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Stockholders' Equity
12 Months Ended
Dec. 29, 2013
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity

The Company’s 2005 Stock and Incentive Plan (the 2005 Stock Plan), 2005 Solexa Equity Incentive Plan (the 2005 Solexa Equity Plan), the Verinata Health, Inc. 2008 Stock Plan (the 2008 Stock Plan), and the New Hire Stock and Incentive Plan allow for the issuance of stock options, restricted stock units and awards, and performance stock units. During December 29, 2013, the stockholders ratified an amendment to increase the maximum number of shares of common stock authorized for issuance under the 2005 Stock Plan by 5.0 million shares. As of December 29, 2013, approximately 6.8 million shares remained available for future grants under the 2005 Stock Plan, the 2005 Solexa Equity Plan, and the 2008 Verinata Health Stock Plan. There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan.

Stock Options

Stock options granted at the time of hire primarily vest over a four or five-year period, with 25% or 20% of options vesting on the first anniversary of the grant date and the remaining options vesting monthly over the remaining vesting period. Stock options granted subsequent to hiring primarily vest monthly over a four or five-year period. Each grant of options has a maximum term of ten years, measured from the applicable grant date, subject to earlier termination if the optionee’s service ceases. Vesting in all cases is subject to the individual’s continued service through the vesting date. The Company satisfies option exercises through the issuance of new shares.

The Company’s stock option activity under all stock option plans from January 2, 2011 through December 29, 2013 is as follows:

 
Options
(in thousands)
 
Weighted-
Average
Exercise Price
Outstanding at January 2, 2011
11,882

 
$
22.83

Granted
1,399

 
64.98

Exercised
(2,784
)
 
17.98

Cancelled
(119
)
 
33.49

Outstanding at January 1, 2012
10,378

 
29.69

Granted
251

 
40.79

Exercised
(2,071
)
 
20.34

Cancelled
(207
)
 
39.18

Outstanding at December 30, 2012
8,351

 
32.10

Granted
512

 
14.74

Exercised
(3,006
)
 
27.70

Cancelled
(133
)
 
41.80

Outstanding at December 29, 2013
5,724

 
$
32.64



At December 29, 2013, outstanding options to purchase 4.7 million shares were exercisable with a weighted average per share exercise price of $31.83. The weighted average remaining life of options outstanding and exercisable is 4.9 years and 4.5 years, respectively, as of December 29, 2013.

The aggregate intrinsic value of options outstanding and options exercisable as of December 29, 2013 was $445.0 million and $370.9 million, respectively. Aggregate intrinsic value represents the product of the number of options outstanding multiplied by the difference between the Company’s closing stock price per share on the last trading day of the fiscal period, which was $110.38 as of December 27, 2013, and the exercise price. Total intrinsic value of options exercised was $141.7 million, $60.6 million, and $136.5 million for the years ended December 29, 2013, December 30, 2012, and January 1, 2012, respectively. Total fair value of options vested was $24.0 million, $31.9 million, and $49.5 million for the years ended December 29, 2013, December 30, 2012, and January 1, 2012, respectively.

Restricted Stock

The Company issues restricted stock units (RSU), restricted stock awards (RSA), and performance stock units (PSU). The Company grants RSU and PSU pursuant to its 2005 Stock and Incentive Plan and 2008 Stock Plan. RSU are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. For grants to new hires prior to July 2011 and for grants to existing employees, RSU generally vest 15% on the first anniversary of the grant date, 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the grant date. For grants to new hires subsequent to July 2011, RSU generally vest over a four-year period with equal vesting on anniversaries of the grant date. The Company satisfies RSU vesting through the issuance of new shares. The Company issues PSU for which the number of shares issuable at the end of a three-year performance period will range from 50% and 150% of the shares approved in the award based on the Company’s performance relative to specified earnings per share targets.

The Company also issues RSA that are released based on service related vesting conditions. RSA may be issued from the Company’s treasury stock or granted pursuant to the Company’s 2005 Stock and Incentive Plan.

A summary of the Company’s restricted stock activity and related information from January 2, 2011 through December 29, 2013 is as follows (in thousands, except per share amounts):

 
 
 
 
 
Weighted Average
Grant-Date Fair Value per Share
 
RSA
 
RSU
 
PSU
 
RSA
 
RSU
 
PSU
Outstanding at January 2, 2011

 
3,109

 

 
$

 
$
40.39

 
$

Awarded
230

 
1,550

 

 
65.95

 
42.02

 

Vested

 
(827
)
 

 

 
36.47

 

Cancelled

 
(356
)
 

 

 
42.15

 

Outstanding at January 1, 2012
230

 
3,476

 

 
65.95

 
41.87

 

Awarded
312

 
1,640

 
599

 
47.91

 
48.52

 
49.66

Vested
(77
)
 
(1,062
)
 

 
65.95

 
38.48

 

Cancelled

 
(394
)
 
(12
)
 

 
45.05

 
50.54

Outstanding at December 30, 2012
465

 
3,660

 
587

 
53.84

 
45.49

 
49.64

Awarded

 
1,532

 
584

 

 
77.53

 
59.16

Vested
(217
)
 
(1,308
)
 

 
54.27

 
42.97

 

Cancelled

 
(256
)
 
(70
)
 

