Cover
Cover | 6 Months Ended |
Jul. 02, 2022 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jul. 02, 2022 |
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, $0.001 par value |
Trading Symbol | MASI |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Smaller Reporting Company | false |
Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 52,530,244 |
Amendment Flag | false |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q2 |
Entity Central Index Key | 0000937556 |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Current assets | ||
Cash and cash equivalents | $ 218,000 | $ 745,300 |
Trade accounts receivable, net of allowance for credit losses of $2.7 million and $2.2 million at July 2, 2022 and January 1, 2022, respectively | 352,700 | 200,800 |
Inventories | 449,200 | 201,400 |
Other current assets | 138,300 | 91,000 |
Total current assets | 1,158,200 | 1,238,500 |
Lease receivable, noncurrent | 75,400 | 73,600 |
Deferred costs and other contract assets | 35,400 | 28,100 |
Property and equipment, net | 370,700 | 272,800 |
Intangible assets, net | 464,500 | 72,700 |
Trademarks - (Note 9) | 262,000 | 0 |
Deferred tax assets | 55,100 | 52,600 |
Other non-current assets | 105,300 | 48,600 |
Total assets | 2,961,100 | 1,887,000 |
Current liabilities | ||
Accounts payable | 244,500 | 75,500 |
Accrued compensation | 75,500 | 70,800 |
Deferred revenue and other contract liabilities, current | 75,400 | 50,900 |
Other current liabilities | 156,600 | 70,400 |
Total current liabilities | 552,000 | 267,600 |
Long-term debt | 922,400 | 0 |
Other non-current liabilities | 284,000 | 69,100 |
Total liabilities | 1,758,400 | 336,700 |
Commitments and contingencies - (Note 23) | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value; 5.0 million shares authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 100 million shares authorized; 52.5 million and 55.3 million shares issued and outstanding at July 2, 2022 and January 1, 2022, respectively | 100 | 100 |
Treasury stock, 19.5 million and 16.5 million shares at July 2, 2022 and January 1, 2022, respectively | (1,169,100) | (767,700) |
Additional paid-in capital | 759,200 | 752,500 |
Accumulated other comprehensive loss | (23,100) | (5,500) |
Retained earnings | 1,635,600 | 1,570,900 |
Total stockholders’ equity | 1,202,700 | 1,550,300 |
Total liabilities and stockholders’ equity | 2,961,100 | 1,887,000 |
Customer relationships | ||
Current assets | ||
Intangible assets, net | 215,600 | 15,300 |
Acquired technologies | ||
Current assets | ||
Intangible assets, net | 170,900 | 20,700 |
Other intangible assets, net | ||
Current assets | ||
Intangible assets, net | $ 78,000 | $ 36,500 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 2.7 | $ 2.2 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5 | 5 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100 | 100 |
Common stock, shares, outstanding (in shares) | 52.5 | 55.3 |
Treasury stock, shares (in shares) | 19.5 | 16.5 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 565,300 | $ 305,100 | $ 869,500 | $ 604,200 |
Cost of goods sold | 307,100 | 112,200 | 406,600 | 214,400 |
Gross profit | 258,200 | 192,900 | 462,900 | 389,800 |
Selling, general and administrative | 188,300 | 93,900 | 297,200 | 190,500 |
Research and development | 47,800 | 33,900 | 83,900 | 68,500 |
Total operating expenses | 236,100 | 127,800 | 381,100 | 259,000 |
Operating income | 22,100 | 65,100 | 81,800 | 130,800 |
Non-operating income (loss) | 4,500 | 100 | 3,900 | (700) |
Income before provision for income taxes | 26,600 | 65,200 | 85,700 | 130,100 |
Provision for income taxes | 8,500 | 15,000 | 21,000 | 26,500 |
Net income | $ 18,100 | $ 50,200 | $ 64,700 | $ 103,600 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.34 | $ 0.91 | $ 1.18 | $ 1.88 |
Diluted (in dollars per share) | $ 0.33 | $ 0.88 | $ 1.15 | $ 1.80 |
Weighted-average shares used in per share calculations: | ||||
Basic (in shares) | 53,900 | 55,000 | 54,700 | 55,100 |
Diluted (in shares) | 55,300 | 57,400 | 56,400 | 57,600 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Income Statement [Abstract] | ||||
Net income | $ 18.1 | $ 50.2 | $ 64.7 | $ 103.6 |
Other comprehensive income, net of tax: | ||||
Unrealized (losses) gains from foreign currency translation adjustments | (14) | 1.2 | (16.9) | (1.7) |
Change in pension benefits | (0.7) | 0 | (0.7) | 0 |
Total comprehensive income | $ 3.4 | $ 51.4 | $ 47.1 | $ 101.9 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings |
Beginning balance (in shares) at Jan. 02, 2021 | 55,300,000 | |||||
Beginning balance (in shares) at Jan. 02, 2021 | 16,000,000 | |||||
Beginning balance at Jan. 02, 2021 | $ 1,407.7 | $ 0.1 | $ (638.7) | $ 703.7 | $ 1.4 | $ 1,341.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock options exercised | 2.9 | 2.9 | ||||
Restricted/Performance stock units vested (in shares) | 300,000 | |||||
Shares paid for tax withholding | (16.7) | (16.7) | ||||
Stock-based compensation | 12.7 | 12.7 | ||||
Repurchases of common stock (in shares) | (500,000) | (500,000) | ||||
Repurchases of common stock | (128.9) | $ (128.9) | ||||
Net income | 53.4 | 53.4 | ||||
Foreign currency translation adjustment | (2.9) | (2.9) | ||||
Ending balance (in shares) at Apr. 03, 2021 | 55,100,000 | |||||
Ending balance (in shares) at Apr. 03, 2021 | 16,500,000 | |||||
Ending balance at Apr. 03, 2021 | 1,328.2 | $ 0.1 | $ (767.6) | 702.6 | (1.5) | 1,394.6 |
Beginning balance (in shares) at Jan. 02, 2021 | 55,300,000 | |||||
Beginning balance (in shares) at Jan. 02, 2021 | 16,000,000 | |||||
Beginning balance at Jan. 02, 2021 | $ 1,407.7 | $ 0.1 | $ (638.7) | 703.7 | 1.4 | 1,341.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchases of common stock (in shares) | (500,000) | |||||
Repurchases of common stock | $ (128.9) | |||||
Net income | 103.6 | |||||
Foreign currency translation adjustment | (1.7) | |||||
Unrealized loss on pension plan | 0 | |||||
Ending balance (in shares) at Jul. 03, 2021 | 55,100,000 | |||||
Ending balance (in shares) at Jul. 03, 2021 | 16,500,000 | |||||
Ending balance at Jul. 03, 2021 | 1,391.3 | $ 0.1 | $ (767.6) | 714.3 | (0.3) | 1,444.8 |
Beginning balance (in shares) at Apr. 03, 2021 | 55,100,000 | |||||
Beginning balance (in shares) at Apr. 03, 2021 | 16,500,000 | |||||
Beginning balance at Apr. 03, 2021 | 1,328.2 | $ 0.1 | $ (767.6) | 702.6 | (1.5) | 1,394.6 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock options exercised | 3.4 | 3.4 | ||||
Stock-based compensation | $ 8.3 | 8.3 | ||||
Repurchases of common stock (in shares) | 0 | |||||
Repurchases of common stock | $ 0 | |||||
Net income | 50.2 | 50.2 | ||||
Foreign currency translation adjustment | 1.2 | 1.2 | ||||
Unrealized loss on pension plan | 0 | |||||
Ending balance (in shares) at Jul. 03, 2021 | 55,100,000 | |||||
Ending balance (in shares) at Jul. 03, 2021 | 16,500,000 | |||||
Ending balance at Jul. 03, 2021 | $ 1,391.3 | $ 0.1 | $ (767.6) | 714.3 | (0.3) | 1,444.8 |
Beginning balance (in shares) at Jan. 01, 2022 | 55,300,000 | 55,300,000 | ||||
Beginning balance (in shares) at Jan. 01, 2022 | 16,500,000 | |||||
Beginning balance at Jan. 01, 2022 | $ 1,550.3 | $ 0.1 | $ (767.7) | 752.5 | (5.5) | 1,570.9 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock options exercised (in shares) | 100,000 | |||||
Stock options exercised | 2.7 | 2.7 | ||||
Restricted/Performance stock units vested (in shares) | 200,000 | |||||
Shares paid for tax withholding (in shares) | (100,000) | |||||
Shares paid for tax withholding | (25.4) | (25.4) | ||||
Stock-based compensation | 10.9 | 10.9 | ||||
Net income | 46.6 | 46.6 | ||||
Foreign currency translation adjustment | (2.9) | (2.9) | ||||
Ending balance (in shares) at Apr. 02, 2022 | 55,500,000 | |||||
Ending balance (in shares) at Apr. 02, 2022 | 16,500,000 | |||||
Ending balance at Apr. 02, 2022 | $ 1,582.2 | $ 0.1 | $ (767.7) | 740.7 | (8.4) | 1,617.5 |
Beginning balance (in shares) at Jan. 01, 2022 | 55,300,000 | 55,300,000 | ||||
Beginning balance (in shares) at Jan. 01, 2022 | 16,500,000 | |||||
Beginning balance at Jan. 01, 2022 | $ 1,550.3 | $ 0.1 | $ (767.7) | 752.5 | (5.5) | 1,570.9 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock options exercised (in shares) | 100,000 | |||||
Repurchases of common stock (in shares) | (3,000,000) | |||||
Repurchases of common stock | $ (401.4) | |||||
Net income | 64.7 | |||||
Foreign currency translation adjustment | (16.9) | |||||
Unrealized loss on pension plan | $ (0.7) | |||||
Ending balance (in shares) at Jul. 02, 2022 | 52,500,000 | 52,500,000 | ||||
Ending balance (in shares) at Jul. 02, 2022 | 19,500,000 | |||||
Ending balance at Jul. 02, 2022 | $ 1,202.7 | $ 0.1 | $ (1,169.1) | 759.2 | (23.1) | 1,635.6 |
Beginning balance (in shares) at Apr. 02, 2022 | 55,500,000 | |||||
Beginning balance (in shares) at Apr. 02, 2022 | 16,500,000 | |||||
Beginning balance at Apr. 02, 2022 | 1,582.2 | $ 0.1 | $ (767.7) | 740.7 | (8.4) | 1,617.5 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock options exercised (in shares) | 0 | |||||
Stock options exercised | 1.2 | 1.2 | ||||
Stock-based compensation | $ 17.3 | 17.3 | ||||
Repurchases of common stock (in shares) | (3,000,000) | (3,000,000) | (3,000,000) | |||
Repurchases of common stock | $ (401.4) | $ (401.4) | ||||
Net income | 18.1 | 18.1 | ||||
Foreign currency translation adjustment | (14) | (14) | ||||
Unrealized loss on pension plan | $ (0.7) | (0.7) | ||||
Ending balance (in shares) at Jul. 02, 2022 | 52,500,000 | 52,500,000 | ||||
Ending balance (in shares) at Jul. 02, 2022 | 19,500,000 | |||||
Ending balance at Jul. 02, 2022 | $ 1,202.7 | $ 0.1 | $ (1,169.1) | $ 759.2 | $ (23.1) | $ 1,635.6 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 64.7 | $ 103.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 79.9 | 17.3 |
Stock-based compensation | 28.2 | 20.9 |
Gain on disposal of equipment, intangibles and other assets | 0.3 | 0.2 |
Provision for credit losses | 0.9 | 0.5 |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable | (44.7) | (38.7) |
(Increase) decrease in inventories | (67.8) | 8.6 |
(Increase) decrease in other current assets | (8.2) | 6.5 |
Increase in lease receivable, net | (1.7) | (7.5) |
Increase in deferred costs and other contract assets | (21.6) | (1.7) |
Increase in other non-current assets | (0.3) | (0.2) |
Increase in accounts payable | 40.4 | 2 |
Decrease in accrued compensation | (22.6) | (16.3) |
Decrease in accrued liabilities | (7.2) | (6) |
Decrease in income tax payable | (18.5) | (2) |
Increase (decrease) in deferred revenue and other contract-related liabilities | 4.8 | (1.2) |
Decrease in other non-current liabilities | (1) | (0.8) |
Net cash provided by operating activities | 25.6 | 85.2 |
Cash flows from investing activities: | ||
Purchases of property and equipment, net | (30) | (14.2) |
Increase in intangible assets | (10.5) | (3) |
Business combinations, net of cash acquired | (985.5) | 0 |
Other strategic investing activities | (1.2) | 0 |
Net cash used in investing activities | (1,027.2) | (17.2) |
Cash flows from financing activities: | ||
Borrowings under line of credit | 927 | 0 |
Repayments on line of credit | 0.1 | 0 |
Debt issuance costs | (8.9) | 0 |
Proceeds from issuance of common stock | 4.6 | 9.1 |
Payroll tax withholdings on behalf of employees for vested equity awards | (25.4) | (16.7) |
Repurchases of common stock | (401.4) | (128.9) |
Net cash provided by (used in) financing activities | 496 | (136.5) |
Effect of foreign currency exchange rates on cash | (22.2) | 0.8 |
Net decrease in cash, cash equivalents and restricted cash | (527.8) | (67.7) |
Cash, cash equivalents and restricted cash at beginning of period | 748.4 | 645 |
Cash, cash equivalents and restricted cash at end of period | $ 220.6 | $ 577.3 |
Description of the Company
Description of the Company | 6 Months Ended |
Jul. 02, 2022 | |
Accounting Policies [Abstract] | |
Description of the Company | 1. Description of the Company Masimo Corporation is a global medical technology company dedicated to improving lives, taking noninvasive monitoring to new sites and applications while improving patient outcomes and reducing the cost of care. 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. Historically, the Company has been focused on the core healthcare businesses derived from its SET ® technology. During the early stages of the COVID-19 pandemic, the Company strategically expanded into the fast evolving remote patient monitoring and home wellness markets as well as the therapeutics markets. On April 11, 2022, the Company acquired Viper Holdings Corporation d/b/a Sound United, LLC (Sound United), via the Company’s wholly-owned subsidiary, Sonic Boom Acquisition Corp (Sonic). Fo r more information on Masimo’s acquisition of Sound United, see Note 17, “ Business Combinations ”. In addition, t he Company updated its financial reporting segments to align with the way it manages the business units post-acquisition. See Note 24, “ Segment and Enterprise Reporting”, for additional details. The terms the “Company” and “Masimo” refer to Masimo Corporation and, where applicable, its consolidated subsidiaries. ______________ (1) The use of the trademark Patient SafetyNet ™ is under license from the University HealthSystem Consortium. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2022 | |
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 January 1, 2022 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 January 1, 2022 (fiscal year 2021), filed with the SEC on February 15, 2022. The results for the three and six months ended July 2, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2022 (fiscal year 2022) or for any other interim period or for any future year. 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 weeks while a 53 week fiscal year includes three 13 week fiscal quarters and one 14 week fiscal quarter. The Company’s last 53 week fiscal year was fiscal year 2020. Fiscal year 2022 is a 52 week fiscal year ending December 31, 2022. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. 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. The Company’s use of estimates include the determination of standalone selling prices, variable consideration, total consideration allocated to each performance obligation within a contract, inventory valuation, valuation of the Company’s equity awards, valuation of identifiable assets and liabilities connected with business combinations, derivative instruments, deferred taxes and any associated valuation allowances, deferred revenue, accounting for pensions, uncertain income tax positions, litigation costs and related accruals. Actual results could differ from such estimates. Business Combinations The Company accounts for business combinations using the acquisition method of accounting in accordance with Accounting Standard Codification (ASC) Topic 805, Business Combinations , which requires that once control is obtained, the assets acquired, liabilities assumed and noncontrolling interests in the acquired entity, if applicable, are recorded at their respective fair values at the date of acquisition, with the exception of acquired contract assets and contract liabilities (i.e., deferred revenue) from contracts with customers. These are recognized and measured in accordance with ASC Topic 606, Revenue from Contracts with Customers. The excess of the purchase price over fair values of identifiable assets, liabilities and noncontrolling interests in the acquired entity, if applicable, is recorded as goodwill. 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. The Company did not carry financial assets measured under the fair value hierarchy based on any of the three levels of inputs (Level 1, 2 and 3) other than cash and cash equivalents during either the six months ended July 2, 2022 or July 3, 2021 . The Company carries cash and cash equivalents at cost, which approximates fair value, and are Level 1 under the fair value hierarchy. For certain other financial assets and liabilities, including restricted cash, accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily goodwill, intangible assets and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment. 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. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist of trade receivables recorded at the time of invoicing of product sales, 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 Company records an allowance for credit losses that it does not expect to collect based on relevant information, including historical experience, current conditions, and reasonable and supportable forecasts. Accounts are charged off against the allowance when the Company believes they are uncollectible. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified receivables for U.S. customers and receivables from international customers each as a portfolio, and measures expected credit losses on such receivables using an aging methodology . Inventory 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 valuation adjustments 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. The Company generally determines inventory valuation adjustments based on an evaluation of the expected future use of its inventory on an item by item basis and applies historical obsolescence rates to estimate the loss on inventory expected to have a recovery value below cost. The Company also records other specific inventory valuation adjustments when it becomes aware of unique events or circumstances that result in an expected recovery value below cost. For inventory items that have been written down, the reduced value becomes the new cost basis. 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 Buildings and building improvements 7 to 39 years Computer equipment and software 1 to 12 years Demonstration units 2 to 3 years Furniture and office equipment 2 to 15 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 20 years Operating lease assets Lesser of useful life or term of lease Transportation, vehicles and other 1 to 20 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 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 ROU assets and lease liabilities. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Intangible Assets Intangible assets consist primarily of patents, trademarks, software development costs, customer relationships and acquired technology. Costs related to patents and trademarks, which include legal and application fees, are ca pitalized and amortized over the estimated useful lives using the straight-line method. Patent and trademark amortization commences once final approval of the patent or trademark has been obtained. Patent costs are amortized over the lesser of 10 years or the patent’s remaining legal life, which assumes renewals, and trademark costs are amortized over a range of 10 years to 17 years , and their associated amortization cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. 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 periodically 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. Intangibles purchased as part of an asset acquisition or business combination historically have included patents, trademarks, customer relationships, developed technologies and contractual licenses. In certain circumstances the Company also has acquired non-compete agreements tied to certain employment relationships. The useful life for all of these is largely determined by valuation estimates of remaining economic life. In connection with the Sound United acquisition, the Company acquired certain trademarks/tradenames, which are intangible assets with indefinite useful lives. These brands are expected to maintain brand value for an indefinite period of time. 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 the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, or if the Company elects to bypass the qualitative analysis, then the Company performs 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 such reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to such reporting unit. The annual impairment test is performed during the fourth fiscal quarter. Similar to Goodwill, indefinite-lived intangible assets are not amortized but instead are subject to annual impairment testing, unless circumstances dictate more frequent testing, if impairment indicators exist. Impairment for indefinite-lived assets exists if the carrying value of the indefinite-lived intangible asset exceeds its fair value. Determining whether impairment indicators exist and estimating the fair value of the Company’s indefinite-lived intangible assets if necessary for impairment testing requires significant judgment. Qualitative factors considered in this assessment include industry and market conditions, overall financial performance, and other relevant events and factors. The Company reviews finite lived intangible assets and long-lived assets 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. Employee Defined Benefit Plans The Company maintains noncontributory defined benefit pension plans that cover employees in Japan and the Netherlands. The Company recognizes the funded status, or difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the condensed consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive income (loss). If the projected benefit obligation exceeds the fair value of plan assets, the difference or unfunded status represents the pension liability. The Company records a net periodic pension cost in the condensed consolidated statement of operations. The liabilities and annual income or expense is determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate and the expected long-term rate of asset return. The fair values of plan assets are determined based on prevailing market prices. See Note 20, “Employee Benefits”, for further details. Income Taxes The Company accounts for income taxes using the asset and liability method, under which the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for net operating loss and tax credit carryforwards. Tax positions that meet a more-likely-than-not recognition threshold are recognized in the first reporting period that it becomes more-likely-than-not such tax position will be sustained upon examination. A tax position that meets this more-likely-than-not recognition threshold is recorded at the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Previously recognized income tax positions that fail to meet the recognition threshold in a subsequent period are derecognized in that period. Differences between actual results and the Company’s assumptions, or changes in the Company’s assumptions in future periods, are recorded in the period they become known. The Company records potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. As a multinational corporation, the Company is subject to complex tax laws and regulations in various jurisdictions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from the Company’s estimates, which could result in the need to record additional liabilities or potentially to reverse previously recorded tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is recorded against any deferred tax assets when, in the judgment of management, it is more likely than not that all or part of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including recent financial performance, scheduled reversals of temporary differences, projected future taxable income, availability of taxable income in carryback periods and tax planning strategies. Income taxes are highly susceptible to changes from period to period, requiring management to make assumptions about the Company’s future income over the lives of its deferred tax assets (DTA) and the impact of changes in valuation allowances. Any difference in the assumptions, judgments and estimates mentioned above could result in changes to the Company’s results of operations. Revenue Recognition, Deferred Revenue and Other Contract Liabilities 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. Healthcare segment While the majority of the Company’s Healthcare segment 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, as well as 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. Revenue from fixed lease payments related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue from fixed lease payments related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease and variable lease payments are recognized as they occur. The Company derives the majority of its Healthcare segment 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 original equipment manufacturer (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 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 customer’s commitment to purchase sensors over the term of the agreement, which generally ranges from three years 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 likelihood to exercise any purchase options. Beginning January 2, 2022, for contracts that contain variable lease payments, the Company also classifies as operating leases any components that would result in a day one selling loss should they be otherwise classified as a sales-type lease. 