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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.75 | 0.55% | 137.00 | 134.51 | 148.11 | 137.85 | 136.18 | 137.02 | 611,099 | 01:00:00 |
|
(Mark One)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
408,784
|
|
|
$
|
552,490
|
|
Short-term investments
|
180,000
|
|
|
—
|
|
||
Trade accounts receivable, net of allowance for doubtful accounts of $1,984 and $1,535 at June 29, 2019 and December 29, 2018, respectively
|
120,580
|
|
|
109,629
|
|
||
Inventories
|
98,785
|
|
|
94,732
|
|
||
Other current assets
|
55,894
|
|
|
29,227
|
|
||
Total current assets
|
864,043
|
|
|
786,078
|
|
||
Lease receivable, noncurrent
|
44,284
|
|
|
—
|
|
||
Deferred costs and other contract assets
|
13,998
|
|
|
126,105
|
|
||
Property and equipment, net
|
202,810
|
|
|
165,972
|
|
||
Intangible assets, net
|
27,633
|
|
|
27,924
|
|
||
Goodwill
|
22,384
|
|
|
23,297
|
|
||
Deferred tax assets
|
30,475
|
|
|
21,210
|
|
||
Other non-current assets
|
24,219
|
|
|
4,232
|
|
||
Total assets
|
$
|
1,229,846
|
|
|
$
|
1,154,818
|
|
LIABILITIES AND STOCKHOLDERS
’
EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
36,472
|
|
|
$
|
40,388
|
|
Accrued compensation
|
42,439
|
|
|
49,486
|
|
||
Deferred revenue and other contract-related liabilities, current
|
25,874
|
|
|
33,106
|
|
||
Other current liabilities
|
31,289
|
|
|
24,627
|
|
||
Total current liabilities
|
136,074
|
|
|
147,607
|
|
||
Other non-current liabilities
|
53,898
|
|
|
38,146
|
|
||
Total liabilities
|
189,972
|
|
|
185,753
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $0.001 par value; 5,000 shares authorized; 0 shares issued and outstanding at June 29, 2019 and December 29, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 100,000 shares authorized; 53,325 and 53,085 shares issued and outstanding at June 29, 2019 and December 29, 2018, respectively
|
53
|
|
|
53
|
|
||
Treasury stock, 15,463 and 15,255 shares at June 29, 2019 and December 29, 2018, respectively
|
(516,880
|
)
|
|
(489,026
|
)
|
||
Additional paid-in capital
|
564,697
|
|
|
533,164
|
|
||
Accumulated other comprehensive loss
|
(6,484
|
)
|
|
(6,199
|
)
|
||
Retained earnings
|
998,488
|
|
|
931,073
|
|
||
Total stockholders’ equity
|
1,039,874
|
|
|
969,065
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,229,846
|
|
|
$
|
1,154,818
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
229,510
|
|
|
$
|
202,004
|
|
|
$
|
460,058
|
|
|
$
|
406,393
|
|
Royalty and other revenue
|
142
|
|
|
9,617
|
|
|
1,258
|
|
|
18,181
|
|
||||
Total revenue
|
229,652
|
|
|
211,621
|
|
|
461,316
|
|
|
424,574
|
|
||||
Cost of goods sold
|
75,313
|
|
|
69,474
|
|
|
155,335
|
|
|
138,766
|
|
||||
Gross profit
|
154,339
|
|
|
142,147
|
|
|
305,981
|
|
|
285,808
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
78,160
|
|
|
70,450
|
|
|
152,364
|
|
|
140,667
|
|
||||
Research and development
|
24,175
|
|
|
20,085
|
|
|
45,590
|
|
|
39,644
|
|
||||
Total operating expenses
|
102,335
|
|
|
90,535
|
|
|
197,954
|
|
|
180,311
|
|
||||
Operating income
|
52,004
|
|
|
51,612
|
|
|
108,027
|
|
|
105,497
|
|
||||
Non-operating income
|
3,529
|
|
|
1,405
|
|
|
7,415
|
|
|
3,052
|
|
||||
Income before provision for income taxes
|
55,533
|
|
|
53,017
|
|
|
115,442
|
|
|
108,549
|
|
||||
Provision for income taxes
|
10,645
|
|
|
9,164
|
|
|
21,232
|
|
|
19,066
|
|
||||
Net income
|
$
|
44,888
|
|
|
$
|
43,853
|
|
|
$
|
94,210
|
|
|
$
|
89,483
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.84
|
|
|
$
|
0.84
|
|
|
$
|
1.77
|
|
|
$
|
1.72
|
|
Diluted
|
$
|
0.79
|
|
|
$
|
0.79
|
|
|
$
|
1.65
|
|
|
$
|
1.60
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
53,356
|
|
|
51,999
|
|
|
53,283
|
|
|
52,047
|
|
||||
Diluted
|
57,066
|
|
|
55,742
|
|
|
56,940
|
|
|
55,842
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||
Net income
|
$
|
44,888
|
|
|
$
|
43,853
|
|
|
$
|
94,210
|
|
|
$
|
89,483
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) from foreign currency translation adjustments
|
292
|
|
|
(2,785
|
)
|
|
(285
|
)
|
|
(3,056
|
)
|
||||
Comprehensive income
|
$
|
45,180
|
|
|
$
|
41,068
|
|
|
$
|
93,925
|
|
|
$
|
86,427
|
|
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
|
|||||||||||||||||||||||||||||
|
Three and Six Months Ended June 29, 2019
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at December 29, 2018
|
53,085
|
|
|
$
|
53
|
|
|
15,255
|
|
|
$
|
(489,026
|
)
|
|
$
|
533,164
|
|
|
$
|
(6,199
|
)
|
|
$
|
931,073
|
|
|
$
|
969,065
|
|
Stock options exercised
|
224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,867
|
|
|
—
|
|
|
—
|
|
|
6,867
|
|
||||||
Restricted/Performance stock units vested
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares paid for tax withholding
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,317
|
|
|
—
|
|
|
—
|
|
|
7,317
|
|
||||||
Cumulative effect of adoption of ASU 2016-02
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,795
|
)
|
|
(26,795
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,322
|
|
|
49,322
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(577
|
)
|
|
—
|
|
|
(577
|
)
|
||||||
Balance at March 30, 2019
|
53,337
|
|
|
53
|
|
|
15,255
|
