STOCK TRANSACTIONS AND STOCK-BASED COMPENSATION

Neither the Company nor any “affiliated purchaser” repurchased any shares of Company common stock during the three or nine months ended September 26, 2014. On July 16, 2013, the Company's Board of Directors approved a repurchase program (the “Repurchase Program”) authorizing the repurchase of up to 20 million shares of the Company's common stock from time to time on the open market or in privately negotiated transactions. As of September 26, 2014, 20 million shares remained available for repurchase pursuant to the Repurchase Program.

For a full description of the Company’s stock-based compensation programs, reference is made to Note 18 of the Company’s financial statements as of and for the year ended December 31, 2013 included in the Company’s 2013 Annual Report on Form 10-K. As of September 26, 2014, approximately 25 million shares of the Company’s common stock were reserved for issuance under the 2007 Stock Incentive Plan.

The following summarizes the assumptions used in the Black-Scholes Merton option pricing model ("Black-Scholes") to value options granted during the nine months ended September 26, 2014:



Risk-free interest rate	1.68% - 2.38%
Weighted average volatility	22.2	%
Dividend yield	0.5	%
Expected years until exercise	5.5 - 8.0

The following summarizes the components of the Company’s stock-based compensation expense ($ in millions):



	Three Months Ended						Nine Months Ended
	September 26, 2014			September 27, 2013			September 26, 2014			September 27, 2013
RSUs:
Pre-tax compensation expense	$	21.2		$	17.6		$	55.0		$	49.9
Income tax benefit	(6.4		)	(5.2		)	(16.0		)	(15.0		)
RSU expense, net of income taxes	$	14.8		$	12.4		$	39.0		$	34.9
Stock options:
Pre-tax compensation expense	$	12.7		$	12.0		$	33.9		$	35.8
Income tax benefit	(3.9		)	(3.7		)	(10.2		)	(11.0		)
Stock option expense, net of income taxes	$	8.8		$	8.3		$	23.7		$	24.8
Total stock-based compensation:
Pre-tax compensation expense	$	33.9		$	29.6		$	88.9		$	85.7
Income tax benefit	(10.3		)	(8.9		)	(26.2		)	(26.0		)
Total stock-based compensation expense, net of income taxes	$	23.6		$	20.7		$	62.7		$	59.7

Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Condensed Statements of Earnings. As of September 26, 2014, $174 million of total unrecognized compensation cost related to RSUs is expected to be recognized over a weighted average period of approximately three years. As of September 26, 2014, $143 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately three years. Both amounts will be adjusted for any future changes in estimated forfeitures.

The following summarizes option activity under the Company’s stock plans (in millions, except exercise price and number of years):



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2013	25.0		$	42.93
Granted	3.6		77.08
Exercised	(2.4	)	34.70
Cancelled/forfeited	(0.4	)	58.56
Outstanding as of September 26, 2014	25.8		$	48.14	6	$	720.1
Vested and Expected to Vest as of September 26, 2014 ⁽¹⁾	24.4		$	47.19	6	$	706.1
Vested as of September 26, 2014	14.1		$	37.03	4	$	547.2


(1)	The “Expected to Vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the third quarter of 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 26, 2014. The amount of aggregate intrinsic value will change based on the price of the Company’s common stock.

The aggregate intrinsic value of options exercised during the nine months ended September 26, 2014 and September 27, 2013 was $95 million and $136 million, respectively. Exercise of options during the first nine months of 2014 and 2013 resulted in cash receipts of $79 million and $134 million, respectively. The Company realized a tax benefit of $8 million and $29 million in the three and nine months ended September 26, 2014 related to the exercise of employee stock options. The net income tax benefit in excess of the expense recorded for financial reporting purposes (the “excess tax benefit”) has been recorded as an increase to additional paid-in capital and is reflected as a financing cash inflow in the accompanying Consolidated Condensed Statements of Cash Flows.

The following summarizes information on unvested RSUs activity (in millions, except grant-date fair value):



	Number of RSUs		Weighted Average Grant-Date Fair Value
Unvested as of December 31, 2013	5.2		$	51.04
Granted	1.5		76.49
Vested	(1.4	)	42.08
Forfeited	(0.3	)	57.46
Unvested as of September 26, 2014	5.0		$	61.11

The Company realized a tax benefit of $13 million and $34 million in the three and nine months ended September 26, 2014, respectively, related to the vesting of RSUs. The excess tax benefit attributable to RSUs has been recorded as an increase to additional paid-in capital and is reflected as a financing cash inflow in the accompanying Consolidated Condensed Statements of Cash Flows.

In connection with the exercise of certain stock options and the vesting of RSUs previously issued by the Company, a number of shares sufficient to fund statutory minimum tax withholding requirements has been withheld from the total shares issued or released to the award holder (though under the terms of the applicable plan, the shares are considered to have been issued and are not added back to the pool of shares available for grant). During the first nine months of 2014, 541 thousand shares with an aggregate value of $41 million were withheld to satisfy the requirement. The withholding is treated as a reduction in additional paid-in capital in the accompanying Consolidated Condensed Statement of Stockholders’ Equity.