Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

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

Stock-Based Compensation

Stock-Based Compensation. Stock-based compensation expense before income tax expense for the three and nine-month periods ended September 30, 2016 and 2015, consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of goods sold	$	105	$	84	$	369	$	285
Research and development	51		35		147		94
Selling, general and administrative	347		439		1,397		1,264
Stock-based compensation expense before taxes	$	503	$	558	$	1,913	$	1,643

As of September 30, 2016, the total remaining unrecognized compensation cost related to non-vested stock options, net of expected forfeitures, was approximately $8.0 million and is expected to be recognized over a weighted average period of 3.61 years.

During the three and nine-month periods ended September 30, 2016, we granted awards representing 21,000 and 805,375 shares of our common stock, respectively. During the three and nine-month periods ended September 30, 2015, we granted awards representing 21,233 and 618,033 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 nine-month periods ended September 30, 2016 and 2015, the fair value of our stock-based awards granted was estimated using the following assumptions for the periods indicated below:

	Nine months ended September 30,
	2016	2015
Risk-free interest rate	1.15% - 1.40%	1.53% - 1.66%
Expected option life	5.0	5.0
Expected dividend yield	—%	—%
Expected price volatility	36.30% - 37.06%	33.72% - 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.