CAPITAL STOCK

Stock Plans

The 2005 Long-Term Incentive Compensation Plan (the “2005 Incentive Compensation Plan”) permits the award of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, deferred stock/restricted stock units, other stock units and performance shares to the Company’s key employees, officers and directors. The 2005 Incentive Compensation Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”) consisting of four independent members of the Company's Board of Directors.

The maximum number of shares available for award under the 2005 Incentive Compensation Plan is 19,824,920. The maximum number of shares that may be issued pursuant to incentive stock options may not exceed 500,000. Any shares that are subject to the award of stock options shall be counted against this limit as one share for every one share issued. Any shares that are subject to awards other than stock options shall be counted against this limit as 3.02 shares for every one share granted. The total shares available for future grant as of March 30, 2019 were 3,897,238.

Share-Based Compensation

Compensation cost related to share-based transactions is recognized in the consolidated financial statements based on fair value. The total amount of share-based compensation expense, which is recorded on a straight line basis, was as follows:



(In thousands)	2019	2018	2017
Selling, general and administrative expenses	$12,878	$9,960	$6,894
Research and development	2,972	2,114	1,549
Cost of goods sold	1,338	951	707
	$17,188	$13,025	$9,150

Stock Options

Options are granted to purchase common stock at prices as determined by the Committee, but in no event shall such exercise price be less than the fair market value of the common stock at the time of the grant. Options generally vest in equal installments over a four year period for employees and one year from grant for non-employee directors. Options expire not more than 7 years from the date of the grant. The grant-date fair value of options, adjusted for estimated forfeitures, is recognized as expense on a straight line basis over the requisite service period, which is generally the vesting period. Forfeitures are estimated based on historical experience.

A summary of stock option activity for the fiscal year ended March 30, 2019 is as follows:



	Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remaining Life (years)	Aggregate Intrinsic Value ($000’s)
Outstanding at March 31, 2018	1,197,438		$	36.68	4.71	$	43,685
Granted	209,675		94.67
Exercised	(290,824	)	35.87
Forfeited/Canceled	(102,886	)	40.01
Outstanding at March 30, 2019	1,013,403		$	48.55	4.48	$	40,902

Exercisable at March 30, 2019	366,857		$	36.63	3.06	$	18,655

Vested or expected to vest at March 30, 2019	936,291		$	47.16	4.20	$	38,931

The total intrinsic value of options exercised was $19.4 million, $15.4 million and $8.3 million during fiscal 2019, 2018 and 2017, respectively.

As of March 30, 2019, there was $7.3 million of total unrecognized compensation cost related to non-vested stock options. This cost is expected to be recognized over a weighted average period of 2.8 years.

The fair value was estimated using the Black-Scholes option-pricing model based on the average of the high and low stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of the Company's common stock over the expected term of the option. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued. The expected life of the option was estimated with reference to historical exercise patterns, the contractual term of the option and the vesting period.

The assumptions utilized for option grants during the periods presented are as follows:



	2019			2018			2017
Volatility	26.1		%	24.2		%	24.0		%
Expected life (years)	4.9			4.8			4.9
Risk-free interest rate	2.8		%	1.7		%	1.2		%
Dividend yield	0.0		%	0.0		%	0.0		%
Grant-date fair value per Option	$	26.67		$	10.25		$	7.61

Restricted Stock Units

Restricted Stock Units ("RSUs") generally vest in equal installments over a four year period for employees and one year from grant for non-employee directors. The grant-date fair value of RSUs, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The fair market value of RSUs is determined based on the market value of the Company’s shares on the date of grant.

A summary of RSU activity for the fiscal year ended March 30, 2019 is as follows:



	Shares		Weighted Average Grant Date Fair Value
Unvested at March 31, 2018	417,714		$	38.95
Granted	108,611		94.55
Vested	(150,583	)	40.04
Forfeited	(66,520	)	44.15
Unvested at March 30, 2019	309,222		$	57.07

The weighted-average grant-date fair value of RSUs granted and total fair value of RSUs vested are as follows:



	2019		2018		2017
Grant-date fair value per RSU	$	94.55	$	41.87	$	32.61
Fair value of RSUs vested	$	40.04	$	33.03	$	34.98

As of March 30, 2019, there was $13.1 million of total unrecognized compensation cost related to non-vested restricted stock units. This cost is expected to be recognized over a weighted average period of 2.6 years.

