Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 29, 2019shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jun. 29, 2019 |
Document Transition Report | false |
Entity File Number | 001-33642 |
Entity Registrant Name | MASIMO CORP |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 33-0368882 |
Entity Address, Address Line One | 52 Discovery |
Entity Address, City or Town | Irvine |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 92618 |
City Area Code | (949) |
Local Phone Number | 297-7000 |
Title of 12(b) Security | Common Stock, $0.001 par value |
Trading Symbol | MASI |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Smaller Reporting Company | false |
Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 53,325,842 |
Amendment Flag | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Entity Central Index Key | 0000937556 |
Current Fiscal Year End Date | --12-28 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 29, 2019 | Dec. 29, 2018 |
Current assets | ||
Cash and cash equivalents | $ 408,784,000 | $ 552,490,000 |
Short-term investments | 180,000,000 | 0 |
Trade accounts receivable, net of allowance for doubtful accounts of $1,984 and $1,535 at June 29, 2019 and December 29, 2018, respectively | 120,580,000 | 109,629,000 |
Inventories | 98,785,000 | 94,732,000 |
Other current assets | 55,894,000 | 29,227,000 |
Total current assets | 864,043,000 | 786,078,000 |
Lease receivable, noncurrent | 44,284,000 | 0 |
Deferred costs and other contract assets | 13,998,000 | 126,105,000 |
Property and equipment, net | 202,810,000 | 165,972,000 |
Intangible assets, net | 27,633,000 | 27,924,000 |
Goodwill | 22,384,000 | 23,297,000 |
Deferred tax assets | 30,475,000 | 21,210,000 |
Other non-current assets | 24,219,000 | 4,232,000 |
Total assets | 1,229,846,000 | 1,154,818,000 |
Current liabilities | ||
Accounts payable | 36,472,000 | 40,388,000 |
Accrued compensation | 42,439,000 | 49,486,000 |
Deferred revenue and other contract-related liabilities, current | 25,874,000 | 33,106,000 |
Other current liabilities | 31,289,000 | 24,627,000 |
Total current liabilities | 136,074,000 | 147,607,000 |
Other non-current liabilities | 53,898,000 | 38,146,000 |
Total liabilities | 189,972,000 | 185,753,000 |
Commitments and contingencies | ||
Masimo Corporation 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 | 0 | 0 |
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 | 53,000 | 53,000 |
Treasury stock, 15,463 and 15,255 shares at June 29, 2019 and December 29, 2018, respectively | (516,880,000) | (489,026,000) |
Additional paid-in capital | 564,697,000 | 533,164,000 |
Accumulated other comprehensive loss | (6,484,000) | (6,199,000) |
Retained earnings | 998,488,000 | 931,073,000 |
Stockholders' Equity Attributable to Parent | 1,039,874,000 | 969,065,000 |
Total liabilities and equity | $ 1,229,846,000 | $ 1,154,818,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,984 | $ 1,535 |
Beginning Balance | $ 1,039,874 | $ 969,065 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 53,325,000 | 53,085,000 |
Treasury stock, shares | 15,463,000 | 15,255,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations Statement - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
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 |
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 |
Basic | $ 0.84 | $ 0.84 | $ 1.77 | $ 1.72 |
Diluted | $ 0.79 | $ 0.79 | $ 1.65 | $ 1.60 |
Basic | 53,356 | 51,999 | 53,283 | 52,047 |
Diluted | 57,066 | 55,742 | 56,940 | 55,842 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net income | $ 44,888 | $ 43,853 | $ 94,210 | $ 89,483 |
Other comprehensive income (loss), 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 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity Statement - USD ($) | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings |
Beginning Balance, shares | 51,636,000 | 15,059,000 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 724,025,000 | $ 52,000 | $ (472,536,000) | $ 461,494,000 | $ (2,941,000) | $ 737,956,000 |
Stock options exercised, shares | 314,000 | |||||
Stock options exercised, value | 8,880,000 | $ 0 | 8,880,000 | |||
Restricted/Performance stock units vested | 31,000 | |||||
Shares paid for tax withholding, shares | (2,000) | |||||
Shares paid for tax withholding, value | (168,000) | (168,000) | ||||
Share-based Compensation Expense | 5,332,000 | |||||
Share-based Compensation Expense | 5,332,000 | |||||
Repurchases of common stock, shares | (196,000) | (196,000) | ||||
Repurchases of common stock, value | 16,490,000 | $ 16,490,000 | ||||
Net income | 45,630,000 | 45,630,000 | ||||
Cumulative Effect on Retained Earnings, Tax, Adoption of ASU 2016-16 | (426,000) | |||||
Cumulative Effect on Retained Earnings, Tax, Adoption of ASU 2016-16 | Adoption of ASU 2016-16 | (426,000) | |||||
Foreign currency translation adjustment | $ (270,000) | (270,000) | ||||
Repurchases of common stock, shares | (196,000) | |||||
Repurchases of common stock, value | $ 16,490,000 | |||||
Net income | 89,483,000 | |||||
Unrealized gains (losses) from foreign currency translation adjustments | (3,056,000) | |||||
Beginning Balance, shares | 51,783,000 | 15,255,000 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 766,513,000 | $ 52,000 | $ (489,026,000) | 475,538,000 | (3,211,000) | 783,160,000 |
Stock options exercised, shares | 378,000 | |||||
Stock options exercised, value | 10,891,000 | $ 0 | 10,891,000 | |||
Restricted/Performance stock units vested | 8,000 | |||||
Share-based Compensation Expense | 6,720,000 | |||||
Share-based Compensation Expense | $ 6,720,000 | |||||
Repurchases of common stock, shares | 0 | |||||
Repurchases of common stock, value | $ 0 | |||||
Net income | 43,853,000 | 43,853,000 | ||||
Unrealized gains (losses) from foreign currency translation adjustments | (2,785,000) | |||||
Foreign currency translation adjustment | (2,786,000) | (2,786,000) | ||||
Beginning Balance, shares | 52,169,000 | 15,255,000 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 825,191,000 | $ 52,000 | $ (489,026,000) | 493,149,000 | (5,997,000) | 827,013,000 |
Beginning Balance, shares | 53,085,000 | 15,255,000 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 969,065,000 | $ 53,000 | $ (489,026,000) | 533,164,000 | (6,199,000) | 931,073,000 |
Stock options exercised, shares | 224,000 | |||||
Stock options exercised, value | 6,867,000 | $ 0 | 6,867,000 | |||
Restricted/Performance stock units vested | 29,000 | |||||
Shares paid for tax withholding, shares | (1,000) | |||||
Shares paid for tax withholding, value | (123,000) | (123,000) | ||||
Share-based Compensation Expense | 7,317,000 | |||||
Share-based Compensation Expense | 7,317,000 | |||||
Cumulative Effect on Retained Earnings, Tax, Adoption of ASU 2016-02 | Cumulative effect of adoption of ASU 2016-02 | (26,795,000) | (26,795,000) | ||||
Net income | 49,322,000 | |||||
Unrealized gains (losses) from foreign currency translation adjustments | (577,000) | |||||
Foreign currency translation adjustment | $ (577,000) | |||||
Stock options exercised, shares | 413,000 | |||||
Repurchases of common stock, shares | (208,000) | |||||
Repurchases of common stock, value | $ 27,854,000 | |||||
Net income | 94,210,000 | |||||
Unrealized gains (losses) from foreign currency translation adjustments | (285,000) | (285,000) | ||||
Beginning Balance, shares | 53,337,000 | 15,255,000 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 1,005,076,000 | $ 53,000 | $ (489,026,000) | 547,225,000 | (6,776,000) | 953,600,000 |
Stock options exercised, shares | 189,000 | |||||
Stock options exercised, value | 5,999,000 | $ 0 | 5,999,000 | |||
Restricted/Performance stock units vested | 7,000 | |||||
Share-based Compensation Expense | 11,473,000 | |||||
Share-based Compensation Expense | $ 11,473,000 | |||||
Repurchases of common stock, shares | (208,000) | (208,000) | (208,000) | |||
Repurchases of common stock, value | $ 27,854,000 | $ 27,854,000 | ||||
Net income | 44,888,000 | |||||
Unrealized gains (losses) from foreign currency translation adjustments | 292,000 | 292,000 | ||||
Foreign currency translation adjustment | 292,000 | |||||
Beginning Balance, shares | 53,325,000 | 15,463,000 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 1,039,874,000 | $ 53,000 | $ (516,880,000) | $ 564,697,000 | $ (6,484,000) | $ 998,488,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 29, 2019 | Jun. 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) | 0 |
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) | 0 |
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 end of period | 408,784 | 429,647 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 408,939 | $ 429,794 |
Description of the Company
Description of the Company | 6 Months Ended |
Jun. 29, 2019 | |
Accounting Policies [Abstract] | |
Description of the Company | 1. Description of the Company Masimo Corporation (the Company) is a global medical technology company that develops, manufactures and markets a variety of noninvasive patient monitoring technologies and hospital automation solutions. The Company’s mission is to improve patient outcomes and reduce the cost of care . The Company’s patient monitoring solutions generally incorporate a monitor or circuit board, proprietary single-patient use or reusable sensors, software and/or cables. The Company primarily sells its products to hospitals, emergency medical service providers, home care providers, physician offices, veterinarians, long term care facilities and consumers through its direct sales force, distributors and original equipment manufacturer (OEM) partners. The Company invented Masimo Signal Extraction Technology ® (SET ® ), which provides the capabilities of Measure-through Motion and Low Perfusion ™ pulse oximetry to address the primary limitations of conventional pulse oximetry. Over the years, the Company’s product offerings have expanded significantly to also include rainbow ® Pulse CO-Oximetry, with its ability to monitor carboxyhemoglobin (SpCO ® ), methemoglobin (SpMet ® ), total hemoglobin concentration (SpHb ® ), fractional arterial oxygen saturation (SpfO 2 ™ ), Oxygen Content (SpOC ™ ), Pleth Variability Index (PVi ® ), rainbow ® Pleth Variability Index (RPVi ™ ), respiration rate from the pleth (RRp ® and Oxygen Reserve Index (ORi ™ ); as well as acoustic respiration monitoring (RRa ® ), SedLine ® brain function monitoring, NomoLine ® capnography and gas monitoring and O3 ® regional oximetry. These technologies are based upon Masimo SET ® , rainbow ® and other proprietary algorithms and are incorporated into a variety of product platforms depending on customers’ specifications. The Company’s current technology offerings also include remote patient monitoring, connectivity, and hospital automation solutions, including Masimo Patient SafetyNet 1 , Masimo Patient SafetyNet Surveillance 1 , Replica ™ , Iris ® , MyView ® , UniView ™ and Trace ™ . The Company’s technologies are supported by a substantial intellectual property portfolio that the Company has built through internal development and, to a lesser extent, acquisitions and license agreements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 29, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The accompanying condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, including normal recurring accruals, necessary to present fairly the Company’s condensed consolidated financial statements. The accompanying condensed consolidated balance sheet as of December 29, 2018 was derived from the Company’s audited consolidated financial statements at that date. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018 (fiscal year 2018 ), filed with the SEC on February 26, 2019 . The results for the three and six months ended June 29, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending December 28, 2019 (fiscal year 2019 ) or for any other interim period or for any future year. As further discussed below in this Note 2 to these condensed consolidated financial statements, the Company adopted Accounting Standards Codification (ASC) Topic 842, Leases (ASC 842), effective December 30, 2018. The Company applied the modified retrospective approach using the current-period adjustment method of adoption, whereby all periods beginning on or after December 30, 2018 are presented under ASC 842 with a cumulative effect adjustment to the opening balance sheet as of the first day of fiscal year 2019, and all prior period amounts are not adjusted and continue to be reported in accordance with the legacy accounting requirements under ASC Topic 840, Leases . Fiscal Periods The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 week fiscal year, a 52 week fiscal year includes four quarters of 13 fiscal weeks while a 53 week fiscal year includes three 13 fiscal week quarters and one 14 fiscal week quarter. The Company’s last 53 week fiscal year was fiscal year 2014. Fiscal year 2019 is a 52 week fiscal year. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. ______________ 1 The use of the trademark Patient SafetyNet is under license from the University HealthSystem Consortium. Use of Estimates The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of total contract consideration and how such consideration should be allocated to each performance obligation within a contract, credit loss allowances on accounts and lease receivables, inventory reserves, warranty reserves, rebate accruals, valuation of the Company’s equity awards, goodwill valuation, deferred taxes and any associated valuation allowances, deferred revenue, uncertain income tax positions, and litigation costs and related accruals. Actual results could differ from such estimates. Reclassifications Certain amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current period presentation, including previously reported selling, general and administrative expenses that have been reclassified as research and development expenses within the condensed consolidated financial statements for the three and six months ended June 30, 2018 . Fair Value Measurements Authoritative guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: ● 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. Pursuant to current authoritative guidance, entities are allowed an irrevocable option to elect the fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract-by-contract basis. The Company did not elect to apply the fair value option under this guidance to specific assets or liabilities on a contract-by-contract basis. There were no transfers between Level 1, Level 2 and Level 3 inputs during the six months ended June 29, 2019 . The Company carries cash and cash equivalents at cost, which approximates fair value. The following tables represent the Company’s financial assets (in thousands), measured at fair value on a recurring basis as of June 29, 2019 : Reported as Adjusted Basis Gross Unrealized Gross Unrealized Estimated Cash and Cash Equivalents Short-Term 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 As of December 29, 2018 , the Company had an insignificant amount of other financial assets that were required to be measured under the fair value hierarchy, the measurement of which were based on Level 1 inputs. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from date of purchase of three months or less , or highly liquid investments that are readily convertible into known amounts of cash, to be cash equivalents. Short-Term Investments The Company classifies its investments in certificates of deposits maturing in one year or less as short-term investments. The carrying value of such investments approximates fair value and are accessible without any significant restrictions, taxes, or penalties. During the six months ended June 29, 2019 , the Company invested $180.0 million in certificates of deposits with maturities ranging from six months to one year . Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of trade receivables recorded upon recognition of revenue for product revenues, reduced by reserves for estimated bad debts and returns. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Credit is extended based on an evaluation of the customer’s financial condition. Collateral is generally not required. The allowance for doubtful accounts is determined based on historical write-off experience, current customer information and other relevant factors, including specific identification of past due accounts, based on the age of the receivable in excess of the contemplated or contractual due date. Accounts are charged off against the allowance when the Company believes they are uncollectible. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory reserves are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory items that have a market price less than carrying value in inventory. Property and Equipment Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: 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 Land is not depreciated and construction-in-progress is not depreciated until placed in service. Normal repair and maintenance costs are expensed as incurred, whereas significant improvements that materially increase values or extend useful lives are capitalized and depreciated over the remaining estimated useful lives of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss on the sale or retirement is recognized in income. Lessee Right-of-Use (ROU) Assets and Lease Liabilities As further discussed below within this Note 2 to these condensed consolidated financial statements, the Company adopted ASC 842 effective December 30, 2018. The Company determines if an arrangement contains a lease at inception. ROU assets represent the Company’s right to use an asset underlying an operating lease for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from an operating lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company generally estimates the applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. Many of the Company’s lessee agreements include options to extend the lease, which the Company does not include in its lease terms unless they are reasonably certain to be exercised. The Company utilizes a portfolio approach to account for the ROU assets and liabilities associated with certain equipment leases. The Company has also made an accounting policy election not to separate lease and non-lease components for its real estate leases and to exclude short-term leases with a term of twelve months or less from its application of ASC 842. