Equity Incentive and Benefit Plans

12 Months Ended

Jul. 31, 2011

Equity Incentive and Benefit Plans [Abstract]

Equity Incentive and Benefit Plans

10.   Equity Incentive and Benefit Plans

In April 2002, the Company’s board of directors approved the Company’s 2002 Stock Plan (the “2002 Plan”). In December 2006, the Company’s board of directors approved the 2007 Equity Incentive Plan (the “2007 Plan”) and the Employee Stock Purchase Plan (“ESPP). Upon the closing of the IPO, all of the remaining shares reserved for issuance under the 2002 Plan, were transferred to the 2007 Plan.

The 2007 Plan provides for annual increases in the number of shares available for issuance equal to the lesser of:

•  5% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; or

•  15,000,000 shares.

In December 2009, the Compensation Committee of the Board of Directors approved the Executive Officer Bonus Plan and the Corporate Bonus Plan, which plans have subsequently been amended in fiscal 2011 (the “Bonus Plans”). The Bonus Plans offer the Company’s executive officers and employees the opportunity to earn stock bonuses based on the achievement of specified performance targets during each performance period.

Stock Options

The following table summarizes information about stock options outstanding:

				Options Outstanding
							Weighted				Weighted
							Average		Weighted		Average
	Shares						Exercise		Average		Remaining		Aggregate
	Available for			Number of			Price		Fair Value		Contractual		Intrinsic
	Grant			Shares			per Share		per Share		Term (Years)		Value(1)
Balance at July 31, 2008		3,169,466			19,518,002		$	4.41				7.4	$	44,913,703
Shares reserved for issuance		4,141,807			—
Restricted stock awards granted		(1,626,631	)		—
Restricted stock awards forfeited		565,582			—
Options granted		(10,491,975	)		10,491,975			3.82	$	1.55
Options exercised		—			(1,436,068	)		1.35						4,874,878
Options repurchased		18,333			—			0.49
Options cancelled		7,031,994			(7,031,994	)		7.48
As of July 31, 2009		2,808,576			21,541,915			3.32				6.7		120,621,047
Shares reserved for issuance		4,337,195			—
Restricted stock awards granted		(1,733,374	)		—
Restricted stock awards forfeited		280,683			—
Options granted		(5,771,745	)		5,771,745			10.11		5.60
Options exercised		—			(2,974,218	)		2.73						28,722,784
Options repurchased		15,624			—			2.33
Options cancelled		698,918			(698,918	)		5.11
As of July 31, 2010		635,877			23,640,524			5.00				5.9		283,285,534
Shares reserved for issuance		4,680,314			—
Restricted stock awards granted		(4,460,081	)		—
Restricted stock awards forfeited		355,781			—
Options granted		(1,853,890	)		1,853,890			21.88	$	11.70
Options exercised		—			(6,413,368	)		4.64						137,156,274
Options cancelled		916,102			(916,102	)		10.11
As of July 31, 2011		274,103			18,164,944		$	6.59				5.0	$	297,688,111
Options vested and expected to vest as of July 31, 2011(2)					17,763,527		$	6.41				5.0	$	294,366,644
Options exercisable as of July 31, 2011					10,833,055		$	3.80				4.8	$	207,452,354

(1)	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the fair value of the Company’s common stock on the date of each option exercise.
(2)	Options expected to vest are the result of applying the pre-vesting forfeiture rate assumption to total outstanding options.

Incentive and nonstatutory stock options issued under the 2007 Plan are issued with an exercise price equal to the market value of the Company’s company stock on the date of grant. Options generally vest over a four year period and generally expire in seven years, but no later than ten years. Upon exercise, new shares are issued.

