Cover
Cover - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 28, 2023 | Jul. 03, 2021 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Current Fiscal Year End Date | --12-31 | ||
Document Period End Date | Dec. 31, 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 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 5.3 | ||
Entity Common Stock, Shares Outstanding | 52,601,943 | ||
Documents Incorporated by Reference | Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K incorporate information by reference from the registrant’s proxy statement for the registrant’s 2023 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this annual report on Form 10-K. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000937556 | ||
Common Stock, par value $0.001 | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Common Stock, par value $0.001 | ||
Trading Symbol | MASI | ||
Security Exchange Name | NASDAQ | ||
Rights to Purchase Series A Junior Participating Preferred Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Rights to Purchase Series A Junior Participating Preferred Stock | ||
Trading Symbol | N/A | ||
Security Exchange Name | NASDAQ |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | GRANT THORNTON LLP |
Auditor Location | Newport Beach, California |
Auditor Firm ID | 248 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Current assets | ||
Cash and cash equivalents | $ 202.9 | $ 745.3 |
Trade accounts receivable, net of allowance for credit losses of $7.7 and $2.2 at December 31, 2022 and January 1, 2022, respectively | 445.9 | 200.8 |
Inventories | 501 | 201.4 |
Other current assets | 158.8 | 91 |
Total current assets | 1,308.6 | 1,238.5 |
Lease receivable, non-current | 73.1 | 73.6 |
Deferred costs and other contract assets | 41.9 | 28.1 |
Property and equipment, net | 402.5 | 272.8 |
Finite-lived intangible assets, net | 460.6 | 72.5 |
Trademarks - (Note 9) | 262 | 0 |
Goodwill | 445.4 | 100.3 |
Deferred tax assets | 102.5 | 52.6 |
Other non-current assets | 114 | 48.6 |
Total assets | 3,210.6 | 1,887 |
Current liabilities | ||
Accounts payable | 276.8 | 75.6 |
Accrued compensation | 89.3 | 70.8 |
Deferred revenue and other contract-related liabilities, current | 80.6 | 50.9 |
Other current liabilities | 183.3 | 70.4 |
Total current liabilities | 630 | 267.7 |
Long-term debt | 941.6 | 0 |
Deferred tax liabilities | 163.6 | 5.1 |
Other non-current liabilities | 136.5 | 64 |
Total liabilities | 1,871.7 | 336.8 |
Commitments and contingencies - (Note 24) | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value; 5.0 shares authorized; 0.0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 100.0 shares authorized; 52.5 and 55.3 shares issued and outstanding at December 31, 2022 and January 1, 2022, respectively | 0.1 | 0.1 |
Treasury stock, 19.5 and 16.5 shares at December 31, 2022 and January 1, 2022, respectively | (1,169.2) | (767.7) |
Additional paid-in capital | 782.2 | 752.5 |
Accumulated other comprehensive income (loss) | 11.5 | (5.5) |
Retained earnings | 1,714.3 | 1,570.8 |
Total stockholders’ equity | 1,338.9 | 1,550.2 |
Total liabilities and stockholders’ equity | 3,210.6 | 1,887 |
Customer relationships | ||
Current assets | ||
Finite-lived intangible assets, net | 201.6 | 15.3 |
Acquired technologies | ||
Current assets | ||
Finite-lived intangible assets, net | 160.1 | 19.7 |
Other intangible assets, net | ||
Current assets | ||
Finite-lived intangible assets, net | $ 98.9 | $ 37.5 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 7.7 | $ 2.2 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
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) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 100 | 100 |
Common stock, shares, issued (in shares) | 52.5 | 55.3 |
Common stock, shares, outstanding (in shares) | 52.5 | 55.3 |
Treasury stock, shares (in shares) | 19.5 | 16.5 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Income Statement [Abstract] | |||
Revenue | $ 2,035.8 | $ 1,239.2 | $ 1,143.7 |
Cost of goods sold | 977 | 430.8 | 400.7 |
Gross profit | 1,058.8 | 808.4 | 743 |
Selling, general and administrative | 657.4 | 395.4 | 369 |
Research and development | 191.4 | 137.2 | 118.7 |
Litigation awards, settlements/or defense costs | 0 | 0 | (0.5) |
Total operating expenses | 848.8 | 532.6 | 487.2 |
Operating income | 210 | 275.8 | 255.8 |
Non-operating (loss) income | (16.6) | (1.4) | 7.9 |
Income before provision for income taxes | 193.4 | 274.4 | 263.7 |
Provision for income taxes | 49.9 | 44.8 | 23.4 |
Net income | $ 143.5 | $ 229.6 | $ 240.3 |
Net income per share: | |||
Basic (in dollars per share) | $ 2.68 | $ 4.16 | $ 4.39 |
Diluted (in dollars per share) | $ 2.60 | $ 3.98 | $ 4.14 |
Weighted-average shares used in per share calculations: | |||
Basic (in shares) | 53.6 | 55.2 | 54.7 |
Diluted (in shares) | 55.2 | 57.7 | 58 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | ||
Income Statement [Abstract] | ||||
Net income | $ 143.5 | $ 229.6 | $ 240.3 | |
Other comprehensive gain (loss), net of tax: | ||||
Unrealized gain (loss) from foreign currency translation adjustments | 4.9 | (6.9) | 8.1 | |
Net change in retirement obligations | (2.6) | 0 | 0 | |
Unrealized gain on cash flow hedge | [1] | 14.7 | 0 | 0 |
Total comprehensive income | $ 160.5 | $ 222.7 | $ 248.4 | |
[1]See Note 17, “ Derivative Instruments and Hedging Activities ”, for further details. |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Millions, $ in Millions | Total | Revision of Prior Period, Accounting Standards Update, Adjustment | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Retained Earnings Revision of Prior Period, Accounting Standards Update, Adjustment | ||
Beginning balance (in shares) at Dec. 28, 2019 | 53.7 | |||||||||
Beginning balance at Dec. 28, 2019 | $ 1,168 | $ 0.4 | $ 0.1 | $ (526.6) | $ 600.7 | $ (6.7) | $ 1,100.5 | $ 0.4 | ||
Beginning balance (in shares) at Dec. 28, 2019 | 15.5 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 1.9 | 1.9 | ||||||||
Stock options exercised | $ 63 | $ 0 | 63 | |||||||
Restricted/Performance stock units vested (in shares) | 0.1 | |||||||||
Shares paid for tax withholding (in shares) | 0 | 0 | ||||||||
Shares paid for tax withholding | (3.8) | $ (1.6) | (2.2) | |||||||
Stock-based compensation | $ 42.2 | 42.2 | ||||||||
Repurchases of common stock (in shares) | 0.5 | 0.4 | 0.5 | |||||||
Repurchases of common stock | $ (110.5) | $ (110.5) | ||||||||
Net change on pension obligations | 0 | |||||||||
Unrealized gain on cash flow hedge | [1] | 0 | ||||||||
Net income | 240.3 | 240.3 | ||||||||
Foreign currency translation adjustment | 8.1 | 8.1 | ||||||||
Ending balance (in shares) at Jan. 02, 2021 | 55.3 | |||||||||
Ending balance at Jan. 02, 2021 | $ 1,407.7 | $ 0.1 | $ (638.7) | 703.7 | 1.4 | 1,341.2 | ||||
Ending balance (in shares) at Jan. 02, 2021 | 16 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 0.4 | 0.4 | ||||||||
Stock options exercised | $ 20.8 | $ 0 | 20.8 | |||||||
Restricted/Performance stock units vested (in shares) | 0.3 | |||||||||
Shares paid for tax withholding (in shares) | (0.1) | 0 | ||||||||
Shares paid for tax withholding | (16.7) | $ 0 | (16.7) | |||||||
Stock-based compensation | $ 44.7 | 44.7 | ||||||||
Repurchases of common stock (in shares) | 0.5 | 0.6 | 0.5 | |||||||
Repurchases of common stock | $ (129) | $ (129) | ||||||||
Net change on pension obligations | 0 | |||||||||
Unrealized gain on cash flow hedge | [1] | 0 | ||||||||
Net income | 229.6 | 229.6 | ||||||||
Foreign currency translation adjustment | $ (6.9) | (6.9) | ||||||||
Ending balance (in shares) at Jan. 01, 2022 | 55.3 | 55.3 | ||||||||
Ending balance at Jan. 01, 2022 | $ 1,550.2 | $ 0.1 | $ (767.7) | 752.5 | (5.5) | 1,570.8 | ||||
Ending balance (in shares) at Jan. 01, 2022 | 16.5 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 0.1 | 0.1 | ||||||||
Stock options exercised | $ 7.4 | $ 0 | 7.4 | |||||||
Restricted/Performance stock units vested (in shares) | 0.2 | |||||||||
Shares paid for tax withholding (in shares) | (0.1) | 0 | ||||||||
Shares paid for tax withholding | (25.4) | $ 0 | (25.4) | |||||||
Stock-based compensation | $ 47.7 | 47.7 | ||||||||
Repurchases of common stock (in shares) | 3 | 3 | 3 | |||||||
Repurchases of common stock | $ (401.5) | $ (401.5) | ||||||||
Net change on pension obligations | (2.6) | (2.6) | ||||||||
Unrealized gain on cash flow hedge | 14.7 | [1] | 14.7 | |||||||
Net income | 143.5 | 143.5 | ||||||||
Foreign currency translation adjustment | $ 4.9 | 4.9 | ||||||||
Ending balance (in shares) at Dec. 31, 2022 | 52.5 | 52.5 | ||||||||
Ending balance at Dec. 31, 2022 | $ 1,338.9 | $ 0.1 | $ (1,169.2) | $ 782.2 | $ 11.5 | $ 1,714.3 | ||||
Ending balance (in shares) at Dec. 31, 2022 | 19.5 | |||||||||
[1]See Note 17, “ Derivative Instruments and Hedging Activities ”, for further details. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Cash flows from operating activities: | |||
Net income | $ 143.5 | $ 229.6 | $ 240.3 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 136.1 | 35.6 | 29.3 |
Stock-based compensation | 47.7 | 44.7 | 42.2 |
Amortization of debt issuance costs | 1.4 | 0 | 0 |
Loss on disposal of equipment, intangibles and other assets | 0.5 | 0.5 | 0.6 |
Provision for credit losses | 1.3 | 0.8 | 0.1 |
Benefit from deferred income taxes | (39.3) | (15.1) | (5) |
Changes in operating assets and liabilities: | |||
Increase in trade accounts receivable | (138.5) | (60.8) | (2.2) |
(Increase) decrease in inventories | (155.9) | 13.5 | (94.4) |
(Increase) decrease in other current assets | (7.4) | 6.9 | (30) |
Increase in lease receivable, net | (12.8) | (16.1) | (7.7) |
Increase in deferred costs and other contract assets | (13.4) | (8.1) | (2.8) |
(Increase) decrease in other non-current assets | (4.9) | 0 | (1.3) |
Increase in accounts payable | 60.5 | 11 | 7.6 |
(Decrease) increase in accrued compensation | (9.3) | 0 | 15.5 |
Increase in deferred revenue and other contract-related liabilities | 28.1 | 7.1 | 10.9 |
Increase (decrease) in income taxes payable | 3.8 | 6.4 | (1.3) |
(Decrease) increase in accrued liabilities | (16.1) | 7.8 | 9.4 |
Increase (decrease) in other non-current liabilities | 4.1 | 0.8 | (0.1) |
Net cash provided by operating activities | 29.4 | 264.6 | 211.1 |
Cash flows from investing activities: | |||
Maturities of short-term investments | 0 | 0 | 120 |
Purchases of property and equipment, net | (52.8) | (25.5) | (72.5) |
Increase in intangible assets | (3.5) | (9.4) | (7.4) |
Business combinations, net of cash acquired | (999.7) | 0 | (112.7) |
Deposit to acquire noncontrolling interest | 0 | 0 | (3.4) |
Other strategic investing activities | (1.7) | (2.6) | (6.8) |
Net cash used in investing activities | (1,057.7) | (37.5) | (82.8) |
Cash flows from financing activities: | |||
Borrowings under revolving line of credit | 1,083.9 | 0 | 0 |
Repayments under revolving line of credit | (135.4) | 0 | 0 |
Proceeds from issuance of common stock | 8.1 | 23.2 | 58.4 |
Repurchases of common stock | (401.5) | (128.9) | (110.5) |
Payroll tax withholdings on behalf of employees for stock options | (25.4) | (16.7) | (2.2) |
Debt issuance costs | (9.3) | 0 | 0 |
Net cash provided by (used in) financing activities | 520.4 | (122.4) | (54.3) |
Effect of foreign currency exchange rates on cash | (30.9) | (1.3) | 2.9 |
Net increase in cash, cash equivalents and restricted cash | (538.8) | 103.4 | 76.9 |
Cash, cash equivalents and restricted cash at beginning of period | 748.4 | 645 | 568.1 |
Cash, cash equivalents and restricted cash at end of period | $ 209.6 | $ 748.4 | $ 645 |
Description of the Company
Description of the Company | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Company | 1. Description of the Company Masimo Corporation (the Company) is a global technology company that develops, manufactures and markets a wide array of patient monitoring technologies, as well as automation and connectivity solutions. The Company’s mission is to improve patient outcomes, reduce the cost of care and take noninvasive monitoring to new sites and applications. The Company’s patient monitoring solutions generally incorporate a monitor or circuit board, proprietary single-patient use or reusable sensors, software and/or cables. The Company primarily sells its products to hospitals, emergency medical service providers, home care providers, physician offices, veterinarians, long-term care facilities and consumers through its direct sales force, distributors and original equipment manufacturer (OEM) partners. The Company invented Masimo Signal Extraction Technology ® (SET ® ), which provides the capabilities of Measure-through Motion and Low Perfusion ™ pulse oximetry to address the primary limitations of conventional pulse oximetry. Over the years, the Company’s product offerings have expanded significantly to also include rainbow ® Pulse CO-Oximetry, with its ability to monitor carboxyhemoglobin (SpCO ® ), methemoglobin (SpMet ® ), total hemoglobin concentration (SpHb ® ), fractional arterial oxygen saturation (SpfO 2 ™ ), Oxygen Content (SpOC ™ ), Pleth Variability Index (PVi ® ), rainbow ® Pleth Variability Index (RPVi ™ ), respiration rate from the pleth (RRp ® ) and Oxygen Reserve Index (ORi ™ ); as well as acoustic respiration monitoring (RRa ® ), SedLine ® brain function monitoring, NomoLine ® capnography and gas monitoring and O3 ® Regional Oximetry. These technologies are based upon Masimo SET ® , rainbow ® and other proprietary algorithms and are incorporated into a variety of product platforms depending on customers’ specifications. The Company’s current technology offerings also include remote patient monitoring, connectivity, and hospital automation ™ solutions, including Masimo Patient SafetyNet ™( 1) , Masimo Patient SafetyNet ™ Surveillance (1) , Masimo SafetyNet ™ , Masimo SafetyNet-Open ™ , Replica ™ , Iris ® , MyView ® , UniView ™ , Uniview: 60 ™ , Trace ™ , Masimo Sleep ™ , Centroid ™ , and Bridge ™ . The Company’s technologies are supported by a substantial intellectual property portfolio that the Company has built through internal development and, to a lesser extent, acquisitions and license agreements. On April 11, 2022, the Company acquired Viper Holdings Corporation, the parent company of DEI Sales, Inc., d/b/a Sound United (Sound United), via the Company’s wholly-owned subsidiary, Sonic Boom Acquisition Corp (Sonic) (Sound United Acquisition). For additional information on Masimo’s acquisition of Sound United, see Note 18, “Business Combinations”. In addition, the Company updated its financial reporting segments to align with the way it manages its business units post-acquisition. See Note 25, “Segment and Enterprise Reporting”, for additional details. The terms “the Company” and “Masimo” refer to Masimo Corporation and, where applicable, its consolidated subsidiaries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 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 was a 52 week fiscal year ended December 31, 2022, with the fourth quarter having 13 weeks. All references to years in these notes to consolidated financial statements are references to fiscal years unless otherwise noted. ___________________________ (1) The use of the trademark Patient SafetyNet ™ is under license from the University HealthSystem Consortium. Use of Estimates The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of 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, and 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 Standards Codification (ASC) Topic 805, Business Combinations , which requires that once control is obtained, 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 The Company accounts for certain financial instruments at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its financial instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures , and considers the estimated amount the Company would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and the Company’s creditworthiness for unrealized loss positions. In certain instances, the Company may utilize financial models to measure the fair value of its financial instruments. In doing so, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. Recurring Fair Value Measurement On a recurring basis, the Company measures certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, the Company applies valuation techniques to estimate fair value. 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. The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at December 31, 2022: Total Carrying Fair Value Measurement Hierarchy (in millions) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 148.5 $ 148.5 $ — $ — Money market funds 54.4 54.4 — — Pension assets 22.2 14.8 7.4 — Cash and cash equivalents — 1.0 — — Equity securities — 6.6 — — Debt securities — 7.2 0.8 — Real estate funds — — 3.5 — Alternative investments — — 1.9 — Other — — 1.2 — Derivative instruments - cash flow hedges 19.7 — 19.7 — Total assets $ 244.8 $ 217.7 $ 27.1 $ — Liabilities None $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at January 1, 2022: Total Carrying Fair Value Measurement Hierarchy (in millions) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 745.3 $ 745.3 $ — $ — Total assets $ 745.3 $ 745.3 $ — $ — Liabilities None $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — The Company invests in checking, savings and money market fund accounts, which are classified within Level 1 of the fair value hierarchy as they are valued using quoted market prices. These investments are classified as cash and cash equivalents within the Company’s accompanying consolidated balance sheets, in accordance with GAAP and its accounting policies. The Company’s pension asset consists of level 1 and level 2 investments. The fair value of level 2 assets are based on observable inputs such as prices or quotes for similar assets, adjusted for any differences in terms or conditions that may affect the value of the instrument being valued. The valuation techniques used for level 2 assets may include the use of models or other valuation techniques, but these methods are all based on observable market inputs. Non-Recurring Fair Value Measurements 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. Furthermore, the Company did not elect to apply the fair value option to specific assets or liabilities on a contract-by-contract basis. The Company did not have any transfers between Level 2 and Level 3 for the years ended December 31, 2022 and January 1, 2022. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from the 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. The Company carries cash and cash equivalents at cost, which approximates fair value, and they are Level 1 under the fair value hierarchy. 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. Based on the risk of characteristics, the Company has identified U.S. and international customers as separate portfolios for both segments, and measures expected credit losses on such receivables using an aging methodology. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory 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 2 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 capitalized 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 17 years, and their associated amortization cost is included in selling, general and administrative expense in the accompanying consolidated statements of operations. For intangibles purchased in an asset acquisition or business combination, which mainly include patents, trademarks, customer relationships and acquired technologies, the useful life is determined largely by valuation estimates of remaining economic life. 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 has two reporting units, healthcare and non-healthcare. 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 require 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 plans that cover certain employees in certain international locations. The Company recognizes the funded status, or the difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the 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 consolidated statement of operations. The liabilities and annual income or expense are 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 21, “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 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 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 are 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 accounts 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 that are not dependent on an index or rate, the Company classifies as operating leases any lease components that would have otherwise been classified as sales-type leases that would result in a selling loss upon lease commencement. 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 the 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 made directly to customers from the Company’s website are paid at the time of product shipment. Prior to determining payment terms for each customer, 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 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 s |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 3. Related Party Transactions Cercacor Laboratories, Inc. (Cercacor) is an independent entity that was spun off from the Company to its stockholders in 1998. Joe Kiani, the Company’s Chairman and Chief Executive Officer (CEO), is also the Chairman and CEO of Cercacor. Effective as of January 3, 2016, in connection with changes in the capital structure of Cercacor, the Company determined that Cercacor was no longer required to be consolidated. Although the Company believes that Cercacor continues to be considered a variable interest entity, the Company has determined that it is no longer the primary beneficiary of Cercacor as it does not have the power to direct the activities of Cercacor that most significantly impact Cercacor’s economic performance and has no obligation to absorb Cercacor’s losses. 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 $16.9 million, $13.5 million and $13.3 million for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, respectively. The Company had sales to Cercacor in the amount of $0.2 million, $0.1 million and less than $0.1 million for the years ended December 31, 2022, January 1, 2022 and January 2, 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 $0.4 million, $0.3 million and $0.3 million for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, respectively. • Lease Agreements - Effective December 2019, the Company entered into a new lease agreement with Cercacor for approximately 34,000 of 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 $1.2 million, $1.2 million and $1.1 million of lease income for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, respectively. Net amounts due to Cercacor were approximately $3.8 million and $3.5 million as of December 31, 2022 and January 1, 2022, 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. For the fiscal years ended December 31, 2022, January 1, 2022 and January 2, 2021, the Company made cash contributions of approximately $1.0 million, $0.0 million and $1.5 million, respectively, to the Masimo Foundation. In addition, for each of the years ended December 31, 2022, January 1, 2022 and January 2, 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. In 2020, 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 fiscal years ended December 31, 2022 and January 1, 2022, the Company incurred $1.4 million and less than $0.1 million in marketing expenses to LMMV under the marketing service agreement, respectively. During the fiscal year ended January 2, 2021, the Company incurred no marketing expenses to LMMV under the marketing service agreement. At December 31, 2022 and January 1, 2022, there were no amoun ts due to LMMV for services rendered. During the second quarter of 2021, the Company entered into a software license and professional services agreement with Like Minded Labs (LML), a subsidiary of LMMV. 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. During the fiscal years ended December 31, 2022, January 1, 2022 and January 2, 2021, the Company charged the Company’s CEO $0.1 million, $0.1 million and less than $0.1 million, respectively, related to such reimbursements. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories consist of the following: (in millions) December 31, January 1, Raw materials $ 209.9 $ 128.3 Work-in-process 30.4 17.1 Finished goods 260.7 56.0 Total inventories $ 501.0 (1) $ 201.4 ______________ (1) Included in the December 31, 2022 ending total inventories balance was approximately $53.3 million of step-up amortization related to the Sound United Acquisition. See Note 18, “Business Combinations”, for further details. |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 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) December 31, January 1, Prepaid expenses $ 77.5 $ 30.9 Indirect taxes receivable 26.8 12.8 Lease receivable, current 28.5 28.7 Prepaid income taxes 12.4 7.0 Contract assets, current 3.9 2.1 Prepaid rebates and royalties 3.7 2.8 Restricted cash (1) 2.4 3.0 Other current assets 3.6 3.7 Total other current assets $ 158.8 $ 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 | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Lease Receivable | 6. Lease Receivable For deferred equipment agreements that contain embedded operating leases, upon lease commencement, the Company defers and records the equipment cost of operating lease assets within property, plant and equipment, net of accumulated depreciation. These operating lease assets are subsequently amortized to cost of goods sold over the lease term on a straight-line basis. For deferred equipment agreements that contain embedded sales-type leases, the Company recognizes lease revenue and costs, as well as a lease receivable, at the time the lease commences. Lease revenue related to both operating-type and sales-type leases for the years ended December 31, 2022 and January 1, 2022 was approximately $57.0 million and $59.4 million, respectively, and is included within revenue in the accompanying consolidated statements of operations. Costs related to embedded sales-type leases within the Company’s deferred equipment agreements are included in cost of goods sold. Lease receivable from sales-type leases consists of the following: (in millions) December 31, January 2, Lease receivable $ 101.8 $ 102.6 Allowance for credit loss (0.2) (0.3) Lease receivable, net 101.6 102.3 Less: current portion of lease receivable (28.5) (28.7) Lease receivable, non-current $ 73.1 $ 73.6 As of December 31, 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 2023 $ 28.4 $ 3.8 2024 25.1 3.5 2025 19.9 3.5 2026 13.5 3.3 2027 7.9 2.7 Thereafter 6.8 3.7 Total $ 101.6 $ 20.5 Less: imputed interest (1) — Present value of total lease payments $ 101.6 ______________ (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 | 12 Months Ended |