|
|
(489,026
|
)
|
|
547,225
|
|
|
(6,776
|
)
|
|
953,600
|
|
|
1,005,076
|
|
||||||
Stock options exercised
|
189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,999
|
|
|
—
|
|
|
—
|
|
|
5,999
|
|
||||||
Restricted/Performance stock units vested
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,473
|
|
|
—
|
|
|
—
|
|
|
11,473
|
|
||||||
Repurchases of common stock
|
(208
|
)
|
|
—
|
|
|
208
|
|
|
(27,854
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,854
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,888
|
|
|
44,888
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|
292
|
|
||||||
Balance at June 29, 2019
|
53,325
|
|
|
$
|
53
|
|
|
15,463
|
|
|
$
|
(516,880
|
)
|
|
$
|
564,697
|
|
|
$
|
(6,484
|
)
|
|
$
|
998,488
|
|
|
$
|
1,039,874
|
|
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
|
|||||||||||||||||||||||||||||
|
Three and Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at December 30, 2017
|
51,636
|
|
|
$
|
52
|
|
|
15,059
|
|
|
$
|
(472,536
|
)
|
|
$
|
461,494
|
|
|
$
|
(2,941
|
)
|
|
$
|
737,956
|
|
|
$
|
724,025
|
|
Stock options exercised
|
314
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,880
|
|
|
—
|
|
|
—
|
|
|
8,880
|
|
||||||
Restricted/Performance stock units vested
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares paid for tax withholding
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
|
—
|
|
|
—
|
|
|
(168
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,332
|
|
|
—
|
|
|
—
|
|
|
5,332
|
|
||||||
Repurchases of common stock
|
(196
|
)
|
|
—
|
|
|
196
|
|
|
(16,490
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,490
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,630
|
|
|
45,630
|
|
||||||
Adoption of ASU 2016-16
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(426
|
)
|
|
(426
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
(270
|
)
|
||||||
Balance at March 31, 2018
|
51,783
|
|
|
52
|
|
|
15,255
|
|
|
(489,026
|
)
|
|
475,538
|
|
|
(3,211
|
)
|
|
783,160
|
|
|
766,513
|
|
||||||
Stock options exercised
|
378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,891
|
|
|
—
|
|
|
—
|
|
|
10,891
|
|
||||||
Restricted/Performance stock units vested
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,720
|
|
|
—
|
|
|
—
|
|
|
6,720
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,853
|
|
|
43,853
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,786
|
)
|
|
|
|
(2,786
|
)
|
|||||||
Balance at June 30, 2018
|
52,169
|
|
|
$
|
52
|
|
|
15,255
|
|
|
$
|
(489,026
|
)
|
|
$
|
493,149
|
|
|
$
|
(5,997
|
)
|
|
$
|
827,013
|
|
|
$
|
825,191
|
|
|
Six Months Ended
|
||||||
|
June 29,
2019 |
|
June 30,
2018 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
94,210
|
|
|
$
|
89,483
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
11,641
|
|
|
10,794
|
|
||
Stock-based compensation
|
18,790
|
|
|
12,049
|
|
||
Loss on disposal of property, equipment and intangibles
|
93
|
|
|
632
|
|
||
Provision from doubtful accounts
|
622
|
|
|
(356
|
)
|
||
Provision (benefit) from deferred income taxes
|
21
|
|
|
(274
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
(Increase) decrease in accounts receivable
|
(11,705
|
)
|
|
20,209
|
|
||
(Increase) decrease in inventories
|
(4,159
|
)
|
|
1,075
|
|
||
Increase in other current assets
|
(7,147
|
)
|
|
(1,694
|
)
|
||
Increase in lease receivable, net
|
(6,238
|
)
|
|
—
|
|
||
Decrease (increase) in deferred costs and other contract assets
|
8,723
|
|
|
(7,809
|
)
|
||
(Increase) decrease in other non-current assets
|
(177
|
)
|
|
430
|
|
||
(Decrease) increase in accounts payable
|
(2,841
|
)
|
|
1,820
|
|
||
Decrease in accrued compensation
|
(6,997
|
)
|
|
(2,771
|
)
|
||
(Decrease) increase in accrued liabilities
|
(2,966
|
)
|
|
1,776
|
|
||
Increase (decrease) in income tax payable
|
2,109
|
|
|
(895
|
)
|
||
Increase in deferred revenue and other contract-related liabilities
|
5,566
|
|
|
3,397
|
|
||
Increase in other non-current liabilities
|
1,234
|
|
|
33
|
|
||
Net cash provided by operating activities
|
100,779
|
|
|
127,899
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of short-term investments
|
(180,000
|
)
|
|
—
|
|
||
Purchases of property and equipment, net
|
(47,323
|
)
|
|
(9,430
|
)
|
||
Increase in intangible assets
|
(2,019
|
)
|
|
(3,643
|
)
|
||
Net cash used in investing activities
|
(229,342
|
)
|
|
(13,073
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
12,870
|
|
|
19,778
|
|
||
Payroll tax withholdings on behalf of employees for vested equity awards
|
(123
|
)
|
|
(168
|
)
|
||
Repurchases of common stock
|
(27,854
|
)
|
|
(18,478
|
)
|
||
Net cash (used in) provided by financing activities
|
(15,107
|
)
|
|
1,132
|
|
||
Effect of foreign currency exchange rates on cash
|
(32
|
)
|
|
(1,647
|
)
|
||
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
(143,702
|
)
|
|
114,311
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
552,641
|
|
|
315,483
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
408,939
|
|
|
$
|
429,794
|
|
1
|
The use of the trademark Patient SafetyNet is under license from the University HealthSystem Consortium.
|
●
|
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.
