Employee Stock Plans (Tables)

12 Months Ended

Sep. 27, 2013

Fair Value of Employee Stock Option Plans with Weighted Average Assumptions

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

	Employee Stock Plans												Employee Stock Purchase Plan
	Fiscal Years												Fiscal Years
	2013				2012				2011					2013				2012				2011
Expected term (in years)		4.76				4.64				4.75					0.50				0.50				0.50
Risk-free interest rate		0.6	%			0.8	%			2.0	%				0.1	%			0.1	%			0.1	%
Expected volatility		32.2	%			36.9	%			35.5	%				16.5	%			19.3	%			14.0	%
Expected dividend yield		0	%			0	%			0	%				0	%			0	%			0	%
Weighted average fair value at grant date	$	19.73		$		18.75		$		23.26		$			12.95		$		12.17		$		12.61

Net Share-Based Compensation Expense

The table below summarizes the effect of recording share-based compensation expense:

	Fiscal Years
(In thousands)	2013			2012			2011
Cost of revenues - Product	$	4,088		$	4,419		$	3,917
Cost of revenues - Service		3,460			1,472			1,977
Research and development		5,993			6,378			5,467
Selling, general and administrative		29,096			35,606			30,657
Taxes on earnings		(12,989	)		(15,406	)		(14,063	)
Net share-based compensation expense	$	29,648		$	32,469		$	27,955

Activity Under Employee Stock Plans

A summary of share-based awards available for grant is as follows:

(In thousands)	Shares Available for Grant
(In thousands)	Shares Available for Grant
Balance at October 1, 2010		8,407
Granted		(108	)
Canceled, expired or forfeited		125
Balance at September 30, 2011		8,424
Authorized		6,000
Granted		(2,680	)
Canceled, expired or forfeited		124
Balance at September 28, 2012		11,868
Granted		(2,045	)
Canceled, expired or forfeited		102
Balance at September 27, 2013		9,925

Awards other than stock options set forth in the table were counted against the shares available for grant limit of the Third Amended 2005 Plan as 2.5 shares for every one share awarded before February 9, 2012 and were counted against the shares available for grant limit as 2.6 shares for every one awarded on or after February 9, 2012. In addition, the shares available for grant limit was further adjusted to reflect a maximum payout of 1.5 shares that could be issued for each performance unit granted.

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

(In thousands, except per share amounts)	Options Outstanding
(In thousands, except per share amounts)	Number of Shares				Weighted Average Exercise Price
Balance at October 1, 2010		10,174		$		44.03
Granted		48				69.67
Canceled, expired or forfeited		(46	)			48.64
Exercised		(3,259	)			40.38
Balance at September 30, 2011		6,917				45.90
Granted		743				58.50
Canceled, expired or forfeited		(30	)			55.73
Exercised		(1,171	)			40.18
Balance at September 28, 2012 (5,540 options exercisable at a weighted average exercise price of $46.91)		6,459				48.34
Granted		613				68.93
Canceled, expired or forfeited		(20	)			60.81
Exercised		(2,567	)			44.97
Balance at September 27, 2013		4,485		$		53.02

Options Outstanding And Exercisable

The following table summarizes information related to options outstanding and exercisable under the Company’s employee stock plans at September 27, 2013:

	Options Outstanding
Range of Exercise Prices	Number of Shares		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)		Number of Shares		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)
(In thousands, except years and per-share amounts)
$32.10 – $39.85		665		1.61		38.23		23,919		665		1.61		38.23		23,919
$40.21 – $52.07		1,359		2.65		50.20		32,599		1,359		2.65		50.20		32,599
$52.08 – $72.26		2,461		3.84		58.58		38,391		1,631		2.93		55.04		31,202
Total		4,485		3.15	$	53.02	$	94,909		3,655		2.58	$	50.18	$	87,720

(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 $74.18 as of September 27, 2013, the last trading date of fiscal year 2013, 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.

Activity for Restricted Stock, Restricted Stock Units, Deferred Stock Units and Performance Units

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

(In thousands, except per share amounts)
Balance at October 1, 2010	1,333		$	46.91
Granted	24			68.67
Vested	(590	)		47.27
Cancelled or expired	(32	)		46.59
Balance at September 30, 2011	735		$	47.36
Granted	716			59.06
Vested	(469	)		44.68
Cancelled or expired	(37	)		53.94
Balance at September 28, 2012	945		$	57.30
Granted	516			70.37
Vested	(396	)		55.67
Cancelled or expired	(30	)		61.82
Balance at September 27, 2013	1,035		$	64.36

- Definition

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

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- Definition

Tabular disclosure of option exercise prices, by grouped ranges, including the upper and lower limits of the price range, the number of shares under option, weighted average exercise price and remaining contractual option terms.

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