Stock-Based Compensation

3 Months Ended

Dec. 26, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The following presents stock-based compensation expense in the Company’s Consolidated Statements of Income:



	Three Months Ended
	December 26, 2015		December 27, 2014
Cost of revenues	$	2.2	$	2.0
Research and development	2.4		1.9
Selling and marketing	2.5		2.0
General and administrative	8.8		6.1
Restructuring and divestiture	—		0.1
	$	15.9	$	12.1

The Company granted 0.9 million and 1.0 million stock options during the three months ended December 26, 2015 and December 27, 2014, respectively, with weighted-average exercise prices of $39.94 and $26.12, respectively. There were 7.2 million options outstanding at December 26, 2015 with a weighted-average exercise price of $24.50.

The Company uses a binomial model to determine the fair value of its stock options. The weighted-average assumptions utilized to value these stock options are indicated in the following table:



	Three Months Ended
	December 26, 2015			December 27, 2014
Risk-free interest rate	1.6		%	1.7		%
Expected volatility	37.8		%	38.6		%
Expected life (in years)	4.7			5.3
Dividend yield	—			—
Weighted average fair value of options granted	$	13.13		$	9.44

The Company granted 0.9 million and 1.3 million restricted stock units (RSUs) during the three months ended December 26, 2015 and December 27, 2014, respectively, with weighted-average grant date fair values of $39.96 and $26.17, per unit respectively. As of December 26, 2015, there were 3.5 million unvested RSUs outstanding with a weighted-average grant date fair value of $29.36 per unit. In addition, the Company granted 0.2 million and 0.3 million performance stock units (PSUs) during the three months ended December 26, 2015 and December 27, 2014, respectively, to members of its senior management team, which have a weighted-average grant date fair value of $39.96 and $26.21 per unit, respectively. Each recipient of PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three years provided the Company’s defined Return on Invested Capital metrics are achieved. The Company is recognizing compensation expense ratably over the required service period based on its estimate of the number of shares that will vest. If there is a change in the estimate of the number of shares that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made.

At December 26, 2015, there was $30.7 million and $104.3 million of unrecognized compensation expense related to stock options and stock units (comprised of RSUs and PSUs), respectively, to be recognized over a weighted-average period of 3.5 years and 2.6 years, respectively.