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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Masimo Corporation | NASDAQ:MASI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.24 | 1.67% | 136.25 | 131.78 | 148.11 | 137.29 | 132.518 | 134.69 | 431,442 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Masimo Corporation
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(Exact name of registrant as specified in its charter)
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Delaware
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33-0368882
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification Number)
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52 Discovery, Irvine, California
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92618
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class:
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Name of each exchange on which registered:
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Common Stock, par value $0.001
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The Nasdaq Global Select Market
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Large accelerated filer
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þ
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Accelerated filer
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Non accelerated filer
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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Item 15
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Item 16
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ITEM 1.
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BUSINESS
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•
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Continue to Expand our Market Share in Pulse Oximetry.
We grew our product revenue to
$829.9 million
in
2018
from
$599.3 million
in
2015
, representing a three-year compound annual growth rate of
11.5%
. This growth can be attributed to continued expansion of our core SET
®
pulse oximeter customer base, higher revenues from rainbow
®
Pulse CO-Oximetry, NomoLine
®
capnography and other new technologies, and our expanding list of OEM partners. We supplement our direct sales to hospitals and other low-acuity healthcare facilities through various U.S. and international distributors. Combined sales through our direct and distributor sales channels increased to
$718.6 million
, or
86.6%
of product revenue in
2018
, from
$508.2 million
, or
84.8%
of product revenue, in
2015
. As the healthcare industry shifts toward hospitals, physicians and providers being rewarded by payers based on the quality and value of the services (as opposed to the volume of fee-for-service transactions), we expect to see more hospitals gravitate towards technologies like Masimo SET
®
that have a proven track record of improving patient care.
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•
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Expand the Pulse Oximetry Market to Other Patient Care Settings.
Many patients die due to unintended opioid overdoses after surgery while on general care floors. We believe the ability to continuously and accurately monitor patients outside of critical care settings, including the general, medical and surgical floors of the hospital, is currently an unmet medical need that has the potential to significantly improve patient care and increase the size of the pulse oximetry market. In addition, we believe the ability of Masimo SET
®
to accurately monitor and address the limitations of conventional pulse oximetry has enabled us, and will continue to enable us, to expand into non-critical care settings, and therefore, significantly expand the market for our products. To further support our expansion into the general care areas, we market Patient SafetyNet, which enables continuous monitoring of up to
200
patients’ oxygen saturation, pulse rate and with rainbow SET
™
, noninvasive hemoglobin and respiration rate. We believe that Patient SafetyNet, when combined with Masimo SET
®
pulse oximetry and RAM
®
or capnography, offers a clinically proven and cost-effective approach to continuous post-operative monitoring. Outside of the hospital setting, patients could die due to unintentional opioid overdose, even when opioids are being taken for short duration, such as after surgery, and as prescribed by a physician. We believe that in the home setting, accurate monitoring with Masimo SET
®
may help reduce the risk of opioid overdose by alerting family members and others when opioids have slowed a patient’s breathing and caused a significant drop in oxygen saturation.
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•
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Expand the Use of rainbow
®
Technology in Hospital Settings.
We believe the noninvasive measurement of rainbow
®
Pulse CO-Oximetry (SpHb
®
, SpCO
®
, SpMet
®
, PVi
®
,
SpfO
2
™
, SPOC
™
and ORi
™
), rainbow Acoustic Monitoring
®
(RRa
®
), and the Halo Index
™
, as well as future measurements, provide an excellent opportunity to help our customers improve patient care while reducing their overall cost of care.
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•
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Expand the Use of rainbow
®
Technology in Non-Hospital Settings.
We believe the noninvasive measurement of hemoglobin, SpHb
®
,
creates a significant opportunity in markets such as the physician office, emergency departments and blood donation centers; and the noninvasive measurement of carboxyhemoglobin, SpCO
®
, creates a significant opportunity in the fire/alternate care market.
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•
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Expand the Use of Root
™
in Hospital Settings.
We believe Root
™
represents a powerful new paradigm in patient monitoring because it enhances our rainbow
®
and SET
®
measurements with multiple specialty parameters, including SedLine
®
brain function monitoring, O3
®
regional oximetry, and NomoLine
®
capnography and gas monitoring, and enables open-architecture connectivity in an integrated, clinician-centric hub. Our Iris
®
integration platform for Root
™
provides a conduit to the patient’s EMR for a range of clinical devices that may otherwise remain disconnected, and therefore, unable to communicate their information. Iris
®
offers clinical utility and flexibility by collecting device information from multiple sources and making it available to clinicians in one networked place, akin to an airplane cockpit. Complementary innovations like the Radius-7
®
wearable, wireless monitor foster an environment of safety without sacrificing patient mobility or comfort. Radius-7
®
provides patients in medical-surgical units with mobility, allowing them to visit common areas and labs, all while being continuously monitored around the clock. Root
™
is acuity-adaptable, meaning it can be configured for any care area, and is competitively priced.
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•
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Utilize our Customer Base and OEM Relationships to Market Masimo rainbow
SET
™
,
O3
®
, SedLine
®
and Capnography Products Incorporating Licensed rainbow
®
Technology.
We currently sell rainbow SET
™
products through our direct sales force and distributors. We include our MX circuit boards in our pulse oximeters and also sell them to our OEM partners. Our MX circuit boards are equipped with circuitry to support rainbow
®
Pulse CO-Oximetry measurements that can be activated at time of sale or through a subsequent software upgrade. We believe that, over time, the clinical need for these measurements, along with our installed customer base, will help drive the adoption of our rainbow
®
Pulse CO-Oximetry products.
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•
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Continue to Innovate and Maintain Our Technology Leadership Position.
We invented and pioneered the first pulse oximeter to accurately measure arterial blood oxygen saturation level and pulse rate in the presence of motion artifact and low perfusion. In addition, we launched our rainbow SET
™
platform that enabled what we believe is the first noninvasive monitoring of carboxyhemoglobin, methemoglobin and hemoglobin, as well as PVi
®
, all of which were previously only available with invasive and/or complicated testing. Furthermore, we believe that our introduction of RRa
®
with rainbow Acoustic Monitoring
®
technology represented the first platform to enable noninvasive and continuous respiration monitoring through an easy-to-use single-patient adhesive acoustic sensor. Finally, we believe that our recent introduction of ORi
™
may provide advance warning of an impending hypoxic state, or an indication of an unintended hyperoxic state.
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Description:
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Use:
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Distribution Channel:
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Line Filters and Mainstream Adapters for Capnography and Gas Monitoring.
(e.g., NomoLine
®
Cannula with EMMA
®
C
apnograph with disposable adapter
(
shown below
)
)
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• Line of disposables to measure gas parameters using mainstream and sidestream capnography
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• Sold directly to end-users and through distributors and to OEM partners who sell to end-users
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Remote Alarm and Supplemental Monitoring Solutions
(e.g., Patient SafetyNet) |
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• Network-linked, wired or wireless, multiple patient floor monitoring solutions
• Standalone wireless alarm notification solutions
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• Sold directly to end-users
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Proprietary Measurements
(e.g., SpHb ® , SpCO ® , SpMet ® , PVi ® , RRa ® , ORi ™ , 3D Alarms ® and Adaptive Threshold Alarm) |
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• rainbow
®
measurements and other proprietary features
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• Sold directly to end-users and through OEM partners who sell to new and existing end-users
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Description:
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Use:
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Distribution Channel:
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Connectivity
(e.g., Iris ® Connectivity, Connectivity Solutions and UniView tm (Shown below) ) |
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• Software and hardware enabling third-party devices to connect through Patient SafetyNet and to document data in the EMR
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• Sold directly to end-users
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Consumer Monitoring Solutions:
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Devices
(e.g. iSpO2 ® , MightySat ® with PVi ® and RRp ® (shown below) ) |
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• Fingertip pulse oximeter, or pulse oximeter cable and sensor for use with an iPhone, iPad, iPod touch and select Android smart phones
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• Sold directly to consumers and through consumer retailers
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•
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a standalone device for bedside monitoring;
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a detachable, battery-operated handheld unit for easy portable monitoring;
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•
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an integrated device as part of the Root
™
patient monitoring and connectivity platform; and
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•
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a monitor interface via SatShare
®
, a proprietary technology allowing our products to work with certain competitor products, to upgrade existing conventional multiparameter patient monitors to Masimo SET
®
while displaying rainbow
®
measurements on the Radical-7
®
itself.
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•
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Patient safety may be compromised by using imitation Masimo sensors and cables because they are not produced with comparable components, do not provide proper shielding from ambient interferences, create electrostatic noise caused by motion, do not have our quality and performance controls, and are not tested or warranted to work within a Masimo system;
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•
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We design our sensors and cables to last well beyond their warranty period and customer feedback indicates our sensors and cables last significantly longer than competing products, but cable and sensor reliability may still be compromised when used beyond their intended life, affecting patient care and causing clinicians and biomedical engineers to spend time troubleshooting intermittent cable and sensor issues; and
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•
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We believe that third-party reprocessed pulse oximetry sensors introduce challenges in the clinical environment due to potential quality issues. In fact, we believe that most third-party reprocessed sensors do not indicate that they are capable of performing in the same conditions as Masimo
Measure-through Motion and Low Perfusion
®
sensors or in neonatal applications, key performance requirements available with Masimo SET
®
sensors. To the best of our knowledge, no third-party company has attempted to reprocess rainbow SET
™
sensors.
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End User Markets
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Measurements
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Professional Caregiver and
Alternate Care Market
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Patient and Pharmacist
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Vital Signs
(1)
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Masimo
(owns)
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Cercacor
(non-exclusive license)
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Non-Vital Signs
(2)
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Masimo
(exclusive license)
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Cercacor
(owns or exclusive license)
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(1)
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Vital Signs measurements include, but are not limited to, SpO
2
, peripheral venous oxygen saturation, mixed venous oxygen saturation, fetal oximetry, sudden infant death syndrome, ECG, blood pressure (noninvasive blood pressure, invasive blood pressure and continuous noninvasive blood pressure), temperature, respiration rate, CO
2
, pulse rate, cardiac output, EEG, perfusion index, depth of anesthesia, cerebral oximetry, tissue oximetry and/or EMG, and associated features derived from these measurements, such as 3D alarm
®
, PVi
®
and other features.
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(2)
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Non-Vital Signs measurements include the body fluid constituents other than vital signs measurements and include, but are not limited to, carbon monoxide, methemoglobin, blood glucose, hemoglobin and bilirubin.
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•
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if the surviving or acquiring entity ceases to use “Masimo” as a company name and trademark, all rights to the “Masimo” trademark will be assigned to Cercacor;
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•
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the option to license technology developed by Cercacor for use in blood glucose monitoring will be deemed automatically exercised and a $2.5 million license fee for this technology will become immediately payable to Cercacor; and
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•
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the minimum aggregate annual royalties payable to Cercacor for carbon monoxide, methemoglobin, fractional arterial oxygen saturation, hemoglobin and/or glucose will increase to $15.0 million per year until the exclusivity period of the agreement ends, plus up to $2.0 million for each additional measurement with no maximum ceiling for non-vital sign measurements.
