STOCK-BASED COMPENSATION

The Company recognizes the grant-date fair value of stock-based compensation as compensation expense using the straight-line attribution approach over the service period for which the stock-based compensation is expected to vest. The following table summarizes the amount of stock-based compensation included in the condensed consolidated statements of operations:



	Three Months Ended September 30,						Six Months Ended September 30,
(in thousands)	2014			2015			2014			2015
Cost of revenues	$	668		$	879		$	1,203		$	1,658

Research, development and engineering	2,115			2,619			3,866			4,978
Selling, general and administrative	4,604			5,334			8,623			10,246
Stock-based compensation included in operating expenses	6,719			7,953			12,489			15,224
Total stock-based compensation	7,387			8,832			13,692			16,882
Income tax benefit	(2,239		)	(2,642		)	(4,028		)	(4,964		)
Total stock-based compensation, net of tax	$	5,148		$	6,190		$	9,664		$	11,918

Stock Options

The following is a summary of the Company’s stock option activity during the six months ended September 30, 2015:



	Options Outstanding
	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)		(in dollars)		(in years)	(in thousands)
Outstanding at March 31, 2015	1,558		$	36.59
Options granted	156		$	54.17
Options exercised	(197	)	$	30.98
Options forfeited or expired	(36	)	$	46.67
Outstanding at September 30, 2015	1,481		$	38.95	4.0	$	18,645
Vested or expected to vest at September 30, 2015	1,448		$	38.68	3.9	$	18,580
Exercisable at September 30, 2015	1,032		$	34.39	3.1	$	17,315

The total intrinsic value of options exercised during the six months ended September 30, 2015 and 2014 was $5.0 million and $5.9 million, respectively. Intrinsic value is defined as the amount by which the fair value of the underlying stock exceeds the exercise price at the time of option exercise. The total cash received as a result of stock option exercises during the six months ended September 30, 2015 was $6.1 million, net of taxes.

As of September 30, 2015, total unrecognized compensation cost related to unvested stock options was $3.8 million, which is expected to be recognized over a weighted average period of 2.0 years.

Restricted Stock

Restricted stock consists of awards of restricted stock and restricted stock units ("RSUs"). The following is a summary of the Company’s restricted stock activity during the six months ended September 30, 2015:



	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Non-vested at March 31, 2015	1,290		$	42.67
Restricted stock granted	643		$	55.04
Restricted stock vested	(546	)	$	41.76
Restricted stock forfeited	(49	)	$	46.01
Non-vested at September 30, 2015	1,338		$	48.86

The weighted average grant-date fair value of awards of restricted stock is based on the quoted market price of the Company's common stock on the date of grant. The weighted average grant-date fair value of restricted stock granted during the six months ended September 30, 2015 and 2014 was $55.04 and $45.05, respectively. The total fair value of restricted stock that vested during the six months ended September 30, 2015 and 2014 was $22.8 million and $15.0 million, respectively.

As of September 30, 2015, total unrecognized compensation cost related to unvested restricted stock was $48.9 million, which is expected to be recognized over a weighted average period of 1.9 years.

Valuation Assumptions

The Company estimates the fair value of stock options and Employee Stock Purchase Plan (“ESPP”) shares using a Black-Scholes option valuation model. At the date of grant, the Company estimated the fair value of each stock option grant and purchase right granted under the ESPP using the following weighted average assumptions:



	Three Months Ended September 30,						Six Months Ended September 30,
Employee Stock Options	2014⁽¹⁾			2015			2014			2015
Expected volatility	n/a			26.7		%	28.4		%	27.2		%
Risk-free interest rate	n/a			1.4		%	1.4		%	1.3		%
Expected dividend yield	n/a			1.1		%	1.4		%	1.1		%
Expected life (in years)	n/a			4.2			4.2			4.2
Weighted-average grant date fair value	n/a			$	12.02		$	9.21		$	11.54
ESPP
Expected volatility	24.8		%	21.9		%	24.8		%	21.9		%
Risk-free interest rate	0.1		%	0.3		%	0.1		%	0.3		%
Expected dividend yield	1.3		%	1.1		%	1.3		%	1.1		%
Expected life (in years)	0.5			0.5			0.5			0.5
Weighted-average grant date fair value	$	10.13		$	11.73		$	10.13		$	11.73

⁽¹⁾No employee stock options were granted during the three months ended September 30, 2014.