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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0154833
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large Accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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o
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Page No.
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Condensed Consolidated Balance Sheets as of
September 30, 2018 and December 31, 2017 (unaudited)
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Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017 (unaudited)
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Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 2018 and 2017 (unaudited)
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|
|
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September 30, 2018
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December 31, 2017
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||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
54,440
|
|
|
$
|
88,950
|
|
Accounts receivable, net of allowance for doubtful accounts of $6,303 in 2018 and $8,978 in 2017
|
121,113
|
|
|
126,809
|
|
||
Inventories
|
80,586
|
|
|
71,529
|
|
||
Prepaid expenses and other current assets
|
30,843
|
|
|
18,340
|
|
||
Total current assets
|
286,982
|
|
|
305,628
|
|
||
Property and equipment, net
|
21,564
|
|
|
22,071
|
|
||
Intangible assets, net
|
155,623
|
|
|
172,582
|
|
||
Goodwill
|
162,995
|
|
|
172,998
|
|
||
Deferred income tax
|
10,135
|
|
|
10,709
|
|
||
Other assets
|
16,746
|
|
|
25,931
|
|
||
Total assets
|
$
|
654,045
|
|
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$
|
709,919
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
20,595
|
|
|
$
|
25,242
|
|
Short-term debt
|
20,000
|
|
|
—
|
|
||
Accrued liabilities
|
52,015
|
|
|
51,738
|
|
||
Deferred revenue
|
16,816
|
|
|
15,157
|
|
||
Total current liabilities
|
109,426
|
|
|
92,137
|
|
||
Long-term liabilities:
|
|
|
|
||||
Other liabilities
|
21,338
|
|
|
21,995
|
|
||
Long-term debt, net
|
94,426
|
|
|
154,283
|
|
||
Deferred income tax
|
18,896
|
|
|
19,407
|
|
||
Total liabilities
|
244,086
|
|
|
287,822
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value, 120,000,000 shares authorized; shares issued and outstanding 33,755,514 in 2018 and 33,134,101 in 2017
|
331,607
|
|
|
316,577
|
|
||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding in 2018 and 2017
|
—
|
|
|
—
|
|
||
Retained earnings
|
113,895
|
|
|
129,115
|
|
||
Accumulated other comprehensive loss
|
(35,543
|
)
|
|
(23,595
|
)
|
||
Total stockholders’ equity
|
409,959
|
|
|
422,097
|
|
||
Total liabilities and stockholders’ equity
|
$
|
654,045
|
|
|
$
|
709,919
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
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2018
|
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2017
|
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2018
|
|
2017
|
||||||||
Revenue
|
$
|
130,638
|
|
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$
|
122,643
|
|
|
$
|
389,900
|
|
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$
|
369,531
|
|
Cost of revenue
|
51,583
|
|
|
47,112
|
|
|
159,849
|
|
|
158,615
|
|
||||
Intangibles amortization
|
1,930
|
|
|
1,290
|
|
|
6,235
|
|
|
3,789
|
|
||||
Gross profit
|
77,125
|
|
|
74,241
|
|
|
223,816
|
|
|
207,127
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Marketing and selling
|
33,200
|
|
|
32,537
|
|
|
102,474
|
|
|
95,106
|
|
||||
Research and development
|
15,127
|
|
|
11,632
|
|
|
46,186
|
|
|
38,098
|
|
||||
General and administrative
|
15,799
|
|
|
17,329
|
