Employee Benefits and Share-Based Compensation

Stock based plans

For a detailed explanation of the Company's stock plans and subsequent changes, please refer to Note 11, Employee Benefits and Stock-Based Compensation, of its Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 26, 2016.

Share-based compensation expense

The following table sets forth the total share-based compensation expense recognized in the Company's Condensed Consolidated Statements of Operations:



	Three months ended				Nine months ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
	(In thousands)
Cost of product and service revenues	$	628	$	581	$	1,821	$	1,630
Research and development	825		587		2,267		1,472
Selling, general and administrative	3,224		2,798		9,975		8,165
Total share-based compensation expense	$	4,677	$	3,966	$	14,063	$	11,267

The following weighted average assumptions are used to value stock options and Employee Stock Purchase Plan ("ESPP") shares issued pursuant to the Company's equity incentive plans for the three and nine months ended September 30, 2016 and September 30, 2015:



	Three months ended				Nine months ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015

Stock Option Plans
Expected life, years	4.92		5.04		4.92		5.04
Expected volatility, %	30.0	%	29.3	%	31.4	%	31.1	%
Risk free interest rate, %	1.21	%	1.73	%	1.34	%	1.63	%
Estimated forfeiture rate %	8.6	%	2.5	%	8.6	%	2.5	%
Dividend yield, %	—	%	—	%	—	%	—	%



	Three months ended				Nine months ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015

Employee Stock Purchase Plan
Expected life, years	0.5-2.0		0.5-2.0		0.5-2.0		0.5-2.0
Expected volatility, %	25.8-34.8%		25.8-34.4%		25.8-34.8%		25.8-37.5%
Risk free interest rate, %	0.41-0.79%		0.12-0.79%		0.34-0.79%		0.03-0.79%
Dividend yield, %	—	%	—	%	—	%	—	%

Stock options activity

The following table summarizes the share option activity under the Company’s equity incentive plans during the nine months ended September 30, 2016:



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Years	Aggregate Intrinsic Value⁽¹⁾
	(In thousands, except per share data)
Stock Options
Outstanding at December 31, 2015	2,688		$	22.89	6.9
Granted	512		29.25
Exercised	(352	)	19.24
Expired	(5	)	28.75
Forfeited	(100	)	29.74
Outstanding at September 30, 2016	2,743		$	24.30	7.0	$	38,482
Exercisable at September 30, 2016	1,368		$	19.36	5.2	$	25,929
Vested and expected to vest at September 30, 2016 and thereafter	2,597		$	23.99	6.9	$	37,230

_________________________________________________

The weighted-average fair value per share of options granted during the three and nine months ended September 30, 2016, was $10.32 and $8.82, respectively, and the weighted-average fair value per share of options granted during the three and nine months ended September 30, 2015 was $10.51 and $10.57, respectively. The intrinsic value of options exercised during the three and nine months ended September 30, 2016 was $2.1 million and $5.0 million, respectively. The intrinsic value of options exercised during the three and nine months ended September 30, 2015 was $3.1 million and $9.7 million, respectively.

As of September 30, 2016, total unrecognized compensation cost related to unvested stock options was $10.1 million, which is expected to be recognized over a weighted-average vesting period of 2.8 years.

Restricted stock activity

The following table summarizes the restricted stock activity under the Company’s equity incentive plans during the nine months ended September 30, 2016:



	Number of Shares		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Years	Aggregate Intrinsic Value
	(In thousands, except per share data)
Restricted Stock Units ("RSUs")
Outstanding at December 31, 2015	417		$	28.49	1.6
Granted	121		29.19
Vested	(106	)	26.80
Forfeited	(19	)	27.85
Outstanding and unvested at September 30, 2016	413		$	29.16	1.3	$	15,812

The weighted-average grant date fair value per share of RSU granted during the nine months ended September 30, 2016 and September 30, 2015 was $29.19 and $34.72, respectively.

As of September 30, 2016, total unrecognized compensation expense related to RSUs was $9.2 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.5 years.



	Number of Shares		Weighted-Average Grant Date Fair Value
	(In thousands, except per share data)
Restricted Stock Awards ("RSAs")
Outstanding at December 31, 2015	31		$	35.97
Granted	35		31.59
Vested	(31	)	36.03
Forfeited	—		—
Outstanding and unvested at September 30, 2016	35		$	31.56

As of September 30, 2016, total unrecognized compensation cost related to RSAs was $0.6 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.66 years.

Performance-based restricted stock unit activity

The following table summarizes the performance-based restricted stock activity under the Company’s equity incentive plans during the nine months ended September 30, 2016:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Unit
	(In thousands, except per share data)
Performance-based Restricted Stock Units ("PSUs")
Outstanding at December 31, 2015	151		$	23.33
Granted	122		24.66
Vested	(52	)	23.04
Forfeited	—		—
Outstanding and unvested at September 30, 2016	221		$	24.13

The weighted-average grant date fair value per share of PSUs granted during the nine months ended September 30, 2016 and September 30, 2015 was $24.66 and $29.56, respectively. As of September 30, 2016, total unrecognized compensation cost related to PSUs was $2.1 million, which is expected to be recognized over the remaining weighted-average period of 1.2 years.

Employee Stock Purchase Plan activity

As of September 30, 2016, the unrecognized compensation cost related to the shares to be purchased under the ESPP was approximately $5.2 million and is expected to be recognized over a weighted-average period of 2.0 years.

Summary of shares reserved for future issuance under equity incentive plans

The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of September 30, 2016:



	Number of Shares
	(In thousands)
Share options outstanding	2,743
Non-vested restricted share awards	668
Shares authorized for future issuance	2,831
ESPP shares available for future issuance	2,831
Total shares reserved for future issuance	9,073

Stock Repurchase Program

On August 2, 2016, the Board of Directors (the "Board") of (the “Company”) authorized a stock repurchase program providing for the repurchase of up to $50.0 million of the Company’s common stock (the “2016 Repurchase Program”). The 2016 Repurchase Program is in addition to the stock repurchase program approved by the Board on November 4, 2014 (the “2014 Repurchase Program”). As of September 30, 2016, the maximum dollar value of shares that may yet be purchased under the two repurchase programs was $54.9 million.

The timing, price and volume of repurchases are to be based on market conditions, relevant securities laws and other factors. The stock repurchases may be made from time to time on the open market, in privately negotiated transactions or pursuant to a Rule 10b-18 plan, subject to the terms and conditions of that certain Credit Agreement, dated as of January 5, 2016, among the Company, the Lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent. The stock repurchase program does not obligate the Company to repurchase any specific number of shares, and the Company may terminate or suspend the repurchase program at any time.

During the three and nine months period ended September 30, 2016, the Company did not repurchase any of its outstanding common stock. The Company repurchased approximately1,424 thousand shares under its stock repurchase programs for $50.02 million during the nine months ended September 30, 2015.