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Stock-Based Compensation | 9 Months Ended
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Oct. 01, 2016
Stock-Based Compensation [Abstract] |
Stock-Based Compensation | 8 Stock-Based Compensation 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 standard s 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 standard s 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 assum ptions in the application of the s e standard s, 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 1, 2016 and October 3, 2015 include the following stock-based compensation expense related to stock option awards, restricted stock, restricted stock unit awards and the employee stock purch ase plan (in thousands):
|  |  | Three Months Ended |  | Nine Months Ended
|  |  | October 1, 2016 |  | October 3, 2015 |  | October 1, 2016 |  | October 3, 2015
Cost of sales |  | $ | 731 |  | $ | 668 |  | $ | 2,058 |  | $ | 1,990
Selling and administrative expenses |  |  | 6,944 |  |  | 6,626 |  |  | 27,526 |  |  | 19,686
Research and development expenses |  |  | 692 |  |  | 1,053 |  |  | 3,020 |  |  | 3,281
| Total stock-based compensation |  | $ | 8,367 |  | $ | 8,347 |  | $ | 32,604 |  | $ | 24,957
During the nine months ended October 1, 2016, the Company recognized $7 million of stock compensation expense related to the modification of certain stock awards upon the retirement of senior executives. Stock Options 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 1, 2016 and October 3, 2015 are as follows:
|  | Nine Months Ended
Options Issued and Significant Assumptions Used to Estimate Option Fair Values |  | October 1, 2016 |  | October 3, 2015
Options issued (in thousands) |  | 86 |  | 115
Risk-free interest rate |  | 1.5% |  | 1.4%
Expected life in years |  | 5 |  | 4
Expected volatility |  | 0.286 |  | 0.291
Expected dividends |  | - |  | -
|  | Nine Months Ended
Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant |  | October 1, 2016 |  | October 3, 2015
Exercise price |  | $ | 122.65 |  | $ | 121.33
Fair value |  | $ | 34.63 |  | $ | 30.85
T he following table summarizes stock option activity for the plans for the nine months ended October 1, 2016 (in thousands, except per share data):
|  |  |  | Number of Shares |  | Price per Share |  | Weighted-Average Exercise Price
Outstanding at December 31, 2015 |  | 3,154 |  | $ | 38.09 | to | $ | 134.37 |  | $ | 96.73
| Granted |  | 86 |  | $ | 117.68 | to | $ | 130.35 |  | $ | 122.65
| Exercised |  | (700) |  | $ | 41.20 | to | $ | 113.36 |  | $ | 76.98
| Canceled |  | (50) |  | $ | 79.15 | to | $ | 128.93 |  | $ | 109.55
Outstanding at October 1, 2016 |  | 2,490 |  | $ | 38.09 | to | $ | 134.37 |  | $ | 102.92
Restricted Stock During the nine months ended October 1, 2016, the Company granted eight thousand shares of restricted stock. The fair value of these awards on the grant date was $130.35 per share. Restricted Stock Units The following table summarizes the unvested restricted stock unit award activity for the nine months ended October 1, 2016 (in thousands, except for per share data):
|  |  | Shares |  | Weighted-Average Price
Unvested at December 31, 2015 |  | 497 |  | $ | 104.16
| Granted |  | 136 |  | $ | 117.75
| Vested |  | (143) |  | $ | 98.76
| Forfeited |  | (11) |  | $ | 109.85
Unvested at October 1, 2016 |  | 479 |  | $ | 109.50
Restricted stock units are generally granted annually in February and vest in equal annual insta llments over a five-year period.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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