XML 32 R20.htm IDEA: XBRL DOCUMENT

EMPLOYEE STOCK PLANS

6 Months Ended

Mar. 29, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The table below summarizes the share-based compensation expense recognized for employee stock awards and employee stock purchase plan shares:



	Three Months Ended						Six Months Ended
(In millions)	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Cost of revenues - Product	$	0.8		$	0.8		$	1.5		$	1.5
Cost of revenues - Service	1.0			1.0			2.1			2.0
Research and development	1.1			1.2			2.2			2.4
Selling, general and administrative	9.6			7.5			17.2			15.3
Total share-based compensation expense	$	12.5		$	10.5		$	23.0		$	21.2
Income tax benefit for share-based compensation	$	(2.2	)	$	(2.6	)	$	(4.5	)	$	(4.7	)

The fair value of options granted was estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:



	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Employee Stock Option Plans
Expected term (in years)	3.76			3.83			3.76			3.83
Risk-free interest rate	2.5		%	2.4		%	2.6		%	2.2		%
Expected volatility	23.6		%	19.2		%	23.1		%	19.0		%
Expected dividend	—		%	—		%	—		%	—		%
Weighted average fair value at grant date	$	29.16		$	21.48		$	27.85		$	20.73

The option component of employee stock purchase plan shares was estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:



	Six Months Ended
	March 29, 2019			March 30, 2018
Employee Stock Purchase Plan
Expected term (in years)	0.50			0.50
Risk-free interest rate	2.5		%	1.2		%
Expected volatility	18.6		%	17.9		%
Expected dividend	—		%	—		%
Weighted average fair value at grant date	$	22.82		$	20.97

Activity under the Company’s employee stock plans related to stock options is presented below:



	Options Outstanding
(In millions, except per share amounts)	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Term (in years)	Aggregate Intrinsic Value⁽¹⁾
Balance at September 28, 2018	2.3		$	85.82
Granted	0.5		126.45
Cancelled or expired ⁽²⁾	—		99.68
Exercised	(0.5	)	74.12
Balance at March 29, 2019	2.3		$	96.77	5.0	$	103.5
Exercisable at March 29, 2019	1.1		$	79.36	3.8	$	69.4

⁽¹⁾

The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of VMS common stock of $141.72 as of March 29, 2019, the last trading date of the second quarter of fiscal year 2019, and which represents the amount that would have been received by the option holders had all option holders exercised their options and sold the shares received upon exercise as of that date.


⁽²⁾	The cancelled and expired shares were not material for disclosure.

As of March 29, 2019, there was $23.7 million of total unrecognized compensation expense related to stock options and performance stock options granted under the Company's employee stock plans. This unrecognized compensation expense is expected to be recognized over a weighted average period of 2.2 years.

The activity for restricted stock, restricted stock units, deferred stock units and performance units is summarized as follows:



(In millions, except per share amounts)	Number of Shares		Weighted Average Grant-Date Fair Value
Balance at September 28, 2018	0.8		$	89.17
Granted	0.3		127.05
Vested	(0.3	)	81.50
Cancelled or expired	(0.1	)	82.14
Balance at March 29, 2019	0.7		$	108.24

As of March 29, 2019, unrecognized compensation expense totaling $54.5 million was related to awards of restricted stock units, deferred stock units and performance units granted under the Company's employee stock plans. This unrecognized share-based compensation expense is expected to be recognized over a weighted average period of 2.1 years.