|
|
|
|
|
|
|
|
|
|
Reported as
|
||||||||||||||
|
Adjusted Basis
Cost |
|
Gross Unrealized
Gains |
|
Gross Unrealized
(Losses) |
|
Estimated
Fair Value |
|
Cash and Cash Equivalents
|
|
Short-Term
Investments |
||||||||||||
Cash
|
$
|
408,784
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
408,784
|
|
|
$
|
408,784
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Certificates of deposit
|
180,000
|
|
|
—
|
|
|
—
|
|
|
180,000
|
|
|
—
|
|
|
180,000
|
|
||||||
Subtotal
|
180,000
|
|
|
—
|
|
|
—
|
|
|
180,000
|
|
|
—
|
|
|
180,000
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Level 3:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total assets measured at fair value
|
$
|
588,784
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
588,784
|
|
|
$
|
408,784
|
|
|
$
|
180,000
|
|
|
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
|
|
Six Months Ended
|
||||||
|
June 29,
2019 |
|
June 30,
2018 |
||||
Warranty accrual, beginning of period
|
$
|
1,910
|
|
|
$
|
1,149
|
|
Accrual for warranties issued
|
1,877
|
|
|
643
|
|
||
Changes to pre-existing warranties (including changes in estimates)
(1)
|
1,601
|
|
|
551
|
|
||
Settlements made
|
(719
|
)
|
|
(502
|
)
|
||
Warranty accrual, end of period
|
$
|
4,669
|
|
|
$
|
1,841
|
|
(1)
|
In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded an adjustment to pre-existing warranties of
$2.5 million
related to equipment previously capitalized under its deferred equipment agreements where the embedded leases were treated as operating leases under prior guidance. See “Recently Adopted Accounting Pronouncements” to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842.
|
|
Six Months Ended
June 29, 2019 |
||
Accumulated other comprehensive loss, beginning of period
|
$
|
(6,199
|
)
|
Unrealized gains from foreign currency translation
|
(285
|
)
|
|
Accumulated other comprehensive loss, end of period
|
$
|
(6,484
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||
Net income
|
$
|
44,888
|
|
|
$
|
43,853
|
|
|
$
|
94,210
|
|
|
$
|
89,483
|
|
Basic net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic
|
53,356
|
|
|
51,999
|
|
|
53,283
|
|
|
52,047
|
|
||||
Net income per basic share
|
$
|
0.84
|
|
|
$
|
0.84
|
|
|
$
|
1.77
|
|
|
$
|
1.72
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic
|
53,356
|
|
|
51,999
|
|
|
53,283
|
|
|
52,047
|
|
||||
Diluted share equivalent: stock options, RSUs and PSUs
|
3,710
|
|
|
3,743
|
|
|
3,657
|
|
|
3,795
|
|
||||
Weighted-average shares outstanding - diluted
|
57,066
|
|
|
55,742
|
|
|
56,940
|
|
|
55,842
|
|
||||
Net income per diluted share
|
$
|
0.79
|
|
|
$
|
0.79
|
|
|
$
|
1.65
|
|
|
$
|
1.60
|
|
|
Six Months Ended
|
||||||
|
June 29,
2019 |
|
June 30,
2018 |
||||
Cash paid during the year for:
|
|
|
|
||||
Interest
|
$
|
73
|
|
|
$
|
229
|
|
Income taxes
|
26,975
|
|
|
21,771
|
|
||
Capitalized operating leases
|
3,409
|
|
|
—
|
|
||
|
|
|
|
||||
Non-cash operating activities:
|
|
|
|
||||
ROU assets obtained in exchange for lease liabilities
(1)
|
$
|
24,093
|
|
|
$
|
—
|
|
|
|
|
|
||||
Non-cash investing activities:
|
|
|
|
||||
Unpaid purchases of property, plant and equipment
|
$
|
1,216
|
|
|
$
|
663
|
|
|
|
|
|
||||
Non-cash financing activities:
|
|
|
|
||||
Unsettled common stock proceeds from option exercises
|
$
|
283
|
|
|
$
|
—
|
|
|
|
|
|
||||
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
408,784
|
|
|
$
|
429,647
|
|
Restricted cash
|
155
|
|
|
147
|
|
||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows
|
$
|
408,939
|
|
|
$
|
429,794
|
|
(1)
|
In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded a lessee operating lease ROU asset of
$22.5 million
. See “Recently Adopted Accounting Pronouncements” to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842.
|
•
|
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 to Cercacor arising under the Cross-Licensing Agreement were
$2.9 million
and
$2.0 million
for the
three
months ended
June 29, 2019
and
June 30, 2018
, respectively. Aggregate liabilities to Cercacor arising under the Cross-Licensing Agreement were
$5.8 million
and
$4.5 million
for the
six
months ended
June 29, 2019
and
June 30, 2018
, respectively.
|
•
|
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 less than
$0.1 million
for each of the
three
and
six
months ended
June 29, 2019
and
June 30, 2018
.
|
•
|
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 less than
$0.1 million
in sublease income for each of the
three
months ended
June 29, 2019
and
June 30, 2018
. The Company recognized less than
$0.2 million
in sublease income for each of the
six
months ended
June 29, 2019
and
June 30, 2018
.
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Raw materials
|
$
|
49,664
|
|
|
$
|
38,955
|
|
Work-in-process
|
9,157
|
|
|
9,036
|
|
||
Finished goods
|
39,964
|
|
|
46,741
|
|
||
Total inventories
|
$
|
98,785
|
|
|
$
|
94,732
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Lease receivable, current
|
$
|
20,129
|
|
|
$
|
—
|
|
Prepaid income taxes
|
11,857
|
|
|
3,071
|
|
||
Prepaid expenses
|
9,676
|
|
|
10,582
|
|
||
Indirect taxes receivable
|
5,251
|
|
|
6,516
|
|
||
Customer notes receivable
|
3,230
|
|
|
3,780
|
|
||
Other current assets
|
5,751
|
|
|
5,278
|
|
||
Total other current assets
|
$
|
55,894
|
|
|
$
|
29,227
|
|
|
June 29,
2019 |
||
Lease receivable
|
$
|
64,748
|
|
Allowance for credit loss
|
(335
|
)
|
|
Lease receivable, net
|
64,413
|
|
|
Less: Current portion of lease receivable
|
(20,129
|
)
|
|
Lease receivable, noncurrent
|
$
|
44,284
|
|
Fiscal year
|
Amount
|
||
2019 (balance of year)
|
$
|
9,790
|
|
2020
|
17,348
|
|
|
2021
|
13,542
|
|
|
2022
|
10,533
|
|
|
2023
|
6,594
|
|
|
Thereafter
|
6,606
|
|
|
Total
|
$
|
64,413
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Prepaid contract incentives
|
$
|
5,862
|
|
|
$
|
7,036
|
|
Deferred commissions
|
5,136
|
|
|
5,085
|
|
||
Unbilled contract receivables
|
2,358
|
|
|
5,567
|
|
||
Equipment leased to customers, net
(1)
|
642
|
|
|
108,417
|
|
||
Total deferred costs and other contract assets
|
$
|
13,998
|
|
|
$
|
126,105
|
|
(1)
|
Formerly titled “Deferred cost of goods sold”. In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded a reduction to equipment leased to customers, net, of
$103.5 million
as a result of the reclassification of certain embedded leases within the Company’s deferred equipment agreements with its customers from operating to sales-type leases. See “Recently Adopted Accounting Pronouncements” to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842.