|
|
56,966
|
|
|
57,501
|
|
||||
Intangibles amortization
|
4,477
|
|
|
3,882
|
|
|
13,434
|
|
|
11,841
|
|
||||
Restructuring
|
11,432
|
|
|
321
|
|
|
14,182
|
|
|
914
|
|
||||
Total operating expenses
|
80,035
|
|
|
65,701
|
|
|
233,242
|
|
|
203,460
|
|
||||
Income (loss) from operations
|
(2,910
|
)
|
|
8,540
|
|
|
(9,426
|
)
|
|
3,667
|
|
||||
Other income (expense), net
|
(726
|
)
|
|
150
|
|
|
(4,944
|
)
|
|
(1,268
|
)
|
||||
Income (loss) before provision for income tax
|
(3,636
|
)
|
|
8,690
|
|
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(14,370
|
)
|
|
2,399
|
|
||||
Provision for income tax
|
1,940
|
|
|
17,203
|
|
|
(3,069
|
)
|
|
15,597
|
|
||||
Net loss
|
$
|
(5,576
|
)
|
|
$
|
(8,513
|
)
|
|
$
|
(11,301
|
)
|
|
$
|
(13,198
|
)
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Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.41
|
)
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.41
|
)
|
Weighted average shares used in the calculation of loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
33,321
|
|
|
32,593
|
|
|
32,982
|
|
|
32,536
|
|
||||
Diluted
|
33,321
|
|
|
32,593
|
|
|
32,982
|
|
|
32,536
|
|
||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on available-for-sale investments
|
—
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
||||
Foreign currency translation adjustment
|
(2,312
|
)
|
|
5,166
|
|
|
(11,948
|
)
|
|
17,370
|
|
||||
Total other comprehensive income (loss)
|
(2,312
|
)
|
|
5,166
|
|
|
(11,948
|
)
|
|
17,325
|
|
||||
Comprehensive income (loss)
|
(7,888
|
)
|
|
(3,347
|
)
|
|
(23,249
|
)
|
|
4,127
|
|
|
Common Stock
|
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|
Stockholders’
Equity |
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balances, December 31, 2017
|
33,134,101
|
|
|
$
|
316,577
|
|
|
$
|
129,115
|
|
|
$
|
(23,595
|
)
|
|
$
|
422,097
|
|
Cumulative-effect adjustment for ASU 2016-16
|
—
|
|
|
—
|
|
|
(3,919
|
)
|
|
—
|
|
|
(3,919
|
)
|
||||
Vesting of restricted stock units
|
100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net issuance of restricted stock awards
|
239,649
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation expense
|
—
|
|
|
2,361
|
|
|
—
|
|
|
—
|
|
|
2,361
|
|
||||
Repurchase of company stock
|
(147,893
|
)
|
|
(4,736
|
)
|
|
—
|
|
|
—
|
|
|
(4,736
|
)
|
||||
Taxes paid related to net share settlement of equity awards
|
(600
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
||||
Exercise of stock options
|
46,173
|
|
|
577
|
|
|
—
|
|
|
—
|
|
|
577
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
3,617
|
|
|
3,617
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(3,148
|
)
|
|
—
|
|
|
(3,148
|
)
|
||||
Balances, March 31, 2018
|
33,271,530
|
|
|
$
|
314,760
|
|
|
$
|
122,048
|
|
|
$
|
(19,978
|
)
|
|
$
|
416,830
|
|
Vesting of restricted stock units
|
166
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net issuance of restricted stock awards
|
21,599
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Employee stock purchase plan
|
30,971
|
|
|
870
|
|
|
—
|
|
|
—
|
|
|
870
|
|
||||
Stock-based compensation expense
|
—
|
|
|
3,219
|
|
|
—
|
|
|
—
|
|
|
3,219
|
|
||||
Repurchase of company stock
|
(25,652
|
)
|
|
(893
|
)
|
|
—
|
|
|
—
|
|
|
(893
|
)
|
||||
Taxes paid related to net share settlement of equity awards
|
(8,627
|
)
|
|
(306
|
)
|
|
—
|
|
|
—
|
|
|
(306
|
)
|
||||
Exercise of stock options
|
300,350
|
|
|
3,645
|
|
|
—
|
|
|
—
|
|
|
3,645
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,253
|
)
|
|
(13,253
|
)
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(2,577
|
)
|
|
—
|
|
|
(2,577
|
)
|
||||
Balances, June 30, 2018
|
33,590,337
|
