Stockholders' Equity

12 Months Ended

May 03, 2015

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Accumulated Other Comprehensive Income

Cumulative foreign currency translation adjustment was the only component of the accumulated other comprehensive income as of May 3, 2015 and April 28, 2014.

Common Stock and Preferred Stock

As of May 3, 2015, Finisar is authorized to issue 750,000,000 shares of $0.001 par value common stock and 5,000,000 shares of $0.001 par value preferred stock. The holder of each share of common stock has the right to one vote and is entitled to receive dividends when and as declared by the Company’s Board of Directors. The Company has never declared or paid dividends on its common stock. The Company has authority to issue up to 5,000,000 shares of preferred stock, $0.001 par value. The preferred stock may be issued in one or more series having such rights, preferences and privileges as may be designated by the Company’s board of directors.

Common stock subject to future issuance as of May 3, 2015 is as follows:

Exercise of outstanding stock options	2,283,162
Vesting of restricted stock awards	6,611,614
Available for grant under employee stock incentive plan	13,023,873
Available for grant under employee stock purchase plan	4,249,965
Total	26,168,614

Employee Stock Purchase Plan

In September 2009, the Company’s board of directors adopted the 2009 Employee Stock Purchase Plan (the "ESPP"), which was approved by the stockholders in November 2009. An amended and restated version of ESPP was approved by the Company's board of directors in June 2014 and by the stockholders in September 2014. Under the restated ESPP, 7,000,000 shares of the Company’s common stock have been reserved for issuance, and the term of the ESPP is scheduled to expire on September 1, 2024. The ESPP permits eligible employees to purchase Finisar common stock through payroll deductions, which may not exceed 20% of the employee’s total compensation. Stock may be purchased under the plan at a price equal to 85% of the fair market value of Finisar common stock on either the first or the last day of the offering period, whichever is lower.

Employee Stock Plans

In September 1999, Finisar’s 1999 Stock Option Plan was adopted by the board of directors and approved by the stockholders. An amendment and restatement of the 1999 Stock Option Plan, including renaming it the 2005 Stock Incentive Plan (the “2005 Plan”), was approved by the board of directors in September 2005 and by the stockholders in October 2005. An amended and restated version of the 2005 Plan was approved by the Company's board of directors in June 2014 and by the stockholders in September 2014. Under the restated 2005 Plan, a total of 22,500,000 shares of common stock have been reserved for issuance, and the term of the 2005 Plan is scheduled to expire on September 1, 2024. The types of stock-based awards available under the 2005 Plan includes stock options, stock appreciation rights, restricted stock units (“RSUs”) and other stock-based awards which vest upon the attainment of designated performance goals or the satisfaction of specified service requirements or, in the case of certain RSUs or other stock-based awards, become payable upon the expiration of a designated time period following such vesting events. Options generally vest over five years and have a maximum term of 10 years. RSUs generally vest over four years. As of May 3, 2015 and April 27, 2014, no shares were subject to repurchase.

Stock Options

	Number of Shares		Weighted-Average Exercise Price
Stock options outstanding as of April 27, 2014	2,621,844		$	14.28
Stock options exercised	(299,517	)	$	10.27
Stock options canceled	(39,165	)	$	23.61
Stock options outstanding as of May 3, 2015	2,283,162		$	14.64

The total intrinsic value of stock options exercised during fiscal 2015, 2014 and 2013 was $3.4 million, $14.2 million and $4.4 million, respectively. All stock options outstanding as of May 3, 2015 are fully vested and exercisable. The aggregate intrinsic value of stock options outstanding as of May 3, 2015 was $19.5 million. The weighted-average remaining contractual life of stock options outstanding as of May 3, 2015 was 2.7 years.

Restricted Stock Units

	Number of Shares		Weighted-Average Grant-Date Fair Value
RSUs unvested as of April 27, 2014	6,516,317		$	15.44
RSUs granted	2,831,517		$	19.55
RSUs vested	(2,350,245	)	$	15.42
RSUs forfeited	(385,975	)	$	17.04
RSUs unvested as of May 3, 2015	6,611,614		$	17.12

The weighted-average grant-date fair value of RSUs granted during fiscal 2014 and 2013 was $16.91 and $13.03, respectively. The aggregate intrinsic value of RSUs outstanding as of May 3, 2015 was $138.5 million. The total grant-date fair value of RSUs vested during fiscal 2015, 2014 and 2013 was $36.3 million, $30.4 million and $17.7 million, respectively.

As of May 3, 2015, the Company had $74.2 million of unrecognized compensation expense, net of estimated forfeitures, related to RSUs grants. These expenses are expected to be recognized over a weighted-average period of 27 months.

Share-Based Compensation Cost

The following table sets forth the detailed allocation of the share-based compensation expense for the fiscal years ended May 3, 2015, April 27, 2014 and April 28, 2013 which was reflected in the Company’s operating results (in thousands):

	Fiscal Years Ended
Share-based compensation expense by caption:	May 3, 2015		April 27, 2014		April 28, 2013
Cost of revenues	$	9,908	$	8,261	$	6,915
Research and development	17,764		14,660		10,970
Sales and marketing	6,251		5,083		3,743
General and administrative	10,677		9,962		10,333
Total	$	44,600	$	37,966	$	31,961

	Fiscal Years Ended
Share-based compensation expense by type of award:	May 3, 2015		April 27, 2014		April 28, 2013
Stock options	$	—	$	693	$	1,892
RSUs	41,729		34,506		26,794
Employee stock purchase rights under ESPP	2,871		2,767		3,275
Total	$	44,600	$	37,966	$	31,961

Total share-based compensation cost capitalized as part of inventory was $2.3 million and $1.7 million as of May 3, 2015 and April 27, 2014, respectively.

The fair value of employee stock purchase rights granted under the ESPP in fiscal 2015, 2014 and 2013 was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Fiscal Years Ended
	May 3, 2015		April 27, 2014		April 28, 2013
Expected term (in years)	0.75		0.75		0.75
Volatility	34% - 53%		40% - 47%		50% - 53%
Risk-free interest rate	0.07 - 0.21%		0.01 - 0.13%		0.10 - 0.15%
Dividend yield	—	%	—	%	—	%

The expected term of employee stock purchase rights is the average of the remaining purchase periods under each offering period.

The Company calculated the volatility factor based on the Company’s historical stock prices.

The Company bases the risk-free interest rate used in the Black-Scholes option-pricing model on constant maturity bonds from the Federal Reserve in which the maturity approximates the expected term.

The Black-Scholes option-pricing model calls for a single expected dividend yield as an input. The Company has not issued and does not expect to issue any dividends.

As share-based compensation expense recognized in the consolidated statement of operations for fiscal 2015, 2014 and 2013 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

The weighted-average estimated per share fair value of purchase rights granted under the ESPP in fiscal 2015, 2014 and 2013 was $3.06, $3.69 and $2.81, respectively.

The Black-Scholes option-pricing model requires the input of highly subjective assumptions, including the expected life of the stock-based award and the stock price volatility. The assumptions listed above represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, recorded share-based compensation expense could have been materially different from that depicted above. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If the actual forfeiture rate is materially different from this estimate, the share-based compensation expense could be materially different.