Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

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 March 31,
	2017		2016
Stock options	$	1.7	$	1.8
Restricted stock awards	0.3		0.4
Restricted stock units	0.6		—
Total stock-based compensation	$	2.6	$	2.2

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 March 31,
	2017		2016
Costs of product revenue	$	0.4	$	0.3
Selling, general and administrative	1.8		1.6
Research and development	0.4		0.3
Total stock-based compensation	$	2.6	$	2.2

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

Assumptions for the three months ended March 31, 2017 and 2016 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:

	2017	2016
Risk-free interest rates	2.02% - 2.09%	1.32% - 2.05%
Expected life	5.56 years	5.75 - 7.02 years
Volatility	33.97% - 34.13%	34.39% - 41.60%
Expected dividend yield	0.67% - 0.74%	0% - 0.63%

Schedule of stock option activity

Stock option activity for the three months ended March 31, 2017 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, 2016	4,625,678		$	18.73
Granted	10,430		22.80
Exercised	(83,829	)	14.41
Forfeited	(69,772	)	17.73
Outstanding at March 31, 2017	4,482,507		$	18.83	6.5	$	20.7
Exercisable at March 31, 2017	2,304,015		$	16.42	5.0	$	16.0
Exercisable and expected to vest at March 31, 2017 (a)	4,336,330		$	18.75	6.4	$	20.3

(a) In addition to the options that are vested at March 31, 2017, 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 March 31, 2017.

(b) The aggregate intrinsic value is based on the positive difference between the fair value of the Company’s common stock price of $23.33 on March 31, 2017, 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 three months ended March 31, 2017 was as follows:

	Shares Subject to Restriction		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	172,506		$	19.37
Vested	(3,276	)	24.80
Forfeited	(4,053	)	22.46
Outstanding at March 31, 2017	165,177		$	19.19

Restricted stock units

Stock-Based Compensation

Schedule of restricted stock award and restricted stock unit activity

Restricted stock unit activity for the three months ended March 31, 2017 was as follows:

	Shares Subject to Restriction		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	262,317		$	22.32
Granted	53,581		21.91
Forfeited	(9,199	)	22.19
Outstanding at March 31, 2017	306,699		$	22.25