Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Stock-Based Compensation

Stock-based compensation expense, by award

The Company recorded stock-based compensation expense as follows in the unaudited condensed consolidated statements of income and comprehensive income (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	2.1	$	2.0	$	5.6	$	5.3
Restricted stock awards	0.4		0.2		1.2		0.5
Restricted stock units	—		—		—		—
Total stock-based compensation	$	2.5	$	2.2	$	6.8	$	5.8

Stock-based compensation expense, cost allocation

The Company recorded stock-based compensation expense as follows in the unaudited condensed consolidated statements of income and comprehensive income (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Costs of product revenue	$	0.4	$	0.4	$	1.0	$	0.9
Selling, general and administrative	1.7		1.4		4.8		4.0
Research and development	0.4		0.4		1.0		0.9
Total stock-based compensation	$	2.5	$	2.2	$	6.8	$	5.8

Assumptions regarding volatility, expected life, dividend yield and risk-free interest rates

Assumptions for the nine months ended September 30, 2016 and 2015 regarding volatility, expected life, dividend yield and risk-free interest rates are required for the Black-Scholes model and are presented in the table below:

	2016	2015
Risk-free interest rates	1.23% - 2.05%	1.58% - 1.89%
Expected life	5.75 - 7.02 years	6.0 - 6.25 years
Volatility	33.57% - 41.60%	36.09% - 52.23%
Expected dividend yield	0.0% - 0.73%	0.0%

Schedule of stock option activity

Stock option activity for the nine months ended September 30, 2016 was as follows:

	Shares Subject to Options		Weighted Average Option Price		Weighted Average Remaining Contractual Term (Yrs)	Aggregate Intrinsic Value (in millions) (b)
Outstanding at December 31, 2015	4,637,279		$	16.72
Granted	254,042		24.66
Exercised	(799,410	)	13.36
Forfeited	(163,037	)	18.99
Outstanding at September 30, 2016	3,928,874		$	17.82	6.5	$	19.5
Exercisable at September 30, 2016	2,370,900		$	15.92	5.3	$	16.0
Exercisable and expected to vest at September 30, 2016 (a)	3,831,345		$	17.75	6.4	$	19.3

(a) In addition to the options that are vested at September 30, 2016, the Company expects a portion of the unvested options to vest in the future. Options expected to vest in the future are determined by applying an estimated forfeiture rate to the options that are unvested as of September 30, 2016.

(b) The aggregate intrinsic value is based on the positive difference between the fair value of the Company’s common stock price of $22.65 on September 30, 2016, or the date of exercises, as appropriate, and the exercise price of the underlying stock options.

Restricted stock awards

Stock-Based Compensation

Schedule of restricted stock award and restricted stock unit activity

Restricted stock award activity for the nine months ended September 30, 2016 was as follows:

	Shares Subject to Restriction		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2015	243,150		$	18.58
Granted	13,105		24.80
Vested	(81,024	)	17.87
Forfeited	(1,375	)	16.57
Outstanding at September 30, 2016	173,856		$	19.39

Restricted stock units

Stock-Based Compensation

Schedule of restricted stock award and restricted stock unit activity

Restricted stock unit activity for the nine months ended September 30, 2016 was as follows:

	Shares Subject to Restriction	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2015	—	$	—
Granted	8,427	25.95
Outstanding at September 30, 2016	8,427	$	25.95