|
|
$
|
321,295
|
|
|
$
|
119,471
|
|
|
$
|
(33,231
|
)
|
|
$
|
407,535
|
|
Net issuance of restricted stock awards
|
2,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation expense
|
—
|
|
|
9,737
|
|
|
—
|
|
|
—
|
|
|
9,737
|
|
||||
Taxes paid related to net share settlement of equity awards
|
(151,163
|
)
|
|
(4,848
|
)
|
|
—
|
|
|
—
|
|
|
(4,848
|
)
|
||||
Exercise of stock options
|
313,745
|
|
|
5,423
|
|
|
—
|
|
|
—
|
|
|
5,423
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,312
|
)
|
|
(2,312
|
)
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(5,576
|
)
|
|
—
|
|
|
(5,576
|
)
|
||||
Balances, September 30, 2018
|
33,755,514
|
|
|
$
|
331,607
|
|
|
$
|
113,895
|
|
|
$
|
(35,543
|
)
|
|
$
|
409,959
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(11,301
|
)
|
|
$
|
(13,198
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Provision for losses on accounts receivable
|
5,871
|
|
|
8,704
|
|
||
Depreciation and amortization
|
25,652
|
|
|
20,859
|
|
||
Loss on disposal of property and equipment
|
410
|
|
|
14
|
|
||
Warranty reserve
|
73
|
|
|
5,307
|
|
||
Share-based compensation
|
15,446
|
|
|
7,223
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
2,955
|
|
|
(13,660
|
)
|
||
Inventories
|
(5,183
|
)
|
|
6,791
|
|
||
Prepaid expenses and other assets
|
(14,398
|
)
|
|
1,395
|
|
||
Accounts payable
|
(3,799
|
)
|
|
(9,530
|
)
|
||
Accrued liabilities
|
968
|
|
|
(8,537
|
)
|
||
Deferred revenue
|
1,745
|
|
|
(7,890
|
)
|
||
Deferred income tax
|
517
|
|
|
16,770
|
|
||
Net cash provided by operating activities
|
18,956
|
|
|
14,248
|
|
||
Investing activities:
|
|
|
|
||||
Acquisition of businesses, net of cash acquired
|
151
|
|
|
(142,592
|
)
|
||
Purchase of property and equipment
|
(5,127
|
)
|
|
(2,749
|
)
|
||
Purchase of intangible assets
|
(637
|
)
|
|
—
|
|
||
Sale of short-term investments
|
—
|
|
|
34,019
|
|
||
Net cash used in investing activities
|
(5,613
|
)
|
|
(111,322
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from stock option exercises and Employee Stock Purchase Program purchases
|
10,515
|
|
|
2,247
|
|
||
Repurchase of common stock
|
(5,629
|
)
|
|
(2,268
|
)
|
||
Taxes paid related to net share settlement of equity awards
|
(5,173
|
)
|
|
(3,685
|
)
|
||
Payment of contingent consideration related to a business combination
|
(147
|
)
|
|
(2,946
|
)
|
||
Proceeds from borrowings
|
—
|
|
|
60,000
|
|
||
Deferred debt issuance costs
|
—
|
|
|
(354
|
)
|
||
Payments on borrowings
|
(40,000
|
)
|
|
(45,000
|
)
|
||
Net cash provided by (used in) financing activities
|
(40,434
|
)
|
|
7,994
|
|
||
Exchange rate changes effect on cash and cash equivalents
|
(7,419
|
)
|
|
7,934
|
|
||
Net decrease in cash and cash equivalents
|
(34,510
|
)
|
|
(81,146
|
)
|
||
Cash and cash equivalents, beginning of period
|
88,950
|
|
|
213,551
|
|
||
Cash and cash equivalents, end of period
|
$
|
54,440
|
|
|
$
|
132,405
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
4,426
|
|
|
$
|
3,056
|
|
Cash paid for income taxes
|
$
|
7,946
|
|
|
$
|
4,312
|
|
Non-cash investing activities:
|
|
|
|
||||
Property and equipment included in accounts payable
|
$
|
82
|
|
|
$
|
57
|
|
Inventory transferred to property and equipment
|
$
|
754
|
|
|
$
|
935
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Contract Assets
|
$
|
3,150
|
|
|
$
|
2,884
|
|
Deferred Revenue
|
$
|
20,866
|
|
|
$
|
18,901
|
|
Unbilled AR, December 31, 2017
|
$
|
2,884
|
|
Additions
|
607
|
|
|
Transferred to Trade Receivable
|
(341
|
)
|
|
Unbilled AR, September 30, 2018
|
$
|
3,150
|
|
Deferred Revenue, December 31, 2017
|
$
|
18,901
|
|
Additions
|
14,132
|
|
|
Revenue Recognized
|
(12,167