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•
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the sale of all or substantially all of either company’s assets to a non-affiliated third-party;
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the acquisition by a non-affiliated third-party of 50% or more of the voting power of either company;
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•
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Joe Kiani, our Chief Executive Officer and the Chief Executive Officer of Cercacor, resigns or is terminated from his position with either company; or
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the merger or consolidation of either company with a non-affiliated third-party.
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product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;
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•
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unique device identification (UDI) registration, which identifies medical devices through their distribution and use;
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•
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QSRs and current good manufacturing practices (GMPs), which require manufacturers, including third-party manufacturers, to follow stringent design control, testing, change control, documentation and other quality assurance procedures during all aspects of the development and manufacturing process, including requirements for packaging, labeling and record keeping, complaint handling, corrective and preventive actions and internal auditing;
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•
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labeling control and advertising regulations, including FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses or indications;
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•
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for 510(k)-cleared devices, clearance of product modifications that could significantly affect safety or efficacy or that would constitute a major change or modification in intended use of one of our cleared devices;
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•
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for any future PMA approved products, approval of product modifications that affect the safety or effectiveness of the device;
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•
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medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury, or if their device has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;
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•
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for any future PMA approved products, post-approval restrictions or conditions, including post-approval study commitments;
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•
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post-market surveillance requirements, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device;
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•
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the FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of its conditions of approval, governing laws and/or regulations;
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regulations pertaining to voluntary recalls; and
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•
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notices of corrections or removals.
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an FDA Form 483, which is issued by the FDA at the conclusion of an inspection when an investigator has observed any conditions that may constitute potential violations of the FDCA and related Acts;
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•
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a public warning letter that notifies a company of potential violations of the FDCA;
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•
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fines and monetary civil penalties against us and/or OEM partners;
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•
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delays in clearing or approving, or refusal to clear or approve, our products;
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withdrawal or suspension of clearances and/or approvals of our products or those of our third-party suppliers by the FDA or other regulatory bodies;
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product recall;
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product detention or seizure;
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interruption of production;
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refusal to provide Certificates to Foreign Governments (CFGs), which may be necessary to permit the export of devices from the U.S. to other countries;
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operating restrictions;
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injunctions (including those agreed to in a consent decree); and
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•
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criminal prosecution.
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•
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accurate monitoring during both patient motion and low perfusion;
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•
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ability to introduce other clinically beneficial measurements related to oxygenation and respiration, such as noninvasive and continuous oxygen reserve index and hemoglobin;
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•
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competitive pricing, including bundling practices;
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brand recognition and perception of innovation abilities;
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sales and marketing capability;
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•
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access to hospitals which are members of GPOs;
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access to integrated delivery networks;
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access to OEM partners; and
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patent protection.
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ITEM 1A.
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RISK FACTORS
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perceived clinical benefits from our products;
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perceived cost effectiveness of our products;
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perceived safety and effectiveness of our products;
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reimbursement available through government and private health care programs for using some of our products; and
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introduction and acceptance of competing products or technologies.
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an exclusive, perpetual and worldwide license, with sublicense rights, to use all Masimo SET
®
technology owned by us, including all improvements to this technology, for the monitoring of non-vital signs parameters and to develop and sell devices incorporating Masimo SET
®
for monitoring non-vital signs parameters in any product market in which a product is intended to be used by a patient or pharmacist rather than by a professional medical caregiver, which we refer to as the Cercacor Market; and
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a non-exclusive, perpetual and worldwide license, with sublicense rights, to use all Masimo SET
®
technology owned by us for measurement of vital signs in the Cercacor Market.
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be expensive and time consuming to defend and result in payment of significant damages to third parties;
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force us to stop making or selling products that incorporate the intellectual property;
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require us to redesign, reengineer or rebrand our products, product candidates and technologies;
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require us to enter into royalty agreements that would increase the costs of our products;
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require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims;
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divert the attention of our management and other key employees; and
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result in our customers or potential customers deferring or limiting their purchase or use of the affected products impacted by the claims until the claims are resolved;
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warning letters or untitled letters issued by the FDA;
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fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution;
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import alerts;
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unanticipated expenditures to address or defend such actions;
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delays in clearing or approving, or refusal to clear or approve, our products;
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withdrawals or suspensions of clearance or approval of our products or those of our third-party suppliers by the FDA or other regulatory bodies;
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product recalls or seizures;
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orders for physician notification or device repair, replacement or refund;
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interruptions of production or inability to export to certain foreign countries; and
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operating restrictions.
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the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any bribe, kickback or other remuneration intended to induce the purchase, order or recommendation of an item or service reimbursable under a federal health care program (such as the Medicare or Medicaid programs);
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•
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the federal False Claims Act and other federal laws which prohibit, among other things, knowingly and willfully presenting, or causing to be presented, claims for payment from Medicare, Medicaid, other government payers or other third-party payers that are false or fraudulent;
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state laws analogous to each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by governmental programs and non-governmental third-party payers, including commercial insurers; and
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the Physician Payments Sunshine Act (Sunshine Act), which requires medical device companies to track and publicly report, with limited exceptions, all payments and transfers of value to physicians and teaching hospitals in the U.S. If we fail to comply with the data collection and reporting obligations imposed by the Sunshine Act, we may be subject to substantial civil monetary penalties.
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•
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the imposition of additional U.S. and foreign governmental controls or regulations;
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the imposition of costly and lengthy new export licensing requirements;
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a shortage of high-quality sales people and distributors;
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the loss of any key personnel that possess proprietary knowledge, or who are otherwise important to our success in certain international markets;
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changes in duties and tariffs, license obligations and other non-tariff barriers to trade;
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the imposition of new trade restrictions;
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the imposition of restrictions on the activities of foreign agents, representatives and distributors;
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compliance with foreign tax laws, regulations and requirements;
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pricing pressure;
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changes in foreign currency exchange rates;
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laws and business practices favoring local companies;
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political instability and actual or anticipated military or political conflicts;
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financial and civil unrest worldwide;
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outbreaks of illnesses, pandemics or other local or global health issues;
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the inability to collect amounts paid by foreign government customers to our appointed foreign agents;
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longer payment cycles, increased credit risk and different collection remedies with respect to receivables; and
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difficulties in enforcing or defending intellectual property rights.
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•
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payment of above-market prices for acquisitions and higher than anticipated acquisition costs;
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•
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issuance of common stock as part of the acquisition price or a need to issue stock options or other equity to newly-hired employees of target companies, resulting in dilution of ownership to our existing stockholders;
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•
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reduced profitability if an acquisition is not accretive to our business over either the short-term or the long-term;
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•
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difficulties in integrating any acquired companies, personnel, products and other assets into our existing business;
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•
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delays in realizing the benefits of the acquired company, products or other assets;
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•
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regulatory challenges;
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cybersecurity and compliance related issues;
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•
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diversion of our management’s time and attention from other business concerns;
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•
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limited or no direct prior experience in new markets or countries we may enter;
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•
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unanticipated issues dealing with unfamiliar suppliers, service providers or other collaborators of the acquired company;
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•
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higher costs of integration than we anticipated;
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write-downs or impairments of goodwill or other intangible assets associated with the acquired company;
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•
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difficulties in retaining key employees of the acquired business who are necessary to manage these acquisitions;
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•
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negative impacts on our relationships with our employees, clients or collaborators;
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•
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litigation or other claims in connection with the acquisition; and
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•
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changes in the overall financial model as certain acquired companies may have a different revenue, gross profit margin or operating expense profile.
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•
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incurring specified types of additional indebtedness (including guarantees or other contingent obligations);
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•
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paying dividends on, repurchasing or making distributions in respect of our common stock or making other restricted payments, subject to specified exceptions;
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•
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making specified investments (including loans and advances);
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•
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selling or transferring certain assets;
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•
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creating certain liens;
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•
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consolidating, merging, selling or otherwise disposing of all or substantially all of our assets; and
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entering into certain transactions with any of our affiliates.
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•
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actual or anticipated fluctuations in our operating results or future prospects;
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•
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our announcements or our competitors’ announcements of new products;
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•
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the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
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•
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strategic actions by us or our competitors, such as acquisitions or restructurings;
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•
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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•
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changes in accounting standards, policies, guidance, interpretations or principles;
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changes in our growth rates or our competitors’ growth rates;
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developments regarding our patents or proprietary rights or those of our competitors;
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ongoing legal proceedings;
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our inability to raise additional capital as needed;
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•
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concerns or allegations as to the safety or efficacy of our products;
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changes in financial markets or general economic conditions, including the effects of recession or slow economic growth in the U.S. and abroad;
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sales of stock by us or members of our management team, our Board of Directors (Board) or certain institutional stockholders; and
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changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
|
Year ended
January 2, 2016 |
|
Year ended
January 3, 2015 |
||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Statement of Operations
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product
|
$
|
829,874
|
|
|
$
|
738,242
|
|
|
$
|
673,962
|
|
|
$
|
599,334
|
|
|
$
|
556,764
|
|
Royalty and other revenue
|
28,415
|
|
|
52,006
|
|
|
38,936
|
|
|
30,777
|
|
|
29,879
|
|
|||||
Total revenue
|
858,289
|
|
|
790,248
|
|
|
712,898
|
|
|
630,111
|
|
|
586,643
|
|
|||||
Cost of goods sold
|
283,397
|
|
|
268,216
|
|
|
234,560
|
|
|
220,128
|
|
|
195,864
|
|
|||||
Gross profit
|
574,892
|
|
|
522,032
|
|
|
478,338
|
|
|
409,983
|
|
|
390,779
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative
|
289,456
|
|
|
276,292
|
|
|
254,707
|
|
|
252,725
|
|
|
241,016
|
|
|||||
Research and development
|
76,967
|
|
|
61,953
|
|
|
57,686
|
|
|
56,617
|
|
|
56,581
|
|
|||||
Litigation settlement, award and/or defense costs
|
425
|
|
|
—
|
|
|
(270,000
|
)
|
|
(19,609
|
)
|
|
(10,331
|
)
|
|||||
Total operating expenses
|
366,848
|
|
|
338,245
|
|
|
42,393
|
|
|
289,733
|
|
|
287,266
|
|
|||||
Operating income
|
208,044
|
|
|
183,787
|
|
|
435,945
|
|
|
120,250
|
|
|
103,513
|
|
|||||
Non-operating (income) expense
|
(5,732
|
)
|
|
(2,013
|
)
|
|
2,429
|
|
|
3,905
|
|
|
1,472
|
|
|||||
Income before provision for income taxes
|
213,776
|
|
|
185,800
|
|
|
433,516
|
|
|
116,345
|
|
|
102,041
|
|
|||||
Provision for income taxes
|
20,233
|
|
|
61,011
|
|
|
122,419
|
|
|
34,845
|
|
|
27,678
|
|
|||||
Net income including noncontrolling interests
|
193,543
|
|
|
124,789
|
|
|
311,097
|
|
|
81,500
|
|
|
74,363
|
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,800
|
)
|
|
1,845
|
|
|||||
Net income attributable to Masimo Corporation stockholders
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
$
|
311,097
|
|
|
$
|
83,300
|
|
|
$
|
72,518
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per common share attributable to Masimo Corporation stockholders
(2)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
3.70
|
|
|
$
|
2.42
|
|
|
$
|
6.28
|
|
|
$
|
1.62
|
|
|
$
|
1.33
|
|
Diluted
|
$
|
3.45
|
|
|
$
|
2.23
|
|
|
$
|
5.85
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
Weighted-average number of common shares:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
52,296
|
|
|
51,516
|
|
|
49,530
|
|
|
51,311
|
|
|
54,708
|
|
|||||
Diluted
|
56,039
|
|
|
55,874
|
|
|
53,195
|
|
|
53,707
|
|
|
55,571
|
|
(1)
|
Cercacor was consolidated as a variable interest entity within our financial statements for all periods prior to January 3, 2016. Accordingly, all intercompany royalties, option and licensing fees, and other charges between us and Cercacor for such periods have been eliminated in the consolidation. For additional discussion of Cercacor, see Note 3 to our accompanying consolidated financial statements in Part IV, Item 15(a) of this Annual Report on Form 10-K.
|
(2)
|
See Note 2 to our accompanying consolidated financial statements in Part IV, Item 15(a) of this Annual Report on Form 10-K for a description of the method used to compute basic and diluted net income per common share.
