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 grant date 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 nine months ended October 3, 2015 and September 27, 2014 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				Nine Months Ended
		October 3, 2015		September 27, 2014		October 3, 2015		September 27, 2014
Cost of sales		$	668	$	633	$	1,990	$	2,061
Selling and administrative expenses			6,626		6,355		19,686		19,345
Research and development expenses			1,053		1,119		3,281		3,054
	Total stock-based compensation	$	8,347	$	8,107	$	24,957	$	24,460

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 option exercises. 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 nine months ended October 3, 2015 and September 27, 2014 are as follows:

	Nine Months Ended
Options Issued and Significant Assumptions Used to Estimate Option Fair Values	October 3, 2015	September 27, 2014
Options issued in thousands	115	32
Risk-free interest rate	1.4%	1.9%
Expected life in years	4	4
Expected volatility	0.291	0.245
Expected dividends	-	-

	Nine Months Ended
Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant	October 3, 2015		September 27, 2014
Exercise price	$	121.33	$	99.22
Fair value	$	30.85	$	22.38

The following table summarizes stock option activity for the plans for the nine months ended October 3, 2015 (in thousands, except per share data):

		Number of Shares	Price per Share					Weighted-Average Exercise Price
Outstanding at December 31, 2014		3,280	$	37.84	to	$	113.36	$	82.85
	Granted	115	$	113.88	to	$	134.37	$	121.33
	Exercised	(342)	$	37.84	to	$	98.21	$	74.44
	Canceled	(72)	$	79.05	to	$	87.06	$	83.25
Outstanding at October 3, 2015		2,981	$	38.09	to	$	134.37	$	85.29

During the nine months ended October 3, 2015, the Company granted ten thousand shares of restricted stock. The fair value of these awards on the grant date was $113.88 per share.

The following table summarizes the unvested restricted stock unit award activity for the nine months ended October 3, 2015 (in thousands, except for per share amounts):

		Shares	Weighted-Average Price
Unvested at December 31, 2014		533	$	94.38
	Granted	150	$	119.46
	Vested	(144)	$	85.40
	Forfeited	(12)	$	99.75
Unvested at October 3, 2015		527	$	103.85

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