Stockholders' Equity

3 Months Ended

Feb. 02, 2020

Stockholders’ Equity

Mandatory Convertible Preferred Stock

On September 30, 2019, we completed an offering of approximately 4 million shares of 8.00% Mandatory Convertible Preferred Stock, Series A, $0.001 par value per share (the “Mandatory Convertible Preferred Stock”), which generated net proceeds of approximately $3,679 million.

On September 30, 2022, unless earlier converted, each outstanding share of the Mandatory Convertible Preferred Stock will automatically convert into shares of our common stock at a rate between the then minimum and maximum conversion rate. At any time prior to September 30, 2022, holders may elect to convert each share of the Mandatory Convertible Preferred Stock into shares of our common stock at the then minimum conversion rate. The conversion rates are subject to anti-dilution adjustments. As of February 2, 2020, the minimum conversion rate was 3.0360 and the maximum conversion rate was 3.5488.

We recognized $28 million and $29 million of accrued preferred stock dividends, which were presented as temporary equity on our condensed consolidated balance sheets as of February 2, 2020 and November 3, 2019, respectively.

Cash Dividends Declared and Paid



	Fiscal Quarter Ended
	February 2, 2020		February 3, 2019

	(In millions, except per share data)
Dividends per share to common stockholders	$	3.25	$	2.65
Dividends to common stockholders	$	1,297	$	1,067
Dividends per share to preferred stockholders	$	20.00	$	—
Dividends to preferred stockholders	$	75	$	—

Stock-Based Compensation Expense



	Fiscal Quarter Ended
	February 2, 2020		February 3, 2019

	(In millions)
Cost of products sold	$	31	$	26
Cost of subscriptions and services	12		8
Research and development	391		311
Selling, general and administrative	111		120
Total stock-based compensation expense	$	545	$	465

As of February 2, 2020, the total unrecognized compensation cost related to unvested stock-based awards was $5,454 million, which is expected to be recognized over the remaining weighted-average service period of 3.9 years.

Equity Incentive Award Plans

A summary of time- and market-based RSU activity is as follows:



	Number of RSUs Outstanding		Weighted-Average Grant Date Fair Value Per Share

	(In millions, except per share data)
Balance as of November 3, 2019	40		$	188.52
Granted	2		$	277.80
Vested	(2	)	$	206.58
Forfeited	(1	)	$	192.84
Balance as of February 2, 2020	39		$	191.37

The aggregate fair value of time- and market-based RSUs that vested during the fiscal quarter ended February 2, 2020 was $503 million, which represents the market value of our common stock on the date that the RSUs vested. The number of RSUs vested included shares of common stock that we withheld for settlement of employees’ tax obligations due upon the vesting of RSUs.

A summary of time- and market-based stock option activity is as follows:



	Number of Options Outstanding		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (In years)	Aggregate Intrinsic Value

	(In millions, except years and per share data)
Balance as of November 3, 2019	4		$	51.83
Exercised	—	*	$	45.70		$	217
Balance as of February 2, 2020	4		$	53.22	0.9	$	908
Fully vested as of February 2, 2020	4		$	53.21	0.9	$	906
Fully vested and expected to vest as of February 2, 2020	4		$	53.22	0.9	$	908

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* Represents fewer than 1 million shares.