|
(Mark One)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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|
Item 1.
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Item 2.
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||
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Item 3.
|
||
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Item 4.
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||
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||
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Item 1.
|
||
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Item 1A.
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||
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Item 2.
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||
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Item 6.
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||
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June 27,
2020 |
|
December 28,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
631,881
|
|
|
$
|
567,687
|
|
Short-term investments
|
50,000
|
|
|
120,000
|
|
||
Trade accounts receivable, net of allowance for doubtful accounts of $1,470 and $1,803 at June 27, 2020 and December 28, 2019, respectively
|
178,879
|
|
|
132,433
|
|
||
Inventories
|
155,145
|
|
|
115,871
|
|
||
Other current assets
|
76,708
|
|
|
60,071
|
|
||
Total current assets
|
1,092,613
|
|
|
996,062
|
|
||
Lease receivable, noncurrent
|
52,118
|
|
|
49,936
|
|
||
Deferred costs and other contract assets
|
18,694
|
|
|
16,214
|
|
||
Property and equipment, net
|
262,953
|
|
|
219,552
|
|
||
Intangible assets, net
|
57,352
|
|
|
27,251
|
|
||
Goodwill
|
78,774
|
|
|
22,350
|
|
||
Deferred tax assets
|
36,159
|
|
|
35,972
|
|
||
Other non-current assets
|
36,971
|
|
|
28,791
|
|
||
Total assets
|
$
|
1,635,634
|
|
|
$
|
1,396,128
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
89,550
|
|
|
$
|
54,548
|
|
Accrued compensation
|
52,864
|
|
|
54,705
|
|
||
Deferred revenue and other contract liabilities, current
|
41,459
|
|
|
25,939
|
|
||
Other current liabilities
|
43,683
|
|
|
37,027
|
|
||
Total current liabilities
|
227,556
|
|
|
172,219
|
|
||
Other non-current liabilities
|
63,533
|
|
|
56,035
|
|
||
Total liabilities
|
291,089
|
|
|
228,254
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $0.001 par value; 5,000 shares authorized; 0 shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 100,000 shares authorized; 54,948 and 53,696 shares issued and outstanding at June 27, 2020 and December 28, 2019, respectively
|
55
|
|
|
54
|
|
||
Treasury stock, 15,534 and 15,530 shares at June 27, 2020 and December 28, 2019, respectively
|
(527,171
|
)
|
|
(526,580
|
)
|
||
Additional paid-in capital
|
658,367
|
|
|
600,624
|
|
||
Accumulated other comprehensive loss
|
(7,867
|
)
|
|
(6,718
|
)
|
||
Retained earnings
|
1,221,161
|
|
|
1,100,494
|
|
||
Total stockholders’ equity
|
1,344,545
|
|
|
1,167,874
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,635,634
|
|
|
$
|
1,396,128
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
300,953
|
|
|
$
|
229,510
|
|
|
$
|
570,578
|
|
|
$
|
460,058
|
|
Royalty and other revenue
|
—
|
|
|
142
|
|
|
—
|
|
|
1,258
|
|
||||
Total revenue
|
300,953
|
|
|
229,652
|
|
|
570,578
|
|
|
461,316
|
|
||||
Cost of goods sold
|
109,369
|
|
|
75,313
|
|
|
193,365
|
|
|
155,335
|
|
||||
Gross profit
|
191,584
|
|
|
154,339
|
|
|
377,213
|
|
|
305,981
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
98,461
|
|
|
78,160
|
|
|
188,338
|
|
|
152,364
|
|
||||
Research and development
|
30,878
|
|
|
24,175
|
|
|
58,119
|
|
|
45,590
|
|
||||
Litigation settlements (awards)
|
25
|
|
|
—
|
|
|
(474
|
)
|
|
—
|
|
||||
Total operating expenses
|
129,364
|
|
|
102,335
|
|
|
245,983
|
|
|