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
|
December 31,
2016 As Adjusted |
|
January 2,
2016 |
|
January 3,
2015 |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
|
$
|
552,490
|
|
|
$
|
315,302
|
|
|
$
|
305,970
|
|
|
$
|
132,317
|
|
|
$
|
134,453
|
|
Working capital
|
637,490
|
|
|
430,041
|
|
|
289,830
|
|
|
166,509
|
|
|
173,182
|
|
|||||
Total assets
|
1,154,818
|
|
|
905,436
|
|
|
814,352
|
|
|
601,735
|
|
|
565,006
|
|
|||||
Total debt
|
—
|
|
|
—
|
|
|
71
|
|
|
185,145
|
|
|
125,224
|
|
|||||
Total equity
|
969,065
|
|
|
724,025
|
|
|
584,177
|
|
|
275,712
|
|
|
307,741
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
|||||||||||||||
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue |
|
Amount
|
|
% of
Revenue |
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
829,874
|
|
|
96.7
|
%
|
|
$
|
738,242
|
|
|
93.4
|
%
|
|
$
|
673,962
|
|
|
94.5
|
%
|
Royalty and other revenue
|
28,415
|
|
|
3.3
|
|
|
52,006
|
|
|
6.6
|
|
|
38,936
|
|
|
5.5
|
|
|||
Total revenue
|
858,289
|
|
|
100.0
|
|
|
790,248
|
|
|
100.0
|
|
|
712,898
|
|
|
100.0
|
|
|||
Cost of goods sold
|
283,397
|
|
|
33.0
|
|
|
268,216
|
|
|
33.9
|
|
|
234,560
|
|
|
32.9
|
|
|||
Gross profit
|
574,892
|
|
|
67.0
|
|
|
522,032
|
|
|
66.1
|
|
|
478,338
|
|
|
67.1
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative
|
289,456
|
|
|
33.7
|
|
|
276,292
|
|
|
35.0
|
|
|
254,707
|
|
|
35.7
|
|
|||
Research and development
|
76,967
|
|
|
9.0
|
|
|
61,953
|
|
|
7.8
|
|
|
57,686
|
|
|
8.1
|
|
|||
Litigation settlement, award and/or defense costs
|
425
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(270,000
|
)
|
|
(37.9
|
)
|
|||
Total operating expenses
|
366,848
|
|
|
42.7
|
|
|
338,245
|
|
|
42.8
|
|
|
42,393
|
|
|
5.9
|
|
|||
Operating income
|
208,044
|
|
|
24.2
|
|
|
183,787
|
|
|
23.3
|
|
|
435,945
|
|
|
61.2
|
|
|||
Non-operating (income) expense
|
(5,732
|
)
|
|
(0.7
|
)
|
|
(2,013
|
)
|
|
(0.3
|
)
|
|
2,429
|
|
|
0.3
|
|
|||
Income before provision for income taxes
|
213,776
|
|
|
24.9
|
|
|
185,800
|
|
|
23.5
|
|
|
433,516
|
|
|
60.8
|
|
|||
Provision for income taxes
|
20,233
|
|
|
2.4
|
|
|
61,011
|
|
|
7.7
|
|
|
122,419
|
|
|
17.2
|
|
|||
Net income
|
$
|
193,543
|
|
|
22.5
|
%
|
|
$
|
124,789
|
|
|
15.8
|
%
|
|
$
|
311,097
|
|
|
43.6
|
%
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Increase/
(Decrease)
|
|
Percentage
Change
|
|||||||||||||
United States
|
$
|
566,816
|
|
|
68.3
|
%
|
|
$
|
502,983
|
|
|
68.1
|
%
|
|
$
|
63,833
|
|
|
12.7
|
%
|
Europe, Middle East and Africa
|
160,910
|
|
|
19.4
|
|
|
138,689
|
|
|
18.8
|
|
|
22,221
|
|
|
16.0
|
|
|||
Asia and Australia
|
75,534
|
|
|
9.1
|
|
|
72,434
|
|
|
9.8
|
|
|
3,100
|
|
|
4.3
|
|
|||
North and South America (excluding United States)
|
26,614
|
|
|
3.2
|
|
|
24,136
|
|
|
3.3
|
|
|
2,478
|
|
|
10.3
|
|
|||
Total product revenue
|
$
|
829,874
|
|
|
100.0
|
%
|
|
$
|
738,242
|
|
|
100.0
|
%
|
|
$
|
91,632
|
|
|
12.4
|
%
|
Royalty and other revenue
|
28,415
|
|
|
|
|
52,006
|
|
|
|
|
(23,591
|
)
|
|
(45.4
|
)%
|
|||||
Total revenue
|
$
|
858,289
|
|
|
|
|
$
|
790,248
|
|
|
|
|
$
|
68,041
|
|
|
|
(1)
|
Certain information presented for the periods ended
December 30, 2017
and
December 31, 2016
has been restated to reflect the full retrospective application of ASU 2014-09. See Note 2 to our accompanying consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for additional information related to our adoption of this new accounting standard.
|
|
Gross Profit
|
|||||||||||||||||||
|
Year ended
December 29, 2018 |
|
Percentage of
Net Revenues |
|
Year ended
December 30, 2017 As Adjusted |
|
Percentage of
Net Revenues
|
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||
Product gross profit
|
$
|
547,188
|
|
|
65.9
|
%
|
|
$
|
473,647
|
|
|
64.2
|
%
|
|
$
|
73,541
|
|
|
15.5
|
%
|
Royalty and other revenue gross profit
|
27,704
|
|
|
97.5
|
|
|
48,385
|
|
|
93.0
|
|
|
(20,681
|
)
|
|
(42.7
|
)
|
|||
Total gross profit
|
$
|
574,892
|
|
|
67.0
|
%
|
|
$
|
522,032
|
|
|
66.1
|
%
|
|
$
|
52,860
|
|
|
10.1
|
%
|
Research and Development
|
|||||
Year ended
December 29, 2018 |
Percentage of
Net Revenues |
Year ended
December 30, 2017 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$76,967
|
9.0%
|
$61,953
|
7.8%
|
$15,014
|
24.2%
|
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||||||
United States
|
$
|
502,983
|
|
|
68.1
|
%
|
|
$
|
475,068
|
|
|
70.5
|
%
|
|
$
|
27,915
|
|
|
5.9
|
%
|
Europe, Middle East and Africa
|
138,689
|
|
|
18.8
|
|
|
113,015
|
|
|
16.8
|
|
|
25,674
|
|
|
22.7
|
|
|||
Asia and Australia
|
72,434
|
|
|
9.8
|
|
|
66,136
|
|
|
9.8
|
|
|
6,298
|
|
|
9.5
|
|
|||
North and South America (excluding United States)
|
24,136
|
|
|
3.3
|
|
|
19,743
|
|
|
2.9
|
|
|
4,393
|
|
|
22.3
|
|
|||
Total product revenue
|
$
|
738,242
|
|
|
100.0
|
%
|
|
$
|
673,962
|
|
|
100.0
|
%
|
|
$
|
64,280
|
|
|
9.5
|
%
|
Royalty and other revenue
|
52,006
|
|
|
|
|
38,936
|
|
|
|
|
13,070
|
|
|
|
||||||
Total revenue
|
$
|
790,248
|
|
|
|
|
$
|
712,898
|
|
|
|
|
$
|
77,350
|
|
|
|
(2)
|
Certain information presented for the periods ended
December 30, 2017
and
December 31, 2016
has been restated to reflect the full retrospective application of ASU 2014-09. See Note 2 to our accompanying consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for additional information related to our adoption of this new accounting standard.
|
|
Gross Profit
|
|||||||||||||||||||
|
Year ended
December 30, 2017 As Adjusted |
|
Percentage of
Net Revenues
|
|
Year ended
December 31, 2016 As Adjusted |
|
Percentage of
Net Revenues
|
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||
Product gross profit
|
$
|
473,647
|
|
|
64.2
|
%
|
|
$
|
441,078
|
|
|
65.4
|
%
|
|
$
|
32,569
|
|
|
7.4
|
%
|
Royalty and other revenue gross profit
|
48,385
|
|
|
93.0
|
|
|
37,260
|
|
|
95.7
|
|
|
11,125
|
|
|
29.9
|
|
|||
Total gross profit
|
$
|
522,032
|
|
|
66.1
|
%
|
|
$
|
478,338
|
|
|
67.1
|
%
|
|
$
|
43,694
|
|
|
9.1
|
%
|
Litigation Settlement, Award and/or Defense Costs
|
|||||
Year ended
December 30, 2017 |
Percentage of
Net Revenues |
Year ended
December 31, 2016 |
Percentage of
Net Revenues |
(Increase)/
Decrease |
Percentage
Change |
$—
|
—%
|
$(270,000)
|
(37.9)%
|
$270,000
|
(100.0)%
|
Non-operating (income) expense
|
|||||
Year ended
December 30, 2017 |
Percentage of
Net Revenues |
Year ended
December 31, 2016 |
Percentage of
Net Revenues |
(Increase)/
Decrease |
Percentage
Change |
$(2,013)
|
(0.3)%
|
$2,429
|
0.3%
|
$(4,442)
|
(182.9)%
|
The following table summarizes our cash flows (in thousands):
|
||||||||
|
|
Year Ended
|
||||||
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Net cash provided by (used in):
|
|
|
|
|||||
Operating activities
|
$
|
239,527
|
|
|
$
|
56,062
|
|
|
Investing activities
|
(26,152
|
)
|
|
(47,908
|
)
|
|||
Financing activities
|
25,780
|
|
|
(4,138
|
)
|
|||
Effect of foreign currency exchange rates on cash
|
(1,997
|
)
|
|
3,269
|
|
|||
Increase in cash and cash equivalents, and restricted cash
|
$
|
237,158
|
|
|
$
|
7,285
|
|
(3)
|
Certain information presented for periods ending prior to December 31, 2017 has been restated to reflect the full retrospective application of the new revenue accounting standard, ASU 2014-09. See Note 2 to the condensed consolidated financial statements included in Part IV, Item 16 of this Annual Report on Form 10-K
|
|
Payments Due By Period
|
||||||||||||||||||
|
Less than
1 year
|
|
Between
1-3 years
|
|
Between
3-5 years
|
|
More than
5 years
|
|
Total
|
||||||||||
Operating leases
(1)
|
$
|
6,926
|
|
|
$
|
6,806
|
|
|
$
|
3,269
|
|
|
$
|
9,921
|
|
(3)
|
$
|
26,922
|
|
Purchase commitments
(2)
|
90,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,400
|
|
|||||
Total contractual obligations
|
$
|
97,326
|
|
|
$
|
6,806
|
|
|
$
|
3,269
|
|
|
$
|
9,921
|
|
|
$
|
117,322
|
|
(1)
|
Facility, equipment and automobile leases.
