Stock-Based Compensation

The following presents stock-based compensation expense in the Company’s Consolidated Statements of Income:



	Three Months Ended				Nine Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Cost of revenues	$	1.8	$	2.3	$	6.5	$	8.7
Research and development	2.2		2.2		7.6		9.1
Selling and marketing	2.6		3.4		8.0		9.3
General and administrative	10.6		6.5		29.7		26.3
Restructuring	—		—		1.3		—
	$	17.2	$	14.4	$	53.1	$	53.4

The Company granted 1.7 million and 1.0 million stock options during the nine months ended June 30, 2018 and July 1, 2017, respectively, with weighted-average exercise prices of $40.76 and $38.07, respectively. There were 6.3 million options outstanding at June 30, 2018 with a weighted-average exercise price of $31.83.

The Company uses a binomial model to determine the fair value of its stock options. The weighted-average assumptions utilized to value these stock options are indicated in the following table:



	Three Months Ended				Nine Months Ended
	June 30, 2018	July 1, 2017			June 30, 2018			July 1, 2017
Risk-free interest rate	**	1.8		%	2.1		%	1.8		%
Expected volatility	**	36.5		%	35.3		%	36.6		%
Expected life (in years)	**	4.7			4.7			4.7
Dividend yield	**	—			—			—
Weighted average fair value of options granted	**	$	14.40		$	12.98		$	12.33

** There were no stock options granted in the three months ended June 30, 2018.

The Company granted 0.8 million and 1.0 million restricted stock units (RSUs) during each of the nine months ended June 30, 2018 and July 1, 2017, respectively, with weighted-average grant date fair values of $40.68 and $37.99 per unit, respectively. As of June 30, 2018, there were 1.8 million unvested RSUs outstanding with a weighted-average grant date fair value of $37.99 per unit. In addition, the Company granted 0.6 million and 0.1 million performance stock units (PSUs) during the nine months ended June 30, 2018 and July 1, 2017, respectively, to members of its senior management team, which have a weighted-average grant date fair value of $40.86 and $38.84 per unit, respectively. At June 30, 2018, there were 0.7 million unvested PSUs with a weighted-average grant date fair value of $39.98 per unit. Each recipient of PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three years provided the Company’s defined Return on Invested Capital metrics are achieved. The Company is recognizing compensation expense ratably over the required service period based on its estimate of the number of shares that will vest. If there is a change in the estimate of the number of shares that are probable of vesting, the Company cumulatively adjusts compensation expense in the period that the change in estimate is made. The Company also granted 0.3 million and 0.1 million market based awards (MSUs) to its senior management team during the nine months ended June 30, 2018 and July 1, 2017, respectively. At June 30, 2018, there were 0.4 million unvested MSUs with a weighted-average grant date fair value of $48.98 per unit. Each recipient of MSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three years based upon achieving a certain total shareholder return relative to a defined peer group. The MSUs were valued at $49.45 and $48.90 per share using the Monte Carlo simulation model. The Company is recognizing compensation expense for the MSUs ratably over the service period.

At June 30, 2018, there was $29.7 million and $78.9 million of unrecognized compensation expense related to stock options and stock units (comprised of RSUs and PSUs), respectively, to be recognized over a weighted-average period of 2.7 and 2.1 years, respectively.