Dec. 31, 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) December 31, January 1, Deferred commissions $ 17.1 $ 11.9 Prepaid contract allowances 13.7 8.6 Unbilled contract receivables 9.4 5.0 Deferred equipment agreements, net 1.7 2.6 Deferred costs and other contract assets $ 41.9 $ 28.1 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 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) December 31, January 1, Building and building improvements $ 151.0 $ 142.1 Machinery, equipment and tooling 149.4 103.5 Land 65.1 57.0 Operating lease assets (1) 50.2 — Computer equipment and software 42.1 32.5 Transportation, vehicles and other 32.7 33.1 Leasehold improvements 32.3 21.9 Furniture and office equipment 19.4 14.2 Demonstration units 11.2 0.9 Construction-in-progress (CIP) 50.6 25.1 Total property and equipment 604.0 430.3 Accumulated depreciation (201.5) (157.5) Property and equipment, net $ 402.5 $ 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, net. A significant portion of the increase in property and equipment was attributable to the Sound United Acquisition. See Note 18, “ Business Combinations ”, for further details. For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, depreciation expense of property and equipment was $43.0 million, $25.3 million and $21.8 million, respectively. For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, depreciation expense of operating lease assets was $4.4 million, $0.5 million and $0.4 million, respectively. For the years ended December 31, 2022 and January 1, 2022, $4.3 million and $0.5 million of equipment leased to customers was amortized to cost of goods sold, respectively. As of December 31, 2022 and January 1, 2022, accumulated amortization of equipment leased to customers was $2.1 million and $0.5 million, respectively. The balance in CIP at December 31, 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 Keltic (Prior) Development Limited Partnership (Vendor) for the purchase of a property in Vancouver, British Columbia, Canada for a purchase price of CAD123.0 million, plus goods and services tax (Purchase Price), subject to certain adjustments. The Company has paid CAD21.0 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 | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net | 9. Intangible Assets, net Intangible assets, net, consist of the following: December 31, January 1, (in millions) Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Customer relationships $ 220.9 $ (19.3) $ 201.6 $ 24.6 $ (9.3) $ 15.3 Acquired technologies 185.3 (25.2) 160.1 28.4 (8.7) 19.7 Trademarks 39.3 (5.8) 33.5 12.2 (4.1) 8.1 Licenses 39.0 (4.4) 34.6 8.1 (2.0) 6.1 Patents 35.2 (13.9) 21.3 31.5 (12.2) 19.3 Licenses-related party 7.5 (6.3) 1.2 7.5 (6.0) 1.5 Non-compete agreements (1) 6.3 (1.1) 5.2 0.3 — 0.3 Capitalized software development costs 5.5 (2.9) 2.6 4.3 (2.6) 1.7 Other 1.6 (1.1) 0.5 1.6 (1.1) 0.5 Total intangible assets subject to amortization, net $ 540.6 $ (80.0) $ 460.6 $ 118.5 $ (46.0) $ 72.5 Intangible assets not subject to amortization: Trademarks 262.0 — Intangible assets, net $ 722.6 $ 72.5 _______________ (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 to Note 18, “Business Combinations”, for further details. Finite lived intangible assets have a weighted-average amortization period of twelve years to fourteen years. For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, total amortization expense of intangible assets was $39.8 million, $10.3 million and $7.5 million, respectively. As of December 31, 2022 and January 1, 2022, the total costs of patents not yet amortizing was $10.6 million and $9.0 million, respectively. As of December 31, 2022 and January 1, 2022, the total costs of trademarks not yet amortizing was $1.1 million and $1.0 million, respectively. For the years ended December 31, 2022 and January 1, 2022, total renewal costs capitalized for patents and trademarks was $1.2 million and $1.5 million, respectively. As of December 31, 2022, the weighted-average number of years until the next renewal was one year for patents and six years for trademarks. Estimated amortization expense for each of the next fiscal years is as follows: Fiscal Year Amount 2023 $ 44.9 2024 47.7 2025 47.2 2026 46.3 2027 45.7 Thereafter 228.8 Total $ 460.6 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 10. Goodwill Changes in goodwill were as follows: December 31, (in millions) Healthcare Non-healthcare Total Goodwill, beginning of period $ 100.3 $ — $ 100.3 Increase from business combinations — 347.8 347.8 Adjustments to goodwill from purchase price allocation — — — Foreign currency translation adjustment (2.7) — (2.7) Goodwill, end of period $ 97.6 $ 347.8 $ 445.4 A significant portion of the increase in goodwill at December 31, 2022 was attributable to the Sound United Acquisition. See Note 18, “Business Combinations”, for further details. January 1, (in millions) Healthcare Non-healthcare Total Goodwill, beginning of period $ 103.2 $ — $ 103.2 Increase from business combinations — — — Adjustments to goodwill from finalization of purchase price allocation — — — Foreign currency translation adjustment (2.9) — (2.9) Goodwill, end of period $ 100.3 $ — $ 100.3 |
Lessee ROU Assets and Lease Lia
Lessee ROU Assets and Lease Liabilities | 12 Months Ended |
Dec. 31, 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 applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. As of December 31, 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 December 31, January 1, Lessee ROU assets, net Other non-current assets $ 69.6 $ 30.5 Lessee current lease liabilities Other current liabilities 18.7 6.4 Lessee non-current lease liabilities Other non-current liabilities 53.4 26.3 Total operating lease liabilities $ 72.1 $ 32.7 For the years ended December 31, 2022 and January 1, 2022, accumulated amortization for lessee ROU assets was $36.6 million and $15.2 million, respectively. The weighted-average remaining lease term for the Company’s operating leases was 5.9 years as of December 31, 2022. As of December 31, 2022, estimated future operating lease payments for each of the following fiscal years were as follows: Fiscal Year Amount 2023 $ 20.3 2024 17.2 2025 13.0 2026 9.2 2027 4.7 Thereafter (1) 17.2 Total 81.6 Imputed interest (9.5) Present value $ 72.1 ______________ (1) Includes optional renewal period for certain leases. For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, the Company’s operating lease costs were approximately $18.0 million, $8.2 million and $6.9 million, respectively. |
Other Non-Current Assets
Other Non-Current Assets | 12 Months Ended |
Dec. 31, 2022 | |
Other Assets, Noncurrent [Abstract] | |
Other Non-Current Assets | 12. Other Non-Current Assets Other non-current assets consist of the following: (in millions) December 31, January 1, Lessee ROU assets, net $ 69.6 $ 30.5 Derivative assets - non-current 19.3 — Strategic investments 13.8 13.8 Prepaid deposits and other 11.0 3.9 Other non-current assets 0.3 0.4 Total other non-current assets $ 114.0 $ 48.6 |
Deferred Revenue and Other Cont
Deferred Revenue and Other Contract Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue and Other Contract Liabilities | 13. Deferred Revenue and Other Contract Liabilities Deferred revenue and other contract liabilities consist of the following: (in millions) December 31, January 1, Deferred revenue $ 61.0 $ 35.1 Accrued rebates and allowances 38.5 13.6 Accrued customer reimbursements 6.1 7.4 Total deferred revenue and other contract liabilities 105.6 56.1 Less: Non-current portion of deferred revenue (25.0) (5.2) Deferred revenue and other contract liabilities - current $ 80.6 $ 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 the 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 December 31, 2022, the Company had approximately $1,289.3 million of Unrecognized Contract Revenue related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately $354.8 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 December 31, 2022, non-healthcare deferred revenue was $17.5 million. Changes in deferred revenue for the year ended December 31, 2022 were as follows: (in millions) December 31, Deferred revenue, beginning of the period $ 35.1 Increase from business combinations 19.0 Revenue deferred during the period 38.9 Recognition of revenue deferred in prior periods (32.0) Deferred revenue, end of the period $ 61.0 |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | 14. Other Current Liabilities Other current liabilities consist of the following: (in millions) December 31, January 1, Accrued expenses $ 39.9 $ 12.1 Accrued indirect taxes payable 28.2 16.3 Lessee lease liabilities, current 18.7 6.4 Current portion of long-term debt 15.1 — Accrued property taxes 12.1 2.0 Accrued legal fees 11.4 7.1 Accrued warranty 10.6 2.5 Income tax payable 32.1 12.0 Other current liabilities 6.1 4.7 Accrued donations 5.1 3.7 Related party payables 4.0 3.6 Total other current liabilities $ 183.3 $ 70.4 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 15. Debt (in millions) December 31, January 1, Term loan - current portion $ 7.5 $ — Japanese loans - current portion 7.6 — Short-term debt 15.1 — Term loan - long-term 278.9 — Revolver - long-term 651.0 — Japanese loans - long-term 11.7 — Long-term debt 941.6 — Total debt $ 956.7 $ — Prior Credit Facility Until April 11, 2022, the Company maintained a credit agreement (Prior Credit Facility) with JPMorgan Chase Bank, N.A., as the 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 $0.1 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 18, “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 $8.4 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 the 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 full compliance with all covenants contained in its debt or credit facility agreements at December 31, 2022. For the years ended December 31, 2022 and January 1, 2022, the Company incurred total interest expense, including amounts capitalized of $23.7 million and $0.0 million, under the Credit Facility, respectively. For the year ended January 1, 2022, the Company did not incur any interest expense under the Credit Facility. 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 $6.1 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 December 31, 2022, the Company had ¥800 million (approximately $6.1 million) of outstanding borrowing under the Japanese Revolving Loan, which is presented under short-term loans on the accompanying 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 the borrower, and determine the eligibility to declare, the amount of potential dividends to be paid during a given fiscal year. The Company was in compliance with all covenants under the Japanese Revolving Loan agreement at December 31, 2022. On February 28, 2023, the Company and Mizuho Bank executed an amendment to the Japanese Revolving Loan, to increase the maximum aggregate revolving commitments to ¥3.00 billion (approximately $22.9 million). Under the amendment, the facility accrues interest at a rate equal to the TIBOR plus a fixed spread of 0.75% per annum. The Company also paid an upfront fee of ¥22.0 million (approximately $0.2 million) on the incremental amount of the revolving credit facility. Japanese Government Loans In May and June 2020, Sound United received ¥1.48 billion (approximately $11.3 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 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 equipment collateralized loans (Japanese Equipment Loans) of ¥150 million (approximately $1.1 million), payable in installments through March 2031 with an 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 consolidated balance sheets. The Company incurred no debt issuance costs in connection with these Japanese Equipment Loans. As of December 31, 2022, the aggregate maturities of principal on all debt for each of the next five years and thereafter is as follows: Fiscal Year Amount 2023 $ 15.1 2024 14.9 2025 16.8 2026 16.8 2027 888.6 Thereafter 4.5 Total $ 956.7 |
Other Non-Current Liabilities
Other Non-Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Non-Current Liabilities | 16. Other Non-Current Liabilities Other non-current liabilities consist of the following: (in millions) December 31, January 1, Lessee non-current lease liabilities $ 53.4 $ 26.3 Deferred revenue, non-current 25.0 5.2 Unrecognized tax benefits 18.0 14.9 Pension benefit obligation 10.1 — Income tax payable, non-current 12.7 17.0 Indirect tax payable, non-current 8.2 — Other 9.1 0.6 Total other non-current liabilities $ 136.5 $ 64.0 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 23, “Income Taxes”, for further details. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | 17. Derivative Instruments and Hedging Activities Derivative Instruments - Cash Flow Hedges The Company’s cash flow hedges are designed to mitigate the risk of exposure to variability in expected future cash flows of recognized assets, liabilities or any unrecognized forecasted transactions. In July 2022, the Company entered into various interest rate swaps that are designated as cash flow hedges on a substantial portion of the outstanding debt the Company issued to fund the Sound United Acquisition. The interest rate swaps reduce the variability of cash flow payments for the Company by converting the variable interest rate on the Company’s long-term debt to an average fixed interest rate of 2.75%. These contracts, carried at fair value, have maturities of approximately five years. All hedging relationships were highly effective at achieving offsetting changes in cash flows attributable to the risk being hedged. The Company used a regression analysis at hedge inception to assess the effectiveness of cash flow hedge and periodically thereafter. The Company records gains and losses from the changes in the fair value of these instruments as a component of other comprehensive income (loss). Deferred gains or losses from these designated cash flow hedges are reclassified into earnings in the period that the hedged items affect earnings. The Company does not offset fair value amounts recognized for derivative instruments in its consolidated balance sheets for presentation purposes. The following table summarizes the fair value of the hedging instruments, presented on a gross basis, including accrued interest, as of December 31, 2022 and January 1, 2022. Consolidated (in millions) Balance Sheet Classification December 31, January 1, Interest rate contracts, inclusive of accrued interest Other non-current assets $ 19.7 $ — Total $ 19.7 $ — The following table summarizes the gains (losses) reclassified from accumulated other comprehensive income to the consolidated financial statements for the year ended December 31, 2022. Consolidated (in millions) Location of Gain (Loss) December 31, January 1, January 2, Cash flow hedges - interest rate contracts Non-operating loss (income) $ 0.7 $ — $ — Total $ 0.7 $ — $ — The following tables summarize the changes in accumulated other comprehensive income related to the hedging instruments: (in millions) December 31, January 1, Beginning balance $ — $ — Amount recognized in other comprehensive income 20.0 — Amount reclassified into earnings (0.7) — Ending balance $ 19.3 $ — The net of tax unrealized gain was $14.7 million as of December 31, 2022. The Company expects to reclassify a net amount of gains of $12.2 million from accumulated other comprehensive (loss) gain to non-operating loss (income) within the next 12 months. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | 18. 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 (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 $1.065 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 $694.9 million and a net loss of $38.6 million for the period of April 11, 2022 to December 31, 2022. Acquisition costs The Company recognized transaction costs related to the Sound United Acquisition of $16.6 million for the year ended December 31, 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. Based on additional supportable information and changes in assumptions during the period, the Company recorded certain measurement period adjustments during the three months ended December 31, 2022. The valuations of the assets acquired and liabilities assumed have not yet been finalized as of December 31, 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. Measurement period adjustments for the period ended December 31, 2022 included changes to the purchase price allocation and total consideration, resulting in a net decrease of $4.4 million to goodwill. The measurement period adjustments resulted primarily from valuation inputs pertaining to certain acquired assets based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date. The fair values assigned to assets acquired and liabilities assumed as of December 31, 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, inclusive of measurement period adjustments, as of April 11, 2022: (in millions) Sound United Cash consideration (1) $ 1,065.0 Purchase price $ 1,065.0 Assets acquired: Cash and cash equivalents $ 82.6 Accounts receivables 108.5 Inventories 235.8 Prepaid expenses and other current assets 31.1 Property, plant and equipment 113.2 Intangible assets 649.0 Goodwill 333.1 Long-term other assets 14.7 Total assets acquired $ 1,568.0 Liabilities assumed: Accounts payable $ (118.8) Accrued liabilities and other current liabilities (165.9) Deferred tax liabilities (143.1) Other long-term liabilities (75.2) Total liabilities assumed $ (503.0) ______________ (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 April 11, Trademarks/tradenames 10 $ 6.0 Customer relationships 17 196.0 Developed technology 8 156.0 Contractual license agreements 15 29.0 Subtotal 14 years $ 387.0 Indefinite trademarks/tradenames N/A 262.0 Total $ 649.0 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 and operating margins reflecting the risk inherent in each cash flow stream, competitive trends, market comparables 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 five years until the next renewal term. The intangible assets were valued using the following valuation approaches: Customer 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. Trademarks/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. Developed 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. Contractual 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 year ended December 31, 2022, Masimo and Sound United incurred $22.4 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 twelve months ended December 31, 2022 in the table below and the acquisition related expenses incurred by Masimo are included in selling, general and administrative in the Company’s consolidated statements of comprehensive income for the twelve months ended January 1, 2022. 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. Twelve Months Ended (in millions) December 31, January 1, Pro forma net revenue $ 2,293.4 $ 2,187.4 Pro forma net income (loss) $ 181.8 $ 126.2 |
Equity
Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Equity | 19. Equity Series A Junior Participating Preferred Stock and Stockholder Rights Plan In September 2022, the Company authorized and declared a dividend of one preferred stock purchase right (Right) for each outstanding share of its common stock to stockholders of record at the close of business on September 20, 2022 (the Record Date) pursuant to a rights agreement, dated as of September 9, 2022, with Broadridge Corporate Issuer Solutions, Inc., as rights agent. In addition, one Right was issued with each share of common stock that became outstanding after the Record Date. Each Right entitles the registered holder to purchase from the Company one thousandth of one share of the Company’s Series A junior participating preferred stock, par value $0.001 per share, at a purchase price equal to $1,000.00 per Right, subject to adjustment. Generally, the Rights become exercisable in the event any person or group of affiliated or associated persons acquires beneficial ownership of 10% (20% in the case of a passive institutional investor), subject to certain exceptions. The Rights will expire on the earliest of (i) 5:00 p.m., New York City time, on September 8, 2023, (ii) the time at which the Rights are redeemed, and (iii) the time at which the Rights are exchanged in full. Stock Repurchase Programs 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 purchases, one or more Rule 10b5-1 trading plans, block trades and privately negotiated transactions. As of December 31, 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 activities during the years ended December 31, 2022, January 1, 2022 and January 2, 2021: Years Ended (in millions, except per share amounts) December 31, January 1, January 2, Shares repurchased 3.0 (1) 0.5 (1) 0.5 (1) Average cost per share $ 133.82 $ 235.88 $ 242.40 Value of shares repurchased $ 401.5 $ 129.0 $ 110.5 ______________ (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 | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 20. Stock-Based Compensation Equity Incentive Plans 2007 Stock Incentive Plan Effective June 1, 2017, upon the approval and ratification of the Masimo Corporation 2017 Equity Incentive Plan (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. 2017 Equity Incentive 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. Total stock-based compensation expense under both the 2007 Equity Plan and the 2017 Equity Incentive Plan for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was $47.7 million, $44.6 million and $42.2 million, respectively. As of December 31, 2022, an aggregate of 10.2 million shares of common stock were reserved for future issuance under the Company’s equity plans, of which 3.9 million shares were available for future grant under the 2017 Equity Plan. Additional information related to the Company’s current equity plans, stock-based award activity and valuation of stock-based awards is included below. 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: Year Ended Year Ended Year Ended (in millions, except for weighted-average exercise prices) Shares Weighted-Average Shares Weighted-Average Shares Weighted-Average Options outstanding, beginning of period 2.9 $ 81.38 3.4 $ 77.44 5.2 $ 54.23 Granted 0.1 150.91 0.1 250.15 0.4 187.83 Canceled (0.1) 162.77 (0.2) 149.11 (0.3) 126.98 Exercised (0.1) 54.53 (0.4) 53.55 (1.9) 32.41 Options outstanding, end of period 2.8 $ 83.85 2.9 $ 81.38 3.4 $ 77.44 Options exercisable, end of period 2.4 $ 65.83 2.2 $ 57.09 2.0 $ 47.31 Total stock option expense for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was $11.4 million, $13.0 million and $16.1 million, respectively. As of December 31, 2022, the Company had $18.9 million of unrecognized compensation cost related to non-vested stock options that are expected to vest over a weighted-average period of approximately 4.3 years. The number and weighted-average exercise price of outstanding and exercisable stock options segregated by exercise price ranges were as follows: Year Ended Year Ended (in millions, except range of exercise prices and average remaining contractual life) Options Outstanding Options Options Outstanding Options Range of Exercise Prices Number of Average Number of Number of Average Number of $15.00 to $50.00 1.3 2.4 1.3 1.4 3.3 1.4 $50.01 to $80.00 0.1 3.7 0.1 0.1 4.8 0.1 $80.01 to $120.00 0.8 4.8 0.7 0.8 5.8 0.5 $120.01 to $160.00 0.4 7.1 0.2 0.4 7.4 0.1 $160.01 to $200.00 0.2 7.2 0.1 0.2 8.2 0.1 $200.01 to $230.00 — 7.2 — — 8.5 — $230.01 to $280.00 — 8.0 — — 9.0 — Total 2.8 4.3 2.4 2.9 5.1 2.2 As of December 31, 2022 and January 1, 2022, the weighted-average remaining contractual term of options outstanding was 4.3 years and 5.1 years, respectively. As of December 31, 2022 and January 1, 2022, the weighted-average remaining contractual term of options exercisable with an exercise price less than the closing price of the Company’s common stock was 3.6 years and 4.3 years, respectively. RSUs The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows: Year Ended Year Ended Year Ended (in millions, except for weighted-average grant date fair value amounts) Units Weighted-Average Units Weighted-Average Units Weighted-Average RSUs outstanding, beginning of period 3.0 $ 104.13 2.9 $ 99.66 2.8 $ 96.85 Granted 0.3 148.52 0.1 257.43 0.1 193.77 Canceled (0.1) 168.90 — 204.33 — 165.03 Vested — 184.04 — 163.71 — 134.78 RSUs outstanding, end of period 3.2 $ 105.65 3.0 $ 104.13 2.9 $ 99.66 Total RSU expense for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was $14.4 million, $9.0 million and $5.7 million, respectively. As of December 31, 2022, the Company had $54.2 million of unrecognized compensation cost related to non-vested RSU awards expected to be recognized and vest over a weighted-average period of approximately 3.7 years, excluding any contingent compensation expense related to certain RSUs that were granted to the Company’s Chairman and CEO in connection with the amendment and restatement of his employment agreement. See “ Employment and Severance Agreements ” in Note 24, “Commitments and Contingencies” for further details on the CEO’s employment agreement. PSUs The number of PSUs outstanding under all of the Company’s equity plans are as follows: Year Ended Year Ended Year Ended (in millions, except for weighted-average grant date fair value) Units Weighted-Average Units Weighted-Average Units Weighted-Average PSUs outstanding, beginning of period 0.3 $ 168.68 0.4 $ 120.28 0.3 $ 102.22 Granted 0.3 (1) 145.49 0.2 (1) 250.73 0.1 179.42 Canceled (0.1) 139.73 — 166.84 — 122.13 Vested (0.2) 127.46 (0.3) 86.95 — 90.69 PSUs outstanding, end of period 0.3 $ 180.04 0.3 $ 168.68 0.4 $ 120.28 (1) On February 27, 2023, the Audit Committee approved the weighted payout percentage for the 2019 PSU awards (three-year performance period), which were based upon the Company’s actual fiscal year 2022 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 year ended January 2, 2021, the Company awarded 97,000 PSUs that will vest three n February 27, 2023, the Audit Committee determined that the performance criteria were achieved within the range. During the year ended January 1, 2022, the Company awarded 69,000 PSUs that will vest three During the year ended December 31, 2022, the Company awarded 162,562 PSUs that will vest three years from the award date, based on the achievement of certain fiscal year 2024 performance criteria approved by the Compensation Committee. 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 162,562 PSUs, or 325,124 shares. Based on management’s estimate of the number of units expected to vest, total PSU expense for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was $21.9 million, $22.6 million and $20.4 million, respectively. As of December 31, 2022, the Company had $42.3 million of unrecognized compensation cost related to non-vested PSU awards expected to be recognized and vest over a weighted-average period of approximately 1.4 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: Year Ended Year Ended Year Ended Risk-free interest rate 1.0% to 1.9% 0.3% to 0.9% 0.2% to 1.7% Expected term 5.1 years to 5.7 years 5.1 years to 5.6 years 5.1 years to 5.1 years Estimated volatility 31.2% to 38.9% 30.9% to 34.7% 26.9% to 35.5% Expected dividends 0% 0% 0% Weighted-average fair value of options granted $49.69 per share $75.72 per share $51.10 per share Risk-free interest rate. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with a remaining term approximately equal to the expected term of the Company’s stock options. Expected term. The expected term represents the average period that the Company’s stock options are expected to be outstanding. The expected term is based on both the Company’s specific historical option exercise experience, as well as expected term information available from a peer group of companies with a similar vesting schedule. Estimated volatility. The estimated volatility is the amount by which the Company’s share price is expected to fluctuate during a period. The Company’s estimated volatilities for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 are based on historical and implied volatilities of the Company’s share price over the expected term of the option. Expected dividends. The Board may from time to time declare, and the Company may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. Any determination to declare and pay dividends will be made by the Board and will depend upon the Company’s results of operations, earnings, capital requirements, financial condition, business prospects, contractual restrictions and other factors deemed relevant by the Board. In the event a dividend is declared, there is no assurance with respect to the amount, timing or frequency of any such dividends. The dividend declared in 2012 was deemed to be a special dividend and there is no assurance that special dividends will be declared again during the expected term. Based on this uncertainty and unknown frequency, for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, no dividend rate was used in the assumptions to calculate the stock-based compensation expense. The Company has elected to recognize stock-based compensation expense on a straight-line basis over the requisite service period for the entire award, net of forfeitures. Forfeitures of stock-based awards are recognized as they occur. The total fair value of all options that vested during the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was $12.4 million, $15.2 million and $15.1 million, respectively. 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 December 31, 2022 was $204.1 million. The aggregate intrinsic value of options exercisable, with an exercise price less than the closing price of the Company’s common stock, as of December 31, 2022 was $199.2 million. The aggregate intrinsic value of options exercised during the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was $14.6 million, $84.7 million and $355.3 million, respectively. The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation expense was $2.5 million, $16.4 million and $30.4 million for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, respectively. The following table presents the total stock-based compensation expense that is included in each functional line item of the consolidated statements of operations: (in millions) Year Ended Year Ended Year Ended Cost of goods sold $ 1.0 $ 0.8 $ 0.7 Selling, general and administrative 32.9 31.3 31.5 Research and development 13.8 12.5 10.0 Total $ 47.7 $ 44.6 $ 42.2 |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2022 | |
Postemployment Benefits [Abstract] | |
Employee Benefits | 21. Employee Benefits Defined Contribution Plans In the U.S., 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. On April 11, 2022, in connection with the Sound United Acquisition, the MRSP was amended to allow for participation by eligible Sound United employees. The MRSP matches 100% of a participant’s salary deferral, up to a maximum of 3% of each participant’s compensation for the pay period, subject to a maximum amount. The Company may also contribute to the MRSP on a discretionary basis. The Company contributed $4.5 million, $3.4 million and $3.2 million to the MRSP for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, respectively, all in the form of matching contributions. In addition, some of the Company’s international subsidiaries also have defined contribution plans to which both the employee and employers are eligible to make contributions. The Company’s contributions to these plans for the year ended December 31, 2022 were $4.3 million . The Company contributed immaterial amounts to these plans for each of the years ended January 1, 2022 and January 2, 2021. Defined Benefit Plans The Company sponsors several international noncontributory defined benefit plans. In connection with the Sound United Acquisition, the Company assumed sponsorship of several international defined benefit plans and post-retirement benefit plans. All defined benefit plans and post-retirement benefit plans assumed with the acquisition of Sound United were closed to new participants prior to the acquisition. The post-retirement benefit plans assumed within the Sound United Acquisition are not material. The service cost component for the defined benefit plans are recorded in operating expenses in the consolidated statement of operations. All other cost components are recorded in other income (expense), net in the consolidated statement of operations. The following table sets forth the funded status and amounts recognized in the consolidated balance sheet for the Company’s defined benefit plans. (in millions) December 31, January 1, Plan Assets Fair value of plan assets at beginning of year (1) $ 21.7 $ — Actual net loss on plan assets (2.5) — Employer contributions 1.5 — Participant contributions 0.5 Benefits paid 2.8 — Other, includes translation (1.8) — Fair value of plan assets at end of year $ 22.2 $ — Projected Benefit Obligation Projected benefit obligation at beginning of year (2) $ 32.3 $ — Service cost 1.1 — Interest cost 0.1 — Participant contributions 0.5 — Actuarial loss (1.9) — Benefits paid 2.0 — Other, includes translation (1.8) — Projected benefit obligation at end of year $ 32.3 $ — Funded status $ (10.1) $ — ______________ (1) In connection with the Sound United Acquisition, the Company acquired $4.6 million of plan asset at April 11,2022, which is included in the fair value of plan assets amount at the beginning of the year. (2) In connection with the Sound United Acquisition, the Company assumed $12.9 million of pension benefit obligation at April 11,2022, which is included in the projected benefit obligation at beginning of year. The net increase in the fair value of the Company’s plan assets for the year ended December 31, 2022 was principally driven by $2.8 million of benefit paid, partially offset by a $2.5 million net loss. The Company’s projected benefit obligation for the year ended December 31, 2022 did not change materially from the prior year. It was primarily driven by a slight increase in the discount rate from the year ended January 1, 2022 and $2.0 million of benefit payments, partially offset by $1.9 million of actuarial loss. The underfunded balance of $10.1 million was included in the long-term other liabilities on the consolidated balance sheet as of December 31, 2022. The Company’s consolidated statement of operations reflect the following components of net periodic defined benefit costs: (in millions) Year Ended Year Ended Components of net periodic benefit cost $ — $ — Service cost 1.1 — Interest cost 0.1 — Expected return on plan assets (0.6) — Amortization of net losses 0.1 — Recognized net actuarial gain 0.3 — Net periodic defined benefit plan cost $ 1.0 $ — The amounts provided above for amortization of prior service costs (credits) and amortization of net losses represent the reclassifications of prior service cost (credits) and net actuarial gain (losses) that were recognized in accumulated other comprehensive income (loss) in prior periods. Classification of amounts recognized in the consolidated balance sheets are as follows: (in millions) December 31, January 1, Non-current assets $ — $ — Current liability — — Non-current liability 10.1 — International defined benefit plans with accumulated benefit obligations in excess of fair value of plan assets consist of the following: (in millions) December 31, January 1, Projected benefit obligation $ 32.3 $ — Accumulated benefit obligation 31.0 — Fair value of plan assets 22.1 — Plan Assumptions The Company determines actuarial assumptions on an annual basis. The actuarial assumptions used for the Company’s defined benefit plans for international participants will vary depending on the applicable country. On a weighted-average basis, the following assumptions were used to determine benefit obligations and to determine net periodic benefit cost: Year Ended Year Ended Assumptions - benefit obligations: Discount rate 1.61 % — % Rate of compensation increase 0.96 — Assumptions - net periodic benefit costs: Discount rate 0.49 % — % Rate of compensation increase 0.09 — Expected long-term return on plan assets (1) 1.70 — Interest credit rate 2.34 — ______________ (1) The pension expected return on assets assumption is derived primarily from underlying investment allocations and historical risk premiums per each plan, adjusted for current and future expectations, such as easing of global inflationary pressure. Plan Assets The weighted-average asset allocations at year end by asset category were as follows: Actual Allocation Asset Category December 31, January 1, Cash and cash equivalents 3.0 % — % Equity securities 30.0 — Debt securities 36.0 — Other 31.0 — The Plan invests in a diversified portfolio of assets intended to minimize risk of poor returns while maximizing expected portfolio returns. The actual portfolio investment mix may, from time to time, deviate from the established target mix due to various factors such as normal market fluctuations, the reliance on estimates in connection with the determination of allocations and normal portfolio activity such as additions and withdrawals. The target allocations are subject to periodic review, including a review of the asset portfolio’s performance, by the named fiduciary of the plans. Such plans have local independent fiduciary advisors with responsibility for the development and oversight of the investment policy, including asset allocation decisions. In making such decisions, consideration is given to local regulations, investment practices and funding rules. The fair value of investments is included in the fair value hierarchy, see Note 2, “Summary of Significant Accounting Policies”. While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Plan Contributions The Company determines expected funding needs of its defined benefit pension plans based on legal funding requirements, plus any additional amounts that may be appropriate considering the funded status of the plans, tax consequences, the cash flow generated by the Company and other factors. The Company made $1.5 million and no contributions to its defined benefit plans for the years ended December 31, 2022 and January 1, 2022, respectively. The Company expects to contribute $1.7 million for the fiscal year 2023. Estimated Future Benefit Payments The estimated future benefit payments, based upon the same assumptions used to measure the benefit obligations and expected future employee service, were as follows: (in millions) Year Ended 2023 $ 2.1 2024 3.5 2025 2.9 2026 2.7 2027 2.7 2028-2032 10.6 Total $ 24.5 |
Non-operating (Loss) Income
Non-operating (Loss) Income | 12 Months Ended |
Dec. 31, 2022 | |
Nonoperating Income (Expense) [Abstract] | |
Non-operating (Loss) Income | 22. Non-operating (Loss) Income Non-operating (loss) income consists of the following: (in millions) Year Ended Year Ended Year Ended Interest income $ 1.8 $ 0.9 $ 5.5 Realized and unrealized foreign currency gain (loss) 7.3 (2.0) 2.7 Interest expense (25.7) (0.3) (0.3) Total non-operating (loss) income $ (16.6) $ (1.4) $ 7.9 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 23. Income Taxes The components of income before provision for income taxes are as follows: (in millions) Year Ended Year Ended Year Ended United States $ 77.6 $ 221.2 $ 214.8 Foreign 115.8 53.2 48.9 Total $ 193.4 $ 274.4 $ 263.7 The following table presents the current and deferred provision (benefit) for income taxes: (in millions) Year Ended Year Ended Year Ended Current: Federal $ 48.7 $ 38.1 $ 13.9 State 6.1 7.1 6.4 Foreign 34.4 14.7 8.1 Subtotal $ 89.2 $ 59.9 $ 28.4 Deferred: Federal $ (20.5) $ (4.9) $ 1.3 State (8.7) (6.1) (6.2) Foreign (10.1) (4.1) (0.1) Subtotal (39.3) (15.1) (5.0) Total $ 49.9 $ 44.8 $ 23.4 Included in the fiscal year 2022, 2021 and 2020 tax provisions are increases of $4.5 million, $3.6 million and $0.2 million, respectively, for tax and accrued interest related to uncertain tax positions for each fiscal year. The reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows: Year Ended Year Ended Year Ended Statutory regular federal income tax rate 21.0 % 21.0 % 21.0 % State provision, net of federal benefit (1.0) 0.3 0.1 Nondeductible executive compensation 2.9 2.1 1.8 Research and development tax credits (1.7) (1.8) (2.2) Foreign income taxed at different rates — (0.3) (1.0) U.S. tax on foreign income, net 4.8 0.9 1.0 Excess stock-based compensation (1.2) (5.5) (10.4) Derecognition of uncertain tax position (0.8) (1.0) (2.2) Transaction-related costs 0.9 — — Other 0.9 0.6 0.8 Total 25.8 % 16.3 % 8.9 % As of December 31, 2022, the Company has accumulated undistributed earnings generated by its foreign subsidiaries of approximately $409.1 million. Because such earnings have previously been subject to U.S. tax, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of its foreign investments would generally be limited to foreign withholding and state taxes. The Company considers $86.5 million of these accumulated undistributed earnings as no longer permanently reinvested and has accrued foreign withholding and state taxes, net of estimated foreign tax credits, of $1.6 million. The Company intends, however, to indefinitely reinvest the remaining $322.6 million of earnings. If the Company decides to distribute such permanently reinvested earnings, the Company would accrue estimated additional income tax expense of up to approximately $15.6 million. The components of the deferred tax assets are as follows: (in millions) December 31, January 1, Deferred tax assets: Deferred revenue $ 27.8 $ 26.1 Net operating losses 34.7 9.5 Accrued liabilities 32.1 19.2 Interest 22.4 — Capitalized R&D 18.5 — Tax credits 18.0 13.1 Stock-based compensation 10.9 8.9 Operating lease assets 8.7 5.7 Other 5.8 — Total 178.9 82.5 Valuation allowance (7.3) (6.5) Total deferred tax assets $ 171.6 $ 76.0 Deferred tax liabilities: Property and equipment $ (18.2) $ (13.0) Intangible assets (186.7) (2.7) Operating lease liabilities (8.6) (5.4) Withholding taxes on undistributed foreign earnings (2.8) (2.8) State taxes and other (7.5) (4.3) Interest rate hedge (4.1) — Inventory (4.0) — Other (0.9) (0.4) Total deferred tax liabilities (232.8) (28.6) Net deferred tax assets $ (61.2) $ 47.4 As of December 31, 2022, the Company has $1.2 million and $213.0 million of net operating losses from federal and various state jurisdictions, which will begin to expire in 2037 and 2023, respectively. Additionally, the Company has $76.3 million of net operating losses from foreign jurisdictions that will begin to expire in 2024. The Company also has federal research and development tax credits of $2.8 million that will begin to expire in 2031, state research and development tax credits of $22.4 million that will carry forward indefinitely and $0.9 million of Canadian investment tax credits on research and development expenditures that will begin to expire in 2040. In assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that all or some portion of the deferred tax assets will not be realized. In making this determination, the Company considered all available positive and negative evidence, including scheduled reversals of liabilities, projected future taxable income, tax planning strategies and recent financial performance. During the year ended January 1, 2022, the Company established a valuation allowance to reduce the deferred tax assets relating to certain acquired operating losses in certain foreign jurisdictions that the Company believes are not likely to be realized. During the year ended December 31, 2022, there was an increase in the valuation allowance of $0.8 million, primarily due to the losses of certain foreign operations. As a result of certain business and employment actions undertaken by the Company, income earned in a certain European country is subject to a reduced tax rate through 2022, which, upon meeting certain requirements, can be extended through 2026. For the year ended December 31, 2022 and January 1, 2022, the estimated income tax benefit related to such business arrangement was $1.7 million and $1.0 million, respectively, and favorably impacted net income per diluted share by $0.03 for each year. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits: (in millions) Year Ended Year Ended Unrecognized tax benefits (gross), beginning of period $ 21.6 $ 18.0 Increase from tax positions in prior period 0.7 0.6 Decrease from tax position in prior period (0.6) (0.9) Increase from tax positions in current period 6.0 7.0 Lapse of statute of limitations (1.6) (3.1) Unrecognized tax benefits (gross), end of period $ 26.1 $ 21.6 The amount of unrecognized benefits which, if ultimately recognized, could favorably affect the tax rate in a future period was $24.0 million and $19.8 million as of December 31, 2022 and January 1, 2022, respectively. It is reasonably possible that the amount of unrecognized tax benefits in various jurisdictions may change in the next 12 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 12 months cannot be made at this time. For the year ended December 31, 2022 the Company recorded an expense of $0.3 million for interest and penalties related to unrecognized tax benefits as part of income tax expense. For the year ended January 1, 2022, the Company recorded a benefit of $0.1 million for interest and penalties related to unrecognized tax benefits as part of income tax expense. Total accrued interest and penalties related to unrecognized tax benefits as of December 31, 2022 and January 1, 2022 were $1.1 million and $0.8 million, respectively. The Company conducts business in multiple jurisdictions, and as a result, one or more of the Company’s subsidiaries files income tax returns in the U.S. federal, various state, local and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for years through 2018. All material state, local and foreign income tax matters have been concluded for years through 2015. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the 2017 Tax Cuts and Jobs Act of 2017. The changes are primarily related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company has reviewed the tax provision in the CARES Act and did not identify any material impact to the Company’s consolidated financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 24. Commitments and Contingencies Employment and Severance Agreements In July 2017, the Company entered into the First Amendment to the certain Amended and Restated Employment Agreement entered into between the Company and Mr. Kiani on November 4, 2015 (as amended, the Amended Employment Agreement). Pursuant to the terms of the Amended Employment Agreement, upon a Qualifying Termination (as defined in the Amended Employment Agreement), Mr. Kiani will be entitled to receive a cash severance benefit equal to two times the sum of his then-current base salary and the average annual bonus paid to Mr. Kiani during the immediately preceding three years, the full amount of the Award Shares (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 (the “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 December 31, 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 Restated Employment Agreement was approximately $664.3 million. As of December 31, 2022, the Company had severance plan participation agreements with six executive officers. The participation agreements (the Agreements) are governed by the terms and conditions of the Company’s 2007 Severance Protection 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. On September 16, 2022, the Company appointed Blair Tripodi as its Chief Operating Officer (COO), Consumer Division. The offer letter entered into with Mr. Tripodi upon completion of the Sound United Acquisition included certain compensation, retention and benefit provisions. In addition, Mr. Tripodi is also a limited participant in the Severance Plan, which provides that, if (a) Mr. Tripodi’s employment is terminated on the date of a Change in Control (as defined in the Severance Plan) specifically because his current job, or similar job, is not offered to him on the date of such Change in Control, or (b) Mr. Tripodi’s employment is terminated by the Company without cause or if he terminates his employment with the Company for Good Reason (as defined in the Severance Plan) upon or within 36 months of a Change in Control, fifty percent of Mr. Tripodi’s unvested and outstanding equity-based awards will immediately vest. 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 $473.8 million of purchase commitments as of December 31, 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 December 31, 2022, the Company had approximately $4.8 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 December 31, 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 in savings accounts with major financial institutions. As of December 31, 2022, the Company had $202.9 million of bank balances, of which $8.2 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 years ended December 31, 2022, January 1, 2022 and January 2, 2021, revenue from the sale of the Company’s products to customers that are members of GPOs approximated 53.8%, 51.9% and 49.3% of total revenue, respectively. For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, the Company had sales through two just-in-time distributors that represented 10.1% and 5.1%, 14.6% and 9.6%, and 11.5% and 10.1% of total revenue, respectively. As of December 31, 2022 and January 1, 2022, one customer represented 9.1% and 15.7%, respectively, of the Company’s accounts receivable balance. The receivable balance related to such customer is fully secured by letters of credit. Litigation 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. In December 2022, Apple filed another motion for summary judgment on the Company’s trade secrets claim, which was denied in February 2023. 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. The Company and Apple filed notices of appeal with the U.S. Court of Appeals for the Federal Circuit seeking review of the IPR decisions on all asserted patents. The Company and Apple filed briefs in one consolidated appeal for five asserted patents and in two appeals for two asserted patents and now await scheduling of oral arguments. The Company filed an opening brief in another consolidated appeal for four asserted patents on December 12, 2022, and Apple filed a reply brief in that other consolidated appeal on February 21, 2023. 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, 2022 to June 10, 2022, the ITC conducted an evidentiary hearing. The current target date for completion of the ITC investigation is May 10, 2023. Apple filed petitions for IPR of the asserted patents in the PTO. In February 2023, the PTO denied Apple’s IPR petitions on some of the asserted patents and instituted IPRs on other asserted patents. Apple has sought rehearing on certain patents for which Apple’s IPR Petitions were denied. On January 10, 2023, a United States Administrative Law Judge in Washington, D.C. ruled that Apple violated Section 337 of the Tariff Act of 1930, as amended, by importing and selling within the United States certain Apple Watches with light-based pulse oximetry functionality and components, which infringe one of the Company’s pulse oximeter patents. On January 24, 2023, the United States Administrative Law Judge further recommended that the ITC issue an exclusion order and a cease and desist order on certain Apple Watches. The ITC will now consider whether to implement a ban on imports of certain Apple Watches. On January 30, 2023, the PTO denied institution of IPR proceedings for the Company’s pulse oximeter patent that the United States Administrative Law Judge ruled was infringed. With respect to the other patents asserted at the ITC, the PTO denied institution of IPR proceedings for two patents and instituted IPR proceedings for two patents in January or February 2023, and Apple filed requests for rehearing of some decisions that denied institution of IPR proceedings on February 23, 2023. On October 20, 2022, Apple filed two complaints against the Company in the U.S. District Court of for the District of Delaware alleging that the Masimo W1 ™ watch infringes a number of utility and design patents. Apple is seeking damages and injunctive relief. On December 12, 2022, the Company counterclaimed for monopolization, attempted monopolization, false advertising (and related causes of action) and infringement of multiple patents. The Company is seeking damages and injunctive relief. The Court has not set a schedule or trial date in either case. On February 3, 2023, Apple moved to (1) sever the Company’s monopolization and false advertising counterclaims into a separate case, (2) stay the Company’s patent-infringement claims and (3) to expedite Apple’s design-patent claims. The Company opposed Apple’s motions on February 24, 2023. On the same day, the Company moved to consolidate Apple’s utility-patent claims, Apple’s design-patents claims and the Company’s counterclaims for discovery and all pretrial proceedings. On February 21, 2023, Apple moved to dismiss the Company’s monopolization and false advertising claims. The Company intends to vigorously pursue all of its legal remedies in its litigation against Apple and believes the Company has good and substantial defenses to Apple’s claims, but there is no guarantee that the Company will be successful in these efforts. On October 21, 2022, a complaint was filed in the Delaware Court of Chancery against the Company and the members of the Company’s Board (Director Defendants) by Politan Capital Management LP and Politan Capital NY LLC (Activist Plaintiffs). The complaint seeks relief to (i) declare certain amendments to the Company’s bylaws that became effective on September 9, 2022 (Bylaw Amendments) unenforceable, (ii) find that the Director Defendants breached their fiduciary duties by approving and implementing the Bylaw Amendments and the shareholder rights plan adopted by the Company on September 9, 2022, and refusing to invalidate certain change in control provisions in the Company’s employment agreement with Joe Kiani, the Company’s Chief Executive Officer (CEO), (iii) invalidate certain change in control provisions in Mr. Kiani’s employment agreement, (iv) permanently enjoin the Company and its Board from taking any actions to prevent the Activist Plaintiffs from exercising their rights in accordance with the Company’s prior bylaws to nominate directors, and (v) have Mr. Kiani, the Company’s CEO and founder leave the Company, and (vi) award the Activist Plaintiffs their fees, costs and expenses in connection with the action covered by the complaint. In response to the complaint, on October 24, 2022, the Company and the Director Defendants filed a counterclaim, answer and defense in the Delaware Court of Chancery against the Activist Plaintiffs, seeking relief to (i) have the court declare that the Bylaw Amendments are valid and enforceable and that the Company is permitted to invalidate any director nominations by the Activist Plaintiffs that are not made in accordance with the amended bylaws and (ii) award the Company reasonable costs, including attorneys’ fees and expenses. On October 28, 2022, the Activist Plaintiffs filed a counterclaim and answer generally denying substantially all of the allegations raised in the Company’s counterclaim and raising a number of affirmative defenses against the Company’s counterclaim. On February 5, 2023, the Company withdrew the Bylaw Amendments. The Company believes that the Company and the Director Defendants have good and substantial defenses to the Activist Plaintiffs’ claims (including those raised in their counterclaim), but there is no guarantee that the Company and the Director Defendants will prevail. The Company is unable to determine whether any loss will ultimately occur or to estimate the range of such loss; therefore, no amount of loss has been accrued by the Company in the accompanying consolidated financial statements. From time to time, the Company may be involved in other litigation and investigations relating to claims and matters arising out of its operations in the normal course of business. The Company believes that it currently is not a party to any other legal proceedings which, individually or in the aggregate, would have a material adverse effect on its consolidated financial position, results of operations or cash flows. |
Segment and Enterprise Reportin
Segment and Enterprise Reporting | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment and Enterprise Reporting | 25. 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 gross profit, as presented in the Company’s financial reports, as the primary measure of segment profitability. The Company uses the same accounting policies to generate segment results as the Company does for consolidated results. 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 years ended December 31, 2022, January 1, 2022 and January 2, 2021: (in millions) Year Ended Year Ended Year Ended Revenues by segment: Healthcare $ 1,340.3 $ 1,239.2 $ 1,143.7 Non-healthcare 695.5 — — Total revenue by segment $ 2,035.8 $ 1,239.2 $ 1,143.7 Gross profit: Healthcare $ 870.2 $ 808.4 $ 743.0 Non-healthcare 252.5 — — Other (1) (63.9) — — Gross profit $ 1,058.8 $ 808.4 $ 743.0 __________________ (1) Management excludes certain corporate expenses from segment gross profit. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment gross profit because management evaluates the operating results of the segments excluding such items. The Company’s depreciation and amortization by segment are as follows: (in millions) Year Ended Year Ended Year Ended Depreciation and amortization by segment: Healthcare $ 36.0 $ 35.6 $ 29.3 Non-healthcare 100.1 — — Total depreciation and amortization $ 136.1 $ 35.6 $ 29.3 The Company’s total assets by segment are as follows: (in millions) December 31, January 1, Total assets by segment: Healthcare $ 1,594.1 $ 1,866.4 Non-healthcare 1,597.5 — Corporate overhead 19.0 20.6 Total assets $ 3,210.6 $ 1,887.0 The Company’s consolidated long-lived assets (tangible non-current assets) by geographic area are as follows: (in millions, except percentages) Year Ended Year Ended Year Ended Long-lived assets by geographic area: United States $ 319.7 79.1 % $ 239.4 86.9 % $ 238.1 86.9 % International 84.5 20.9 36.0 13.1 35.7 13.1 Total long-lived assets $ 404.2 100.0 % $ 275.4 100.0 % $ 273.8 100.0 % The following schedule presents an analysis of the Company’s revenues based upon the geographic area: (in millions, except percentages) Year Ended Year Ended Year Ended Geographic area by destination: United States (U.S.) $ 1,141.7 56.1 % $ 822.4 66.4 % $ 763.1 66.7 % Europe, Middle East and Africa 523.6 25.7 251.8 20.3 238.7 20.9 Asia and Australia 326.8 16.1 123.6 10.0 103.7 9.1 North and South America (excluding U.S.) 43.7 2.1 41.4 3.3 38.2 3.3 Total revenue $ 2,035.8 100.0 % $ 1,239.2 100.0 % $ 1,143.7 100.0 % |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2022 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 2022, January 1, 2022 and January 2, 2021 (in millions) Description Balance at Additions Charged to Amounts Charged Balance at Year ended December 31, 2022 Allowance for credit losses $ 2.5 $ 5.6 (1) $ (0.2) $ 7.9 Allowance for sales returns and allowances 0.1 0.2 (1.0) — 0.3 Year ended January 1, 2022 Allowance for credit losses 1.8 0.7 (1.0) — 2.5 Allowance for sales returns and allowances 1.2 (1.0) (1.0) (0.1) 0.1 Year ended January 2, 2021 Allowance for credit losses 2.2 0.1 (0.5) 1.8 Allowance for sales returns and allowances 0.7 0.8 (0.3) 1.2 ______________ (1) Additions charged to expense and other accounts include amounts from immaterial business combinations. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
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 was a 52 week fiscal year ended December 31, 2022, with the fourth quarter having 13 weeks. All references to years in these notes to consolidated financial statements are references to fiscal years unless otherwise noted. |
Use of Estimates | Use of Estimates The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of 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, and 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 Standards Codification (ASC) Topic 805, Business Combinations , which requires that once control is obtained, 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 | Fair Value Measurements The Company accounts for certain financial instruments at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its financial instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures , and considers the estimated amount the Company would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and the Company’s creditworthiness for unrealized loss positions. In certain instances, the Company may utilize financial models to measure the fair value of its financial instruments. In doing so, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. Recurring Fair Value Measurement On a recurring basis, the Company measures certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, the Company applies valuation techniques to estimate fair value. 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. The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at December 31, 2022: Total Carrying Fair Value Measurement Hierarchy (in millions) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 148.5 $ 148.5 $ — $ — Money market funds 54.4 54.4 — — Pension assets 22.2 14.8 7.4 — Cash and cash equivalents — 1.0 — — Equity securities — 6.6 — — Debt securities — 7.2 0.8 — Real estate funds — — 3.5 — Alternative investments — — 1.9 — Other — — 1.2 — Derivative instruments - cash flow hedges 19.7 — 19.7 — Total assets $ 244.8 $ 217.7 $ 27.1 $ — Liabilities None $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at January 1, 2022: Total Carrying Fair Value Measurement Hierarchy (in millions) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 745.3 $ 745.3 $ — $ — Total assets $ 745.3 $ 745.3 $ — $ — Liabilities None $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — The Company invests in checking, savings and money market fund accounts, which are classified within Level 1 of the fair value hierarchy as they are valued using quoted market prices. These investments are classified as cash and cash equivalents within the Company’s accompanying consolidated balance sheets, in accordance with GAAP and its accounting policies. The Company’s pension asset consists of level 1 and level 2 investments. The fair value of level 2 assets are based on observable inputs such as prices or quotes for similar assets, adjusted for any differences in terms or conditions that may affect the value of the instrument being valued. The valuation techniques used for level 2 assets may include the use of models or other valuation techniques, but these methods are all based on observable market inputs. Non-Recurring Fair Value Measurements 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 the 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. The Company carries cash and cash equivalents at cost, which approximates fair value, and they are Level 1 under the fair value hierarchy. |
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. Based on the risk of characteristics, the Company has identified U.S. and international customers as separate portfolios for both segments, and measures expected credit losses on such receivables using an aging methodology. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory 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 2 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 capitalized 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 17 years, and their associated amortization cost is included in selling, general and administrative expense in the accompanying consolidated statements of operations. For intangibles purchased in an asset acquisition or business combination, which mainly include patents, trademarks, customer relationships and acquired technologies, the useful life is determined largely by valuation estimates of remaining economic life. 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 has two reporting units, healthcare and non-healthcare. 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 require 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 plans that cover certain employees in certain international locations. The Company recognizes the funded status, or the difference between the fair value of plan assets and the projected benefit obligations of the pension plan on the 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 consolidated statement of operations. The liabilities and annual income or expense are 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 21, “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 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 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 are 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 accounts 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 that are not dependent on an index or rate, the Company classifies as operating leases any lease components that would have otherwise been classified as sales-type leases that would result in a selling loss upon lease commencement. 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 the 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 made directly to customers from the Company’s website are paid at the time of product shipment. Prior to determining payment terms for each customer, 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 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 product warranty accrual were as follows: Year Ended (in millions) December 31, January 1, January 2, Warranty accrual, beginning of period $ 2.5 $ 2.7 $ 3.4 Increase related to acquisition 8.4 — — Accrual for warranties issued 1.8 2.2 0.8 Changes in pre-existing warranties (including changes in estimates) 4.7 (1.4) 0.2 Settlements made (6.8) (1.0) (1.7) Warranty accrual, end of period $ 10.6 $ 2.5 $ 2.7 |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. These costs are included in selling, general and administrative expense in the accompanying consolidated statements of operations. Advertising costs for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 were $12.3 million, $9.0 million and $30.8 million, respectively. |
Research and Development | Research and Development Costs related to research and development activities are expensed as incurred. These costs include personnel costs, materials, depreciation and amortization on associated tangible and intangible assets and an allocation of facility costs, all of which are directly related to research and development activities. |
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 | 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 the Japanese Yen, the British Pound, the Chinese Yuan and the European Euro. |
