Employee Stock and Savings Plans and Stockholders' Equity

Stock Options Plans and Stock Plans

Our 2010 Omnibus Incentive Plan (Incentive Plan) is administered by the Compensation Committee of our Board of Directors and permits accelerated vesting of outstanding options, restricted stock units, restricted stock awards, and other equity incentives upon the occurrence of certain changes in control of our company.

Stock options and restricted stock units under the Incentive Plan are generally expected to vest over four years. Stock options have an expiration date of ten years from the date of grant and an exercise price no less than the fair market value of the shares on the date of grant. The source of shares issued under the Incentive Plan is new shares.

During fiscal 2014, restricted stock units with a performance condition were granted to certain officers. Vesting of these restricted stock units occurs after three years and is dependent upon attainment of goals for operating income margin.

As of January 31, 2014, a total of 3,993 shares of common stock were available for future grant under the Incentive Plan.

Stock options outstanding, the weighted average exercise price, and transactions involving stock options are summarized as follows:



	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)	Aggregate Intrinsic Value
Balance as of January 31, 2013	6,717		$	11.08
Granted	—		—
Exercised	(3,124	)	12.43
Forfeited	3		4.20
Expired	(9	)	12.37
Balance as of January 31, 2014	3,587		9.87		5.38	$	39,195
Options exercisable as of January 31, 2014	2,933		8.94		4.79	34,784
Options vested as of January 31, 2014 and options expected to vest after January 31, 2014	3,587		$	9.87	5.38	$	39,195

The total intrinsic value of options exercised and cash received from options exercised was as follows:



Year ended January 31,	2014		2013		2012
Intrinsic value	$	26,769	$	21,647	$	15,802
Cash received	$	38,830	$	24,262	$	15,194

The following table summarizes restricted stock activity (including the target number of shares awarded under performance-based restricted stock units):



	Restricted Stock Units		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested as of January 31, 2013	3,996		$	13.39
Granted	1,616		22.42
Vested	(1,374	)	12.93
Forfeited	(155	)	14.83
Nonvested as of January 31, 2014	4,083		$	17.07	1.60	$	84,925

The following table summarizes the fair value of restricted stock units vested:



Year ended January 31,	2014		2013		2012
Total fair value of restricted stock units vested	$	17,736	$	11,698	$	5,446

Employee Stock Purchase Plans

We have an ESPP for U.S. employees and an ESPP for certain foreign subsidiary employees. The ESPPs provide for six month offerings commencing on January 1 and July 1 of each year with purchases on June 30 and December 31 of each year. Each eligible employee may purchase up to six thousand shares of stock on each purchase date at prices no less than 85% of the lesser of the fair market value of the shares on the offering date or on the purchase date. As of January 31, 2014, 2,547 shares remain available for future purchase under the ESPPs.

The following table summarizes shares issued under the ESPPs:



Year ended January 31,	2014		2013		2012
Shares issued under the ESPPs	1,554		1,884		2,099
Cash received for the purchase of shares under the ESPPs	$	23,895	$	22,645	$	22,155
Weighted average purchase price per share	$	15.38	$	12.02	$	10.55

Stock-Based Compensation Expense

We estimate the fair value of the purchase rights under our ESPPs and stock options using a Black-Scholes option-pricing model. The Black-Scholes option-pricing model incorporates several highly subjective assumptions including expected volatility, expected term, and interest rates.

In determining expected volatility for options, we include the elements listed below at the weighted percentages presented:


•	Historical volatility of our shares of common stock at 35%;


•	Historical volatility of shares of comparable companies at 20%;


•	Implied volatility of our traded options at 30%; and


•	Implied volatility of traded options of comparable companies at 15%.

The greatest weighting is provided to our historic volatility based on the amount of consistent historic information available. A lesser weighting is applied to the implied volatility of our traded options due to a low volume of trades and shorter terms. We also include the historic and implied volatility of comparable companies in our industry in an effort to capture a broader view of the marketplace.

