and $164 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 29, 2016, we repurchased a total of 237 million shares of our common stock at an average price of $33.22 per share, for an aggregate purchase price of $7.9 billion.

Dividends

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

	Nine Months Ended
	January 29, 2016		January 23, 2015
Dividends per share declared	$	0.540	$	0.495
Dividend payments allocated to additional paid-in capital	$	84	$	52
Dividend payments allocated to retained earnings	$	75	$	105

On February 17, 2016, we declared a cash dividend of $0.18 per share of common stock, payable on April 27, 2016 to holders of record as of the close of business on April 8, 2016. 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 us to be legally authorized under the laws of the state in which we are incorporated.

Retained Earnings

A reconciliation of retained earnings is as follows (in millions):

Balance as of April 24, 2015	$	53
Net income		237
Repurchases of common stock		(164	)
Dividends		(75	)
Balance as of January 29, 2016	$	51

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) (AOCI) by component, net of tax, are summarized below (in millions):

	Foreign Currency Translation Adjustments			Defined Benefit Obligation Adjustments			Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Derivative Instruments		Total
Balance as of April 24, 2015	$	(23	)	$	(13	)	$	11		$	1	$	(24	)
OCI before reclassifications, net of tax		(7	)		—			(11	)		—		(18	)
Amounts reclassified from AOCI, net of tax		—			2			(1	)		—		1
Total OCI		(7	)		2			(12	)		—		(17	)
Balance as of January 29, 2016	$	(30	)	$	(11	)	$	(1	)	$	1	$	(41	)

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

	Three Months Ended						Nine Months Ended
	January 29, 2016			January 23, 2015			January 29, 2016			January 23, 2015
	Amounts Reclassified from AOCI						Amounts Reclassified from AOCI						Statements of Operations Location
Recognized losses on defined benefit obligations	$	—		$	—		$	2		$	—		Operating expenses
Realized gains on available-for-sale securities		—			—			(1	)		—		Other income (expense), net
Realized gains on cash flow hedges		(2	)		(15	)		—			(9	)	Net revenues
Total reclassifications	$	(2	)	$	(15	)	$	1		$	(9	)