Derivatives Instruments and Hedging Activities | Derivatives Instruments and Hedging Activities The Company addresses market risk from changes in foreign currency and interest rates risks through risk management programs, which include the use of derivative and nonderivative instruments. The Company’s exposure to a counterparty’s credit risk is generally limited to the amounts of the net obligation to the counterparty. The Company established policies to enter into contracts only with major investment-grade financial institutions to mitigate such counterparty credit risk. The Company also established a policy to further monitor the counterparty risks throughout the life of the instruments. None of the derivative instruments currently held by the Company were entered into for speculative trading purposes. All derivative financial instruments are recognized as either assets or liabilities at fair value in the consolidated balance sheets and are classified as short-term or long-term based on the tenor of the instrument. The Company has elected not to separate a derivative instrument into current and long-term portions. A derivative instrument whose fair value is a net liability is classified as current in total. A derivative instrument whose fair value is a net asset and whose current portion is an asset is classified as non-current in total. For a derivative instrument that meets the criteria to qualify for hedge accounting, the Company marks the fair value of the derivative instrument to market periodically through other comprehensive income (loss). When the hedged items are recorded to income (expense), the associated deferred gains (losses) of the derivatives in accumulated other comprehensive income (loss) will be reclassified into earnings. Any fluctuation in the fair value of a derivative instrument that does not meet the criteria for hedge accounting is recorded to earnings (expense) in the period it occurs. |
Comprehensive Income | Comprehensive Income Comprehensive income includes foreign currency translation adjustments, changes to pension benefits, unrealized gains or (losses) on cash flow hedges and any related tax benefits (expenses) 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: Year Ended (in millions, except per share amounts) December 31, January 1, January 2, Net income: $ 143.5 $ 229.6 $ 240.3 Basic net income per share: Weighted-average shares outstanding - basic 53.6 55.2 54.7 Net income per basic share $ 2.68 $ 4.16 $ 4.39 Diluted net income per share: Weighted-average shares outstanding - basic 53.6 55.2 54.7 Diluted share equivalents: stock options, RSUs and PSUs 1.6 2.5 3.3 Weighted-average shares outstanding - diluted 55.2 57.7 58.0 Net income per diluted share $ 2.60 $ 3.98 $ 4.14 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 years ended December 31, 2022, January 1, 2022 and January 2, 2021, weighted options to purchase 0.8 million, 0.2 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 each of the years ended December 31, 2022, January 1, 2022 and January 2, 2021, certain RSUs were 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 December 31, 2022, January 1, 2022 and January 2, 2021, 2.7 million of weighted-average shares related to such RSUs have been excluded from the calculation of potential shares. For additional information with respect to these RSUs, please see “ Employment and Severance Agreements ” in Note 24, “Commitments and Contingencies”. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In November 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 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 that 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. Upon amendment of these leases, the Company applies the modification framework such that, based on this guidance, certain leases may be accordingly reclassified from sales-type to operating or vice versa. In certain situations, the reclassification from sales-type to operating lease results in the net investment in the original lease immediately before the effective date of the modification being reclassified to property, plant and equipment upon modification. This property, plant and equipment is depreciated to cost of goods sold over the lesser of the asset’s useful life or contractual term of the lease. See Notes 6, “Lease Receivable” and 8, “Property and Equipment, net”, 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 Prior Credit Facility (as defined in Note 15) and execution of a new Credit Facility (as defined in Note 15), 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 consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement benefits - Defined Benefit Plans - General (Subtopic 715-20) (ASU 2018-14). The final guidance changes the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans and eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new ones that are considered pertinent. ASU 2018-14 is effective as of December 15, 2020. Early adoption is permitted and is applied retrospectively. The Company’s adoption of this standard, effective December 31, 2022, did not have a material impact on its consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at December 31, 2022: Total Carrying Fair Value Measurement Hierarchy (in millions) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 148.5 $ 148.5 $ — $ — Money market funds 54.4 54.4 — — Pension assets 22.2 14.8 7.4 — Cash and cash equivalents — 1.0 — — Equity securities — 6.6 — — Debt securities — 7.2 0.8 — Real estate funds — — 3.5 — Alternative investments — — 1.9 — Other — — 1.2 — Derivative instruments - cash flow hedges 19.7 — 19.7 — Total assets $ 244.8 $ 217.7 $ 27.1 $ — Liabilities None $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — The following tables represent the Company’s financial assets, measured at fair value on a recurring basis at January 1, 2022: Total Carrying Fair Value Measurement Hierarchy (in millions) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 745.3 $ 745.3 $ — $ — Total assets $ 745.3 $ 745.3 $ — $ — Liabilities None $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — |
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 2 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) December 31, January 1, Building and building improvements $ 151.0 $ 142.1 Machinery, equipment and tooling 149.4 103.5 Land 65.1 57.0 Operating lease assets (1) 50.2 — Computer equipment and software 42.1 32.5 Transportation, vehicles and other 32.7 33.1 Leasehold improvements 32.3 21.9 Furniture and office equipment 19.4 14.2 Demonstration units 11.2 0.9 Construction-in-progress (CIP) 50.6 25.1 Total property and equipment 604.0 430.3 Accumulated depreciation (201.5) (157.5) Property and equipment, net $ 402.5 $ 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, net. |
Changes in Product Warranty Accrual | Changes in the product warranty accrual were as follows: Year Ended (in millions) December 31, January 1, January 2, Warranty accrual, beginning of period $ 2.5 $ 2.7 $ 3.4 Increase related to acquisition 8.4 — — Accrual for warranties issued 1.8 2.2 0.8 Changes in pre-existing warranties (including changes in estimates) 4.7 (1.4) 0.2 Settlements made (6.8) (1.0) (1.7) Warranty accrual, end of period $ 10.6 $ 2.5 $ 2.7 |
Reconciliation of Basic Diluted Net Income Per Share | A computation of basic and diluted net income per share is as follows: Year Ended (in millions, except per share amounts) December 31, January 1, January 2, Net income: $ 143.5 $ 229.6 $ 240.3 Basic net income per share: Weighted-average shares outstanding - basic 53.6 55.2 54.7 Net income per basic share $ 2.68 $ 4.16 $ 4.39 Diluted net income per share: Weighted-average shares outstanding - basic 53.6 55.2 54.7 Diluted share equivalents: stock options, RSUs and PSUs 1.6 2.5 3.3 Weighted-average shares outstanding - diluted 55.2 57.7 58.0 Net income per diluted share $ 2.60 $ 3.98 $ 4.14 |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental cash flow information includes the following: Year Ended (in millions) December 31, January 1, January 2, Cash paid during the year for: Interest expense $ 23.0 $ 0.3 $ 0.3 Income taxes 87.3 43.9 39.5 Operating lease liabilities 17.2 7.3 6.3 Non-cash operating activities: ROU assets obtained in exchange for lease liabilities $ — $ 6.0 $ 15.4 Non-cash investing activities: Unpaid purchases of property and equipment $ 3.8 $ — $ 2.1 Settlement of promissory note receivable in connection with business combination — — 5.1 Non-cash financing activities: Unsettled common stock proceeds from option exercises $ — $ 0.7 $ 3.0 Fair value of common stock received for payment of stock option exercise price — — 1.6 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 202.9 $ 745.3 $ 641.4 Restricted cash 6.7 3.1 3.6 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 209.6 $ 748.4 $ 645.0 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | Inventories consist of the following: (in millions) December 31, January 1, Raw materials $ 209.9 $ 128.3 Work-in-process 30.4 17.1 Finished goods 260.7 56.0 Total inventories $ 501.0 (1) $ 201.4 ______________ (1) Included in the December 31, 2022 ending total inventories balance was approximately $53.3 million of step-up amortization related to the Sound United Acquisition. See Note 18, “Business Combinations”, for further details. |
Other Current Assets - (Tables)
Other Current Assets - (Tables) | 12 Months Ended |
Dec. 31, 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) December 31, January 1, Prepaid expenses $ 77.5 $ 30.9 Indirect taxes receivable 26.8 12.8 Lease receivable, current 28.5 28.7 Prepaid income taxes 12.4 7.0 Contract assets, current 3.9 2.1 Prepaid rebates and royalties 3.7 2.8 Restricted cash (1) 2.4 3.0 Other current assets 3.6 3.7 Total other current assets $ 158.8 $ 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) December 31, January 1, Lessee ROU assets, net $ 69.6 $ 30.5 Derivative assets - non-current 19.3 — Strategic investments 13.8 13.8 Prepaid deposits and other 11.0 3.9 Other non-current assets 0.3 0.4 Total other non-current assets $ 114.0 $ 48.6 |
Lease Receivable (Tables)
Lease Receivable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Sales-Type Lease Receivable | Lease receivable from sales-type leases consists of the following: (in millions) December 31, January 2, Lease receivable $ 101.8 $ 102.6 Allowance for credit loss (0.2) (0.3) Lease receivable, net 101.6 102.3 Less: current portion of lease receivable (28.5) (28.7) Lease receivable, non-current $ 73.1 $ 73.6 |
Sales-Type Lease, Lease Receivable, Maturity | As of December 31, 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 2023 $ 28.4 $ 3.8 2024 25.1 3.5 2025 19.9 3.5 2026 13.5 3.3 2027 7.9 2.7 Thereafter 6.8 3.7 Total $ 101.6 $ 20.5 Less: imputed interest (1) — Present value of total lease payments $ 101.6 ______________ (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) | 12 Months Ended |
Dec. 31, 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) December 31, January 1, Deferred commissions $ 17.1 $ 11.9 Prepaid contract allowances 13.7 8.6 Unbilled contract receivables 9.4 5.0 Deferred equipment agreements, net 1.7 2.6 Deferred costs and other contract assets $ 41.9 $ 28.1 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [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 2 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) December 31, January 1, Building and building improvements $ 151.0 $ 142.1 Machinery, equipment and tooling 149.4 103.5 Land 65.1 57.0 Operating lease assets (1) 50.2 — Computer equipment and software 42.1 32.5 Transportation, vehicles and other 32.7 33.1 Leasehold improvements 32.3 21.9 Furniture and office equipment 19.4 14.2 Demonstration units 11.2 0.9 Construction-in-progress (CIP) 50.6 25.1 Total property and equipment 604.0 430.3 Accumulated depreciation (201.5) (157.5) Property and equipment, net $ 402.5 $ 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, net. |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Components of Intangible Assets | Intangible assets, net, consist of the following: December 31, January 1, (in millions) Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Customer relationships $ 220.9 $ (19.3) $ 201.6 $ 24.6 $ (9.3) $ 15.3 Acquired technologies 185.3 (25.2) 160.1 28.4 (8.7) 19.7 Trademarks 39.3 (5.8) 33.5 12.2 (4.1) 8.1 Licenses 39.0 (4.4) 34.6 8.1 (2.0) 6.1 Patents 35.2 (13.9) 21.3 31.5 (12.2) 19.3 Licenses-related party 7.5 (6.3) 1.2 7.5 (6.0) 1.5 Non-compete agreements (1) 6.3 (1.1) 5.2 0.3 — 0.3 Capitalized software development costs 5.5 (2.9) 2.6 4.3 (2.6) 1.7 Other 1.6 (1.1) 0.5 1.6 (1.1) 0.5 Total intangible assets subject to amortization, net $ 540.6 $ (80.0) $ 460.6 $ 118.5 $ (46.0) $ 72.5 Intangible assets not subject to amortization: Trademarks 262.0 — Intangible assets, net $ 722.6 $ 72.5 _______________ (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. |
Estimated Amortization Expense | Estimated amortization expense for each of the next fiscal years is as follows: Fiscal Year Amount 2023 $ 44.9 2024 47.7 2025 47.2 2026 46.3 2027 45.7 Thereafter 228.8 Total $ 460.6 |
Goodwill - (Tables)
Goodwill - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Goodwill | Changes in goodwill were as follows: December 31, (in millions) Healthcare Non-healthcare Total Goodwill, beginning of period $ 100.3 $ — $ 100.3 Increase from business combinations — 347.8 347.8 Adjustments to goodwill from purchase price allocation — — — Foreign currency translation adjustment (2.7) — (2.7) Goodwill, end of period $ 97.6 $ 347.8 $ 445.4 January 1, (in millions) Healthcare Non-healthcare Total Goodwill, beginning of period $ 103.2 $ — $ 103.2 Increase from business combinations — — — Adjustments to goodwill from finalization of purchase price allocation — — — Foreign currency translation adjustment (2.9) — (2.9) Goodwill, end of period $ 100.3 $ — $ 100.3 |
Lessee ROU Assets and Lease L_2
Lessee ROU Assets and Lease Liabilities (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, January 1, Lessee ROU assets, net Other non-current assets $ 69.6 $ 30.5 Lessee current lease liabilities Other current liabilities 18.7 6.4 Lessee non-current lease liabilities Other non-current liabilities 53.4 26.3 Total operating lease liabilities $ 72.1 $ 32.7 |
Lessee, Operating Lease, Liability, Maturity | As of December 31, 2022, estimated future operating lease payments for each of the following fiscal years were as follows: Fiscal Year Amount 2023 $ 20.3 2024 17.2 2025 13.0 2026 9.2 2027 4.7 Thereafter (1) 17.2 Total 81.6 Imputed interest (9.5) Present value $ 72.1 ______________ (1) Includes optional renewal period for certain leases. |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of Other Non-Current Assets | Other current assets consist of the following: (in millions) December 31, January 1, Prepaid expenses $ 77.5 $ 30.9 Indirect taxes receivable 26.8 12.8 Lease receivable, current 28.5 28.7 Prepaid income taxes 12.4 7.0 Contract assets, current 3.9 2.1 Prepaid rebates and royalties 3.7 2.8 Restricted cash (1) 2.4 3.0 Other current assets 3.6 3.7 Total other current assets $ 158.8 $ 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) December 31, January 1, Lessee ROU assets, net $ 69.6 $ 30.5 Derivative assets - non-current 19.3 — Strategic investments 13.8 13.8 Prepaid deposits and other 11.0 3.9 Other non-current assets 0.3 0.4 Total other non-current assets $ 114.0 $ 48.6 |
Deferred Revenue and Other Co_2
Deferred Revenue and Other Contract Liabilities - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Contract with Customer, Contract Asset, Contract Liability, and Receivable | Deferred revenue and other contract liabilities consist of the following: (in millions) December 31, January 1, Deferred revenue $ 61.0 $ 35.1 Accrued rebates and allowances 38.5 13.6 Accrued customer reimbursements 6.1 7.4 Total deferred revenue and other contract liabilities 105.6 56.1 Less: Non-current portion of deferred revenue (25.0) (5.2) Deferred revenue and other contract liabilities - current $ 80.6 $ 50.9 |
Schedule of Deferred Revenue | Changes in deferred revenue for the year ended December 31, 2022 were as follows: (in millions) December 31, Deferred revenue, beginning of the period $ 35.1 Increase from business combinations 19.0 Revenue deferred during the period 38.9 Recognition of revenue deferred in prior periods (32.0) Deferred revenue, end of the period $ 61.0 |
Other Current Liabilities - (Ta
Other Current Liabilities - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other current liabilities consist of the following: (in millions) December 31, January 1, Accrued expenses $ 39.9 $ 12.1 Accrued indirect taxes payable 28.2 16.3 Lessee lease liabilities, current 18.7 6.4 Current portion of long-term debt 15.1 — Accrued property taxes 12.1 2.0 Accrued legal fees 11.4 7.1 Accrued warranty 10.6 2.5 Income tax payable 32.1 12.0 Other current liabilities 6.1 4.7 Accrued donations 5.1 3.7 Related party payables 4.0 3.6 Total other current liabilities $ 183.3 $ 70.4 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | (in millions) December 31, January 1, Term loan - current portion $ 7.5 $ — Japanese loans - current portion 7.6 — Short-term debt 15.1 — Term loan - long-term 278.9 — Revolver - long-term 651.0 — Japanese loans - long-term 11.7 — Long-term debt 941.6 — Total debt $ 956.7 $ — |
Schedule of Maturities of Long-term Debt | As of December 31, 2022, the aggregate maturities of principal on all debt for each of the next five years and thereafter is as follows: Fiscal Year Amount 2023 $ 15.1 2024 14.9 2025 16.8 2026 16.8 2027 888.6 Thereafter 4.5 Total $ 956.7 |
Other Non-Current Liabilities -
Other Non-Current Liabilities - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Components of Other Non-Current Liabilities | Other non-current liabilities consist of the following: (in millions) December 31, January 1, Lessee non-current lease liabilities $ 53.4 $ 26.3 Deferred revenue, non-current 25.0 5.2 Unrecognized tax benefits 18.0 14.9 Pension benefit obligation 10.1 — Income tax payable, non-current 12.7 17.0 Indirect tax payable, non-current 8.2 — Other 9.1 0.6 Total other non-current liabilities $ 136.5 $ 64.0 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table summarizes the fair value of the hedging instruments, presented on a gross basis, including accrued interest, as of December 31, 2022 and January 1, 2022. Consolidated (in millions) Balance Sheet Classification December 31, January 1, Interest rate contracts, inclusive of accrued interest Other non-current assets $ 19.7 $ — Total $ 19.7 $ — |
Reclassification out of Accumulated Other Comprehensive Income | The following table summarizes the gains (losses) reclassified from accumulated other comprehensive income to the consolidated financial statements for the year ended December 31, 2022. Consolidated (in millions) Location of Gain (Loss) December 31, January 1, January 2, Cash flow hedges - interest rate contracts Non-operating loss (income) $ 0.7 $ — $ — Total $ 0.7 $ — $ — |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables summarize the changes in accumulated other comprehensive income related to the hedging instruments: (in millions) December 31, January 1, Beginning balance $ — $ — Amount recognized in other comprehensive income 20.0 — Amount reclassified into earnings (0.7) — Ending balance $ 19.3 $ — |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 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, inclusive of measurement period adjustments, as of April 11, 2022: (in millions) Sound United Cash consideration (1) $ 1,065.0 Purchase price $ 1,065.0 Assets acquired: Cash and cash equivalents $ 82.6 Accounts receivables 108.5 Inventories 235.8 Prepaid expenses and other current assets 31.1 Property, plant and equipment 113.2 Intangible assets 649.0 Goodwill 333.1 Long-term other assets 14.7 Total assets acquired $ 1,568.0 Liabilities assumed: Accounts payable $ (118.8) Accrued liabilities and other current liabilities (165.9) Deferred tax liabilities (143.1) Other long-term liabilities (75.2) Total liabilities assumed $ (503.0) ______________ (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 April 11, Trademarks/tradenames 10 $ 6.0 Customer relationships 17 196.0 Developed technology 8 156.0 Contractual license agreements 15 29.0 Subtotal 14 years $ 387.0 Indefinite trademarks/tradenames N/A 262.0 Total $ 649.0 |
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. Twelve Months Ended (in millions) December 31, January 1, Pro forma net revenue $ 2,293.4 $ 2,187.4 Pro forma net income (loss) $ 181.8 $ 126.2 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Stock Repurchase Activities | The following table provides a summary of the Company’s stock repurchase activities during the years ended December 31, 2022, January 1, 2022 and January 2, 2021: Years Ended (in millions, except per share amounts) December 31, January 1, January 2, Shares repurchased 3.0 (1) 0.5 (1) 0.5 (1) Average cost per share $ 133.82 $ 235.88 $ 242.40 Value of shares repurchased $ 401.5 $ 129.0 $ 110.5 ______________ (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 - (Tab
Stock-Based Compensation - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
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: Year Ended Year Ended Year Ended (in millions, except for weighted-average exercise prices) Shares Weighted-Average Shares Weighted-Average Shares Weighted-Average Options outstanding, beginning of period 2.9 $ 81.38 3.4 $ 77.44 5.2 $ 54.23 Granted 0.1 150.91 0.1 250.15 0.4 187.83 Canceled (0.1) 162.77 (0.2) 149.11 (0.3) 126.98 Exercised (0.1) 54.53 (0.4) 53.55 (1.9) 32.41 Options outstanding, end of period 2.8 $ 83.85 2.9 $ 81.38 3.4 $ 77.44 Options exercisable, end of period 2.4 $ 65.83 2.2 $ 57.09 2.0 $ 47.31 |
Number and Weighted Average Exercise Price of Outstanding and Exercisable Options | The number and weighted-average exercise price of outstanding and exercisable stock options segregated by exercise price ranges were as follows: Year Ended Year Ended (in millions, except range of exercise prices and average remaining contractual life) Options Outstanding Options Options Outstanding Options Range of Exercise Prices Number of Average Number of Number of Average Number of $15.00 to $50.00 1.3 2.4 1.3 1.4 3.3 1.4 $50.01 to $80.00 0.1 3.7 0.1 0.1 4.8 0.1 $80.01 to $120.00 0.8 4.8 0.7 0.8 5.8 0.5 $120.01 to $160.00 0.4 7.1 0.2 0.4 7.4 0.1 $160.01 to $200.00 0.2 7.2 0.1 0.2 8.2 0.1 $200.01 to $230.00 — 7.2 — — 8.5 — $230.01 to $280.00 — 8.0 — — 9.0 — Total 2.8 4.3 2.4 2.9 5.1 2.2 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows: Year Ended Year Ended Year Ended (in millions, except for weighted-average grant date fair value amounts) Units Weighted-Average Units Weighted-Average Units Weighted-Average RSUs outstanding, beginning of period 3.0 $ 104.13 2.9 $ 99.66 2.8 $ 96.85 Granted 0.3 148.52 0.1 257.43 0.1 193.77 Canceled (0.1) 168.90 — 204.33 — 165.03 Vested — 184.04 — 163.71 — 134.78 RSUs outstanding, end of period 3.2 $ 105.65 3.0 $ 104.13 2.9 $ 99.66 |
Schedule of Nonvested Performance-based Units Activity | The number of PSUs outstanding under all of the Company’s equity plans are as follows: Year Ended Year Ended Year Ended (in millions, except for weighted-average grant date fair value) Units Weighted-Average Units Weighted-Average Units Weighted-Average PSUs outstanding, beginning of period 0.3 $ 168.68 0.4 $ 120.28 0.3 $ 102.22 Granted 0.3 (1) 145.49 0.2 (1) 250.73 0.1 179.42 Canceled (0.1) 139.73 — 166.84 — 122.13 Vested (0.2) 127.46 (0.3) 86.95 — 90.69 PSUs outstanding, end of period 0.3 $ 180.04 0.3 $ 168.68 0.4 $ 120.28 (1) On February 27, 2023, the Audit Committee approved the weighted payout percentage for the 2019 PSU awards (three-year performance period), which were based upon the Company’s actual fiscal year 2022 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. |
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: Year Ended Year Ended Year Ended Risk-free interest rate 1.0% to 1.9% 0.3% to 0.9% 0.2% to 1.7% Expected term 5.1 years to 5.7 years 5.1 years to 5.6 years 5.1 years to 5.1 years Estimated volatility 31.2% to 38.9% 30.9% to 34.7% 26.9% to 35.5% Expected dividends 0% 0% 0% Weighted-average fair value of options granted $49.69 per share $75.72 per share $51.10 per share |