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 control over the equipment is transferred to the customer. 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 lease arrangements after the end of the agreement. Revenue from the sale of products to end-user hospitals, emergency medical response organizations, other direct customers, distributors and OEM customers, is recognized by the Company when control of such products transfer to the customer based upon the terms of the contract or underlying purchase order. Revenue related to OEM rainbow ® parameter software licenses is recognized by the Company upon the OEM’s shipment of its product to its customer, 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 records estimates related to 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. Non-healthcare segment Non-healthcare segment revenue is related to hardware and embedded software that is integrated into final products that are manufactured and sold by the Company. Products and related software are accounted for as a single performance obligation and all intended functionality is available to the customer upon purchase. Non-healthcare segment revenue is recognized upon transfer of control of promised products or service to customers, which is either upon shipment or upon delivery to the customers, depending on delivery terms. The Company offers sales incentives and has customer programs consisting primarily of discounts and market development fund programs, and records them as a contra revenue. Estimates for sales incentives are developed using most likely amount and are included in the transaction price to the extent that a significant reversal of revenue would not result once the uncertainty is resolved. In developing its estimates, the Company also considers the susceptibility of the incentive to outside influences, the length of time until the uncertainty is resolved and the Company’s experience with similar contracts. Reductions in revenue related to discounts are allocated to products on a relative basis based on their respective standard selling price if there are undelivered products in a contract. Judgement is required to determine the timing and amount of recognition of marketing funds which the Company estimates based on past practice of providing similar funds. Payment terms and conditions vary among the Company’s distribution channels although terms generally include a requirement of payment within 30 to 60 days of product shipment. Sales directly to customers from the Company’s website are paid at the time of product shipment. Prior to determining payment terms for each customers, an evaluation of such customer’s credit risk is performed. Contractual allowances are an offset to accounts receivable. 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 condensed consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of 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 customers 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 allowances to be made directly to the end-user hospital customer at the inception of the arrangement. These allowances 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. In connection with the Sound United acquisition, the Company recognized non-healthcare royalty revenue associated with certain prepaid license arrangements. The Company recognizes non-healthcare revenue from the prepaid license arrangements based upon sales-based royalties when a subsequent sale occurs. Warranty The Company generally provides a warranty against defects in material and workmanship for a period ranging from six months 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 goods sold. Customers may also purchase extended warranty coverage or service level upgrades separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage and service level upgrades is generally recognized over the life of the contract, which reasonably approximates the period over which such services will be provided. The related extended warranty and service level upgrade costs are expensed as incurred. Changes in the warranty accrual were as follows: Six Months Ended (in millions) July 2, July 3, Warranty accru |
Related Party Disclosures
Related Party Disclosures | 6 Months Ended |
Jul. 02, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 3. Related Party Transactions The Company’s Chairman and Chief Executive Officer (CEO) is also the Chairman and CEO of Cercacor Laboratories, Inc. (Cercacor). The Company is a party to the following agreements with Cercacor: • Cross-Licensing Agreement - The Company and Cercacor are parties to a cross-licensing agreement (Cross-Licensing Agreement), which governs each party’s rights to certain intellectual property held by the two companies. The Company is subject to certain annual minimum aggregate royalty obligations for use of the rainbow ® licensed technology. The current annual minimum royalty obligation is $5.0 million. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were $5.1 million and $3.2 million for the three months ended July 2, 2022 and July 3, 2021, respectively. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were $8.5 million and $6.7 million for the six months ended July 2, 2022 and July 3, 2021, 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 $0.1 million and less than $0.1 million for the three months ended July 2, 2022 and July 3, 2021, respectively. Amounts charged by the Company pursuant to the G&A Services Agreement were $0.2 million and $0.1 million for the six months ended July 2, 2022 and July 3, 2021, respectively. • Lease Agreement - Effective December 2019, the Company entered into a lease agreement with Cercacor for approximately 34,000 square feet of office, research and development space at one of the Company’s owned facilities in Irvine (Cercacor Lease). The term of the Cercacor Lease expires on December 31, 2024. The Company recognized approximately $0.3 million of lease income for each of the three months ended July 2, 2022 and July 3, 2021. The Company recognized approximately $0.6 million of lease income for each of the six months ended July 2, 2022 and July 3, 2021. Net amounts due to Cercacor at July 2, 2022 and January 1, 2022 were approximately $5.1 million and $3.5 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. In addition, the Company’s Executive Vice President (EVP), Chief Financial Officer (CFO) serves as the Treasurer of the Masimo Foundation and the Company’s EVP, General Counsel and Corporate Secretary serves as the Secretary for the Masimo Foundation. During the three months ended July 2, 2022 and July 3, 2021, the Company made no cash contributions to the Masimo Foundation. During the six months ended July 2, 2022, the Company made cash contributions of approximately $1.0 million to the Masimo Foundation. During the six months ended July 3, 2021, the Company made no cash contributions to the Masimo Foundation. During the three and six months ended July 2, 2022 and July 3, 2021 , 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 a co-founder and a member of the board of directors of Like Minded Media Ventures (LMMV), a team of storytellers that create content focused in the areas of true stories, social causes and science . LMMV creates stories with a multi-platform strategy, bridging the gap between film, television, digital and social media. The Company entered into a marketing service agreement with LMMV for audiovisual production services promoting brand awareness, including television commercials and digital advertising, during the second quarter of 2020. During the three months ended July 2, 2022 and July 3, 2021, the Company incurred no marketing expenses to LMMV under the marketing service agreement. During the six months ended July 2, 2022 the Company incurred $0.6 million in marketing expenses to LMMV under the marketing service agreement. During the six months ended July 3, 2021 the Company incurred no marketing expenses to LMMV under the marketing service agreement. At July 2, 2022 and January 1, 2022, there was no amoun t due to LMMV for services rendered. The Company entered into a software license and professional services agreement with Like Minded Labs (LML), a subsidiary of LMMV, during the second quarter of 2021. Pursuant to the software license agreement, LML granted the Company a perpetual, non-exclusive and fully paid-up right and license to integrate LML’s software into the Company’s products in exchange for a $3.0 million one-time license fee. Pursuant to the professional services agreement, LML will provide professional services to the Company, including the development of custom software intended to support the integration of the licensed software into the Company’s products, as well as future support services upon the Company’s acceptance of deliverables. In July 2021, the Company entered into a patent purchase and option agreement with Vantrix Corporation (Vantrix), an acquiree of LML, for certain patents for $0.5 million, and the right to purchase two pools of additional patents from Vantrix for an exercise fee of up to $1.1 million. The agreements with LML and Vantrix include sublicensing provisions whereby the software and patents are licensed back to LML or Vantrix, respectively, for further advancement of the technologies. 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 July 2, 2022, the Company’s CEO did not incur any charges pursuant to this agreement. For each of the three and six months ended July 3, 2021, the Company charged the Company’s CEO less than $0.1 million, pursuant to this agreement. The Company’s President, Consumer is the Chairman of the Sou nd Start Foundation, a non-profit organization that was founded in 1996 to provide a way of emboldening the mindset to Bring Joy to the World Through Sound. During the three months ended July 2, 2022 and July 3, 2021, the Company made no cash contributions to the Sound Start Foundation. |
Inventories
Inventories | 6 Months Ended |
Jul. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories consist of the following: (in millions) July 2, January 1, Raw materials $ 186.7 $ 128.3 Work-in-process 29.3 17.1 Finished goods 233.2 56.0 Total inventories $ 449.2 $ 201.4 A significant portion of the increase in the inventory balance at July 2, 2022 was attributable to the Sound United acquisition. See Note 17, Business Combinations for further details. |
Other Current Assets
Other Current Assets | 6 Months Ended |
Jul. 02, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | 5. Other Current Assets Other current assets consist of the following: (in millions) July 2, January 1, Prepaid expenses $ 62.2 $ 30.9 Lease receivable, current 28.9 28.7 Indirect taxes receivable 22.2 12.8 Prepaid income taxes 8.4 7.0 Prepaid rebates and royalties, current 4.0 2.8 Restricted cash (1) 2.6 3.0 Customer notes receivable 2.2 2.4 Contract assets, current 1.5 2.1 Other current assets 6.3 1.3 Total other current assets $ 138.3 $ 91.0 ______________ (1) Restricted cash includes funds received from the Bill and Melinda Gates Foundation. As the Company incurs costs associated with research and development related to this project, on a quarterly basis, the Company reclasses amounts from the grant to offset costs incurred. |
Lease Receivable
Lease Receivable | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Lease Receivable | 6. Lease Receivable Effective January 2, 2022, the Company adopted ASU 2021-05 prospectively for leases that commenced or were modified on or after the date of adoption, resulting in the Company recording these operating lease assets within property, plant, and equipment, net of accumulated depreciation. The equipment costs associated with such new operating leases were initially deferred and will subsequently be amortized over the lease term on a straight-line basis. The Company 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. Lease revenue related to both operating-type and sales-type leases for the three months ended July 2, 2022 and July 3, 2021 was approximately $11.0 million and $18.0 million, respectively, and is included within product revenue in the accompanying condensed consolidated statements of operations. Lease revenue related to both operating-type and sales-type leases for the six months ended July 2, 2022 and July 3, 2021 was approximately $24.0 million and $28.0 million, respectively, and is included within revenue in the accompanying condensed consolidated statements of operations. Costs related to embedded leases within the Company’s deferred equipment agreements are included in cost of goods sold in the accompanying condensed consolidated statements of operations. Lease receivable from sales-type leases consists of the following: (in millions) July 2, January 1, Lease receivable $ 104.6 $ 102.6 Allowance for credit loss (0.3) (0.3) Lease receivable, net 104.3 102.3 Less: current portion of lease receivable (28.9) (28.7) Lease receivable, noncurrent $ 75.4 $ 73.6 As of July 2, 2022, estimated future maturities of customer sales-type lease receivables and operating lease payments for each of the following fiscal years are as follows: Future Lease Receivables/Payments Fiscal year Sales-Type Leases Operating Leases 2022 (balance of year) $ 15.0 $ 1.1 2023 26.9 1.6 2024 23.2 1.6 2025 17.8 1.5 2026 11.1 1.3 Thereafter 10.3 3.0 Total $ 104.3 $ 10.1 Less: imputed interest (1) — Present value of total lease payments $ 104.3 ______________ (1) The calculation of the rates implicit in the leases resulted in negative discount rates. Therefore, the Company as a lessor used a 0% discount rate to measure the net investment in the lease. |
Deferred Costs and Other Contra
Deferred Costs and Other Contract Assets | 6 Months Ended |
Jul. 02, 2022 | |
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 millions) July 2, January 1, Deferred commissions $ 14.7 $ 11.9 Prepaid contract allowances 12.1 8.6 Unbilled contract receivables 7.8 5.0 Deferred equipment agreements, net 0.8 2.6 Deferred costs and other contract assets $ 35.4 $ 28.1 |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jul. 02, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | 8. Property and Equipment, net Property and equipment, net, consists of the following: (in millions) July 2, January 1, Building and building improvements $ 148.7 $ 142.1 Machinery, equipment and tooling 139.5 103.5 Land 64.5 57.0 Computer equipment and software 40.2 32.5 Transportation, vehicles and other 33.1 33.1 Leasehold improvements 31.1 21.9 Furniture and office equipment 16.5 14.2 Operating lease assets (1) 14.1 — Demonstration units 7.8 0.9 Construction-in-progress (CIP) 48.6 25.1 Total property and equipment 544.1 430.3 Accumulated depreciation (173.4) (157.5) Property and equipment, net $ 370.7 $ 272.8 ______________ (1) Effective January 2, 2022, the Company adopted ASU 2021-05, resulting in the Company recording these operating lease assets within property, plant, and equipment. A significant portion of the increase in property and equipment at July 2, 2022, as compared to January 1, 2022. was attributable to the Sound United acquisition. See Note 17, “Business Combinations” for further details. For the three months ended July 2, 2022 and July 3, 2021, depreciation expense of property and equipment was $12.0 million and $6.4 million, respectively. For the six months ended July 2, 2022 and July 3, 2021, depreciation expense of property and equipment was $18.5 million and $12.3 million, respectively. For the three months ended July 2, 2022 and July 3, 2021, depreciation expense of operating lease assets was $0.9 million and $0.0 million, respectively. For the six months ended July 2, 2022 and July 3, 2021, depreciation expense of operating lease assets was $1.0 million and $0.0 million, respectively. The balance in CIP at July 2, 2022 and January 1, 2022 related primarily to the capitalized implementation costs related to a new enterprise resource planning software system and costs related to equipment and other facility improvements at the Company’s corporate headquarters, as well as at a new research and development facility, the underlying assets for which have not been completed or placed into service. On February 14, 2022, the Company’s wholly owned subsidiary, Masimo Canada ULC, entered into a Purchase and Sale Agreement (Purchase Agreement) with Ke ltic (Prior) Development Limited Partnership (Vendor) for the purchase of a property in Vancouver, British Columbia, Canada for a purchase price of CAD 123.0 million, plus GST (Purchase Price), subject to certain adjustments. The Company has paid CAD 21.0 million as a deposit towards the purchase . The balance of the Purchase Price will be due and payable upon the closing of the transaction, which is currently expected to occur during the second half of 2024. |
Intangible Assets, net
Intangible Assets, net | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net | 9. Intangible Assets, net Intangible assets, net, consist of the following: July 2, January 1, (in millions) Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Customer relationships $ 228.6 $ (13.0) $ 215.6 $ 24.6 $ (9.3) $ 15.3 Acquired technologies 183.9 (13.0) 170.9 28.4 (7.7) 20.7 Patents 61.9 (14.0) 47.9 31.5 (13.2) 18.3 Trademarks 18.7 (5.6) 13.1 12.2 (4.1) 8.1 Licenses 8.7 (2.5) 6.2 8.1 (2.0) 6.1 Licenses-related party 7.5 (6.2) 1.3 7.5 (6.0) 1.5 Non-compete agreements (1) 6.0 — 6.0 — — — Capitalized software development costs 5.3 (2.7) 2.6 4.2 (2.6) 1.6 Other 1.9 (1.0) 0.9 2.0 (0.9) 1.1 Total intangible assets subject to amortization, net $ 522.5 $ (58.0) $ 464.5 $ 118.5 $ (45.8) $ 72.7 Intangible assets not subject to amortization: Trademarks 262.0 — Intangible assets, net $ 726.5 $ 72.7 _______________ (1) In connection with the Sound United acquisition, the Company also acquired non-compete agreements with a gross carrying amount equal to $6.0 million. A significant portion of the increase in intangible assets was attributable to the Sound United acquisition. Please refer t o Note 17, “Business Combinations”, for further details. Finite lived intangible assets have a weighted-average amortization period ranging from twelve years to fourteen years. Total amortization expense for the three months ended July 2, 2022 and July 3, 2021 was $58.9 million and $2.4 million, respectively. Total amortization expense for the six months ended July 2, 2022 and July 3, 2021 was $61.4 million and $5.0 million, respectively. Total renewal costs for patents and trademarks for the three months ended July 2, 2022 and July 3, 2021 were $0.3 million and $0.2 million, respectively. Total renewal costs for patents and trademarks for the six months ended July 2, 2022 and July 3, 2021 were $0.7 million and $0.4 million, respectively. As of July 2, 2022, the weighted-average number of years until the next renewal was two years for patents and six years for trademarks. Estimated amortization expense for each of the next fiscal years is as follows: Fiscal year Amount 2022 (balance of year) $ 23.8 2023 43.8 2024 40.4 2025 45.5 2026 40.7 Thereafter 270.3 Total $ 464.5 |
Goodwill
Goodwill | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill [Abstract] | |
Goodwill | 10. Goodwill Changes in goodwill were as follows: Six Months Ended (in millions) Healthcare Non-healthcare Total Goodwill, beginning of period $ 100.3 $ — $ 100.3 Increase from business combinations — 337.5 337.5 Foreign currency translation adjustment (3.3) — (3.3) Goodwill, end of period $ 97.0 $ 337.5 $ 434.5 A significant portion of the increase in goodwill at July 2, 2022 was attributable to the Sound United acquisition. See Note 17, “Business Combinations”, for further details. |
Lessee ROU Assets and Lease Lia