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Building and building improvements
|
$
|
91,595
|
|
|
$
|
88,449
|
|
Machinery and equipment
|
58,077
|
|
|
54,525
|
|
||
Land
|
40,216
|
|
|
23,762
|
|
||
Aircraft and vehicles
|
25,595
|
|
|
25,555
|
|
||
Computer equipment
|
18,649
|
|
|
16,582
|
|
||
Leasehold improvements
|
17,167
|
|
|
16,428
|
|
||
Tooling
|
14,742
|
|
|
14,212
|
|
||
Furniture and office equipment
|
10,670
|
|
|
10,459
|
|
||
Demonstration units
|
474
|
|
|
470
|
|
||
Construction-in-progress (CIP)
|
32,125
|
|
|
13,320
|
|
||
Total property and equipment
|
309,310
|
|
|
263,762
|
|
||
Accumulated depreciation and amortization
|
(106,500
|
)
|
|
(97,790
|
)
|
||
Property and equipment, net
|
$
|
202,810
|
|
|
$
|
165,972
|
|
|
Balance sheet classification
|
|
June 29,
2019 |
||
Lessee ROU assets
|
Other non-current assets
|
|
$
|
19,800
|
|
|
|
|
|
||
Lessee current lease liabilities
|
Other current liabilities
|
|
4,543
|
|
|
Lessee non-current lease liabilities
|
Other non-current liabilities
|
|
16,447
|
|
|
Total operating lease liabilities
|
|
|
$
|
20,990
|
|
Fiscal year
|
Amount
|
||
2019 (balance of year)
|
$
|
2,819
|
|
2020
|
4,553
|
|
|
2021
|
2,744
|
|
|
2022
|
1,941
|
|
|
2023
|
1,748
|
|
|
Thereafter
(1)
|
10,846
|
|
|
Total
|
24,651
|
|
|
Imputed interest
|
(3,661
|
)
|
|
Present value
|
$
|
20,990
|
|
Fiscal year
|
Amount
|
||
2019
|
$
|
6,926
|
|
2020
|
4,422
|
|
|
2021
|
2,384
|
|
|
2022
|
1,701
|
|
|
2023
|
1,568
|
|
|
Thereafter
(1)
|
9,921
|
|
|
Total
|
$
|
26,922
|
|
|
June 29, 2019
|
||||||
|
Three Months Ended
|
|
Six Months
Ended |
||||
Operating lease costs
|
$
|
1,688
|
|
|
$
|
3,453
|
|
Short-term lease costs
|
3
|
|
|
12
|
|
||
Sublease income
|
(52
|
)
|
|
(104
|
)
|
||
Total lease cost
|
$
|
1,639
|
|
|
$
|
3,361
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Patents
|
$
|
22,224
|
|
|
$
|
21,323
|
|
Customer relationships
|
7,669
|
|
|
7,669
|
|
||
Licenses-related party
|
7,500
|
|
|
7,500
|
|
||
Acquired technology
|
5,580
|
|
|
5,580
|
|
||
Trademarks
|
4,372
|
|
|
4,190
|
|
||
Capitalized software development costs
|
3,436
|
|
|
3,430
|
|
||
Other
|
5,466
|
|
|
5,466
|
|
||
Total intangible assets
|
56,247
|
|
|
55,158
|
|
||
Accumulated amortization
|
(28,614
|
)
|
|
(27,234
|
)
|
||
Intangible assets, net
|
$
|
27,633
|
|
|
$
|
27,924
|
|
Fiscal year
|
Amount
|
||
2019 (balance of year)
|
$
|
4,373
|
|
2020
|
3,842
|
|
|
2021
|
3,673
|
|
|
2022
|
2,309
|
|
|
2023
|
1,719
|
|
|
Thereafter
|
11,717
|
|
|
Total
|
$
|
27,633
|
|
|
Six Months Ended
June 29, |
||
Goodwill, beginning of period
|
$
|
23,297
|
|
Adjustments to goodwill from finalization of purchase price allocation
|
(651
|
)
|
|
Foreign currency translation adjustment
|
(262
|
)
|
|
Goodwill, end of period
|
$
|
22,384
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Lessee ROU assets
|
$
|
19,800
|
|
|
$
|
—
|
|
Prepaid deposits
|
3,065
|
|
|
2,881
|
|
||
Long term investments
|
1,200
|
|
|
1,200
|
|
||
Restricted cash
|
154
|
|
|
151
|
|
||
Total other assets, long-term
|
$
|
24,219
|
|
|
$
|
4,232
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Deferred revenue
(1)
|
$
|
13,825
|
|
|
$
|
10,883
|
|
Accrued rebates and incentives
|
7,054
|
|
|
6,282
|
|
||
Accrued customer reimbursements
(2)
|
4,515
|
|
|
16,194
|
|
||
Other contract-related liabilities
|
606
|
|
|
432
|
|
||
Total deferred revenue and other contract-related liabilities
|
26,000
|
|
|
33,791
|
|
||
Less: Non-current portion of deferred revenue
|
(126
|
)
|
|
(685
|
)
|
||
Deferred revenue and other contract-related liabilities - current
|
$
|
25,874
|
|
|
$
|
33,106
|
|
(1)
|
In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded a reduction to deferred revenue of approximately
$1.1 million
due to the acceleration of revenue as a result of the reclassification of certain embedded leases within the Company’s deferred equipment agreements with its customers from operating to sales-type leases. See “Recently Adopted Accounting Pronouncements” to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842.