Total Share-Based Compensation Expense Included in Consolidated Statements of Comprehensive Income | The following table presents the total stock-based compensation expense that is included in each functional line item of the consolidated statements of operations: (in millions) Year Ended Year Ended Year Ended Cost of goods sold $ 1.0 $ 0.8 $ 0.7 Selling, general and administrative 32.9 31.3 31.5 Research and development 13.8 12.5 10.0 Total $ 47.7 $ 44.6 $ 42.2 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Postemployment Benefits [Abstract] | |
Defined Benefit Plan, Plan with Projected Benefit Obligation in Excess of Plan Assets | The following table sets forth the funded status and amounts recognized in the consolidated balance sheet for the Company’s defined benefit plans. (in millions) December 31, January 1, Plan Assets Fair value of plan assets at beginning of year (1) $ 21.7 $ — Actual net loss on plan assets (2.5) — Employer contributions 1.5 — Participant contributions 0.5 Benefits paid 2.8 — Other, includes translation (1.8) — Fair value of plan assets at end of year $ 22.2 $ — Projected Benefit Obligation Projected benefit obligation at beginning of year (2) $ 32.3 $ — Service cost 1.1 — Interest cost 0.1 — Participant contributions 0.5 — Actuarial loss (1.9) — Benefits paid 2.0 — Other, includes translation (1.8) — Projected benefit obligation at end of year $ 32.3 $ — Funded status $ (10.1) $ — ______________ (1) In connection with the Sound United Acquisition, the Company acquired $4.6 million of plan asset at April 11,2022, which is included in the fair value of plan assets amount at the beginning of the year. (2) In connection with the Sound United Acquisition, the Company assumed $12.9 million of pension benefit obligation at April 11,2022, which is included in the projected benefit obligation at beginning of year. International defined benefit plans with accumulated benefit obligations in excess of fair value of plan assets consist of the following: (in millions) December 31, January 1, Projected benefit obligation $ 32.3 $ — Accumulated benefit obligation 31.0 — Fair value of plan assets 22.1 — |
Schedule of Net Benefit Costs | The Company’s consolidated statement of operations reflect the following components of net periodic defined benefit costs: (in millions) Year Ended Year Ended Components of net periodic benefit cost $ — $ — Service cost 1.1 — Interest cost 0.1 — Expected return on plan assets (0.6) — Amortization of net losses 0.1 — Recognized net actuarial gain 0.3 — Net periodic defined benefit plan cost $ 1.0 $ — Year Ended Year Ended Assumptions - benefit obligations: Discount rate 1.61 % — % Rate of compensation increase 0.96 — Assumptions - net periodic benefit costs: Discount rate 0.49 % — % Rate of compensation increase 0.09 — Expected long-term return on plan assets (1) 1.70 — Interest credit rate 2.34 — ______________ (1) The pension expected return on assets assumption is derived primarily from underlying investment allocations and historical risk premiums per each plan, adjusted for current and future expectations, such as easing of global inflationary pressure. |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | Classification of amounts recognized in the consolidated balance sheets are as follows: (in millions) December 31, January 1, Non-current assets $ — $ — Current liability — — Non-current liability 10.1 — |
Schedule of Allocation of Plan Assets | The weighted-average asset allocations at year end by asset category were as follows: Actual Allocation Asset Category December 31, January 1, Cash and cash equivalents 3.0 % — % Equity securities 30.0 — Debt securities 36.0 — Other 31.0 — |
Schedule of Expected Benefit Payments | The estimated future benefit payments, based upon the same assumptions used to measure the benefit obligations and expected future employee service, were as follows: (in millions) Year Ended 2023 $ 2.1 2024 3.5 2025 2.9 2026 2.7 2027 2.7 2028-2032 10.6 Total $ 24.5 |
Non-operating (Loss) Income - (
Non-operating (Loss) Income - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Nonoperating Income (Expense) [Abstract] | |
Schedule of Non-operating Income (Expense) | Non-operating (loss) income consists of the following: (in millions) Year Ended Year Ended Year Ended Interest income $ 1.8 $ 0.9 $ 5.5 Realized and unrealized foreign currency gain (loss) 7.3 (2.0) 2.7 Interest expense (25.7) (0.3) (0.3) Total non-operating (loss) income $ (16.6) $ (1.4) $ 7.9 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Components of Income Before Provision for Income Taxes | The components of income before provision for income taxes are as follows: (in millions) Year Ended Year Ended Year Ended United States $ 77.6 $ 221.2 $ 214.8 Foreign 115.8 53.2 48.9 Total $ 193.4 $ 274.4 $ 263.7 |
Current and Deferred Provision (Benefit) for Income Taxes | The following table presents the current and deferred provision (benefit) for income taxes: (in millions) Year Ended Year Ended Year Ended Current: Federal $ 48.7 $ 38.1 $ 13.9 State 6.1 7.1 6.4 Foreign 34.4 14.7 8.1 Subtotal $ 89.2 $ 59.9 $ 28.4 Deferred: Federal $ (20.5) $ (4.9) $ 1.3 State (8.7) (6.1) (6.2) Foreign (10.1) (4.1) (0.1) Subtotal (39.3) (15.1) (5.0) Total $ 49.9 $ 44.8 $ 23.4 |
Reconciliation of U.S. Federal Statutory Tax Rate to Company's Effective Tax Rate | The reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows: Year Ended Year Ended Year Ended Statutory regular federal income tax rate 21.0 % 21.0 % 21.0 % State provision, net of federal benefit (1.0) 0.3 0.1 Nondeductible executive compensation 2.9 2.1 1.8 Research and development tax credits (1.7) (1.8) (2.2) Foreign income taxed at different rates — (0.3) (1.0) U.S. tax on foreign income, net 4.8 0.9 1.0 Excess stock-based compensation (1.2) (5.5) (10.4) Derecognition of uncertain tax position (0.8) (1.0) (2.2) Transaction-related costs 0.9 — — Other 0.9 0.6 0.8 Total 25.8 % 16.3 % 8.9 % |
Components of Deferred Tax Assets | The components of the deferred tax assets are as follows: (in millions) December 31, January 1, Deferred tax assets: Deferred revenue $ 27.8 $ 26.1 Net operating losses 34.7 9.5 Accrued liabilities 32.1 19.2 Interest 22.4 — Capitalized R&D 18.5 — Tax credits 18.0 13.1 Stock-based compensation 10.9 8.9 Operating lease assets 8.7 5.7 Other 5.8 — Total 178.9 82.5 Valuation allowance (7.3) (6.5) Total deferred tax assets $ 171.6 $ 76.0 Deferred tax liabilities: Property and equipment $ (18.2) $ (13.0) Intangible assets (186.7) (2.7) Operating lease liabilities (8.6) (5.4) Withholding taxes on undistributed foreign earnings (2.8) (2.8) State taxes and other (7.5) (4.3) Interest rate hedge (4.1) — Inventory (4.0) — Other (0.9) (0.4) Total deferred tax liabilities (232.8) (28.6) Net deferred tax assets $ (61.2) $ 47.4 |
Reconciliation of Total Amounts of Unrecognized Tax Benefits | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits: (in millions) Year Ended Year Ended Unrecognized tax benefits (gross), beginning of period $ 21.6 $ 18.0 Increase from tax positions in prior period 0.7 0.6 Decrease from tax position in prior period (0.6) (0.9) Increase from tax positions in current period 6.0 7.0 Lapse of statute of limitations (1.6) (3.1) Unrecognized tax benefits (gross), end of period $ 26.1 $ 21.6 |
Segment and Enterprise Report_2
Segment and Enterprise Reporting - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Selected information by reportable segment is presented below for the years ended December 31, 2022, January 1, 2022 and January 2, 2021: (in millions) Year Ended Year Ended Year Ended Revenues by segment: Healthcare $ 1,340.3 $ 1,239.2 $ 1,143.7 Non-healthcare 695.5 — — Total revenue by segment $ 2,035.8 $ 1,239.2 $ 1,143.7 Gross profit: Healthcare $ 870.2 $ 808.4 $ 743.0 Non-healthcare 252.5 — — Other (1) (63.9) — — Gross profit $ 1,058.8 $ 808.4 $ 743.0 __________________ (1) Management excludes certain corporate expenses from segment gross profit. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment gross profit because management evaluates the operating results of the segments excluding such items. The Company’s depreciation and amortization by segment are as follows: (in millions) Year Ended Year Ended Year Ended Depreciation and amortization by segment: Healthcare $ 36.0 $ 35.6 $ 29.3 Non-healthcare 100.1 — — Total depreciation and amortization $ 136.1 $ 35.6 $ 29.3 The Company’s total assets by segment are as follows: (in millions) December 31, January 1, Total assets by segment: Healthcare $ 1,594.1 $ 1,866.4 Non-healthcare 1,597.5 — Corporate overhead 19.0 20.6 Total assets $ 3,210.6 $ 1,887.0 The Company’s consolidated long-lived assets (tangible non-current assets) by geographic area are as follows: (in millions, except percentages) Year Ended Year Ended Year Ended Long-lived assets by geographic area: United States $ 319.7 79.1 % $ 239.4 86.9 % $ 238.1 86.9 % International 84.5 20.9 36.0 13.1 35.7 13.1 Total long-lived assets $ 404.2 100.0 % $ 275.4 100.0 % $ 273.8 100.0 % The following schedule presents an analysis of the Company’s revenues based upon the geographic area: (in millions, except percentages) Year Ended Year Ended Year Ended Geographic area by destination: United States (U.S.) $ 1,141.7 56.1 % $ 822.4 66.4 % $ 763.1 66.7 % Europe, Middle East and Africa 523.6 25.7 251.8 20.3 238.7 20.9 Asia and Australia 326.8 16.1 123.6 10.0 103.7 9.1 North and South America (excluding U.S.) 43.7 2.1 41.4 3.3 38.2 3.3 Total revenue $ 2,035.8 100.0 % $ 1,239.2 100.0 % $ 1,143.7 100.0 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Detail) - Recurring - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Assets | ||
Cash and cash equivalents | $ 148.5 | $ 745.3 |
Money market funds | 54.4 | |
Pension assets | 22.2 | |
Pension Asset, Cash and Cash Equivalents, Fair Value Disclosure | 0 | |
Equity securities | 0 | |
Debt securities | 0 | |
Real estate funds | 0 | |
Alternative investments | 0 | |
Other | 0 | |
Derivative instruments - cash flow hedges | 19.7 | |
Total assets | 244.8 | 745.3 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 1 | ||
Assets | ||
Cash and cash equivalents | 148.5 | 745.3 |
Money market funds | 54.4 | |
Pension assets | 14.8 | |
Pension Asset, Cash and Cash Equivalents, Fair Value Disclosure | 1 | |
Equity securities | 6.6 | |
Debt securities | 7.2 | |
Real estate funds | 0 | |
Alternative investments | 0 | |
Other | 0 | |
Derivative instruments - cash flow hedges | 0 | |
Total assets | 217.7 | 745.3 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 2 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Money market funds | 0 | |
Pension assets | 7.4 | |
Pension Asset, Cash and Cash Equivalents, Fair Value Disclosure | 0 | |
Equity securities | 0 | |
Debt securities | 0.8 | |
Real estate funds | 3.5 | |
Alternative investments | 1.9 | |
Other | 1.2 | |
Derivative instruments - cash flow hedges | 19.7 | |
Total assets | 27.1 | 0 |
Liabilities | ||
Total liabilities | 0 | 0 |
Level 3 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Money market funds | 0 | |
Pension assets | 0 | |
Pension Asset, Cash and Cash Equivalents, Fair Value Disclosure | 0 | |
Equity securities | 0 | |
Debt securities | 0 | |
Real estate funds | 0 | |
Alternative investments | 0 | |
Other | 0 | |
Derivative instruments - cash flow hedges | 0 | |
Total assets | 0 | 0 |
Liabilities | ||
Total liabilities | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Useful Life (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Building and building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 7 years |
Building and building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 39 years |
Computer equipment and software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 2 years |
Computer equipment and software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 12 years |
Demonstration units | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 2 years |
Demonstration units | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Furniture and office equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 2 years |
Furniture and office equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 15 years |
Machinery, equipment and tooling | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Machinery, equipment and tooling | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 20 years |
Transportation, vehicles and other | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 1 year |
Transportation, vehicles and other | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 20 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Additional Information (Detail) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment shares | Jan. 01, 2022 USD ($) shares | Jan. 02, 2021 USD ($) shares | |
Summary Of Significant Accounting Policies [Line Items] | |||
Number of Sources of Product Revenue | segment | 4 | ||
Advertising costs | $ | $ 12.3 | $ 9 | $ 30.8 |
Options to purchase of shares of common stock (in shares) | 0.8 | 0.2 | 0.4 |
Restricted Stock Units (RSUs) | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Weighted average shares contingently issuable (in shares) | 0.3 | 0.1 | 0.1 |
Chief Executive Officer | Restricted Stock Units (RSUs) | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Weighted average shares contingently issuable (in shares) | 2.7 | 2.7 | 2.7 |
Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 3 years | ||
Warranty period for defects in material and workmanship | 6 months | ||
Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 years | ||
Warranty period for defects in material and workmanship | 48 months | ||
Patents | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Estimated life maximum | 10 years | ||
Trademarks | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Estimated life maximum | 17 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Changes in Product Warranty Accrual (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Warranty accrual, beginning of period | $ 2.5 | $ 2.7 | $ 3.4 |
Increase related to acquisition | 8.4 | 0 | 0 |
Accrual for warranties issued | 1.8 | 2.2 | 0.8 |
Changes in pre-existing warranties (including changes in estimates) | 4.7 | (1.4) | 0.2 |
Settlements made | (6.8) | (1) | (1.7) |
Warranty accrual, end of period | $ 10.6 | $ 2.5 | $ 2.7 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Computation of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Net income attributable to stockholders of Masimo Corporation: | |||
Net income | $ 143.5 | $ 229.6 | $ 240.3 |
Basic net income per share: | |||
Weighted-average shares outstanding - basic (in shares) | 53.6 | 55.2 | 54.7 |
Net income per basic share (in dollars per share) | $ 2.68 | $ 4.16 | $ 4.39 |
Diluted net income per share: | |||
Weighted-average shares outstanding - basic (in shares) | 53.6 | 55.2 | 54.7 |
Diluted share equivalents: stock options and RSUs (in shares) | 1.6 | 2.5 | 3.3 |
Weighted-average shares outstanding - diluted (in shares) | 55.2 | 57.7 | 58 |
Net income per diluted share (in dollars per share) | $ 2.60 | $ 3.98 | $ 4.14 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies-Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | Dec. 28, 2019 | |
Cash paid during the year for: | ||||
Interest expense | $ 23 | $ 0.3 | $ 0.3 | |
Income taxes | 87.3 | 43.9 | 39.5 | |
Operating lease liabilities | 17.2 | 7.3 | 6.3 | |
Non-cash operating activities: | ||||
ROU assets obtained in exchange for lease liabilities | 0 | 6 | 15.4 | |
Non-cash Investing and financing activities | ||||
Unpaid purchases of property and equipment | 3.8 | 0 | 2.1 | |
Settlement of promissory note receivable in connection with business combination | 0 | 0 | 5.1 | |
Unsettled common stock proceeds from option exercises | 0 | 0.7 | 3 | |
Fair value of common stock received for payment of stock option exercise price | 0 | 0 | 1.6 | |
Reconciliation of cash, cash equivalents and restricted cash: | ||||
Cash and cash equivalents | 202.9 | 745.3 | 641.4 | |
Restricted cash | 6.7 | 3.1 | 3.6 | |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 209.6 | $ 748.4 | $ 645 | $ 568.1 |
Related Party Transactions (Det
Related Party Transactions (Detail) | 12 Months Ended | ||||
Jul. 08, 2021 USD ($) | Dec. 31, 2022 USD ($) ft² | Jan. 01, 2022 USD ($) | Jan. 02, 2021 USD ($) | Jul. 03, 2021 USD ($) | |
Minimum | |||||
Related Party Transaction [Line Items] | |||||
Minimum aggregate royalty payments | $ 5,000,000 | ||||
Cercacor Laboratories | |||||
Related Party Transaction [Line Items] | |||||
Minimum aggregate royalty payments | 16,900,000 | $ 13,500,000 | $ 13,300,000 | ||
Related party transaction other revenues | 200,000 | 100,000 | 100,000 | ||
Payment for administrative fees | 400,000 | 300,000 | 300,000 | ||
Sublease Income | 1,200,000 | 1,200,000 | 1,100,000 | ||
Due to related party | $ 3,800,000 | 3,500,000 | |||
Leased Property | |||||
Related Party Transaction [Line Items] | |||||
Square feet of office | ft² | 34,000 | ||||
Not for Profit Organization | |||||
Related Party Transaction [Line Items] | |||||
Cash contributions | $ 1,000,000 | 0 | 1,500,000 | ||
Like Minded Entertainment | |||||
Related Party Transaction [Line Items] | |||||
Due to related party | 0 | 0 | |||
Related party transaction expenses | 1,400,000 | 100,000 | 0 | ||
Reimbursement Fee | Chief Executive Officer | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction expenses | $ 100,000 | $ 100,000 | $ 100,000 | ||
Like Minded Labs | |||||
Related Party Transaction [Line Items] | |||||
License fee | $ 3,000,000 | ||||
Vantrix Corp | Purchase Commitment | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | $ 500,000 | ||||
Vantrix Corp | Options Held | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | $ 1,100,000 |
Inventories - Components of Inv
Inventories - Components of Inventory (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 209.9 | $ 128.3 |
Work-in-process | 30.4 | 17.1 |
Finished goods | 260.7 | 56 |
Total inventories | 501 | $ 201.4 |
Sound United | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Step-up amortization | $ 53.3 |
Other Current Assets - (Details
Other Current Assets - (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 77.5 | $ 30.9 |
Indirect taxes receivable | 26.8 | 12.8 |
Lease receivable, current | 28.5 | 28.7 |
Prepaid income taxes | 12.4 | 7 |
Contract assets, current | 3.9 | 2.1 |
Prepaid rebates and royalties | 3.7 | 2.8 |
Restricted cash | 2.4 | 3 |
Other current assets | 3.6 | 3.7 |
Total other current assets | $ 158.8 | $ 91 |
Lease Receivable (Details)
Lease Receivable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Leases [Abstract] | ||
Lease revenue | $ 57 | $ 59.4 |
Lease Receivable - Sales-Type (
Lease Receivable - Sales-Type (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
Lease receivable | $ 101.8 | $ 102.6 |
Allowance for credit loss | (0.2) | (0.3) |
Lease receivable, net | 101.6 | 102.3 |
Less: current portion of lease receivable | (28.5) | (28.7) |
Lease receivable, non-current | $ 73.1 | $ 73.6 |
Lease Receivable - Sales-Type L
Lease Receivable - Sales-Type Lease, Maturity (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Sales-Type Leases | ||
2023 | $ 28.4 | |
2024 | 25.1 | |
2025 | 19.9 | |
2026 | 13.5 | |
2027 | 7.9 | |
Thereafter | 6.8 | |
Lease receivable, net | 101.6 | $ 102.3 |
Less: imputed interest | 0 | |
Present value of total lease payments | 101.6 | |
Operating Leases | ||
2023 | 3.8 | |
2024 | 3.5 | |
2025 | 3.5 | |
2026 | 3.3 | |
2027 | 2.7 | |
Thereafter | 3.7 | |
Total | $ 20.5 | |
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 | Dec. 31, 2022 | Jan. 01, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred commissions | $ 17.1 | $ 11.9 |
Prepaid contract allowances | 13.7 | 8.6 |
Unbilled contract receivables | 9.4 | 5 |
Deferred equipment agreements, net | 1.7 | 2.6 |
Deferred costs and other contract assets | $ 41.9 | $ 28.1 |
Property and Equipment, net - C
Property and Equipment, net - Components of Property and Equipment (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 604 | $ 430.3 |
Accumulated depreciation | (201.5) | (157.5) |
Property and equipment, net | 402.5 | 272.8 |
Building and building improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 151 | 142.1 |
Machinery, equipment and tooling | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 149.4 | 103.5 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 65.1 | 57 |
Operating lease assets | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 50.2 | 0 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 42.1 | 32.5 |
Transportation, vehicles and other | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 32.7 | 33.1 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 32.3 | 21.9 |
Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 19.4 | 14.2 |
Demonstration units | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 11.2 | 0.9 |
Construction-in-progress (CIP) | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 50.6 | $ 25.1 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Detail) $ in Millions, $ in Millions | 12 Months Ended | |||
Feb. 14, 2022 CAD ($) | Dec. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | Jan. 02, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 43 | $ 25.3 | $ 21.8 | |
Property, plant and equipment, additions | $ 123 | |||
Escrow deposit | $ 21 | |||
Amortization of deferred cost of goods sold | 4.3 | 0.5 | ||
Accumulated amortization of deferred cost of goods sold | 2.1 | 0.5 | ||
Operating lease assets | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 4.4 | $ 0.5 | $ 0.4 |
Intangible Assets, net - Schedu
Intangible Assets, net - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Apr. 11, 2022 | Dec. 31, 2022 | Jan. 01, 2022 |
Intangible assets subject to amortization: | |||
Gross Carrying Amount | $ 540.6 | $ 118.5 | |
Accumulated Amortization | (80) | (46) | |
Net Carrying Amount | 460.6 | 72.5 | |
Trademarks - (Note 9) | 262 | 0 | |
Other intangible assets, net | 722.6 | 72.5 | |
Intangible assets not subject to amortization: | |||
Trademarks - (Note 9) | 262 | 0 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Intangible assets, net | 722.6 | 72.5 | |
Trademarks | |||
Intangible assets subject to amortization: | |||
Trademarks - (Note 9) | 262 | 0 | |
Intangible assets not subject to amortization: | |||
Trademarks - (Note 9) | 262 | 0 | |
Customer relationships | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 220.9 | 24.6 | |
Accumulated Amortization | (19.3) | (9.3) | |
Net Carrying Amount | 201.6 | 15.3 | |
Acquired technologies | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 185.3 | 28.4 | |
Accumulated Amortization | (25.2) | (8.7) | |
Net Carrying Amount | 160.1 | 19.7 | |
Trademarks | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 39.3 | 12.2 | |
Accumulated Amortization | (5.8) | (4.1) | |
Net Carrying Amount | 33.5 | 8.1 | |
Licenses | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 39 | 8.1 | |
Accumulated Amortization | (4.4) | (2) | |
Net Carrying Amount | 34.6 | 6.1 | |
Licenses | Cercacor Laboratories | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 7.5 | 7.5 | |
Accumulated Amortization | (6.3) | (6) | |
Net Carrying Amount | 1.2 | 1.5 | |
Patents | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 35.2 | 31.5 | |
Accumulated Amortization | (13.9) | (12.2) | |
Net Carrying Amount | 21.3 | 19.3 | |
Non-compete agreements | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 6.3 | 0.3 | |
Accumulated Amortization | (1.1) | 0 | |
