11. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On February 23, 2017, the Company announced its Board of Directors had authorized the repurchase of up to $100.0 million of the Company’s outstanding common stock. During the six months ended June 30, 2017, the Company repurchased $100.0 million of its common stock, or 2.5 million shares at an average cost of $40.23 per share. The Company had no remaining authorization under this stock repurchase program as of June 30, 2017.

Equity-Based Compensation Plans

As of June 30, 2017, $84.5 million of unrecognized compensation costs related to unvested stock options, restricted stock units (RSUs) and performance share units (PSUs) are expected to be recognized over a remaining weighted average period of 1.5 years. There were no significant capitalized equity-based compensation costs at June 30, 2017.

The following table shows a summary of the equity-based compensation expense included in the Condensed Consolidated Statements of Operations and Comprehensive Income:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Selling, general and administrative	$	8,517	$	7,178	$	15,676	$	13,894
Cost of sales		1,418		1,255		2,615		2,447
Research and development		1,251		978		2,307		1,905
Total equity-based compensation expense	$	11,186	$	9,411	$	20,598	$	18,246

Stock Options

Stock options are awards that allow the recipient to purchase shares of the Company’s common stock at a fixed price. Stock options are granted at an exercise price equal to the Company’s stock price at the date of grant. These awards generally vest over one to three years following the grant date and have a contractual term of ten years.

The following table summarizes the stock option activity (in thousands, except per share data):

	Shares			Weighted Average Option Exercise Price Per Share		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at March 31, 2017		5,404		$	12.65
Granted		3		$	42.32
Exercised		(385	)	$	6.65
Forfeited		(32	)	$	28.16
Options outstanding at June 30, 2017		4,990		$	13.03		4.7	$	124,780

Options outstanding at December 31, 2016		5,497		$	10.33
Granted		484		$	38.00
Exercised		(921	)	$	9.24
Forfeited		(70	)	$	23.83
Options outstanding at June 30, 2017		4,990		$	13.03		4.7	$	124,780
Options exercisable at June 30, 2017		4,075		$	8.50		3.8	$	120,313
Options expected to vest at June 30, 2017		915		$	33.16		8.9	$	4,467

The exercise prices of outstanding options at June 30, 2017 were in the following ranges:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Shares (in thousands)		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price Per Share		Shares (in thousands)		Weighted Average Exercise Price Per Share
$2.96 to $5.35		337		1.7	$	2.96		337	$	2.96
$5.36 to $5.67		99		4.6	$	5.57		99	$	5.57
$5.68 to $8.54		2,277		3.6	$	5.74		2,277	$	5.74
$8.55 to $8.90		888		2.9	$	8.59		888	$	8.59
$8.91 to $23.00		186		6.6	$	22.88		186	$	22.88
$23.01 to $42.32		1,203		8.7	$	31.99		288	$	28.25
$2.96 to $42.32		4,990		4.7	$	13.03		4,075	$	8.50

The Company uses the Black-Scholes model to estimate the fair value of stock option awards at the date of grant. Key inputs and assumptions used in the model include the grant date fair value of common stock, exercise price of the award, the expected option term, stock price volatility, the risk-free interest rate and the Company’s projected dividend yield. The risk-free interest rate reflects the yield on zero-coupon U.S. treasury securities with a term equal to the option’s expected term. The expected life represents the period over which the Company’s employees are expected to hold their options. Expected volatility is derived based on the historical Company volatility, as well as volatilities from publicly traded companies operating in the Company’s industry. The Company’s projected dividend yield is zero. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in estimating the fair values of its stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards. Subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.

The following table presents the weighted average assumptions used to estimate the fair value of stock option awards granted during the three and six months ended June 30, 2017 and 2016.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017			2016	2017			2016
Expected option term (in years)		6.0		*		6.0			6.0
Risk-free interest rate		2.0	%	*		2.0	%		1.4	%
Expected volatility		40.0	%	*		40.0	%		50.0	%
Weighted average exercise price	$	42.32		*	$	38.00		$	24.94
Weighted average fair value at grant date	$	17.48		*	$	15.72		$	12.03

*No stock options were granted during the three months ended June 30, 2016.

Restricted Stock Units

RSUs entitle the holder to shares of common stock after a vesting period that generally ranges from one to three years. The fair value of the awards is determined on the grant date based on the Company’s stock price.

The following table summarizes the RSU activity (in thousands, except per share data):

	Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share
Non-vested RSUs at March 31, 2017		2,495		$	31.65
Granted		33		$	36.09
Vested and shares issued		(33	)	$	29.45
Forfeited		(73	)	$	30.55
Non-vested RSUs at June 30, 2017		2,422		$	31.77

Non-vested RSUs at December 31, 2016		2,519		$	26.37
Granted		1,124		$	37.91
Vested and shares issued		(1,089	)	$	26.09
Forfeited		(132	)	$	27.91
Non-vested RSUs at June 30, 2017		2,422		$	31.77

Performance Share Units

PSUs are stock awards in which the number of shares ultimately received by the employee depends on Company performance against specified targets. Such awards typically vest over three years and the number of shares issued can vary from 0% to 150% of the number of PSUs granted, depending on performance. The fair value of each PSU is determined on the date of grant based on the Company’s stock price. The ultimate number of shares issued and the related compensation cost recognized will be based on the final performance metrics compared to the targets specified in the grants.

The following table summarizes the PSU activity (in thousands, except per share data):

	Performance Share Units			Weighted Average Grant Date Fair Value Per Share
Non-vested PSUs at March 31, 2017		571		$	30.19
Granted		1		$	42.32
Vested and shares issued		-		$	-
Forfeited		(13	)	$	25.40
Non-vested PSUs at June 30, 2017		559		$	30.32

Non-vested PSUs at December 31, 2016		445		$	26.68
Granted		200		$	38.00
Vested and shares issued		(64	)	$	30.76
Forfeited		(22	)	$	25.22
Non-vested PSUs at June 30, 2017		559		$	30.32