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Intangible Assets The Company’s policy is to renew its patents and trademarks. Costs to renew patents and trademarks are capitalized and amortized over the remaining useful life of the intangible asset. The Company continually evaluates the amortization period and carrying basis of patents and trademarks to determine whether any events or circumstances warrant a revised estimated useful life or reduction in value. Capitalized application costs are charged to operations when it is determined that the patent or trademark will not be obtained or is abandoned. Total renewal costs for patents and trademarks for the six months ended June 29, 2019 and June 30, 2018 were $0.4 million and $0.2 million , respectively. As of June 29, 2019 , the weighted-average number of years until the next renewal was less than one year for patents and six years for trademarks. Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. In assessing goodwill impairment, the Company has the option to first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macroeconomic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of a reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if the Company elects to bypass the qualitative analysis, then the Company must perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit. The annual impairment test is performed during the fourth fiscal quarter. The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of goodwill, intangible assets or other long-lived assets was recorded during each of the six months ended June 29, 2019 and June 30, 2018 . Revenue Recognition, and Deferred Revenue and Other Contract Liabilities The Company derives the majority of its product revenue from four primary sources: (i) direct sales under deferred equipment agreements with end-user hospitals where the Company provides up-front monitoring equipment at no up-front charge in exchange for a multi-year sensor purchase commitment, (ii) other direct sales of noninvasive monitoring solutions to end-user hospitals, emergency medical response organizations and other direct customers; (iii) sales of noninvasive monitoring solutions to distributors who then typically resell to end-user hospitals, emergency medical response organizations and other customers; and (iv) sales of integrated circuit boards to OEM customers who incorporate the Company’s embedded software technology into their multiparameter monitoring devices. Subject to customer credit considerations, the majority of such sales are made on open account using industry standard payment terms based on the geography within which the specific customer is located. The Company generally recognizes revenue following a single, principles-based five-step model to be applied to all contracts with customers and generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers that are remitted to government authorities, when control over the promised goods or services are transferred to the customer. Revenue related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease. While the majority of the Company’s revenue contracts and transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation, judgment and analysis is required to determine the appropriate accounting, including: (i) the amount of the total consideration, including variable consideration, (ii) whether the arrangement contains an embedded lease, and if so, whether such embedded lease is a sales-type lease or an operating lease, (iii) the identification of the distinct performance obligations contained within the arrangement, (iv) how the arrangement consideration should be allocated to each performance obligation when multiple performance obligations exist, including the determination of standalone selling price, and (v) when to recognize revenue on the performance obligations. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. The Company enters into agreements to sell its monitoring solutions and services, sometimes as a part of arrangements with multiple performance obligations that include various combinations of product sales, equipment leases and services. In the case of contracts with multiple performance obligations, the authoritative guidance provides that the total consideration be allocated to each performance obligation on the basis of relative standalone selling prices. When a standalone selling price is not readily observable, the Company estimates the standalone selling price by considering multiple factors including, but not limited to, features and functionality of the product, geographies, type of customer, contractual prices pursuant to Group Purchasing Organization (GPO) contracts, the Company’s pricing and discount practices, and other market conditions. Sales under deferred equipment agreements are generally structured such that the Company agrees to provide certain monitoring-related equipment, software, installation, training and/or warranty support at no up-front charge in exchange for the hospital’s agreement to purchase sensors over the term of the agreement, which generally ranges from three to six years . The Company allocates contract consideration under deferred equipment agreements containing fixed annual sensor purchase commitments to the underlying lease and non-lease components at contract inception. In determining whether any underlying lease components are related to a sales-type lease or an operating lease, the Company evaluates the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by the Company, as well as the Company’s expectations surrounding potential contract/lease extensions or renewals and the customer’s exercise of any purchase options. Revenue allocable to non-lease performance obligations is generally recognized as such non-lease performance obligations are satisfied. Revenue allocable to lease components under sales-type lease arrangements is generally recognized when the lease commences. Revenue allocable to lease components under operating lease arrangements is generally recognized over the term of the operating lease. The Company generally does not expect to derive any significant value in excess of such asset’s unamortized book value from equipment underlying its operating leases arrangements after the end of the agreement. Revenue from direct sales of products to the Company’s end-user hospitals, emergency medical response organizations and other direct customers, as well as to its distributors, is generally recognized upon shipment or delivery to the customer based on the terms of the contract or underlying purchase order. Sales of integrated circuit boards and other products to the Company’s OEM customers are generally recognized as revenue at the time of shipment. Revenue related to OEM rainbow ® parameter software licenses is generally recognized upon shipment of the OEM’s product to its customers, as reported to the Company by the OEM. The Company provides certain customers with various sales incentives that may take the form of discounts or rebates. The Company estimates and provides allowances for these programs as a reduction to revenue at the time of sale. In general, customers do not have a right of return for credit or refund. However, the Company allows returns under certain circumstances. At the end of each period, the Company estimates and accrues for these returns as a reduction to revenue. The Company estimates the revenue constraints related to these forms of variable consideration based on various factors, including expected purchasing volumes, prior sales and returns history, and specific contractual terms and limitations. The majority of the Company’s royalty and other revenue arose from one agreement that was due and payable quarterly in arrears. An estimate of these royalty revenues was recorded in the period earned based on historical results, adjusted for any new information or trends known to management at the time of estimation. This estimated revenue was adjusted prospectively when the Company received the underlying royalty report, approximately sixty days after the end of the previous quarter. The Company received its final royalty payment from this agreement during the three months ended March 30, 2019. For the three months ended June 29, 2019 and June 30, 2018 , the Company recognized royalty revenue pursuant to this agreement of approximately $0.0 million and $9.1 million , respectively. For the six months ended June 29, 2019 and June 30, 2018 , the Company recognized royalty revenue pursuant to this agreement of approximately $0.7 million and $17.2 million , respectively. The Company also recognizes revenue from time-to-time related to non-recurring engineering (NRE) services. NRE service revenue is generally recognized over time based on actual costs incurred by the Company. Shipping and Handling Costs and Fees All shipping and handling costs are expensed as incurred and are recorded as a component of cost of goods sold in the accompanying consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of product revenue. Taxes Collected From Customers and Remitted to Governmental Authorities The Company’s policy is to present revenue net of taxes collected from customers and remitted to governmental authorities. Deferred Costs and Other Contract Assets The costs of monitoring-related equipment provided to hospitals under operating lease arrangements within the Company’s deferred equipment agreements are generally deferred and amortized to cost of goods sold over the life of the underlying contracts. Some of the Company’s deferred equipment agreements also contain provisions for certain payments to be made directly to the end-user hospital customer at the inception of the arrangement. These contractual incentive payments are generally allocated to the lease and non-lease components and recognized as a reduction to revenue as the underlying performance obligations are satisfied. The Company generally invoices its customers under deferred equipment agreements as sensors are provided to the customer. However, the Company may recognize revenue for certain non-lease performance obligations under deferred equipment agreements with fixed annual commitments at the time such performance obligations are satisfied and prior to the customer being invoiced. When this occurs, the Company records an unbilled contract receivable related to such revenue until the customer has been invoiced pursuant to the terms of the underlying deferred equipment agreement. The incremental costs of obtaining a contract with a customer are capitalized and deferred if the Company expects such costs to be recoverable over the life of the contract and the contract term is greater than one year. Such deferred costs generally relate to certain incentive sales commissions earned by the Company’s internal sales team in connection with the execution of deferred equipment agreements and are amortized to expense over the expected term of the underlying contract. Product Warranty The Company generally provides a warranty against defects in material and workmanship for a period ranging from six to forty-eight months , depending on the product type. In traditional sales activities, including direct and OEM sales, the Company establishes an accrued liability for the estimated warranty costs at the time of revenue recognition, with a corresponding provision to cost of sales. Customers may also purchase extended warranty coverage separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage is recognized over the extended life of the contract, which is reasonably expected to be the period over which such services will be provided. The related extended warranty costs are expensed as incurred. Changes in the product warranty accrual were as follows (in thousands): Six Months Ended June 29, June 30, 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. Litigation Costs and Contingencies The Company records a charge equal to at least the minimum estimated liability for a loss contingency or litigation settlement when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements, and (ii) the range of loss can be reasonably estimated. The determination of whether a loss contingency or litigation settlement is probable or reasonably possible involves a significant amount of management judgment, as does the estimation of the range of loss given the nature of contingencies. Liabilities related to litigation settlements with multiple elements are recorded based on the fair value of each element. Legal and other litigation related expenses are recognized as the services are provided. The Company records insurance and other indemnity recoveries for litigation expenses when both of the following conditions are met: (a) the recovery is probable, and (b) collectability is reasonably assured. Insurance recoveries are only recorded to the extent the litigation costs to which they relate have been incurred and recognized in the financial statements. Comprehensive Income Comprehensive income includes foreign currency translation adjustments and any related tax benefits that have been excluded from net income and reflected in stockholders’ equity. The change in accumulated other comprehensive loss was as follows (in thousands): Six Months Ended 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 ) Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Net income per diluted share i s computed by dividing the net income by the weighted-average number of shares and potential shares outstanding during the period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options and the vesting of both restricted share units (RSUs) and performance share units (PSUs). For the three months ended June 29, 2019 and June 30, 2018 , weighted options to purchase 0.4 million and 1.2 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. For the six months ended June 29, 2019 and June 30, 2018 , weighted options to purchase 0.3 million and 1.1 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. Certain RSUs are considered contingently issuable shares as their vesting is contingent upon the occurrence of certain future events. Since such events had not occurred and were not considered probable of occurring as of each of June 29, 2019 and June 30, 2018 , 2.7 million weighted average shares related to such RSUs have been excluded from the calculation of potential shares for each of the three and six month periods then ended. A reconciliation of basic and diluted net income per share is as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 Supplemental Cash Flow Information Supplemental cash flow information includes the following (in thousands): Six Months Ended June 29, June 30, 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. Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02) . The new standard allows a reclassification for certain stranded tax effects from accumulated other comprehensive income to retained earnings, and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for annual and interim periods beginning after December 15, 2018. The Company adopted this standard during the three months ended March 30, 2019 and such adoption did not have a material impact on its condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02) . Subsequent to the issuance of ASU 2016-02, the FASB clarified the guidance through several ASUs. The collective guidance was codified by the FASB in ASC 842, which, among other thin |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 29, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 3. Related Party Transactions The Company’s Chairman and CEO is also the Chairman and CEO of Cercacor. The Company is a party to the following agreements with Cercacor: • 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 . Net amounts due to Cercacor at June 29, 2019 and December 29, 2018 were $2.8 million and $2.9 million , respectively. The Company’s CEO is also the Chairman of the Masimo Foundation for Ethics, Innovation and Competition in Healthcare (Masimo Foundation), a non-profit organization that was founded in 2010 to provide a platform for encouraging ethics, innovation and competition in healthcare. During the three and six months ended June 29, 2019, the Company made various in-kind contributions to the Masimo Foundation, mainly in the form of donated administrative services. The Company’s CEO is also the Chairman of both the Patient Safety Movement Foundation (PSMF), a non-profit organization which was founded in 2013 to work with hospitals, medical technology companies and patient advocates to unite the healthcare ecosystem and eliminate the more than 200,000 U.S. preventable hospital deaths that occur every year by 2020, and the Patient Safety Movement Coalition (PSMC), a not-for-profit social welfare organization that was founded in 2013 to promote patient safety legislation. The Company’s EVP, CFO also serves as the Treasurer of both PSMF and PSMC, and the Company’s EVP, General Counsel and Corporate Secretary also serves as the Secretary for PSMC. During the three and six months ended June 29, 2019, the Company made various in-kind contributions to PSMF, mainly in the form of donated office space and administrative services. The Company maintains an aircraft time share agreement, pursuant to which the Company has agreed from time to time to make its aircraft available to the Company’s CEO for lease on a time-sharing basis. The Company charges the Company’s CEO for personal use based on agreed upon reimbursement rates. For each of the three and six months ended June 29, 2019 and June 30, 2018 , the Company charged the Company’s CEO less than $0.1 million |
Inventories
Inventories | 6 Months Ended |
Jun. 29, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories consist of the following (in thousands): June 29, December 29, 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 |
Other Current Assets
Other Current Assets | 6 Months Ended |
Jun. 29, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | 5. Other Current Assets Other current assets consist of the following (in thousands): June 29, December 29, 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 |
Lease Receivable Lease Receivab
Lease Receivable Lease Receivable (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Leases [Abstract] | |