Net Carrying Amount | 5.2 | 0.3 | |
Non-compete agreements | Sound United | |||
Intangible assets subject to amortization: | |||
Finite-lived intangible assets acquired | $ 6 | ||
Capitalized software development costs | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 5.5 | 4.3 | |
Accumulated Amortization | (2.9) | (2.6) | |
Net Carrying Amount | 2.6 | 1.7 | |
Other | |||
Intangible assets subject to amortization: | |||
Gross Carrying Amount | 1.6 | 1.6 | |
Accumulated Amortization | (1.1) | (1.1) | |
Net Carrying Amount | $ 0.5 | $ 0.5 |
Intangible Assets, net - Additi
Intangible Assets, net - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | $ 80 | $ 46 | |
Cost of patents, gross | 10.6 | 9 | |
Cost of trademarks, gross | $ 1.1 | 1 | |
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Acquired finite-lived intangible assets, weighted average useful life | 14 years | ||
Patents | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | $ 13.9 | 12.2 | |
Weighted average number of years until the next renewal | 1 year | ||
Acquired technologies | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | $ 25.2 | 8.7 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | 19.3 | 9.3 | |
Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | $ 5.8 | 4.1 | |
Weighted average number of years until the next renewal | 6 years | ||
Other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | $ 1.1 | 1.1 | |
Patents And Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated Amortization | 39.8 | 10.3 | $ 7.5 |
Total renewal costs capitalized | $ 1.2 | $ 1.5 |
Intangible Assets, net - Estima
Intangible Assets, net - Estimated Amortization Expense (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 44.9 | |
2024 | 47.7 | |
2025 | 47.2 | |
2026 | 46.3 | |
2027 | 45.7 | |
Thereafter | 228.8 | |
Net Carrying Amount | $ 460.6 | $ 72.5 |
Goodwill - Changes in Goodwill
Goodwill - Changes in Goodwill - (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | $ 100.3 | $ 103.2 |
Increase from business combinations | 347.8 | 0 |
Adjustments to goodwill from purchase price allocation | 0 | 0 |
Foreign currency translation adjustment | (2.7) | (2.9) |
Goodwill, end of period | 445.4 | 100.3 |
Healthcare | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | 100.3 | 103.2 |
Increase from business combinations | 0 | 0 |
Foreign currency translation adjustment | (2.7) | (2.9) |
Goodwill, end of period | 97.6 | 100.3 |
Non-healthcare | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | 0 | 0 |
Increase from business combinations | 347.8 | 0 |
Foreign currency translation adjustment | 0 | 0 |
Goodwill, end of period | $ 347.8 | $ 0 |
Lessee ROU Assets and Lease L_3
Lessee ROU Assets and Lease Liabilities - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Leases [Abstract] | |||
Operating lease renewal term | 5 years | ||
Weighted average discount rate | 3.80% | ||
Accumulated amortization for operating leases | $ 36.6 | $ 15.2 | |
Weighted average remaining lease term | 5 years 10 months 24 days | ||
Operating lease costs | $ 18 | $ 8.2 | $ 6.9 |
Lessee ROU Assets and Lease L_4
Lessee ROU Assets and Lease Liabilities Lessee - Operating Lease Balance Sheet Classification (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
Lessee ROU assets, net | $ 69.6 | $ 30.5 |
Lessee current lease liabilities | 18.7 | 6.4 |
Lessee non-current lease liabilities | 53.4 | 26.3 |
Total operating lease liabilities | $ 72.1 | $ 32.7 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other non-current assets | Other non-current assets |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other non-current liabilities | Other non-current liabilities |
Lessee ROU Assets and Lease L_5
Lessee ROU Assets and Lease Liabilities - Future Maturities Operating Lease Payments (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
2023 | $ 20.3 | |
2024 | 17.2 | |
2025 | 13 | |
2026 | 9.2 | |
2027 | 4.7 | |
Thereafter | 17.2 | |
Total | 81.6 | |
Imputed interest | (9.5) | |
Present value | $ 72.1 | $ 32.7 |
Other Non-Current Assets - (Det
Other Non-Current Assets - (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Other Assets, Noncurrent [Abstract] | ||
Lessee ROU assets, net | $ 69.6 | $ 30.5 |
Derivative assets - non-current | 19.3 | 0 |
Strategic investments | 13.8 | 13.8 |
Prepaid deposits and other | 11 | 3.9 |
Other non-current assets | 0.3 | 0.4 |
Total other non-current assets | $ 114 | $ 48.6 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total other non-current assets | Total other non-current assets |
Deferred Revenue and Other Co_3
Deferred Revenue and Other Contract Liabilities - (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Deferred revenue | $ 61 | $ 35.1 |
Accrued rebates and allowances | 38.5 | 13.6 |
Accrued customer reimbursements | 6.1 | 7.4 |
Total deferred revenue and other contract liabilities | 105.6 | 56.1 |
Less: Non-current portion of deferred revenue | (25) | (5.2) |
Deferred revenue and other contract-related liabilities, current | $ 80.6 | $ 50.9 |
Deferred Revenue and Other Co_4
Deferred Revenue and Other Contract Liabilities, Current - Changes in Deferred Revenue (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Deferred revenue, beginning of the period | $ 35.1 |
Increase from business combinations | 19 |
Revenue deferred during the period | 38.9 |
Recognition of revenue deferred in prior periods | (32) |
Deferred revenue, end of the period | $ 61 |
Deferred Revenue and Other Co_5
Deferred Revenue and Other Contract Liabilities - Narrative - (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 | Oct. 31, 2020 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Unrecognized contract revenue | $ 1,289.3 | ||
Deferred revenue | 61 | $ 35.1 | |
Bowers and Wilkins | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accrued Royalties | $ 20 | ||
Deferred revenue | 17.5 | $ 35 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Unrecognized contract revenue | $ 354.8 | ||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Twelve Months and Thereafter | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Other Current Liabilities - (De
Other Current Liabilities - (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Accrued expenses | $ 39.9 | $ 12.1 |
Accrued indirect taxes payable | 28.2 | 16.3 |
Lessee lease liabilities, current | 18.7 | 6.4 |
Current portion of long-term debt | 15.1 | 0 |
Accrued property taxes | 12.1 | 2 |
Accrued legal fees | 11.4 | 7.1 |
Accrued warranty | 10.6 | 2.5 |
Income tax payable | 32.1 | 12 |
Other current liabilities | 6.1 | 4.7 |
Accrued donations | 5.1 | 3.7 |
Related party payables | 4 | 3.6 |
Total other current liabilities | $ 183.3 | $ 70.4 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Debt Instrument [Line Items] | ||
Short-term debt | $ 15.1 | $ 0 |
Long-term debt | 941.6 | 0 |
Total debt | 956.7 | 0 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Short-term debt | 7.5 | 0 |
Long-term debt | 278.9 | 0 |
Revolver | ||
Debt Instrument [Line Items] | ||
Long-term debt | 651 | 0 |
Japanese Loans | ||
Debt Instrument [Line Items] | ||
Short-term debt | 7.6 | 0 |
Long-term debt | $ 11.7 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||||
Feb. 28, 2023 USD ($) | Apr. 11, 2022 USD ($) | Mar. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | Feb. 28, 2023 JPY (¥) | Dec. 31, 2022 JPY (¥) | May 16, 2022 USD ($) | Apr. 10, 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 (¥) | |
New Credit Facility Agreement | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Accordion feature, increase limit | $ 400 | |||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR) | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on variable rate | 1% | |||||||||||||||
New Credit Facility Agreement | Federal Funds Effective Swap Rate | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on variable rate | 0.50% | |||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR), One-Month Interest Period | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on variable rate | 0.10% | |||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR), Three-Month Interest Period | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on variable rate | 0.15% | |||||||||||||||
New Credit Facility Agreement | Adjusted Secured Overnight Financing Rate (SOFR), Six-Month Interest Period | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on 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] | ||||||||||||||||
Basis spread on variable rate | 0% | |||||||||||||||
New Credit Facility Agreement | Minimum | Adjusted Secured Overnight Financing Rate (SOFR) | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on 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] | ||||||||||||||||
Basis spread on variable rate | 0.75% | |||||||||||||||
New Credit Facility Agreement | Maximum | Adjusted Secured Overnight Financing Rate (SOFR) | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Basis spread on variable rate | 1.75% | |||||||||||||||
Japanese Government Loans | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt instrument face amount | $ 11.3 | ¥ 1,480 | ||||||||||||||
Average interest rate | 1.33% | 1.33% | ||||||||||||||
Japanese Equipment Loans | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt instrument face amount | $ 0.6 | ¥ 80 | $ 1.1 | ¥ 150 | ||||||||||||
Average interest rate | 1.20% | 1.20% | 0.58% | 0.58% | ||||||||||||
Revolving Credit Facility | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum sublimit | $ 25 | |||||||||||||||
Foreign Line of Credit | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum sublimit | 75 | |||||||||||||||
Revolving Credit Facility | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Current borrowing capacity | 150 | |||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 550 | |||||||||||||||
Interest expense | $ 23.7 | $ 0 | ||||||||||||||
Revolving Credit Facility | New Credit Facility Agreement | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 500 | $ 705 | ||||||||||||||
Accordion feature, increase limit | $ 205 | |||||||||||||||
Revolving Credit Facility | Line of Credit | Japanese Revolving Loan | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 6.1 | ¥ 800 | ||||||||||||||
Debt issuance costs | $ 0.1 | ¥ 7.2 | ||||||||||||||
Basis spread on variable rate | 0.50% | |||||||||||||||
Line of credit current | $ 6.1 | ¥ 800 | ||||||||||||||
Revolving Credit Facility | Line of Credit | Japanese Revolving Loan | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 22.9 | ¥ 3,000 | ||||||||||||||
Debt issuance costs | $ 0.2 | ¥ 22 | ||||||||||||||
Basis spread on variable rate | 0.75% | |||||||||||||||
Revolving Credit Facility | Line of Credit | Lenders | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt issuance costs | 0.1 | |||||||||||||||
Revolving Credit Facility | Line of Credit | Initial Lenders | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt issuance costs | 8.4 | |||||||||||||||
Unsecured Debt | New Credit Facility Agreement | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | 300 | |||||||||||||||
Letter of Credit | New Credit Facility Agreement | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 50 |
Debt - Maturity Debt Schedule (
Debt - Maturity Debt Schedule (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 15.1 |
2024 | 14.9 |
2025 | 16.8 |
2026 | 16.8 |
2027 | 888.6 |
Thereafter | 4.5 |
Total | $ 956.7 |
Other Non-Current Liabilities_2
Other Non-Current Liabilities - (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Lessee non-current lease liabilities | $ 53.4 | $ 26.3 |
Deferred revenue, non-current | 25 | 5.2 |
Unrecognized tax benefits | 18 | 14.9 |
Pension benefit obligation | 10.1 | 0 |
Income tax payable, non-current | 12.7 | 17 |
Indirect tax payable, non-current | 8.2 | 0 |
Other | 9.1 | 0.6 |
Other non-current liabilities | $ 136.5 | $ 64 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 30, 2023 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Net of tax gain on derivatives | [1] | $ 14.7 | $ 0 | $ 0 | |
Forecast [Member] | Interest Expense | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Net of tax gain on derivatives | $ 12.2 | ||||
Designated as Hedging Instrument | Interest rate contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Average fixed interest rate related to derivative contracts | 2.75% | ||||
Maturities of derivative contracts | 5 years | ||||
[1]See Note 17, “ Derivative Instruments and Hedging Activities ”, for further details. |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Fair Value of Hedging Instruments (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Fair value of hedging instruments | $ 19.7 | $ 0 |
Interest rate contracts | Other non-current assets | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Fair value of hedging instruments | $ 19.7 | $ 0 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Schedule of Gain (Losses) Reclassified from AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Gains (losses) reclassified from accumulated other comprehensive income | $ 0.7 | $ 0 | $ 0 |
Designated as Hedging Instrument | Interest rate contracts | Non-operating loss (income) | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Gains (losses) reclassified from accumulated other comprehensive income | $ 0.7 | $ 0 | $ 0 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities - Schedule of Accumulated Other Comprehensive Income Related to Hedging Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,550.2 | $ 1,407.7 |
Ending balance | 1,338.9 | 1,550.2 |
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 0 | 0 |
Amount recognized in other comprehensive income | 20 | 0 |
Amount reclassified into earnings | (0.7) | 0 |
Ending balance | $ 19.3 | $ 0 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Apr. 11, 2022 | Oct. 01, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Business Acquisition [Line Items] | ||||||
Revenue | $ 2,035.8 | $ 1,239.2 | $ 1,143.7 | |||
Purchase price allocation completion, term (in years) | 1 year | 1 year | ||||
Adjustments to goodwill from purchase price allocation | $ 0 | 0 | ||||
Operating Segments | ||||||
Business Acquisition [Line Items] | ||||||
Revenue | 2,035.8 | 1,239.2 | 1,143.7 | |||
Non-healthcare | ||||||
Business Acquisition [Line Items] | ||||||
Net loss | $ 38.6 | |||||
Non-healthcare | Operating Segments | ||||||
Business Acquisition [Line Items] | ||||||
Revenue | 694.9 | 695.5 | $ 0 | $ 0 | ||
Sound United | ||||||
Business Acquisition [Line Items] | ||||||
Cash consideration | $ 1,065 | |||||
Percentage of voting interests acquired | 100% | |||||
Transaction costs | 22.4 | 22.4 | ||||
Adjustments to goodwill from purchase price allocation | $ 4.4 | |||||
Profit Interests Units, value | $ 49.3 | |||||
Sound United | Selling, General and Administrative Expenses | ||||||
Business Acquisition [Line Items] | ||||||
Transaction costs | 16.6 | 16.6 | ||||
Sound United | Sound United | ||||||
Business Acquisition [Line Items] | ||||||
Transaction costs | $ 41.1 | $ 41.1 |
Business Combinations - Fair Va
Business Combinations - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Apr. 11, 2022 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 |
Assets acquired: | ||||
Goodwill | $ 445.4 | $ 100.3 | $ 103.2 | |
Sound United | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | $ 1,065 | |||
Purchase price | 1,065 | |||
Assets acquired: | ||||
Cash and cash equivalents | 82.6 | |||
Accounts receivables | 108.5 | |||
Inventories | 235.8 | |||
Prepaid expenses and other current assets | 31.1 | |||
Property, plant and equipment | 113.2 | |||
Intangible assets | 649 | $ 387 | ||
Goodwill | 333.1 | |||
Long-term other assets | 14.7 | |||
Total assets acquired | 1,568 | |||
Liabilities assumed: | ||||
Accounts payable | (118.8) | |||
Accrued liabilities and other current liabilities | (165.9) | |||
Deferred tax liabilities | (143.1) | |||
Other long-term liabilities | (75.2) | |||
Total liabilities assumed | $ (503) |
Business Combinations - Schedul
Business Combinations - Schedule of Acquired Intangible Assets (Details) - Sound United - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Apr. 11, 2022 | |
Business Acquisition [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 14 years | |
Intangible assets | $ 387 | $ 649 |
Indefinite trademarks/tradenames | 262 | |
Total | $ 649 | |
Trademarks/tradenames | ||
Business Acquisition [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 10 years | |
Intangible assets | $ 6 | |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 17 years | |
Intangible assets | $ 196 | |
Developed technology | ||
Business Acquisition [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 8 years | |
Intangible assets | $ 156 | |
Contractual license agreements | ||
Business Acquisition [Line Items] | ||
Acquired finite-lived intangible assets, weighted average useful life | 15 years | |
Intangible assets | $ 29 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - Sound United - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Pro forma net revenue | $ 2,293.4 | $ 2,187.4 |
Pro forma net income (loss) | $ 181.8 | $ 126.2 |
Equity - Additional Information
Equity - Additional Information (Detail) - $ / shares | 1 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2021 | Sep. 30, 2021 | Jul. 31, 2018 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | Sep. 20, 2022 | Jun. 30, 2022 | |
Class of Stock [Line Items] | ||||||||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 | ||||||
Shares repurchased | 1,300,000 | 3,000,000 | 500,000 | 500,000 | ||||
Rights to Purchase Series A Junior Participating Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock purchase right declared for each share of common stock (in shares) | 1 | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | |||||||
Purchase price per each right (in dollars per share) | $ 1,000 | |||||||
Rights to Purchase Series A Junior Participating Preferred Stock | Minimum | ||||||||
Class of Stock [Line Items] | ||||||||
Threshold percentage to exercise purchase right | 10% | |||||||
Rights to Purchase Series A Junior Participating Preferred Stock | Maximum | ||||||||
Class of Stock [Line Items] | ||||||||
Threshold percentage to exercise purchase right | 20% | |||||||
2018 Repurchase Program | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Stock repurchase program, number of shares authorized to be repurchased (in shares) | 5,000,000 | |||||||
Stock repurchase program period in force | 3 years | |||||||
2021 Repurchase Program | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Stock repurchase program, number of shares authorized to be repurchased (in shares) | 3,000,000 | |||||||
Stock repurchase program period in force | 3 years | |||||||
2022 Repurchase Program | Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Stock repurchase program, number of shares authorized to be repurchased (in shares) | 5,000,000 | 5,000,000 |
Equity - Schedule of Stock Repu
Equity - Schedule of Stock Repurchase Activities (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Equity [Abstract] | ||||
Repurchases of common stock (in shares) | 1.3 | 3 | 0.5 | 0.5 |
Average cost per share (in dollars per share) | $ 133.82 | $ 235.88 | $ 242.40 | |
Value of shares repurchased | $ 401.5 | $ 129 | $ 110.5 |
Stock-Based Compensation - (Det
Stock-Based Compensation - (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
May 31, 2020 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | Jun. 01, 2017 | |
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Stock-based compensation expense | $ 47.7 | $ 44.6 | $ 42.2 | ||
Common stock reserved for future issuance (in shares) | 10,200,000 | ||||
Weighted average remaining contractual term of options outstanding, years price below the market value | 4 years 3 months 18 days | 5 years 1 month 6 days | |||
Weighted average remaining contractual term of options exercisable, years | 3 years 7 months 6 days | 4 years 3 months 18 days | |||
Award vesting period | 3 years | 3 years | 3 years | ||
Total fair market value of all vesting options | $ 12.4 | $ 15.2 | $ 15.1 | ||
Aggregated intrinsic value of options outstanding | 204.1 | ||||
Aggregated intrinsic value of options exercisable | 199.2 | ||||
Aggregated intrinsic value of options exercised | 14.6 | 84.7 | 355.3 | ||
Total income tax benefit recognized for share-based compensation expense | 2.5 | 16.4 | 30.4 | ||
Employee Stock Option | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Stock-based compensation expense | 11.4 | 13 | 16.1 | ||
Unrecognized compensation cost | $ 18.9 | ||||
Unrecognized share-based compensation related to unvested options granted, term | 4 years 3 months 18 days | ||||
Restricted Stock Units (RSUs) | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Stock-based compensation expense | $ 14.4 | $ 9 | $ 5.7 | ||
Unrecognized share-based compensation related to unvested options granted | $ 54.2 | ||||
Weighted average period | 3 years 8 months 12 days | ||||
Weighted average shares contingently issuable (in shares) | 300,000 | 100,000 | 100,000 | ||
Performance Shares | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Stock-based compensation expense | $ 21.9 | $ 22.6 | $ 20.4 | ||
Unrecognized share-based compensation related to unvested options granted | $ 42.3 | ||||
Weighted average period | 1 year 4 months 24 days | ||||
Award vesting period | 3 years | ||||
Weighted average shares contingently issuable (in shares) | 300,000 | 200,000 | 100,000 | ||
2017 Equity Incentive Plan | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Common stock reserved for future issuance (in shares) | 3,900,000 | ||||
Increase in number of shares authorized (in shares) | 2,500,000 | ||||
Maximum | Performance Shares | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Weighted average shares contingently issuable (in shares) | 325,124 | 138,000 | 194,000 | ||
Maximum | Performance Shares | 2018 Grant | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 200% | ||||
Maximum | Performance Shares | 2019 Grant | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 200% | ||||
Maximum | Performance Shares | 2020 Grant | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 200% | ||||
Maximum | 2007 Stock Incentive Plan | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Number of shares available for grant (in shares) | 5,000,000 | ||||
Maximum | 2017 Equity Incentive Plan | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Number of shares available for grant (in shares) | 7,500,000 | ||||
Minimum | Performance Shares | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Weighted average shares contingently issuable (in shares) | 162,562 | 69,000 | 97,000 | ||
Minimum | Performance Shares | 2018 Grant | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 0% | ||||
Minimum | Performance Shares | 2019 Grant | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 0% | ||||
Minimum | Performance Shares | 2020 Grant | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 0% | ||||
Minimum | 2017 Equity Incentive Plan | |||||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||||
Number of shares available for grant (in shares) | 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 Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Shares | |||
Options outstanding, beginning of period (in shares) | 2.9 | 3.4 | 5.2 |
Granted (in shares) | 0.1 | 0.1 | 0.4 |
Canceled/Forfeited (in shares) | (0.1) | (0.2) | (0.3) |
Exercised (in shares) | (0.1) | (0.4) | (1.9) |
Options outstanding, end of period (in shares) | 2.8 | 2.9 | 3.4 |
Options exercisable, end of period (in shares) | 2.4 | 2.2 | 2 |
Weighted-Average Exercise Price | |||