Lessee ROU Assets and Lease Liabilities | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Lessee ROU Assets and Lease Liabilities | 11. Lessee ROU Assets and Lease Liabilities 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 January 2032. In addition, the Company leases equipment in the U.S. and Europe pursuant to leases that are classified as operating leases and expire at various dates through August 2026. The majority of these leases are non-cancellable and generally do not contain any material restrictive covenants, material residual value guarantees or other material guarantees. 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 five years. The Company generally estimates the applicabl e discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. As of July 2, 2022, the weighted-average discount rate used by the Company for all operating leases was approximately 3.8%. The balance sheet classifications for amounts related to the Company’s operating leases for which it is the lessee are as follows: (in millions) Balance sheet classification July 2, January 1, Lessee ROU assets Other non-current assets $ 66.3 $ 30.5 Lessee current lease liabilities Other current liabilities 16.4 6.4 Lessee non-current lease liabilities Other non-current liabilities 49.9 26.3 Total operating lease liabilities $ 66.3 $ 32.7 As of July 2, 2022 and January 1, 2022, accumulated amortization for lessee ROU assets was $29.5 million and $15.2 million, respectively. The weighted-average remaining lease term for the Company’s operating leases was 6.5 years as of July 2, 2022. As of July 2, 2022, estimated future operating lease payments for each of the following fiscal years were as follows: Fiscal year Amount 2022 (balance of year) $ 9.4 2023 16.8 2024 13.3 2025 9.2 2026 5.8 Thereafter (1) 21.1 Total 75.6 Imputed interest (9.3) Present value $ 66.3 ______________ (1) Includes optional renewal period for certain leases. During the three months ended July 2, 2022 and July 3, 2021, operating lease costs were approximately $5.4 million and $2.2 million, respectively. During the six months ended July 2, 2022 and July 3, 2021, operating lease costs were approximately $7.8 million and $4.1 million, respectively. |
Other Non-Current Assets
Other Non-Current Assets | 6 Months Ended |
Jul. 02, 2022 | |
Other Assets, Longterm [Abstract] | |
Other Non-Current Assets | 12. Other Non-Current Assets Other non-current assets consist of the following: (in millions) July 2, January 1, Lessee ROU assets, net $ 66.3 $ 30.5 Prepaid deposits and other 24.7 3.9 Strategic investments 13.9 13.8 Other non-current assets 0.4 0.4 Total non-current assets $ 105.3 $ 48.6 |
Deferred Revenue and Other Cont
Deferred Revenue and Other Contract Liabilities, Current | 6 Months Ended |
Jul. 02, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue and Other Contract Liabilities, Current | 13. Deferred Revenue and Other Contract Liabilities, Current Deferred revenue and other contract liabilities, current, consist of the following: (in millions) July 2, January 1, Deferred revenue $ 60.2 $ 35.1 Accrued rebates and allowances 31.9 13.6 Accrued customer reimbursements 5.9 7.4 Total deferred revenue and other contract liabilities 98.0 56.1 Less: Non-current portion of deferred revenue (22.6) (5.2) Deferred revenue and other contract liabilities - current $ 75.4 $ 50.9 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 revenue. Generally, both healthcare and non-healthcare segments record deferred revenue when revenue is to be recognized subsequent to invoicing. Healthcare Deferred Revenue Healthcare deferred revenue primarily relates to undelivered equipment, sensors and services under deferred equipment agreements, extended warranty agreements, and maintenance agreements. 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. Unrecognized Contract Revenue excludes revenue allocable to monitoring-related equipment that is effectively leased to customers under deferred equipment agreements and other contractual obligations for which neither party has performed. 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. As of July 2, 2022, the Company had approximately $1,236.3 million of Unrecognized Contract Revenue related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately $347.6 million of this amount as revenue within the next twelve months and the remaining balance thereafter. Non-Healthcare Deferred Revenue In October 2020, Bowers and Wilkins (B&W), a subsidiary of Sound United, entered into an amendment to a licensing agreement, whereby B&W received a $20.0 million royalty prepayment in relation to sound system units manufactured by B&W for various high-end car manufacturers with a total commitment of $35.0 million to be received by September 30, 2028. As of July 2, 2022, the deferred revenue was $17.9 million. Changes in deferred revenue were as follows: (in millions) Six Months Ended Deferred revenue, beginning of the period $ 35.1 Increase from business combinations 18.6 Revenue deferred during the period 22.4 Recognition of revenue deferred in prior periods (15.9) Deferred revenue, end of the period $ 60.2 |
Other Current Liabilities
Other Current Liabilities | 6 Months Ended |
Jul. 02, 2022 | |
Accrued Liabilities [Abstract] | |
Other Current Liabilities | 14. Other Current Liabilities Other current liabilities consist of the following: (in millions) July 2, January 1, Accrued expenses $ 51.6 $ 12.1 Accrued indirect taxes payable 27.6 16.3 Lessee lease liabilities, current 16.4 6.4 Current portion of long-term debt 13.9 — Accrued warranty 9.9 2.5 Income tax payable 9.3 12.0 Accrued property taxes 8.6 2.0 Accrued legal fees 6.5 7.1 Related party payables 5.2 3.6 Accrued donations 1.6 3.7 Other current liabilities 6.0 4.7 Total other current liabilities $ 156.6 $ 70.4 |
Debt
Debt | 6 Months Ended |
Jul. 02, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 15. Debt (in millions) July 2, January 1, Term loan - current portion $ 7.5 $ — Revolver - current portion — — Japanese loans - current portion 6.4 — Short-term debt $ 13.9 $ — Term loan - long-term $ 281.7 $ — Revolver - long-term 629.0 — Japanese loans - long-term 11.7 — Long-term debt 922.4 — Total debt $ 936.3 $ — Prior Credit Facility Until April 11, 2022, the Company maintained a credit agreement (Prior 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 Prior Credit Facility provided for up to $150.0 million of unsecured borrowings, 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 Lenders and additional lenders, as required. The Prior Credit Facility also provided 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. On April 11, 2022, the Company paid off all obligations owing under the Prior Credit Facility, and terminated it. As a result of the repayment, the Company expensed $0.2 million of previously capitalized debt issuance costs. Credit Facility On April 11, 2022, concurrently with the closing of the Sound United acquisition, as disclosed in Note 17, “Business Combinations”, the Company entered into a new credit agreement (Credit Facility) with financial institutions party thereto as initial lenders (collectively, the Initial Lenders), Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., Bank of the West and BofA Securities, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., Bank of the West and BofA Securities, Inc., as co-syndication agents. The Credit Facility provides for an unsecured term loan of $300.0 million (Term Loan) and $500.0 million of ongoing unsecured revolving commitments (Revolver), with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity by an additional $400.0 million (plus additional unlimited amounts if certain incurrence tests are met) in the future with the Initial Lenders and additional lenders, as required. Debt issuance costs of $8.9 million were recorded as a reduction to the carrying amount of the Credit Facility, and are being amortized to interest expense using the effective interest method. The Credit Facility also provides for a sublimit of up to $50.0 million for the issuance of letters of credit. Borrowings under the 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 0.000% to 0.750% based upon a Company leverage ratio, or (b) a Term SOFR Loan, which bears interest at the Adjusted Term SOFR Rate (as defined below), plus a spread of 1.000% to 1.750% based upon a Company net leverage ratio. Pursuant to the terms of the 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 Term SOFR plus 1.0%. The Adjusted Term SOFR Rate is equal to the Term SOFR Rate (as defined in the Credit Facility) for the applicable interest period plus a spread adjustment of 0.10%, 0.15% and 0.25% for the interest periods ending one, three and six months, respectively. The Company is also obligated under the 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 non-utilized portion of the 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 Credit Facility also includes customary events of default which, upon the occurrence of any such event of default, provide the Initial Lenders (and any additional 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. All unpaid principal under the Credit Facility will become due and payable on April 12, 2027. On May 16, 2022, the Company entered into the First Amendment to the Credit Agreement (First Amendment) with the Initial Lenders and Citibank, N.A., as administrative agent, which amended the Credit Facility. The First Amendment provides for an additional $205 million of unsecured revolving commitments, increasing the aggregate amount of the Revolver from $500 million to $705 million. Borrowing rates, financial covenants, affirmative and negative covenants and other restricted terms remain unchanged from the Credit Facility. All unpaid principal under the First Amendment will become due and payable on April 12, 2027. The Company was in compliance with the financial covenants as of July 2, 2022. For each of the three and six months ended July 2, 2022 and July 3, 2021, the Company incurred total interest expense of $4.5 million and $0 under the Credit Facility, respectively. On July 13, 2022, the Company entered two interest rate swaps (swaps) as a means to manage the interest rate risks associated with the above floating interest debt facilities. These swaps were designated as cash flow hedges. The notional amounts of these hedges were $500.0 million and $250.0 million. The Company will record the interest swaps in the condensed consolidated balance sheet at fair value. Furthermore, in connection with the Sound United acquisition, the Company assumed three outstanding loans as follows: Japanese Revolving Loan In March 2020, Sound United entered into a secured revolving loan (Japanese Revolving Loan) with Mizuho bank, which allows Sound United to borrow up to ¥800 million (approximately $5.9 million). The Japanese Revolving Loan is an evergreen agreement that terminates upon request by either the financial institution or the borrower and is collateralized with land and buildings in Shirakawa-Shi owned by the borrower. Interest accrues at a rate equal to the Mizuho Tokyo Interbank Offered Rate (TIBOR) plus a fixed spread of 0.50% per annum. In connection with the execution of the Japanese Revolving Loan, the Company incurred debt issuance costs of ¥7.2 million (approximately $0.1 million). As of July 2, 2022, the Company had ¥800 million (approximately $5.9 million) of outstanding borrowing under the Japanese Revolving Loan, which is presented under short-term loans on the accompanying condensed consolidated balance sheets. The Japanese Revolving Loan agreement contains customary affirmative and negative covenants, such as financial reporting requirements and customary covenants that restrict the borrower’s ability to, among other things, provide collateral for obligations borne by borrower, and determine the eligibility to declare, and amount of potential dividends to be paid during a given fiscal year. The Company was in compliance with the financial covenants as of July 2, 2022. Japanese Government Loans In May and June 2020, Sound United received ¥1.48 billion (approximately $10.9 million in non-collateralized Japanese Government Loan facilities (Japanese Government Loans) as part of its local Japanese stimulus program. Interest accrues at a weighted average rate of 1.33% and is repayable in installments with various maturities through June 2035. The non-current portion of the Japanese Government Loans is presented under long-term debt and the current portion is presented under short-term loans on the accompanying condensed consolidated balance sheets. The Company incurred no debt issuance costs in connection with the Japanese Government Loans. Japanese Equipment Loans In April and May 2021, Sound United entered into collateralized Japanese Equipment Loans of ¥150 million (approximately $1.1 million), payable in installments through March 2031 with interest of 0.58%, and ¥80 million (approximately $0.6 million) payable in installments through April 2028 with interest of 1.2%. The non-current portion of the Japanese Equipment Loans is presented under long-term debt and the current portion is presented under short-term loans on the accompanying condensed consolidated balance sheets. The Company incurred no debt issuance costs in connection with these Japanese Equipment Loans. As of July 2, 2022, the aggregate maturities of principal on all debt for each of the next five years and thereafter is as follows: Fiscal year Amount 2022 (balance of the year) $ 3.1 2023 6.6 2024 14.1 2025 13.4 2026 12.7 Thereafter 886.4 Total $ 936.3 |
Other Non-Current Liabilities
Other Non-Current Liabilities | 6 Months Ended |
Jul. 02, 2022 | |
Other Liabilities, Long Term [Abstract] | |
Other Non-Current Liabilities | 16. Other Non-Current Liabilities Other non-current liabilities consist of the following: (in millions) July 2, January 1, Deferred tax liabilities $ 162.3 $ 5.1 Lessee non-current lease liabilities 49.9 26.3 Deferred revenue, non-current 22.6 5.2 Unrecognized tax benefits 16.6 14.9 Income tax payable, non-current 12.7 17.0 Retirement allowance 9.6 — Indirect tax payable, non-current 8.0 — Other 2.3 0.6 Total other non-current liabilities $ 284.0 $ 69.1 Unrecognized tax benefits relate 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 22, “Income Taxes”, to these condensed consolidated financial statements for further details. |
Business Combinations
Business Combinations | 6 Months Ended |
Jul. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | 17. Business Combinations Sound United Acquisition On April 11, 2022, the Company completed the previously announced acquisition of Sound United, pursuant to a Merger Agreement dated as of February 15, 2022 (Merger Agreement), by and among the Company, Sonic Boom Acquisition Corp., a wholly-owned subsidiary of the Company (Merger Sub), Viper Holdings Corporation d/b/a Sound United, LLC (Sound United), and, solely in its capacity as the Seller Representative, Viper Holdings, LLC, Merger Sub merged with and into Sound United, with Sound United continuing as a wholly-owned subsidiary of the Company (Merger). Sound United is a leading innovator of premium, high-performance audio products for consumers around the world, which operates iconic consumer brands: Bowers & Wilkins ® , Denon ® , Marantz ® , HEOS ® , Classé ® , Polk Audio ® , Boston Acoustics ® and Definitive Technology ® . The brands are linked by a commitment to the highest production standards and a focus on unparalleled audio quality and audio performance. Sound United delivers significant competitive benefits through its platform advantages including global distribution across online, retail and custom installation channels; a cloud-connected home ecosystem; and a state-of-the-art research and development function focused on creating the highest-quality consumer products with world-class industrial design. The Company acquired 100% of the equity interests of Sound United for $1.086 billion in cash, subject to adjustments based on Sound United’s net working capital, transaction expenses, cash and debt as of the closing of the Merger (Closing), payable by the Company in cash. The transaction was primarily funded with the proceeds from the Credit Facility. See Note 15, “Debt”, for additional information about the Credit Facility. There was no contingent consideration resulting from the transaction. The results of operations of Sound United subsequent to the acquisition date and the acquired assets and assumed liabilities, including the preliminary allocation of goodwill and intangible assets, are included in the non-healthcare segment, including revenue of $208.3 million and a net loss of $26.9 million for the period of April 11, 2022 to July 2, 2022. Acquisition costs The Company recognized transaction costs related to the Sound United acquisition of $15.1 million for the three months ended July 2, 2022. These costs include investment banker fees, legal, due diligence, and other external costs that the Company recorded within selling, general and administrative expense. Purchase price allocations The purchase price for the Sound United acquisition is preliminary, pending final customary purchase price adjustments. The valuations of the assets acquired and liabilities assumed have not yet been finalized as of July 2, 2022. The purchase price allocation is preliminary and subject to change, including measurement period adjustments, the valuation of intangible assets, leases, deferred taxes, inventory, property, plant and equipment and goodwill. The purchase price allocation will be finalized as the information necessary to complete the required analysis is obtained, which the Company will complete within one year from the acquisition date. Goodwill was calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired in a business combination and represents the future economic benefits expected to arise from intangible assets acquired that do not qualify for separate recognition, including the assembled workforce. Goodwill is not expected to be deductible for tax purposes. The fair values assigned to assets acquired and liabilities assumed as of July 2, 2022 are based on management’s best estimates and assumptions as of the reporting date and are considered preliminary pending finalization of the valuation analysis. The table below summarizes the preliminary allocation of fair value of assets acquired and liabilities assumed as of April 11, 2022: (in millions) Sound United Cash consideration (1) $ 1,086.2 Purchase price $ 1,086.2 Assets acquired: Cash and cash equivalents $ 81.4 Accounts receivables 108.4 Inventories 230.7 Prepaid expenses and other current assets 61.4 Property, plant and equipment 101.5 Intangible asset 657.0 Goodwill 337.5 Long-term other assets 9.5 Total assets acquired $ 1,587.4 Liabilities assumed: Accounts payable $ (127.9) Accrued liabilities and other current liabilities (153.1) Deferred tax liabilities (159.5) Other long-term liabilities (60.7) Total liabilities assumed $ (501.2) ______________ (1) The purchase price for the Sound United acquisition is preliminary, pending final customary purchase price adjustments. Identifiable Intangible Assets The following table sets forth the components of identifiable intangible assets acquired and the weighted average amortization period as of the acquisition date: Weighted average July 2, Trademarks/tradenames 10 $ 268.0 Customer relationships 18 204.0 Developed technology 8 156.0 Contractual license agreements 15 29.0 Total 14 years $ 657.0 In determining the fair value of the identifiable intangible assets, the Company utilized various forms of the income approach, depending on the asset being valued. The estimation of fair value requires significant judgment related to cash flow forecasts, discount rates reflecting the risk inherent in each cash flow stream, competitive trends, market comparable and other factors. Other inputs included historical data, current and anticipated market conditions, and growth rates. Contractual license agreements have a weighted average amortization period of 5 years until the next renewal term. The intangible assets were valued using the following valuation approaches: C ustomer relationships The fair value of customer relationships was determined using the multi-period excess earnings method. The multi-period excess earnings method involves forecasting the net earnings expected to be generated by the asset, reducing them by appropriate returns on contributory assets, and then discounting the resulting net cash flows to a present value using an appropriate discount rate. T rademarks/tradenames The fair values of the trademark/tradenames were determined using the relief-from-royalty method under the income approach. This involves forecasting avoided royalties, reducing them by taxes, and discounting the resulting net cash flows to a present value using an appropriate discount rate. Judgment was applied for a number of assumptions in valuing the identified intangible assets including revenue and cash flow forecasts, survival rates, technology life, royalty rate, obsolescence and discount rate. D eveloped technology The fair values of the developed technology was determined using the relief-from-royalty method under the income approach. This involves forecasting avoided royalties, reducing them by taxes, and discounting the resulting net cash flows to a present value using an appropriate discount rate. Judgment was applied for a number of assumptions in valuing the identified intangible assets including revenue and cash flow forecasts, survival rates, technology life, royalty rate, obsolescence and discount rate. C ontractual licensing agreements The fair value of the contractual license agreements was determined using a variation of the multi-period excess earnings method. This method involves forecasting the net earnings expected to be generated by the asset and then discounting the resulting net cash flows to a present value using an appropriate discount rate. Unaudited pro forma financial information The supplemental pro forma financial information has been prepared using the acquisition method of accounting and is based on the historical financial information of Masimo and Sound United, assuming the transaction occurred on January 1, 2021. The supplemental pro forma financial information does not necessarily represent what the combined companies’ revenue or results of operations would have been had the acquisition of Sound United been completed on January 1, 2021, nor is it intended to be a projection of future operating results of the combined company. It also does not reflect any operating efficiencies or potential cost savings that might be achieved from synergies of combining Masimo and Sound United. The unaudited supplemental pro forma financial information has been calculated after applying Masimo’s accounting policies and adjusting the results of the combined company to reflect incremental amortization and depreciation expense resulting from the fair value adjustments for acquired intangible assets, inventory, property, plant and equipment as well as the net decrease to interest expense resulting from the elimination of the historical interest expense on Sound United’s debt that was paid off at closing partially offset by incremental interest expense resulting from the external debt borrowed by Masimo to fund the acquisition, and the corresponding income tax impact of these adjustments. Also, during the six months ended July 2, 2022, Masimo and Sound United incurred $18.1 million and $41.1 million of acquisition-related costs, respectively. Additionally, there were $49.3 million of Profit Interest Units paid out in conjunction with the transaction. These expenses are reflected in pro forma net income for the three months ended July 2, 2022, in the table below and the acquisition related expenses incurred by Masimo are included in selling, general and administrative, in the Company’s condensed consolidated statements of comprehensive income for the three and six months ended July 1, 2021. There are no other material non-recurring pro forma adjustments directly attributable to the acquisition included in the reported pro forma revenue and pro forma net income. Three Months Ended Six Months Ended (in millions) July 2, July 1, July 2, July 1, Pro forma net revenue $ 572.2 $ 511.5 $ 1,127.1 $ 1,021.6 Pro forma net income (loss) $ 29.0 $ 36.0 $ 88.8 $ (31.5) |