|
(2)
|
Certain inventory items under non-cancellable purchase orders.
|
(3)
|
Includes optional renewal periods for certain leases.
|
|
Payments Due By Period
|
||||||||||||
|
Less than
1 year
|
|
Between
1-3 years
|
|
Between
3-5 years
|
|
More than
5 years
|
||||||
Minimum royalty commitment to Cercacor
(1)
|
$
|
5,000
|
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
(1)
|
(1)
|
Subsequent to 2022, the royalty arrangement requires a $5.0 million minimum annual royalty payment unless the agreement is amended, restated or terminated.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Exhibit
Number
|
|
Description of Document
|
|
||
3.1(1)
|
|
|
|
|
|
3.2(2)
|
|
|
|
|
|
4.1(1)
|
|
|
|
|
|
4.2(1)
|
|
|
|
|
|
4.3(4)#
|
|
|
|
|
|
10.1(1)#
|
|
|
|
|
|
10.2(5)#
|
|
|
|
|
|
10.3(17)
|
|
|
|
|
|
10.4(1)#
|
|
|
|
|
|
10.5(1)#
|
|
|
|
|
|
10.6(6)#
|
|
|
|
|
|
10.7#*
|
|
|
|
|
|
10.8(18)#
|
|
|
|
|
|
10.9(5)#
|
|
|
|
|
|
10.10(5)#
|
|
|
|
|
|
10.11(7)#
|
|
|
|
|
|
10.12(12)#
|
|
|
|
|
|
10.13#*
|
|
|
|
|
|
10.14#*
|
|
|
|
|
|
10.15(3)#
|
|
|
|
|
|
10.16(21)#*
|
|
|
|
|
|
Exhibit
Number |
|
Description of Document
|
|
|
|
|
|
10.17(1)#
|
|
||
|
|
||
10.18(19)#
|
|
||
|
|
|
|
10.19(20)#
|
|
||
|
|
|
|
10.20(6)+
|
|
||
|
|
|
|
10.21(1)+
|
|
||
|
|
||
10.22(1)+
|
|
||
|
|
||
10.23(8)+
|
|
||
|
|
|
|
10.24(10)+
|
|
||
|
|
|
|
10.25(1)
|
|
||
|
|
|
|
10.26(9)
|
|
||
|
|
|
|
10.27(1)
|
|
||
|
|
|
|
10.28(1)
|
|
||
|
|
|
|
10.29(11)
|
|
||
|
|
|
|
10.30(11)
|
|
||
|
|
|
|
10.31(11)
|
|
||
|
|
|
|
10.32(11)
|
|
||
|
|
|
|
10.33(11)
|
|
||
|
|
|
|
10.34(13)+
|
|
||
|
|
|
|
10.35(13)
|
|
||
|
|
|
|
10.36(13)
|
|
||
|
|
|
|
10.37(3)
|
|
||
|
|
|
Exhibit
Number |
|
Description of Document
|
|
|
|
10.38(13)
|
|
|
|
|
|
10.39(14)
|
|
|
|
|
|
10.40(15)
|
|
|
|
|
|
10.41(16)+
|
|
|
|
|
|
10.42*
|
|
|
|
|
|
10.43(22)#
|
|
|
|
|
|
10.44(22)#
|
|
|
|
|
|
10.45(22)#
|
|
|
|
|
|
10.46(22)#
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1)
|
Incorporated by reference to the exhibits to the Registrant’s Registration Statement on Form S-1 (No. 333-142171), originally filed on April 17, 2007. The number given in parentheses indicates the corresponding exhibit number in such Form S-1, as amended.
|
(2)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, filed on October 26, 2011. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(3)
|
Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K, filed on February 17, 2015. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K.
|
(4)
|
Incorporated by reference to the exhibit to the Registrant’s Registration Statement on Form S-8, filed on February 11, 2008. The number given in parentheses indicates the corresponding exhibit number in such Form S-8.
|
(5)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, filed on November 5, 2015 at 4:45 p.m. Eastern Time. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(6)
|
Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K, filed on March 4, 2009. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K.
|
(7)
|
Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K, filed on February 15, 2013. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K.
|
(8)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, filed on June 5, 2008. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(9)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, filed on January 31, 2011. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(10)
|
Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K filed February 14, 2014. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K.
|
(11)
|
Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed on May 1, 2014. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q.
|
(12)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, filed on January 17, 2008. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(13)
|
Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K, filed on February 24, 2016. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(14)
|
Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed on August 3, 2016. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(15)
|
Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 8-K, filed on September 2, 2016. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(16)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K, filed on November 7, 2016. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(17)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K filed on August 2, 2017. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(18)
|
Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K filed on September 25, 2017. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(19)
|
Incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-33642) filed on April 12, 2017.
|
(20)
|
Incorporated by reference to Appendix C to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-33642) filed on April 12, 2017.
|
(21)
|
Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K filed February 28, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 10-K.
|
(22)
|
Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q filed May 7, 2018. The number given in parentheses indicates the corresponding exhibit number in such Form 10-Q.
|
*
|
Filed herewith.
|
#
|
Indicates management contract or compensatory plan.
|
+
|
The SEC has granted confidential treatment with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Date:
|
February 26, 2019
|
|
By:
|
/s/ J
OE
K
IANI
|
|
|
|
|
Joe Kiani
Chairman of the Board & Chief Executive Officer
|
SIGNATURE
|
|
TITLE(S)
|
|
DATE
|
|
|
|
||
/s/ J
OE
K
IANI
|
|
Chairman of the Board & Chief Executive Officer
(
Principal Executive Officer
)
|
|
February 26, 2019
|
Joe Kiani
|
|
|
|
|
|
|
|
||
/s/ M
ICAH
Y
OUNG
|
|
Executive Vice President, Finance & Chief Financial Officer
(
Principal Financial Officer
)
|
|
February 26, 2019
|
Micah Young
|
|
|
|
|
|
|
|
||
/s/ D
AVID
J. V
AN
R
AMSHORST
|
|
Senior Vice President, Chief Accounting Officer
(
Principal Accounting Officer
)
|
|
February 26, 2019
|
David J. Van Ramshorst
|
|
|
|
|
|
|
|
|
|
/s/ S
TEVEN
J. B
ARKER
, M.D. P
H
.D.
|
|
Director
|
|
February 26, 2019
|
Steven J. Barker, M.D., Ph.D.
|
|
|
|
|
|
|
|
||
/s/ H M
ICHAEL
C
OHEN
|
|
Director
|
|
February 26, 2019
|
H Michael Cohen
|
|
|
|
|
|
|
|
|
|
/s/ S
ANFORD
F
ITCH
|
|
Director
|
|
February 26, 2019
|
Sanford Fitch
|
|
|
|
|
|
|
|
||
/s/ T
HOMAS
H
ARKIN
|
|
Director
|
|
February 26, 2019
|
Thomas Harkin
|
|
|
|
|
|
|
|
|
|
/s/ A
DAM
M
IKKELSON
|
|
Director
|
|
February 26, 2019
|
Adam Mikkelson
|
|
|
|
|
|
|
|
|
|
/s/ C
RAIG
R
EYNOLDS
|
|
Director
|
|
February 26, 2019
|
Craig Reynolds
|
|
|
|
|
|
|
|
|
|
/s/ J
ULIE
A. S
HIMER
, P
H
.D
|
|
Director
|
|
February 26, 2019
|
Julie A. Shimer, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
|
|
Schedule
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
552,490
|
|
|
$
|
315,302
|
|
Trade accounts receivable, net of allowance for doubtful accounts of $1,535 and $2,116 at December 29, 2018 and December 30, 2017, respectively
|
109,629
|
|
|
118,532
|
|
||
Inventories
|
93,751
|
|
|
92,259
|
|
||
Other current assets
|
29,227
|
|
|
33,602
|
|
||
Total current assets
|
785,097
|
|
|
559,695
|
|
||
Deferred costs and other contract assets
|
127,086
|
|
|
109,256
|
|
||
Property and equipment, net
|
165,972
|
|
|
164,096
|
|
||
Intangible assets, net
|
27,924
|
|
|
27,123
|
|
||
Goodwill
|
23,297
|
|
|
20,617
|
|
||
Deferred tax assets
|
21,210
|
|
|
19,981
|
|
||
Other assets
|
4,232
|
|
|
4,668
|
|
||
Total assets
|
$
|
1,154,818
|
|
|
$
|
905,436
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
40,388
|
|
|
$
|
33,780
|
|
Accrued compensation
|
49,486
|
|
|
39,515
|
|
||
Deferred revenue and other contract liabilities, current
|
33,106
|
|
|
32,105
|
|
||
Other current liabilities
|
24,627
|
|
|
24,254
|
|
||
Total current liabilities
|
147,607
|
|
|
129,654
|
|
||
Other liabilities
|
38,146
|
|
|
51,757
|
|
||
Total liabilities
|
185,753
|
|
|
181,411
|
|
||
Commitments and contingencies (Note 19)
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $0.001 par value; 5,000 shares authorized at December 29, 2018 and December 30, 2017; 0 shares issued and outstanding at December 29, 2018 and December 30, 2017
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 100,000 shares authorized at December 29, 2018 and December 30, 2017; 53,085 and 51,636 shares issued and outstanding at December 29, 2018 and December 30, 2017, respectively
|
53
|
|
|
52
|
|
||
Treasury stock, 15,255 and 15,059 shares at December 29, 2018 and December 30, 2017, respectively
|
(489,026
|
)
|
|
(472,536
|
)
|
||
Additional paid-in capital
|
533,164
|
|
|
461,494
|
|
||
Accumulated other comprehensive loss
|
(6,199
|
)
|
|
(2,941
|
)
|
||
Retained earnings
|
931,073
|
|
|
737,956
|
|
||
Total stockholders’ equity
|
969,065
|
|
|
724,025
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,154,818
