Stock Plans

In addition to the Company's Employee Stock Purchase Plan, the Company utilizes one stock-based compensation plan, the 2009 Incentive Plan (the “2009 Plan”). Under the 2009 Plan, 10.0 million shares of the Company's common stock are authorized for stock option grants, restricted stock awards, performance units and stock grants as part of the Company’s compensation programs. In addition to shares of the Company’s common stock originally authorized for issuance under the 2009 Plan, the 2009 Plan includes shares of the Company’s common stock previously granted under the Amended and Restated 2001 Incentive Plan and the 2005 Incentive Plan that were canceled or forfeited without the shares being issued.

The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock options, restricted stock, performance restricted stock units, performance units and stock awards, included in the Company’s condensed consolidated statements of operations for the three months ended April 2, 2017 and April 3, 2016:



	Three Months Ended
	April 2, 2017		April 3, 2016
	(In thousands)
Cost of product and service revenue	$	260	$	190
Research and development expenses	327		169
Selling, general and administrative expenses	4,339		3,487
Total stock-based compensation expense	$	4,926	$	3,846

The total income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation was $2.9 million and $1.9 million for the three months ended April 2, 2017 and April 3, 2016, respectively. Stock-based compensation costs capitalized as part of inventory was $0.3 million each as of April 2, 2017 and April 3, 2016, respectively.

Stock Options: The fair value of each option grant is estimated using the Black-Scholes option pricing model. The Company’s weighted-average assumptions used in the Black-Scholes option pricing model were as follows:



	Three Months Ended
	April 2, 2017		April 3, 2016
Risk-free interest rate	1.9	%	1.4	%
Expected dividend yield	0.5	%	0.6	%
Expected term	5 years		5 years
Expected stock volatility	22.4	%	25.2	%

The following table summarizes stock option activity for the three months ended April 2, 2017:



	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Total Intrinsic Value
	(In thousands)				(In years)	(In millions)
Outstanding at January 1, 2017	2,287		$	37.64
Granted	446		53.45
Exercised	(140	)	33.09
Outstanding at April 2, 2017	2,593		$	40.60	4.2	$	36.1
Exercisable at April 2, 2017	1,611		$	35.48	3.1	$	30.7

The weighted-average per-share grant-date fair value of options granted during the three months ended April 2, 2017 and April 3, 2016 was $11.72 and $10.10, respectively. The total intrinsic value of options exercised during the three months ended April 2, 2017 and April 3, 2016 was $3.0 million and $1.7 million, respectively. Cash received from option exercises for the three months ended April 2, 2017 and April 3, 2016 was $4.6 million and $1.2 million, respectively.

The total compensation expense recognized related to the Company’s outstanding options was $1.2 million and $1.1 million for the three months ended April 2, 2017 and April 3, 2016, respectively.

There was $9.7 million of total unrecognized compensation cost related to nonvested stock options granted as of April 2, 2017. This cost is expected to be recognized over a weighted-average period of 2.3 years.

Restricted Stock Awards: The following table summarizes restricted stock award activity for the three months ended April 2, 2017:



	Number of Shares		Weighted- Average Grant- Date Fair Value
	(In thousands)
Nonvested at January 1, 2017	521		$	46.48
Granted	204		53.44
Vested	(174	)	44.76
Forfeited	(7	)	47.78
Nonvested at April 2, 2017	544		$	49.62

The fair value of restricted stock awards vested during the three months ended April 2, 2017 and April 3, 2016 was $7.8 million and $6.9 million, respectively. The total compensation expense recognized related to the Company’s outstanding restricted stock awards was $2.5 million for the three months ended April 2, 2017, and $2.2 million for the three months ended April 3, 2016.

As of April 2, 2017, there was $20.5 million of total unrecognized compensation cost related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 2.0 years.

Performance Restricted Stock Units: As part of the Company's executive compensation program, the Company granted 54,337 performance restricted stock units during the three months ended April 2, 2017, that will vest based on performance of the Company. The weighted-average per-share grant date fair value of performance restricted stock units granted during the three months ended April 2, 2017 was $52.78. During the three months ended April 2, 2017, no performance restricted stock units were forfeited. The total compensation expense recognized related to the performance restricted stock units was $0.2 million. As of April 2, 2017, there were 54,337 performance restricted stock units outstanding.

Performance Units: As part of the Company's executive compensation program, the Company granted 49,845 and 77,453 performance units during the three months ended April 2, 2017 and April 3, 2016, respectively. The weighted-average per-share grant-date fair value of performance units granted during the three months ended April 2, 2017 and April 3, 2016 was $52.69 and $42.47, respectively. During the three months ended April 2, 2017 and April 3, 2016, no performance units were forfeited. The total compensation expense recognized related to performance units was $1.1 million and $0.6 million for the three months ended April 2, 2017 and April 3, 2016, respectively. As of April 2, 2017, there were 179,620 performance units outstanding and subject to forfeiture, with a corresponding liability of $4.0 million recorded in accrued expenses and other current liabilities.

Stock Awards: The Company’s stock award program provides non-employee directors an annual equity award. During the three months ended April 2, 2017 and April 3, 2016, the Company did not grant any stock awards.

Employee Stock Purchase Plan: During the three months ended April 2, 2017 and April 3, 2016, the Company did not issue shares of common stock under the Company's Employee Stock Purchase Plan. At April 2, 2017, an aggregate of 0.9 million shares of the Company’s common stock remained available for sale to employees out of the 5.0 million shares authorized by shareholders for issuance under this plan.