|
(2)
|
In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded a reduction to accrued customer reimbursements of approximately
$12.3 million
related to the derecognition of liabilities and leased equipment assets related to certain OEM equipment reimbursements. See “Recently Adopted Accounting Pronouncements” to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842.
|
|
Six Months Ended
June 29, 2019 |
||
Deferred revenue, beginning of the period
|
$
|
10,883
|
|
Revenue deferred during the period
|
5,780
|
|
|
Recognition of revenue deferred in prior periods
|
(2,838
|
)
|
|
Deferred revenue, end of the period
|
$
|
13,825
|
|
|
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
|
$
|
211,727
|
|
|
$
|
278,572
|
|
|
$
|
121,698
|
|
|
$
|
27,316
|
|
|
$
|
639,313
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Income tax payable
|
$
|
5,185
|
|
|
$
|
3,071
|
|
Accrued expenses
|
5,161
|
|
|
5,038
|
|
||
Accrued warranty
|
4,669
|
|
|
1,910
|
|
||
Accrued indirect taxes payable
|
4,659
|
|
|
6,465
|
|
||
Lessee lease liabilities, current
|
4,543
|
|
|
—
|
|
||
Related party payables
|
2,876
|
|
|
4,000
|
|
||
Accrued legal fees
|
1,554
|
|
|
1,481
|
|
||
Other
|
2,642
|
|
|
2,662
|
|
||
Total accrued and other current liabilities
|
$
|
31,289
|
|
|
$
|
24,627
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||
Income tax payable, noncurrent
|
$
|
21,522
|
|
|
$
|
21,522
|
|
Lessee lease liabilities, noncurrent
|
16,447
|
|
|
—
|
|
||
Unrecognized tax benefits
|
12,801
|
|
|
11,717
|
|
||
Deferred tax liabilities
|
2,972
|
|
|
2,956
|
|
||
Other
|
156
|
|
|
1,951
|
|
||
Total other non-current liabilities
|
$
|
53,898
|
|
|
$
|
38,146
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||
Shares repurchased
(1)
|
208
|
|
|
—
|
|
|
208
|
|
|
196
|
|
||||
Average cost per share
|
$
|
134.03
|
|
|
$
|
—
|
|
|
$
|
134.03
|
|
|
$
|
84.14
|
|
Value of shares repurchased
|
$
|
27,854
|
|
|
$
|
—
|
|
|
$
|
27,854
|
|
|
$
|
16,490
|
|
(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.
|
|
Six Months Ended
June 29, 2019 |
|||||
|
Shares
|
|
Average
Exercise Price
|
|||
Options outstanding, beginning of period
|
5,676
|
|
|
$
|
43.61
|
|
Granted
|
335
|
|
|
134.09
|
|
|
Canceled
|
(105
|
)
|
|
77.56
|
|
|
Exercised
|
(413
|
)
|
|
31.14
|
|
|
Options outstanding, end of period
|
5,493
|
|
|
$
|
49.42
|
|
Options exercisable, end of period
|
3,456
|
|
|
$
|
31.98
|
|
|
Six Months Ended
June 29, 2019 |
|||||
|
Units
|
|
Weighted Average Grant
Date Fair Value
|
|||
RSUs outstanding, beginning of period
|
2,707
|
|
|
$
|
95.54
|
|
Granted
|
98
|
|
|
133.24
|
|
|
Canceled
|
(2
|
)
|
|
133.50
|
|
|
Expired
|
—
|
|
|
—
|
|
|
Vested
|
(7
|
)
|
|
99.05
|
|
|
RSUs outstanding, end of period
|
2,796
|
|
|
$
|
96.82
|
|
|
Six Months Ended
June 29, 2019 |
|||||
|
Units
|
|
Weighted Average Grant
Date Fair Value
|
|||
PSUs outstanding, beginning of period
|
313
|
|
|
$
|
88.34
|
|
Granted
|
128
|
|
|
133.50
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
Expired
|
—
|
|
|
—
|
|
|
Vested
|
(29
|
)
|
|
90.69
|
|
|
PSUs outstanding, end of period
|
412
|
|
|
$
|
102.22
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
Risk-free interest rate
|
1.8% to 2.4%
|
|
2.6% to 2.9%
|
|
1.8% to 2.6%
|
|
2.3% to 2.9%
|
Expected term (in years)
|
5.2
|
|
5.6
|
|
5.2
|
|
5.5
|
Estimated volatility
|
28.3% to 28.9%
|
|
27.2% to 29.2%
|
|
28.3% to 30.0%
|
|
27.2% to 29.7%
|
Expected dividends
|
0%
|
|
0%
|
|
0%
|
|
0%
|
Weighted-average fair value of options granted
|
$41.90
|
|
$30.33
|
|
$41.30
|
|
$28.96
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||
Interest income
|
$
|
3,609
|
|
|
$
|
1,789
|
|
|
$
|
7,042
|
|
|
$
|
2,922
|
|
Interest expense
|
(80
|
)
|
|
(60
|
)
|
|
(161
|
)
|
|
(687
|
)
|
||||
Realized and unrealized foreign currency gain (loss)
|
6
|
|
|
(566
|
)
|
|
541
|
|
|
547
|
|
||||
Other
|
(6
|
)
|
|
242
|
|
|
(7
|
)
|
|
270
|
|
||||
Total
|
$
|
3,529
|
|
|
$
|
1,405
|
|
|
$
|
7,415
|
|
|
$
|
3,052
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||||||||||||||
Geographic area by destination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
United States (U.S.)
