15. Share-Based Compensation

The Company's share-based compensation consists of stock-settled stock appreciation rights (SARs), restricted stock unit awards with a service condition (time-based RSUs), restricted stock unit awards with a performance condition (performance-based RSUs), restricted stock unit awards with a market performance condition (market-based RSUs) and an employee stock purchase plan.

The Company recognizes expense related to the fair value of SARs and the 1990 Employee Stock Purchase Plan (ESPP) using the Black-Scholes model to estimate the fair value of awards on the date of grant. The fair value of time-based and performance-based restricted stock units (RSUs) are measured on the grant date based on the market value of the Company's common stock. The market-based RSUs must achieve the total shareholder return (TSR) measures in order for the awards to vest, and the grant date fair value of the awards is calculated using a Monte Carlo simulation model.

Except for performance-based RSUs, the Company recognizes compensation expense for all share-based compensation awards, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. Expense for performance-based RSUs is recognized based on the probability of achievement of the performance criteria. The compensation cost for market-based RSUs is recognized over the related service period, even if the market condition is never satisfied. The impact of adjustments related to awards where the requisite service period was not completed is reflected as an offset to current period shared-based compensation expense.

The Company granted a total of 442,400 time-based RSUs and 222,400 market-based RSUs during the first three quarters of 2018, but did not grant any SARs or performance-based RSUs. Grants for the third quarter of 2018 consisted of 46,000 time-based RSUs and 25,000 market-based RSUs.

Share-based compensation expense under the stock incentive plans is included in the Company’s Condensed Consolidated Statements of Operations as follows:



	Fiscal quarter ended				Three fiscal quarters ended
(In thousands)	Dec 30, 2017		Dec 31, 2016		Dec 30, 2017		Dec 31, 2016
Cost of sales	$	64	$	142	$	208	$	398
Selling, general and administrative	498		1,391		2,629		3,573
Research, development and engineering	151		285		484		656
Total share-based compensation expense	$	713	$	1,818	$	3,321	$	4,627

The Company does not have any capitalizable share-based compensation costs for the three fiscal quarters ended December 30, 2017 and December 31, 2016, respectively. As of December 30, 2017, the Company had $8.0 million of total unrecognized share-based compensation costs, net of estimated forfeitures, which are expected to be recognized over a weighted average period of 2.3 years.