Lease Receivable | 6. Lease Receivable The Company adopted ASC 842, the lease accounting standard, effective as of December 30, 2018. Among other things, the Company’s adoption of ASC 842 resulted in changes to the classification of certain embedded leases within its deferred equipment agreements from operating to sales-type leases. As a result, the Company now recognizes revenue and costs, as well as a lease receivable, at the time the lease commences pursuant to deferred equipment agreements containing embedded sales-type leases. Revenue and costs related to embedded leases within the Company’s deferred equipment agreements are included in product revenue and cost of goods sold, respectively. See “Recently Adopted Accounting Pronouncements” under Note 2 to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842. Lease receivable consists of the following (in thousands): June 29, 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 As of June 29, 2019 , estimated future maturities of customer sales-type lease receivables for each of the following fiscal years are as follows (in thousands): 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 Estimated future operating lease payments expected to be received from customers under deferred equipment agreements are not material as of June 29, 2019 . |
Deferred Costs and Other Contra
Deferred Costs and Other Contract Assets | 6 Months Ended |
Jun. 29, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred Costs and Other Contract Assets | 7. Deferred Costs and Other Contract Assets Deferred costs and other contract assets consist of the following (in thousands): June 29, December 29, 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. For the three months ended June 29, 2019 and June 30, 2018 , $0.4 million and $7.2 million , respectively, of equipment leased to customers was amortized to cost of goods sold. For the six months ended June 29, 2019 and June 30, 2018 , $0.6 million and $14.8 million , respectively, of equipment leased to customers was amortized to cost of goods sold. As of June 29, 2019 and December 29, 2018 , accumulated amortization of equipment leased to customers was $0.9 million and $103.1 million , respectively. For each of the three months ended June 29, 2019 and June 30, 2018 , $0.4 million of prepaid contract incentives was amortized as a reduction to revenue. For the six months ended June 29, 2019 and June 30, 2018 , $0.9 million and $0.8 million , respectively, of prepaid contract incentives was amortized as a reduction to revenue. For each of the three months ended June 29, 2019 and June 30, 2018 , $0.5 million of deferred commissions was amortized to selling, general and administrative expenses. For the six months ended June 29, 2019 and June 30, 2018 , $1.0 million and $1.1 million |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 29, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 8. Property and Equipment Property and equipment, net, consists of the following (in thousands): June 29, December 29, 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 For the three months ended June 29, 2019 and June 30, 2018 , depreciation expense of property and equipment was $5.1 million and $4.1 million , respectively. For the six months ended June 29, 2019 and June 30, 2018 , depreciation expense of property and equipment was $9.4 million and $8.1 million , respectively. During the three months ended June 29, 2019 , the Company, through its wholly owned subsidiaries, completed the purchase of two buildings for an aggregate purchase price of $35.6 million . The balance in CIP at June 29, 2019 related primarily to a recently purchased building and capitalized implementation costs related to a new enterprise resource planning software system, the underlying assets for which have not been completed or placed into service. The balance in CIP at December 29, 2018 |
Lessee ROU Assets and Lease Lia
Lessee ROU Assets and Lease Liabilities Lessee ROU Assets and Lease Liabilities (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Leases [Abstract] | |
Lessee, Operating Leases | 9. Lessee ROU Assets and Lease Liabilities The Company adopted ASC 842, the lease accounting standard, effective as of December 30, 2018. Among other things, the Company’s adoption of ASC 842 resulted in: (a) the recognition of lessee ROU assets for the right to use assets subject to operating leases; and (b) the recognition of lessee lease liabilities for its obligation to make operating lease payments. See “Recently Adopted Accounting Pronouncements” under Note 2 to these condensed consolidated financial statements for additional information related to the Company’s adoption of ASC 842. The Company leases certain facilities in North and South America, Europe, the Middle East and Asia-Pacific regions under operating lease agreements expiring at various dates through December 2026 . In addition, the Company leases equipment in the U.S. and Europe that are classified as operating leases and expire at various dates through September 2023 . The majority of these leases are non-cancellable and generally do not contain any material residual value guarantees or material restrictive covenants. The Company recognizes lease costs under these agreements using a straight-line method based on total lease payments. Certain facility leases contain predetermined price escalations and in some cases renewal options, the longest of which is for 5 years . The Company generally estimates the applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. As of June 29, 2019 , the weighted average discount rate used by the Company for all operating leases was approximately 3.8% . Balance sheet classifications related to the Company’s operating leases for the period ended June 29, 2019 are as follows: Balance sheet classification June 29, 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 The weighted average remaining lease term for the Company’s operating leases was 8.2 years as of June 29, 2019 . As of June 29, 2019 , estimated future operating lease payments for each of the following fiscal years were as follows (in thousands): 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 ______________ (1) Includes optional renewal period for certain leases. As of December 29, 2018 , the estimated future minimum lease payments, including interest, under operating leases for each of the following fiscal years ending on or about December 31 were as follows (in thousands): 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 ______________ (1) Includes optional renewal period for certain leases. Lease costs for the three and six months ended June 29, 2019 were as follows (in thousands): June 29, 2019 Three Months Ended Six Months Operating lease costs $ 1,688 $ 3,453 Short-term lease costs 3 12 Sublease income (52 ) (104 ) Total lease cost $ 1,639 $ 3,361 For the three and six months ended June 30, 2018 , rental expense related to operating leases was $1.7 million and $3.5 million , respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 10. Intangible Assets Intangible assets, net, consist of the following (in thousands): June 29, December 29, 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 Total amortization expense for the three months ended June 29, 2019 and June 30, 2018 was $1.1 million and $1.5 million , respectively. Total amortization expense for the six months ended June 29, 2019 and June 30, 2018 was $2.2 million and $2.7 million , respectively. All of these intangible assets have a ten year weighted average amortization period. Estimated amortization expense for each of the next fiscal years is as follows (in thousands): 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 |
Goodwill Goodwill
Goodwill Goodwill | 6 Months Ended |
Jun. 29, 2019 | |
Goodwill [Abstract] | |
Goodwill | 11. Goodwill Changes in goodwill during the six months ended June 29, 2019 were as follows (in thousands): Six Months Ended 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 On September 21, 2018, the Company acquired all of the outstanding shares of a private patient monitoring software company for approximately $4.0 million . Based on the Company’s purchase price allocation, approximately $2.8 million of the purchase price has been assigned to goodwill, $0.7 million of which was recorded as an adjustment to the preliminary purchase price allocation to deferred tax assets based on additional analysis completed during the six months ended June 29, 2019 . |
Other Assets, Long-Term Other A
Other Assets, Long-Term Other Assets, Long-Term (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Other Assets, Longterm [Abstract] | |
Other Assets Disclosure | 12. Other Assets, Long-Term Other assets, long-term consist of the following (in thousands): June 29, December 29, 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 |
Deferred Revenue and Other Cont
Deferred Revenue and Other Contract Liabilities | 6 Months Ended |
Jun. 29, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue and Other Contract Liabilities | 13. Deferred Revenue and Other Contract Liabilities Deferred revenue and other contract liabilities consist of the following (in thousands): June 29, December 29, 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. Deferred revenue relates to contracted amounts that have been invoiced to customers for which remaining performance obligations must be completed before the Company can recognize the revenue. These amounts primarily relate to undelivered equipment, sensors and services under deferred equipment agreements, extended warranty agreements and NRE service agreements. Changes in deferred revenue for the six months ended June 29, 2019 were as follows: Six Months Ended 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 revenue from remaining contractual performance obligations (Unrecognized Contract Revenue) includes deferred revenue, as well as other amounts that will be invoiced and recognized as revenue in future periods, when the Company completes its performance obligations. While Unrecognized Contract Revenue is similar in concept to backlog, Unrecognized Contract Revenue excludes revenue allocable to monitoring-related equipment that is effectively leased to hospitals under deferred equipment agreements and other contractual obligations for which neither party has performed. The following table summarizes the Company’s estimated Unrecognized Contract Revenue as of June 29, 2019 and the future periods within which the Company expects to recognize such revenue. 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 The estimated timing of this revenue is based, in part, on management’s estimates and assumptions about when its performance obligations will be completed. As a result, the actual timing of this revenue in future periods may vary, possibly materially, from those reflected in this table. |
Other Current Liabilities
Other Current Liabilities | 6 Months Ended |
Jun. 29, 2019 | |
Accrued Liabilities [Abstract] | |
Other Current Liabilities | 14. Other Current Liabilities Other current liabilities consist of the following (in thousands): June 29, December 29, 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 |
Credit Facilities Credit Facili
Credit Facilities Credit Facilities (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Debt Disclosure [Abstract] | |
Credit Facilities | 15. Credit Facilities On December 17, 2018, the Company entered into a Credit Agreement ( the 2018 Credit Facility ) with JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender, and Bank of the West, a Lender (collectively, the Lenders). The 2018 Credit Facility provides for up to $150.0 million of unsecured borrowings in multiple currencies, with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity up to $550.0 million in the future with the initial Lenders and additional Lenders, as required. The 2018 Credit Facility also provides for a sublimit of up to $25.0 million for the issuance of letters of credit and a sublimit of $75.0 million for borrowings in specified foreign currencies. All unpaid principal under the 2018 Credit Facility will become due and payable on December 17, 2023. Proceeds from the 2018 Credit Facility are expected to be used for general corporate, capital investment and working capital needs. Borrowings under the 2018 Credit Facility will be deemed, at the Company’s election, either: (a) an Alternate Base Rate (ABR) Loan, which bears interest at the ABR, plus a spread of 0.125% to 1.000% based upon a Company leverage ratio, or (b) a Eurocurrency Loan, which bears interest at the Adjusted LIBO Rate (as defined below), plus a spread of 1.125% to 2.000% based upon a Company net leverage ratio. Subject to certain conditions, the Company may also request swingline loans from time to time that bear interest similar to an ABR Loan. Pursuant to the terms of the 2018 Credit Facility , the ABR is equal to the greatest of (i) the prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% , and (iii) the one-month Adjusted LIBO Rate plus 1.0% . The Adjusted LIBO Rate is equal to the Eurocurrency Rate (as defined within the 2018 Credit Facility ) for the applicable interest period multiplied by the statutory reserve rate for such period, rounded upward, if necessary, to the next 1/16 of 1% . The Company is also obligated under the 2018 Credit Facility to pay an unused fee ranging from 0.150% to 0.275% per annum, based upon a Company leverage ratio, with respect to any unutilized portion of the 2018 Credit Facility . Pursuant to the terms of the 2018 Credit Facility , the Company is subject to certain covenants, including financial covenants related to a net leverage ratio and an interest charge coverage ratio, and other customary negative covenants. The 2018 Credit Facility also includes customary events of default which, upon the occurrence of any such event of default, provide the Lenders with the right to take either or both of the following actions: (a) immediately terminate the commitments, and (b) declare the loans then outstanding immediately due and payable in full. As of June 29, 2019 , the 2018 Credit Facility had no outstanding draws and $1.7 million of outstanding letters of credit. As of December 29, 2018 , the 2018 Credit Facility had no outstanding draws or letters of credit. The Company was in compliance with all covenants under the 2018 Credit Facility as of June 29, 2019 and December 29, 2018 . In January 2016, the Company entered into an Amended and Restated Credit Agreement (Restated Credit Facility) with JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender, Bank of America, as Syndication Agent and a Lender, Citibank, N.A., as Documentation Agent and a Lender, and various other Lenders (collectively, the Lenders). The Company terminated the Restated Credit Facility in February 2018. For the three months ended June 29, 2019 and June 30, 2018 , the Company incurred total interest expense of less than $0.1 million and $0.0 million , respectively, under the 2018 Credit Facility and the Restated Credit Facility. For the six months ended June 29, 2019 and June 30, 2018 , the Company incurred total interest expense of less than $0.2 million and $0.6 million , respectively, under the 2018 Credit Facility and the Restated Credit Facility. |
Other Non-Current Liabilities
Other Non-Current Liabilities | 6 Months Ended |
Jun. 29, 2019 | |
Other Liabilities, Long Term [Abstract] | |
Other Non-Current Liabilities | 16. Other Non-Current Liabilities Other non-current liabilities consist of the following (in thousands): June 29, December 29, 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 Unrecognized tax benefit relates to the Company’s long-term portion of tax liability associated with uncertain tax positions. Authoritative guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. See Note 20 to these condensed consolidated financial statements for further details. |
Stock Repurchase Program (Notes
Stock Repurchase Program (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Equity [Abstract] | |