Stock Repurchase Program
Stock Repurchase Program | 6 Months Ended |
Jul. 02, 2022 | |
Equity [Abstract] | |
Stock Repurchase Program | 18. Stock Repurchase Program In July 2018, the Company’s Board of Directors (Board) approved a stock repurchase program, authorizing the Company to purchase up to 5.0 million shares of its common stock over a period of up to three years (2018 Repurchase Program). A total of 1.3 million shares were purchased by the Company pursuant to the 2018 Repurchase Program prior to its expiration in September 2021. In October 2021, the Board approved a stock repurchase program, authorizing the Company to purchase up to 3.0 million shares of its common stock over a period of up to three years (2021 Repurchase Program). The 2021 Repurchase Program became effective in October 2021 upon the expiration of the 2018 Repurchase Program. The 2021 Repurchase Program was completed in May 2022. In June 2022, the Board approved a new stock repurchase program, authorizing the Company to purchase up to 5.0 million shares of its common stock on or before December 31, 2027 (2022 Repurchase Program). The 2022 Repurchase Program became effective in July 2022. The Company expects to fund the 2022 Repurchase Program through its available cash, cash expected to be generated from future operations, the Credit Facility and other potential sources of capital. The 2022 Repurchase Program can be carried out at the discretion of a committee comprised of the Company’s CEO and CFO through open market pu rchases, one or more Rule 10b5-1 trading plans, block trades and privately negotiated transactions. As of July 2, 2022, 5.0 million shares remained available for repurchase pursuant the 2022 Repurchase Program. The following table provides a summary of the Company’s stock repurchase act ivities : Three Months Ended Six Months Ended (in millions, except per share amounts) July 2, July 3, July 2, July 3, Shares repurchased (1) 3.0 — 3.0 0.5 Average cost per share $ 133.82 $ — $ 133.82 $ 235.88 Value of shares repurchased $ 401.4 $ — $ 401.4 $ 128.9 ______________ (1) Excludes shares withheld from the shares of its common stock actually issued in connection with the vesting of PSU or RSU awards to satisfy certain U.S. federal and state tax withholding obligations. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jul. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | 19. Stock-Based Compensation Total stock-based compensation expense for the three months ended July 2, 2022 and July 3, 2021 was $17.3 million and $8.3 million, respectively. Total stock-based compensation expense for the six months ended July 2, 2022 and July 3, 2021 was $28.2 million and $21.0 million, respectively. As of July 2, 2022, an aggregate of 10.1 million shares of common stock were reserved for future issuance under the Company’s equity plans, of which 3.6 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. Upon effectiveness, an aggregate of 5.0 million shares were available for issuance under the 2017 Equity Plan. In May 2020, the Company’s stockholders approved an increase of 2.5 million shares to the 2017 Equity Plan. The aggregate number of shares that may be awarded under the 2017 Equity Plan is 7.5 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: Six Months Ended (in millions, except for weighted-average exercise prices) Shares Weighted-Average Options outstanding, beginning of period 3.0 $ 81.38 Granted 0.1 150.91 Canceled — 154.63 Exercised (0.1) 52.66 Options outstanding, end of period 3.0 $ 84.19 Options exercisable, end of period 2.3 $ 64.43 Total stock option expense for the three months ended July 2, 2022 and July 3, 2021 was $3.2 million and $2.9 million, respectively. Total stock option expense for the six months ended July 2, 2022 and July 3, 2021 was $6.4 million and $6.7 million, respectively. As of July 2, 2022, the Company had $24.8 million of unrecognized compensation cost related to non-vested stock options that are expected to vest over a weighted-average period of approximately 2.4 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 July 2, 2022 was 4.8 years. RSUs The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows: Six Months Ended (in millions, except for weighted-average grant date fair value amounts) Units Weighted-Average Grant RSUs outstanding, beginning of period 2.9 $ 104.13 Granted 0.3 149.86 Canceled — 220.62 Expired — — Vested — 183.66 RSUs outstanding, end of period 3.2 $ 106.28 Total RSU expense for the three months ended July 2, 2022 and July 3, 2021 was $10.0 million and $2.4 million, respectively. Total RSU expense for the six months ended July 2, 2022 and July 3, 2021 was $13.0 million and $4.4 million, respectively. As of July 2, 2022, the Company had $66.0 million of unrecognized compensation cost related to non-vested RSU awards expected to be recognized and vest over a weighted-average period of approximately 4.1 years. PSUs The number of PSUs outstanding under all of the Company’s equity plans are as follows: Six Months Ended (in millions, except for weighted-average grant date fair value amounts) Units Weighted-Average Grant PSUs outstanding, beginning of period 0.3 $ 168.68 Granted (1) 0.3 145.49 Canceled — — Expired — — Vested (0.2) 127.46 PSUs outstanding, end of period 0.4 $ 170.85 ______________ (1) On February 14, 2022, the Audit Committee approved the weighted payout percentage for the 2019 PSU awards (three-year performance period), which were based upon the actual fiscal 2021 performance against pre-established performance objectives. Included in the granted amount are those additional PSUs earned based on actual performance achieved. These PSUs were originally awarded at target. During the six months ended July 2, 2022, the Company awarded 142,900 PSUs that will vest three years from the award date, based on the achievement of certain 2025 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 142,900 PSUs, or 285,800 shares. Based on management’s estimate of the number of units expected to vest, total PSU expense for the three months ended July 2, 2022 and July 3, 2021 was $4.1 million and $3.0 million, respectively. Based on management’s estimate of the number of units expected to vest, total PSU expense for the six months ended July 2, 2022 and July 3, 2021 was $8.8 million and $9.9 million, respectively. As of July 2, 2022, the Company had $90.3 million of unrecognized compensation cost related to non-vested PSU awards expected to be recognized and vest over a weighted-average period of approximately 2.0 years. Valuation of Stock-Based Award Activity The fair value of each RSU and PSU is determined based on the closing price of the Company’s common stock on the grant date. 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 July 2, 2022 (1) July 3, July 2, July 3, Risk-free interest rate —% 0.4% 1.0% to 1.9% 0.3% to 0.9% Expected term (in years) 0.0 5.1 5.7 5.6 Estimated volatility —% 32.9% 31.2% to 38.9% 30.9% to 34.7% Expected dividends 0% 0% 0% 0% Weighted-average fair value of options granted $— $66.53 $49.69 $75.72 __________________ (1) No stock options were granted during the three months ended July 2, 2022. 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 July 2, 2022 was $180.8 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 July 2, 2022 was $172.9 million. The aggregate intrinsic value of options exercised during the six months ended July 2, 2022 was $9.1 million. |
Employee Benefits
Employee Benefits | 6 Months Ended |
Jul. 02, 2022 | |
Postemployment Benefits [Abstract] | |
Employee Benefits | 20. Employee Benefits Defined Contribution Plans The Company sponsors one 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. The MRSP matches a Masimo employee’s contribution up to 3% of the Masimo employee’s compensation, subject to a maximum amount. The Company may also contribute to the MRSP on a discretionary basis. The Company contributed $1.0 million and $0.9 million to the MRSP for the three months ended July 2, 2022 and July 3, 2021, respectively, all in the form of matching contributions. The Company contributed $2.1 million and $1.9 million to the MRSP for the six months ended July 2, 2022 and July 3, 2021, respectively, all in the form of matching contributions. In addition, the Company sponsors various defined contribution plans in certain locations outside of the United States, the contributions to which were not material for any period. On April 11, 2022, in connection with the Sound United acquisition, the MRSP was amended to allow for participation by eligible SU employees. Defined Benefit Plans On April 11, 2022, the Company assumed sponsorship of the two noncontributory defined benefit pension plans (Defined Benefit Plans) which cover employees in Japan and the Netherlands. The Company’s contributions are designed to fund normal cost on a current basis and to fund the estimated prior service cost of benefit improvements. The unit credit actuarial cost method is used to determine the annual cost. The Company pays the entire cost of the Defined Benefit Plan and funds such costs as they accrue. Virtually all of the assets of the Defined Benefit Plan are comprised of equities and participation in equity and fixed income funds. The service cost component for the Defined Benefit Plans are recorded in cost of sales and operating expenses in the condensed consolidated statement of operations. All other cost components are recorded in other income (expense), net in the condensed consolidated statement of operations. The Company’s net periodic defined benefit costs for each of the three and six months ended July 2, 2022, and July 3, 2021 were not material. The Company is still determining its contributions to the Defined Benefit Plans for the year. No contributions were made to the Defined Benefit Plans during the three and six months ended July 2, 2022 and July 3, 2021. The expected rate of return on the Defined Benefit Plans’ assets for determining net periodic benefit plan cost is 0% . |
Non-operating income (loss)
Non-operating income (loss) | 6 Months Ended |
Jul. 02, 2022 | |
Nonoperating Income (Expense) [Abstract] | |
Non-operating income (loss) | 21. Non-operating income (loss) Non-operating income (loss) consists of the following: Three Months Ended Six Months Ended (in millions) July 2, July 3, July 2, July 3, Interest income $ 0.2 $ 0.2 $ 0.5 $ 0.4 Interest expense (4.5) (0.1) (4.6) (0.2) Realized and unrealized foreign currency (losses) gains 8.8 — 8.0 (0.9) Total non-operating income (loss) $ 4.5 $ 0.1 $ 3.9 $ (0.7) |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 22. Income Taxes The Company has provided for income taxes in fiscal year 2022 interim periods based on the estimated effective income tax rate for the complete fiscal year, as 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 July 2, 2022 and July 3, 2021, the Company recorded discrete tax benefits of approximately $0.2 million and $1.3 million, respectively, related to excess tax benefits realized from stock-based compensation. For the six months ended July 2, 2022 and July 3, 2021, the Company recorded discrete tax benefits of approximately $1.9 million and $5.6 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 July 2, 2022, the liability for income taxes associated with uncertain tax positions was approximately $23.3 million. If fully recognized, approximately $21.3 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 2017. All material state, local and foreign income tax matters have been concluded through fiscal year 2014. 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 | 6 Months Ended |
Jul. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 23. Commitments and Contingencies Employment and Severance Agreements In July 2017, the Company entered into the First Amendment to that 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” (as defined in the Amended Employment Agreement) and the full amount of the “Cash Payment” (as defined in the Amended Employment Agreement). 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. On January 14, 2022, the Company entered into the Second Amendment to the Amended Employment Agreement (Second Amendment) with Mr. Kiani. The Second Amendment provides that the RSUs granted to Mr. Kiani pursuant to the Amended Employment Agreement will vest in full upon the termination of Mr. Kiani’s employment with the Company pursuant to Mr. Kiani’s death or disability. As of July 2, 2022, 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 Amended Employment Agreement, as amended by the Second Amendment, was approximately $664.3 million. As of July 2, 2022, the Company had severance plan participation agreements with five 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. Each executive officer is also required to give the Company six months’ advance notice of his resignation under certain circumstances. In connection with the Sound United acquisition, effective April 11, 2022, the Company entered into an employee offer letter with Kevin Duffy, which included certain compensation, retention and benefit provisions. In addition, certain severance-related provisions contained in the Fifth Amended and Restated Employment Agreement made and entered into as of November 30, 2017, between DEI Holdings, Inc. and Mr. Duffy continued pursuant to their terms following completion of the Sound United acquisition. On July 11, 2022, the Company sent Mr. Duffy a notice of termination without cause of his employment with the Company, effective as of August 5, 2022. Mr. Duffy has agreed to remain with the Company until August 5, 2022, and to assist the Company with transition and other matters on an as-needed basis following the termination of his employment with the Company. Cercacor Cross-Licensing Agreement Provisions The Company’s Cross-Licensing Agreement with Cercacor contains annual minimum aggregate royalty obligations for use of the rainbow ® licensed technology. The current annual minimum royalty obligation is $5.0 million. Upon a change in control (as defined in the Cross-Licensing Agreement) of the Company or Cercacor: (i) all rights to the “Masimo” trademark will be assigned to Cercacor if the surviving or acquiring entity ceases to use “Masimo” as a company name and trademark; (ii) the option to license technology developed by Cercacor for use in blood glucose monitoring will be deemed automatically exercised and a $2.5 million license fee for this technology will become immediately payable to Cercacor; and (iii) the minimum aggregate annual royalties payable to Cercacor for carbon monoxide, methemoglobin, fractional arterial oxygen saturation, hemoglobin and/or glucose measurements will increase to $15.0 million per year until the exclusivity period of the agreement ends, plus up to $2.0 million for each additional vital sign measurement with no maximum ceiling for non-vital sign measurements. Purchase Commitments Pursuant to contractual obligations with vendors, the Company had $387.4 million of purchase commitments as of July 2, 2022 that 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, other critical inventory and manufacturing supplies, 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 July 2, 2022, the Company had approximately $5.4 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 July 2, 2022, 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 a portion of its excess cash with major financial institutions. As of July 2, 2022, the Company had $218.0 million of bank balances, of which $7.6 million was covered by either the U.S. Federal Deposit Insurance Corporation limit or foreign countries’ deposit insurance organizations. 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 July 2, 2022 and July 3, 2021, revenue from the sale of the Company’s products to customers that are members of GPOs approximated 31.4% and 49.0% of revenue, respectively. During the six months ended July 2, 2022 and July 3, 2021, revenue from the sale of the Company’s products to customers that are members of GPOs approximated 40.0% and 50.1% of revenue, r espectively. For the three months ended July 2, 2022, the Company had sales through one just-in-time distributor that represented 10.6% of revenue. For the three months ended July 3, 2021, the Company had sales through the same two just-in-time distributors that represented 13.7% and 10.8% of revenue, respectively. For the six months ended July 2, 2022, the Company had sales through one just-in-time distributor that represented 11.6% revenue. For the six months ended July 3, 2021, the Company had sales through the same two just-in-time distributors that represented 14.4% and 10.4% of revenue, respectively. As of July 2, 2022 and January 1, 2022, one customer represented 6.8% and 15.7%, respectively, of the Company’s accounts receivable balance. The receivable balance related to such customer is fully secured by a letter of credit. Litigation 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 (District Court) by Physicians Healthsource, Inc. The complaint alleged that the Company sent unsolicited facsimile advertisements in violation of the Junk Fax Protection Act of 2005 and related regulations. The complaint sought $500 for each alleged violation, treble damages if the District Court found the alleged violations to be knowing, plus interest, costs and injunctive relief. On March 26, 2019, an amended complaint was filed adding Radha Geismann, M.D. PC as an additional named plaintiff. On June 17, 2019, the plaintiffs filed their motion for class certification. On November 21, 2019, the District Court issued an order denying the plaintiffs’ motion for class certification and granting in part and denying in part the Company’s motion for summary judgment, and deferring ruling on the plaintiffs’ motion for summary judgment. On December 5, 2019, the plaintiffs filed a petition for permission to appeal the order denying class certification, which was denied on January 24, 2020. On July 13, 2020, the District Court issued an order granting in part and denying in part the plaintiffs’ motion for summary judgment. On July 27, 2022, the parties filed a joint stipulation to dismiss the case with prejudice. On January 9, 2020, the Company filed a complaint against Apple Inc. (Apple) in the District Court for infringement of a number of patents, for trade secret misappropriation, and for ownership and correction of inventorship of a number of Apple patents listing one of its former employees as an inventor. The Company is seeking damages, injunctive relief, and declaratory judgment regarding ownership of the Apple patents. Apple filed petitions for Inter Partes review (IPR) of the asserted patents in the U.S. Patent and Trademark Office (PTO). The PTO instituted IPR of the asserted patents. On October 13, 2020, the District Court stayed the patent infringement claims pending completion of the IPR proceedings. On February 5, 2021, the Company filed a fourth amended complaint. On February 26, 2021, Apple filed a partial motion to dismiss the trade secrets claim in the fourth amended complaint. On April 21, 2021, the District Court issued an order granting in part and denying in part the motion to dismiss. On May 5, 2021, Apple filed its answer to the fourth amended complaint. On December 7, 2021, Apple filed a motion for partial summary judgment on the trade secrets claim, which was denied on February 17, 2022. Trial is currently set to begin on March 27, 2023. In the IPR proceedings, one or more of the challenged claims of three of the asserted patents were found valid. The challenged claims of nine of the asserted patents were found invalid. On April 12, 2022, the Company filed notices of appeal with the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) seeking review of the IPR decisions on five of the asserted patents. On June 8, 2022, the Company filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit seeking review of the IPR decision on one of the asserted patents. On June 28, 2022, the Company filed notices of appeal with the Federal Circuit seeking review of the IPR decisions on four of the asserted patents. On June 30, 2021, the Company filed a complaint with the U.S. International Trade Commission (ITC) against Apple for infringement of a number of other patents. The Company filed an amended complaint on July 12, 2021. On August 13, 2021, the ITC issued a Notice of Institution of Investigation on the asserted patents. From June 6-10, 2022, the ITC conducted an evidentiary hearing. The target date for completion of the ITC investigation is January 16, 2023, with an initial determination due September 16, 2022. The Company is seeking an exclusion order and a permanent cease and desist order. Apple filed petitions for IPR of the asserted patents in the PTO. The Company will have the opportunity to respond to the petitions before the PTO determines whether to institute IPRs. Although the Company intends to vigorously pursue all of its legal remedies in its litigation with Apple, there is no guarantee that the Company will be successful in these efforts. 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 and Enterprise Reportin