 
49.24

 
50.42

Outstanding at December 29, 2013
248

 
3,628

 
1,101

 
$
53.46

 
$
59.66

 
$
54.64



Pre-tax intrinsic values of all outstanding restricted and performance stock and total fair values of vested restricted and performance stock are as follows (in thousands):
 
Years Ended
 
December 29,
2013
 
December 30,
2012
 
January 1,
2012
Pre-tax intrinsic value of outstanding restricted and performance stock:
 
 
 
 
 
RSA
$
27,384

 
$
25,437

 
$
6,986

RSU
400,421

 
200,383

 
105,944

PSU
121,555

 
32,149

 

 
 
 
 
 
 
Fair value of restricted and performance stock vested:
 
 
 
 
 
RSA
$
11,750

 
$
5,039

 

RSU
56,212

 
40,870

 
30,155

PSU

 

 



Employee Stock Purchase Plan

A total of 15.5 million shares of the Company’s common stock have been reserved for issuance under its 2000 Employee Stock Purchase Plan, or ESPP. The ESPP permits eligible employees to purchase common stock at a discount, but only through payroll deductions, during defined offering periods. The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. The initial offering period commenced in July 2000.

The ESPP provides for annual increases of shares available for issuance by the lesser of 3% of the number of outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, 3.0 million shares, or such lesser amount as determined by the Company’s board of directors. Approximately 400,000, 328,000, and 328,000 shares were issued under the ESPP during the years ended December 29, 2013, December 30, 2012, and January 1, 2012, respectively. As of December 29, 2013 and December 30, 2012, there were approximately 15.0 million and 15.4 million shares available for issuance under the ESPP, respectively.

Warrants

In connection with the offering of the Company’s 2014 Notes, the Company sold warrants to purchase 18.3 million shares of common stock to counterparties to the convertible note hedge transactions. The warrants have an exercise price of $31.435 per share. In July 2013, the Company settled with a hedging counterparty outstanding warrants to purchase approximately 3.0 million shares of the Company’s common stock for $125.0 million in cash. As of December 29, 2013, warrants to purchase 15.4 million shares of the Company’s common stock remained outstanding. All outstanding warrants expire in equal installments during the 40 consecutive scheduled trading days beginning on May 16, 2014.

During the year ended January 1, 2012, the remaining warrants assumed by the Company in a prior acquisition to purchase approximately 505,000 shares of the Company’s common stock were exercised, resulting in cash proceeds to the Company of approximately $5.5 million.

Share Repurchases

During the years ended December 29, 2013, December 30, 2012, and January 1, 2012, the Company repurchased approximately 0.9 million shares for $50.0 million, 1.9 million shares for $82.5 million, and 2.4 million shares for $156.0 million, respectively. In addition, concurrently with the issuance of the Company’s 2016 Notes in 2011, approximately 4.9 million shares were repurchased for $314.3 million.

As of December 29, 2013, the Company had authorization to repurchase up to an additional $117.5 million of its common stock, which was part of the $250.0 million stock repurchase program authorized by the Board of Directors in April 2012 via a combination of Rule 10b5-1 and discretionary share repurchase programs. In addition, on January 30, 2014, the Company’s Board of Directors authorized up to $250.0 million to repurchase shares of the Company’s common stock on a discretionary basis.
 
In August 2011, the Company’s board of directors authorized a $100.0 million discretionary repurchase program, which became completely utilized as of January 1, 2012. In July 2010, the Company’s board of directors authorized a $200.0 million stock repurchase program, with $100.0 million allocated to repurchasing Company common stock under a 10b5-1 plan over a twelve month period and $100.0 million allocated to repurchasing Company common stock at management’s discretion during open trading windows. This authorized repurchase amount had been utilized completely as of January 1, 2012.

Stockholder Rights Plan

In connection with the unsolicited tender offer by Roche (refer to note “15. Unsolicited Tender Offer”), on January 25, 2012, the Company’s Board of Directors declared a dividend of one preferred share purchase right (Right) for each outstanding share of the Company’s common stock. Each Right entitled the registered holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock, par value $0.01 per share (Preferred Shares), at a price of $275.00 per one thousandth of a Preferred Share, subject to adjustment. The Rights were not exercisable until such time that the Board of Directors determined to eliminate its deferral of the date on which separate Rights certificates are issued and the Rights traded separately from the Company’s common stock (Distribution Date). If a person or group (triggering party) acquired 15% or more of the Company’s outstanding common stock, each Right would have entitled holders other than the triggering party to purchase, at the exercise price of the Right, a number of shares of common stock having a market value of two times the exercise price of the Right. If the Company was acquired in a merger or other business combination transaction after a person acquires 15% or more of the Company’s common stock, each Right would have entitled holders other than the triggering party to purchase, at the Right’s then-current exercise price, a number of common shares of the acquiring company that at the time of such transaction have a market value of two times the exercise price of the Right. The Board of Directors would have been entitled to redeem the Rights at a price of $0.001 per Right at any time before the Distribution Date. The Board of Directors would have been entitled to exchange the Rights at an exchange ratio per Right of one share of common stock after any person acquires beneficial ownership of 15% or more of the Company’s outstanding common stock, and prior to the acquisition of 50% or more of the Company’s outstanding common stock. In 2013, the expiration date was amended to March 27, 2013 from January 26, 2017, and the Rights expired accordingly.