STOCK-BASED COMPENSATION

Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and six months ended June 30, 2018 and 2017 was as follows (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of sales	$	2.8	$	2.3	$	5.8	$	4.6
Selling, general, and administrative expenses	12.7		10.0		24.5		20.2
Research and development expenses	3.7		3.0		7.3		5.7
Total stock-based compensation expense	$	19.2	$	15.3	$	37.6	$	30.5

At June 30, 2018, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $134.8 million, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 33 months.

During the six months ended June 30, 2018, the Company granted 0.8 million stock options at a weighted-average exercise price of $135.80 and 0.2 million shares of restricted stock units at a weighted-average grant-date fair value of $135.70. The Company also granted 42 thousand shares of market-based restricted stock units at a weighted-average grant-date fair value of $148.69. In addition, the Company issued an additional 50 thousand shares related to a previous year's grant of market-based restricted stock units since the payout percentage achieved at the end of the performance period was in excess of the targeted shares. The market-based restricted stock units vest based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company's total shareholder return relative to a selected industry peer group over a three-year performance period, and may range from 0% to 175% of the targeted number of shares granted.

Fair Value Disclosures

The fair value of the market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units granted during the six months ended June 30, 2018 and 2017 included a risk-free interest rate of 2.7% and 1.7%, respectively, and an expected volatility rate of 29.7% and 30.2%, respectively.

The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:



Option Awards	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Average risk-free interest rate	2.9		%	1.8		%	2.9		%	1.8		%
Expected dividend yield	None			None			None			None
Expected volatility	29.0		%	33.0		%	29.1		%	33.0		%
Expected term (years)	5.0			4.5			5.0			4.5
Fair value, per option	$	42.12		$	33.64		$	42.14		$	33.54

The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:



ESPP	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Average risk-free interest rate	1.0		%	0.5		%	0.9		%	0.4		%
Expected dividend yield	None			None			None			None
Expected volatility	32.8		%	32.8		%	32.6		%	32.9		%
Expected term (years)	0.6			0.6			0.6			0.6
Fair value, per share	$	36.94		$	29.89		$	35.49		$	25.19