Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

NOTE 8. STOCK-BASED COMPENSATION

Stock Option Plans

2010 Incentive Award Plan

In April 2011, the Company's stockholders approved the amended and restated 2010 Incentive Award Plan ("2010 Plan") to provide for an increase in the number of shares of common stock authorized for issuance pursuant to awards granted under the 2010 Plan from 1,250,000 to 2,450,000.

2009 Employment Commencement Incentive Plan

In July 2011, the Company's Board of Directors amended and restated the 2009 Employment Commencement Incentive Plan ("2009 Plan") to provide for an increase in the number of shares of common stock authorized for issuance pursuant to awards granted under the 2009 Plan from 350,000 to 530,000.

A summary of stock option activity under all stock plans for the six months ended June 30, 2011 is presented as follows (in millions, except per share amounts):

				Stock Options Outstanding
	Shares Available for Grant			Number Outstanding			Weighted Average Exercise Price Per Share
Balance at December 31, 2010		1.4			4.8		$	209.03
Options authorized		1.3			—			—
Options granted		(1.2	)		1.2			339.76
Options exercised		—			(0.5	)		142.81
Options forfeited/expired		0			(0.1	)		274.47
Balance at June 30, 2011		1.5			5.4		$	244.66

As of June 30, 2011, 2.5 million shares of options were exercisable at a weighted-average price of $194.58 per share.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan ("ESPP"), employees purchased 92,072 shares for $10.4 million and 82,948 shares for $7.7 million during the six months ended June 30, 2011 and 2010, respectively.

Stock-based Compensation

The following table summarizes stock-based compensation charges (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Cost of sales - products	$	3.2	$	2.4	$	6.0	$	4.5
Cost of sales - services		2.8		2.2		5.3		4.1
Total cost of sales		6.0		4.6		11.3		8.6
Selling, general and administrative		21.4		20.0		41.6		37.8
Research and development		7.4		5.7		14.0		10.7
Stock-based compensation expense before income taxes		34.8		30.3		66.9		57.1
Income tax effect		11.2		8.3		21.7		15.9
Stock-based compensation expense after income tax effect	$	23.6	$	22.0	$	45.2	$	41.2

The fair value of each option grant and the fair value of the option component of the ESPP shares were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions, assuming no expected dividends:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Stock Options
Average risk free interest rate		1.95	%		2.33	%		2.30	%		2.33	%
Average expected term (years)		4.6			4.6			4.8			4.8
Average expected volatility		35	%		37	%		35	%		35	%
Weighted average fair value at grant date	$	113.55		$	115.53		$	114.67		$	111.69
Total stock-based compensation expense (in millions)	$	32.8		$	28.3		$	62.8		$	53.2
ESPP
Average risk free interest rate								0.37	%		0.49	%
Average expected term (years)								1.3			1.3
Average expected volatility								35	%		35	%
Weighted average fair value at grant date							$	97.07		$	99.34
Total stock-based compensation expense (in millions)	$	2.0		$	2.0		$	4.1		$	3.9

There were no new ESPP offerings during the three months ended June 30, 2011 and 2010.