Stock-Based Compensation

6 Months Ended

Mar. 30, 2012

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

We have adopted compensation plans that provide for grants of stock-based awards as a form of compensation to employees, officers, and directors. We have issued stock-based awards in the form of stock options, restricted stock units, stock appreciation rights, and shares issued under our employee stock purchase plan (“ESPP”).

We recognize stock-based compensation expense net of estimated forfeitures. Stock-based compensation expense included in our condensed consolidated statements of operations was as follows:

	Fiscal Quarter Ended					Fiscal Year-to-Date Ended
	April 1, 2011			March 30, 2012		April 1, 2011			March 30, 2012
	(in thousands)
Stock-based compensation expense:
Stock options	$	6,130		$	5,995	$	13,027		$	12,054
Restricted stock units	4,595			5,880		8,721			11,144
Employee stock purchase plan	184			144		366			225
Stock appreciation rights	(169		)	44		(114		)	79
Total stock-based compensation expense	$	10,740		$	12,063	$	22,000		$	23,502

	Fiscal Quarter Ended				Fiscal Year-to-Date Ended
	April 1, 2011		March 30, 2012		April 1, 2011		March 30, 2012
	(in thousands)
Stock-based compensation expense was classified as follows:
Cost of products	$	168	$	179	$	314	$	345
Cost of services	44		61		82		117
Research and development	2,611		2,968		4,934		5,632
Sales and marketing	3,367		4,004		6,363		7,719
General and administrative	4,550		4,851		10,307		9,689
Total stock-based compensation expense	$	10,740	$	12,063	$	22,000	$	23,502

As of March 30, 2012, total unrecognized stock-based compensation expense associated with employee stock options expected to vest was $61.5 million, which is expected to be recognized over a weighted-average period of approximately 2.79 years. As of March 30, 2012, total unrecognized stock-based compensation expense associated with restricted stock units expected to vest was $57.9 million, which is expected to be recognized over a weighted-average period of approximately 3.08 years.

The following table summarizes information about stock options issued to officers, directors, and employees under our 2000 Stock Incentive Plan and 2005 Stock Plan:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)				(in years)	(in thousands)
Stock options outstanding at September 30, 2011	5,801		$	45.19
Grants	2,086		31.55
Exercises	(181	)	24.34
Forfeitures and cancellations	(269	)	51.49
Stock options outstanding at March 30, 2012	7,437		$	41.64	7.8	$	34,766
Stock options vested at March 30, 2012 and expected to vest	7,143		$	41.61	7.7	$	33,732
Stock options exercisable at March 30, 2012	3,355		$	40.27	6.3	$	19,438

Aggregate intrinsic value is based on the closing price of our common stock on March 30, 2012 of $38.06 and excludes the impact of stock options that were not in-the-money.

We use the Black-Scholes option pricing model to determine the fair value of employee stock options at the date of grant. The fair value of our stock-based awards was estimated using the following weighted-average assumptions:

	Fiscal Quarter Ended				Fiscal Year-to-Date Ended
	April 1, 2011		March 30, 2012		April 1, 2011		March 30, 2012
Expected life (in years)	4.40		4.53		4.40		4.53
Risk-free interest rate	1.6	%	0.7	%	1.5	%	0.7	%
Expected stock price volatility	41.2	%	43.5	%	41.5	%	44.4	%
Dividend yield	—		—		—		—

The following table summarizes information about restricted stock units issued to officers, directors, and employees under our 2005 Stock Plan:

	Shares		Weighted Average Fair Value
	(in thousands)
Non-vested at September 30, 2011	946		$	53.71
Granted	1,082		32.08
Vested	(336	)	51.44
Forfeitures and cancellations	(47	)	48.00
Non-vested at March 30, 2012	1,645		$	40.11

Employee Stock Purchase Plan.    In January 2005, our board of directors adopted and our stockholders approved our ESPP, which allows eligible employees to have up to 10 percent of their eligible compensation withheld and used to purchase Class A common stock, subject to a maximum of $25,000 worth of stock purchased in a calendar year or no more than 1,000 shares in an offering period, whichever is less. The plan provides for a discount equal to 15 percent of the closing price on the New York Stock Exchange on the last day of the purchase period.

Amended Employee Stock Purchase Plan.    During the first quarter of fiscal 2012, the compensation committee of our board of directors approved an amendment to the ESPP to provide for overlapping one-year offering periods composed of successive six-month purchase periods, with a look back feature to the Company’s stock price at the commencement of a one-year offering period. The amended plan also includes an automatic reset feature that provides for an offering period to be reset and recommenced to a new lower-priced offering if the offering price of a new offering period is less than that of the immediately preceding offering period. The amendment is effective for the ESPP offering period commencing in May 2012. We do not expect adoption of the amendment to the ESPP to have a material impact on our results of operations.