|
)
|
|
Deferred Revenue, September 30, 2018
|
$
|
20,866
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
$
|
(5,576
|
)
|
|
$
|
(8,513
|
)
|
|
$
|
(11,301
|
)
|
|
$
|
(13,198
|
)
|
Weighted average common shares
|
33,321
|
|
|
32,593
|
|
|
32,982
|
|
|
32,536
|
|
||||
Dilutive effect of stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted Shares
|
33,321
|
|
|
32,593
|
|
|
32,982
|
|
|
32,536
|
|
||||
Basic loss per share
|
$
|
(0.17
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.41
|
)
|
Diluted loss per share
|
$
|
(0.17
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.41
|
)
|
Shares excluded from calculation of diluted EPS
|
230
|
|
|
507
|
|
|
407
|
|
|
550
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Raw materials and subassemblies
|
$
|
30,512
|
|
|
$
|
44,699
|
|
Work in process
|
3,521
|
|
|
3,788
|
|
||
Finished goods
|
61,839
|
|
|
43,488
|
|
||
Total inventories
|
95,872
|
|
|
91,975
|
|
||
Less: Non-current inventories
|
(15,286
|
)
|
|
(20,446
|
)
|
||
Inventories, current
|
$
|
80,586
|
|
|
$
|
71,529
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accumulated
Impairment |
|
Accumulated
Amortization |
|
Net Book
Value |
|
Gross
Carrying Amount |
|
Accumulated
Impairment |
|
Accumulated
Amortization |
|
Net Book
Value |
||||||||||||||||
Intangible assets with definite lives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Technology
|
$
|
111,853
|
|
|
$
|
(1,044
|
)
|
|
$
|
(48,275
|
)
|
|
$
|
62,534
|
|
|
$
|
101,045
|
|
|
$
|
(1,058
|
)
|
|
$
|
(42,048
|
)
|
|
$
|
57,939
|
|
Customer related
|
100,349
|
|
|
(50
|
)
|
|
(36,244
|
)
|
|
64,055
|
|
|
108,074
|
|
|
(50
|
)
|
|
(28,972
|
)
|
|
79,052
|
|
||||||||
Trade names
|
47,450
|
|
|
(3,864
|
)
|
|
(17,768
|
)
|
|
25,818
|
|
|
49,313
|
|
|
(3,916
|
)
|
|
(13,273
|
)
|
|
32,124
|
|
||||||||
Internally developed software
|
16,243
|
|
|
—
|
|
|
(13,650
|
)
|
|
2,593
|
|
|
15,610
|
|
|
—
|
|
|
(12,293
|
)
|
|
3,317
|
|
||||||||
Patents
|
2,737
|
|
|
(132
|
)
|
|
(2,521
|
)
|
|
84
|
|
|
2,778
|
|
|
(133
|
)
|
|
(2,495
|
)
|
|
150
|
|
||||||||
Service Agreements
|
1,190
|
|
|
—
|
|
|
(651
|
)
|
|
539
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Definite-lived intangible assets
|
$
|
279,822
|
|
|
$
|
(5,090
|
)
|
|
$
|
(119,109
|
)
|
|
$
|
155,623
|
|
|
$
|
276,820
|
|
|
$
|
(5,157
|
)
|
|
$
|
(99,081
|
)
|
|
$
|
172,582
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Technology
|
$
|
2,028
|
|
|
$
|
1,614
|
|
|
$
|
6,405
|
|
|
$
|
4,731
|
|
Customer related
|
2,596
|
|
|
2,264
|
|
|
7,779
|
|
|
6,627
|
|
||||
Trade names
|
1,553
|
|
|
1,481
|
|
|
4,635
|
|
|
4,385
|
|
||||
Internally developed software
|
545
|
|
|
504
|
|
|
1,603
|
|
|
1,511
|
|
||||
Patents
|
20
|
|
|
29
|
|
|
64
|
|
|
85
|
|
||||
Service Agreements
|
$
|
165
|
|
|
$
|
—
|
|
|
$
|
651
|
|
|
$
|
—
|
|
Total amortization
|
$
|
6,907
|
|
|
$
|
5,892
|
|
|
$
|
21,137
|
|
|
$
|
17,339
|
|
Three months ending December 31, 2018
|
$
|
6,750
|
|
2019
|
26,060
|
|
|
2020
|
23,580
|
|
|
2021
|
22,170
|
|
|
2022
|
18,533
|
|
|
2023
|
17,511
|
|
|
Thereafter
|
41,019
|
|
|
Total expected amortization expense
|
$
|
155,623
|
|
December 31, 2017
|
$
|
172,998
|
|
Purchase accounting adjustments
|
(7,822
|
)
|
|
Foreign currency translation
|
(2,181
|
)
|
|
September 30, 2018
|
$
|
162,995
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
1,828
|
|
|
$
|
2,815
|
|
Buildings
|
4,900
|
|
|
5,096
|
|
||
Leasehold improvements
|
4,630
|
|
|
3,295
|
|
||
Equipment and furniture
|
24,896
|
|
|
25,612
|
|
||
Computer software and hardware
|
12,647
|
|
|
9,760
|
|
||
Demonstration and loaned equipment
|
12,397
|
|
|
11,932
|
|
||
|
61,298
|