Segment and Enterprise Reporting | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Segment and Enterprise Reporting | 24. Segment and Enterprise Reporting The Company’s reportable segments are determined based upon the Company’s new organizational structure and the way in which the Company’s Chief Operating Decision Maker (CODM), the CEO, makes operating decisions and assesses financial performance. The CODM considered several factors including, but not limited to, customer base, technology, and homogeneity of products. The two segments are: • Healthcare - develops, manufactures, and markets a variety of noninvasive monitoring technologies and hospital automation solutions and therapeutics. This segment includes the Company’s core legacy hospital business and new Masimo-technology-enabled consumer products that are distributed through many channels including e-commerce sites, leading national retailers and specialty chains globally. • Non-healthcare - designs, develops, manufactures, markets and sells a broad portfolio of premium, high-performance audio products and services. This is a new reportable segment comprised primarily of Sound United’s operations. Income from operations for each segme nt includes all geographic revenues, related cost of net revenues and operating expenses directly attributable to the segment. The Company uses operating income, as presented in the Company’s financial reports, as the primary measure of segment profitability. The Company does not allocate costs from corporate functions to segment operating income. Items below operating income are not considered when measuring the profitability of a segment. The Company uses the same accounting policies to generate segment results as the Company does for consolidated results. Non-reportable operating segment and unallocated corporate expenses are reported within “Corporate overhead and Other”. Segment information presented herein reflects the impact of these changes for all periods presented. There was no inter-segment revenue for any of the periods presented. Selected information by reportable segment is presented below for the three and six months ended July 2, 2022 and July 3, 2021: Three Months Ended Six Months Ended (in millions) July 2, July 3, July 2, July 3, Revenues by segment: Healthcare $ 357.0 $ 305.1 $ 661.2 $ 604.2 Non-healthcare 208.3 — 208.3 — Total revenue by segment $ 565.3 $ 305.1 $ 869.5 $ 604.2 Gross profit: Healthcare $ 236.7 $ 197.5 442.1 $ 395.2 Non-healthcare 72.6 — 72.6 — Corporate overhead — — — — Other (1) (51.1) (4.6) (51.8) (5.4) Gross profit $ 258.2 $ 192.9 $ 462.9 $ 389.8 Gross profit margin: Healthcare 66.3 % 64.7 % 66.9 % 65.4 % Non-healthcare 34.9 — 34.9 — Corporate overhead — — — — Other (1) — (1.5) — (0.9) Gross profit margin: 45.7 % 63.2 % 53.2 % 64.5 % Operating income (loss): Healthcare $ 106.5 $ — $ — $ — Non-healthcare 15.2 — — — Corporate overhead (15.1) — — — Other (1) (84.5) — — — Operating income $ 22.1 $ 65.1 $ 81.8 $ 130.8 Interest income $ 0.2 $ 0.2 $ 0.5 $ 0.4 Interest expense (4.5) (0.1) (4.6) (0.2) Other (income) expense, net 8.8 — 8.0 (0.9) Income before income taxes $ 26.6 $ 65.2 $ 85.7 $ 130.1 _______________ (1) Management excludes certain corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items. Corporate overhead represents certain costs that are not allocated to the segments for purposes of the CODM assessing performance and allocating resources--for example, the costs of being a publicly traded company. The Company’s depreciation and amortization by segment: Three Months Ended Six Months Ended (in millions) July 2, July 3, July 2, July 3, Depreciation and amortization by segment: Healthcare $ 9.1 $ 8.8 $ 18.1 $ 17.3 Non-healthcare 61.8 — 61.8 — Total depreciation and amortization $ 70.9 $ 8.8 $ 79.9 $ 17.3 The Company’s total assets by segment: As of As of (in millions) July 2, January 1, Total assets by segment: Healthcare $ 2,478.9 $ 1,866.4 Non-healthcare 462.1 — Corporate overhead 20.1 20.6 Other — — Total assets $ 2,961.1 $ 1,887.0 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2022 | |
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 January 1, 2022 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 January 1, 2022 (fiscal year 2021), filed with the SEC on February 15, 2022. The results for the three and six months ended July 2, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2022 (fiscal year 2022) or for any other interim period or for any future year. |
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 weeks while a 53 week fiscal year includes three 13 week fiscal quarters and one 14 week fiscal quarter. The Company’s last 53 week fiscal year was fiscal year 2020. Fiscal year 2022 is a 52 week fiscal year ending December 31, 2022. 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. The Company’s use of estimates include the determination of standalone selling prices, variable consideration, total consideration allocated to each performance obligation within a contract, inventory valuation, valuation of the Company’s equity awards, valuation of identifiable assets and liabilities connected with business combinations, derivative instruments, deferred taxes and any associated valuation allowances, deferred revenue, accounting for pensions, uncertain income tax positions, litigation costs and related accruals. Actual results could differ from such estimates. |
Business Combinations | Business Combinations The Company accounts for business combinations using the acquisition method of accounting in accordance with Accounting Standard Codification (ASC) Topic 805, Business Combinations , which requires that once control is obtained, the assets acquired, liabilities assumed and noncontrolling interests in the acquired entity, if applicable, are recorded at their respective fair values at the date of acquisition, with the exception of acquired contract assets and contract liabilities (i.e., deferred revenue) from contracts with customers. These are recognized and measured in accordance with ASC Topic 606, Revenue from Contracts with Customers. |
Fair Value 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. The Company did not carry financial assets measured under the fair value hierarchy based on any of the three levels of inputs (Level 1, 2 and 3) other than cash and cash equivalents during either the six months ended July 2, 2022 or July 3, 2021 . The Company carries cash and cash equivalents at cost, which approximates fair value, and are Level 1 under the fair value hierarchy. For certain other financial assets and liabilities, including restricted cash, accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily goodwill, intangible assets and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment. |
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. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable consist of trade receivables recorded at the time of invoicing of product sales, 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 Company records an allowance for credit losses that it does not expect to collect based on relevant information, including historical experience, current conditions, and reasonable and supportable forecasts. Accounts are charged off against the allowance when the Company believes they are uncollectible. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified receivables for U.S. customers and receivables from international customers each as a portfolio, and measures expected credit losses on such receivables using an aging methodology . |
Inventory | Inventory 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 valuation adjustments 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. The Company generally determines inventory valuation adjustments based on an evaluation of the expected future use of its inventory on an item by item basis and applies historical obsolescence rates to estimate the loss on inventory expected to have a recovery value below cost. The Company also records other specific inventory valuation adjustments when it becomes aware of unique events or circumstances that result in an expected recovery value below cost. For inventory items that have been written down, the reduced value becomes the new cost basis. |
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 Buildings and building improvements 7 to 39 years Computer equipment and software 1 to 12 years Demonstration units 2 to 3 years Furniture and office equipment 2 to 15 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 20 years Operating lease assets Lesser of useful life or term of lease Transportation, vehicles and other 1 to 20 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 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 ROU assets and lease liabilities. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of patents, trademarks, software development costs, customer relationships and acquired technology. Costs related to patents and trademarks, which include legal and application fees, are ca pitalized and amortized over the estimated useful lives using the straight-line method. Patent and trademark amortization commences once final approval of the patent or trademark has been obtained. Patent costs are amortized over the lesser of 10 years or the patent’s remaining legal life, which assumes renewals, and trademark costs are amortized over a range of 10 years to 17 years , and their associated amortization cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. 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 periodically 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. Intangibles purchased as part of an asset acquisition or business combination historically have included patents, trademarks, customer relationships, developed technologies and contractual licenses. In certain circumstances the Company also has acquired non-compete agreements tied to certain employment relationships. The useful life for all of these is largely determined by valuation estimates of remaining economic life. In connection with the Sound United acquisition, the Company acquired certain trademarks/tradenames, which are intangible assets with indefinite useful lives. These brands are expected to maintain brand value for an indefinite period of time. |
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 the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, or if the Company elects to bypass the qualitative analysis, then the Company performs 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 such reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to such reporting unit. The annual impairment test is performed during the fourth fiscal quarter. Similar to Goodwill, indefinite-lived intangible assets are not amortized but instead are subject to annual impairment testing, unless circumstances dictate more frequent testing, if impairment indicators exist. Impairment for indefinite-lived assets exists if the carrying value of the indefinite-lived intangible asset exceeds its fair value. Determining whether impairment indicators exist and estimating the fair value of the Company’s indefinite-lived intangible assets if necessary for impairment testing requires significant judgment. Qualitative factors considered in this assessment include industry and market conditions, overall financial performance, and other relevant events and factors. The Company reviews finite lived intangible assets and long-lived assets 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. |
Employee Defined Benefit Plans | Employee Defined Benefit Plans The Company maintains noncontributory defined benefit pension plans that cover employees in Japan and the Netherlands. The Company recognizes the funded status, or difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the condensed consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive income (loss). If the projected benefit obligation exceeds the fair value of plan assets, the difference or unfunded status represents the pension liability. The Company records a net periodic pension cost in the condensed consolidated statement of operations. The liabilities and annual income or expense is determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate and the expected long-term rate of asset return. The fair values of plan assets are determined based on prevailing market prices. See Note 20, “Employee Benefits”, for further details. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method, under which the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for net operating loss and tax credit carryforwards. Tax positions that meet a more-likely-than-not recognition threshold are recognized in the first reporting period that it becomes more-likely-than-not such tax position will be sustained upon examination. A tax position that meets this more-likely-than-not recognition threshold is recorded at the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Previously recognized income tax positions that fail to meet the recognition threshold in a subsequent period are derecognized in that period. Differences between actual results and the Company’s assumptions, or changes in the Company’s assumptions in future periods, are recorded in the period they become known. The Company records potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. As a multinational corporation, the Company is subject to complex tax laws and regulations in various jurisdictions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from the Company’s estimates, which could result in the need to record additional liabilities or potentially to reverse previously recorded tax liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is recorded against any deferred tax assets when, in the judgment of management, it is more likely than not that all or part of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including recent financial performance, scheduled reversals of temporary differences, projected future taxable income, availability of taxable income in carryback periods and tax planning strategies. Income taxes are highly susceptible to changes from period to period, requiring management to make assumptions about the Company’s future income over the lives of its deferred tax assets (DTA) and the impact of changes in valuation allowances. Any difference in the assumptions, judgments and estimates mentioned above could result in changes to the Company’s results of operations. |
Revenue Recognition, Deferred Revenue and Other Contract Liabilities | Revenue Recognition, Deferred Revenue and Other Contract Liabilities 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. Healthcare segment While the majority of the Company’s Healthcare segment 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, as well as 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. Revenue from fixed lease payments related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue from fixed lease payments related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease and variable lease payments are recognized as they occur. The Company derives the majority of its Healthcare segment 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 original equipment manufacturer (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 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 customer’s commitment to purchase sensors over the term of the agreement, which generally ranges from three years 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 likelihood to exercise any purchase options. Beginning January 2, 2022, for contracts that contain variable lease payments, the Company also classifies as operating leases any components that would result in a day one selling loss should they be otherwise classified as a sales-type lease. 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 control over the equipment is transferred to the customer. 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 lease arrangements after the end of the agreement. Revenue from the sale of products to end-user hospitals, emergency medical response organizations, other direct customers, distributors and OEM customers, is recognized by the Company when control of such products transfer to the customer based upon the terms of the contract or underlying purchase order. Revenue related to OEM rainbow ® parameter software licenses is recognized by the Company upon the OEM’s shipment of its product to its customer, 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 records estimates related to 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. Non-healthcare segment Non-healthcare segment revenue is related to hardware and embedded software that is integrated into final products that are manufactured and sold by the Company. Products and related software are accounted for as a single performance obligation and all intended functionality is available to the customer upon purchase. Non-healthcare segment revenue is recognized upon transfer of control of promised products or service to customers, which is either upon shipment or upon delivery to the customers, depending on delivery terms. The Company offers sales incentives and has customer programs consisting primarily of discounts and market development fund programs, and records them as a contra revenue. Estimates for sales incentives are developed using most likely amount and are included in the transaction price to the extent that a significant reversal of revenue would not result once the uncertainty is resolved. In developing its estimates, the Company also considers the susceptibility of the incentive to outside influences, the length of time until the uncertainty is resolved and the Company’s experience with similar contracts. Reductions in revenue related to discounts are allocated to products on a relative basis based on their respective standard selling price if there are undelivered products in a contract. Judgement is required to determine the timing and amount of recognition of marketing funds which the Company estimates based on past practice of providing similar funds. Payment terms and conditions vary among the Company’s distribution channels although terms generally include a requirement of payment within 30 to 60 days of product shipment. Sales directly to customers from the Company’s website are paid at the time of product shipment. Prior to determining payment terms for each customers, an evaluation of such customer’s credit risk is performed. Contractual allowances are an offset to accounts receivable. |
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 condensed consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of 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 customers 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 allowances to be made directly to the end-user hospital customer at the inception of the arrangement. These allowances 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. In connection with the Sound United acquisition, the Company recognized non-healthcare royalty revenue associated with certain prepaid license arrangements. The Company recognizes non-healthcare revenue from the prepaid license arrangements based upon sales-based royalties when a subsequent sale occurs. |
Warranty | Warranty The Company generally provides a warranty against defects in material and workmanship for a period ranging from six months 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 goods sold. Customers may also purchase extended warranty coverage or service level upgrades separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage and service level upgrades is generally recognized over the life of the contract, which reasonably approximates the period over which such services will be provided. The related extended warranty and service level upgrade costs are expensed as incurred. Changes in the warranty accrual were as follows: Six Months Ended (in millions) July 2, July 3, Warranty accrual, beginning of period $ 2.5 $ 2.7 Increase related to acquisition, net of reserve 8.0 — Accrual for warranties issued 1.8 2.2 Changes in pre-existing warranties (including changes in estimates) (0.4) (1.5) Settlements made (2.0) (0.7) Warranty accrual, end of period $ 9.9 $ 2.7 |
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. |
Foreign Currency Translation and Foreign Currency Derivative Instruments | Foreign Currency Translation The Company’s international headquarters is in Switzerland, and its functional currency is the U.S. Dollar. The Company has many other foreign subsidiaries, and the largest transactions in foreign currency translations occur in Japanese Yen, the British Pou nd, Chinese Yuan a nd the European Euro. The Company records certain revenues and expenses in foreign currencies. These revenues and expenses are translated into U.S. Dollars based on the average exchange rate for the reporting period. Assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the exchange rate in effect as of the balance sheet date. Translation gains and losses related to foreign currency assets and liabilities of a subsidiary that are denominated in the functional currency of such subsidiary are included as a component of accumulated other comprehensive income (loss) within the accompanying condensed consolidated balance sheets. Realized and unrealized foreign currency gains and losses related to foreign currency assets and liabilities of the Company or a subsidiary that are not denominated in the underlying functional currency are included as a component of non-operating income (loss) within the accompanying condensed consolidated statements of operations. Foreign Currency Derivative Instruments The Company uses foreign currency derivative instruments in the form of forward contracts to hedge certain monetary assets and liabilities, primarily receivables and payables denominated in foreign currencies. The Company’s objective is to partially offset gains or losses resulting from these exposures with opposing gains or losses on the forward contracts, thereby reducing volatility of earnings created by these foreign currency exposures. The Company did not enter into or hold derivative instruments for speculative trading purposes. In conjunction with the Sound United acquisition, the Company acquired multiple foreign currency forward contracts. The fair values of the forward contracts are estimated at each period end based on quoted market prices and are recorded as either a net asset or liability on the accompanying condensed consolidated balance sheets. These contracts are considered economic hedges but were not designated as hedges. The changes in the fair value of the instruments are recognized in the condensed consolidated statement of operations and were immaterial for the three and six months ended July 2, 2022. |
Comprehensive Income | Comprehensive Income Comprehensive income includes foreign currency translation adjustments, changes to pension benefits and any related tax benefits that have been excluded from net income and reflected in stockholders’ equity. |
