Stockholders’ Equity

Issuances and Repurchases of Common Stock

The Company issued 99,669 shares of common stock in conjunction with the vesting and release of RSUs, 954,527 shares of common stock upon the exercise of stock options and 58,099 shares of common stock in connection with the Company’s employee stock purchase plan (the “ESPP”), resulting in net proceeds to the Company of approximately $15.2 million during the nine months ended September 30, 2017. The Company repurchased no shares of common stock under its previously announced share repurchase program during nine months ended September 30, 2017. The Company withheld 25,079 shares of outstanding common stock in connection with payment of minimum tax withholding obligations for certain employees relating to the lapse of restrictions on certain RSUs of approximately $0.5 million during the nine months ended September 30, 2017. The Company repurchased 1,152,386 shares of common stock under its previously announced share repurchase program for approximately $19.6 million during the nine months ended September 30, 2016. The Company withheld 25,699 shares of outstanding common stock in connection with payment of minimum tax withholding obligations for certain employees relating to the lapse of restrictions on certain RSUs of approximately $0.4 million during the nine months ended September 30, 2016. As of September 30, 2017, there was $35.0 million available under the Company’s share repurchase program.

Stock-Based Compensation

The compensation expense related to the Company’s stock-based compensation plans included in the accompanying Consolidated Statements of Operations was as follows (in thousands):



	Three months ended September 30,				Nine months ended September 30,
	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Cost of sales	$	117	$	129	$	354	$	498
Research and development	396		365		1,212		1,006
Sales and marketing	434		376		1,341		645
General and administrative	932		864		3,031		3,671
Total stock-based compensation expense	$	1,879	$	1,734	$	5,938	$	5,820

Total compensation expense recognized for the three and nine months ended September 30, 2017 includes $1.0 million and $3.1 million related to stock options and $0.9 million and $2.8 million related to RSUs. Total compensation expense recognized for the three and nine months ended September 30, 2016 includes $1.1 million and $3.5 million related to stock options and $0.6 million and $2.3 million related to RSUs. As of September 30, 2017, total unrecognized compensation expense related to non-vested stock options was $5.3 million, which is expected to be recognized over a weighted-average period of approximately 2.1 years. As of September 30, 2017, total unrecognized compensation expense related to non-vested restricted stock was $6.1 million, which is expected to be recognized over a weighted-average period of approximately 2.4 years. Compensation expense capitalized to inventory and compensation expense related to the Company’s ESPP were not material for the three and nine months ended September 30, 2017 or 2016.

The estimated fair value of each stock option was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the option grants.



	Nine months ended September 30,
	Nine months ended September 30,
	2017		2016
Risk-free interest rate	2.31	%	1.47	%
Expected option life (in years)	6.63		6.59
Volatility rate	36	%	36	%
Dividend rate	—	%	—	%

The weighted-average fair value of stock options granted during the nine months ended September 30, 2017 and 2016 was $8.71 and $5.97, respectively. The Company granted 253,844 and 670,733 stock options during the nine months ended September 30, 2017 and 2016, respectively. The fair value of RSUs is determined based on the closing market price of the Company’s common stock on the grant date. The weighted-average fair value of RSUs granted during the nine months ended September 30, 2017 and 2016 was $21.61 and $16.06, respectively. The Company granted 335,716 and 182,425 shares of restricted stock during the nine months ended September 30, 2017 and 2016, respectively.