|
|
58,510
|
|
||
Accumulated depreciation
|
(39,734
|
)
|
|
(36,439
|
)
|
||
Total
|
$
|
21,564
|
|
|
$
|
22,071
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance, beginning of period
|
$
|
10,913
|
|
|
$
|
14,139
|
|
|
$
|
10,995
|
|
|
$
|
10,670
|
|
Assumed through acquisitions
|
—
|
|
|
722
|
|
|
—
|
|
|
1,888
|
|
||||
Additions charged to expense
|
792
|
|
|
1,984
|
|
|
3,127
|
|
|
9,437
|
|
||||
Utilizations
|
(945
|
)
|
|
(3,616
|
)
|
|
(2,003
|
)
|
|
(7,977
|
)
|
||||
Changes in estimate related to product remediation activities
|
(1,695
|
)
|
|
(796
|
)
|
|
(3,054
|
)
|
|
(1,585
|
)
|
||||
Balance, end of period
|
$
|
9,065
|
|
|
$
|
12,433
|
|
|
$
|
9,065
|
|
|
$
|
12,433
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenue
|
$
|
42
|
|
|
$
|
52
|
|
|
$
|
181
|
|
|
$
|
173
|
|
Marketing and selling
|
207
|
|
|
171
|
|
|
603
|
|
|
356
|
|
||||
Research and development
|
278
|
|
|
299
|
|
|
827
|
|
|
1,076
|
|
||||
General and administrative
|
1,056
|
|
|
1,727
|
|
|
4,895
|
|
|
5,618
|
|
||||
Restructuring
|
8,231
|
|
|
—
|
|
|
8,940
|
|
|
—
|
|
||||
Total
|
$
|
9,814
|
|
|
$
|
2,249
|
|
|
$
|
15,446
|
|
|
$
|
7,223
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest income
|
$
|
318
|
|
|
$
|
—
|
|
|
$
|
324
|
|
|
$
|
413
|
|
Interest expense
|
(1,649
|
)
|
|
(1,042
|
)
|
|
(5,250
|
)
|
|
(3,291
|
)
|
||||
Foreign currency gain (loss)
|
572
|
|
|
1,123
|
|
|
337
|
|
|
1,591
|
|
||||
Other income
|
33
|
|
|
69
|
|
|
(355
|
)
|
|
19
|
|
||||
Total other income (expense), net
|
$
|
(726
|
)
|
|
$
|
150
|
|
|
$
|
(4,944
|
)
|
|
$
|
(1,268
|
)
|
•
|
Leverage Ratio, as defined, to be no higher than
2.75
to
1.00
.
|
•
|
Interest Coverage Ratio, as defined, to be at least
1.75
to
1.00
at all times.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Revolving credit facility
|
$
|
115,000
|
|
|
$
|
155,000
|
|
Debt issuance costs
|
(574
|
)
|
|
(717
|
)
|
||
Less: current portion of long-term debt
|
20,000
|
|
|
—
|
|
||
Total long-term debt
|
$
|
94,426
|
|
|
$
|
154,283
|
|
Hedged Item
|
Current Notional Amount
|
Designation Date
|
Effective Date
|
Termination Date
|
Fixed Interest Rate
|
Floating Rate
|
Estimated Fair Value
|
||||
1-month USD LIBOR Loan
|
$
|
40,000
|
|
May 31, 2018
|
June 1, 2018
|
September 23, 2021
|
2.611%
|
1-month USD LIBOR
|
$
|
(130
|
)
|
Total interest rate derivatives designated as cash flow hedge
|
$
|
40,000
|
|
|
|
|
|
|
$
|
(130
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Consolidated Revenue:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
77,980
|
|
|
$
|
68,697
|
|
|
$
|
222,135
|
|
|
$
|
200,506
|
|
International
|
52,658
|
|
|
53,946
|
|
|
167,765
|
|
|
169,025
|
|
||||
Totals
|
$
|
130,638
|
|
|
$
|
122,643
|
|
|
$
|
389,900
|
|
|
$
|
369,531
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue by End Market:
|
|
|
|
|
|
|
|
||||||||
Neurology Products
|
|
|
|
|
|
|
|
||||||||
Devices and Systems
|
$
|
50,662
|
|
|
$
|
42,207
|
|
|
$
|
147,024
|
|
|
$
|
121,982
|
|
Supplies
|
16,406
|
|
|
14,151
|
|
|
50,113
|
|
|
44,220
|
|
||||
Services
|
2,722
|
|
|
3,010
|
|
|
9,025
|
|
|
8,753
|
|
||||
Total Neurology Revenue
|
69,790
|
|
|
59,368
|
|
|
206,162
|
|
|
174,955
|
|
||||
Newborn Care Products
|
|
|
|
|
|
|
|
||||||||
Devices and Systems
|
15,324
|
|
|
16,785
|
|
|
45,275
|
|
|
58,387
|
|
||||
Supplies
|
10,831
|
|
|
10,988
|
|
|
29,978
|
|
|
33,733
|
|
||||
Services
|
5,055
|
|
|
5,893
|
|
|
15,935
|
|
|
16,288
|
|
||||
Total Newborn Care Revenue
|
31,210
|
|
|
33,666
|
|
|
91,188
|
|
|
108,408
|
|
||||
Otometrics Products
|
|
|
|
|
|
|
|
||||||||
Devices and Systems
|
28,346
|
|
|
19,820
|
|
|
85,686
|
|
|
63,719
|
|
||||
Supplies