197,954
|
|
||||
Operating income
|
62,220
|
|
|
52,004
|
|
|
131,230
|
|
|
108,027
|
|
||||
Non-operating income
|
1,405
|
|
|
3,529
|
|
|
4,751
|
|
|
7,415
|
|
||||
Income before provision for income taxes
|
63,625
|
|
|
55,533
|
|
|
135,981
|
|
|
115,442
|
|
||||
Provision for income taxes
|
7,853
|
|
|
10,645
|
|
|
15,753
|
|
|
21,232
|
|
||||
Net income
|
$
|
55,772
|
|
|
$
|
44,888
|
|
|
$
|
120,228
|
|
|
$
|
94,210
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.02
|
|
|
$
|
0.84
|
|
|
$
|
2.21
|
|
|
$
|
1.77
|
|
Diluted
|
$
|
0.96
|
|
|
$
|
0.79
|
|
|
$
|
2.08
|
|
|
$
|
1.65
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
54,764
|
|
|
53,356
|
|
|
54,316
|
|
|
53,283
|
|
||||
Diluted
|
58,204
|
|
|
57,066
|
|
|
57,913
|
|
|
56,940
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Net income
|
$
|
55,772
|
|
|
$
|
44,888
|
|
|
$
|
120,228
|
|
|
$
|
94,210
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) from foreign currency translation adjustments
|
1,314
|
|
|
292
|
|
|
(1,149
|
)
|
|
(285
|
)
|
||||
Comprehensive income
|
$
|
57,086
|
|
|
$
|
45,180
|
|
|
$
|
119,079
|
|
|
$
|
93,925
|
|
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
|
|||||||||||||||||||||||||||||
|
Three and Six Months Ended June 27, 2020
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at December 28, 2019
|
53,696
|
|
|
$
|
54
|
|
|
15,530
|
|
|
$
|
(526,580
|
)
|
|
$
|
600,624
|
|
|
$
|
(6,718
|
)
|
|
$
|
1,100,494
|
|
|
$
|
1,167,874
|
|
Stock options exercised
|
384
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,495
|
|
|
—
|
|
|
—
|
|
|
13,495
|
|
||||||
Restricted/Performance stock units vested
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares paid for tax withholding
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,424
|
)
|
|
—
|
|
|
—
|
|
|
(1,424
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,272
|
|
|
—
|
|
|
—
|
|
|
11,272
|
|
||||||
Repurchases of common stock
|
(3
|
)
|
|
—
|
|
|
3
|
|
|
(371
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(371
|
)
|
||||||
Cumulative effect of adoption of ASU 2016-13
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
439
|
|
|
439
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,456
|
|
|
64,456
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,463
|
)
|
|
—
|
|
|
(2,463
|
)
|
||||||
Balance at March 28, 2020
|
54,115
|
|
|
54
|
|
|
15,533
|
|
|
(526,951
|
)
|
|
623,967
|
|
|
(9,181
|
)
|
|
1,165,389
|
|
|
1,253,278
|
|
||||||
Stock options exercised
|
825
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
21,212
|
|
|
—
|
|
|
—
|
|
|
21,213
|
|
||||||
Restricted/Performance stock units vested
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,188
|
|
|
—
|
|
|
—
|
|
|
13,188
|
|
||||||
Repurchases of common stock
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
(220
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(220
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,772
|
|
|
55,772
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,314
|
|
|
—
|
|
|
1,314
|
|
||||||
Balance at June 27, 2020
|
54,948
|
|
|
$
|
55
|
|
|
15,534
|
|
|
$
|
(527,171
|
)
|
|
$
|
658,367
|
|
|
$
|
(7,867
|
)
|
|
$
|
1,221,161
|
|
|
$
|
1,344,545
|
|
|
Three and Six Months Ended June 29, 2019
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total Stockholders’
Equity
|
||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at December 29, 2018
|
53,085
|
|
|
$
|
53
|
|
|
15,255
|
|
|
$
|
(489,026
|
)
|
|
$
|
533,164
|
|
|
$
|
(6,199
|
)
|
|
$
|
931,073
|
|
|
$
|
969,065
|
|
Stock options exercised
|
224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,867
|
|
|
—
|
|
|
—
|
|
|
6,867
|
|
||||||
Restricted/Performance stock units vested
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares paid for tax withholding
