EARNINGS PER SHARE

9 Months Ended

Jun. 29, 2012

EARNINGS PER SHARE

14. EARNINGS PER SHARE

Basic net earnings per share is computed by dividing net earnings by the weighted average number of shares of VMS common stock outstanding for the period. Diluted net earnings per share is computed by dividing net earnings by the sum of the weighted average number of common shares outstanding and dilutive common shares under the treasury method.

The following table sets forth the computation of net basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended
(In thousands, except per share amounts)	June 29, 2012		July 1, 2011		June 29, 2012		July 1, 2011
Net earnings	$	108,843	$	98,605	$	306,848	$	298,173
Weighted average shares outstanding—basic		111,070		116,874		111,857		117,614
Dilutive effect of potential common shares		1,753		2,190		2,104		2,217
Weighted average shares outstanding—diluted		112,823		119,064		113,961		119,831
Net earnings per share—basic	$	0.98	$	0.84	$	2.74	$	2.54
Net earnings per share—diluted	$	0.96	$	0.83	$	2.69	$	2.49

The Company excludes potentially dilutive common shares (consisting of shares underlying stock options and the employee stock purchase plan) from the computation of diluted weighted average shares outstanding if the per share value, either the exercise price of the awards or the sum of (a) the exercise price of the awards and (b) the amount of the compensation cost attributed to future services and not yet recognized and (c) the amount of tax benefit or shortfall that would be recorded in additional paid-in capital when the award becomes deductible, is greater than the average market price of the shares, because the inclusion of the shares underlying these stock awards would be antidilutive to earnings per share.

Based on this calculation, stock options to purchase 559,695 shares at an average exercise price of $59.71 per share and 47,750 shares at an average exercise price of $69.67 per share were excluded from the computation of diluted weighted average shares outstanding for the three months ended June 29, 2012 and July 1, 2011, respectively. Stock options to purchase 250,619 shares at an average exercise price of $61.92 and 41,000 shares at an average exercise price of $70.60 per share were excluded from the computation of diluted weighted average shares outstanding for the nine months ended June 29, 2012 and July 1, 2011, respectively.