EMPLOYEE STOCK PLANS

9 Months Ended

Jun. 28, 2019

Share-based Payment Arrangement [Abstract]

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



	Three Months Ended						Nine Months Ended
(In millions)	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Cost of revenues - Product	$	0.7		$	0.8		$	2.2		$	2.3
Cost of revenues - Service	1.2			1.1			3.3			3.1
Research and development	1.3			1.2			3.5			3.6
Selling, general and administrative	9.0			10.2			26.2			25.5
Total share-based compensation expense	$	12.2		$	13.3		$	35.2		$	34.5
Income tax benefit for share-based compensation	$	(2.3	)	$	(3.0	)	$	(6.8	)	$	(7.7	)

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						Nine Months Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Employee Stock Option Plans
Expected term (in years)	3.76			3.85			3.76			3.83
Risk-free interest rate	2.2		%	2.8		%	2.6		%	2.2		%
Expected volatility	23.9		%	21.0		%	23.1		%	19.0		%
Expected dividend	—		%	—		%	—		%	—		%
Weighted average fair value at grant date	$	28.52		$	24.93		$	27.85		$	20.82

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:



	Three Months Ended						Nine Months Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Employee Stock Purchase Plan
Expected term (in years)	0.50			0.50			0.50			0.50
Risk-free interest rate	2.5		%	2.0		%	2.5		%	1.6		%
Expected volatility	27.8		%	32.9		%	22.8		%	25.2		%
Expected dividend	—		%	—		%	—		%	—		%
Weighted average fair value at grant date	$	31.38		$	28.41		$	26.76		$	24.56

The activity for stock options and performance stock options is summarized as follows:



	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	(0.1	)	106.69
Exercised	(0.5	)	75.01
Balance at June 28, 2019	2.2		$	96.98	4.7	$	87.5
Exercisable at June 28, 2019	1.1		$	80.48	3.7	$	63.9

⁽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 $136.13 as of June 28, 2019, the last trading date of the third 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.

As of June 28, 2019, there was $20.2 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 2.0 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		127.14
Vested	(0.4	)	81.81
Cancelled or expired	(0.1	)	87.47
Balance at June 28, 2019	0.6		$	108.49

As of June 28, 2019, unrecognized compensation expense totaling $46.1 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 1.9 years.