|
$
|
155,513
|
|
|
67.8
|
%
|
|
$
|
140,134
|
|
|
69.4
|
%
|
|
$
|
312,181
|
|
|
67.9
|
%
|
|
$
|
281,175
|
|
|
69.2
|
%
|
Europe, Middle East and Africa
|
45,406
|
|
|
19.8
|
|
|
34,328
|
|
|
17.0
|
|
|
93,878
|
|
|
20.4
|
|
|
78,374
|
|
|
19.3
|
|
||||
Asia and Australia
|
21,685
|
|
|
9.4
|
|
|
20,497
|
|
|
10.1
|
|
|
39,803
|
|
|
8.7
|
|
|
33,403
|
|
|
8.2
|
|
||||
North and South America (excluding the U.S.)
|
6,906
|
|
|
3.0
|
|
|
7,045
|
|
|
3.5
|
|
|
14,196
|
|
|
3.0
|
|
|
13,441
|
|
|
3.3
|
|
||||
Total product revenue
|
$
|
229,510
|
|
|
100.0
|
%
|
|
$
|
202,004
|
|
|
100.0
|
%
|
|
$
|
460,058
|
|
|
100.0
|
%
|
|
$
|
406,393
|
|
|
100.0
|
%
|
|
|
June 29,
2019 |
|
December 29,
2018 |
||||||||||
Long-lived assets by geographic area:
|
|
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
199,237
|
|
|
97.9
|
%
|
|
$
|
262,373
|
|
|
95.6
|
%
|
International
|
|
4,215
|
|
|
2.1
|
|
|
12,016
|
|
|
4.4
|
|
||
Total
|
|
$
|
203,452
|
|
|
100.0
|
%
|
|
$
|
274,389
|
|
|
100.0
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 29,
2019 |
|
Percentage
of Revenue |
|
June 30,
2018 |
|
Percentage
of Revenue |
|
June 29,
2019 |
|
Percentage
of Revenue
|
|
June 30,
2018 |
|
Percentage
of Revenue |
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
$
|
229,510
|
|
|
99.9
|
%
|
|
$
|
202,004
|
|
|
95.5
|
%
|
|
$
|
460,058
|
|
|
99.7
|
%
|
|
$
|
406,393
|
|
|
95.7
|
%
|
Royalty and other revenue
|
142
|
|
|
0.1
|
|
|
9,617
|
|
|
4.5
|
|
|
1,258
|
|
|
0.3
|
|
|
18,181
|
|
|
4.3
|
|
||||
Total revenue
|
229,652
|
|
|
100.0
|
|
|
211,621
|
|
|
100.0
|
|
|
461,316
|
|
|
100.0
|
|
|
424,574
|
|
|
100.0
|
|
||||
Cost of goods sold
|
75,313
|
|
|
32.8
|
|
|
69,474
|
|
|
32.8
|
|
|
155,335
|
|
|
33.7
|
|
|
138,766
|
|
|
32.7
|
|
||||
Gross profit
|
154,339
|
|
|
67.2
|
|
|
142,147
|
|
|
67.2
|
|
|
305,981
|
|
|
66.3
|
|
|
285,808
|
|
|
67.3
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative
|
78,160
|
|
|
34.0
|
|
|
70,450
|
|
|
33.3
|
|
|
152,364
|
|
|
33.0
|
|
|
140,667
|
|
|
33.1
|
|
||||
Research and development
|
24,175
|
|
|
10.5
|
|
|
20,085
|
|
|
9.5
|
|
|
45,590
|
|
|
9.9
|
|
|
39,644
|
|
|
9.3
|
|
||||
Total operating expenses
|
102,335
|
|
|
44.6
|
|
|
90,535
|
|
|
42.8
|
|
|
197,954
|
|
|
42.9
|
|
|
180,311
|
|
|
42.5
|
|
||||
Operating income
|
52,004
|
|
|
22.6
|
|
|
51,612
|
|
|
24.4
|
|
|
108,027
|
|
|
23.4
|
|
|
105,497
|
|
|
24.8
|
|
||||
Non-operating income
|
3,529
|
|
|
1.5
|
|
|
1,405
|
|
|
0.7
|
|
|
7,415
|
|
|
1.6
|
|
|
3,052
|
|
|
0.7
|
|
||||
Income before provision for income taxes
|
55,533
|
|
|
24.2
|
|
|
53,017
|
|
|
25.1
|
|
|
115,442
|
|
|
25.0
|
|
|
108,549
|
|
|
25.6
|
|
||||
Provision for income taxes
|
10,645
|
|
|
4.6
|
|
|
9,164
|
|
|
4.3
|
|
|
21,232
|
|
|
4.6
|
|
|
19,066
|
|
|
4.5
|
|
||||
Net income
|
$
|
44,888
|
|
|
19.5
|
%
|
|
$
|
43,853
|
|
|
20.7
|
%
|
|
$
|
94,210
|
|
|
20.4
|
%
|
|
$
|
89,483
|
|
|
21.1
|
%
|
|
Three Months Ended
|
|||||||||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
Increase/
(Decrease)
|
|
Percentage
Change
|
|||||||||||||
United States (U.S.)
|
$
|
155,513
|
|
|
67.8
|
%
|
|
$
|
140,134
|
|
|
69.4
|
%
|
|
$
|
15,379
|
|
|
11.0
|
%
|
Europe, Middle East and Africa
|
45,406
|
|
|
19.8
|
|
|
34,328
|
|
|
17.0
|
|
|
11,078
|
|
|
32.3
|
|
|||
Asia and Australia
|
21,685
|
|
|
9.4
|
|
|
20,497
|
|
|
10.1
|
|
|
1,188
|
|
|
5.8
|
|
|||
North and South America (excluding the U.S.)
