Employee Stock Plans (Tables)

6 Months Ended

Mar. 28, 2014

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						Six Months Ended
	March 28,			March 29,			March 28,			March 29,
(In thousands, except per share amounts)	2014			2013			2014			2013
Cost of revenues - Product	$	717		$	1,274		$	1,424		$	2,385
Cost of revenues - Service		1,115			1,098			2,062			1,461
Research and development		1,320			1,487			2,621			3,226
Selling, general and administrative		6,444			9,369			12,533			16,319
Total share-based compensation expense		9,596			13,228			18,640			23,391
Taxes on earnings		(2,939	)		(4,009	)		(5,737	)		(7,178	)
Net share-based compensation expense	$	6,657		$	9,219		$	12,903		$	16,213

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						Six Months Ended
	March 28,			March 29,			March 28,			March 29,
	2014			2013			2014			2013
Employee Stock Option Plans
Expected term (in years)		4.11			4.77			4.13		4.76
Risk-free interest rate		1.2	%		0.8	%		1.2	%		0.6	%
Expected volatility		24.6	%		30.9	%		24.6	%		32.3	%
Expected dividend		0.0	%		0.0	%		0.0	%		0.0	%
Weighted average fair value at grant date	$	18.21		$	19.56		$	18.23		$	19.74

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:

	Six Months Ended
	March 28,			March 29,
	2014			2013
Employee Stock Purchase Plan
Expected term (in years)		0.50			0.50
Risk-free interest rate		0.1	%		0.1	%
Expected volatility		14.5	%		19.3	%
Expected dividend		0.0	%		0.0	%
Weighted average fair value at grant date	$	13.98		$	13.65

Activity Under Employee Stock Plans

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

	Shares
	Available
(In thousands)	for Grant
Balance at September 27, 2013		9,925
Granted		(1,915	)
Cancelled or expired		68
Balance at March 28, 2014		8,078

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
						Weighted-
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
(In thousands, except per share amounts)	Shares			Price		Term (in years)		Value (1)
Balance at September 27, 2013		4,485		$	53.02
Granted		619			83.49
Cancelled or expired		(11	)		66.16
Exercised		(1,182	)		47.97
Balance at March 28, 2014		3,911		$	59.35		3.6	$	91,241

Exercisable at March 28, 2014		2,828		$	53.04		2.6	$	83,282

(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 $82.49 as of March 28, 2014, the last trading date of the second 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:

				Weighted Average
				Grant-Date Fair
(In thousands, except per share amounts)	Shares			Value
Balance at September 27, 2013		1,035		$	64.36
Granted		464			82.51
Vested		(325	)		63.06
Cancelled or expired		(18	)		69.31
Balance at March 28, 2014		1,156		$	72.08