As of July 31, 2011, $38.0 million of total unrecognized compensation cost, net of forfeitures, related to non-vested stock options is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Awards

The following table summarizes information about unvested restricted stock awards and units:

				Weighted Average
				Grant Date
				Fair Value
	Shares			per Share
As of July 31, 2008		3,364,950		$	6.81
Awards granted		1,626,631			4.67
Awards vested		(1,566,715	)		5.86
Awards forfeited		(565,582	)		6.31
As of July 31, 2009		2,859,284			6.21
Awards granted		1,733,374			11.51
Awards vested		(2,096,043	)		6.81
Awards forfeited		(280,683	)		6.56
As of July 31, 2010		2,215,932			9.74
Awards granted		4,460,081			24.46
Awards vested		(1,226,393	)		14.70
Awards forfeited		(355,781	)		16.24
As of July 31, 2011		5,093,839		$	20.98

Restricted stock units and awards are granted under the 2007 Plan. Restricted stock awards are shares of common stock that vest and restricted stock units are awards that will result in a payment if performance goals are achieved or the awards otherwise vest. The terms and conditions of these awards are established by the plan administrator.

The estimated fair value of restricted stock awards is based on the market price of the Company’s stock on the grant date. The total fair value of the awards granted during the fiscal years ended July 31, 2011, 2010 and 2009 was $109.1 million, $19.9 million, and $7.6 million, respectively. As of July 31, 2011, $73.5 million of total unrecognized compensation cost, net of forfeitures, related to non-vested restricted stock awards is expected to be recognized over a weighted-average period of 2.8 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, the Company can grant stock purchase rights to all eligible employees during a two year offering period with purchase dates at the end of each six-month purchase period. Shares are purchased through employees’ payroll deductions, up to a maximum of 15% of employees’ compensation for each purchase period, at purchase prices equal to 85% of the lesser of the fair market value of the Company’s common stock at the first trading day of the applicable offering period or the purchase date. No participant may purchase more than $25,000 worth of common stock or 3,000 shares of common stock in any one calendar year period. The ESPP is compensatory and results in compensation expense. A total of 2,051,915 shares of common stock have been reserved for future issuance under the ESPP as of July 31, 2011.

The following table shows for each purchase date, the shares issued and the weighted average purchase price per share:

Purchase date		September 1, 2010
Shares issued		990,512
Weighted average purchase price per share	$	3.02
Purchase date		March 1, 2011
Shares issued		1,056,930
Weighted average purchase price per share	$	3.68

Fair Value Disclosures

The total fair value of options and share awards vested in each of the fiscal years ended July 31, 2011, 2010, and 2009, was $35.8 million, $24.3 million, and $15.9 million, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes model with the following weighted average assumptions:

Employee Stock Options

	Years Ended July 31,
	2011			2010			2009
Risk-free interest rate		1.6	%		1.8	%		2.0	%
Expected term (in years)		4.0			4.3			4.2
Dividend yield		0			0			0
Volatility		70	%		71	%		66	%

Employee Stock Purchase Plan

	Years Ended July 31,
	2011		2010		2009
Risk-free interest rate		0.2% to 0.7%		0.2% to 1.0%		0.5% to 2.3%
Expected term (in years)		0.5 to 2.0		0.5 to 2.0		0.5 to 2.0
Dividend yield		0		0		0
Volatility		41% to 69%		43% to 81%		53% to 101%

The expected term of the stock-based awards represents the period of time that the Company expects such stock-based awards to be outstanding, giving consideration to the contractual term of the awards, vesting schedules and expectations of future employee behavior. The Company gave consideration to its historical exercises, the vesting term of its stock options, the post vesting cancellation history of its stock options and the stock options’ contractual terms. Prior to the third quarter of fiscal 2011, the Company computed expected volatility based on its historical volatility and the historical volatility of comparable companies. Beginning in March 2011, the Company computes expected volatility solely based on its own historical volatility. The Company made an estimate of expected forfeitures, and is recognizing stock-based compensation only for those equity awards that it expects to vest. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury Constant Maturity rate as of the date of grant.

Stock-based Expenses

The following table presents stock-based compensation by award-type:

	Years Ended July 31,
	2011		2010		2009
	(In thousands)
Stock options	$	19,324	$	16,154	$	11,741
Stock awards		38,636		15,954		10,247
Employee stock purchase plan		5,791		3,973		2,591
Total	$	63,751	$	36,081	$	24,579

The amount of capitalized stock-based compensation during the fiscal year ended July 31, 2011, 2010, 2009 was immaterial.

401(k) Defined Contribution Plan

The Company sponsors a 401(k) defined contribution plan covering all employees. Matching contributions to the plan are at the discretion of the Company. To date, there have been no employer contributions under this plan.