|
6,906
|
|
|
3.0
|
|
|
7,045
|
|
|
3.5
|
|
|
(139
|
)
|
|
(2.0
|
)
|
|||
Total product revenue
|
$
|
229,510
|
|
|
100.0
|
%
|
|
$
|
202,004
|
|
|
100.0
|
%
|
|
$
|
27,506
|
|
|
13.6
|
%
|
Royalty and other revenue
|
142
|
|
|
|
|
9,617
|
|
|
|
|
(9,475
|
)
|
|
(98.5
|
)
|
|||||
Total revenue
|
$
|
229,652
|
|
|
|
|
$
|
211,621
|
|
|
|
|
$
|
18,031
|
|
|
8.5
|
%
|
|
Three Months Ended
|
|||||||||||||||||||
|
June 29,
2019 |
|
Gross Profit
Percentage |
|
June 30,
2018 |
|
Gross Profit
Percentage |
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||
Product gross profit
|
$
|
154,229
|
|
|
67.2
|
%
|
|
$
|
132,732
|
|
|
65.7
|
%
|
|
$
|
21,497
|
|
|
16.2
|
%
|
Royalty and other revenue gross profit
|
110
|
|
|
77.5
|
|
|
9,415
|
|
|
97.9
|
|
|
(9,305
|
)
|
|
(98.8
|
)
|
|||
Total gross profit
|
$
|
154,339
|
|
|
67.2
|
%
|
|
$
|
142,147
|
|
|
67.2
|
%
|
|
$
|
12,192
|
|
|
8.6
|
%
|
Research and Development
|
|||||
Three Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Three Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$24,175
|
10.5%
|
$20,085
|
9.5%
|
$4,090
|
20.4%
|
Non-operating Income
|
|||||
Three Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Three Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$3,529
|
1.5%
|
$1,405
|
0.7%
|
$2,124
|
151.2%
|
Provision for Income Taxes
|
|||||
Three Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Three Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$10,645
|
4.6%
|
$9,164
|
4.3%
|
$1,481
|
16.2%
|
|
Six Months Ended
|
|||||||||||||||||||
|
June 29,
2019 |
|
June 30,
2018 |
|
Increase/
(Decrease)
|
|
Percentage
Change
|
|||||||||||||
United States (U.S.)
|
$
|
312,181
|
|
|
67.9
|
%
|
|
$
|
281,175
|
|
|
69.2
|
%
|
|
$
|
31,006
|
|
|
11.0
|
%
|
Europe, Middle East and Africa
|
93,878
|
|
|
20.4
|
|
|
78,374
|
|
|
19.3
|
|
|
15,504
|
|
|
19.8
|
|
|||
Asia and Australia
|
39,803
|
|
|
8.7
|
|
|
33,403
|
|
|
8.2
|
|
|
6,400
|
|
|
19.2
|
|
|||
North and South America (excluding the U.S.)
|
14,196
|
|
|
3.0
|
|
|
13,441
|
|
|
3.3
|
|
|
755
|
|
|
5.6
|
|
|||
Total product revenue
|
$
|
460,058
|
|
|
100.0
|
%
|
|
$
|
406,393
|
|
|
100.0
|
%
|
|
$
|
53,665
|
|
|
13.2
|
%
|
Royalty and other revenue
|
1,258
|
|
|
|
|
18,181
|
|
|
|
|
(16,923
|
)
|
|
(93.1
|
)
|
|||||
Total revenue
|
$
|
461,316
|
|
|
|
|
$
|
424,574
|
|
|
|
|
$
|
36,742
|
|
|
8.7
|
%
|
|
Six Months Ended
|
|||||||||||||||||||
|
June 29, 2019
|
|
Gross Profit
Percentage |
|
June 30, 2018
|
|
Gross Profit
Percentage |
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||
Product gross profit
|
$
|
304,822
|
|
|
66.3
|
%
|
|
$
|
268,003
|
|
|
65.9
|
%
|
|
$
|
36,819
|
|
|
13.7
|
%
|
Royalty and other revenue gross profit
|
1,159
|
|
|
92.1
|
|
|
17,805
|
|
|
97.9
|
|
|
(16,646
|
)
|
|
(93.5
|
)
|
|||
Total gross profit
|
$
|
305,981
|
|
|
66.3
|
%
|
|
$
|
285,808
|
|
|
67.3
|
%
|
|
$
|
20,173
|
|
|
7.1
|
%
|
Selling, General and Administrative
|
|||||
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Six Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$152,364
|
33.0%
|
$140,667
|
33.1%
|
$11,697
|
8.3%
|
Research and Development
|
|||||
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Six Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$45,590
|
9.9%
|
$39,644
|
9.3%
|
$5,946
|
15.0%
|
Non-operating Income
|
|||||
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Six Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$7,415
|
1.6%
|
$3,052
|
0.7%
|
$4,363
|
143.0%
|
Provision for Income Taxes
|
|||||
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Six Months Ended
June 30, 2018 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$21,232
|
4.6%
|
$19,066
|
4.5%
|
$2,166
|
11.4%
|
|
|
Six Months Ended
|
||||||
|
|
June 29,
2019 |
|
June 30,
2018 |
||||
Net cash provided by (used in):
|
|
|
|
|||||
Operating activities
|
$
|
100,779
|
|
|
$
|
127,899
|
|
|
Investing activities
|
(229,342
|
)
|
|
(13,073
|
)
|
|||
Financing activities
|
(15,107
|
)
|
|
1,132
|
|
|||
Effect of foreign currency exchange rates on cash
|
(32
|
)
|
|
(1,647
|
)
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
(143,702
|
)
|
|
$
|
114,311
|
|
•
|
perceived clinical benefits from our products;
|
•
|
perceived cost effectiveness of our products;
|
•
|
perceived safety and effectiveness of our products;
|
•
|
reimbursement available through government and private health care programs for using some of our products; and
|
•
|
introduction and acceptance of competing products or technologies.
|
•
|
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
|
•
|
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.
|
•
|
be expensive and time consuming to defend and result in payment of significant damages to third parties;
|
•
|
force us to stop making or selling products that incorporate the intellectual property;
|
•
|
require us to redesign, reengineer or rebrand our products, product candidates and technologies;
|
•
|
require us to enter into royalty agreements that would increase the costs of our products;
|
•
|
require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims;
|
•
|
divert the attention of our management and other key employees; and
|
•
|
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;
|
•
|
warning letters or untitled letters issued by the FDA;
|
•
|
fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution;
|
•
|
import alerts;
|
•
|
unanticipated expenditures to address or defend such actions;
|
•
|
delays in clearing or approving, or refusal to clear or approve, our products;
|
•
|
withdrawals or suspensions of clearance or approval of our products or those of our third-party suppliers by the FDA or other regulatory bodies;
|
•
|
product recalls or seizures;
|
•
|
orders for physician notification or device repair, replacement or refund;
|
•
|
interruptions of production or inability to export to certain foreign countries; and
|
•
|
operating restrictions.