The relative weighting percentages are periodically reviewed for reasonableness and are subject to change depending on market conditions and our particular facts and circumstances.

The expected volatility for the purchase rights for our ESPPs is based on the historical volatility of our shares of common stock. The expected term for the purchase rights for our ESPPs is the 6 month offering period.

We base the expected term of our stock options on historical experience.

The risk-free interest rate for periods within the contractual life of the purchase rights under our ESPPs and stock options is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of restricted stock units is the market value as of the grant date.

The weighted average grant date fair values are summarized as follows:



Year ended January 31,	2014		2013		2012
Options granted	$	—	$	7.18	$	5.43
Restricted stock units granted	$	22.42	$	16.74	$	10.91
ESPP purchase rights	$	4.30	$	3.82	$	3.19

The fair value calculations used the following assumptions:



Year ended January 31,	2014	2013		2012
Stock Option Plans
Risk-free interest rate	—	0.9% - 1.3%		1.2	%
Dividend yield	—	0	%	0	%
Expected life (in years)	—	5.8 - 6.3		6.3
Volatility (range)	—	43% - 53%		53	%
Volatility (weighted average)	—	43	%	53	%



Year ended January 31,	2014		2013		2012
Employee Stock Purchase Plans
Risk-free interest rate	0.09% - 0.14%		0.05% - 0.15%		0.05% - 0.18%
Dividend yield (range)	0% - 1%		0	%	0	%
Dividend yield (weighted average)	0.5	%	0	%	0	%
Expected life (in years)	0.5		0.5		0.5
Volatility (range)	22% - 33%		33% - 43%		32% - 38%
Volatility (weighted average)	29	%	39	%	35	%

The following table summarizes stock-based compensation expense included in the results of operations and the tax benefit associated with the exercise of stock options:



Year ended January 31,	2014		2013		2012
Cost of revenues:
Service and support	$	1,992	$	1,529	$	1,065
Operating expense:
Research and development	11,182		9,206		8,203
Marketing and selling	7,777		6,654		5,874
General and administration	8,399		6,308		6,516
Equity plan-related compensation expense	$	29,350	$	23,697	$	21,658
Tax effect of the exercise of stock options	$	386	$	266	$	—

As of January 31, 2014, we had $3,580 in unrecognized compensation cost related to nonvested options which is expected to be recognized over a weighted average period of 1.1 years and $58,964 in unrecognized compensation cost related to nonvested restricted stock units which is expected to be recognized over a weighted average period of 1.5 years.

Employee Savings Plan

We have an employee savings plan (the Savings Plan) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the Savings Plan, participating U.S. employees may defer a portion of their pretax earnings, up to the Internal Revenue Service annual contribution limit. We currently match 50% of eligible employee’s contributions, up to a maximum of 6% of the employee’s earnings. Employer matching contributions vest over five years, 20% for each year of service completed. Our matching contributions to the Savings Plan were as follows:



Year ended January 31,	2014		2013		2012
Employer matching contribution	$	7,708	$	7,181	$	7,141

Dividends

On March 7, 2013, our Board of Directors announced the adoption of a dividend policy under which we commenced payment of cash dividends at an annual rate of $0.18 per share of common stock. On February 27, 2014, we announced an increase to the quarterly dividend to $0.05 per share. The following table summarizes the dividends declared:



Declaration Date	Record Date	Payment Date	Per Share Amount		Total Amount
3/7/2013	3/22/2013	4/10/2013	$	0.045	$	5,064
5/23/2013	6/10/2013	7/1/2013	$	0.045	$	5,079
8/22/2013	9/10/2013	9/30/2013	$	0.045	$	5,096
11/21/2013	12/10/2013	1/2/2014	$	0.045	$	5,159
2/27/2014	3/10/2014	3/31/2014	$	0.05

Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the quarterly determination of our Board of Directors.