Stock Repurchase Program | 17. Stock Repurchase Program In September 2015, the Company’s Board of Directors (Board) authorized a stock repurchase program, whereby the Company could purchase up to 5.0 million shares of its common stock over a period of up to three years (2015 Repurchase Program). A total of 3.1 million shares were purchased by the Company pursuant to the 2015 Repurchase Program prior to its expiration in September 2018. In July 2018, the Board approved a new stock repurchase program, authorizing the Company to purchase up to 5.0 million additional shares of its common stock over a period of up to three years (2018 Repurchase Program). As of June 29, 2019 , 4.8 million shares remained available for repurchase pursuant the 2018 Repurchase Program. The following table provides a summary of the Company’s stock repurchase activities during the three and six months ended June 29, 2019 and June 30, 2018 (in thousands, except per share amounts): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 29, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | 18. Stock-Based Compensation Total stock-based compensation expense for the three months ended June 29, 2019 and June 30, 2018 was $11.5 million and $6.7 million , respectively. Total stock-based compensation expense for the six months ended June 29, 2019 and June 30, 2018 was $18.8 million and $12.1 million , respectively. As of June 29, 2019 , an aggregate of 11.2 million shares of common stock were reserved for future issuance under the Company’s equity plans, of which 2.5 million shares were available for future grant under the Masimo Corporation 2017 Equity Incentive Plan (2017 Equity Plan). Additional information related to the Company’s current equity incentive plans, stock-based award activity and valuation of stock-based awards is included below. Equity Incentive Plans 2017 Equity Incentive Plan On June 1, 2017, the Company’s stockholders ratified and approved the 2017 Equity Plan. The 2017 Equity Plan permits the grant of stock options, restricted stock, RSUs, stock appreciation rights, PSUs, performance shares, performance bonus awards and other stock or cash awards to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. The aggregate number of shares that may be awarded under the 2017 Equity Plan is 5.0 million shares. The 2017 Equity Plan provides that at least 95% of the equity awards issued under the 2017 Equity Plan must vest over a period of not less than one year following the date of grant. The exercise price per share of each option granted under the 2017 Equity Plan may not be less than the fair market value of a share of the Company’s common stock on the date of grant, which is generally equal to the closing price of the Company’s common stock on the Nasdaq Global Select Market on the grant date. 2007 Stock Incentive Plan Effective June 1, 2017, upon the approval and ratification of the 2017 Equity Plan, the Company’s 2007 Stock Incentive Plan (2007 Equity Plan) terminated, provided that awards outstanding under the 2007 Equity Plan will continue to be governed by the terms of that plan. In addition, upon the effectiveness of the 2017 Equity Plan, an aggregate of 5.0 million shares of the Company’s common stock registered under prior registration statements for issuance pursuant to the 2007 Equity Plan were deregistered and concurrently registered under the 2017 Equity Plan. Stock-Based Award Activity Stock Options The number and weighted-average exercise price of options issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for exercise prices): Six Months Ended 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 Total stock option expense for the three months ended June 29, 2019 and June 30, 2018 was $3.8 million and $3.4 million , respectively. Total stock option expense for the six months ended June 29, 2019 and June 30, 2018 was $7.2 million and $6.8 million , respectively. As of June 29, 2019 , the Company had $44.7 million of unrecognized compensation cost related to non-vested stock options that are expected to vest over a weighted average period of approximately 3.6 years . The weighted-average remaining contractual term of options outstanding with an exercise price less than the closing price of the Company’s common stock as of June 29, 2019 was 5.8 years . The weighted-average remaining contractual term of options exercisable, with an exercise price less than the closing price of the Company’s common stock as of June 29, 2019 , was 4.6 years . RSUs The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted average grant date fair value amounts): Six Months Ended 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 Total RSU expense for the three months ended June 29, 2019 and June 30, 2018 was $0.8 million and $0.2 million , respectively. Total RSU expense for the six months ended June 29, 2019 and June 30, 2018 was $1.1 million and $0.4 million , respectively. As of June 29, 2019 , the Company had $12.0 million of unrecognized compensation cost related to non-vested RSU awards expected to be recognized and vest over a weighted-average period of approximate ly 4.4 years . PSUs The number of PSUs outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted average grant date fair value amounts): Six Months Ended 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 During the six months ended June 29, 2019 , the Company awarded 128,000 PSUs that will vest three years from the award date, based on the achievement of certain 2021 performance criteria approved by the Board. If earned, the PSUs granted will vest upon achievement of the performance criteria after the year in which the performance achievement level has been determined. The number of shares that may be earned can range from 0% to 200% of the target amount; therefore, the maximum number of shares that can be issued under these awards is twice the original award of 128,000 PSUs or 256,000 shares. Based on management’s estimate of the number of units expected to vest, total PSU expense for the three months ended June 29, 2019 and June 30, 2018 was $6.9 million and $3.2 million , respectively. Based on management’s estimate of the number of units expected to vest, total PSU expense for the six months ended June 29, 2019 and June 30, 2018 was $10.5 million and $4.9 million , respectively. As of June 29, 2019 , the Company had $51.8 million of unrecognized compensation cost related to non-vested PSU awards expected to be recognized and vest over a weighted-average period of approximately 2.2 years . Valuation of Stock-Based Award Activity The Black-Scholes option pricing model is used to estimate the fair value of options granted under the Company’s stock-based compensation plans. The range of assumptions used and the resulting weighted-average fair value of options granted at the date of grant were as follows: Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 The aggregate intrinsic value of options is calculated as the positive difference, if any, between the market value of the Company’s common stock on the date of exercise or the respective period end, as appropriate, and the exercise price of the options. The aggregate intrinsic value of options outstanding with an exercise price less than the closing price of the Company’s common stock as of June 29, 2019 was $546.1 million . The aggregate intrinsic value of options exercisable with an exercise price less than the closing price of the Company’s common stock as of June 29, 2019 was $403.8 million . The aggregate intrinsic value of options exercised during the three months ended June 29, 2019 was $20.7 million . The aggregate intrinsic value of options exercised during the six months ended June 29, 2019 was $42.4 million . The fair value of each RSU and PSU award is determined based on the closing price of the Company’s common stock on the grant date, or the modification date, if any. |
Non-operating income Non-operat
Non-operating income Non-operating income (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Nonoperating Income (Expense) [Abstract] | |
Non-operating income | 19. Non-operating income Non-operating income consists of the following (in thousands): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 |
Income Taxes (Notes)
Income Taxes (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 20. Income Taxes The Company has provided for income taxes in fiscal year 2019 interim periods based on the estimated effective income tax rate for the complete fiscal year and adjusted for discrete tax events, including excess tax benefits or deficiencies related to stock-based compensation, in the period such events occur. The estimated annual effective tax rate is computed based on the expected annual pretax income of the consolidated entities located within each taxing jurisdiction based on legislation enacted as of the balance sheet date. For the three months ended June 29, 2019 and June 30, 2018 , the Company recorded discrete tax benefits of approximately $2.6 million and $3.9 million , respectively, related to excess tax benefits realized from stock-based compensation. For the six months ended June 29, 2019 and June 30, 2018 , the Company recorded discrete tax benefits of approximately $6.0 million and $7.1 million , respectively, related to excess tax benefits realized from stock-based compensation. Deferred tax assets and liabilities are determined based on the future tax consequences associated with temporary differences between income and expenses reported for accounting and tax purposes. A valuation allowance for deferred tax assets is recorded to the extent that the Company cannot determine that the ultimate realization of the net deferred tax assets is more likely than not. Realization of deferred tax assets is principally dependent upon the achievement of future taxable income, the estimation of which requires significant judgment by the Company’s management. The judgment of the Company’s management regarding future profitability may change due to many factors, including future market conditions and the Company’s ability to successfully execute its business plans or tax planning strategies. These changes, if any, may require material adjustments to these deferred tax asset balances. As of June 29, 2019 , the liability for income taxes associated with uncertain tax positions was approximately $16.4 million . If fully recognized, approximately $15.1 million (net of federal benefit on state taxes) would impact the Company’s effective tax rate. It is reasonably possible that the amount of unrecognized tax benefits in various jurisdictions may change in the next twelve months due to the expiration of statutes of limitation and audit settlements. However, due to the uncertainty surrounding the timing of these events, an estimate of the change within the next twelve months cannot currently be made. The Company conducts business in multiple jurisdictions and, as a result, one or more of the Company’s subsidiaries files income tax returns in U.S. federal, various state, local and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters through fiscal year 2014. All material state, local and foreign income tax matters have been concluded through fiscal year 2011. The Company does not believe that the results of any tax authority examination would have a significant impact on its consolidated financial statements. |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 21. Commitments and Contingencies Employee Retirement Savings Plan The Company sponsors a qualified defined contribution plan or 401(k) plan, the Masimo Retirement Savings Plan (MRSP), covering the Company’s full-time U.S. employees who meet certain eligibility requirements. In general, the Company matches an employee’s contribution up to 3% of the employee’s compensation, subject to a maximum amount. The Company may also contribute to the MRSP on a discretionary basis. The Company contributed $0.7 million and $0.6 million to the MRSP for the three months ended June 29, 2019 and June 30, 2018 , respectively. The Company contributed $1.2 million and $1.3 million to the MRSP for the six months ended June 29, 2019 and June 30, 2018 , respectively. In addition, the Company sponsors various defined contribution plans in certain locations outside of the United States and the amounts contributed to such plans are immaterial. Employment and Severance Agreements In July 2017, the Company entered into the First Amendment to the certain Amended and Restated Employment Agreement entered into between the Company and Mr. Kiani on November 4, 2015 (as amended, the Amended Employment Agreement). Pursuant to the terms of the Amended Employment Agreement, upon a “Qualifying Termination” (as defined in the Amended Employment Agreement), Mr. Kiani will be entitled to receive a cash severance benefit equal to two times the sum of his then-current base salary and the average annual bonus paid to Mr. Kiani during the immediately preceding three years, the full amount of the Award Shares and the full amount of the Cash Payment. In addition, in the event of a “Change in Control” (as defined in the Amended Employment Agreement) prior to a Qualifying Termination, on each of the first and second anniversaries of the Change in Control, 50% of the Cash Payment and 50% of the Award Shares will vest, subject in each case to Mr. Kiani’s continuous employment through each such anniversary date; however, in the event of a Qualifying Termination or a termination of Mr. Kiani’s employment due to death or disability prior to either of such anniversaries, any unvested amount of the Cash Payment and all of the unvested Award Shares shall vest and be paid in full. Additionally, in the event of a Change in Control prior to a Qualifying Termination, Mr. Kiani’s stock options and any other equity awards will vest in accordance with their terms, but in no event later than in two equal installments on each of the one year and two year anniversaries of the Change in Control, subject in each case to Mr. Kiani’s continuous employment through each such anniversary date. As of June 29, 2019 , the expense related to the Award Shares and Cash Payment that would be recognized in the Company’s consolidated financial statements upon the occurrence of a Qualifying Termination under the Restated Employment Agreement was approximately $292.9 million . As of June 29, 2019 , the Company had severance plan participation agreements with eight executive officers. The participation agreements (the Agreements) are governed by the terms and conditions of the Company’s 2007 Severance Protection Plan (the Severance Plan), which became effective on July 19, 2007 and which was amended effective December 31, 2008. Under each of the Agreements, the applicable executive officer may be entitled to receive certain salary, equity, medical and life insurance benefits if he is terminated by the Company without cause or if he terminates his employment for good reason under certain circumstances. The executive officers are also required to give the Company six months ’ advance notice of their resignation under certain circumstances. Purchase Commitments Pursuant to contractual obligations with vendors, the Company had $89.5 million of purchase commitments as of June 29, 2019 , which are expected to be purchased within one year. These purchase commitments have been made for certain inventory items in order to secure sufficient levels of those items and to achieve better pricing. Other Contractual Commitments In the normal course of business, the Company may provide bank guarantees to support government hospital tenders in certain foreign jurisdictions. As of June 29, 2019 , the Company had approximately $2.4 million in outstanding unsecured bank guarantees. In certain circumstances, the Company also provides limited indemnification within its various customer contracts whereby the Company indemnifies the parties to whom it sells its products with respect to potential infringement of intellectual property, and against bodily injury caused by a defective Company product. It is not possible to predict the maximum potential amount of future payments under these or similar agreements, due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved. As of June 29, 2019 , the Company had not incurred any significant costs related to contractual indemnification of its customers. Concentrations of Risk The Company is exposed to credit loss for the amount of its cash deposits with financial institutions in excess of federally insured limits. The Company invests its excess cash in time deposits with major financial institutions. As of June 29, 2019 , the Company had $588.8 million of bank balances, which was comprised of $180.0 million of certificates of deposit and $408.8 million in checking or deposit accounts. Of the $588.8 million of bank balances, $3.6 million was covered by either the U.S. Federal Deposit Insurance Corporation limit or foreign countries’ deposit insurance organizations. While the Company and its contract manufacturers rely on sole source suppliers for certain components, steps have been taken to minimize the impact of a shortage or stoppage of shipments, such as maintaining a safety stock of inventory and designing products that could be modified to use different components. However, there can be no assurance that a shortage or stoppage of shipments of the materials or components that the Company purchases will not result in a delay in production or adversely affect the Company’s business. The Company’s ability to sell its products to U.S. hospitals depends in part on its relationships with GPOs. Many existing and potential customers for the Company’s products become members of GPOs. GPOs negotiate pricing arrangements and contracts, sometimes exclusively, with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO’s affiliated hospitals and other members. During the three months ended June 29, 2019 and June 30, 2018 , revenue from the sale of the Company’s products to U.S. hospitals that are members of GPOs approximated 56.8% and 57.4% of total product revenue, respectively. During the six months ended June 29, 2019 and June 30, 2018 , revenue from the sale of the Company’s products to U.S. hospitals that are members of GPOs approximated 56.5% and 57.8% of total product revenue, respectively. For the three months ended June 29, 2019 , the Company had sales through two just-in-time distributors that represented 13.3% and 12.1% of total product revenue, respectively. For the three months ended June 30, 2018 , the Company had sales through the same two just-in-time distributors that represented 11.3% and 11.1% of total product revenue, respectively. For the six months ended June 29, 2019 , the Company had sales through two just-in-time distributors that represented 13.5% and 11.2% of total product revenue, respectively. For the six months ended June 30, 2018 , the Company had sales through the same two just-in-time distributors that represented 12.5% and 10.9% of total product revenue, respectively. As of June 29, 2019 , one just-in-time distributor represented 7.0% of the Company’s accounts receivable balance. As of December 29, 2018 , one just-in-time distributor represented 6.7% of the Company’s accounts receivable balance. Litigation During the third quarter of fiscal year 2017, the Company became aware that certain amounts had been paid by a foreign government customer to the Company’s former appointed foreign agent in connection with a foreign government tender, but had not been remitted by such agent to the Company in accordance with the agency agreement. On December 28, 2017, the Company initiated arbitration proceedings against this foreign agent after unsuccessful attempts to recover such remittances. As a result, the Company recorded a net charge of approximately $10.5 million during the fourth quarter of fiscal year 2017 in connection with this dispute, of which $2.0 million was recovered during the year ended December 29, 2018 . An arbitration hearing was held on February 11, 2019. On July 8, 2019, the arbitrator awarded the Company $10.5 million in damages, fees, and costs. Although the Company intends to vigorously pursue collection of the arbitration award, there is no guarantee that the Company will be successful in these efforts. On January 2, 2014, a putative class action complaint was filed against the Company in the U.S. District Court for the Central District of California by Physicians Healthsource, Inc.. The complaint alleges that the Company sent unsolicited facsimile advertisements in violation of the Junk Fax Protection Act of 2005 and related regulations. The complaint seeks $500 for each alleged violation, treble damages if the District Court finds the alleged violations to be knowing, plus interest, costs and injunctive relief. On March 26, 2019, an amended complaint was filed adding Radha Geismann MD PC as an additional named plaintiff. On June 17, 2019, the plaintiffs filed their motion for class certification. The Company’s opposition to the motion for class certification is due August 26, 2019. A trial date of November 5, 2019 has been set by the District Court. The Company believes it has good and substantial defenses to the class claims, but there is no guarantee that the Company will prevail. The Company is unable to determine whether any loss will ultimately occur or to estimate the range of such loss; therefore, no amount of loss has been accrued by the Company in the accompanying condensed consolidated financial statements. From time to time, the Company may be involved in other litigation and investigations relating to claims and matters arising out of its operations in the normal course of business. The Company believes that it currently is not a party to any other legal proceedings which, individually or in the aggregate, would have a material adverse effect on its consolidated financial position, results of operations or cash flows. |