|
1,292
|
|
|
9,789
|
|
|
6,864
|
|
|
22,449
|
|
||||
Total Otometrics Revenue
|
29,638
|
|
|
29,609
|
|
|
92,550
|
|
|
86,168
|
|
||||
Total Revenue
|
$
|
130,638
|
|
|
$
|
122,643
|
|
|
$
|
389,900
|
|
|
$
|
369,531
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Property and equipment, net:
|
|
|
|
||||
United States
|
$
|
10,398
|
|
|
$
|
10,128
|
|
Canada
|
4,427
|
|
|
5,068
|
|
||
Ireland
|
3,926
|
|
|
3,178
|
|
||
Argentina
|
1,003
|
|
|
1,591
|
|
||
Denmark
|
996
|
|
|
1,158
|
|
||
Other countries
|
814
|
|
|
948
|
|
||
Totals
|
$
|
21,564
|
|
|
$
|
22,071
|
|
|
December 31, 2017
|
|
Additions
|
|
Payments
|
|
Adjustments
|
|
September 30, 2018
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Rate Swap
|
$
|
—
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(130
|
)
|
Total
|
$
|
—
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(130
|
)
|
|
December 31, 2017
|
|
Additions
|
|
Payments
|
|
Adjustments
|
|
September 30, 2018
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contingent consideration
|
$
|
147
|
|
|
$
|
—
|
|
|
$
|
(147
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
147
|
|
|
$
|
—
|
|
|
$
|
(147
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Neurology - Includes products and services for diagnostic electroencephalography and long term monitoring, Intensive Care Unit monitoring, electromyography, sleep analysis or polysomnography, intra-operative monitoring, diagnostic and monitoring transcranial doppler ultrasound technology, and neurocritical and neurosurgical solutions.
|
•
|
Newborn Care - Includes products and services for newborn care including video streaming, hearing screening, brain injury, thermoregulation, jaundice management, retinopathy of prematurity, and various disposable products, as well as products for diagnostic hearing assessment for children through adult populations, and products to diagnose and assist in treating balance and mobility disorders.
|
•
|
Otometrics - Includes products such as computer-based audiological, otoneurologic and vestibular instrumentation and sound rooms for hearing and balance care professionals worldwide. Otometrics has a complete product and brand portfolio known for its sophisticated design technology in the hearing and balance assessment markets. Global brands include Aurical®, ICS®, and Madsen®.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Devices and Systems
|
72
|
%
|
|
65
|
%
|
|
72
|
%
|
|
66
|
%
|
Supplies
|
22
|
%
|
|
28
|
%
|
|
22
|
%
|
|
27
|
%
|
Services
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
7
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
•
|
Revenue recognition
|
•
|
Acquisition accounting
|
•
|
Income taxes
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenue
|
39.5
|
%
|
|
38.4
|
%
|
|
41.0
|
%
|
|
42.9
|
%
|
Intangibles amortization
|
1.5
|
%
|
|
1.1
|
%
|
|
1.6
|
%
|
|
1.0
|
%
|
Gross profit
|
59.0
|
%
|
|
60.5
|
%
|
|
57.4
|
%
|
|
56.1
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Marketing and selling
|
25.4
|
%
|
|
26.5
|
%
|
|
26.3
|
%
|
|
25.7
|
%
|
Research and development
|
11.6
|
%
|
|
9.5
|
%
|
|
11.8
|
%
|
|
10.3
|
%
|
General and administrative
|
12.1
|
%
|
|
14.1
|
%
|
|
14.6
|
%
|
|
15.6
|
%
|
Intangibles amortization
|
3.4
|
%
|
|
3.2
|
%
|
|
3.4
|
%
|
|
3.2
|
%
|
Restructuring
|
8.8
|
%
|
|
0.3
|
%
|
|
3.6
|
%
|
|
0.2
|
%
|
Total operating expenses
|
61.3
|
%
|
|
53.6
|
%
|
|
59.7
|
%
|
|
55.0
|
%
|
Loss from operations
|
(2.3
|
)%
|
|
6.9
|
%
|
|
(2.3
|
)%
|
|
1.1
|
%
|
Other expense, net
|
(0.5
|
)%
|
|
0.1
|
%
|
|
(1.4
|
)%
|
|
(0.3
|
)%
|
Loss before provision for income tax
|
(2.8
|
)%
|
|
7.0
|
%
|
|
(3.7
|
)%
|
|
0.8
