(16) Stock-based Employee Compensation

We measure the compensation expense of all stock-based awards at fair value on the grant date. We estimate the fair value of stock options and purchase rights granted under the ESPP using the Black-Scholes valuation model. The fair value of restricted stock units is equal to the market value of the underlying shares as determined at the grant date less the fair value of dividends that holders are not entitled to, during the vesting period. We recognize the fair value as compensation expense using the straight-line method over the service period for awards expected to vest.

We estimate the fair value of stock options granted under our stock option plans and purchase rights granted under the ESPP using the following assumptions:


	Fiscal Year Ended June 30,
	2019		2018		2017
Stock options:
Weighted average grant date fair value	$	21.92	$	16.68	$	10.89
Weighted average risk-free interest rate		2.96%		2.08%		1.61%
Expected life in years		4.9		4.9		4.9
Dividend yield		1.34% - 1.46%		1.46% - 1.65%		2.02% - 2.29%
Expected volatility		23%		23%		25%
ESPP purchase rights:
Weighted average grant date fair value	$	22.12	$	17.44	$	12.50
Weighted average risk-free interest rate		2.4%		0.8%		0.5%
Expected life in years		6 months		6 months		6 months
Dividend yield		1.40% - 1.47%		1.47% - 1.92%		1.92% - 2.27%
Expected volatility		23%		23%		23%

During the fiscal years ended June 30, 2019 and June 30, 2018, we granted 139,000 and 167,000, performance restricted stock units (“PRSUs”), which contain a market condition, with the ultimate realizable number of PRSUs dependent on relative total stockholder return over a three-year period, up to a maximum amount to be issued under the award of 225% of the original grant. The weighted average grant date fair value of PRSUs granted during the fiscal years 2019 and 2018 was estimated at $98.23 and $76.20 per PRSU, respectively, using a Monte-Carlo simulation valuation model.

The following table summarizes the total stock-based compensation costs incurred and the associated tax benefit recognized during the years ended June 30, 2019, 2018 and 2017 (in thousands):


	2019		2018		2017
Cost of sales - capitalized as part of inventory	$	3,043	$	2,990	$	2,877
Selling, general and administrative expenses		42,700		39,754		37,096
Research and development expenses		6,330		5,668		5,952
Stock-based compensation costs		52,073		48,412		45,925
Tax benefit		(26,658)		(17,078)		(20,100)
Stock-based compensation costs, net of tax benefit	$	25,415	$	31,334	$	25,825