|
•
|
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);
|
•
|
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;
|
•
|
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
|
•
|
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.
|
•
|
the imposition of additional U.S. and foreign governmental controls or regulations;
|
•
|
the imposition of costly and lengthy new export licensing requirements;
|
•
|
a shortage of high-quality sales people and distributors;
|
•
|
the loss of any key personnel that possess proprietary knowledge, or who are otherwise important to our success in certain international markets;
|
•
|
changes in duties and tariffs, license obligations and other non-tariff barriers to trade;
|
•
|
the imposition of new trade restrictions;
|
•
|
the imposition of restrictions on the activities of foreign agents, representatives and distributors;
|
•
|
compliance with foreign tax laws, regulations and requirements;
|
•
|
pricing pressure;
|
•
|
changes in foreign currency exchange rates;
|
•
|
laws and business practices favoring local companies;
|
•
|
political instability and actual or anticipated military or political conflicts;
|
•
|
financial and civil unrest worldwide;
|
•
|
outbreaks of illnesses, pandemics or other local or global health issues;
|
•
|
the inability to collect amounts paid by foreign government customers to our appointed foreign agents;
|
•
|
longer payment cycles, increased credit risk and different collection remedies with respect to receivables; and
|
•
|
difficulties in enforcing or defending intellectual property rights.
|
•
|
payment of above-market prices for acquisitions and higher than anticipated acquisition costs;
|
•
|
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;
|
•
|
reduced profitability if an acquisition is not accretive to our business over either the short-term or the long-term;
|
•
|
difficulties in integrating any acquired companies, personnel, products and other assets into our existing business;
|
•
|
delays in realizing the benefits of the acquired company, products or other assets;
|
•
|
regulatory challenges;
|
•
|
cybersecurity and compliance related issues;
|
•
|
diversion of our management’s time and attention from other business concerns;
|
•
|
limited or no direct prior experience in new markets or countries we may enter;
|
•
|
unanticipated issues dealing with unfamiliar suppliers, service providers or other collaborators of the acquired company;
|
•
|
higher costs of integration than we anticipated;
|
•
|
write-downs or impairments of goodwill or other intangible assets associated with the acquired company;
|
•
|
difficulties in retaining key employees of the acquired business who are necessary to manage these acquisitions;
|
•
|
negative impacts on our relationships with our employees, clients or collaborators;
|
•
|
litigation or other claims in connection with the acquisition; and
|
•
|
changes in the overall financial model as certain acquired companies may have a different revenue, gross profit margin or operating expense profile.
|
•
|
incurring specified types of additional indebtedness (including guarantees or other contingent obligations);
|
•
|
paying dividends on, repurchasing or making distributions in respect of our common stock or making other restricted payments, subject to specified exceptions;
|
•
|
making specified investments (including loans and advances);
|
•
|
selling or transferring certain assets;
|
•
|
creating certain liens;
|
•
|
consolidating, merging, selling or otherwise disposing of all or substantially all of our assets; and
|
•
|
entering into certain transactions with any of our affiliates.
|
•
|
actual or anticipated fluctuations in our operating results or future prospects;
|
•
|
our announcements or our competitors’ announcements of new products;
|
•
|
the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
|
•
|
strategic actions by us or our competitors, such as acquisitions or restructurings;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
changes in our growth rates or our competitors’ growth rates;
|
•
|
developments regarding our patents or proprietary rights or those of our competitors;
|
•
|
ongoing legal proceedings;
|
•
|
our inability to raise additional capital as needed;
|
•
|
concerns or allegations as to the safety or efficacy of our products;
|
•
|
changes in financial markets or general economic conditions, including the effects of recession or slow economic growth in the U.S. and abroad;
|
•
|
sales of stock by us or members of our management team, our Board of Directors (Board) or certain institutional stockholders; and
|
•
|
changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally.
|
Period
|
|
Total Number
of Shares Purchased |
|
Average Price
Paid Per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs |
|
Maximum Number
of Shares that May Yet Be Purchased Under the Plans or Programs (1) |
|||||
March 31, 2019 to April 27, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
April 28, 2019 to May 25, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000,000
|
|
|
May 26, 2019 to June 29, 2019
|
|
207,816
|
|
|
134.03
|
|
|
207,816
|
|
|
4,792,184
|
|
|
Total
|
|
207,816
|
|
|
$
|
134.03
|
|
|
207,816
|
|
|
4,792,184
|
|
(1)
|
In July 2018, our board of directors authorized a stock repurchase program (2018 Repurchase Program), whereby we may repurchase up to 5.0 million shares of our common stock. The 2018 Repurchase Program can be carried out at the discretion of a committee comprised of the Company’s CEO and CFO through open market purchases, one or more Rule 10b5-1 trading plans, block trades and privately negotiated transactions.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 29,
2019 |
|
June 30
2018 |
|
June 29,
2019 |
|
June 30,
2018 |
||||||||
Shares withheld
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||
Average cost per share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105.52
|
|
|
$
|
86.08
|
|
Value of shares withheld
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
123
|
|
|
$
|
168
|
|
(1)
|
Incorporated by reference to the exhibits to the Company’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 Company’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 Company’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.
|
#
|
Indicates management or compensatory plan.
|
*
|
Filed herewith.
|
|
|
|
|
M
ASIMO
C
ORPORATION
|
||||
|
|
|
|
|
|
|
||
Date: July 31, 2019
|
|
|
|
By:
|
|
/s/
J
OE
K
IANI
|
||
|
|
|
|
|
|
Joe Kiani
|
||
|
|
|
|
|
|
Chief Executive Officer and Chairman
|
||
|
|
|
|
|
|
|
||
Date: July 31, 2019
|
|
|
|
By:
|
|
/s/
M
ICAH
Y
OUNG
|
||
|
|
|
|
|
|
Micah Young
|
||
|
|
|
|
|
|
Executive Vice President, Finance and Chief Financial Officer
|
1 Year Masimo Chart |
1 Month Masimo Chart |
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