STOCK-BASED COMPENSATION

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of sales	$	2.7	$	2.4	$	8.5	$	7.0
Selling, general, and administrative expenses	11.9		10.3		36.4		30.5
Research and development expenses	2.8		3.1		10.1		8.8
Total stock-based compensation expense	$	17.4	$	15.8	$	55.0	$	46.3

At September 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 $129.6 million, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 32 months.

During the nine months ended September 30, 2018, the Company granted 0.9 million stock options at a weighted-average exercise price of $136.59 and 0.3 million shares of restricted stock units at a weighted-average grant-date fair value of $138.03. 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 nine months ended September 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 September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Average risk-free interest rate	2.8		%	1.8		%	2.9		%	1.8		%
Expected dividend yield	None			None			None			None
Expected volatility	29.2		%	33.2		%	29.1		%	33.0		%
Expected term (years)	5.2			4.7			5.0			4.6
Fair value, per option	$	46.37		$	36.26		$	42.44		$	33.74

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 September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Average risk-free interest rate	1.2		%	0.7		%	0.9		%	0.5		%
Expected dividend yield	None			None			None			None
Expected volatility	34.3		%	34.3		%	32.8		%	33.1		%
Expected term (years)	0.7			0.7			0.6			0.6
Fair value, per share	$	46.58		$	29.15		$	36.53		$	25.69