EMPLOYEE STOCK PLANS

Employee Stock Plans

Prior to the separation and distribution, the Company’s employees, consultants and certain members of the Company's board of directors were eligible to participate in Varian's 2005 Omnibus Stock Plan (the "2005 Plan"). The 2005 Plan provides for the grants of stock options, restricted stock units, performance units and deferred stock units among other types of awards. The expense associated with the Company’s employees who participated in the 2005 Plan is included in the accompanying condensed consolidated statements of earnings. Subsequent to the separation and distribution, the Company's employees, consultants and members of the Company's board of directors are eligible to participate in Varex's 2017 Omnibus Stock Plan and only in the case of employees, Varex's 2017 Employee Stock Purchase Plan.

Share-Based Compensation Expense

As share-based compensation expense recognized in the condensed consolidated statements of earnings is based on awards ultimately expected to vest. Share-based compensation expense includes expenses related to the Company’s direct employees. Prior to the separation and distribution, Varian also charged the Company for the allocated share-based compensation costs of certain employees of Varian who provided selling, general and administrative services on the Company’s behalf.

The table below summarizes the effect of recording the share-based compensation expense (which includes the option component of the employee stock purchase plan shares):



	Three Months Ended				Nine Months Ended
(In millions)	June 29, 2018		June 30, 2017		June 29, 2018		June 30, 2017
Cost of revenues	$	0.4	$	0.4	$	1.0	$	0.7
Research and development	0.5		0.4		1.3		1.9
Selling, general and administrative	1.9		1.7		5.2		3.5
Total share-based compensation expense	$	2.8	$	2.5	$	7.5	$	6.1

Stock Option Activity

The following table summarizes the activity for stock options under Varex’s 2017 Omnibus Stock Plan and 2017 Employee Stock Purchase Plan for the Company’s employees:



	Options Outstanding
(In thousands, except per share amounts and the remaining term)	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Term (in years)	Aggregate Intrinsic Value (1)
Balance at September 29, 2017	1,926		$	29.11
Granted	232		37.12
Canceled, expired or forfeited	(19	)	27.78
Exercised	(134	)	25.86
Balance at June 29, 2018	2,005		$	30.27	4.8	$	13,685

Exercisable at June 29, 2018	991		$	28.31	4.9	$	8,699

(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 Varex common stock of $37.09 as of June 29, 2018, the last trading date of the Company's first quarter, 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.

Restricted Stock Units

The following table summarizes the activity for restricted stock units under Varex’s 2017 Omnibus Stock Plan for the Company’s employees:



(In thousands, except per share amounts)	Number of Shares		Weighted Average Grant-Date Fair Value
Balance at September 29, 2017	525		$	29.76
Granted	343		37.10
Vested	(186	)	29.43
Canceled or expired	(31	)	32.07
Balance at June 29, 2018	651		$	33.58