The Company maintains various shareholder-approved, stock-based compensation plans which allow for the issuance of incentive or non-qualified stock options, stock appreciation rights, restricted stock or other types of awards (e.g. restricted stock units).

The Company accounts for stock-based compensation costs in accordance with the accounting standards for stock-based compensation, which require that all share-based payments to employees be recognized in the statements of operations based on their fair values. The Company recognizes the expense using the straight-line attribution method. The stock-based compensation expense recognized in the consolidated statements of operations is based on awards that ultimately are expected to vest; therefore, the amount of expense has been reduced for estimated forfeitures. The stock-based compensation accounting standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience. If actual results differ significantly from these estimates, stock-based compensation expense and the Company's results of operations could be materially impacted. In addition, if the Company employs different assumptions in the application of these standards, the compensation expense that the Company records in the future periods may differ significantly from what the Company has recorded in the current period.

The consolidated statements of operations for the three and six months ended June 28, 2014 and June 29, 2013 include the following stock-based compensation expense related to stock option awards, restricted stock, restricted stock unit awards and the employee stock purchase plan (in thousands):

		Three Months Ended				Six Months Ended
		June 28, 2014		June 29, 2013		June 28, 2014		June 29, 2013
Cost of sales		$	672	$	657	$	1,428	$	1,325
Selling and administrative expenses			6,555		6,215		12,990		11,971
Research and development expenses			997		1,004		1,935		2,011
	Total stock-based compensation	$	8,224	$	7,876	$	16,353	$	15,307

In determining the fair value of the stock options, the Company makes a variety of assumptions and estimates, including volatility measures, expected yields and expected stock option lives. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. The Company uses implied volatility on its publicly-traded options as the basis for its estimate of expected volatility. The Company believes that implied volatility is the most appropriate indicator of expected volatility because it is generally reflective of historical volatility and expectations of how future volatility will differ from historical volatility. The expected life assumption for grants is based on historical experience for the population of non-qualified stock optionees. The risk-free interest rate is the yield currently available on U.S. Treasury zero-coupon issues with a remaining term approximating the expected term used as the input to the Black-Scholes model. The relevant data used to determine the value of the stock options granted during the six months ended June 28, 2014 and June 29, 2013 are as follows:

Options Issued and Significant Assumptions Used to Estimate Option Fair Values	June 28, 2014	June 29, 2013
Options issued in thousands	32	32
Risk-free interest rate	1.9%	1.0%
Expected life in years	4	5
Expected volatility	0.245	0.260
Expected dividends	-	-

Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant	June 28, 2014		June 29, 2013
Exercise price	$	99.22	$	88.71
Fair value	$	22.38	$	22.03

The following table summarizes stock option activity for the plans for the six months ended June 28, 2014 (in thousands, except per share data):

		Number of Shares	Price per Share					Weighted-Average Exercise Price
Outstanding at December 31, 2013		3,917	$	33.12	to	$	103.47	$	71.08
	Granted	32		$	99.22			$	99.22
	Exercised	(632)	$	33.12	to	$	87.06	$	60.26
	Canceled	(21)	$	79.15	to	$	98.21	$	88.02
Outstanding at June 28, 2014		3,296	$	37.84	to	$	103.47	$	73.32

During the six months ended June 28, 2014, the Company granted twelve thousand shares of restricted stock. The fair value of these awards on the grant date was $99.22 per share.

The following table summarizes the unvested restricted stock unit award activity for the six months ended June 28, 2014 (in thousands, except for per share amounts):

		Shares	Weighted-Average Price
Unvested at December 31, 2013		642	$	82.16
	Granted	134	$	112.59
	Vested	(190)	$	66.26
	Forfeited	(14)	$	83.80
Unvested at June 28, 2014		572	$	94.53

Restricted stock units are generally granted annually in February and vest in equal annual installments over a five-year period.