Segment Information and Enterpr
Segment Information and Enterprise Reporting (Notes) | 6 Months Ended |
Jun. 29, 2019 | |
Segment Reporting [Abstract] | |
Segment Information and Enterprise Reporting | 22. Segment Information and Enterprise Reporting The Company’s chief operating decision maker, the CEO, reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by geographic region, for purposes of making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in a single reporting segment, specifically noninvasive patient monitoring solutions and related products. The Company does not assess the performance of its geographic regions on other measures of income or expense, such as depreciation and amortization, operating income or net income. In addition, the Company’s assets are primarily located in the U.S. The Company does not produce reports for, or measure the performance of, its geographic regions on any asset-based metrics. Therefore, geographic information is presented only for revenues and long-lived assets. The following schedule presents an analysis of the Company’s product revenues based upon the geographic area to which the product was shipped (in thousands, except percentages): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 % The Company’s consolidated long-lived assets (tangible non-current assets) by geographic area are (in thousands, except percentages): June 29, December 29, 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 % |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 29, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The accompanying condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, including normal recurring accruals, necessary to present fairly the Company’s condensed consolidated financial statements. The accompanying condensed consolidated balance sheet as of December 29, 2018 was derived from the Company’s audited consolidated financial statements at that date. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018 (fiscal year 2018 ), filed with the SEC on February 26, 2019 . The results for the three and six months ended June 29, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending December 28, 2019 (fiscal year 2019 ) or for any other interim period or for any future year. As further discussed below in this Note 2 to these condensed consolidated financial statements, the Company adopted Accounting Standards Codification (ASC) Topic 842, Leases (ASC 842), effective December 30, 2018. The Company applied the modified retrospective approach using the current-period adjustment method of adoption, whereby all periods beginning on or after December 30, 2018 are presented under ASC 842 with a cumulative effect adjustment to the opening balance sheet as of the first day of fiscal year 2019, and all prior period amounts are not adjusted and continue to be reported in accordance with the legacy accounting requirements under ASC Topic 840, Leases . |
Fiscal Periods | Fiscal Periods The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 week fiscal year, a 52 week fiscal year includes four quarters of 13 fiscal weeks while a 53 week fiscal year includes three 13 fiscal week quarters and one 14 fiscal week quarter. The Company’s last 53 week fiscal year was fiscal year 2014. Fiscal year 2019 is a 52 week fiscal year. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. |
Use of Estimates | Use of Estimates The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of total contract consideration and how such consideration should be allocated to each performance obligation within a contract, credit loss allowances on accounts and lease receivables, inventory reserves, warranty reserves, rebate accruals, valuation of the Company’s equity awards, goodwill valuation, deferred taxes and any associated valuation allowances, deferred revenue, uncertain income tax positions, and litigation costs and related accruals. Actual results could differ from such estimates. |
Reclassifications | Reclassifications Certain amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current period presentation, including previously reported selling, general and administrative expenses that have been reclassified as research and development expenses within the condensed consolidated financial statements for the three and six months ended June 30, 2018 . |
Fair Value of Measurements | Fair Value Measurements Authoritative guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: ● 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. Pursuant to current authoritative guidance, entities are allowed an irrevocable option to elect the fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract-by-contract basis. The Company did not elect to apply the fair value option under this guidance to specific assets or liabilities on a contract-by-contract basis. There were no transfers between Level 1, Level 2 and Level 3 inputs during the six months ended June 29, 2019 . The Company carries cash and cash equivalents at cost, which approximates fair value. The following tables represent the Company’s financial assets (in thousands), measured at fair value on a recurring basis as of June 29, 2019 : Reported as Adjusted Basis Gross Unrealized Gross Unrealized Estimated Cash and Cash Equivalents Short-Term 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 As of December 29, 2018 , the Company had an insignificant amount of other financial assets that were required to be measured under the fair value hierarchy, the measurement of which were based on Level 1 inputs. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from date of purchase of three months or less , or highly liquid investments that are readily convertible into known amounts of cash, to be cash equivalents. |
Short-Term Investments | Short-Term Investments The Company classifies its investments in certificates of deposits maturing in one year or less as short-term investments. The carrying value of such investments approximates fair value and are accessible without any significant restrictions, taxes, or penalties. During the six months ended June 29, 2019 , the Company invested $180.0 million in certificates of deposits with maturities ranging from six months to one year . |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of trade receivables recorded upon recognition of revenue for product revenues, reduced by reserves for estimated bad debts and returns. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Credit is extended based on an evaluation of the customer’s financial condition. Collateral is generally not required. The allowance for doubtful accounts is determined based on historical write-off experience, current customer information and other relevant factors, including specific identification of past due accounts, based on the age of the receivable in excess of the contemplated or contractual due date. Accounts are charged off against the allowance when the Company believes they are uncollectible. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory reserves are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory items that have a market price less than carrying value in inventory. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: 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 Land is not depreciated and construction-in-progress is not depreciated until placed in service. Normal repair and maintenance costs are expensed as incurred, whereas significant improvements that materially increase values or extend useful lives are capitalized and depreciated over the remaining estimated useful lives of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss on the sale or retirement is recognized in income. |
Lessee Right-of-Use (ROU) Assets and Lease Liabilities | Lessee Right-of-Use (ROU) Assets and Lease Liabilities As further discussed below within this Note 2 to these condensed consolidated financial statements, the Company adopted ASC 842 effective December 30, 2018. The Company determines if an arrangement contains a lease at inception. ROU assets represent the Company’s right to use an asset underlying an operating lease for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from an operating lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company generally estimates the applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. Many of the Company’s lessee agreements include options to extend the lease, which the Company does not include in its lease terms unless they are reasonably certain to be exercised. The Company utilizes a portfolio approach to account for the ROU assets and liabilities associated with certain equipment leases. The Company has also made an accounting policy election not to separate lease and non-lease components for its real estate leases and to exclude short-term leases with a term of twelve months or less from its application of ASC 842. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. |
Intangible Assets | Intangible Assets The Company’s policy is to renew its patents and trademarks. Costs to renew patents and trademarks are capitalized and amortized over the remaining useful life of the intangible asset. The Company continually evaluates the amortization period and carrying basis of patents and trademarks to determine whether any events or circumstances warrant a revised estimated useful life or reduction in value. Capitalized application costs are charged to operations when it is determined that the patent or trademark will not be obtained or is abandoned. Total renewal costs for patents and trademarks for the six months ended June 29, 2019 and June 30, 2018 were $0.4 million and $0.2 million , respectively. As of June 29, 2019 , the weighted-average number of years until the next renewal was less than one year for patents and six years for trademarks. |
Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets | Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. In assessing goodwill impairment, the Company has the option to first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macroeconomic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of a reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if the Company elects to bypass the qualitative analysis, then the Company must perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit. The annual impairment test is performed during the fourth fiscal quarter. The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. No impairment of goodwill, intangible assets or other long-lived assets was recorded during each of the six months ended June 29, 2019 and June 30, 2018 . |
Revenue Recognition, and Deferred Revenue and Other Contract Liabilities | Revenue Recognition, and Deferred Revenue and Other Contract Liabilities The Company derives the majority of its product revenue from four primary sources: (i) direct sales under deferred equipment agreements with end-user hospitals where the Company provides up-front monitoring equipment at no up-front charge in exchange for a multi-year sensor purchase commitment, (ii) other direct sales of noninvasive monitoring solutions to end-user hospitals, emergency medical response organizations and other direct customers; (iii) sales of noninvasive monitoring solutions to distributors who then typically resell to end-user hospitals, emergency medical response organizations and other customers; and (iv) sales of integrated circuit boards to OEM customers who incorporate the Company’s embedded software technology into their multiparameter monitoring devices. Subject to customer credit considerations, the majority of such sales are made on open account using industry standard payment terms based on the geography within which the specific customer is located. The Company generally recognizes revenue following a single, principles-based five-step model to be applied to all contracts with customers and generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers that are remitted to government authorities, when control over the promised goods or services are transferred to the customer. Revenue related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease. While the majority of the Company’s revenue contracts and transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation, judgment and analysis is required to determine the appropriate accounting, including: (i) the amount of the total consideration, including variable consideration, (ii) whether the arrangement contains an embedded lease, and if so, whether such embedded lease is a sales-type lease or an operating lease, (iii) the identification of the distinct performance obligations contained within the arrangement, (iv) how the arrangement consideration should be allocated to each performance obligation when multiple performance obligations exist, including the determination of standalone selling price, and (v) when to recognize revenue on the performance obligations. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. The Company enters into agreements to sell its monitoring solutions and services, sometimes as a part of arrangements with multiple performance obligations that include various combinations of product sales, equipment leases and services. In the case of contracts with multiple performance obligations, the authoritative guidance provides that the total consideration be allocated to each performance obligation on the basis of relative standalone selling prices. When a standalone selling price is not readily observable, the Company estimates the standalone selling price by considering multiple factors including, but not limited to, features and functionality of the product, geographies, type of customer, contractual prices pursuant to Group Purchasing Organization (GPO) contracts, the Company’s pricing and discount practices, and other market conditions. Sales under deferred equipment agreements are generally structured such that the Company agrees to provide certain monitoring-related equipment, software, installation, training and/or warranty support at no up-front charge in exchange for the hospital’s agreement to purchase sensors over the term of the agreement, which generally ranges from three to six years . The Company allocates contract consideration under deferred equipment agreements containing fixed annual sensor purchase commitments to the underlying lease and non-lease components at contract inception. In determining whether any underlying lease components are related to a sales-type lease or an operating lease, the Company evaluates the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by the Company, as well as the Company’s expectations surrounding potential contract/lease extensions or renewals and the customer’s exercise of any purchase options. Revenue allocable to non-lease performance obligations is generally recognized as such non-lease performance obligations are satisfied. Revenue allocable to lease components under sales-type lease arrangements is generally recognized when the lease commences. Revenue allocable to lease components under operating lease arrangements is generally recognized over the term of the operating lease. The Company generally does not expect to derive any significant value in excess of such asset’s unamortized book value from equipment underlying its operating leases arrangements after the end of the agreement. Revenue from direct sales of products to the Company’s end-user hospitals, emergency medical response organizations and other direct customers, as well as to its distributors, is generally recognized upon shipment or delivery to the customer based on the terms of the contract or underlying purchase order. Sales of integrated circuit boards and other products to the Company’s OEM customers are generally recognized as revenue at the time of shipment. Revenue related to OEM rainbow ® parameter software licenses is generally recognized upon shipment of the OEM’s product to its customers, as reported to the Company by the OEM. The Company provides certain customers with various sales incentives that may take the form of discounts or rebates. The Company estimates and provides allowances for these programs as a reduction to revenue at the time of sale. In general, customers do not have a right of return for credit or refund. However, the Company allows returns under certain circumstances. At the end of each period, the Company estimates and accrues for these returns as a reduction to revenue. The Company estimates the revenue constraints related to these forms of variable consideration based on various factors, including expected purchasing volumes, prior sales and returns history, and specific contractual terms and limitations. The majority of the Company’s royalty and other revenue arose from one agreement that was due and payable quarterly in arrears. An estimate of these royalty revenues was recorded in the period earned based on historical results, adjusted for any new information or trends known to management at the time of estimation. This estimated revenue was adjusted prospectively when the Company received the underlying royalty report, approximately sixty days after the end of the previous quarter. The Company received its final royalty payment from this agreement during the three months ended March 30, 2019. For the three months ended June 29, 2019 and June 30, 2018 , the Company recognized royalty revenue pursuant to this agreement of approximately $0.0 million and $9.1 million , respectively. For the six months ended June 29, 2019 and June 30, 2018 , the Company recognized royalty revenue pursuant to this agreement of approximately $0.7 million and $17.2 million , respectively. The Company also recognizes revenue from time-to-time related to non-recurring engineering (NRE) services. NRE service revenue is generally recognized over time based on actual costs incurred by the Company. |