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,317
|
|
|
—
|
|
|
—
|
|
|
7,317
|
|
||||||
Cumulative effect of adoption of ASU 2016-02
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,795
|
)
|
|
(26,795
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,322
|
|
|
49,322
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(577
|
)
|
|
—
|
|
|
(577
|
)
|
||||||
Balance at March 30, 2019
|
53,337
|
|
|
53
|
|
|
15,255
|
|
|
(489,026
|
)
|
|
547,225
|
|
|
(6,776
|
)
|
|
953,600
|
|
|
1,005,076
|
|
||||||
Stock options exercised
|
189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,999
|
|
|
—
|
|
|
—
|
|
|
5,999
|
|
||||||
Restricted/Performance stock units vested
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,473
|
|
|
—
|
|
|
—
|
|
|
11,473
|
|
||||||
Repurchases of common stock
|
(208
|
)
|
|
—
|
|
|
208
|
|
|
(27,854
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,854
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,888
|
|
|
44,888
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|
292
|
|
||||||
Balance at June 29, 2019
|
53,325
|
|
|
$
|
53
|
|
|
15,463
|
|
|
$
|
(516,880
|
)
|
|
$
|
564,697
|
|
|
$
|
(6,484
|
)
|
|
$
|
998,488
|
|
|
$
|
1,039,874
|
|
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
120,228
|
|
|
$
|
94,210
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
13,587
|
|
|
11,641
|
|
||
Stock-based compensation
|
24,460
|
|
|
18,790
|
|
||
Loss on disposal of property, equipment and intangibles
|
196
|
|
|
93
|
|
||
(Benefit) provision for doubtful accounts
|
(170
|
)
|
|
622
|
|
||
Benefit for deferred income taxes
|
77
|
|
|
21
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Increase in accounts receivable
|
(41,295
|
)
|
|
(11,705
|
)
|
||
Increase in inventories
|
(37,548
|
)
|
|
(4,159
|
)
|
||
Increase in other current assets
|
(12,004
|
)
|
|
(7,147
|
)
|
||
Increase in lease receivable, net
|
(2,183
|
)
|
|
(6,238
|
)
|
||
(Increase) decrease in deferred costs and other contract assets
|
(2,105
|
)
|
|
8,723
|
|
||
Increase in other non-current assets
|
(442
|
)
|
|
(177
|
)
|
||
Increase (decrease) in accounts payable
|
32,798
|
|
|
(2,841
|
)
|
||
Decrease in accrued compensation
|
(2,025
|
)
|
|
(6,997
|
)
|
||
Increase (decrease) in accrued liabilities
|
5,876
|
|
|
(2,966
|
)
|
||
Increase in income tax payable
|
248
|
|
|
2,109
|
|
||
Increase in deferred revenue and other contract-related liabilities
|
6,920
|
|
|
5,566
|
|
||
(Decrease) increase in other non-current liabilities
|
(558
|
)
|
|
1,234
|
|
||
Net cash provided by operating activities
|
106,060
|
|
|
100,779
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Maturities (purchases) of short-term investments, net
|
70,000
|
|
|
(180,000
|
)
|
||
Purchases of property and equipment, net
|
(51,263
|
)
|
|
(47,323
|
)
|
||
Increase in intangible assets
|
(4,322
|
)
|
|
(2,019
|
)
|
||
Business combinations, net of cash acquired
|
(78,310
|
)
|
|
—
|
|
||
Purchases of strategic investments, net
|
(6,750
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(70,645
|
)
|
|
(229,342
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
34,629
|
|
|
12,870
|
|
||
Payroll tax withholdings on behalf of employees for vested equity awards
|
(1,424
|
)
|
|
(123
|
)
|
||
Repurchases of common stock
|
(591
|
)
|
|
(27,854
|
)
|
||
Net cash provided by (used in) financing activities
|
32,614
|
|
|
(15,107
|
)
|
||
Effect of foreign currency exchange rates on cash
|
(847
|
)
|
|
(32
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
67,182
|
|
|
(143,702
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
568,075
|
|
|
552,641
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
635,257
|
|
|
$
|
408,939
|
|
●
|
Level 1—Quoted prices in active markets for identical assets or liabilities.
