Share-Based Compensation

9 Months Ended

Sep. 30, 2015

NOTE F – Share-Based Compensation

The table below sets forth the line items where share-based compensation expense was recorded for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Cost of goods sold	$	99	$	114	$	345	$	317
Selling, general and administrative		3,713		3,311		10,307		9,119
Research and development		287		313		1,003		891
Total share-based compensation expense	$	4,099	$	3,738	$	11,655	$	10,327

Stock Options. Stock options generally vest in equal annual installments over a four-year period and expire eight years after the grant date. Stock option expense was estimated on the date of grant using the Black-Scholes-Merton option pricing model.

The total net cash proceeds received from stock option exercises during the nine months ended September 30, 2015 was approximately $10 million. Stock option expense was approximately $1 million for both the three months ended September 30, 2015 and 2014, and $2 million and $3 million for the nine months ended September 30, 2015 and 2014, respectively.

The table below sets forth a summary of stock option activity for the nine months ended September 30, 2015:

Stock Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2015		2,736		$	21.26		4.0	$	17,840
Granted		-			-		-		-
Exercised		(639	)		15.50		-		7,785
Forfeited or expired		(20	)		-		-		-
Outstanding at September 30, 2015		2,077			23.02		4.2		2,739
Exercisable at September 30, 2015		1,790			22.81		3.8		2,586

The aggregate intrinsic value in the table above is before applicable income taxes and represents the amount option holders would have received if all options had been exercised on the last business day of the period indicated, based on our closing stock price.

As of September 30, 2015, total unrecognized share-based compensation expense related to unvested stock options, net of forfeitures, was approximately $3 million, before income taxes, and is expected to be recognized over a weighted average period of approximately two years.

Share Grants. Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period.

Share grant expense for the three months ended September 30, 2015 and 2014 was approximately $4 million and $3 million, respectively, and share grant expense for the nine months ended September 30, 2015 and 2014 was approximately $10 million and $8 million, respectively.

The table below sets forth a summary of restricted stock awards and restricted stock units for the nine months ended September 30, 2015:

Share Grants	Shares			Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value
Non-vested at January 1, 2015		1,535		$	23.32	$	42,324
Granted		821			24.02		-
Vested		(371	)		25.17		9,158
Forfeited		(34	)		26.11		-
Non-vested at September 30, 2015		1,951			22.92		41,606

As of September 30, 2015, total unrecognized share-based compensation expense related to non-vested stock awards, net of forfeitures, was approximately $40 million, before income taxes, and is expected to be recognized over a weighted average period of approximately three years.