Employee Stock Plans (Tables)

3 Months Ended

Dec. 27, 2013

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

	Three Months Ended
(In thousands, except per share amounts)	December 27, 2013			December 28, 2012
Cost of revenues – Product	$	707		$	1,111
Cost of revenues – Service		947			363
Research and development		1,301			1,739
Selling, general and administrative		6,089			6,950
Taxes on earnings		(2,798	)		(3,169	)
Net share-based compensation expense	$	6,246		$	6,994

Fair Value of Employee Stock Option Plans With Weighted Average Assumptions

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
	December 27, 2013			December 28, 2012
Employee Stock Option Plans
Expected term (in years)		4.87			4.76
Risk-free interest rate		1.3	%		0.6	%
Expected volatility		27.2	%		32.4	%
Expected dividend		0.0	%		0.0	%
Weighted average fair value at grant date	$	19.44		$	19.76

Fair Value of Employee Stock Purchase Plan With Weighted Average Assumptions

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
	December 27, 2013			December 28, 2012
Employee Stock Purchase Plan
Expected term (in years)		0.50			0.50
Risk-free interest rate		0.1	%		0.2	%
Expected volatility		14.5	%		19.3	%
Expected dividend		0.0	%		0.0	%
Weighted average fair value at grant date	$	13.98		$	13.45

Activity Under Employee Stock Plans

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

(In thousands, except per share amounts)	Shares Available for Grant
Balance at September 27, 2013		9,925
Granted		(310	)
Cancelled or expired		24
Balance at December 27, 2013		9,639

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:

	Options Outstanding
(In thousands, except per share amounts)	Number of Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value ⁽¹⁾
Balance at September 27, 2013		4,485		$	53.02
Granted		11			74.28
Cancelled or expired		(6	)		65.76
Exercised		(489	)		47.92
Balance at December 27, 2013		4,001		$	53.68		3.0	$	92,915
Exercisable at December 27, 2013		3,419		$	51.71		2.6	$	86,142

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value of options, which is computed based on the difference between the exercise price and VMS’s closing common stock price of $76.91 as of December 27, 2013, that last trading date of the first quarter of fiscal year 2014, and which would have been received by the option holders had all option holders exercised and sold their options 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)	Shares			Weighted Average Grant-Date Fair Value
Balance at September 27, 2013		1,035		$	64.36
Granted		81			76.91
Vested		(312	)		62.73
Cancelled or expired		(7	)		64.70
Balance at December 27, 2013		797		$	66.30