Stock-based Compensation

Stock-based compensation expense recognized in the Consolidated Statements of Income are as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Cost of goods sold	$	639	$	578	$	1,295	$	1,231
Research and development	1,380		1,206		2,579		2,287
Selling, general and administrative	6,428		5,846		10,734		9,809
Restructuring expenses	—		—		2,595		—
Stock-based compensation expense	$	8,447	$	7,630	$	17,203	$	13,327

Stock-based compensation costs capitalized in inventory are as follows (in thousands):



	June 30,
	2014		2013
Capitalized in inventory	$	694	$	755

As of June 30, 2014, the Company had $50.7 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, to be recognized over a weighted average period of 2.1 years.


Note 2.	Stock-based Compensation - (Continued)

The fair value of the stock-based awards granted in the three and six months ended June 30, 2014 and 2013 was estimated with the following weighted-average assumptions:



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Stock option awards:
Risk-free interest rate	0.9	%	0.3	%	0.9	%	0.3	%
Expected dividend yield	1.2	%	1.5	%	1.2	%	1.5	%
Expected term	4.3 years		4.3 years		4.3 years		4.3 years
Expected volatility	28.7	%	33.8	%	28.7	%	33.8	%
Employee stock purchase plan:
Risk-free interest rate	0.5	%	0.1	%	0.5	%	0.1	%
Expected dividend yield	1.2	%	1.5	%	1.2	%	1.5	%
Expected term	6 months		6 months		6 months		6 months
Expected volatility	28.2	%	25.0	%	28.2	%	25.0	%

The weighted average fair value of stock-based compensation awards granted and vested, and the intrinsic value of options exercised during the period were (in thousands, except per share amounts):



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Stock Option Awards:
Weighted average grant date fair value per share	$	7.32	$	5.86	$	7.32	$	5.86
Total fair value of awards granted	$	4,446	$	5,817	$	4,446	$	5,817
Total fair value of awards vested	$	4,651	$	5,013	$	4,662	$	5,026
Total intrinsic value of options exercised	$	12,418	$	652	$	21,334	$	1,839
Restricted Stock Unit Awards:
Weighted average grant date fair value per share	$	32.87	$	23.43	$	32.85	$	23.38
Total fair value of awards granted	$	21,660	$	25,188	$	21,830	$	25,330
Total fair value of awards vested	$	24,157	$	13,134	$	27,761	$	13,319
Employee Stock Purchase Plan:
Weighted average grant date fair value per share	$	7.87	$	5.25	$	7.87	$	5.25
Total fair value of shares estimated to be issued	$	591	$	552	$	591	$	552

The total amount of cash received from the exercise of stock options in the three months ended June 30, 2014 and 2013 was $18.0 million and $0.6 million, respectively, and the related tax impact realized from the exercise of the stock options was a benefit of $4.3 million and an expense of $0.3 million, respectively. The total amount of cash received from the exercise of stock options in the six months ended June 30, 2014 and 2013 was $28.1 million and $1.7 million, respectively, and the related tax impact realized from the exercise of the stock options was a benefit of $7.0 million and $0.1 million, respectively.


Note 2.	Stock-based Compensation - (Continued)

Information with respect to stock option activity is as follows:



	Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2013	7,338		$	22.38	4.6
Granted	608		33.86
Exercised	(1,439	)	19.52
Forfeited	(53	)	33.09
Outstanding at June 30, 2014	6,454		$	24.01	5.0	$	69,324
Exercisable at June 30, 2014	5,232		$	23.02	4.0	$	61,455
Vested and expected to vest at June 30, 2014	6,393		$	23.97	5.0	$	68,931

Information with respect to restricted stock unit activity is as follows:



	Shares (in thousands)		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2013	2,788		$	21.16
Granted	665		32.85
Vested and distributed	(807	)	25.00
Forfeited	(85	)	25.99
Outstanding at June 30, 2014	2,561		$	22.82

During the six months ended June 30, 2014 and 2013, the Company granted approximately 665,000 and 1,088,000 time-vested restricted stock units, respectively. The fair value of time-vested restricted stock units is fixed and determined on the date of grant based upon the Company's stock price on the date of grant. The weighted average fair values per share of the time-vested restricted stock units granted during the six months ended June 30, 2014 and 2013 were $32.85 and $23.43, respectively.

During the six months ended June 30, 2013, the Company also granted approximately 7,000 market-based restricted stock units. These units may be earned based upon the Company's total shareholder return compared to the total shareholder return of the S&P 500 Index over a three year period. The fair value per share of the market-based restricted stock units granted during the six months ended June 30, 2013 was $15.87. There were no market-based restricted stock units granted during the three or six months ended June 30, 2014.

There were 85,000 shares issued under the 2011 Employee Stock Purchase Plan ("ESPP") during the six months ended June 30, 2014 and 3,545,000 shares remain available under the ESPP at June 30, 2014 for future issuance. Shares issued for ESPP

purchases are newly issued shares.