Net Income Per Share | Net Income Per Share A computation of basic and diluted net income per share is as follows: Three Months Ended Six Months Ended (in millions, except per share amounts) July 2, July 3, July 2, July 3, Net income $ 18.1 $ 50.2 $ 64.7 $ 103.6 Basic net income per share: Weighted-average shares outstanding - basic 53.9 55.0 54.7 55.1 Net income per basic share $ 0.34 $ 0.91 $ 1.18 $ 1.88 Diluted net income per share: Weighted-average shares outstanding - basic 53.9 55.0 54.7 55.1 Diluted share equivalents: stock options, RSUs and PSUs 1.4 2.4 1.7 2.5 Weighted-average shares outstanding - diluted 55.3 57.4 56.4 57.6 Net income per diluted share $ 0.33 $ 0.88 $ 1.15 $ 1.80 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 is 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 stock units (PSUs). For the three months ended July 2, 2022 and July 3, 2021, weighted options to purchase 0.7 million and 0.4 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 July 2, 2022 and July 3, 2021, weighted options to purchase 1.8 million and 0.2 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. 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 July 2, 2022 and July 3, 2021, 2.7 million weighted-average shares related to such RSUs have been excluded from the calculation of potential shares for each of the three month periods then ended. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In November 2021, the Financial Accounting Standards Board (FASB) issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08) . The standard requires companies to apply ASC Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC Topic 805. ASU 2021-08 is effective for annual reporting periods beginning after December 15, 2022, and for interim periods within those years, and should be adopted prospectively. Early adoption is permitted. The Company’s early adoption of this standard, effective January 3, 2021, did not have a material impact on its consolidated financial statements. Subsequently, upon the closing of the Sound United acquisition, the Company recognized and measured acquired contract assets and contract liabilities (i.e., deferred revenue) in accordance with the ASC Topic 606. In July 2021, the FASB issued Accounting Standards Update (ASU) No. 2021-05, Leases (Topic 842), Lessors - Certain Leases with Variable Lease Payments (ASU 2021-05) . The new standard amends the original ASU No. 2016-02 lease standard by requiring lessors to classify leases as operating leases if they have variable lease payments that do not depend on an index or rate and would have selling losses at lease commencement if they were classified as sales-type. ASU 2021-05 is effective for annual reporting periods beginning after December 15, 2021, and for interim periods within those years, and may be adopted either prospectively or on a retrospective basis for leases that commenced or were modified after the date of initial adoption of ASC 842. On January 2, 2022, the Company adopted ASU 2021-05 prospectively for leases that commenced or were modified on or after the date of adoption. As a result, certain leases which would have previously been classified as lease receivables (sales-type leases) were classified as operating leases, as they were determined to have variable lease payments that do not depend on an index or rate and would have selling losses at lease commencement. For leases that are classified as operating leases, the Company recorded these operating lease assets within property, plant, and equipment, net of accumulated depreciation. The equipment costs associated with such new operating leases were initially deferred and will subsequently be amortized over the lease term on a straight-line basis, rather than being immediately recognized upon lease commencement. Similarly, revenue associated with such new operating leases is now being recognized over the term of the lease, rather than being immediately recognized at the date of the lease commencement. See Notes 6, 8 and 11 of these condensed consolidated financial statements for further details. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) . The standard provides temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). Entities can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply this standard prospectively through December 31, 2022. The relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (ASU 2021-01) . The new standard clarified the scope and application of the original guidance. ASU 2021-01 is effective as of March 12, 2020 through December 31, 2022 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020. On April 11, 2022, the Company adopted ASU 2020-04 and ASU 2021-01 prospectively, in conjunction with the termination of the Company’s Credit Facility and execution of a new Credit Facility, which included both term loans and a revolving line of credit. At the time of transition, the Company no longer held any debt based upon the then-current reference rate, thus, it did not elect any optional practical expedients for contract modifications. Ultimately, the Company transitioned away from an interest rate based on LIBOR to SOFR, and such adoption did not have a material impact on its condensed consolidated fi nancial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Accounting Policies [Abstract] | |
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 Buildings and building improvements 7 to 39 years Computer equipment and software 1 to 12 years Demonstration units 2 to 3 years Furniture and office equipment 2 to 15 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 20 years Operating lease assets Lesser of useful life or term of lease Transportation, vehicles and other 1 to 20 years Property and equipment, net, consists of the following: (in millions) July 2, January 1, Building and building improvements $ 148.7 $ 142.1 Machinery, equipment and tooling 139.5 103.5 Land 64.5 57.0 Computer equipment and software 40.2 32.5 Transportation, vehicles and other 33.1 33.1 Leasehold improvements 31.1 21.9 Furniture and office equipment 16.5 14.2 Operating lease assets (1) 14.1 — Demonstration units 7.8 0.9 Construction-in-progress (CIP) 48.6 25.1 Total property and equipment 544.1 430.3 Accumulated depreciation (173.4) (157.5) Property and equipment, net $ 370.7 $ 272.8 ______________ (1) Effective January 2, 2022, the Company adopted ASU 2021-05, resulting in the Company recording these operating lease assets within property, plant, and equipment. |
Changes in Product Warranty Accrual | Changes in the warranty accrual were as follows: Six Months Ended (in millions) July 2, July 3, Warranty accrual, beginning of period $ 2.5 $ 2.7 Increase related to acquisition, net of reserve 8.0 — Accrual for warranties issued 1.8 2.2 Changes in pre-existing warranties (including changes in estimates) (0.4) (1.5) Settlements made (2.0) (0.7) Warranty accrual, end of period $ 9.9 $ 2.7 |
Reconciliation of Basic and Diluted Net Income Per Share | A computation of basic and diluted net income per share is as follows: Three Months Ended Six Months Ended (in millions, except per share amounts) July 2, July 3, July 2, July 3, Net income $ 18.1 $ 50.2 $ 64.7 $ 103.6 Basic net income per share: Weighted-average shares outstanding - basic 53.9 55.0 54.7 55.1 Net income per basic share $ 0.34 $ 0.91 $ 1.18 $ 1.88 Diluted net income per share: Weighted-average shares outstanding - basic 53.9 55.0 54.7 55.1 Diluted share equivalents: stock options, RSUs and PSUs 1.4 2.4 1.7 2.5 Weighted-average shares outstanding - diluted 55.3 57.4 56.4 57.6 Net income per diluted share $ 0.33 $ 0.88 $ 1.15 $ 1.80 |
Supplemental Cash Flow Information | Supplemental cash flow information includes the following: Six Months Ended (in millions) July 2, July 3, Cash paid during the year for: Interest expense $ 2.9 $ 0.2 Income taxes 39.7 24.2 Operating lease liabilities 4.2 3.7 Non-cash operating activities: ROU assets obtained in exchange for lease liabilities $ 8.1 $ 4.4 Non-cash investing activities: Unpaid purchases of property and equipment $ 4.1 $ 2.4 Unpaid strategic investments — 6.0 Deposit release to acquire noncontrolling interest (1) — 3.4 Unpaid purchase consideration to be settled upon net working capital finalization 21.0 — Non-cash financing activities: Unsettled common stock proceeds from option exercises $ — $ 0.2 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 218.0 $ 576.0 Restricted cash 2.6 1.4 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 220.6 $ 577.3 ______________ (1) See Note 5, “Other Current Assets”, for more details. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | Inventories consist of the following: (in millions) July 2, January 1, Raw materials $ 186.7 $ 128.3 Work-in-process 29.3 17.1 Finished goods 233.2 56.0 Total inventories $ 449.2 $ 201.4 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Non-Current Assets | Other current assets consist of the following: (in millions) July 2, January 1, Prepaid expenses $ 62.2 $ 30.9 Lease receivable, current 28.9 28.7 Indirect taxes receivable 22.2 12.8 Prepaid income taxes 8.4 7.0 Prepaid rebates and royalties, current 4.0 2.8 Restricted cash (1) 2.6 3.0 Customer notes receivable 2.2 2.4 Contract assets, current 1.5 2.1 Other current assets 6.3 1.3 Total other current assets $ 138.3 $ 91.0 ______________ (1) Restricted cash includes funds received from the Bill and Melinda Gates Foundation. As the Company incurs costs associated with research and development related to this project, on a quarterly basis, the Company reclasses amounts from the grant to offset costs incurred. Other non-current assets consist of the following: (in millions) July 2, January 1, Lessee ROU assets, net $ 66.3 $ 30.5 Prepaid deposits and other 24.7 3.9 Strategic investments 13.9 13.8 Other non-current assets 0.4 0.4 Total non-current assets $ 105.3 $ 48.6 |
Lease Receivable (Tables)
Lease Receivable (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Sale-Type Lease Receivable | Lease receivable from sales-type leases consists of the following: (in millions) July 2, January 1, Lease receivable $ 104.6 $ 102.6 Allowance for credit loss (0.3) (0.3) Lease receivable, net 104.3 102.3 Less: current portion of lease receivable (28.9) (28.7) Lease receivable, noncurrent $ 75.4 $ 73.6 |
Sales-type Lease, Lease Receivable, Maturity | As of July 2, 2022, estimated future maturities of customer sales-type lease receivables and operating lease payments for each of the following fiscal years are as follows: Future Lease Receivables/Payments Fiscal year Sales-Type Leases Operating Leases 2022 (balance of year) $ 15.0 $ 1.1 2023 26.9 1.6 2024 23.2 1.6 2025 17.8 1.5 2026 11.1 1.3 Thereafter 10.3 3.0 Total $ 104.3 $ 10.1 Less: imputed interest (1) — Present value of total lease payments $ 104.3 ______________ (1) The calculation of the rates implicit in the leases resulted in negative discount rates. Therefore, the Company as a lessor used a 0% discount rate to measure the net investment in the lease. |
Deferred Costs and Other Cont_2
Deferred Costs and Other Contract Assets (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
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 millions) July 2, January 1, Deferred commissions $ 14.7 $ 11.9 Prepaid contract allowances 12.1 8.6 Unbilled contract receivables 7.8 5.0 Deferred equipment agreements, net 0.8 2.6 Deferred costs and other contract assets $ 35.4 $ 28.1 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
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 Buildings and building improvements 7 to 39 years Computer equipment and software 1 to 12 years Demonstration units 2 to 3 years Furniture and office equipment 2 to 15 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 20 years Operating lease assets Lesser of useful life or term of lease Transportation, vehicles and other 1 to 20 years Property and equipment, net, consists of the following: (in millions) July 2, January 1, Building and building improvements $ 148.7 $ 142.1 Machinery, equipment and tooling 139.5 103.5 Land 64.5 57.0 Computer equipment and software 40.2 32.5 Transportation, vehicles and other 33.1 33.1 Leasehold improvements 31.1 21.9 Furniture and office equipment 16.5 14.2 Operating lease assets (1) 14.1 — Demonstration units 7.8 0.9 Construction-in-progress (CIP) 48.6 25.1 Total property and equipment 544.1 430.3 Accumulated depreciation (173.4) (157.5) Property and equipment, net $ 370.7 $ 272.8 ______________ (1) Effective January 2, 2022, the Company adopted ASU 2021-05, resulting in the Company recording these operating lease assets within property, plant, and equipment. |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net, consist of the following: July 2, January 1, (in millions) Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Customer relationships $ 228.6 $ (13.0) $ 215.6 $ 24.6 $ (9.3) $ 15.3 Acquired technologies 183.9 (13.0) 170.9 28.4 (7.7) 20.7 Patents 61.9 (14.0) 47.9 31.5 (13.2) 18.3 Trademarks 18.7 (5.6) 13.1 12.2 (4.1) 8.1 Licenses 8.7 (2.5) 6.2 8.1 (2.0) 6.1 Licenses-related party 7.5 (6.2) 1.3 7.5 (6.0) 1.5 Non-compete agreements (1) 6.0 — 6.0 — — — Capitalized software development costs 5.3 (2.7) 2.6 4.2 (2.6) 1.6 Other 1.9 (1.0) 0.9 2.0 (0.9) 1.1 Total intangible assets subject to amortization, net $ 522.5 $ (58.0) $ 464.5 $ 118.5 $ (45.8) $ 72.7 Intangible assets not subject to amortization: Trademarks 262.0 — Intangible assets, net $ 726.5 $ 72.7 _______________ (1) In connection with the Sound United acquisition, the Company also acquired non-compete agreements with a gross carrying amount equal to $6.0 million. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for each of the next fiscal years is as follows: Fiscal year Amount 2022 (balance of year) $ 23.8 2023 43.8 2024 40.4 2025 45.5 2026 40.7 Thereafter 270.3 Total $ 464.5 |
Goodwill (Table)
Goodwill (Table) | 6 Months Ended |
Jul. 02, 2022 | |
Goodwill [Abstract] | |
Schedule of Goodwill | Changes in goodwill were as follows: Six Months Ended (in millions) Healthcare Non-healthcare Total Goodwill, beginning of period $ 100.3 $ — $ 100.3 Increase from business combinations — 337.5 337.5 Foreign currency translation adjustment (3.3) — (3.3) Goodwill, end of period $ 97.0 $ 337.5 $ 434.5 |
Lessee ROU Assets and Lease L_2
Lessee ROU Assets and Lease Liabilities (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Leases [Abstract] | |
Lessee Operating Lease Balance Sheet Classification | The balance sheet classifications for amounts related to the Company’s operating leases for which it is the lessee are as follows: (in millions) Balance sheet classification July 2, January 1, Lessee ROU assets Other non-current assets $ 66.3 $ 30.5 Lessee current lease liabilities Other current liabilities 16.4 6.4 Lessee non-current lease liabilities Other non-current liabilities 49.9 26.3 Total operating lease liabilities $ 66.3 $ 32.7 |
Lessee, Operating Lease, Liability, Maturity | As of July 2, 2022, estimated future operating lease payments for each of the following fiscal years were as follows: Fiscal year Amount 2022 (balance of year) $ 9.4 2023 16.8 2024 13.3 2025 9.2 2026 5.8 Thereafter (1) 21.1 Total 75.6 Imputed interest (9.3) Present value $ 66.3 ______________ (1) Includes optional renewal period for certain leases. |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Other Assets, Longterm [Abstract] | |
Schedule of Other Non-Current Assets | Other current assets consist of the following: (in millions) July 2, January 1, Prepaid expenses $ 62.2 $ 30.9 Lease receivable, current 28.9 28.7 Indirect taxes receivable 22.2 12.8 Prepaid income taxes 8.4 7.0 Prepaid rebates and royalties, current 4.0 2.8 Restricted cash (1) 2.6 3.0 Customer notes receivable 2.2 2.4 Contract assets, current 1.5 2.1 Other current assets 6.3 1.3 Total other current assets $ 138.3 $ 91.0 ______________ (1) Restricted cash includes funds received from the Bill and Melinda Gates Foundation. As the Company incurs costs associated with research and development related to this project, on a quarterly basis, the Company reclasses amounts from the grant to offset costs incurred. Other non-current assets consist of the following: (in millions) July 2, January 1, Lessee ROU assets, net $ 66.3 $ 30.5 Prepaid deposits and other 24.7 3.9 Strategic investments 13.9 13.8 Other non-current assets 0.4 0.4 Total non-current assets $ 105.3 $ 48.6 |
Deferred Revenue and Other Co_2
Deferred Revenue and Other Contract Liabilities, Current (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Contract with Customer, Asset and Liability | Deferred revenue and other contract liabilities, current, consist of the following: (in millions) July 2, January 1, Deferred revenue $ 60.2 $ 35.1 Accrued rebates and allowances 31.9 13.6 Accrued customer reimbursements 5.9 7.4 Total deferred revenue and other contract liabilities 98.0 56.1 Less: Non-current portion of deferred revenue (22.6) (5.2) Deferred revenue and other contract liabilities - current $ 75.4 $ 50.9 Changes in deferred revenue were as follows: (in millions) Six Months Ended Deferred revenue, beginning of the period $ 35.1 Increase from business combinations 18.6 Revenue deferred during the period 22.4 Recognition of revenue deferred in prior periods (15.9) Deferred revenue, end of the period $ 60.2 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Accrued Liabilities [Abstract] | |
Schedule Other Current Liabilities | Other current liabilities consist of the following: (in millions) July 2, January 1, Accrued expenses $ 51.6 $ 12.1 Accrued indirect taxes payable 27.6 16.3 Lessee lease liabilities, current 16.4 6.4 Current portion of long-term debt 13.9 — Accrued warranty 9.9 2.5 Income tax payable 9.3 12.0 Accrued property taxes 8.6 2.0 Accrued legal fees 6.5 7.1 Related party payables 5.2 3.6 Accrued donations 1.6 3.7 Other current liabilities 6.0 4.7 Total other current liabilities $ 156.6 $ 70.4 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | (in millions) July 2, January 1, Term loan - current portion $ 7.5 $ — Revolver - current portion — — Japanese loans - current portion 6.4 — Short-term debt $ 13.9 $ — Term loan - long-term $ 281.7 $ — Revolver - long-term 629.0 — Japanese loans - long-term 11.7 — Long-term debt 922.4 — Total debt $ 936.3 $ — |
Schedule of Maturities of Long-term Debt | As of July 2, 2022, the aggregate maturities of principal on all debt for each of the next five years and thereafter is as follows: Fiscal year Amount 2022 (balance of the year) $ 3.1 2023 6.6 2024 14.1 2025 13.4 2026 12.7 Thereafter 886.4 Total $ 936.3 |
Other Non-Current Liabilities (
Other Non-Current Liabilities (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Other Liabilities, Long Term [Abstract] | |
Schedule of Components Of Other Liabilities Long Term Table | Other non-current liabilities consist of the following: (in millions) July 2, January 1, Deferred tax liabilities $ 162.3 $ 5.1 Lessee non-current lease liabilities 49.9 26.3 Deferred revenue, non-current 22.6 5.2 Unrecognized tax benefits 16.6 14.9 Income tax payable, non-current 12.7 17.0 Retirement allowance 9.6 — Indirect tax payable, non-current 8.0 — Other 2.3 0.6 Total other non-current liabilities $ 284.0 $ 69.1 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The table below summarizes the preliminary allocation of fair value of assets acquired and liabilities assumed as of April 11, 2022: (in millions) Sound United Cash consideration (1) $ 1,086.2 Purchase price $ 1,086.2 Assets acquired: Cash and cash equivalents $ 81.4 Accounts receivables 108.4 Inventories 230.7 Prepaid expenses and other current assets 61.4 Property, plant and equipment 101.5 Intangible asset 657.0 Goodwill 337.5 Long-term other assets 9.5 Total assets acquired $ 1,587.4 Liabilities assumed: Accounts payable $ (127.9) Accrued liabilities and other current liabilities (153.1) Deferred tax liabilities (159.5) Other long-term liabilities (60.7) Total liabilities assumed $ (501.2) ______________ (1) The purchase price for the Sound United acquisition is preliminary, pending final customary purchase price adjustments. The following table sets forth the components of identifiable intangible assets acquired and the weighted average amortization period as of the acquisition date: Weighted average July 2, Trademarks/tradenames 10 $ 268.0 Customer relationships 18 204.0 Developed technology 8 156.0 Contractual license agreements 15 29.0 Total 14 years $ 657.0 |
Business Acquisition, Pro Forma Information | There are no other material non-recurring pro forma adjustments directly attributable to the acquisition included in the reported pro forma revenue and pro forma net income. Three Months Ended Six Months Ended (in millions) July 2, July 1, July 2, July 1, Pro forma net revenue $ 572.2 $ 511.5 $ 1,127.1 $ 1,021.6 Pro forma net income (loss) $ 29.0 $ 36.0 $ 88.8 $ (31.5) |
Stock Repurchase Program (Table
Stock Repurchase Program (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Equity [Abstract] | |
Schedule of Stock Repurchase Activities | The following table provides a summary of the Company’s stock repurchase act ivities : Three Months Ended Six Months Ended (in millions, except per share amounts) July 2, July 3, July 2, July 3, Shares repurchased (1) 3.0 — 3.0 0.5 Average cost per share $ 133.82 $ — $ 133.82 $ 235.88 Value of shares repurchased $ 401.4 $ — $ 401.4 $ 128.9 ______________ (1) Excludes shares withheld from the shares of its common stock actually issued in connection with the vesting of PSU or RSU awards to satisfy certain U.S. federal and state tax withholding obligations. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
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: Six Months Ended (in millions, except for weighted-average exercise prices) Shares Weighted-Average Options outstanding, beginning of period 3.0 $ 81.38 Granted 0.1 150.91 Canceled — 154.63 Exercised (0.1) 52.66 Options outstanding, end of period 3.0 $ 84.19 Options exercisable, end of period 2.3 $ 64.43 |
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: Six Months Ended (in millions, except for weighted-average grant date fair value amounts) Units Weighted-Average Grant RSUs outstanding, beginning of period 2.9 $ 104.13 Granted 0.3 149.86 Canceled — 220.62 Expired — — Vested — 183.66 RSUs outstanding, end of period 3.2 $ 106.28 |