Options outstanding, beginning of period, average exercise price (in dollars per share) | $ 81.38 | $ 77.44 | $ 54.23 |
Granted (in dollars per share) | 150.91 | 250.15 | 187.83 |
Canceled/Forfeited (in dollars per share) | 162.77 | 149.11 | 126.98 |
Exercised (in dollars per share) | 54.53 | 53.55 | 32.41 |
Options outstanding, end of period, average exercise price (in dollars per share) | 83.85 | 81.38 | 77.44 |
Options exercisable, end of period (in dollars per share) | $ 65.83 | $ 57.09 | $ 47.31 |
Stock-Based Compensation - Nu_2
Stock-Based Compensation - Number and Weighted Average Exercise Price of Outstanding and Exercisable Options (Detail) - $ / shares shares in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | Dec. 28, 2019 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Number of options, options outstanding (in shares) | 2.8 | 2.9 | 3.4 | 5.2 |
Average Remaining Contractual Life | 4 years 3 months 18 days | 5 years 1 month 6 days | ||
Number of options, options exercisable (in shares) | 2.4 | 2.2 | 2 | |
$15.00 to $50.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 15 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 50 | |||
Number of options, options outstanding (in shares) | 1.3 | 1.4 | ||
Average Remaining Contractual Life | 2 years 4 months 24 days | 3 years 3 months 18 days | ||
Number of options, options exercisable (in shares) | 1.3 | 1.4 | ||
$50.01 to $80.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 50.01 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 80 | |||
Number of options, options outstanding (in shares) | 0.1 | 0.1 | ||
Average Remaining Contractual Life | 3 years 8 months 12 days | 4 years 9 months 18 days | ||
Number of options, options exercisable (in shares) | 0.1 | 0.1 | ||
$80.01 to $120.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 80.01 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 120 | |||
Number of options, options outstanding (in shares) | 0.8 | 0.8 | ||
Average Remaining Contractual Life | 4 years 9 months 18 days | 5 years 9 months 18 days | ||
Number of options, options exercisable (in shares) | 0.7 | 0.5 | ||
$120.01 to $160.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 120.01 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 160 | |||
Number of options, options outstanding (in shares) | 0.4 | 0.4 | ||
Average Remaining Contractual Life | 7 years 1 month 6 days | 7 years 4 months 24 days | ||
Number of options, options exercisable (in shares) | 0.2 | 0.1 | ||
$160.01 to $200.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 160.01 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 200 | |||
Number of options, options outstanding (in shares) | 0.2 | 0.2 | ||
Average Remaining Contractual Life | 7 years 2 months 12 days | 8 years 2 months 12 days | ||
Number of options, options exercisable (in shares) | 0.1 | 0.1 | ||
$200.01 to $230.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 200.01 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 230 | |||
Number of options, options outstanding (in shares) | 0 | 0 | ||
Average Remaining Contractual Life | 7 years 2 months 12 days | 8 years 6 months | ||
Number of options, options exercisable (in shares) | 0 | 0 | ||
$230.01 to $275.00 | ||||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||||
Range of exercise prices, lower (in dollars per share) | $ 230.01 | |||
Range of Exercise Prices, upper (in dollars per share) | $ 280 | |||
Number of options, options outstanding (in shares) | 0 | 0 | ||
Average Remaining Contractual Life | 8 years | 9 years | ||
Number of options, options exercisable (in shares) | 0 | 0 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Unvested RSU and PSU Award Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Weighted-Average Grant Date Fair Value | |||
Award vesting period | 3 years | 3 years | 3 years |
Restricted Stock Units (RSUs) | |||
Units | |||
Beginning of period (in shares) | 3,000,000 | 2,900,000 | 2,800,000 |
Granted (in shares) | 300,000 | 100,000 | 100,000 |
Canceled/Forfeited (in shares) | (100,000) | 0 | 0 |
Vested (in shares) | 0 | 0 | 0 |
End of period (in shares) | 3,200,000 | 3,000,000 | 2,900,000 |
Weighted-Average Grant Date Fair Value | |||
Beginning of period (in dollars per share) | $ 104.13 | $ 99.66 | $ 96.85 |
Granted (in dollars per share) | 148.52 | 257.43 | 193.77 |
Expired (in dollars per share) | 168.90 | 204.33 | 165.03 |
Vested (in dollars per share) | 184.04 | 163.71 | 134.78 |
End of period, fair value (in dollars per share) | $ 105.65 | $ 104.13 | $ 99.66 |
Performance Shares | |||
Units | |||
Beginning of period (in shares) | 300,000 | 400,000 | 300,000 |
Granted (in shares) | 300,000 | 200,000 | 100,000 |
Canceled/Forfeited (in shares) | (100,000) | 0 | 0 |
Vested (in shares) | (200,000) | (300,000) | 0 |
End of period (in shares) | 300,000 | 300,000 | 400,000 |
Weighted-Average Grant Date Fair Value | |||
Beginning of period (in dollars per share) | $ 168.68 | $ 120.28 | $ 102.22 |
Granted (in dollars per share) | 145.49 | 250.73 | 179.42 |
Expired (in dollars per share) | 139.73 | 166.84 | 122.13 |
Vested (in dollars per share) | 127.46 | 86.95 | 90.69 |
End of period, fair value (in dollars per share) | $ 180.04 | $ 168.68 | $ 120.28 |
Award vesting period | 3 years |
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 | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | |||
Risk-free interest rate, minimum | 1% | 0.30% | 0.20% |
Risk-free interest rate, maximum | 1.90% | 0.90% | 1.70% |
Estimated volatility, minimum | 31.20% | 30.90% | 26.90% |
Estimated volatility, maximum | 38.90% | 34.70% | 35.50% |
Expected dividends | 0% | 0% | 0% |
Weighted-average fair value of options granted (in dollars per share) | $ 49.69 | $ 75.72 | $ 51.10 |
Minimum | |||
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | |||
Expected term, years | 5 years 1 month 6 days | 5 years 1 month 6 days | 5 years 1 month 6 days |
Maximum | |||
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | |||
Expected term, years | 5 years 8 months 12 days | 5 years 7 months 6 days | 5 years 1 month 6 days |
Stock-Based Compensation - Tota
Stock-Based Compensation - Total Share-Based Compensation Expense Included in Consolidated Statements of Comprehensive Income (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Schedule Of Share Based Compensation Arrangements [Line Items] | |||
Stock-based compensation | $ 47.7 | $ 44.6 | $ 42.2 |
Cost of goods sold | |||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||
Stock-based compensation | 1 | 0.8 | 0.7 |
Selling, general and administrative | |||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||
Stock-based compensation | 32.9 | 31.3 | 31.5 |
Research and development | |||
Schedule Of Share Based Compensation Arrangements [Line Items] | |||
Stock-based compensation | $ 13.8 | $ 12.5 | $ 10 |
Employee Benefits - Narrative (
Employee Benefits - Narrative (Details) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) plan | Jan. 01, 2022 USD ($) | Dec. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) plan | Jan. 01, 2022 USD ($) | Jan. 02, 2021 USD ($) | |
Defined Contribution Plan Disclosure [Line Items] | ||||||
Defined contribution plan, number of plans | plan | 1 | 1 | ||||
Expected long-term return on plan assets | 1.70% | 0% | ||||
Benefits paid | $ 2,800,000 | |||||
Actual net loss on plan assets | (2,500,000) | |||||
Benefits paid | 2,000,000 | |||||
Actuarial loss | 1,900,000 | |||||
Unfunded balance | $ (10,100,000) | (10,100,000) | ||||
Employer contributions | $ 1,500,000 | $ 0 | ||||
Forecast [Member] | ||||||
Defined Contribution Plan Disclosure [Line Items] | ||||||
Employer contributions | $ 1,700,000 | |||||
Masimo Retirement Savings Plan | ||||||
Defined Contribution Plan Disclosure [Line Items] | ||||||
Percent of employees pay | 100% | |||||
Percent of match | 3% | |||||
Company's contribution to employee retirement savings plan | $ 4,500,000 | $ 3,400,000 | $ 3,200,000 | |||
Masimo Retirement Savings Plan | Foreign Plan | ||||||
Defined Contribution Plan Disclosure [Line Items] | ||||||
Company's contribution to employee retirement savings plan | $ 4,300,000 |
Employee Benefits - Defined Ben
Employee Benefits - Defined Benefit Plans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Plan Assets | ||
Fair value of plan assets at beginning of year(1) | $ 21,700,000 | |
Actual net loss on plan assets | (2,500,000) | |
Employer contributions | 1,500,000 | $ 0 |
Participant contributions | 500,000 | |
Benefits paid | 2,800,000 | |
Other, includes translation | (1,800,000) | |
Fair value of plan assets at end of year | 22,200,000 | 21,700,000 |
Projected Benefit Obligation | ||
Projected benefit obligation at beginning of year(2) | 32,300,000 | |
Service cost | 1,100,000 | 0 |
Interest cost | 100,000 | 0 |
Participant contributions | 500,000 | |
Actuarial loss | (1,900,000) | |
Benefits paid | 2,000,000 | |
Other, includes translation | (1,800,000) | |
Projected benefit obligation at end of year | 32,300,000 | $ 32,300,000 |
Funded status | $ (10,100,000) |
Employee Benefits - Net Periodi
Employee Benefits - Net Periodic Costs (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Postemployment Benefits [Abstract] | ||
Service cost | $ 1.1 | $ 0 |
Interest cost | 0.1 | 0 |
Expected return on plan assets | (0.6) | 0 |
Amortization of net losses | 0.1 | 0 |
Recognized net actuarial gain | 0.3 | 0 |
Net periodic defined benefit plan cost | $ 1 | $ 0 |
Employee Benefits - Classificat
Employee Benefits - Classification of Amounts Recognized in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Defined Contribution Plan Disclosure [Line Items] | ||
Unfunded balance | $ 10.1 | |
Non-current assets | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Unfunded balance | 0 | $ 0 |
Current liability | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Unfunded balance | 0 | 0 |
Non-current liability | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Unfunded balance | $ 10.1 | $ 0 |
Employee Benefits - Internation
Employee Benefits - International Define Benefit Plans (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Defined Contribution Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Benefit Obligation | $ 32.3 | $ 32.3 |
Defined Benefit Plan, Plan Assets, Amount | 22.2 | 21.7 |
Foreign Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Benefit Obligation | 32.3 | 0 |
Defined Benefit Plan, Accumulated Benefit Obligation | 31 | 0 |
Defined Benefit Plan, Plan Assets, Amount | $ 22.1 | $ 0 |
Employee Benefits - Plan Assump
Employee Benefits - Plan Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Assumptions - benefit obligations: | ||
Discount rate | 1.61% | 0% |
Rate of compensation increase | 0.96% | 0% |
Assumptions - net periodic benefit costs: | ||
Discount rate | 0.49% | 0% |
Rate of compensation increase | 0.09% | 0% |
Expected long-term return on plan assets | 1.70% | 0% |
Interest credit rate | 2.34% | 0% |
Employee Benefits - Plan Assets
Employee Benefits - Plan Assets (Details) | Dec. 31, 2022 | Jan. 01, 2022 |
Cash and cash equivalents | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Weighted-average asset allocation | 3% | 0% |
Equity securities | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Weighted-average asset allocation | 30% | 0% |
Debt securities | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Weighted-average asset allocation | 36% | 0% |
Other | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Weighted-average asset allocation | 31% | 0% |
Employee Benefits - Estimated F
Employee Benefits - Estimated Future Benefit Payments (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Postemployment Benefits [Abstract] | |
2023 | $ 2.1 |
2024 | 3.5 |
2025 | 2.9 |
2026 | 2.7 |
2027 | 2.7 |
2028-2032 | 10.6 |
Total | $ 24.5 |
Non-operating (Loss) Income -_2
Non-operating (Loss) Income - (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Nonoperating Income (Expense) [Abstract] | |||
Interest income | $ 1.8 | $ 0.9 | $ 5.5 |
Realized and unrealized foreign currency gain (loss) | 7.3 | (2) | 2.7 |
Interest expense | (25.7) | (0.3) | (0.3) |
Non-operating (loss) income | $ (16.6) | $ (1.4) | $ 7.9 |
Income Taxes - Components of In
Income Taxes - Components of Income Before Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 77.6 | $ 221.2 | $ 214.8 |
Foreign | 115.8 | 53.2 | 48.9 |
Income before provision for income taxes | $ 193.4 | $ 274.4 | $ 263.7 |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Provision (Benefit) for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Current: | |||
Federal | $ 48.7 | $ 38.1 | $ 13.9 |
State | 6.1 | 7.1 | 6.4 |
Foreign | 34.4 | 14.7 | 8.1 |
Subtotal | 89.2 | 59.9 | 28.4 |
Deferred: | |||
Federal | (20.5) | (4.9) | 1.3 |
State | (8.7) | (6.1) | (6.2) |
Foreign | (10.1) | (4.1) | (0.1) |
Subtotal | (39.3) | (15.1) | (5) |
Total | $ 49.9 | $ 44.8 | $ 23.4 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Income Taxes [Line Items] | |||
Increase (decrease) to tax and accrued interest related to uncertain tax positions | $ 4.5 | $ 3.6 | $ 0.2 |
Undistributed earnings of foreign subsidiaries | 409.1 | ||
Accumulated undistributed earnings | 86.5 | ||
Foreign tax credits | 1.6 | ||
Reinvested earnings | 322.6 | ||
Additional income tax expense | 15.6 | ||
Indefinitely carryforward research and development credits | 22.4 | ||
Investment tax credit | 0.9 | ||
Decrease in valuation allowance | 0.8 | ||
Estimated income tax benefit | $ 1.7 | $ 1 | |
Earnings per share, diluted, effect of foreign tax benefit relating to business and employment actions (in dollars per share) | $ 0.03 | $ 0.03 | |
Amount of unrecognized benefits affecting future tax rate | $ 24 | $ 19.8 | |
Income tax expense related to unrecognized tax benefits | 0.3 | (0.1) | |
Penalties and interest related to unrecognized tax benefits | 1.1 | $ 0.8 | |
Research Tax Credit Carryforward | |||
Income Taxes [Line Items] | |||
Tax credit | 2.8 | ||
Domestic Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards, gross | 1.2 | ||
State and Local Jurisdiction | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards, gross | 213 | ||
Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards, gross | $ 76.3 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of U.S. Federal Statutory Tax Rate to Company's Effective Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |||
Statutory regular federal income tax rate | 21% | 21% | 21% |
State provision, net of federal benefit | (1.00%) | 0.30% | 0.10% |
Nondeductible executive compensation | 2.90% | 2.10% | 1.80% |
Research and development tax credits | (1.70%) | (1.80%) | (2.20%) |
Foreign income taxed at different rates | 0% | (0.30%) | (1.00%) |
U.S. tax on foreign income, net | 4.80% | 0.90% | 1% |
Excess stock-based compensation | (1.20%) | (5.50%) | (10.40%) |
Derecognition of uncertain tax position | (0.80%) | (1.00%) | (2.20%) |
Effective Income Tax Rate Reconciliation, Transaction Costs, Percent | 0.90% | 0% | 0% |
Other | 0.90% | 0.60% | 0.80% |
Total | 25.80% | 16.30% | 8.90% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 |
Deferred tax assets: | ||
Deferred revenue | $ 27.8 | $ 26.1 |
Net operating losses | 34.7 | 9.5 |
Accrued liabilities | 32.1 | 19.2 |
Interest | 22.4 | 0 |
Capitalized R&D | 18.5 | 0 |
Tax credits | 18 | 13.1 |
Stock-based compensation | 10.9 | 8.9 |
Operating lease assets | 8.7 | 5.7 |
Other | 5.8 | 0 |
Total | 178.9 | 82.5 |
Valuation allowance | (7.3) | (6.5) |
Total deferred tax assets | 171.6 | 76 |
Deferred tax liabilities: | ||
Property and equipment | (18.2) | (13) |
Intangible assets | (186.7) | (2.7) |
Operating lease liabilities | (8.6) | (5.4) |
Withholding taxes on undistributed foreign earnings | (2.8) | (2.8) |
State taxes and other | (7.5) | (4.3) |
Interest rate hedge | (4.1) | 0 |
Inventory | (4) | 0 |
Other | (0.9) | (0.4) |
Total deferred tax liabilities | (232.8) | (28.6) |
Net deferred tax liabilities | $ (61.2) | |
Net deferred tax assets | $ 47.4 |
Income Taxes - Reconciliation_2
Income Taxes - Reconciliation of Total Amounts of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Jan. 01, 2022 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits (gross), beginning of period | $ 21,600 | $ 18,000 |
Increase from tax positions in prior period | 700 | 600 |
Decrease from tax position in prior period | (600) | (900) |
Increase from tax positions in current period | 6,000 | 7,000 |
Lapse of statute of limitations | (1,600) | (3,100) |
Unrecognized tax benefits (gross), end of period | $ 26,100 | $ 21,600 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information - (Detail) $ in Millions | 1 Months Ended | 12 Months Ended | |||||||||||
Jan. 30, 2023 patent | Dec. 12, 2022 patent | Oct. 19, 2022 patent appeal | Sep. 16, 2022 | Aug. 05, 2022 appeal patent | Jan. 14, 2022 USD ($) | Apr. 21, 2021 patent | Feb. 28, 2023 patent | Jul. 31, 2017 | Dec. 31, 2022 USD ($) distributor customer agreement | Jan. 01, 2022 USD ($) distributor customer | Jan. 02, 2021 distributor | Oct. 20, 2022 complaint | |
Contingencies And Commitments [Line Items] | |||||||||||||
Severance plan participation agreements | agreement | 6 | ||||||||||||
Period for notice of resignation | 6 months | ||||||||||||
Current annual minimum royalty obligation | $ 5 | ||||||||||||
License fee | 2.5 | ||||||||||||
Royalty guarantees, commitments, change in control | 15 | ||||||||||||
Royalty guarantees, commitments, additional, change in control | 2 | ||||||||||||
Remaining amount committed | 473.8 | ||||||||||||
Commitments and contingencies - (Note 24) | |||||||||||||
Cash and cash equivalents | 202.9 | ||||||||||||
Bank balance covered by Federal Deposit Insurance Corporation limit | $ 8.2 | ||||||||||||
Masimo Vs. Apple Inc | Subsequent Event | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Number of patents found infringed | patent | 2 | 2 | |||||||||||
Masimo Vs. Apple Inc | Pending Litigation | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Patents found infringed upon | patent | 3 | ||||||||||||
Patents found not infringed upon | patent | 9 | ||||||||||||
Apple, Inc. Patent Infringement | Pending Litigation | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Pending claims | appeal | 2 | 1 | |||||||||||
Number of patents allegedly infringed | patent | 4 | 2 | 5 | ||||||||||
Number of complaints | complaint | 2 | ||||||||||||
Sales | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Number of just-in-time distributors | distributor | 2 | 2 | 2 | ||||||||||
Accounts Receivable | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Concentration risk accounts receivable customer | customer | 1 | 1 | |||||||||||
GPO Members | Revenue Benchmark | Customer Concentration Risk | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Concentration risk, percentage | 53.80% | 51.90% | 49.30% | ||||||||||
Just in time distributor one | Revenue Benchmark | Customer Concentration Risk | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Concentration risk, percentage | 10.10% | 14.60% | 11.50% | ||||||||||
Just in time distributor two | Revenue Benchmark | Customer Concentration Risk | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Concentration risk, percentage | 5.10% | 9.60% | 10.10% | ||||||||||
Customer One | Accounts Receivable | Customer Concentration Risk | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Percentage of accounts receivable balance | 9.10% | 15.70% | |||||||||||
Unsecured Bank Guarantees | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Commitments and contingencies - (Note 24) | $ 4.8 | ||||||||||||
Chief Executive Officer | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Qualifying termination | $ 664.3 | ||||||||||||
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% | ||||||||||||
Chief Operating Officer | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Severance payment period | 36 months | ||||||||||||
Chief Operating Officer | Restricted Stock Units (RSUs) | |||||||||||||
Contingencies And Commitments [Line Items] | |||||||||||||
Severance terms | 50% |
Segment and Enterprise Report_3
Segment and Enterprise Reporting - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Number of operating segments | 2 |
Segment and Enterprise Report_4
Segment and Enterprise Reporting - Segment Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Segment Reporting Information [Line Items] | ||||
Total revenue by segment | $ 2,035,800 | $ 1,239,200 | $ 1,143,700 | |
Gross profit | 1,058,800 | 808,400 | 743,000 | |
Depreciation and amortization | 136,100 | 35,600 | 29,300 | |
Total long-lived assets | $ 404,200 | 404,200 | 275,400 | 273,800 |
Total assets | 3,210,600 | 3,210,600 | 1,887,000 | |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue by segment | 2,035,800 | 1,239,200 | 1,143,700 | |
Corporate overhead | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 19,000 | 19,000 | 20,600 | |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Gross profit | (63,900) | 0 | 0 | |
Non-healthcare | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 100,100 | 0 | 0 | |
Non-healthcare | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue by segment | 694,900 | 695,500 | 0 | 0 |
Gross profit | 252,500 | 0 | 0 | |
Total assets | 1,597,500 | 1,597,500 | 0 | |
Healthcare | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 36,000 | 35,600 | 29,300 | |
Healthcare | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue by segment | 1,340,300 | 1,239,200 | 1,143,700 | |
Gross profit | 870,200 | 808,400 | $ 743,000 | |
Total assets | $ 1,594,100 | $ 1,594,100 | $ 1,866,400 |
Segment and Enterprise Report_5
Segment and Enterprise Reporting - Revenue and Long-Lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total long-lived assets | $ 404,200 | $ 275,400 | $ 273,800 |
Total long-lived assets, percentage | 100% | 100% | 100% |
Total revenue | $ 2,035,800 | $ 1,239,200 | $ 1,143,700 |
Total revenue, percentage | 100% | 100% | 100% |
United States (U.S.) | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total long-lived assets | $ 319,700 | $ 239,400 | $ 238,100 |
Total long-lived assets, percentage | 79.10% | 86.90% | 86.90% |
Total revenue | $ 1,141,700 | $ 822,400 | $ 763,100 |
Total revenue, percentage | 56.10% | 66.40% | 66.70% |
Europe, Middle East and Africa | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | $ 523,600 | $ 251,800 | $ 238,700 |
Total revenue, percentage | 25.70% | 20.30% | 20.90% |
Asia and Australia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | $ 326,800 | $ 123,600 | $ 103,700 |
Total revenue, percentage | 16.10% | 10% | 9.10% |
North and South America (excluding U.S.) | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total revenue | $ 43,700 | $ 41,400 | $ 38,200 |
Total revenue, percentage | 2.10% | 3.30% | 3.30% |
International | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total long-lived assets | $ 84,500 | $ 36,000 | $ 35,700 |
Total long-lived assets, percentage | 20.90% | 13.10% | 13.10% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 01, 2022 | Jan. 02, 2021 | |
Allowance for credit losses | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 2.5 | $ 1.8 | $ 2.2 |
Additions Charged to Expense and Other Accounts | 5.6 | 0.7 | 0.1 |
Amounts Charged Against Reserve | (0.2) | 0 | (0.5) |
Balance at End of Period | 7.9 | 2.5 | 1.8 |
Allowance for sales returns and allowances | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 0.1 | 1.2 | 0.7 |
Additions Charged to Expense and Other Accounts | 0.2 | (1) | 0.8 |
Amounts Charged Against Reserve | 0 | (0.1) | (0.3) |
Balance at End of Period | $ 0.3 | $ 0.1 | $ 1.2 |
Uncategorized Items - masi-2022
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-13 [Member] |