Shipping and Handling Costs and Fees | Shipping and Handling Costs and Fees All shipping and handling costs are expensed as incurred and are recorded as a component of cost of goods sold in the accompanying consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of product revenue. |
Taxes Collected From Customers And Remitted To Governmental Authorities | Taxes Collected From Customers and Remitted to Governmental Authorities The Company’s policy is to present revenue net of taxes collected from customers and remitted to governmental authorities. |
Deferred Costs and Other Contract Assets | Deferred Costs and Other Contract Assets The costs of monitoring-related equipment provided to hospitals under operating lease arrangements within the Company’s deferred equipment agreements are generally deferred and amortized to cost of goods sold over the life of the underlying contracts. Some of the Company’s deferred equipment agreements also contain provisions for certain payments to be made directly to the end-user hospital customer at the inception of the arrangement. These contractual incentive payments are generally allocated to the lease and non-lease components and recognized as a reduction to revenue as the underlying performance obligations are satisfied. The Company generally invoices its customers under deferred equipment agreements as sensors are provided to the customer. However, the Company may recognize revenue for certain non-lease performance obligations under deferred equipment agreements with fixed annual commitments at the time such performance obligations are satisfied and prior to the customer being invoiced. When this occurs, the Company records an unbilled contract receivable related to such revenue until the customer has been invoiced pursuant to the terms of the underlying deferred equipment agreement. The incremental costs of obtaining a contract with a customer are capitalized and deferred if the Company expects such costs to be recoverable over the life of the contract and the contract term is greater than one year. Such deferred costs generally relate to certain incentive sales commissions earned by the Company’s internal sales team in connection with the execution of deferred equipment agreements and are amortized to expense over the expected term of the underlying contract. |
Product Warranty | Product Warranty The Company generally provides a warranty against defects in material and workmanship for a period ranging from six to forty-eight months , depending on the product type. In traditional sales activities, including direct and OEM sales, the Company establishes an accrued liability for the estimated warranty costs at the time of revenue recognition, with a corresponding provision to cost of sales. Customers may also purchase extended warranty coverage separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage is recognized over the extended life of the contract, which is reasonably expected to be the period over which such services will be provided. The related extended warranty costs are expensed as incurred. Changes in the product warranty accrual were as follows (in thousands): Six Months Ended June 29, June 30, 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. |
Litigation Costs and Contingencies | Litigation Costs and Contingencies The Company records a charge equal to at least the minimum estimated liability for a loss contingency or litigation settlement when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements, and (ii) the range of loss can be reasonably estimated. The determination of whether a loss contingency or litigation settlement is probable or reasonably possible involves a significant amount of management judgment, as does the estimation of the range of loss given the nature of contingencies. Liabilities related to litigation settlements with multiple elements are recorded based on the fair value of each element. Legal and other litigation related expenses are recognized as the services are provided. The Company records insurance and other indemnity recoveries for litigation expenses when both of the following conditions are met: (a) the recovery is probable, and (b) collectability is reasonably assured. Insurance recoveries are only recorded to the extent the litigation costs to which they relate have been incurred and recognized in the financial statements. |
Comprehensive Income | Comprehensive Income Comprehensive income includes foreign currency translation adjustments and any related tax benefits that have been excluded from net income and reflected in stockholders’ equity. The change in accumulated other comprehensive loss was as follows (in thousands): Six Months Ended 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 ) |
Net Income Per Share | Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Net income per diluted share i s computed by dividing the net income by the weighted-average number of shares and potential shares outstanding during the period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options and the vesting of both restricted share units (RSUs) and performance share units (PSUs). For the three months ended June 29, 2019 and June 30, 2018 , weighted options to purchase 0.4 million and 1.2 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. For the six months ended June 29, 2019 and June 30, 2018 , weighted options to purchase 0.3 million and 1.1 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. Certain RSUs are considered contingently issuable shares as their vesting is contingent upon the occurrence of certain future events. Since such events had not occurred and were not considered probable of occurring as of each of June 29, 2019 and June 30, 2018 , 2.7 million weighted average shares related to such RSUs have been excluded from the calculation of potential shares for each of the three and six month periods then ended. A reconciliation of basic and diluted net income per share is as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 |
Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02) . The new standard allows a reclassification for certain stranded tax effects from accumulated other comprehensive income to retained earnings, and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for annual and interim periods beginning after December 15, 2018. The Company adopted this standard during the three months ended March 30, 2019 and such adoption did not have a material impact on its condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02) . Subsequent to the issuance of ASU 2016-02, the FASB clarified the guidance through several ASUs. The collective guidance was codified by the FASB in ASC 842, which, among other things (i) requires the Company to recognize an ROU asset and a lease liability for all operating leases for which the Company is the lessee; (ii) changes the classification of certain embedded leases within the Company’s deferred equipment agreements with its customers from operating to sales-type leases, resulting in the acceleration of revenue under certain contracts, as well as the immediate expensing of certain costs that were previously deferred and expensed over the term of the lease; and (iii) requires disclosures by the Company as a lessor and lessee about the amount, timing and uncertainty of cash flows arising from its leases. On December 30, 2018, the Company adopted ASC 842 using the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning December 30, 2018 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840, Leases . Adoption of this new accounting standard had a material impact on the Company’s condensed consolidated balance sheet as of March 30, 2019, but did not have a significant impact on the Company’s consolidated net earnings and cash flows for the three months ended March 30, 2019. For leases that commenced before the effective date of ASC 842, the Company did not elect any of the permitted practical expedients. However, the Company utilized a portfolio approach for purposes of determining the discount rate associated with certain equipment leases and made certain accounting policy elections not to separate lease and non-lease components for its real estate leases and to exclude short-term leases with a term of twelve months or less from its application of ASC 842. In connection with its adoption of ASC 842, the Company recorded lessee operating lease ROU assets and lessee operating lease liabilities of $22.5 million as of December 30, 2018, primarily related to real estate and equipment leases, based on the present value of the future lease payments on such date. As a lessor, the Company also recorded customer lease receivables of $62.0 million , a reduction to equipment leased to customers (formerly titled deferred cost of goods sold) of $103.5 million , an increase to deferred tax assets of $8.6 million , a decrease to deferred revenue and contract-related liabilities of $9.1 million , an increase in other current liabilities of $3.0 million and a cumulative net decrease to retained earnings of $26.8 million , all related to the reclassification of certain embedded leases in existing deferred equipment agreements from operating to sales-type leases as of December 30, 2018. See Notes 6 , 7 and 9 to these condensed consolidated financial statements for additional disclosures required by ASC 842. Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). The new standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company does not expect this standard will have a material impact on its consolidated financial statements upon adoption. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). The new standard adds and modifies certain disclosure requirements for fair value measurements including where entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will need to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company does not expect this standard will have a material impact on its consolidated financial statements upon adoption. In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements (ASU 2018-09). This new standard amends, clarifies, corrects errors in and makes minor improvements to the ASC. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments of ASU 2018-09 do not require transition guidance and are effective upon issuance. The Company does not expect this standard will have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). Subsequent to the issuance of ASU 2016-13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326) generally requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect. The entity’s estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts. ASC 326 is effective for annual and interim fiscal reporting periods beginning after December 15, 2019, with early adoption permitted for annual reporting periods beginning after December 15, 2018. The Company is continuing to evaluate the expected impact of this ASC 326 but does not expect it to have a material impact on its consolidated financial statements upon adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Accounting Policies [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following tables represent the Company’s financial assets (in thousands), measured at fair value on a recurring basis as of June 29, 2019 : Reported as Adjusted Basis Gross Unrealized Gross Unrealized Estimated Cash and Cash Equivalents Short-Term 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 |
Property, Plant and Equipment | Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: 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 Property and equipment, net, consists of the following (in thousands): June 29, December 29, 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 |
Changes in Product Warranty Accrual | Changes in the product warranty accrual were as follows (in thousands): Six Months Ended June 29, June 30, 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. |
Changes in Accumulated Other Comprehensive Loss | The change in accumulated other comprehensive loss was as follows (in thousands): Six Months Ended 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 ) |
Reconciliation of Basic and Diluted Net Income Per Share | A reconciliation of basic and diluted net income per share is as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 |
Supplemental Cash Flow Information | Supplemental cash flow information includes the following (in thousands): Six Months Ended June 29, June 30, 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 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | Inventories consist of the following (in thousands): June 29, December 29, 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 |
Other Current Assets Other Curr
Other Current Assets Other Current Assets (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consist of the following (in thousands): June 29, December 29, 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 Other assets, long-term consist of the following (in thousands): June 29, December 29, 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 |
Lease Receivable Lease Receiv_2
Lease Receivable Lease Receivable (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Leases [Abstract] | |
Sale-Type Lease Receivable | Lease receivable consists of the following (in thousands): June 29, 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 |
Sales-type Lease, Lease Receivable, Maturity | As of June 29, 2019 , estimated future maturities of customer sales-type lease receivables for each of the following fiscal years are as follows (in thousands): 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 |
Deferred Costs and Other Cont_2
Deferred Costs and Other Contract Assets Deferred Costs and Other Contract Assets (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Costs and Other Contract Assets | Deferred costs and other contract assets consist of the following (in thousands): June 29, December 29, 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. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: 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 Property and equipment, net, consists of the following (in thousands): June 29, December 29, 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 |
Lessee ROU Assets and Lease L_2
Lessee ROU Assets and Lease Liabilities Lessee ROU Assets and Lease Liabilities (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Leases [Abstract] | |
Lessee Operating Lease Balance Sheet Classification | Balance sheet classifications related to the Company’s operating leases for the period ended June 29, 2019 are as follows: Balance sheet classification June 29, 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 |
Lessee, Operating Lease, Liability, Maturity | As of June 29, 2019 , estimated future operating lease payments for each of the following fiscal years were as follows (in thousands): 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 ______________ (1) Includes optional renewal period for certain leases. |
Contractual Obligation, Fiscal Year Maturity Schedule | As of December 29, 2018 , the estimated future minimum lease payments, including interest, under operating leases for each of the following fiscal years ending on or about December 31 were as follows (in thousands): 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 ______________ (1) Includes optional renewal period for certain leases. |
Lease, Cost | Lease costs for the three and six months ended June 29, 2019 were as follows (in thousands): June 29, 2019 Three Months Ended Six Months Operating lease costs $ 1,688 $ 3,453 Short-term lease costs 3 12 Sublease income (52 ) (104 ) Total lease cost $ 1,639 $ 3,361 For the three and six months ended June 30, 2018 , rental expense related to operating leases was $1.7 million and $3.5 million , respectively. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net, consist of the following (in thousands): June 29, December 29, 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 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for each of the next fiscal years is as follows (in thousands): 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 |
Goodwill Goodwill (Table)
Goodwill Goodwill (Table) | 6 Months Ended |
Jun. 29, 2019 | |
Goodwill [Abstract] | |
Schedule of Goodwill | Changes in goodwill during the six months ended June 29, 2019 were as follows (in thousands): Six Months Ended 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 |
Other Assets, Long-Term Other_2
Other Assets, Long-Term Other Assets, Long-Term (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Other Assets, Longterm [Abstract] | |
Schedule of Other Assets, Long-Term | Other current assets consist of the following (in thousands): June 29, December 29, 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 Other assets, long-term consist of the following (in thousands): June 29, December 29, 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 |
Deferred Revenue and Other Co_2
Deferred Revenue and Other Contract Liabilities Deferred Revenue and Other Contract Liabilities (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue, by Arrangement, Disclosure | Deferred revenue and other contract liabilities consist of the following (in thousands): June 29, December 29, 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. Changes in deferred revenue for the six months ended June 29, 2019 were as follows: Six Months Ended 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 The following table summarizes the Company’s estimated Unrecognized Contract Revenue as of June 29, 2019 and the future periods within which the Company expects to recognize such revenue. 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 |
Other Current Liabilities Other
Other Current Liabilities Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Accrued Liabilities [Abstract] | |
Schedule Other Current Liabilities | Other current liabilities consist of the following (in thousands): June 29, December 29, 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 |
Other Non-Current Liabilities O
Other Non-Current Liabilities Other Non-Current Liabilities (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Other Liabilities, Long Term [Abstract] | |