Schedule of Nonvested Performance-based Units Activity | The number of PSUs outstanding under all of the Company’s equity plans are as follows: Six Months Ended (in millions, except for weighted-average grant date fair value amounts) Units Weighted-Average Grant PSUs outstanding, beginning of period 0.3 $ 168.68 Granted (1) 0.3 145.49 Canceled — — Expired — — Vested (0.2) 127.46 PSUs outstanding, end of period 0.4 $ 170.85 ______________ (1) On February 14, 2022, the Audit Committee approved the weighted payout percentage for the 2019 PSU awards (three-year performance period), which were based upon the actual fiscal 2021 performance against pre-established performance objectives. Included in the granted amount are those additional PSUs earned based on actual performance achieved. These PSUs were originally awarded at target. |
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 July 2, 2022 (1) July 3, July 2, July 3, Risk-free interest rate —% 0.4% 1.0% to 1.9% 0.3% to 0.9% Expected term (in years) 0.0 5.1 5.7 5.6 Estimated volatility —% 32.9% 31.2% to 38.9% 30.9% to 34.7% Expected dividends 0% 0% 0% 0% Weighted-average fair value of options granted $— $66.53 $49.69 $75.72 __________________ (1) No stock options were granted during the three months ended July 2, 2022. |
Non-operating income (loss) (Ta
Non-operating income (loss) (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Nonoperating Income (Expense) [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | Non-operating income (loss) consists of the following: Three Months Ended Six Months Ended (in millions) July 2, July 3, July 2, July 3, Interest income $ 0.2 $ 0.2 $ 0.5 $ 0.4 Interest expense (4.5) (0.1) (4.6) (0.2) Realized and unrealized foreign currency (losses) gains 8.8 — 8.0 (0.9) Total non-operating income (loss) $ 4.5 $ 0.1 $ 3.9 $ (0.7) |
Segment and Enterprise Report_2
Segment and Enterprise Reporting (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Selected information by reportable segment is presented below for the three and six months ended July 2, 2022 and July 3, 2021: Three Months Ended Six Months Ended (in millions) July 2, July 3, July 2, July 3, Revenues by segment: Healthcare $ 357.0 $ 305.1 $ 661.2 $ 604.2 Non-healthcare 208.3 — 208.3 — Total revenue by segment $ 565.3 $ 305.1 $ 869.5 $ 604.2 Gross profit: Healthcare $ 236.7 $ 197.5 442.1 $ 395.2 Non-healthcare 72.6 — 72.6 — Corporate overhead — — — — Other (1) (51.1) (4.6) (51.8) (5.4) Gross profit $ 258.2 $ 192.9 $ 462.9 $ 389.8 Gross profit margin: Healthcare 66.3 % 64.7 % 66.9 % 65.4 % Non-healthcare 34.9 — 34.9 — Corporate overhead — — — — Other (1) — (1.5) — (0.9) Gross profit margin: 45.7 % 63.2 % 53.2 % 64.5 % Operating income (loss): Healthcare $ 106.5 $ — $ — $ — Non-healthcare 15.2 — — — Corporate overhead (15.1) — — — Other (1) (84.5) — — — Operating income $ 22.1 $ 65.1 $ 81.8 $ 130.8 Interest income $ 0.2 $ 0.2 $ 0.5 $ 0.4 Interest expense (4.5) (0.1) (4.6) (0.2) Other (income) expense, net 8.8 — 8.0 (0.9) Income before income taxes $ 26.6 $ 65.2 $ 85.7 $ 130.1 _______________ (1) Management excludes certain corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items. Corporate overhead represents certain costs that are not allocated to the segments for purposes of the CODM assessing performance and allocating resources--for example, the costs of being a publicly traded company. The Company’s depreciation and amortization by segment: Three Months Ended Six Months Ended (in millions) July 2, July 3, July 2, July 3, Depreciation and amortization by segment: Healthcare $ 9.1 $ 8.8 $ 18.1 $ 17.3 Non-healthcare 61.8 — 61.8 — Total depreciation and amortization $ 70.9 $ 8.8 $ 79.9 $ 17.3 The Company’s total assets by segment: As of As of (in millions) July 2, January 1, Total assets by segment: Healthcare $ 2,478.9 $ 1,866.4 Non-healthcare 462.1 — Corporate overhead 20.1 20.6 Other — — Total assets $ 2,961.1 $ 1,887.0 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 shares | Jul. 03, 2021 shares | Jul. 02, 2022 segment shares | Jul. 03, 2021 shares | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of sources of product revenue | segment | 4 | |||
Options to purchase of shares of common stock | 700 | 400 | 1,800 | 200 |
Patents | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||
Restricted Stock Units (RSUs) | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Share-based compensation arrangement, grants in period (in shares) | 300 | |||
Restricted Stock Units (RSUs) | Chief Executive Officer | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Share-based compensation arrangement, grants in period (in shares) | 2,700 | 2,700 | ||
Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Payment terms | 30 days | |||
Warranty period for defects in material and workmanship | 6 months | |||
Minimum | Trademarks | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||
Minimum | Buildings and building improvements | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 7 years | |||
Minimum | Computer equipment and software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 1 year | |||
Minimum | Demonstration units | ||||
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, equipment and tooling | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 3 years | |||
Minimum | Transportation, vehicles and other | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 1 year | |||
Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Payment terms | 60 days | |||
Warranty period for defects in material and workmanship | 48 months | |||
Maximum | Trademarks | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 17 years | |||
Maximum | Buildings and building improvements | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 39 years | |||
Maximum | Computer equipment and software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 12 years | |||
Maximum | Demonstration units | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 3 years | |||
Maximum | Furniture and office equipment | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 15 years | |||
Maximum | Machinery, equipment and tooling | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 20 years | |||
Maximum | Transportation, vehicles and other | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 20 years | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-03 | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Revenue remaining performance obligation, expected timing of satisfaction | 1 year | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-03 | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Revenue remaining performance obligation, expected timing of satisfaction | 3 years | 3 years | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-03 | Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Revenue remaining performance obligation, expected timing of satisfaction | 6 years | 6 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Changes in Product Warranty Accrual (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Warranty accrual, beginning of period | $ 2,500 | $ 2,700 |
Increase related to acquisition, net of reserve | 8,000 | 0 |
Accrual for warranties issued | 1,800 | 2,200 |
Changes in pre-existing warranties (including changes in estimates) | (400) | (1,500) |
Settlements made | (2,000) | (700) |
Warranty accrual, end of period | $ 9,900 | $ 2,700 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2022 | Apr. 02, 2022 | Jul. 03, 2021 | Apr. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Net income per share: | ||||||
Net income | $ 18.1 | $ 46.6 | $ 50.2 | $ 53.4 | $ 64.7 | $ 103.6 |
Basic net income per share: | ||||||
Weighted-average shares outstanding - basic (in shares) | 53,900 | 55,000 | 54,700 | 55,100 | ||
Net income per basic share (in dollars per share) | $ 0.34 | $ 0.91 | $ 1.18 | $ 1.88 | ||
Diluted net income per share: | ||||||
Weighted-average shares outstanding - basic (in shares) | 53,900 | 55,000 | 54,700 | 55,100 | ||
Diluted share equivalent: stock options, RSUs and PSUs (in shares) | 1,400 | 2,400 | 1,700 | 2,500 | ||
Weighted-average shares outstanding - diluted (in shares) | 55,300 | 57,400 | 56,400 | 57,600 | ||
Net income per diluted share (in dollars per share) | $ 0.33 | $ 0.88 | $ 1.15 | $ 1.80 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Detail) - USD ($) $ in Millions | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jan. 01, 2022 | Jan. 02, 2021 | |
Accounting Policies [Abstract] | ||||
Interest expense | $ 2.9 | $ 0.2 | ||
Income taxes | 39.7 | 24.2 | ||
Operating lease liabilities | 4.2 | 3.7 | ||
ROU assets obtained in exchange for lease liabilities | 8.1 | 4.4 | ||
Unpaid purchases of property and equipment | 4.1 | 2.4 | ||
Unpaid strategic investments | 0 | 6 | ||
Deposit release to acquire noncontrolling interest | 0 | 3.4 | ||
Unpaid purchase consideration to be settled upon net working capital finalization | 21 | 0 | ||
Unsettled common stock proceeds from option exercises | 0 | 0.2 | ||
Cash and cash equivalents | 218 | 576 | $ 745.3 | |
Restricted cash | 2.6 | 1.4 | ||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ 220.6 | $ 577.3 | $ 748.4 | $ 645 |
Related Party Transactions - (D
Related Party Transactions - (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 USD ($) | Jul. 02, 2022 USD ($) | Jul. 03, 2021 USD ($) | Jul. 02, 2022 USD ($) ft² | Jul. 03, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Cercacor Laboratories | ||||||
Related Party Transaction [Line Items] | ||||||
Payments for royalties | $ 5,100,000 | $ 3,200,000 | $ 8,500,000 | $ 6,700,000 | ||
Payment for administrative fees | 100,000 | 100,000 | $ 200,000 | 100,000 | ||
Related party transaction, date | Dec. 31, 2024 | |||||
Sublease income | 300,000 | 300,000 | $ 600,000 | 600,000 | ||
Related party transaction, due from (to) related party | (5,100,000) | $ (5,100,000) | $ (3,500,000) | |||
Leased Property | ||||||
Related Party Transaction [Line Items] | ||||||
Property plant and equipment, occupied square feet | ft² | 34,000 | |||||
Not for Profit Organization | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, amounts of transaction | 0 | 0 | $ 1,000,000 | 0 | ||
Like Minded Media Ventures | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, expenses from transactions with related party | 0 | 0 | 600,000 | 0 | ||
Related party transaction, due from (to) related party | 0 | 0 | $ 0 | |||
Reimbursement Fee | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, expenses from transactions with related party | $ 100,000 | $ 100,000 | ||||
Like Minded Labs | ||||||
Related Party Transaction [Line Items] | ||||||
Finite-lived license agreements, gross | $ 3,000,000 | 3,000,000 | ||||
Vantrix Corp | Purchase Commitment | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, purchases from related party | $ 500,000 | |||||
Vantrix Corp | Options Held | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, purchases from related party | $ 1,100,000 | |||||
Minimum | ||||||
Related Party Transaction [Line Items] | ||||||
Payments for royalties | $ 5,000,000 |
Inventories - Components of Inv
Inventories - Components of Inventory (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 186.7 | $ 128.3 |
Work-in-process | 29.3 | 17.1 |
Finished goods | 233.2 | 56 |
Total inventories | $ 449.2 | $ 201.4 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 62.2 | $ 30.9 |
Lease receivable, current | 28.9 | 28.7 |
Indirect taxes receivable | 22.2 | 12.8 |
Prepaid income taxes | 8.4 | 7 |
Prepaid rebates and royalties, current | 4 | 2.8 |
Restricted cash | 2.6 | 3 |
Customer notes receivable | 2.2 | 2.4 |
Contract assets, current | 1.5 | 2.1 |
Other current assets | 6.3 | 1.3 |
Total other current assets | $ 138.3 | $ 91 |
Lease Receivable (Details)
Lease Receivable (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Leases [Abstract] | ||||
Operating Lease, Variable Lease Income | $ 11 | $ 18 | $ 24 | $ 28 |
Lease Receivable Sales-Type (De
Lease Receivable Sales-Type (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
Lease receivable | $ 104.6 | $ 102.6 |
Allowance for credit loss | (0.3) | (0.3) |
Lease receivable, net | 104.3 | 102.3 |
Less: current portion of lease receivable | (28.9) | (28.7) |
Lease receivable, noncurrent | $ 75.4 | $ 73.6 |
Lease Receivable Sales-type Lea
Lease Receivable Sales-type Lease, Maturity (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Sales-Type Leases | ||
2022 (balance of year) | $ 15 | |
2023 | 26.9 | |
2024 | 23.2 | |
2025 | 17.8 | |
2026 | 11.1 | |
Thereafter | 10.3 | |
Less: imputed interest | 0 | |
Lease receivable, net | 104.3 | $ 102.3 |
Operating Leases | ||
2022 (balance of year) | 1.1 | |
2023 | 1.6 | |
2024 | 1.6 | |
2025 | 1.5 | |
2026 | 1.3 | |
Thereafter | 3 | |
Total | $ 10.1 | |
Discount rate used to measure the net investment in lease | 0% |
Deferred Costs and Other Cont_3
Deferred Costs and Other Contract Assets (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred commissions | $ 14.7 | $ 11.9 |
Prepaid contract allowances | 12.1 | 8.6 |
Unbilled contract receivables | 7.8 | 5 |
Deferred equipment agreements, net | 0.8 | 2.6 |
Deferred costs and other contract assets | $ 35.4 | $ 28.1 |
Property and Equipment (Details
Property and Equipment (Details) $ in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Feb. 14, 2022 CAD ($) | Jul. 02, 2022 USD ($) | Jul. 03, 2021 USD ($) | Jul. 02, 2022 USD ($) | Jul. 03, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | $ 544.1 | $ 544.1 | $ 430.3 | |||
Accumulated depreciation | (173.4) | (173.4) | (157.5) | |||
Property and equipment, net | 370.7 | 370.7 | 272.8 | |||
Depreciation | 12 | $ 6.4 | 18.5 | $ 12.3 | ||
Depreciation expense under operating leases | 0.9 | $ 0 | 1 | $ 0 | ||
Property, plant and equipment, additions | $ 123 | |||||
Escrow deposit | $ 21 | |||||
Building and building improvements | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 148.7 | 148.7 | 142.1 | |||
Machinery, equipment and tooling | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 139.5 | 139.5 | 103.5 | |||
Land | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 64.5 | 64.5 | 57 | |||
Computer equipment and software | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 40.2 | 40.2 | 32.5 | |||
Transportation, vehicles and other | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 33.1 | 33.1 | 33.1 | |||
Leasehold improvements | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 31.1 | 31.1 | 21.9 | |||
Furniture and office equipment | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 16.5 | 16.5 | 14.2 | |||
Operating lease assets | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 14.1 | 14.1 | 0 | |||
Demonstration units | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | 7.8 | 7.8 | 0.9 | |||
Construction-in-progress (CIP) | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Total property and equipment | $ 48.6 | $ 48.6 | $ 25.1 |
Intangible Assets, net - Schedu
Intangible Assets, net - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Apr. 11, 2022 | Jul. 02, 2022 | Jan. 01, 2022 |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 522.5 | $ 118.5 | |
Accumulated Amortization | (58) | (45.8) | |
Total intangible assets subject to amortization, net | 464.5 | 72.7 | |
Intangible assets not subject to amortization: | 262 | 0 | |
Intangible assets, net | 726.5 | 72.7 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 228.6 | 24.6 | |
Accumulated Amortization | (13) | (9.3) | |
Total intangible assets subject to amortization, net | 215.6 | 15.3 | |
Acquired technologies | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 183.9 | 28.4 | |
Accumulated Amortization | (13) | (7.7) | |
Total intangible assets subject to amortization, net | 170.9 | 20.7 | |
Patents | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 61.9 | 31.5 | |
Accumulated Amortization | (14) | (13.2) | |
Total intangible assets subject to amortization, net | 47.9 | 18.3 | |
Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 18.7 | 12.2 | |
Accumulated Amortization | (5.6) | (4.1) | |
Total intangible assets subject to amortization, net | 13.1 | 8.1 | |
Licenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 8.7 | 8.1 | |
Accumulated Amortization | (2.5) | (2) | |
Total intangible assets subject to amortization, net | 6.2 | 6.1 | |
Licenses | Cercacor Laboratories | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 7.5 | 7.5 | |
Accumulated Amortization | (6.2) | (6) | |
Total intangible assets subject to amortization, net | 1.3 | 1.5 | |
Non-compete agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 6 | 0 | |
Accumulated Amortization | 0 | 0 | |
Total intangible assets subject to amortization, net | 6 | 0 | |
Non-compete agreements | Sound United | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets acquired | $ 6 | ||
Capitalized software development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 5.3 | 4.2 | |
Accumulated Amortization | (2.7) | (2.6) | |
Total intangible assets subject to amortization, net | 2.6 | 1.6 | |
Other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 1.9 | 2 | |
Accumulated Amortization | (1) | (0.9) | |
Total intangible assets subject to amortization, net | $ 0.9 | $ 1.1 |
Intangible Assets, net - Additi
Intangible Assets, net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 58.9 | $ 2.4 | $ 61.4 | $ 5 |
Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average amortization period (in years) | 12 years | |||
Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average amortization period (in years) | 14 years | |||
Patents And Trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, cost incurred to renew or extend | $ 0.3 | $ 0.2 | $ 0.7 | $ 0.4 |
Patents | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average number of years until the next renewal | 2 years | |||
Trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average number of years until the next renewal | 6 years |
Intangible Assets, net - Future
Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (balance of year) | $ 23.8 | |
2023 | 43.8 | |
2024 | 40.4 | |
2025 | 45.5 | |
2026 | 40.7 | |
Thereafter | 270.3 | |
Total intangible assets subject to amortization, net | $ 464.5 | $ 72.7 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 6 Months Ended |
Jul. 02, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 100.3 |
Increase from business combinations | 337.5 |
Foreign currency translation adjustment | (3.3) |
Goodwill, end of period | 434.5 |
Healthcare | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | 100.3 |
Increase from business combinations | 0 |
Foreign currency translation adjustment | (3.3) |
Goodwill, end of period | 97 |
Non-healthcare | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | 0 |
Increase from business combinations | 337.5 |
Foreign currency translation adjustment | 0 |
Goodwill, end of period | $ 337.5 |
Lessee ROU Assets and Lease L_3
Lessee ROU Assets and Lease Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Leases [Abstract] | ||||
Lessee, operating lease, renewal term | 5 years | 5 years | ||
Operating lease, weighted average discount rate | 3.80% | 3.80% | ||
Accumulated amortization for lessee ROU assets | $ 29.5 | $ 15.2 | $ 29.5 | $ 15.2 |
Weighted average remaining lease term | 6 years 6 months | 6 years 6 months | ||
Operating lease costs | $ 5.4 | $ 2.2 | $ 7.8 | $ 4.1 |
Lessee ROU Assets and Lease L_4
Lessee ROU Assets and Lease Liabilities Lessee Operating Lease Balance Sheet Classification (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
Lessee ROU assets | $ 66,300 | $ 30,500 |
Lessee lease liabilities, current | 16,400 | 6,400 |
Lessee non-current lease liabilities | 49,900 | 26,300 |
Total operating lease liabilities | $ 66,300 | $ 32,700 |
Lessee ROU Assets and Lease L_5
Lessee ROU Assets and Lease Liabilities Future Maturities Operating Lease Payments (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
2022 (balance of year) | $ 9.4 | |
2023 | 16.8 | |
2024 | 13.3 | |
2025 | 9.2 | |
2026 | 5.8 | |
Thereafter | 21.1 | |
Total | 75.6 | |
Imputed interest | (9.3) | |
Present value | $ 66.3 | $ 32.7 |
Other Non-Current Assets (Detai
Other Non-Current Assets (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Other Assets, Longterm [Abstract] | ||
Lessee ROU assets, net | $ 66.3 | $ 30.5 |
Prepaid deposits and other | 24.7 | 3.9 |
Strategic investments | 13.9 | 13.8 |
Other non-current assets | 0.4 | 0.4 |
Total non-current assets | $ 105.3 | $ 48.6 |
Deferred Revenue and Other Co_3
Deferred Revenue and Other Contract Liabilities, Current (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Deferred revenue | $ 60,200 | $ 35,100 |
Accrued rebates and allowances | 31,900 | 13,600 |
Accrued customer reimbursements | 5,900 | 7,400 |
Total deferred revenue and other contract liabilities | 98,000 | 56,100 |
Less: Non-current portion of deferred revenue | (22,600) | (5,200) |
Deferred revenue and other contract liabilities - current | $ 75,400 | $ 50,900 |
Deferred Revenue and Other Co_4
Deferred Revenue and Other Contract Liabilities, Current - Narrative (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 | Oct. 31, 2020 |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |||
Unrecognized contract revenue | $ 1,236,300 | ||
Deferred revenue | 60,200 | $ 35,100 | |
Bowers and Wilkins | |||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |||
Royalty prepayment | $ 20,000 | ||
Deferred revenue | 17,900 | $ 35,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-03 | |||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |||
Unrecognized contract revenue | $ 347,600 | ||
Revenue remaining performance obligation, expected timing of satisfaction | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-03 | Twelve Months and Thereafter | |||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | |||
Revenue remaining performance obligation, expected timing of satisfaction | 12 months |
Deferred Revenue and Other Co_5
Deferred Revenue and Other Contract Liabilities, Current - Changes in Deferred Revenue (Details) $ in Thousands | 6 Months Ended |
Jul. 02, 2022 USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Deferred revenue, beginning of the period | $ 35,100 |
Increase from business combinations | 18,600 |
Revenue deferred during the period | 22,400 |
Recognition of revenue deferred in prior periods | (15,900) |
Deferred revenue, end of the period | $ 60,200 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Accrued Liabilities [Abstract] | ||
Accrued expenses | $ 51,600 | $ 12,100 |
Accrued indirect taxes payable | 27,600 | 16,300 |
Lessee lease liabilities, current | 16,400 | 6,400 |
Current portion of long-term debt | 13,900 | 0 |
Accrued warranty | 9,900 | 2,500 |
Income tax payable | 9,300 | 12,000 |
Accrued property taxes | 8,600 | 2,000 |
Accrued legal fees | 6,500 | 7,100 |
Related party payables | 5,200 | 3,600 |
Accrued donations | 1,600 | 3,700 |
