Stock-based Compensation

We measure the cost of employee services received in exchange for restricted stock unit (RSU) awards based on the fair value of our common stock on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award.

Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as the principal equity incentive awards, including certain performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.

Our equity incentive plans are described more fully in Note K to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013.



Restricted stock unit activity for the nine months ended June 28, 2014	Shares		Weighted Average Grant Date Fair Value (Per Share)
	(in thousands)
Balance of outstanding restricted stock units October 1, 2013	5,186		$	21.67
Granted	1,904		$	33.79
Vested	(2,353	)	$	21.59
Forfeited or not earned	(314	)	$	23.70
Balance of outstanding restricted stock units June 28, 2014	4,423		$	26.77



	Restricted Stock Units
Grant Period	Performance-based (1)	Time-based (2)

	(Number of Units in thousands)
First nine months of 2014	449	1,454

_________________

(1)

The performance-based RSUs were granted to employees, including our executive officers. Approximately 87,000 of these RSUs are eligible to vest in three substantially equal installments in November 2016, 2017 and 2018 based on achievement of the applicable performance criteria. Substantially all other performance-based RSUs will be eligible to vest in three substantially equal installments in November 2014, 2015 and 2016 to the extent the applicable performance criteria have been achieved. RSUs not earned for a period may be earned in subsequent periods.


(2)	The time-based RSUs were issued to employees, including our executive officers, and our Board of Directors. The RSUs granted to our Board of Directors generally vest one year from the date of grant. Substantially all other time-based RSUs, will vest in three substantially equal annual installments on or about the anniversary of the date of grant.

Compensation expense recorded for our stock-based awards was classified in our consolidated statements of operations as follows:



	Three months ended				Nine months ended
	June 28, 2014		June 29, 2013		June 28, 2014		June 29, 2013
	(in thousands)
Cost of license revenue	$	4	$	4	$	13	$	17
Cost of service revenue	1,608		1,372		4,632		4,404
Cost of support revenue	898		722		2,711		2,383
Sales and marketing	3,065		2,693		8,583		7,986
Research and development	2,231		2,139		7,067		6,475
General and administrative	4,726		4,247		14,856		13,615
Total stock-based compensation expense	$	12,532	$	11,177	$	37,862	$	34,880