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Employee Stock Plans
 12 Months Ended
Oct. 02, 2020
Share-based Payment Arrangement [Abstract]  
Employee Stock Plans EMPLOYEE STOCK PLANS
Employee Stock Plans
Varian's 2005 Omnibus Stock Plan was last amended and restated in December 2017 and approved by VMS’s stockholders at the 2018 Annual Meeting of Stockholders (as amended and restated, the “2005 Plan”). The maximum number of shares issuable under the 2005 Plan is (a) 31.0 million, plus (b) the number of shares authorized for issuance, but never issued, under previously approved plans, plus (c) the number of shares subject to awards previously granted under previously approved plans that terminate, expire, or lapse, plus (d) amounts granted in substitution of options in connection with certain transactions. Pursuant to the 2005 Plan, the Company may grant stock options, restricted stock units, performance units, performance-based options, cash-settled stock appreciation rights to employees, and restricted stock units to directors. Stock options and cash-settled stock appreciation rights generally vest and become exercisable over three years from the date of grant and restricted stock unit awards generally vest over a period of three years from the date of grant (one year in the case of directors). Performance units and performance-based options generally vest over a three-year performance period based on specified performance targets which are set by the Compensation and Management Development Committee of the Board of Directors at the beginning of the performance period. The award agreements documenting such awards contain certain provisions that
provide for continued and/or accelerated vesting in the event of retirement, disability and death, and proration in the event of retirement.

The fair value of stock options, performance-based options and cash-settled stock appreciation rights granted under the 2005 Plan and the option component of the shares purchased under the Employee Stock Purchase Plan (which is described further below) were estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:

 Employee Stock Option PlansEmployee Stock Purchase Plans
 Fiscal YearsFiscal Years
 202020192018202020192018
Expected term (in years)3.743.763.830.500.500.50
Risk-free interest rate1.5 %2.4 %2.3 %0.9 %2.5 %1.6 %
Expected volatility24.8 %23.6 %19.1 %35.2 %22.8 %25.2 %
Expected dividend— %— %— %— %— %— %
Weighted average fair value at grant date$29.55$27.20$20.88$29.44$26.76$24.56

(1)Excludes the fair value of the market condition based on relative total shareholder return for the performance stock options granted during the period
The expected term represents the weighted average period the equity awards or Employee Stock Purchase Plan purchase rights are expected to remain outstanding. The expected term is based on the observed and expected time to post-vesting exercise and post-vesting cancellations by Company employees. The Company used a combination of historical and implied volatility of its traded options, or blended volatility, in deriving the expected volatility assumption. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of the equity awards or Employee Stock Purchase Plan purchase rights. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts. Share-based compensation expense recognized in the Consolidated Statements of Earnings is based on awards ultimately expected to vest.
The table below summarizes the effect of recording share-based compensation expense:
 Fiscal Years
(In millions)202020192018
Cost of revenues - Product$3.8 $2.9 $3.1 
Cost of revenues - Service5.6 4.5 4.2 
Research and development6.1 4.7 4.8 
Selling, general and administrative28.4 35.8 34.3 
Total share-based compensation expense$43.9 $47.9 $46.4 
Income tax benefit for share-based compensation$(7.7)$(9.2)$(10.5)
The table below summarizes the effect of recording pre-tax share-based compensation expense for equity awards: 
 Fiscal Years
(In millions)202020192018
Restricted stock units (1)
$26.1 $21.1 $21.6 
Performance units and performance options2.1 13.6 12.1 
Stock options8.9 8.6 8.5 
Employee stock purchase plan5.9 4.5 4.2 
Cash-settled stock appreciation rights0.9 0.1 — 
Total share-based compensation expense$43.9 $47.9 $46.4 
(1)Restricted stock units include restricted units granted to directors.
Activity under the Company’s employee stock plans related to stock options and performance-based options is presented below: 
 Options Outstanding
(In millions, except per share amounts)Number of SharesWeighted Average Exercise Price
Balance at September 27, 2019 (1.2 million options exercisable at a weighted average exercise price of $80.98)
2.2 $97.66 
Granted0.4 139.86 
Canceled, expired or forfeited— 119.05 
Exercised(0.7)84.08 
Balance at October 2, 20201.9 $110.79 
The total pre-tax intrinsic value of stock options exercised was $42.3 million, $31.0 million and $28.3 million in fiscal years 2020, 2019 and 2018, respectively. The total fair value of stock options vested was $10.4 million, $9.3 million and $9.6 million in fiscal years 2020, 2019 and 2018, respectively.
 
The following table summarizes information related to stock options outstanding and exercisable under the Company’s employee stock plans at October 2, 2020:
 Options OutstandingOptions Exercisable
Range of Exercise PricesNumber of SharesWeighted Average Remaining Contractual Term (in years)Weighted Average Exercise Price
Aggregate Intrinsic Value (1)
Number of SharesWeighted Average Remaining Contractual Term (in years)Weighted Average Exercise Price
Aggregate Intrinsic Value (1)
(In millions, except years and per share amounts)        
$67.12 - $81.97
0.5 2.4$77.92 $49.7 0.5 2.4$77.92 $49.7 
$99.26 - $110.36
0.4 4.6108.56 21.2 0.1 5.0107.79 3.7 
$112.82 - $118.76
0.4 4.7115.64 23.8 0.2 4.3113.47 10.7 
$129.97 - $146.91
0.6 5.9137.26 21.1 0.1 5.4131.77 4.3 
Total1.9 4.4$110.79 $115.8 0.9 3.3$93.83 $68.4 

(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 $171.93 as of October 2, 2020, the last trading date of fiscal year 2020, 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 October 2, 2020, there was $15.4 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 1.8 years.
As of October 2, 2020, there was $1.9 million of total unrecognized compensation expense related to cash-settled stock appreciation rights granted outside the Company's employee stock plans. This unrecognized compensation expense is expected to be recognized over a weighted average period of 2.1 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 SharesWeighted Average Grant-Date Fair Value
Balance at September 27, 20190.7 $108.35 
Granted0.4 146.03 
Vested(0.3)99.00 
Canceled or expired(0.1)124.71 
Balance at October 2, 20200.7 $133.82 
The total grant-date fair value of restricted stock units, deferred stock units and performance units was $54.8 million, $36.9 million and $33.7 million in fiscal years 2020, 2019 and 2018, respectively. The total fair value of restricted stock, restricted stock units, deferred stock units and performance units that vested was $40.9 million, $43.9 million and $36.9 million in fiscal years 2020, 2019 and 2018, respectively.
As of October 2, 2020, unrecognized compensation expense totaling $50.2 million was related to restricted stock, 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 2.0 years. The Company withheld 0.1 million shares with a fair value of $12.8 million to cover employees’ minimum withholding taxes due at vesting and/or settlement of such awards in fiscal year 2020.
Employee Stock Purchase Plan
In February 2010, VMS’s stockholders approved the 2010 Employee Stock Purchase Plan (the “2010 ESPP”). The 2010 ESPP provides eligible employees with an opportunity to purchase shares of VMS common stock at 85% of the lower of its fair market value at the start and end of a six-month purchase period. The 2010 ESPP provides for the purchase of up to seven million shares of VMS common stock.
VMS issued approximately 0.2 million shares for $18.7 million in fiscal year 2020 and approximately 0.2 million shares for $16.9 million in fiscal year 2019. At October 2, 2020, 4.8 million shares were available for issuance under the 2010 ESPP.