|
%
|
Provision for income tax
|
1.5
|
%
|
|
14.0
|
%
|
|
(0.8
|
)%
|
|
4.2
|
%
|
Net loss
|
(4.3
|
)%
|
|
(7.0
|
)%
|
|
(2.9
|
)%
|
|
(3.4
|
)%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Neurology Products
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Devices and Systems
|
$
|
50,662
|
|
|
$
|
42,207
|
|
|
20
|
%
|
|
$
|
147,024
|
|
|
$
|
121,982
|
|
|
21
|
%
|
Supplies
|
16,406
|
|
|
14,151
|
|
|
16
|
%
|
|
50,113
|
|
|
44,220
|
|
|
13
|
%
|
||||
Services
|
2,722
|
|
|
3,010
|
|
|
(10
|
)%
|
|
9,025
|
|
|
8,753
|
|
|
3
|
%
|
||||
Total Neurology Revenue
|
69,790
|
|
|
59,368
|
|
|
18
|
%
|
|
206,162
|
|
|
174,955
|
|
|
18
|
%
|
||||
Newborn Care Products
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Devices and Systems
|
15,324
|
|
|
16,785
|
|
|
(9
|
)%
|
|
45,275
|
|
|
58,387
|
|
|
(22
|
)%
|
||||
Supplies
|
10,831
|
|
|
10,988
|
|
|
(1
|
)%
|
|
29,978
|
|
|
33,733
|
|
|
(11
|
)%
|
||||
Services
|
5,055
|
|
|
5,893
|
|
|
(14
|
)%
|
|
15,935
|
|
|
16,288
|
|
|
(2
|
)%
|
||||
Total Newborn Care Revenue
|
31,210
|
|
|
33,666
|
|
|
(7
|
)%
|
|
91,188
|
|
|
108,408
|
|
|
(16
|
)%
|
||||
Otometrics Products
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Devices and Systems
|
28,346
|
|
|
19,820
|
|
|
43
|
%
|
|
85,686
|
|
|
63,719
|
|
|
34
|
%
|
||||
Supplies
|
1,292
|
|
|
9,789
|
|
|
(87
|
)%
|
|
6,864
|
|
|
22,449
|
|
|
(69
|
)%
|
||||
Total Otometrics Revenue
|
29,638
|
|
|
29,609
|
|
|
—
|
%
|
|
92,550
|
|
|
86,168
|
|
|
7
|
%
|
||||
Total Revenue
|
$
|
130,638
|
|
|
$
|
122,643
|
|
|
7
|
%
|
|
$
|
389,900
|
|
|
$
|
369,531
|
|
|
6
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
130,638
|
|
|
$
|
122,643
|
|
|
$
|
389,900
|
|
|
$
|
369,531
|
|
Cost of revenue
|
51,583
|
|
|
47,112
|
|
|
159,849
|
|
|
158,615
|
|
||||
Intangibles amortization
|
1,930
|
|
|
1,290
|
|
|
6,235
|
|
|
3,789
|
|
||||
Gross profit
|
77,125
|
|
|
74,241
|
|
|
223,816
|
|
|
207,127
|
|
||||
Gross profit percentage
|
59.0
|
%
|
|
60.5
|
%
|
|
57.4
|
%
|
|
56.1
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Marketing and selling
|
$
|
33,200
|
|
|
$
|
32,537
|
|
|
$
|
102,474
|
|
|
$
|
95,106
|
|
Percentage of revenue
|
25.4
|
%
|
|
26.5
|
%
|
|
26.3
|
%
|
|
25.7
|
%
|
||||
Research and development
|
$
|
15,127
|
|
|
$
|
11,632
|
|
|
$
|
46,186
|
|
|
$
|
38,098
|
|
Percentage of revenue
|
11.6
|
%
|
|
9.5
|
%
|
|
11.8
|
%
|
|
10.3
|
%
|
||||
General and administrative
|
$
|
15,799
|
|
|
$
|
17,329
|
|
|
$
|
56,966
|
|
|
$
|
57,501
|
|
Percentage of revenue
|
12.1
|
%
|
|
14.1
|
%
|
|
14.6
|
%
|
|
15.6
|
%
|
||||
Intangibles amortization
|
$
|
4,477
|
|
|
$
|
3,882
|
|
|
$
|
13,434
|
|
|
$
|
11,841
|
|
Percentage of revenue
|
3.4
|
%
|
|
3.2
|
%
|
|
3.4
|
%
|
|
3.2
|
%
|
||||
Restructuring
|
$
|
11,432
|
|
|
$
|
321
|
|
|
$
|
14,182
|
|
|
$
|
914
|
|
Percentage of revenue
|
8.8
|
%
|
|
0.3
|
%
|
|
3.6
|
%
|
|
0.2
|
%
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
54,440
|
|
|
$
|
88,950
|
|
Working capital
|
177,556
|
|
|
213,491
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
18,956
|
|
|
$
|
14,248
|
|
Net cash used in investing activities
|
(5,613
|
)
|
|
(111,322
|
)
|
||
Net cash provided by (used in) financing activities
|
(40,434
|
)
|
|
7,994
|
|
•
|
Extent to which we make acquisitions;
|
•
|
Amount and timing of revenue;
|
•
|
Extent to which our existing and new products gain market acceptance;
|
•
|
Cost and timing of product development efforts and the success of these development efforts;
|
•
|
Cost and timing of marketing and selling activities; and
|
•
|
Availability of borrowings under line of credit arrangements and the availability of other means of financing.
