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Stockholders' Equity
 6 Months Ended
Oct. 26, 2012
Stockholders' Equity

10.  Stockholders’ Equity

Stock Options

A summary of the activity under our stock option plans and agreements is as follows (in millions, except for the exercise price):

 

     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         

Options granted

      2.2        30.03         

Options exercised

      (1.1 )      18.05         

Options forfeited and expired

      (0.6 )      39.75         
  

 

 

          

Outstanding at October 26, 2012

      21.1        30.31         3.66       $ 75.3   
  

 

 

          

Options vested and expected to vest as of October 26, 2012

      20.5        30.07         3.59         75.2   

Exercisable at October 26, 2012

      15.0        27.46         2.95         69.3   

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. As of October 26, 2012, the total unrecognized compensation expense related to stock options was $68.6 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.3 years.

Additional information related to our stock options is summarized below (in millions, except per share information):

 

     Three Months Ended      Six Months Ended  
     October 26, 2012      October 28, 2011      October 26, 2012      October 28, 2011  

Weighted-average fair value per share granted

    $ 12.40       $ 13.77       $ 10.86       $ 16.96   

Intrinsic value of options exercised

    $ 10.4       $ 6.8       $ 15.8       $ 50.6   

Proceeds received from the exercise of stock options

    $ 12.8       $ 7.7       $ 19.5       $ 42.7   

Fair value of options vested

    $ 15.1       $ 20.3       $ 29.5       $ 38.7   

Restricted Stock Units

The following table summarizes activity related to our restricted stock units (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   

 RSUs granted

      5.0        29.31   

 RSUs vested

      (2.3 )      39.74   

 RSUs forfeited

      (0.7 )      41.32   
  

 

 

    

Outstanding at October 26, 2012

      14.0        39.01   
  

 

 

    

 

RSUs are converted into common stock upon vesting. Upon the vesting of RSUs, we primarily use the net share settlement approach, where a portion of the shares are withheld and retired 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):

 

     Three Months Ended      Six Months Ended  
     October 26,
2012		      October 28,
2011		      October 26,
2012		      October 28,
2011		  

Shares withheld for taxes

      0.1         0.1         0.7         0.6   

Fair value of shares withheld and retired

    $ 2.8       $ 2.5       $ 22.6       $ 27.8   

As of October 26, 2012, the total unrecognized compensation expense related to RSUs was $379.1 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 2.8 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan (ESPP), employees who elect to participate are granted options that include a purchase price adjustment provision under which the employees may purchase common stock at a 15% discount from the market value of the common stock at certain specified dates within a two-year offering period. Additional information related to the purchase rights issued under the ESPP is provided below (in millions, except per right and per share information):

 

     Six Months Ended  
     October 26, 2012      October 28, 2011  

Weighted-average fair value per right granted

    $ 10.25       $ 15.88   

Shares issued under the ESPP

      1.9         1.1   

Weighted-average price per share issued

    $ 25.30       $ 39.17   

As of October 26, 2012, the total unrecognized compensation expense related to the ESPP was $63.5 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of 1.6 years.

Stock-Based Compensation Expense

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

 

     Three Months Ended      Six Months Ended  
     October 26, 2012      October 28, 2011      October 26, 2012      October 28, 2011  

Cost of product revenues

    $ 1.5       $ 1.4       $ 3.3       $ 2.5   

Cost of service revenues

      4.6         4.2         10.2         8.1   

Sales and marketing

      30.9         30.4         69.9         59.0   

Research and development

      19.3         18.2         43.0         34.2   

General and administrative

      8.7         8.8         17.8         17.3   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total stock-based compensation expense

    $ 65.0       $ 63.0       $ 144.2       $ 121.1   
  

 

 

     

 

 

     

 

 

     

 

 

  

The following table summarizes stock-based compensation associated with each type of award (in millions):

 

     Three Months Ended      Six Months Ended  
     October 26, 2012      October 28, 2011      October 26, 2012      October 28, 2011  

Employee stock options

    $ 11.7       $ 14.7       $ 23.7       $ 29.2   

RSUs

      43.3         38.9         87.8         73.3   

ESPP

      10.0         9.4         32.7         18.6   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total stock-based compensation expense

    $ 65.0       $ 63.0       $ 144.2       $ 121.1   
  

 

 

     

 

 

     

 

 

     

 

 

  

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

 

     Six Months Ended  
     October 26,
2012		      October 28,
2011		  

Income tax benefit associated with employee stock transactions

    $ 28.2       $ 79.1   

 

Valuation Assumptions

The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model, assuming no expected dividends and the following weighted-average assumptions:

 

                                   
     Stock Options  
     Three Months Ended     Six Months Ended  
     October 26, 2012     October 28, 2011     October 26, 2012     October 28, 2011  

Expected term in years

      4.8        4.8        4.8        4.8   

Risk-free interest rate

      0.62 %      0.97 %      0.63 %      1.55 % 

Volatility

      43 %      41 %      41 %      36 % 

 

                                   
               ESPP  
               Six Months Ended  
               October 26, 2012     October 28, 2011  

Expected term in years

            1.2        1.2   

Risk-free interest rate

            0.18 %      0.25 % 

Volatility

            38 %      35 % 

Stock Repurchase Program

During the six months ended October 26, 2012, we repurchased and retired 10.9 million shares of our common stock at an average price of $31.86 per share, for an aggregate purchase price of $348.3 million, of which $104.6 million and $243.7 million was allocated to additional paid-in capital and retained earnings, respectively. Since the May 13, 2003 inception of our stock repurchase program through October 26, 2012, we repurchased a total of 129.9 million shares of our common stock at an average price of $29.84 per share, for an aggregate purchase price of $3.9 billion.

As of October 26, 2012, our Board of Directors had authorized the repurchase of up to $4.0 billion of our common stock under our stock repurchase program. As of October 26, 2012, the remaining authorized amount for stock repurchases under this program was $0.1 billion with no termination date. On November 14, 2012, our Board of Directors approved an increase of $1.5 billion to our stock repurchase program. Under this program, we may purchase shares of our outstanding common stock through open market and privately negotiated transactions at prices deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time.