|
|
|
$
|
905,436
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
||||||
Revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
829,874
|
|
|
$
|
738,242
|
|
|
$
|
673,962
|
|
Royalty and other revenue
|
28,415
|
|
|
52,006
|
|
|
38,936
|
|
|||
Total revenue
|
858,289
|
|
|
790,248
|
|
|
712,898
|
|
|||
Cost of goods sold
|
283,397
|
|
|
268,216
|
|
|
234,560
|
|
|||
Gross profit
|
574,892
|
|
|
522,032
|
|
|
478,338
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
289,456
|
|
|
276,292
|
|
|
254,707
|
|
|||
Research and development
|
76,967
|
|
|
61,953
|
|
|
57,686
|
|
|||
Litigation settlement, award and/or defense costs
|
425
|
|
|
—
|
|
|
(270,000
|
)
|
|||
Total operating expenses
|
366,848
|
|
|
338,245
|
|
|
42,393
|
|
|||
Operating income
|
208,044
|
|
|
183,787
|
|
|
435,945
|
|
|||
Non-operating (income) expense
|
(5,732
|
)
|
|
(2,013
|
)
|
|
2,429
|
|
|||
Income before provision for income taxes
|
213,776
|
|
|
185,800
|
|
|
433,516
|
|
|||
Provision for income taxes
|
20,233
|
|
|
61,011
|
|
|
122,419
|
|
|||
Net income
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
$
|
311,097
|
|
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.70
|
|
|
$
|
2.42
|
|
|
$
|
6.28
|
|
Diluted
|
$
|
3.45
|
|
|
$
|
2.23
|
|
|
$
|
5.85
|
|
|
|
|
|
|
|
||||||
Weighted-average shares used in per share calculations:
|
|
|
|
|
|
||||||
Basic
|
52,296
|
|
|
51,516
|
|
|
49,530
|
|
|||
Diluted
|
56,039
|
|
|
55,874
|
|
|
53,195
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
||||||
Net income
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
$
|
311,097
|
|
Other comprehensive gain (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation gains (losses)
|
(3,258
|
)
|
|
4,201
|
|
|
(2,288
|
)
|
|||
Unrealized loss on marketable securities
|
—
|
|
|
(115
|
)
|
|
—
|
|
|||
Total comprehensive income
|
$
|
190,285
|
|
|
$
|
128,875
|
|
|
$
|
308,809
|
|
MASIMO CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands)
|
|||||||||||||||||||||||||||||||||
|
Masimo Corporation Stockholders
|
|
|
|
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income
|
|
Retained
Earnings
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
||||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||
Balance at January 2, 2016
|
49,881
|
|
|
$
|
50
|
|
|
12,759
|
|
|
$
|
(340,873
|
)
|
|
$
|
332,417
|
|
|
$
|
(4,739
|
)
|
|
$
|
288,560
|
|
|
$
|
297
|
|
|
$
|
275,712
|
|
Adoption of ASU 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,510
|
|
|
—
|
|
|
13,510
|
|
|||||||
Balance at January 2, 2016, as adjusted
|
49,881
|
|
|
50
|
|
|
12,759
|
|
|
(340,873
|
)
|
|
332,417
|
|
|
(4,739
|
)
|
|
302,070
|
|
|
297
|
|
|
289,222
|
|
|||||||
Stock options exercised
|
1,799
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,342
|
|
|||||||
Restricted/Performance stock units vested
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,503
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,503
|
|
|||||||
Repurchases of common stock
|
(1,496
|
)
|
|
—
|
|
|
1,496
|
|
|
(63,403
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,402
|
)
|
|||||||
Gain on deconsolidation of variable interest entity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(297
|
)
|
|
(297
|
)
|
|||||||
Net income, as adjusted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
311,097
|
|
|
—
|
|
|
311,097
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,288
|
)
|
|
—
|
|
|
—
|
|
|
(2,288
|
)
|
|||||||
Balance at December 31, 2016, as adjusted
|
50,188
|
|
|
50
|
|
|
14,255
|
|
|
(404,276
|
)
|
|
382,263
|
|
|
(7,027
|
)
|
|
613,167
|
|
|
—
|
|
|
584,177
|
|
|||||||
Stock options exercised
|
2,246
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
62,044
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,046
|
|
|||||||
Restricted/Performance stock units vested
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,187
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,187
|
|
|||||||
Repurchases of common stock
|
(804
|
)
|
|
—
|
|
|
804
|
|
|
(68,260
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68,260
|
)
|
|||||||
Net income, as adjusted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124,789
|
|
|
—
|
|
|
124,789
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,201
|
|
|
—
|
|
|
—
|
|
|
4,201
|
|
|||||||
Unrealized loss on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(115
|
)
|
|
—
|
|
|
—
|
|
|
(115
|
)
|
|||||||
Balance at December 30, 2017, as adjusted
|
51,636
|
|
|
52
|
|
|
15,059
|
|
|
(472,536
|
)
|
|
461,494
|
|
|
(2,941
|
)
|
|
737,956
|
|
|
—
|
|
|
724,025
|
|
|||||||
Stock options exercised
|
1,608
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
44,421
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,422
|
|
|||||||
Restricted/Performance stock units vested
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Shares paid for tax withholding
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,417
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,417
|
|
|||||||
Repurchases of common stock
|
(196
|
)
|
|
—
|
|
|
196
|
|
|
(16,490
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,490
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193,543
|
|
|
—
|
|
|
193,543
|
|
|||||||
Adoption of ASU 2016-16
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(426
|
)
|
|
—
|
|
|
(426
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,258
|
)
|
|
—
|
|
|
—
|
|
|
(3,258
|
)
|
|||||||
Balance at December 29, 2018
|
53,085
|
|
|
$
|
53
|
|
|
15,255
|
|
|
$
|
(489,026
|
)
|
|
$
|
533,164
|
|
|
$
|
(6,199
|
)
|
|
$
|
931,073
|
|
|
$
|
—
|
|
|
$
|
969,065
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
$
|
311,097
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
21,127
|
|
|
20,061
|
|
|
16,817
|
|
|||
Stock-based compensation
|
27,417
|
|
|
17,187
|
|
|
12,503
|
|
|||
Loss on disposal of equipment, intangibles and other assets
|
949
|
|
|
522
|
|
|
658
|
|
|||
Provision for doubtful accounts
|
(439
|
)
|
|
251
|
|
|
259
|
|
|||
Provision for amount due from former foreign agent
|
(2,016
|
)
|
|
10,477
|
|
|
—
|
|
|||
Gain on deconsolidation of variable interest entity
|
—
|
|
|
—
|
|
|
(273
|
)
|
|||
(Benefit) provision from deferred income taxes
|
(8,274
|
)
|
|
17,276
|
|
|
10,149
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Decrease (increase) in trade accounts receivable
|
10,826
|
|
|
(19,772
|
)
|
|
(21,244
|
)
|
|||
Increase in inventories
|
(1,885
|
)
|
|
(24,014
|
)
|
|
(8,955
|
)
|
|||
Decrease (increase) in other current assets
|
3,843
|
|
|
(2,908
|
)
|
|
(4,816
|
)
|
|||
Increase in deferred cost of goods sold
|
(17,935
|
)
|
|
(14,102
|
)
|
|
(7,661
|
)
|
|||
(Increase) decrease in prepaid income taxes
|
—
|
|
|
(2,498
|
)
|
|
1,355
|
|
|||
Decrease (increase) in other assets
|
407
|
|
|
(10,771
|
)
|
|
455
|
|
|||
Increase (decrease) in accounts payable
|
5,211
|
|
|
(4,057
|
)
|
|
11,048
|
|
|||
Increase (decrease) in accrued compensation
|
10,195
|
|
|
(4,292
|
)
|
|
5,675
|
|
|||
Increase (decrease) in deferred revenue and other contract liabilities
|
1,420
|
|
|
(13,295
|
)
|
|
27,945
|
|
|||
(Decrease) increase in income taxes payable
|
(1,208
|
)
|
|
(72,087
|
)
|
|
73,755
|
|
|||
Increase (decrease) in other current liabilities
|
3,923
|
|
|
5,282
|
|
|
(16,207
|
)
|
|||
(Decrease) increase in other liabilities
|
(7,577
|
)
|
|
28,013
|
|
|
6,565
|
|
|||
Net cash provided by operating activities
|
239,527
|
|
|
56,062
|
|
|
419,125
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(17,126
|
)
|
|
(43,684
|
)
|
|
(19,707
|
)
|
|||
Increase in intangible assets
|
(5,557
|
)
|
|
(3,079
|
)
|
|
(4,644
|
)
|
|||
Business combination, net of cash acquired
|
(3,922
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisitions of equity investments
|
—
|
|
|
(1,145
|
)
|
|
(200
|
)
|
|||
Other
|
453
|
|
|
—
|
|
|
(763
|
)
|
|||
Net cash used in investing activities
|
(26,152
|
)
|
|
(47,908
|
)
|
|
(25,314
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Borrowings under revolving line of credit
|
—
|
|
|
—
|
|
|
45,000
|
|
|||
Repayments under revolving line of credit
|
—
|
|
|
—
|
|
|
(230,000
|
)
|
|||
Proceeds from issuance of common stock
|
44,748
|
|
|
62,205
|
|
|
37,290
|
|
|||
Repurchases of common stock
|
(18,478
|
)
|
|
(66,272
|
)
|
|
(68,218
|
)
|
|||
Other
|
(490
|
)
|
|
(71
|
)
|
|
(696
|
)
|
|||
Net cash provided by (used in) financing activities
|
25,780
|
|
|
(4,138
|
)
|
|
(216,624
|
)
|
|||
Effect of foreign currency exchange rates on cash
|
(1,997
|
)
|
|
3,269
|
|
|
(1,451
|
)
|
|||
Net increase in cash, cash equivalents and restricted cash
|
237,158
|
|
|
7,285
|
|
|
175,736
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
315,483
|
|
|
308,198
|
|
|
132,462
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
552,641
|
|
|
$
|
315,483
|
|
|
$
|
308,198
|
|
•
|
Level 1 - Quoted prices in active markets for
identical
assets or liabilities.
