STOCKHOLDERS' EQUITY

6 Months Ended

Nov. 30, 2011

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

10.    STOCKHOLDERS’ EQUITY

Stock Repurchases

Our Board of Directors has approved a program for us to repurchase shares of our common stock. On December 20, 2011, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $5.0 billion. This amount was in addition to the $8.0 billion expansion announced on October 20, 2008 for which $2.3 billion remained available for stock repurchases as of November 30, 2011. We repurchased 60.6 million shares for $1.8 billion during the six months ended November 30, 2011 (including 1.6 million shares for $49 million that were repurchased but not settled) and 20.0 million shares for $500 million during the six months ended November 30, 2010 under the applicable stock repurchase program.

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchase of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

Dividends on Common Stock

During the six months ended November 30, 2011, our Board of Directors declared cash dividends of $0.12 per share of our outstanding common stock, which we paid during the same period.

In December 2011, our Board of Directors declared a quarterly cash dividend of $0.06 per share of our outstanding common stock payable on February 1, 2012 to stockholders of record as of the close of business on January 11, 2012. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

Stock-Based Compensation Expense and Valuation of Stock Options

Stock-based compensation is included in the following operating expense line items in our condensed consolidated statements of operations:

	Three Months Ended November 30,				Six Months Ended November 30,
(in millions)	2011		2010		2011		2010
Sales and marketing	$	29	$	19	$	55	$	42
Software license updates and product support		5		3		8		8
Hardware systems products		—		1		1		2
Hardware systems support		2		1		3		2
Services		6		4		10		8
Research and development		68		55		139		114
General and administrative		40		36		79		72
Acquisition related and other		2		5		3		6
Total stock-based compensation	$	152	$	124	$	298	$	254

During the first half of fiscal 2012, we issued 105 million stock options (including our annual grant of stock options in our first quarter of fiscal 2012) and assumed certain stock options from companies acquired by us. These stock option issuances were partially offset by forfeitures and cancellations of 8 million shares during the first half of fiscal 2012.

We estimate the fair value of our share-based payments using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair value of stock options. Option valuation models, including the Black-Scholes-Merton option-pricing model, require the input of assumptions, including stock price volatility. Changes in the input assumptions can materially affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. The fair values of our stock options were estimated at the date of grant or date of acquisition for options assumed in a business combination. The weighted average input assumptions used and resulting fair values were as follows for the three and six months ended November 30, 2011 and 2010:

		Three Months Ended November 30,				Six Months Ended November 30,
	2011		2010		2011		2010
Expected life (in years)		4.7		5.1		5.1		5.1
Risk-free interest rate		0.8%		1.5%		1.7%		1.8%
Volatility		34%		31%		30%		33%
Dividend yield		0.8%		0.8%		0.7%		0.9%
Weighted-average fair value per share	$	9.60	$	6.73	$	8.80	$	6.40

The expected life input is based on historical exercise patterns and post-vesting termination behavior, the risk-free interest rate input is based on United States Treasury instruments, the annualized dividend yield input is based on the per share dividend declared by our Board of Directors and the volatility input is calculated based on the implied volatility of our longest-term, traded options.