Shareholders' Equity

9 Months Ended

Sep. 30, 2011

Shareholders' Equity

Shareholders' Equity

8. Shareholders' Equity

Stock options

The Company estimates the fair value of each award on the grant date using the Black-Scholes option-pricing model and recognizes it as expense over the employee's requisite service period.

During the nine months ended September 30, 2011, the Company granted options to purchase approximately 1,896,000 shares with a weighted-average exercise price of $27.47. This amount includes options to purchase approximately 1,554,500 shares granted in the Company's annual grant during the first quarter of 2011. All options have an exercise price equal to the fair value of the Company's common stock on the grant date. The fair value of the Company's common stock on the grant date is equal to the Nasdaq closing price of the Company's stock on the date of grant. The weighted-average grant date fair value per share and the aggregate fair value of options granted during the nine months ended September 30, 2010 and 2011 was $5.15 and $6.81 per share, and $16.5 million and $12.9 million, respectively. As of September 30, 2011, the Company had options outstanding to purchase 11.8 million shares of its common stock.

Restricted stock units

The Company has issued restricted stock units that are subject to a three-year linear vesting schedule with one-third of the grant vesting on each of the first, second and third anniversaries of the award date. The Company determines expense based on the market value of the restricted stock units on the award date, and recognizes expense on a straight-line basis over the vesting period.

During the nine months ended September 30, 2011, the Company awarded approximately 367,000 restricted stock units to employees. This amount includes restricted stock units of approximately 359,000 granted in the Company's annual grant during the first quarter of 2011. The weighted-average award date fair value per unit and the aggregate fair value of units during the nine months ended September 30, 2011 was $27.31 per share and $10.0 million, respectively. As of September 30, 2011, approximately 355,000 restricted stock units were outstanding.

Stock repurchase program

In February 2008, the Company's Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $350.0 million of its common stock from time to time. In February 2011, the Company entered into an accelerated share repurchase, or ASR, arrangement with Barclays Capital Inc., or Barclays, under which the Company used $200.0 million of the remaining amount to repurchase additional shares of its common stock. During the first quarter of 2011, the Company repurchased approximately 6.5 million shares of its common stock under this arrangement for an aggregate purchase price of $200.0 million. The agreement with Barclays for the ASR included a forward sale contract settlement date in December 2011, but it could be settled prior to that date. Under the terms of the forward sale contract, Barclays was required to purchase, in the open market, $200.0 million of the Company's common stock during the term of the contract to fulfill its obligation and cover its position related to 6.5 million shares borrowed from third parties and sold to the Company during the first quarter of 2011 and for any additional shares payable upon settlement. The forward contract was settled in September 2011, and the Company received approximately 503,000 shares.

As of September 30, 2011, $60.7 million remained available for stock repurchases authorized by the Board of Directors. The manner of the purchases, the amount the Company spends and the number of shares repurchased will vary based on a variety of factors, including the stock price and blackout periods in which the Company is restricted from repurchasing shares. The Company's October 2, 2011 Merger Agreement with Jaguar Holdings (see Note 16) does not allow it to repurchase additional shares.