Performance Share Units

The grant date fair value of Performance Share Units ("PSUs"), adjusted for estimated forfeitures, is recognized as expense on a straight line basis from the grant date through the end of the performance period. The value of these PSUs is generally based on relative total shareholder return which equals total shareholder return for the Company as compared to total shareholder return of the PSU comparison group, measured over a three year performance period. The PSU comparison group consists of the S&P Mid Cap 400 and the S&P Small Cap 600 indices. Depending on the Company's relative performance during the performance period, a recipient of the award is entitled to receive a number of ordinary shares equal to a percentage, ranging from 0% to 200%, of the award granted. If the Company’s total shareholder return for the performance period is negative, then any share payout will be capped at 100% of the target award, regardless of the Company's performance relative to the its comparison group. In addition to these relative total shareholder return PSUs, the Company's Chief Executive Officer received PSU grants during both fiscal 2018 and 2017 with performance conditions based on the financial results of the Company and other internal metrics. As a result, the Company may issue up to 872,887 shares related to outstanding performance based awards.

A summary of PSU activity for the fiscal year ended March 30, 2019 is as follows:



	Shares		Weighted Average Grant Date Fair Value
Unvested at March 31, 2018	388,107		$	39.63
Granted	94,460		115.64
Vested⁽¹⁾	(12,352	)	29.20
Forfeited	(21,559	)	49.50
Unvested at March 30, 2019⁽²⁾⁽³⁾	448,656		$	54.22

⁽¹⁾ Includes the vesting of 6,176 shares that were earned in connection with awards granted in fiscal 2016 for the three-year performance cycle award period ended September 30, 2018, based on actual relative total shareholder return of 200%.

⁽²⁾ Includes 48,851 shares that were earned in connection with the fiscal 2018 and 2017 internal metrics awards granted to the Company's Chief Executive Officer for the performance period ended March 30, 2019, disclosed in this table at the target number of 100%. The fiscal 2018 and 2017 awards were certified by the Committee in May 2019 at 144.31% and 80.05%, respectively.

⁽³⁾ Includes 65,525 shares that were earned for awards granted in fiscal 2017 for the performance period ended March 30, 2019, disclosed in this table at the target number of 100%. Shares earned under this award were certified by the Committee in April 2019 based on the actual relative total shareholder return of 200%.

The Company uses the Monte Carlo model to estimate the probability of satisfying the performance criteria and the resulting fair value of PSU awards with market conditions. The assumptions used in the Monte Carlo model for PSUs granted during each fiscal year were as follows:



	2019		2018		2017
Expected stock price volatility	27.07	%	26.11	%	26.39	%
Peer group stock price volatility	34.98	%	34.13	%	33.86	%
Correlation of returns	47.57	%	49.51	%	51.17	%

The weighted-average grant-date fair value of PSUs granted and total fair value of PSUs vested are as follows:



	2019		2018		2017
Grant-date fair value per PSU	$	115.64	$	46.49	$	34.07
Fair value of PSUs vested	$	29.20	$	—	$	—

As of March 30, 2019, there was $11.7 million of total unrecognized compensation cost related to non-vested performance share units. This cost is expected to be recognized over a weighted average period of 1.9 years.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “Purchase Plan”) under which a maximum of 3,200,000 shares (subject to adjustment for stock splits and similar changes) of common stock may be purchased by eligible employees. Substantially all of its full-time employees are eligible to participate in the Purchase Plan.

The Purchase Plan provides for two “purchase periods” within each of its fiscal years, the first commencing on November 1 of each year and continuing through April 30 of the next calendar year, and the second commencing on May 1 of each year and continuing through October 31 of such year. Shares are purchased through an accumulation of payroll deductions (of not less than 2% or more than 15% of compensation, as defined) for the number of whole shares determined by dividing the balance in the employee’s account on the last day of the purchase period by the purchase price per share for the stock determined under the Purchase Plan. The purchase price for shares is the lower of 85% of the fair market value of the common stock at the beginning of the purchase period, or 85% of such value at the end of the purchase period.

The fair values of shares purchased under the Employee Stock Purchase Plan are estimated using the Black-Scholes single option-pricing model with the following weighted average assumptions:



	2019		2018		2017
Volatility	30.0	%	22.6	%	31.3	%
Expected life (months)	6		6		6
Risk-free interest rate	2.3	%	1.2	%	0.5	%
Dividend Yield	0.0	%	0.0	%	0.0	%

The weighted average grant date fair value of the six-month option inherent in the Purchase Plan was approximately $21.51, $9.66 and $7.79 during fiscal 2019, 2018 and 2017, respectively.