Schedule of Components Of Other Liabilities Long Term Table | Other non-current liabilities consist of the following (in thousands): June 29, December 29, 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 |
Stock Repurchase Program (Table
Stock Repurchase Program (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Class of Stock [Line Items] | |
Treasury Stock | The following table provides a summary of the Company’s stock repurchase activities during the three and six months ended June 29, 2019 and June 30, 2018 (in thousands, except per share amounts): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Number and Weighted Average Exercise Price of Options Issued and Outstanding under all Stock Option Plans | The number and weighted-average exercise price of options issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for exercise prices): Six Months Ended 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 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted average grant date fair value amounts): Six Months Ended 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 |
Schedule of Nonvested Performance-based Units Activity | The number of PSUs outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted average grant date fair value amounts): Six Months Ended 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 |
Schedule of Range of Assumptions Used and Resulting Weighted-Average Fair Value of Options Granted at Date of Grant | The range of assumptions used and the resulting weighted-average fair value of options granted at the date of grant were as follows: Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 |
Non-operating income Non-oper_2
Non-operating income Non-operating income (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Nonoperating Income (Expense) [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | Non-operating income consists of the following (in thousands): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 |
Segment Information and Enter_2
Segment Information and Enterprise Reporting (Tables) | 6 Months Ended |
Jun. 29, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The following schedule presents an analysis of the Company’s product revenues based upon the geographic area to which the product was shipped (in thousands, except percentages): Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 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 % |
Schedule of Long-lived Assets by Geographic Areas | The Company’s consolidated long-lived assets (tangible non-current assets) by geographic area are (in thousands, except percentages): June 29, December 29, 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 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) shares in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 29, 2019USD ($)shares | Mar. 30, 2019USD ($) | Jun. 30, 2018USD ($)shares | Jun. 29, 2019USD ($)segmentshares | Jun. 30, 2018USD ($)shares | Dec. 30, 2018USD ($) | Dec. 29, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||||
Short-term investments | $ 180,000,000 | $ 180,000,000 | $ 0 | ||||
Impairment of goodwill, intangible assets and other long-lived assets | $ 0 | $ 0 | |||||
Number of Sources of Product Revenue | segment | 4 | ||||||
Number of days royalty revenue is adjusted subsequent to quarter end | 60 days | ||||||
Royalty | $ 0 | $ 9,100,000 | $ 700,000 | $ 17,200,000 | |||
Options to purchase of shares of common stock | shares | 400 | 1,200 | 300 | 1,100 | |||
Cumulative Effect on Retained Earnings, Net of Tax, ROU Assets and Lease Liabilities | $ 22,500,000 | ||||||
Cumulative Effect on Retained Earnings, Net of Tax, Lease Receivable | 62,000,000 | ||||||
Cumulative Effect on Retained Earnings, Net of Tax, Leased Equipment | 103,500,000 | ||||||
Cumulative Effect on Retained Earnings, Net of Tax, Deferred Tax Assets | 8,600,000 | ||||||
Cumulative Effect on Retained Earnings, Net of Tax, Deferred Tax Deferred Revenue and Contract-Related Liabilities | 9,100,000 | ||||||
Cumulative Effect on Retained Earnings, Net of Tax, Other Current Liabilities | $ 3,000,000 | ||||||
Patents | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Finite-Lived Intangible Assets, Cost Incurred to Renew or Extend | $ 400,000 | $ 200,000 | |||||
Weighted average number of years until the next renewal | 1 year | ||||||
Trademarks | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Weighted average number of years until the next renewal | 6 years | ||||||
Buildings | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 39 years | ||||||
Demonstration units | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 3 years | ||||||
Tooling | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 3 years | ||||||
Vehicles | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 5 years | ||||||
Restricted Stock Units (RSUs) | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares | 98 | ||||||
Restricted Stock Units (RSUs) | Chief Executive Officer | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares | 2,700 | 2,700 | |||||
Accounting Standards Update 2016-02 | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Cumulative Effect on Retained Earnings, Tax, Adoption of ASU 2016-02 | $ (26,795,000) | ||||||
Minimum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Maturity of Time Deposits | 6 months | ||||||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 3 years | 3 years | |||||
Warranty period for defects in material and workmanship | 6 months | ||||||
Minimum | Aircraft and components | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 10 years | ||||||
Minimum | Building improvements | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 7 years | ||||||
Minimum | Computer equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 2 years | ||||||
Minimum | Furniture and office equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 2 years | ||||||
Minimum | Machinery and equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 5 years | ||||||
Maximum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Maturity of Time Deposits | 1 year | ||||||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 years | 6 years | |||||
Warranty period for defects in material and workmanship | 48 months | ||||||
Maximum | Aircraft and components | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 20 years | ||||||
Maximum | Building improvements | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 15 years | ||||||
Maximum | Computer equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 6 years | ||||||
Maximum | Furniture and office equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 6 years | ||||||
Maximum | Machinery and equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Property, Plant and Equipment, Useful Life | 10 years | ||||||
Retained Earnings | Accounting Standards Update 2016-02 | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Cumulative Effect on Retained Earnings, Tax, Adoption of ASU 2016-02 | $ (26,795,000) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Fair Value Hierarchy for Financial Assets (Details) - USD ($) | Jun. 29, 2019 | Dec. 29, 2018 | Jun. 30, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 408,784,000 | $ 552,490,000 | $ 429,647,000 |
Short-term investments | 180,000,000 | $ 0 | |
Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale Securities, Amortized Cost Basis | 588,784,000 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | ||
Available-for-sale Securities | 588,784,000 | ||
Cash and cash equivalents | 408,784,000 | ||
Short-term investments | 180,000,000 | ||
Recurring | Cash and Cash Equivalents | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale Securities, Amortized Cost Basis | 408,784,000 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | ||
Available-for-sale Securities | 408,784,000 | ||
Cash and cash equivalents | 408,784,000 | ||
Short-term investments | 0 | ||
Recurring | Fair Value, Inputs, Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale Securities, Amortized Cost Basis | 180,000,000 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | ||
Available-for-sale Securities | 180,000,000 | ||
Cash and cash equivalents | 0 | ||
Short-term investments | 180,000,000 | ||
Recurring | Fair Value, Inputs, Level 1 | Certificates of Deposit | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale Securities, Amortized Cost Basis | 180,000,000 | ||
Available-for-sale Securities | 180,000,000 | ||
Short-term investments | 180,000,000 | ||
Recurring | Fair Value, Inputs, Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale Securities, Amortized Cost Basis | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | ||
Available-for-sale Securities | 0 | ||
Cash and cash equivalents | 0 | ||
Short-term investments | 0 | ||
Recurring | Fair Value, Inputs, Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale Securities, Amortized Cost Basis | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | ||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | ||
Available-for-sale Securities | 0 | ||
Cash and cash equivalents | 0 | ||
Short-term investments | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Changes in Product Warranty Accrual (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 29, 2019 | Jun. 30, 2018 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
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 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Change in Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Accumulated other comprehensive loss, beginning of period | $ (6,199) | |||
Unrealized gains (losses) from foreign currency translation adjustments | $ 292 | $ (2,785) | (285) | $ (3,056) |
Accumulated other comprehensive loss, end of period | $ (6,484) | $ (6,484) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Options to purchase of shares of common stock | 400 | 1,200 | 300 | 1,100 |
Net income attributable to stockholders of Masimo Corporation: | ||||
Net income | $ 44,888 | $ 43,853 | $ 94,210 | $ 89,483 |
Net income | ||||
Net income | $ 44,888 | $ 43,853 | $ 94,210 | $ 89,483 |
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 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2018 | Dec. 29, 2018 | Dec. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Interest | $ 73 | $ 229 | ||
Income taxes | 26,975 | 21,771 | ||
Capitalized operating leases | 3,409 | 0 | ||
ROU assets obtained in exchange for lease liabilities(1) | 24,093 | 0 | ||
Unpaid purchases of property, plant and equipment | 1,216 | 663 | ||
Unsettled common stock proceeds from option exercises | 283 | 0 | ||
Cash and cash equivalents | 588,800 | |||
Restricted cash | 155 | 147 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 408,939 | $ 429,794 | $ 552,641 | $ 315,483 |
Related Party Transactions Rela
Related Party Transactions Related Party Transactions - (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 29, 2019USD ($)death | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 29, 2019USD ($)ft²death | Jun. 30, 2018USD ($) | Dec. 29, 2018USD ($) | |
Related Party Transaction [Line Items] | ||||||
Property Plant and Equipment, Occupied Square Feet | ft² | 16,830 | |||||
Estimate of Annual Preventable Hospital Deaths Prevented by 2020 | death | 200,000 | 200,000 | ||||
Cercacor Laboratories | ||||||
Related Party Transaction [Line Items] | ||||||
Payments for Royalties | $ 2.9 | $ 2 | $ 5.8 | $ 4.5 | ||
Payment for Administrative Fees | 0.1 | 0.1 | 0.1 | 0.1 | ||
Operating Leases, Income Statement, Sublease Revenue | 0.1 | $ 0.1 | 0.2 | 0.2 | ||
Related Party Transaction, Due from (to) Related Party | (2.8) | (2.8) | $ (2.9) | |||
Reimbursement Fee | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0.1 | $ 0.1 | 0.1 | $ 0.1 | ||
Variable Interest Entity, Not Primary Beneficiary | Minimum | ||||||
Related Party Transaction [Line Items] | ||||||
Payments for Royalties | $ 5 |
Inventories - Components of Inv
Inventories - Components of Inventory (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Inventory Disclosure [Abstract] | ||
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 |
Other Current Assets Other Cu_2
Other Current Assets Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Lease receivable, current | $ 20,129 | $ 0 |
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 |
Lease Receivable Sales-Type Lea
Lease Receivable Sales-Type Lease Receivable (Details) - USD ($) | Jun. 29, 2019 | Dec. 29, 2018 |
Leases [Abstract] | ||
Lease receivable | $ 64,748,000 | |
Allowance for credit loss | (335,000) | |
Lease receivable, net | 64,413,000 | |
Less: Current portion of lease receivable | (20,129,000) | $ 0 |
Lease receivable, noncurrent | $ 44,284,000 | $ 0 |
Lease Receivable Sales-type L_2
Lease Receivable Sales-type Lease, Lease Receivable, Maturity (Details) $ in Thousands | Jun. 29, 2019USD ($) |
Leases [Abstract] | |
2019 (balance of year) | $ 9,790 |
2020 | 17,348 |
2021 | 13,542 |
2022 | 10,533 |
2023 | 6,594 |
Thereafter | 6,606 |
Total | $ 64,413 |
Deferred Costs and Other Cont_3
Deferred Costs and Other Contract Assets Deferred Costs and Other Contract Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | Dec. 29, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||
Prepaid contract incentives | $ 5,862 | $ 5,862 | $ 7,036 | ||
Deferred commissions | 5,136 | 5,136 | 5,085 | ||
Unbilled contract receivables | 2,358 | 2,358 | 5,567 | ||
Equipment leased to customers, net(1) | 642 | 642 | 108,417 | ||
Total deferred costs and other contract assets | 13,998 | 13,998 | 126,105 | ||
Deferred Cost of Goods Sold, Amortization | 400 | $ 7,200 | 600 | $ 14,800 | |
Deferred Cost of Goods Sold, Accumulated Amortization | 900 | 900 | $ 103,100 | ||
Amortization of Other Deferred Charges | 400 | 400 | 900 | 800 | |
Amortization of Deferred Sales Commissions | $ 500 | $ 500 | $ 1,000 | $ 1,100 |
Property and Equipment Property
Property and Equipment Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | Dec. 29, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 309,310 | $ 309,310 | $ 263,762 | ||
Accumulated depreciation and amortization | (106,500) | (106,500) | (97,790) | ||
Property and equipment, net | 202,810 | 202,810 | 165,972 | ||
Depreciation | 5,100 | $ 4,100 | 9,400 | $ 8,100 | |
Building and building improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 91,595 | 91,595 | 88,449 | ||
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 58,077 | 58,077 | 54,525 | ||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 40,216 | 40,216 | 23,762 | ||
Aircraft and vehicles | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 25,595 | 25,595 | 25,555 | ||
Computer equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 18,649 | 18,649 | 16,582 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 17,167 | 17,167 | 16,428 | ||
Tooling | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 14,742 | 14,742 | 14,212 | ||
Furniture and office equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 10,670 | 10,670 | 10,459 | ||
Demonstration units | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 474 | 474 | 470 | ||
Construction-in-progress (CIP) | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 32,125 | $ 32,125 | $ 13,320 |
Property and Equipment Proper_2
Property and Equipment Property and Equipment Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2019USD ($)Facilities | Jun. 30, 2018USD ($) | Jun. 29, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 29, 2018USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 309,310 | $ 309,310 | $ 263,762 | ||
Accumulated depreciation | 106,500 | 106,500 | $ 97,790 | ||
Depreciation | $ 5,100 | $ 4,100 | $ 9,400 | $ 8,100 | |
Properties Purchased | Facilities | 2 | ||||
Property, Plant and Equipment, Additions | $ 35,600 |
Lessee ROU Assets and Lease L_3
Lessee ROU Assets and Lease Liabilities Lessee ROU Assets and Lease Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 29, 2019 | |
Leases [Abstract] | |||
Lessee, Operating Lease, Renewal Term | 5 years | ||
Operating Lease, Weighted Average Discount Rate, Percent | 3.80% | ||
Operating Lease, Weighted Average Remaining Lease Term | 8 years 2 months 12 days | ||
Rent Expense under ASC 840 | $ 1.7 | $ 3.5 |
Lessee ROU Assets and Lease L_4
Lessee ROU Assets and Lease Liabilities Lessee Operating Lease Balance Sheet Classification (Details) - USD ($) | Jun. 29, 2019 | Dec. 29, 2018 |
Leases [Abstract] | ||
Lessee ROU assets | $ 19,800,000 | $ 0 |
Lessee lease liabilities, current | 4,543,000 | 0 |
Lessee lease liabilities, noncurrent | 16,447,000 | $ 0 |
Present value | $ 20,990,000 |
Lessee ROU Assets and Lease L_5
Lessee ROU Assets and Lease Liabilities Future Maturities Operating Lease Payments (Details) $ in Thousands | Jun. 29, 2019USD ($) |
Leases [Abstract] | |
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 |
Lessee ROU Assets and Lease L_6
Lessee ROU Assets and Lease Liabilities Future Minimum Lease Payment (Details) $ in Thousands | Dec. 29, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 6,926 |
2020 | 4,422 |
2021 | 2,384 |
2022 | 1,701 |
2023 | 1,568 |
Thereafter(1) | 9,921 |
Total | $ 26,922 |
Lessee ROU Assets and Lease L_7
Lessee ROU Assets and Lease Liabilities Lease, Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 29, 2019 | Jun. 29, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 1,688 | $ 3,453 |
Short-term lease costs | 3 | 12 |
Sublease income | (52) | (104) |
Total lease cost | $ 1,639 | $ 3,361 |
Intangible Assets Intangible As
Intangible Assets Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 56,247 | $ 55,158 |
Accumulated amortization | (28,614) | (27,234) |
Intangible assets, net | 27,633 | 27,924 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 22,224 | 21,323 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 7,669 | 7,669 |
Licenses-related party | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 7,500 | 7,500 |
Acquired technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 5,580 | 5,580 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 4,372 | 4,190 |
Capitalized software development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 3,436 | 3,430 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 5,466 | $ 5,466 |
Intangible Assets Intangible _2
Intangible Assets Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of Intangible Assets | $ 1.1 | $ 1.5 | $ 2.2 | $ 2.7 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