|
•
|
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for
similar
assets or liabilities, quoted prices in markets that are not active or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Useful Lives
|
Aircraft and components
|
10 to 20 years
|
Buildings
|
39 years
|
Building improvements
|
7 to 15 years
|
Computer equipment
|
2 to 6 years
|
Demonstration units
|
3 years
|
Furniture and office equipment
|
2 to 6 years
|
Leasehold improvements
|
Lesser of useful life or term of lease
|
Machinery and equipment
|
5 to 10 years
|
Tooling
|
3 years
|
Vehicles
|
5 years
|
|
Year Ended
|
||||||||||
|
December 29,
2018 |
|
December 30,
2017 |
|
December 31,
2016 |
||||||
Warranty accrual, beginning of period
|
$
|
1,149
|
|
|
$
|
910
|
|
|
$
|
1,222
|
|
Accrual for warranties issued (including specific accrual)
|
1,549
|
|
|
1,061
|
|
|
871
|
|
|||
Changes in pre-existing warranties (including changes in estimates)
|
551
|
|
|
332
|
|
|
110
|
|
|||
Settlements made
|
(1,339
|
)
|
|
(1,154
|
)
|
|
(1,293
|
)
|
|||
Warranty accrual, end of period
|
$
|
1,910
|
|
|
$
|
1,149
|
|
|
$
|
910
|
|
|
Year ended
|
||||||||||
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
|
December 31,
2016 As Adjusted |
||||||
Net Income
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
$
|
311,097
|
|
Basic net income per share:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding - basic
|
52,296
|
|
|
51,516
|
|
|
49,530
|
|
|||
Net income per basic share
|
$
|
3.70
|
|
|
$
|
2.42
|
|
|
$
|
6.28
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding - basic
|
52,296
|
|
|
51,516
|
|
|
49,530
|
|
|||
Diluted share equivalents: stock options and RSUs
|
3,743
|
|
|
4,358
|
|
|
3,665
|
|
|||
Weighted-average shares outstanding - diluted
|
56,039
|
|
|
55,874
|
|
|
53,195
|
|
|||
Net income per diluted share
|
$
|
3.45
|
|
|
$
|
2.23
|
|
|
$
|
5.85
|
|
|
Year ended
|
||||||||||
|
December 29,
2018 |
|
December 30,
2017 |
|
December 31,
2016 |
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest (net of amounts capitalized)
|
$
|
193
|
|
|
$
|
551
|
|
|
$
|
4,052
|
|
Income taxes
|
36,589
|
|
|
91,061
|
|
|
31,230
|
|
|||
Noncash investing and financing activities:
|
|
|
|
|
|
||||||
Unpaid purchases of property, plant and equipment
|
$
|
2,391
|
|
|
$
|
1,559
|
|
|
$
|
2,009
|
|
Unsettled common stock proceeds from option exercises
|
4
|
|
|
161
|
|
|
165
|
|
|||
Unsettled common stock repurchases
|
—
|
|
|
1,988
|
|
|
—
|
|
|||
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
552,490
|
|
|
$
|
315,302
|
|
|
$
|
305,970
|
|
Restricted cash
|
151
|
|
|
181
|
|
|
2,228
|
|
|||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
552,641
|
|
|
$
|
315,483
|
|
|
$
|
308,198
|
|
Consolidated Balance Sheet:
|
December 30, 2017
|
||||||||||
|
As Previously
Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||
Trade accounts receivable
|
$
|
121,309
|
|
|
$
|
(2,777
|
)
|
|
$
|
118,532
|
|
Inventories
|
95,944
|
|
|
(3,685
|
)
|
|
92,259
|
|
|||
Other current assets
|
31,564
|
|
|
2,038
|
|
|
33,602
|
|
|||
Deferred costs and other contract assets
|
99,600
|
|
|
9,656
|
|
|
109,256
|
|
|||
Deferred tax assets
|
23,898
|
|
|
(3,917
|
)
|
|
19,981
|
|
|||
Other assets
|
10,782
|
|
|
(6,114
|
)
|
|
4,668
|
|
|||
Accrued and other liabilities
|
42,344
|
|
|
(18,090
|
)
|
|
24,254
|
|
|||
Deferred revenue and other contract liabilities, current
|
35,929
|
|
|
(3,824
|
)
|
|
32,105
|
|
|||
Retained earnings
|
720,842
|
|
|
17,114
|
|
|
737,956
|
|
Consolidated Statement of Operations:
|
Year ended
December 30, 2017 |
||||||||||
|
As Previously
Reported |
|
Adjustments
|
|
As Adjusted
|
||||||
Product revenue
|
$
|
741,324
|
|
|
$
|
(3,082
|
)
|
|
$
|
738,242
|
|
Royalty and other revenue
|
56,784
|
|
|
(4,778
|
)
|
|
52,006
|
|
|||
Cost of goods sold
|
263,008
|
|
|
5,208
|
|
|
268,216
|
|
|||
Selling, general and administrative
|
275,786
|
|
|
506
|
|
|
276,292
|
|
|||
Provision for income taxes
|
67,758
|
|
|
(6,747
|
)
|
|
61,011
|
|
|||
Net income
|
131,616
|
|
|
(6,827
|
)
|
|
124,789
|
|
|||
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.55
|
|
|
$
|
(0.13
|
)
|
|
$
|
2.42
|
|
Diluted
|
$
|
2.36
|
|
|
$
|
(0.13
|
)
|
|
$
|
2.23
|
|
Consolidated Statement of Operations:
|
Year ended
December 31, 2016 |
||||||||||
|
As Previously
Reported |
|
Adjustments
|
|
As Adjusted
|
||||||
Product revenue
|
$
|
663,846
|
|
|
$
|
10,116
|
|
|
$
|
673,962
|
|
Royalty and other revenue
|
30,779
|
|
|
8,157
|
|
|
38,936
|
|
|||
Cost of goods sold
|
230,826
|
|
|
3,734
|
|
|
234,560
|
|
|||
Selling, general and administrative
|
253,667
|
|
|
1,040
|
|
|
254,707
|
|
|||
Research and development
|
59,362
|
|
|
(1,676
|
)
|
|
57,686
|
|
|||
Provision for income taxes
|
117,675
|
|
|
4,744
|
|
|
122,419
|
|
|||
Net income
|
300,666
|
|
|
10,431
|
|
|
311,097
|
|
|||
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
6.07
|
|
|
$
|
0.21
|
|
|
$
|
6.28
|
|
Diluted
|
$
|
5.65
|
|
|
$
|
0.20
|
|
|
$
|
5.85
|
|
Consolidated Statement of Cash Flows:
|
Year ended
December 30, 2017 |
||||||||||
|
As Previously
Reported |
|
Adjustments
|
|
As Adjusted
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
131,616
|
|
|
$
|
(6,827
|
)
|
|
$
|
124,789
|
|
Provision for deferred income taxes
|
24,023
|
|
|
(6,747
|
)
|
|
17,276
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Increase in inventories
|
(22,923
|
)
|
|
(1,091
|
)
|
|
(24,014
|
)
|
|||
Increase in other current assets
|
(3,855
|
)
|
|
947
|
|
|
(2,908
|
)
|
|||
Increase in deferred cost of goods sold
|
(19,438
|
)
|
|
5,336
|
|
|
(14,102
|
)
|
|||
Increase in other assets
|
(10,952
|
)
|
|
181
|
|
|
(10,771
|
)
|
|||
Increase in other current liabilities
|
11,156
|
|
|
(5,874
|
)
|
|
5,282
|
|
|||
Decrease in deferred revenue and other contract liabilities
|
(27,370
|
)
|
|
14,075
|
|
|
(13,295
|
)
|
Consolidated Statement of Cash Flows:
|
Year ended
December 31, 2016 |
||||||||||
|
As Previously
Reported |
|
Adjustments
|
|
As Adjusted
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
300,666
|
|
|
$
|
10,431
|
|
|
$
|
311,097
|
|
Provision for deferred income taxes
|
5,405
|
|
|
4,744
|
|
|
10,149
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Increase in inventories
|
(10,831
|
)
|
|
1,876
|
|
|
(8,955
|
)
|
|||
Increase in other current assets
|
(3,422
|
)
|
|
(1,394
|
)
|
|
(4,816
|
)
|
|||
Increase in deferred cost of goods sold
|
(8,251
|
)
|
|
590
|
|
|
(7,661
|
)
|
|||
(Increase) decrease in other assets
|
(1,609
|
)
|
|
2,064
|
|
|
455
|
|
|||
Decrease in other current liabilities
|
(11,929
|
)
|
|
(4,278
|
)
|
|
(16,207
|
)
|
|||
Increase in deferred revenue and other contract liabilities
|
41,977
|
|
|
(14,032
|
)
|
|
27,945
|
|
•
|
Cross-Licensing Agreement
- The Company and Cercacor are parties to the Cross-Licensing Agreement, which governs each party’s rights to certain intellectual property held by the two companies. The Company is subject to certain annual minimum aggregate royalty obligations for use of the rainbow
®
licensed technology. The current annual minimum royalty obligation is
$5.0 million
. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were
$10.9 million
,
$8.0 million
and
$6.4 million
for the years ended
December 29, 2018
,
December 30, 2017
and
|
•
|
Administrative Services Agreement
- The Company is a party to an administrative services agreement with Cercacor (G&A Services Agreement), which governs certain general and administrative services that the Company provides to Cercacor. Amounts charged by the Company pursuant to the G&A Services Agreement were
$0.2 million
for each of the years ended
December 29, 2018
,
December 30, 2017
and
December 31, 2016
.
|
•
|
Patent Transfer and Licensing Agreement.
The Company entered into a patent transfer and licensing agreement with Cercacor (the Patent Agreement) effective July 2015, pursuant to which, among other things, it purchased certain patents from Cercacor (the Purchased Patents) for an aggregate purchase price of
$2.4 million
. Pursuant to the Patent Agreement, the Company granted Cercacor an irrevocable, non-exclusive, worldwide license with respect to the products and services covered by the Purchased Patents.
|
•
|
Sublease Agreement
- In March 2016, the Company entered into a sublease agreement with Cercacor for approximately
16,830
square feet of excess office and laboratory space located at 40 Parker, Irvine, California (Cercacor Sublease). The Cercacor Sublease began on May 1, 2016 and expires on November 30, 2019. The Company recognized
$0.4 million
,
$0.4 million
and
$0.3 million
of sublease income for the years ended
December 29, 2018
,
December 30, 2017
, and
December 31, 2016
, respectively.
