Stock-based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-Based Compensation. Stock-based compensation expense before income tax expense for the three and nine-month periods ended September 30, 2015 and 2014, consisted of the following (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Cost of goods sold	$	84	$	19	$	285	$	109
Research and development	35		24		94		57
Selling, general, and administrative	439		298		1,264		838
Stock-based compensation expense before taxes	$	558	$	341	$	1,643	$	1,004

As of September 30, 2015, the total remaining unrecognized compensation cost related to non-vested stock options, net of expected forfeitures, was approximately $6.5 million and is expected to be recognized over a weighted average period of 3.66 years.

During the three and nine-month periods ended September 30, 2015, we granted awards representing 21,233 and 618,033 shares of our common stock, respectively. We did not grant any awards for shares of our common stock during the three-month period ended September 30, 2014; however, during the nine-month period ended September 30, 2014, we granted awards representing 125,000 shares of our common stock. We use the Black-Scholes methodology to value the stock-based compensation expense for options. In applying the Black-Scholes methodology to the options granted during the nine-month periods ended September 30, 2015 and 2014, the fair value of our stock-based awards granted was estimated using the following assumptions:

	Nine Months Ended
	September 30, 2015			September 30, 2014
Risk-free interest rate	1.53%	-	1.66%	1.97%
Expected option life in years	5.0			5.5
Expected dividend yield	—%			—%
Expected price volatility	33.72%	-	35.11%	36.90%

For purposes of the foregoing analysis, the average risk-free interest rate is determined using the U.S. Treasury rate in effect as of the date of grant, based on the expected term of the stock option. The expected term of the stock options is determined using the historical exercise behavior of employees. The expected price volatility is determined using a weighted average of daily historical volatility of our stock price over the corresponding expected option life and implied volatility based on recent trends of the daily historical volatility. Compensation expense is recognized on a straight-line basis over the service period, which corresponds to the related vesting period.