Intangible Assets Intangible _3
Intangible Assets Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 (balance of year) | $ 4,373 | |
2020 | 3,842 | |
2021 | 3,673 | |
2022 | 2,309 | |
2023 | 1,719 | |
Thereafter | 11,717 | |
Intangible assets, net | $ 27,633 | $ 27,924 |
Goodwill Goodwill (Details)
Goodwill Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 29, 2019 | Dec. 29, 2018 | |
Goodwill [Abstract] | ||
Goodwill | $ 22,384 | $ 23,297 |
Adjustments to goodwill from finalization of purchase price allocation | (651) | |
Foreign currency translation adjustment | $ (262) |
Goodwill Goodwill - Additional
Goodwill Goodwill - Additional Information (Details) $ in Millions | Sep. 21, 2018USD ($) |
Goodwill [Abstract] | |
Acquisition through business combination | $ 4 |
Goodwill, Acquired During Period | 2.8 |
Deferred Tax Adjustment from Purchase Price Allocation | $ 0.7 |
Other Assets, Long-Term Other_3
Other Assets, Long-Term Other Assets, Long-Term (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Other Assets, Longterm [Abstract] | ||
Lessee ROU assets | $ 19,800 | $ 0 |
Prepaid deposits | 3,065 | 2,881 |
Long term investments | 1,200 | 1,200 |
Restricted cash | 154 | 151 |
Other non-current assets | $ 24,219 | $ 4,232 |
Deferred Revenue and Other Co_3
Deferred Revenue and Other Contract Liabilities - Deferred Revenue and Other Contract Liabilities (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Revenue Recognition and Deferred Revenue [Abstract] | ||
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 |
Deferred Revenue and Other Co_4
Deferred Revenue and Other Contract Liabilities - Changes in Deferred Revenue (Details) $ in Thousands | 6 Months Ended |
Jun. 29, 2019USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
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 |
Deferred Revenue and Other Co_5
Deferred Revenue and Other Contract Liabilities - Unrecognized Contract Revenue (Details) $ in Thousands | Jun. 29, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-06-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unrecognized Contract Revenue | $ 211,727 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-06-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unrecognized Contract Revenue | 278,572 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-06-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unrecognized Contract Revenue | 121,698 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-06-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unrecognized Contract Revenue | 27,316 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unrecognized Contract Revenue | $ 639,313 |
Other Current Liabilities Oth_2
Other Current Liabilities Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Accrued Liabilities [Abstract] | ||
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 | 0 |
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 |
Credit Facilities Credit Faci_2
Credit Facilities Credit Facilities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | Dec. 29, 2018 | |
Debt Instrument [Line Items] | |||||
Letters of Credit Outstanding, Amount | $ 1,700,000 | $ 1,700,000 | $ 0 | ||
Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Sublimit | 25,000,000 | $ 25,000,000 | |||
Revolving Credit Facility [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis Spread on Variable Rate | 0.50% | ||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis Spread on Variable Rate | 1.00% | ||||
Foreign Line of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Sublimit | 75,000,000 | $ 75,000,000 | |||
Minimum | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Commitment Fee Percentage | 0.15% | ||||
Minimum | Revolving Credit Facility [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis Spread on Variable Rate | 0.125% | ||||
Minimum | Revolving Credit Facility [Member] | Eurocurrency [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis Spread on Variable Rate | 1.125% | ||||
Maximum | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Commitment Fee Percentage | 0.275% | ||||
Maximum | Revolving Credit Facility [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis Spread on Variable Rate | 1.00% | ||||
Maximum | Revolving Credit Facility [Member] | Eurocurrency [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis Spread on Variable Rate | 2.00% | ||||
Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Borrowing Capacity | 150,000,000 | $ 150,000,000 | |||
Line of Credit Facility, Maximum Borrowing Capacity | 550,000,000 | 550,000,000 | |||
Long-term Line of Credit, Noncurrent | 0 | 0 | $ 0 | ||
Interest Expense, Debt | $ 100,000 | $ 0 | $ 200,000 | $ 600,000 |
Other Non-Current Liabilities_2
Other Non-Current Liabilities Other Non-Current Liabilities - Components of Other Non-Current Liabilities (Detail) - USD ($) | Jun. 29, 2019 | Dec. 29, 2018 |
Other Liabilities, Long Term [Abstract] | ||
Income tax payable, noncurrent | $ 21,522,000 | $ 21,522,000 |
Lessee lease liabilities, noncurrent | 16,447,000 | 0 |
Unrecognized tax benefits | 12,801,000 | 11,717,000 |
Deferred tax liabilities | 2,972,000 | 2,956,000 |
Other | 156,000 | 1,951,000 |
Total other non-current liabilities | $ 53,898,000 | $ 38,146,000 |
Stock Repurchase Program - Addi
Stock Repurchase Program - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | 36 Months Ended | |||||
Jun. 29, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | Sep. 01, 2018 | Jul. 01, 2018 | Sep. 01, 2015 | |
Class of Stock [Line Items] | ||||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 4,800,000 | $ 4,800,000 | ||||||
Shares repurchased(1) | 208,000 | 0 | 208,000 | 196,000 | ||||
Average cost per share | $ 134.03 | $ 0 | $ 134.03 | $ 84.14 | ||||
Value of shares repurchased | $ 27,854,000 | $ 0 | $ 16,490,000 | $ 27,854,000 | $ 16,490,000 | |||
2015 Repurchase Program | ||||||||
Class of Stock [Line Items] | ||||||||
Shares repurchased(1) | 3,100,000 | |||||||
2015 Repurchase Program | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common shares authorized to be repurchased under new stock repurchase program | 5,000,000 | 5,000,000 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 11.5 | $ 6.7 | $ 18.8 | $ 12.1 | |
Common Stock, Capital Shares Reserved for Future Issuance | 11,200,000 | 11,200,000 | |||
Options available for grant, end of period | 2,500,000 | 2,500,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 5,493,000 | 5,493,000 | 5,676,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | P3Y | ||||
Aggregate intrinsic value of options outstanding | $ 546.1 | $ 546.1 | |||
Aggregate intrinsic value of options exercisable | 403.8 | 403.8 | |||
Aggregate intrinsic value of options exercised | 20.7 | 42.4 | |||
Employee Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | 3.8 | 3.4 | 7.2 | 6.8 | |
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | 44.7 | $ 44.7 | |||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 3 years 7 months 6 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 5 years 9 months 18 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 4 years 7 months 6 days | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | 0.8 | 0.2 | $ 1.1 | 0.4 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 12 | $ 12 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 4 years 4 months 24 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 2,796,000 | 2,796,000 | 2,707,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 98,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 2,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Exercised in Period | (7,000) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 96.82 | $ 96.82 | $ 95.54 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 133.24 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 133.50 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 99.05 | ||||
Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 6.9 | $ 3.2 | $ 10.5 | $ 4.9 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 51.8 | $ 51.8 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 2 years 2 months 12 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 412,000 | 412,000 | 313,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 102.22 | $ 102.22 | $ 88.34 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 133.50 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 90.69 | ||||
Performance Shares | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 0 | 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 128,000 | ||||
Performance Shares | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 2 | 2 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 256,000 | ||||
2017 Equity Incentive Plan | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 5,000,000 | 5,000,000 | |||
2007 Stock Incentive Plan | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 5,000,000 | 5,000,000 | |||
Chief Executive Officer | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 2,700,000 | 2,700,000 |
Stock-Based Compensation - Numb
Stock-Based Compensation - Number and Weighted Average Exercise Price of Options Issued and Outstanding under all Stock Option Plans (Detail) - $ / shares shares in Thousands | 6 Months Ended |
Jun. 29, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Options available for grant, end of period | 2,500 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding, beginning of period | 5,676 |
Granted | 335 |
Canceled | (105) |
Exercised | (413) |
Options outstanding, end of period | 5,493 |
Options exercisable, end of period | 3,456 |
Average Exercise Price | |
Options outstanding, beginning of period | $ 43.61 |
Granted | 134.09 |
Canceled | 77.56 |
Exercised | 31.14 |
Options outstanding, end of period | 49.42 |
Options exercisable, end of period | $ 31.98 |
Stock-Based Compensation Stock-
Stock-Based Compensation Stock-Based Compensation - Summary of Unvested RSU Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 11.5 | $ 6.7 | $ 18.8 | $ 12.1 | |
Employee Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | 3.8 | 3.4 | 7.2 | 6.8 | |
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 44.7 | $ 44.7 | |||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 2,796,000 | 2,796,000 | 2,707,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 98,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (2,000) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Exercised in Period | (7,000) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 96.82 | $ 96.82 | $ 95.54 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 133.24 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 133.50 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired, Weighed Average Grant Date Fair Value | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 99.05 | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 0.8 | 0.2 | $ 1.1 | 0.4 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 12 | $ 12 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 4 years 4 months 24 days | ||||
Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 412,000 | 412,000 | 313,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (29,000) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 102.22 | $ 102.22 | $ 88.34 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 133.50 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired, Weighed Average Grant Date Fair Value | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 90.69 | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 6.9 | $ 3.2 | $ 10.5 | $ 4.9 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 51.8 | $ 51.8 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 2 years 2 months 12 days | ||||
Chief Executive Officer | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 2,700,000 | 2,700,000 |
Stock-Based Compensation - Rang
Stock-Based Compensation - Range of Assumptions Used and Resulting Weighted-Average Fair Value of Options Granted at Date of Grant (Detail) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | ||||
Risk-free interest rate, minimum | 1.80% | 2.60% | 1.80% | 2.30% |
Risk-free interest rate, maximum | 2.40% | 2.90% | 2.60% | 2.90% |
Expected term (in years) | 5 years 2 months 12 days | 5 years 7 months 6 days | 5 years 2 months 12 days | 5 years 6 months |
Estimated volatility, minimum | 28.30% | 27.20% | 28.30% | 27.20% |
Estimated volatility, maximum | 28.90% | 29.20% | 30.00% | 29.70% |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Weighted-average fair value of options granted | $ 41.90 | $ 30.33 | $ 41.30 | $ 28.96 |
Non-operating income Non-oper_3
Non-operating income Non-operating income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Nonoperating Income (Expense) [Abstract] | ||||
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 |
Non-operating income | $ 3,529 | $ 1,405 | $ 7,415 | $ 3,052 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Other Tax Expense (Benefit) | $ 2.6 | $ 3.9 | $ 6 | $ 7.1 |
Gross unrecognized tax benefit | 16.4 | 16.4 | ||
Unrecognized tax benefit that would affect effective tax rate | $ 15.1 | $ 15.1 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Jul. 27, 2017 | Jan. 03, 2014USD ($) | Jun. 29, 2019USD ($)distributorAgreement | Mar. 30, 2019 | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($)distributor | Dec. 30, 2017USD ($) | Jun. 29, 2019USD ($)distributorAgreement | Jun. 30, 2018USD ($)distributor | Dec. 29, 2018USD ($)distributor |
Contingencies And Commitments [Line Items] | ||||||||||
Company contribution percentage based on employee contribution of up to 3% of employee's compensation | 3.00% | |||||||||
Severance plan participation agreements | Agreement | 8 | 8 | ||||||||
Supplemental Unemployment Benefits, Severance Benefits, Required Notice of Resignation | 6 months | |||||||||
Purchase Commitment, Remaining Minimum Amount Committed | $ 89,500,000 | $ 89,500,000 | ||||||||
Other Commitment | 2,400,000 | 2,400,000 | ||||||||
Bank balances | 588,800,000 | 588,800,000 | ||||||||
Short-term investments | 180,000,000 | 180,000,000 | $ 0 | |||||||
Cash Equivalents, at Carrying Value | 408,800,000 | 408,800,000 | ||||||||
Bank balance covered by Federal Deposit Insurance Corporation limit | 3,600,000 | $ 3,600,000 | ||||||||
Percentage Of Revenue One Customer | 13.30% | 11.30% | 13.50% | 12.50% | ||||||
Percentage Of Revenue Two Customer | 12.10% | 11.10% | 11.20% | 10.90% | ||||||
Loss Contingency, Damages Awarded, Value | $ 10,500,000 | |||||||||
Sales | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Concentration Risk, Just-in-time Distributors | distributor | 2 | 2 | 2 | 2 | ||||||
Accounts Receivable | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Concentration Risk, Just-in-time Distributors | distributor | 1 | 1 | ||||||||
Sales Revenue, Product Line | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Percentage of Revenue - Customer Concentration | 56.80% | 57.40% | 56.50% | 57.80% | ||||||
Just in time distributor two | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Percentage Of Accounts Receivable Balance From Two Just In Time Distributor | 7.00% | 7.00% | ||||||||
Just in time distributor one | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Percentage Of Accounts Receivable Balance From Two Just In Time Distributor | 6.70% | |||||||||
Masimo vs Former Agency Tender | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Litigation Settlement, Expense | $ 10,500,000 | |||||||||
Proceeds from Legal Settlements | $ 2,000,000 | |||||||||
Masimo vs. Physicians Healthsource, Inc. | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Loss contingency, damages sought | $ 500 | |||||||||
International | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Company's contribution to employee retirement savings plan | $ 100,000 | |||||||||
United States (U.S.) | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Company's contribution to employee retirement savings plan | $ 700,000 | $ 600,000 | $ 1,200,000 | $ 1,300,000 | ||||||
Chief Executive Officer | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Employment Agreement, Severance Benefits, Special Payment, Qualifying Termination | $ 292,900,000 | |||||||||
Chief Executive Officer | Restricted Stock Units (RSUs) | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Employment Agreement, Severance Terms | 50.00% | |||||||||
Chief Executive Officer | Cash Distribution | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Employment Agreement, Severance Terms | 50.00% |
Segment Information and Enter_3
Segment Information and Enterprise Reporting - Analysis of Product Revenues Based upon Geographic Area Shipped (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2019 | Jun. 30, 2018 | Jun. 29, 2019 | Jun. 30, 2018 | |
Revenue, Major Customer [Line Items] | ||||
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Product revenue | $ 229,510 | $ 202,004 | $ 460,058 | $ 406,393 |
United States (U.S.) | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration Risk, Percentage | 67.80% | 69.40% | 67.90% | 69.20% |
Product revenue | $ 155,513 | $ 140,134 | $ 312,181 | $ 281,175 |
Europe, Middle East and Africa | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration Risk, Percentage | 19.80% | 17.00% | 20.40% | 19.30% |
Product revenue | $ 45,406 | $ 34,328 | $ 93,878 | $ 78,374 |
Asia and Australia | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration Risk, Percentage | 9.40% | 10.10% | 8.70% | 8.20% |
Product revenue | $ 21,685 | $ 20,497 | $ 39,803 | $ 33,403 |
North and South America (excluding the U.S.) | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration Risk, Percentage | 3.00% | 3.50% | 3.00% | 3.30% |
Product revenue | $ 6,906 | $ 7,045 | $ 14,196 | $ 13,441 |
Segment Information and Enter_4
Segment Information and Enterprise Reporting Long-lived assets by geographic area (Details) - USD ($) $ in Thousands | Jun. 29, 2019 | Dec. 29, 2018 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 203,452 | $ 274,389 |
Concentration Risk, Long-lived Asset Geographic Area, Percentage | 100.00% | 100.00% |
Reportable Geographical Components | United States (U.S.) | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 199,237 | $ 262,373 |
Concentration Risk, Long-lived Asset Geographic Area, Percentage | 97.90% | 95.60% |
Reportable Geographical Components | International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 4,215 | $ 12,016 |
Concentration Risk, Long-lived Asset Geographic Area, Percentage | 2.10% | 4.40% |