10. Stockholders’ Equity

Equity Incentive Awards

As of January 26, 2018, we have certain equity incentive awards (awards) outstanding, 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 28, 2017		4		$	35.76
Exercised		(2	)	$	36.44
Outstanding as of January 26, 2018		2		$	33.24		3.35	$	49
Exercisable as of January 26, 2018		1		$	37.57		2.62	$	34

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 26, 2018		January 27, 2017
Intrinsic value of exercises	$	29	$	18
Proceeds received from exercises	$	72	$	33
Fair value of options vested	$	6	$	12

Restricted Stock Units

In the nine months ended January 26, 2018, we granted PBRSUs to certain of our executives. Each PBRSU has performance-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 the second or third fiscal year, respectively, following the grant date. 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 over the shorter of the remaining applicable performance or service periods.

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding as of April 28, 2017		11		$	28.81
Granted		4		$	38.96
Vested		(5	)	$	31.08
Forfeited		(1	)	$	29.06
Outstanding as of January 26, 2018		9		$	32.10

We primarily use the net share settlement approach upon vesting, where a portion of the shares are withheld as settlement of 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 26, 2018		January 27, 2017
Shares withheld for taxes		2		2
Fair value of shares withheld	$	67	$	42

Employee Stock Purchase Plan

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

	Nine Months Ended
	January 26, 2018		January 27, 2017
Shares issued under the ESPP		4		4
Proceeds from issuance of shares	$	85	$	80

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 26, 2018		January 27, 2017		January 26, 2018		January 27, 2017
Cost of product revenues	$	—	$	1	$	2	$	3
Cost of hardware maintenance and other services revenues		3		3		8		10
Sales and marketing		16		20		53		64
Research and development		11		14		38		46
General and administrative		8		8		24		26
Total stock-based compensation expense	$	38	$	46	$	125	$	149
Income tax benefit for stock-based compensation	$	5	$	10	$	23	$	30

As of January 26, 2018, total unrecognized compensation expense related to our equity awards was $239 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.2 years.

Stock Repurchase Program

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 26, 2018 (in millions, except per share amounts):

Number of shares repurchased		10
Average price per share	$	46.37
Aggregate purchase price	$	450
Remaining authorization at end of period	$	344

The aggregate purchase price of our stock repurchases for the nine months ended January 26, 2018 consisted of $450 million of open market purchases, of which $224 million and $226 million were allocated to additional paid-in capital and retained earnings, respectively.

Since the May 13, 2003 inception of our stock repurchase program through January 26, 2018, we repurchased a total of 279 million shares of our common stock at an average price of $33.31 per share, for an aggregate purchase price of $9.3 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 26, 2018		January 27, 2017
Dividends per share declared	$	0.60	$	0.57
Dividend payments allocated to additional paid-in capital	$	53	$	88
Dividend payments allocated to retained earnings (accumulated deficit)	$	108	$	69

On February 14, 2018, we declared a cash dividend of $0.20 per share of common stock, payable on April 25, 2018 to holders of record as of the close of business on April 6, 2018. 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 (Accumulated Deficit)

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

Balance as of April 28, 2017	$	40
Net loss		(195	)
Repurchases of common stock		(226	)
Dividends		(108	)
Balance as of January 26, 2018	$	(489	)

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) 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			Total
Balance as of April 28, 2017	$	(29	)	$	—		$	—		$	(29	)
Other comprehensive income, net of tax		3			(1	)		(15	)		(13	)
Balance as of January 26, 2018	$	(26	)	$	(1	)	$	(15	)	$	(42	)

The amounts reclassified out of accumulated other comprehensive income (loss) are as follows (in millions):

	Three Months Ended						Nine Months Ended
	January 26, 2018			January 27, 2017			January 26, 2018			January 27, 2017
	Amounts Reclassified from AOCI						Amounts Reclassified from AOCI						Statements of Operations Classification
Recognized (gains) losses on defined benefit obligations	$	(1	)	$	—		$	(2	)	$	1		Operating expenses
Realized gains on cash flow hedges		—			(5	)		—			(6	)	Net revenues
Total reclassifications	$	(1	)	$	(5	)	$	(2	)	$	(5	)