Stock-based Compensation

6 Months Ended

Dec. 31, 2015

6. Stock-based Compensation

As of December 31, 2015, the Company maintained two share-based employee compensation plans (the “OSI Plans”): the 2012 Incentive Award Plan (“2012 Plan”) and the Amended and Restated 2006 Equity Participation Plan (“2006 Plan”). Upon stockholder approval of the 2012 Plan, the Company ceased to make grants under the 2006 Plan.

The Company recorded stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2014			2015			2014			2015
Cost of goods sold	$	290		$	305		$	495		$	597
Selling, general and administrative	5,724			3,911			11,488			8,019
Research and development	68			73			95			138

Stock-based compensation expense before taxes	$	6,082		$	4,289		12,078			$	8,754
Less: related income tax benefit	(2,354		)	(1,635		)	(4,761		)	(3,334		)

Stock-based compensation expense, net of estimated taxes	$	3,728		$	2,654		$	7,317		$	5,420

As of December 31, 2015, total unrecognized compensation cost related to share-based compensation grants were estimated at $1.1 million for stock options and $20.9 million for restricted stock and restricted stock units (“RSUs”) under the OSI Plans. The Company expects to recognize these costs over a weighted-average period of 1.9 years.

The following summarizes stock option activity during the six months ended December 31, 2015:

	Number of Options		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2015	1,012,650		$	27.30
Granted	33,088		$	74.48
Exercised	(104,944	)	$	27.52
Expired or forfeited	(3,087	)	$	63.48

Outstanding at December 31, 2015	937,707		$	28.82	4.5 years	$	56,109

Exercisable at December 31, 2015	860,203		$	25.35	4.1 years	$	54,462

The following summarizes restricted stock and RSU award activity during the six months ended December 31, 2015:

	Shares		Weighted- Average Fair Value
Nonvested at June 30, 2015	659,906		$	63.75
Granted	330,743		73.22
Vested	(382,797	)	65.45
Forfeited	(47,070	)	67.67

Nonvested at December 31, 2015	560,782		$	67.85

As of December 31, 2015, there were 2,786,427 shares available for grant under the 2012 Plan. Under the terms of that plan, restricted stock and RSUs granted from the pool of shares available for grant on or after December 12, 2012 reduce the pool by 1.87 shares for each award granted. Restricted stock and RSUs forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited.

The Company granted 151,469 and 139,300 performance-based RSUs during the six months ended December 31, 2014 and 2015, respectively. These performance-based RSUs are contingent on the achievement of certain financial performance metrics. The payout can range from zero to 250% of the original number of shares or units awarded.