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Raw materials
|
$
|
38,955
|
|
|
$
|
31,200
|
|
Work-in-process
|
9,036
|
|
|
8,619
|
|
||
Finished goods
|
45,760
|
|
|
52,440
|
|
||
Total
|
$
|
93,751
|
|
|
$
|
92,259
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Prepaid expenses
|
$
|
10,582
|
|
|
$
|
10,517
|
|
Indirect taxes receivable
|
6,516
|
|
|
6,556
|
|
||
Customer notes receivable
|
3,780
|
|
|
2,777
|
|
||
Prepaid income taxes
|
3,071
|
|
|
3,494
|
|
||
Royalties receivable
|
500
|
|
|
7,400
|
|
||
Other
|
4,778
|
|
|
2,858
|
|
||
Total other current assets
|
$
|
29,227
|
|
|
$
|
33,602
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Deferred cost of goods sold
|
$
|
109,398
|
|
|
$
|
93,261
|
|
Prepaid contract incentives
|
7,036
|
|
|
6,115
|
|
||
Unbilled contract receivables
|
5,567
|
|
|
4,267
|
|
||
Deferred commissions
|
5,085
|
|
|
5,613
|
|
||
Deferred costs and other contract assets
|
$
|
127,086
|
|
|
$
|
109,256
|
|
|
December 29,
2018 |
|
December 30,
2017 |
||||
Building and building improvements
|
$
|
88,449
|
|
|
$
|
87,999
|
|
Machinery and equipment
|
54,525
|
|
|
47,556
|
|
||
Aircraft and vehicles
|
25,555
|
|
|
25,329
|
|
||
Land
|
23,762
|
|
|
23,762
|
|
||
Computer equipment
|
16,582
|
|
|
15,789
|
|
||
Leasehold improvements
|
16,428
|
|
|
15,326
|
|
||
Tooling
|
14,212
|
|
|
13,754
|
|
||
Furniture and office equipment
|
10,459
|
|
|
9,967
|
|
||
Demonstration units
|
470
|
|
|
486
|
|
||
Construction-in-progress (CIP)
|
13,320
|
|
|
6,365
|
|
||
Total property and equipment
|
263,762
|
|
|
246,333
|
|
||
Accumulated depreciation and amortization
|
(97,790
|
)
|
|
(82,237
|
)
|
||
Total property and equipment, net
|
$
|
165,972
|
|
|
$
|
164,096
|
|
|
December 29,
2018 |
|
December 30,
2017 |
||||
Cost
|
|
|
|
||||
Patents
|
$
|
21,323
|
|
|
$
|
20,623
|
|
Customer relationships
|
7,669
|
|
|
7,669
|
|
||
Licenses-related party
|
7,500
|
|
|
7,500
|
|
||
Acquired technology
|
5,580
|
|
|
5,580
|
|
||
Trademarks
|
4,190
|
|
|
4,036
|
|
||
Capitalized software development costs
|
3,430
|
|
|
2,699
|
|
||
Other
|
5,466
|
|
|
3,691
|
|
||
Total cost
|
55,158
|
|
|
51,798
|
|
||
Accumulated amortization
|
|
|
|
||||
Patents
|
(8,868
|
)
|
|
(8,473
|
)
|
||
Customer relationships
|
(4,921
|
)
|
|
(4,154
|
)
|
||
Licenses-related party
|
(5,252
|
)
|
|
(4,831
|
)
|
||
Acquired technology
|
(3,624
|
)
|
|
(3,066
|
)
|
||
Trademarks
|
(1,889
|
)
|
|
(1,611
|
)
|
||
Capitalized software development costs
|
(1,983
|
)
|
|
(1,864
|
)
|
||
Other
|
(697
|
)
|
|
(676
|
)
|
||
Total accumulated amortization
|
(27,234
|
)
|
|
(24,675
|
)
|
||
Net carrying amount
|
$
|
27,924
|
|
|
$
|
27,123
|
|
Fiscal year
|
Amount
|
||
2019
|
$
|
4,218
|
|
2020
|
3,748
|
|
|
2021
|
3,647
|
|
|
2022
|
2,941
|
|
|
2023
|
1,737
|
|
|
Thereafter
|
11,633
|
|
|
Total
|
$
|
27,924
|
|
|
December 29,
2018 |
|
December 30,
2017 |
||||
Goodwill, beginning of period
|
$
|
20,617
|
|
|
$
|
19,780
|
|
Goodwill as a result of acquisitions
|
3,402
|
|
|
—
|
|
||
Foreign currency translation adjustment
|
(722
|
)
|
|
837
|
|
||
Goodwill, end of period
|
$
|
23,297
|
|
|
$
|
20,617
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Prepaid deposits
|
$
|
2,881
|
|
|
$
|
3,286
|
|
Long term investments
|
1,200
|
|
|
1,234
|
|
||
Restricted cash
|
151
|
|
|
148
|
|
||
Total other assets, long-term
|
$
|
4,232
|
|
|
$
|
4,668
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Accrued customer reimbursements
|
$
|
16,194
|
|
|
$
|
16,896
|
|
Deferred revenue
|
10,883
|
|
|
11,589
|
|
||
Accrued rebates and incentives
|
6,282
|
|
|
3,598
|
|
||
Other
|
432
|
|
|
259
|
|
||
Total deferred revenue and other contract liabilities
|
33,791
|
|
|
32,342
|
|
||
Less: Non-current portion of deferred revenue
|
(685
|
)
|
|
(237
|
)
|
||
Deferred revenue and other contract liabilities - current
|
$
|
33,106
|
|
|
$
|
32,105
|
|
|
December 29,
2018 |
||
Deferred revenue, beginning of the period
|
$
|
11,589
|
|
Revenue deferred during the period
|
11,356
|
|
|
Recognition of revenue deferred in prior periods
|
(12,062
|
)
|
|
Deferred revenue, end of the period
|
$
|
10,883
|
|
|
Expected Future Revenue By Period
(in thousands)
|
||||||||||||||||||
|
Less than
1 year
|
|
Between
1-3 years
|
|
Between
3-5 years
|
|
More than
5 years
|
|
Total
|
||||||||||
Unrecognized Contract Revenue
|
$
|
194,151
|
|
|
$
|
271,477
|
|
|
$
|
128,116
|
|
|
$
|
36,688
|
|
|
$
|
630,432
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Accrued indirect taxes payable
|
$
|
6,465
|
|
|
$
|
6,711
|
|
Related party payables
|
4,000
|
|
|
1,528
|
|
||
Income tax payable
|
3,071
|
|
|
4,292
|
|
||
Accrued expenses
|
2,875
|
|
|
2,924
|
|
||
Accrued customer rebates, fees and reimbursements
|
2,163
|
|
|
2,351
|
|
||
Accrued warranty
|
1,910
|
|
|
1,149
|
|
||
Accrued legal fees
|
1,481
|
|
|
975
|
|
||
Accrued stock repurchases
|
—
|
|
|
1,988
|
|
||
Other
|
2,662
|
|
|
2,336
|
|
||
Total other current liabilities
|
$
|
24,627
|
|
|
$
|
24,254
|
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Income tax payable, long-term
|
$
|
21,522
|
|
|
$
|
25,734
|
|
Unrecognized tax benefits
|
11,717
|
|
|
14,348
|
|
||
Deferred tax liabilities
|
2,956
|
|
|
9,880
|
|
||
Deferred rent, long-term
|
1,236
|
|
|
1,266
|
|
||
Deferred revenue, long-term
|
685
|
|
|
237
|
|
||
Other
|
30
|
|
|
292
|
|
||
Total other non-current liabilities
|
$
|
38,146
|
|
|
$
|
51,757
|
|
|
Years Ended
|
||||||||||
|
December 29,
2018 |
|
December 30,
2017 |
|
December 31,
2016 |
||||||
Shares repurchased
|
196
|
|
(1)
|
804
|
|
(1)
|
1,496
|
|
|||
Average cost per share
|
$
|
84.12
|
|
|
$
|
84.90
|
|
|
$
|
42.39
|
|
Value of shares repurchased
|
$
|
16,490
|
|
|
$
|
68,260
|
|
|
$
|
63,403
|
|
(1)
|
Excludes shares withheld from the shares of its common stock actually issued in connection the vesting of PSU awards to satisfy certain U.S. federal and state tax withholding obligations.
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
|
Year ended
December 31, 2016 |
|||||||||||||||
|
Shares
|
|
Average
Exercise Price |
|
Shares
|
|
Average
Exercise
Price
|
|
Shares
|
|
Average
Exercise Price |
|||||||||
Options outstanding, beginning of period
|
6,953
|
|
|
$
|
36.26
|
|
|
8,521
|
|
|
$
|
28.56
|
|
|
9,202
|
|
|
$
|
25.46
|
|
Granted
|
564
|
|
|
98.47
|
|
|
928
|
|
|
86.69
|
|
|
1,290
|
|
|
39.94
|
|
|||
Canceled/Forfeited
|
(233
|
)
|
|
67.45
|
|
|
(250
|
)
|
|
38.59
|
|
|
(172
|
)
|
|
29.13
|
|
|||
Exercised
|
(1,608
|
)
|
|
27.62
|
|
|
(2,246
|
)
|
|
27.63
|
|
|
(1,799
|
)
|
|
20.76
|
|
|||
Options outstanding, end of period
|
5,676
|
|
|
$
|
43.61
|
|
|
6,953
|
|
|
$
|
36.26
|
|
|
8,521
|
|
|
$
|
28.56
|
|
Options exercisable, end of period
|
3,273
|
|
|
$
|
29.63
|
|
|
3,812
|
|
|
$
|
26.28
|
|
|
4,988
|
|
|
$
|
26.33
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
||||||||||||
|
Options Outstanding
|
|
Options
Exercisable
|
|
Options Outstanding
|
|
Options
Exercisable
|
||||||||
Range of Exercise Prices
|
Number of
Options
|
|
Average
Remaining
Contractual
Life
|
|
Number of
Options
|
|
Number of
Options
|
|
Average
Remaining
Contractual
Life
|
|
Number of
Options
|
||||
$15.00 to $35.00
|
2,956
|
|
|
4.24
|
|
2,560
|
|
|
4,442
|
|
|
4.47
|
|
3,418
|
|
$35.01 to $55.00
|
1,341
|
|
|
6.97
|
|
548
|
|
|
1,536
|
|
|
7.86
|
|
379
|
|
$55.01 to $75.00
|
72
|
|
|
7.75
|
|
20
|
|
|
101
|
|
|
8.82
|
|
15
|
|
$75.01 to $95.00
|
1,076
|
|
|
8.75
|
|
141
|
|
|
855
|
|
|
9.59
|
|
—
|
|
$95.01 to $115.00
|
160
|
|
|
9.54
|
|
4
|
|
|
19
|
|
|
9.40
|
|
—
|
|
$115.01 to $125.00
|
71
|
|
|
9.73
|
|
—
|
|
|
—
|
|
|
0.00
|
|
—
|
|
Total
|
5,676
|
|
|
6.01
|
|
3,273
|
|
|
6,953
|
|
|
5.92
|
|
3,812
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
|
Year ended
December 31, 2016 |
|||||||||||||||
|
Units
|
|
Weighted Average
Grant Date Fair Value |
|
Units
|
|
Weighted Average
Grant Date Fair Value |
|
Units
|
|
Weighted Average
Grant Date Fair Value |
|||||||||
RSUs outstanding, beginning of period
|
2,708
|
|
|
$
|
95.51
|
|
|
2,706
|
|
|
$
|
95.40
|
|
|
2,703
|
|
|
$
|
41.45
|
|
Granted
|
7
|
|
|
99.05
|
|
|
33
|
|
|
86.42
|
|
|
6
|
|
|
43.09
|
|
|||
Canceled/Forfeited
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
85.79
|
|
|
—
|
|
|
—
|
|
|||
Vested
|
(8
|
)
|
|
88.40
|
|
|
(6
|
)
|
|
43.09
|
|
|
(3
|
)
|
|
41.45
|
|
|||
RSUs outstanding, end of period