Other current liabilities | 6,000 | 4,700 |
Total other current liabilities | $ 156,600 | $ 70,400 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Millions | Jul. 02, 2022 | Jan. 01, 2022 |
Debt Instrument [Line Items] | ||
Short-term debt | $ 13.9 | $ 0 |
Long-term debt | 922.4 | 0 |
Total debt | 936.3 | 0 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Short-term debt | 7.5 | 0 |
Long-term debt | 281.7 | 0 |
Revolver | ||
Debt Instrument [Line Items] | ||
Short-term debt | 0 | 0 |
Long-term debt | 629 | 0 |
Japanese Loans | ||
Debt Instrument [Line Items] | ||
Short-term debt | 6.4 | 0 |
Long-term debt | $ 11.7 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Thousands, ¥ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||
Apr. 11, 2022 USD ($) | Mar. 31, 2020 USD ($) | Jul. 02, 2022 USD ($) | Jul. 03, 2021 USD ($) | Jul. 02, 2022 USD ($) | Jul. 03, 2021 USD ($) | Jul. 13, 2022 USD ($) instrument | Jul. 02, 2022 JPY (¥) | May 16, 2022 USD ($) | May 31, 2021 USD ($) | May 31, 2021 JPY (¥) | Apr. 30, 2021 USD ($) | Apr. 30, 2021 JPY (¥) | Jun. 30, 2020 USD ($) | Jun. 30, 2020 JPY (¥) | Mar. 31, 2020 JPY (¥) | Dec. 17, 2018 USD ($) | |
Interest Rate Swap | Subsequent Event | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Number of derivative instruments | instrument | 2 | ||||||||||||||||
Interest Rate Swap 1 | Designated as Hedging Instrument | Subsequent Event | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Notional amount | $ 500,000 | ||||||||||||||||
Interest Rate Swap 2 | Designated as Hedging Instrument | Subsequent Event | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Notional amount | $ 250,000 | ||||||||||||||||
New Credit Facility Agreement | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Accordion feature, increase limit | $ 400,000 | ||||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR) | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 1% | ||||||||||||||||
New Credit Facility Agreement | Fed Funds Effective Rate Overnight Index Swap Rate | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 0.50% | ||||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR), One-Month Interest Period | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 0.10% | ||||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR), Three-Month Interest Period | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 0.15% | ||||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR), Six-Month Interest Period | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 0.25% | ||||||||||||||||
New Credit Facility Agreement | Minimum | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Commitment fee percentage | 0.15% | ||||||||||||||||
New Credit Facility Agreement | Minimum | Alternate Base Rate | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 0% | ||||||||||||||||
New Credit Facility Agreement | Minimum | Adjusted Secured Overnight Financing Rate (SOFR) | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 1% | ||||||||||||||||
New Credit Facility Agreement | Maximum | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Commitment fee percentage | 0.275% | ||||||||||||||||
New Credit Facility Agreement | Maximum | Alternate Base Rate | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 0.75% | ||||||||||||||||
New Credit Facility Agreement | Maximum | Adjusted Secured Overnight Financing Rate (SOFR) | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Variable rate | 1.75% | ||||||||||||||||
Japanese Government Loans | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Average interest rate | 1.33% | 1.33% | |||||||||||||||
Debt instrument face amount | $ 10,900 | ¥ 1,480 | |||||||||||||||
Japanese Equipment Loans | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Average interest rate | 1.20% | 1.20% | 0.58% | 0.58% | |||||||||||||
Debt instrument face amount | $ 600 | ¥ 80 | $ 1,100 | ¥ 150 | |||||||||||||
Revolving Credit Facility | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum sublimit | $ 25,000 | ||||||||||||||||
Foreign Line of Credit | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum sublimit | 75,000 | ||||||||||||||||
Revolving Credit Facility | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Current borrowing capacity | 150,000 | ||||||||||||||||
Maximum borrowing capacity | $ 550,000 | ||||||||||||||||
Interest expense | $ 4,500 | $ 0 | $ 4,500 | $ 0 | |||||||||||||
Revolving Credit Facility | New Credit Facility Agreement | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum borrowing capacity | $ 500,000 | $ 705,000 | |||||||||||||||
Accordion feature, increase limit | $ 205,000 | ||||||||||||||||
Revolving Credit Facility | Line of Credit | Japanese Revolving Loan | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum borrowing capacity | $ 5,900 | ¥ 800 | |||||||||||||||
Debt issuance costs | $ 100 | ¥ 7.2 | |||||||||||||||
Variable rate | 0.50% | ||||||||||||||||
Line of credit current | $ 5,900 | $ 5,900 | ¥ 800 | ||||||||||||||
Revolving Credit Facility | Line of Credit | Lenders | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Debt issuance costs | 200 | ||||||||||||||||
Revolving Credit Facility | Line of Credit | Initial Lenders | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Debt issuance costs | 8,900 | ||||||||||||||||
Unsecured Debt | New Credit Facility Agreement | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum borrowing capacity | 300,000 | ||||||||||||||||
Letter of Credit | New Credit Facility Agreement | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum borrowing capacity | $ 50,000 |
Debt - Maturity Debt Schedule (
Debt - Maturity Debt Schedule (Details) $ in Millions | Jul. 02, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2022 (balance of the year) | $ 3.1 |
2023 | 6.6 |
2024 | 14.1 |
2025 | 13.4 |
2026 | 12.7 |
Thereafter | 886.4 |
Total | $ 936.3 |
Other Non-Current Liabilities -
Other Non-Current Liabilities - (Detail) - USD ($) $ in Thousands | Jul. 02, 2022 | Jan. 01, 2022 |
Other Liabilities, Long Term [Abstract] | ||
Deferred tax liabilities | $ 162,300 | $ 5,100 |
Lessee non-current lease liabilities | 49,900 | 26,300 |
Deferred revenue, non-current | 22,600 | 5,200 |
Unrecognized tax benefits | 16,600 | 14,900 |
Income tax payable, non-current | 12,700 | 17,000 |
Retirement allowance | 9,600 | 0 |
Indirect tax payable, non-current | 8,000 | 0 |
Other | 2,300 | 600 |
Total other non-current liabilities | $ 284,000 | $ 69,100 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Apr. 11, 2022 | Jul. 02, 2022 | |
Business Acquisition [Line Items] | ||
Purchase price allocation completion, term (in years) | 1 year | |
Non-healthcare | ||
Business Acquisition [Line Items] | ||
Revenue | $ 208.3 | |
Net loss | (26.9) | |
Sound United | ||
Business Acquisition [Line Items] | ||
Percentage of voting interests acquired | 100% | |
Cash consideration(1) | $ 1,086.2 | |
Transaction costs | 18.1 | |
Profit Interests Units, value | $ 49.3 | |
Sound United | Selling, General and Administrative Expenses | ||
Business Acquisition [Line Items] | ||
Transaction costs | $ 15.1 | |
Sound United | Licenses | ||
Business Acquisition [Line Items] | ||
Weighted average period before renewal term | 5 years | |
Sound United | Sound United | ||
Business Acquisition [Line Items] | ||
Transaction costs | $ 41.1 |
Business Combinations - Fair Va
Business Combinations - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Apr. 11, 2022 | Jul. 02, 2022 | Jan. 01, 2022 |
Assets acquired: | |||
Goodwill | $ 434,500 | $ 100,300 | |
Sound United | |||
Business Acquisition [Line Items] | |||
Cash consideration(1) | $ 1,086,200 | ||
Purchase price | 1,086,200 | ||
Assets acquired: | |||
Cash and cash equivalents | 81,400 | ||
Accounts receivables | 108,400 | ||
Inventories | 230,700 | ||
Prepaid expenses and other current assets | 61,400 | ||
Property, plant and equipment | 101,500 | ||
Intangible asset | 657,000 | $ 657,000 | |
Goodwill | 337,500 | ||
Long-term other assets | 9,500 | ||
Total assets acquired | 1,587,400 | ||
Liabilities assumed: | |||
Accounts payable | (127,900) | ||
Accrued liabilities and other current liabilities | (153,100) | ||
Deferred tax liabilities | (159,500) | ||
Other long-term liabilities | (60,700) | ||
Total liabilities assumed | $ (501,200) |
Business Combinations - Schedul
Business Combinations - Schedule of Acquired Intangible Assets (Details) - Sound United - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2022 | Apr. 11, 2022 | |
Business Acquisition [Line Items] | ||
Weighted average amortization period (in years) | 14 years | |
Intangible asset | $ 657,000 | $ 657,000 |
Trademarks/tradenames | ||
Business Acquisition [Line Items] | ||
Weighted average amortization period (in years) | 10 years | |
Intangible asset | $ 268,000 | |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Weighted average amortization period (in years) | 18 years | |
Intangible asset | $ 204,000 | |
Developed technology | ||
Business Acquisition [Line Items] | ||
Weighted average amortization period (in years) | 8 years | |
Intangible asset | $ 156,000 | |
Contractual license agreements | ||
Business Acquisition [Line Items] | ||
Weighted average amortization period (in years) | 15 years | |
Intangible asset | $ 29,000 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - Sound United - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Pro forma net revenue | $ 572,200 | $ 511,500 | $ 1,127,100 | $ 1,021,600 |
Pro forma net income (loss) | $ 29,000 | $ 36,000 | $ 88,800 | $ (31,500) |
Stock Repurchase Program - Addi
Stock Repurchase Program - Additional Information (Detail) - shares | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Oct. 31, 2021 | Sep. 30, 2021 | Jul. 31, 2018 | Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jun. 30, 2022 | Jul. 01, 2018 | |
Class of Stock [Line Items] | |||||||||
Repurchase of common stock (in shares) | 1,300,000 | 3,000,000 | 0 | 3,000,000 | 500,000 | ||||
2018 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 | ||||||||
Stock repurchase program, period | 3 years | ||||||||
2021 Repurchase Program | Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Number of common shares authorized to be repurchased under new stock repurchase program | 3,000,000 | ||||||||
Stock repurchase program, period | 3 years | ||||||||
2022 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 | ||||||||
Stock repurchase program, remaining number of shares available for repurchase (in shares) | 5,000,000 | 5,000,000 |
Stock Repurchase Program - Sche
Stock Repurchase Program - Schedule of Stock Repurchase Activities (Detail) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Apr. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Class of Stock [Line Items] | ||||||
Shares repurchased | 1,300,000 | 3,000,000 | 0 | 3,000,000 | 500,000 | |
Average cost per share | $ 133.82 | $ 0 | $ 133.82 | $ 235.88 | ||
Value of shares repurchased | $ 401.4 | $ 0 | $ 128.9 | $ 401.4 | $ 128.9 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | May 31, 2020 | Jun. 01, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock compensation expense | $ 17.3 | $ 8.3 | $ 28.2 | $ 21 | ||
Common stock, capital shares reserved for future issuance (in shares) | 10,100,000 | 10,100,000 | ||||
Options available for grant, end of period (in shares) | 3,600,000 | 3,600,000 | ||||
Share-based compensation arrangement, award vesting rights | three | |||||
Aggregate intrinsic value of options outstanding | $ 180.8 | $ 180.8 | ||||
Aggregate intrinsic value of options exercisable | 172.9 | 172.9 | ||||
Aggregate intrinsic value of options exercised | 9.1 | |||||
Employee Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock compensation expense | 3.2 | 2.9 | 6.4 | 6.7 | ||
Share-based payment arrangement, cost not yet recognized, amount | 24.8 | $ 24.8 | ||||
Share-based payment arrangement, period for recognition (in years) | 2 years 4 months 24 days | |||||
Share-based compensation arrangement, weighted average remaining contractual term (in years) | 4 years 9 months 18 days | |||||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock compensation expense | 10 | 2.4 | $ 13 | 4.4 | ||
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | 66 | $ 66 | ||||
Share-based compensation arrangement outstanding, weighted average remaining contractual terms (in years) | 4 years 1 month 6 days | |||||
Granted (in units) | 300,000 | |||||
Performance Shares | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock compensation expense | 4.1 | $ 3 | $ 8.8 | $ 9.9 | ||
Share-based payment arrangement, nonvested award, cost not yet recognized, amount | $ 90.3 | $ 90.3 | ||||
Share-based compensation arrangement outstanding, weighted average remaining contractual terms (in years) | 2 years | |||||
Granted (in units) | 300,000 | |||||
Performance Shares | Minimum | 2021 PSU Grant | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in units) | 142,900 | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 0% | 0% | ||||
Performance Shares | Maximum | 2021 PSU Grant | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in units) | 285,800 | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 200% | 200% | ||||
2017 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation, number of additional shares authorized (in shares) | 2,500,000 | |||||
2017 Equity Incentive Plan | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options available for grant, end of period (in shares) | 5,000,000 | |||||
2017 Equity Incentive Plan | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options available for grant, end of period (in shares) | 7,500,000 | |||||
2007 Stock Incentive Plan | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options available for grant, end of period (in shares) | 5,000,000 | 5,000,000 |
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 |
Jul. 02, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding, beginning of period | 3,000 |
Granted (in shares) | 100 |
Canceled (in shares) | 0 |
Exercised (in shares) | (100) |
Options outstanding, end of period | 3,000 |
Options exercisable, end of period | 2,300 |
Weighted-Average Exercise Price | |
Options outstanding, beginning of period | $ 81.38 |
Granted (in usd per share) | 150.91 |
Canceled (in usd per share) | 154.63 |
Exercised (in usd per share) | 52.66 |
Options outstanding, end of period | 84.19 |
Options exercisable, end of period | $ 64.43 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Units Activity (Detail) - $ / shares | 6 Months Ended | |
Jul. 02, 2022 | Jan. 01, 2022 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding, beginning of period | 2,900,000 | |
Granted (in units) | 300,000 | |
Canceled (in units) | 0 | |
Expired (in units) | 0 | |
Vested (in units) | 0 | |
Outstanding, end of period | 3,200,000 | |
Weighted average grant date fair value, beginning of period (in usd per unit) | $ 106.28 | $ 104.13 |
Weighted average grant date fair value, granted (in usd per unit) | 149.86 | |
Weighted average grant date fair value, canceled (in usd per unit) | 220.62 | |
Weighted average grant date fair value, expired (in usd per unit) | 0 | |
Weighted average grant date fair value, vested (in usd per unit) | 183.66 | |
Weighted average grant date fair value, granted, end of period (in usd per unit) | $ 106.28 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding, beginning of period | 300,000 | |
Granted (in units) | 300,000 | |
Canceled (in units) | 0 | |
Expired (in units) | 0 | |
Vested (in units) | (200,000) | |
Outstanding, end of period | 400,000 | |
Weighted average grant date fair value, beginning of period (in usd per unit) | $ 170.85 | $ 168.68 |
Weighted average grant date fair value, granted (in usd per unit) | 145.49 | |
Weighted average grant date fair value, canceled (in usd per unit) | 0 | |
Weighted average grant date fair value, expired (in usd per unit) | 0 | |
Weighted average grant date fair value, vested (in usd per unit) | 127.46 | |
Weighted average grant date fair value, granted, end of period (in usd per unit) | $ 170.85 |
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 | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | ||||
Risk-free interest rate, minimum | 0% | 0.40% | 1% | 0.30% |
Risk-free interest rate, maximum | 0.40% | 1.90% | 0.90% | |
Expected term (in years) | 0 years | 5 years 1 month 6 days | 5 years 8 months 12 days | 5 years 7 months 6 days |
Estimated volatility, minimum | 0% | 32.90% | 31.20% | 30.90% |
Estimated volatility, maximum | 32.90% | 38.90% | 34.70% | |
Expected dividends | 0% | 0% | 0% | 0% |
Weighted-average fair value of options granted | $ 0 | $ 66.53 | $ 49.69 | $ 75.72 |
Employee Benefits - Narrative (
Employee Benefits - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 USD ($) plan | Jul. 03, 2021 USD ($) | Jul. 02, 2022 USD ($) plan | Jul. 03, 2021 USD ($) | |
Defined Contribution Plan Disclosure [Line Items] | ||||
Defined contribution plan, number of plans | 1 | 1 | ||
Defined benefit plan, number of plans | 2 | 2 | ||
Expected rate of return on plan assets | 0% | |||
Masimo Retirement Savings Plan | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Percent of match | 3% | |||
Company's contribution to employee retirement savings plan | $ | $ 1 | $ 0.9 | $ 2.1 | $ 1.9 |
Non-operating income (loss) (De
Non-operating income (loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Nonoperating Income (Expense) [Abstract] | ||||
Interest income | $ 200 | $ 200 | $ 500 | $ 400 |
Interest expense | (4,500) | (100) | (4,600) | (200) |
Realized and unrealized foreign currency (losses) gains | 8,800 | 0 | 8,000 | (900) |
Non-operating income (loss) | $ 4,500 | $ 100 | $ 3,900 | $ (700) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Other Tax Expense (Benefit) | $ 0.2 | $ 1.3 | $ 1.9 | $ 5.6 |
Gross unrecognized tax benefit | 23.3 | 23.3 | ||
Unrecognized tax benefit that would affect effective tax rate | $ 21.3 | $ 21.3 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jan. 02, 2014 USD ($) | Jul. 31, 2017 | Jul. 02, 2022 USD ($) Customer distributor executiveOfficer | Jul. 03, 2021 distributor | Jul. 02, 2022 USD ($) Customer distributor executiveOfficer | Jul. 03, 2021 distributor | Jan. 01, 2022 Customer | |
Contingencies And Commitments [Line Items] | |||||||
Severance plan participation agreements | executiveOfficer | 5 | 5 | |||||
Required notice of resignation | 6 months | ||||||
Royalty obligation | $ 5,000,000 | $ 5,000,000 | |||||
License fee | 2,500,000 | 2,500,000 | |||||
Change in control | 15,000,000 | 15,000,000 | |||||
Royalty guarantees, commitments, additional, change in control | 2,000,000 | 2,000,000 | |||||
Remaining commitment | 387,400,000 | 387,400,000 | |||||
Other commitment | 5,400,000 | 5,400,000 | |||||
Bank balances | 218,000,000 | 218,000,000 | |||||
Bank balance covered by Federal Deposit Insurance Corporation limit | $ 7,600,000 | $ 7,600,000 | |||||
Percentage of revenue one customer | 10.60% | 13.70% | 11.60% | 14.40% | |||
Percentage of revenue two customer | 10.80% | 10.40% | |||||
Concentration risk, AR balance one customer | Customer | 1 | 1 | 1 | ||||
Masimo vs. Physicians Healthsource, Inc. | |||||||
Contingencies And Commitments [Line Items] | |||||||
Loss contingency, damages sought | $ 500 | ||||||
Sales | |||||||
Contingencies And Commitments [Line Items] | |||||||
Distributors | distributor | 1 | 2 | 1 | 2 | |||
Accounts Receivable | |||||||
Contingencies And Commitments [Line Items] | |||||||
Percentage of accounts receivable balance | 6.80% | 6.80% | 15.70% | ||||
Sales Revenue, Product Line | |||||||
Contingencies And Commitments [Line Items] | |||||||
Percentage of revenue - customer concentration | 31.40% | 49% | 40% | 50.10% | |||
Chief Executive Officer | |||||||
Contingencies And Commitments [Line Items] | |||||||
Qualifying termination | $ 664,300,000 | ||||||
Chief Executive Officer | Cash Distribution | |||||||
Contingencies And Commitments [Line Items] | |||||||
Severance terms | 50% | ||||||
Chief Executive Officer | Restricted Stock Units (RSUs) | |||||||
Contingencies And Commitments [Line Items] | |||||||
Severance terms | 50% |
Segment and Enterprise Report_3
Segment and Enterprise Reporting - Segment Information (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 USD ($) | Jul. 03, 2021 USD ($) | Jul. 02, 2022 USD ($) segment | Jul. 03, 2021 USD ($) | Jan. 01, 2022 USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Segment Reporting Information [Line Items] | |||||
Total revenue by segment | $ 565,300 | $ 305,100 | $ 869,500 | $ 604,200 | |
Gross profit: | $ 258,200 | $ 192,900 | $ 462,900 | $ 389,800 | |
Gross profit margin: | 45.70% | 63.20% | 53.20% | 64.50% | |
Operating income (loss): | $ 22,100 | $ 65,100 | $ 81,800 | $ 130,800 | |
Interest income | 200 | 200 | 500 | 400 | |
Interest expense | (4,500) | (100) | (4,600) | (200) | |
Other (income) expense, net | 8,800 | 0 | 8,000 | (900) | |
Income before provision for income taxes | 26,600 | 65,200 | 85,700 | 130,100 | |
Depreciation and amortization | 70,900 | 8,800 | 79,900 | 17,300 | |
Total assets | 2,961,100 | 2,961,100 | $ 1,887,000 | ||
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue by segment | 565,300 | 305,100 | 869,500 | 604,200 | |
Corporate, Non-Segment | |||||
Segment Reporting Information [Line Items] | |||||
Gross profit: | $ 0 | $ 0 | $ 0 | $ 0 | |
Gross profit margin: | 0% | 0% | 0% | 0% | |
Operating income (loss): | $ (15,100) | $ 0 | $ 0 | $ 0 | |
Total assets | 20,100 | 20,100 | 20,600 | ||
Segment Reconciling Items | |||||
Segment Reporting Information [Line Items] | |||||
Gross profit: | $ (51,100) | $ (4,600) | $ (51,800) | $ (5,400) | |
Gross profit margin: | 0% | (1.50%) | 0% | (0.90%) | |
Operating income (loss): | $ (84,500) | $ 0 | $ 0 | $ 0 | |
Total assets | 0 | 0 | 0 | ||
Healthcare | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation and amortization | 9,100 | 8,800 | 18,100 | 17,300 | |
Healthcare | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue by segment | 357,000 | 305,100 | 661,200 | 604,200 | |
Gross profit: | $ 236,700 | $ 197,500 | $ 442,100 | $ 395,200 | |
Gross profit margin: | 66.30% | 64.70% | 66.90% | 65.40% | |
Operating income (loss): | $ 106,500 | $ 0 | $ 0 | $ 0 | |
Total assets | 2,478,900 | 2,478,900 | 1,866,400 | ||
Non-healthcare | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation and amortization | 61,800 | 0 | 61,800 | 0 | |
Non-healthcare | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue by segment | 208,300 | 0 | 208,300 | 0 | |
Gross profit: | $ 72,600 | $ 0 | $ 72,600 | $ 0 | |
Gross profit margin: | 34.90% | 0% | 34.90% | 0% | |
Operating income (loss): | $ 15,200 | $ 0 | $ 0 | $ 0 | |
Total assets | $ 462,100 | $ 462,100 | $ 0 |