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 Year |
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years |
||||||||||
Unconditional purchase obligations
|
$
|
66,988
|
|
|
$
|
61,274
|
|
|
$
|
5,714
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
|
27,710
|
|
|
1,746
|
|
|
11,454
|
|
|
7,451
|
|
|
7,059
|
|
|||||
Bank debt
|
115,000
|
|
|
—
|
|
|
—
|
|
|
115,000
|
|
|
—
|
|
|||||
Interest payments
|
10,160
|
|
|
1,449
|
|
|
7,645
|
|
|
1,066
|
|
|
—
|
|
|||||
Repatriation tax
|
$
|
11,754
|
|
|
$
|
1,078
|
|
|
$
|
2,034
|
|
|
$
|
2,923
|
|
|
$
|
5,719
|
|
Total
|
$
|
231,612
|
|
|
$
|
65,547
|
|
|
$
|
26,847
|
|
|
$
|
126,440
|
|
|
$
|
12,778
|
|
•
|
improving the design of internal controls related to our review of key assumptions and data used to allocate acquisition purchase price by evaluating the specific financial reporting risks associated with each acquisition as they occur;
|
•
|
improving the design of internal controls related to the evidence and documentation of internal control procedures with respect to the process of determining purchase price allocation; and
|
•
|
sufficiently distinguishing our internal controls from the process we undertake to allocate purchase price.
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
July 1, 2018 - July 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
24,383,696
|
|
August 1, 2018 - August 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
24,383,696
|
|
September 1, 2018 - September 30, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
24,383,696
|
|
Total
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
24,383,696
|
|
(a)
|
Exhibits
|
|
|
|
|
Incorporated By Reference
|
|||||||
Exhibit
No.
|
|
Exhibit
|
|
Filing
|
|
Exhibit
No.
|
|
File Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
X
|
|||
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
X
|
|||
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
X
|
|||
|
|
|
|
|
|
|
|||||
10.17
|
|
Form of Employment Agreement between Natus Medical Incorporated and Jonathan A. Kennedy dated August 24, 2018
|
|
8-K
|
|
99.1
|
|
|
8/29/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
X
|
|
|
|
N
ATUS
M
EDICAL
I
NCORPORATED
|
||
|
|
|
|
|
|
Dated:
|
November 8, 2018
|
|
|
By:
|
/s/ Jonathan A. Kennedy
|
|
|
|
|
|
Jonathan A. Kennedy
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
Dated:
|
November 8, 2018
|
|
|
By:
|
/s/ B. Drew Davies
|
|
|
|
|
|
B. Drew Davies
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
•
|
delivered in full, or
|
•
|
delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 8 shall be made in writing by the Company’s independent public accountants immediately prior to Change of Control (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 8, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 8. If payment is to be in a lesser amount then reduction shall occur in the following order: (i) reduction of payments of cash; and (ii) reduction in equity awards; and in each category reduction shall be pro rata between those payments subject to Section 409A and payments not subject to Section 409A.
|
|
|
|
|
|
|
|
Date:
|
November 8, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jonathan A. Kennedy
|
|
|
|
|
|
|
Jonathan A. Kennedy
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date:
|
November 8, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ B. Drew Davies
|
|
|
|
|
|
|
B. Drew Davies
|
|
|
|
|
|
|
Executive Vice President
|
|
|
|
|
|
|
and Chief Financial Officer
|
|
|
/s/ Jonathan A. Kennedy
|
|
Print Name: Jonathan A. Kennedy
|
|
Title: President and Chief Executive Officer
|
|
Date:
|
November 8, 2018
|
|
|
/s/ B. Drew Davies
|
|
Print Name: B. Drew Davies
|
|
Title: Executive Vice President and Chief Financial Officer
|
|
Date:
|
November 8, 2018
|