|
2,707
|
|
|
$
|
95.54
|
|
|
2,708
|
|
|
$
|
95.51
|
|
|
2,706
|
|
|
$
|
41.45
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
|
Year ended
December 31, 2016 |
|||||||||||||||
|
Units
|
|
Weighted Average
Grant Date Fair Value |
|
Units
|
|
Weighted Average
Grant Date Fair Value |
|
Units
|
|
Weighted Average
Grant Date Fair Value |
|||||||||
PSUs outstanding, beginning of period
|
233
|
|
|
$
|
90.70
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
197
|
|
|
86.95
|
|
|
248
|
|
|
90.71
|
|
|
—
|
|
|
—
|
|
|||
Canceled/Forfeited
|
(86
|
)
|
|
90.71
|
|
|
(15
|
)
|
|
90.87
|
|
|
—
|
|
|
|
||||
Vested
|
(31
|
)
|
|
90.70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
PSUs outstanding, end of period
|
313
|
|
|
$
|
88.34
|
|
|
233
|
|
|
$
|
90.70
|
|
|
—
|
|
|
$
|
—
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
|
Year ended
December 31, 2016 |
Risk-free interest rate
|
2.3% to 3.1%
|
|
1.7% to 2.2%
|
|
1.0% to 2.1%
|
Expected term
|
5.2 years to 5.6 years
|
|
5.5 years to 5.6 years
|
|
5.5 years to 5.7 years
|
Estimated volatility
|
26.8% to 32.0%
|
|
29.7% to 32.1%
|
|
29.8% to 35.7%
|
Expected dividends
|
0%
|
|
0%
|
|
0%
|
Weighted-average fair value of options granted
|
$31.85 per share
|
|
$27.81 per share
|
|
$13.64 per share
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
|
Year ended
December 31, 2016 |
||||||
Cost of goods sold
|
$
|
334
|
|
|
$
|
351
|
|
|
$
|
355
|
|
Selling, general and administrative
|
21,391
|
|
|
13,272
|
|
|
9,443
|
|
|||
Research and development
|
5,692
|
|
|
3,564
|
|
|
2,705
|
|
|||
Total
|
$
|
27,417
|
|
|
$
|
17,187
|
|
|
$
|
12,503
|
|
|
December 29,
2018 |
|
December 30,
2017 |
|
December 31,
2016 |
||||||
Interest income
|
$
|
(8,178
|
)
|
|
$
|
(2,974
|
)
|
|
$
|
(464
|
)
|
Realized and unrealized foreign currency (gain) loss
|
2,027
|
|
|
270
|
|
|
(103
|
)
|
|||
Interest expense
|
706
|
|
|
678
|
|
|
3,260
|
|
|||
Other
|
(287
|
)
|
|
13
|
|
|
(264
|
)
|
|||
Total
|
$
|
(5,732
|
)
|
|
$
|
(2,013
|
)
|
|
$
|
2,429
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
||||||
United States
|
$
|
173,848
|
|
|
$
|
159,245
|
|
|
$
|
333,054
|
|
Foreign
|
39,928
|
|
|
26,555
|
|
|
100,462
|
|
|||
Total
|
$
|
213,776
|
|
|
$
|
185,800
|
|
|
$
|
433,516
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
20,418
|
|
|
$
|
38,777
|
|
|
$
|
99,533
|
|
State
|
3,075
|
|
|
1,940
|
|
|
6,922
|
|
|||
Foreign
|
5,014
|
|
|
3,018
|
|
|
5,815
|
|
|||
|
28,507
|
|
|
43,735
|
|
|
112,270
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(6,678
|
)
|
|
20,735
|
|
|
7,169
|
|
|||
State
|
(1,258
|
)
|
|
(3,420
|
)
|
|
2,751
|
|
|||
Foreign
|
(338
|
)
|
|
(39
|
)
|
|
229
|
|
|||
|
(8,274
|
)
|
|
17,276
|
|
|
10,149
|
|
|||
Total
|
$
|
20,233
|
|
|
$
|
61,011
|
|
|
$
|
122,419
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
|||
Statutory regular federal income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State provision, net of federal benefit
|
0.7
|
|
|
(0.6
|
)
|
|
1.4
|
|
Nondeductible executive compensation
|
1.9
|
|
|
1.3
|
|
|
0.6
|
|
Research and development tax credits
|
(1.4
|
)
|
|
(2.2
|
)
|
|
(0.5
|
)
|
Foreign income taxed at different rates
|
(2.0
|
)
|
|
(3.4
|
)
|
|
(5.6
|
)
|
U.S. tax on foreign income, net
|
0.7
|
|
|
—
|
|
|
—
|
|
Impact of 2017 Tax Act
|
0.1
|
|
|
18.8
|
|
|
—
|
|
Withholding taxes on undistributed foreign earnings, net
|
(0.6
|
)
|
|
3.5
|
|
|
—
|
|
Excess stock based compensation
|
(9.4
|
)
|
|
(20.3
|
)
|
|
(2.9
|
)
|
Derecognition of uncertain tax position
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
Other
|
—
|
|
|
0.7
|
|
|
0.2
|
|
Total
|
9.5
|
%
|
|
32.8
|
%
|
|
28.2
|
%
|
|
December 29,
2018 |
|
December 30,
2017 As Adjusted |
||||
Deferred tax assets:
|
|
|
|
||||
Tax credits
|
$
|
5,672
|
|
|
$
|
6,414
|
|
Deferred revenue
|
331
|
|
|
665
|
|
||
Accrued liabilities
|
12,645
|
|
|
8,167
|
|
||
Stock-based compensation
|
6,615
|
|
|
8,601
|
|
||
Total
|
25,263
|
|
|
23,847
|
|
||
Valuation allowance
|
—
|
|
|
—
|
|
||
Total deferred tax assets
|
25,263
|
|
|
23,847
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(2,504
|
)
|
|
(1,651
|
)
|
||
State taxes and other
|
(857
|
)
|
|
(1,990
|
)
|
||
Withholding taxes on undistributed foreign earnings
|
(2,803
|
)
|
|
(9,500
|
)
|
||
Other
|
(845
|
)
|
|
(605
|
)
|
||
Total deferred tax liabilities
|
(7,009
|
)
|
|
(13,746
|
)
|
||
Net deferred tax assets
|
$
|
18,254
|
|
|
$
|
10,101
|
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 |
||||
Unrecognized tax benefits (gross), beginning of period
|
$
|
16,157
|
|
|
$
|
14,494
|
|
Increase from tax positions in prior period
|
701
|
|
|
498
|
|
||
Increase from tax positions in current period
|
2,633
|
|
|
2,142
|
|
||
Settlements
|
(33
|
)
|
|
—
|
|
||
Lapse of statute of limitations
|
(4,046
|
)
|
|
(977
|
)
|
||
Unrecognized tax benefits (gross), end of period
|
$
|
15,412
|
|
|
$
|
16,157
|
|
Fiscal year
|
Total
Operating Leases |
||
2019
|
$
|
6,926
|
|
2020
|
4,422
|
|
|
2021
|
2,384
|
|
|
2022
|
1,701
|
|
|
2023
|
1,568
|
|
|
Thereafter
(1)
|
9,921
|
|
|
Total
|
$
|
26,922
|
|
(1)
|
Includes optional renewal period for certain leases.
|
|
Year ended
December 29, 2018 |
|
Year ended
December 30, 2017 As Adjusted |
|
Year ended
December 31, 2016 As Adjusted |
|||||||||||||||
Long-lived assets by geographic area
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
United States
|
$
|
280,215
|
|
|
94.3
|
%
|
|
$
|
265,678
|
|
|
95.6
|
%
|
|
$
|
224,540
|
|
|
95.8
|
%
|
International
|
17,075
|
|
|
5.7
|
|
|
12,342
|
|
|
4.4
|
|
|
9,893
|
|
|
4.2
|
|
|||
Total
|
$
|
297,290
|
|
|
100.0
|
%
|
|
$
|
278,020
|
|
|
100.0
|
%
|
|
$
|
234,433
|
|
|
100.0
|
%
|
|
Quarters Ended
|
||||||||||||||
Fiscal 2018
|
March 31,
2018 |
|
June 30,
2018 |
|
September 29,
2018 |
|
December 29,
2018 |
||||||||
Total revenue
|
$
|
212,953
|
|
|
$
|
211,621
|
|
|
$
|
210,583
|
|
|
$
|
223,132
|
|
Gross profit
|
143,661
|
|
|
142,147
|
|
|
140,753
|
|
|
148,331
|
|
||||
Operating income
|
53,885
|
|
|
51,612
|
|
|
48,641
|
|
|
53,906
|
|
||||
Net income
|
45,630
|
|
|
43,853
|
|
|
57,126
|
|
|
46,934
|
|
||||
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
(1)
|
$
|
0.88
|
|
|
$
|
0.84
|
|
|
$
|
1.09
|
|
|
$
|
0.88
|
|
Diluted
(1)
|
$
|
0.82
|
|
|
$
|
0.79
|
|
|
$
|
1.02
|
|
|
$
|
0.83
|
|
|
Quarters Ended
|
||||||||||||||
Fiscal 2017
|
April 1,
2017 As Adjusted |
|
July 1,
2017 As Adjusted |
|
September 30,
2017 As Adjusted |
|
December 30,
2017 As Adjusted |
||||||||
Total revenue
|
$
|
196,643
|
|
|
$
|
192,306
|
|
|
$
|
193,360
|
|
|
$
|
207,939
|
|
Gross profit
|
132,414
|
|
|
126,901
|
|
|
124,065
|
|
|
138,652
|
|
||||
Operating income
|
52,151
|
|
|
43,849
|
|
|
43,061
|
|
|
44,726
|
|
||||
Net income
|
51,533
|
|
|
45,138
|
|
|
35,853
|
|
|
(7,735
|
)
|
||||
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
(1)
|
$
|
1.02
|
|
|
$
|
0.87
|
|
|
$
|
0.69
|
|
|
$
|
(0.15
|
)
|
Diluted
(1)
|
$
|
0.93
|
|
|
$
|
0.80
|
|
|
$
|
0.64
|
|
|
$
|
(0.15
|
)
|
MASIMO CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 29, 2018, December 30, 2017 and December 31, 2016
(in thousands)
|
||||||||||||||||
Description
|
Balance at
beginning of period
|
|
Additions charged to
expense and other accounts
|
|
Amounts charged
against reserve
|
|
Balance at
end of period
|
|||||||||
Year ended December 29, 2018
|
|
|
|
|
|
|
|
|||||||||
|
Allowance for doubtful accounts
|
$
|
2,116
|
|
|
$
|
(486
|
)
|
|
$
|
(95
|
)
|
|
$
|
1,535
|
|
|
Sales returns, allowance and reserves
|
371
|
|
|
1,416
|
|
|
(1,408
|
)
|
|
379
|
|
||||
|
Valuation allowance on deferred tax asset
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Year ended December 30, 2017
|
|
|
|
|
|
|
|
|||||||||
|
Allowance for doubtful accounts
|
1,698
|
|
|
251
|
|
|
167
|
|
|
2,116
|
|
||||
|
Sales returns, allowance and reserves
|
605
|
|
|
1,593
|
|
|
(1,827
|
)
|
|
371
|
|
||||
|
Valuation allowance on deferred tax asset
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|||||||||
|
Allowance for doubtful accounts
|
1,967
|
|
|
259
|
|
|
(528
|
)
|
|
1,698
|
|
||||
|
Sales returns, allowance and reserves
|
710
|
|
|
2,320
|
|
|
(2,425
|
)
|
|
605
|
|
||||
|
Valuation allowance on deferred tax asset
|
4,196
|
|
|
—
|
|
|
(4,196
|
)
|
|
—
|
|
1 Year Masimo Chart |
1 Month Masimo Chart |
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