Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

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

Stock-based compensation expense for each employee and director is presented in the same income statement caption as their cash compensation. Stock-based compensation expense by income statement caption and the related income tax benefit were as follows:



	Three Months Ended March 31,
(In thousands)	2016		2015
Cost of sales	$	14	$	9
Research and development expenses	136		105
Selling, general and administrative expenses:
Employees	1,845		1,471
Outside directors	498		374
Total stock-based compensation expense	$	2,493	$	1,959

Income tax benefit	$	733	$	560

Stock Options

Stock option activity was as follows:



	Number of Options (in 000's)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in 000's)
Outstanding at December 31, 2015	648		$	30.50
Granted	244		49.67
Exercised	(77	)	25.25			$	2,415
Forfeited/canceled/expired	—		—
Outstanding at March 31, 2016 ⁽¹⁾	815		$	36.72	5.36	$	20,847
Vested and expected to vest at March 31, 2016⁽¹⁾	814		$	36.72	5.36	$	20,840
Exercisable at March 31, 2016 ⁽¹⁾	469		$	27.15	4.57	$	16,422

⁽¹⁾

The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of the first quarter of 2016 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on March 31, 2016. This amount will change based on the fair market value of our stock.

The assumptions we utilized in the Black-Scholes option pricing model and the resulting weighted average fair value of stock option grants were the following:



	Three Months Ended March 31,
	2016			2015
Weighted average fair value of grants	$	17.96		$	24.77
Risk-free interest rate	1.36		%	1.38		%
Expected volatility	41.38		%	43.50		%
Expected life in years	4.55			4.56

As of March 31, 2016, we expect to recognize $5.9 million of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options over a remaining weighted-average life of 2.5 years.

Restricted Stock

Non-vested restricted stock award activity was as follows:



	Shares (in 000's)		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2015	225		$	51.31
Granted	37		51.39
Vested	(28	)	45.92
Forfeited	(2	)	55.85
Non-vested at March 31, 2016	232		$	51.95

As of March 31, 2016, we expect to recognize $10.6 million of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards over a weighted-average life of 2.1 years.