Stock-based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Stock Purchase Plan Stock Options and Warrants

Stock-Based Compensation. Stock-based compensation expense before income tax expense for the three-month periods ended March 31, 2016 and 2015, consisted of the following (in thousands):

	Three Months Ended March 31,
	2016		2015
Cost of goods sold	$	123	$	93
Research and development	42		27
Selling, general, and administrative	459		400
Stock-based compensation expense before taxes	$	624	$	520

As of March 31, 2016, the total remaining unrecognized compensation cost related to non-vested stock options, net of expected forfeitures, was approximately $8.1 million and is expected to be recognized over a weighted average period of 3.65 years.

During the three-month periods ended March 31, 2016 and 2015, we granted awards representing 563,500 and 446,800 shares of our common stock, respectively. We use the Black-Scholes methodology to value the stock-based compensation expense for options. In applying the Black-Scholes methodology to the options granted during the three-month periods ended March 31, 2016 and 2015, the fair value of our stock-based awards granted was estimated using the following assumptions for the periods indicated below:

	Three months ended March 31,
	2016	2015
Risk-free interest rate	1.40%	1.53%
Expected option life	5.0	5.0
Expected dividend yield	—%	—%
Expected price volatility	37.06%	35.11%

For purposes of the foregoing analysis, the average risk-free interest rate is determined using the U.S. Treasury rate in effect as of the date of grant, based on the expected term of the stock option. The expected term of the stock options is determined using the historical exercise behavior of employees. The expected price volatility is determined using a weighted average of daily historical volatility of our stock price over the corresponding expected option life and implied volatility based on recent trends of the daily historical volatility. Compensation expense is recognized on a straight-line basis over the service period, which corresponds to the related vesting period.