|
●
|
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
●
|
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
|
|
|
|
|
|
|
|
Reported as
|
||||||||||||||
|
Adjusted Basis
Cost |
|
Gross Unrealized
Gains |
|
Gross Unrealized
(Losses) |
|
Estimated
Fair Value |
|
Cash and Cash
Equivalents |
|
Short-Term
Investments |
||||||||||||
Cash and cash equivalents
|
$
|
631,881
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
631,881
|
|
|
$
|
631,881
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Certificates of deposit
|
50,000
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
—
|
|
|
50,000
|
|
||||||
Subtotal
|
50,000
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
—
|
|
|
50,000
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Level 3:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total assets measured at fair value
|
$
|
681,881
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
681,881
|
|
|
$
|
631,881
|
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
|
|
Reported as
|
||||||||||||||
|
Adjusted Basis
Cost |
|
Gross Unrealized
Gains |
|
Gross Unrealized
(Losses) |
|
Estimated
Fair Value |
|
Cash and Cash
Equivalents
|
|
Short-Term
Investments |
||||||||||||
Cash and cash equivalents
|
$
|
567,687
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
567,687
|
|
|
$
|
567,687
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Certificates of deposit
|
120,000
|
|
|
—
|
|
|
—
|
|
|
120,000
|
|
|
—
|
|
|
120,000
|
|
||||||
Subtotal
|
120,000
|
|
|
—
|
|
|
—
|
|
|
120,000
|
|
|
—
|
|
|
120,000
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
||||||
Level 3:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Total assets measured at fair value
|
$
|
687,687
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
687,687
|
|
|
$
|
567,687
|
|
|
$
|
120,000
|
|
|
Useful Lives
|
Aircraft and components
|
4 to 20 years
|
Buildings
|
39 years
|
Building improvements
|
7 to 15 years
|
Computer equipment and software
|
2 to 12 years
|
Demonstration units
|
3 years
|
Furniture and office equipment
|
2 to 6 years
|
Leasehold improvements
|
Lesser of useful life or term of lease
|
Machinery and equipment
|
5 to 10 years
|
Tooling
|
3 years
|
Vehicles
|
5 years
|
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
Warranty accrual, beginning of period
|
$
|
3,395
|
|
|
$
|
1,910
|
|
Accrual for warranties issued
|
1,019
|
|
|
1,877
|
|
||
Changes in pre-existing warranties (including changes in estimates)
|
(270
|
)
|
|
1,601
|
|
||
Settlements made
|
(508
|
)
|
|
(719
|
)
|
||
Warranty accrual, end of period
|
$
|
3,636
|
|
|
$
|
4,669
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Net income
|
$
|
55,772
|
|
|
$
|
44,888
|
|
|
$
|
120,228
|
|
|
$
|
94,210
|
|
Basic net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic
|
54,764
|
|
|
53,356
|
|
|
54,316
|
|
|
53,283
|
|
||||
Net income per basic share
|
$
|
1.02
|
|
|
$
|
0.84
|
|
|
$
|
2.21
|
|
|
$
|
1.77
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic
|
54,764
|
|
|
53,356
|
|
|
54,316
|
|
|
53,283
|
|
||||
Diluted share equivalent: stock options, RSUs and PSUs
|
3,440
|
|
|
3,710
|
|
|
3,597
|
|
|
3,657
|
|
||||
Weighted-average shares outstanding - diluted
|
58,204
|
|
|
57,066
|
|
|
57,913
|
|
|
56,940
|
|
||||
Net income per diluted share
|
$
|
0.96
|
|
|
$
|
0.79
|
|
|
$
|
2.08
|
|
|
$
|
1.65
|
|
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
Cash paid during the year for:
|
|
|
|
||||
Interest expense
|
$
|
130
|
|
|
$
|
73
|
|
Income taxes
|
10,049
|
|
|
26,975
|
|
||
Operating lease liabilities
|
3,038
|
|
|
3,409
|
|
||
|
|
|
|
||||
Non-cash operating activities:
|
|
|
|
||||
ROU assets obtained in exchange for lease liabilities
|
$
|
7,394
|
|
|
$
|
24,093
|
|
|
|
|
|
||||
Non-cash investing activities:
|
|
|
|
||||
Unpaid purchases of property and equipment
|
$
|
3,135
|
|
|
$
|
1,216
|
|
Settlement of promissory note receivable in connection with business combination
|
5,100
|
|
|
—
|
|
||
|
|
|
|
||||
Non-cash financing activities:
|
|
|
|
||||
Unsettled common stock proceeds from option exercises
|
$
|
94
|
|
|
$
|
283
|
|
Fair value of common stock received for payment of stock option exercise price
|
220
|
|
|
—
|
|
||
|
|
|
|
||||
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
631,881
|
|
|
$
|
408,784
|
|
Restricted cash
|
3,376
|
|
|
155
|
|
||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows
|
$
|
635,257
|
|
|
$
|
408,939
|
|
•
|
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 to Cercacor arising under the Cross-Licensing Agreement were $3.1 million and $2.9 million for the three months ended June 27, 2020 and June 29, 2019, respectively. Aggregate liabilities to Cercacor arising under the Cross-Licensing Agreement were $6.2 million and $5.8 million for the six months ended June 27, 2020 and June 29, 2019, respectively.
|
•
|
Administrative Services Agreement - The Company is a party to an administrative services agreement with Cercacor (G&A Services Agreement), which governs certain general and administrative services that the Company provides to Cercacor. Amounts charged by the Company pursuant to the G&A Services Agreement were less than $0.1 million for each of the three months ended June 27, 2020 and June 29, 2019. Amounts charged by the Company pursuant to the G&A Services Agreement were $0.2 million and $0.1 million for the six months ended June 27, 2020 and June 29, 2019, respectively.
|
•
|
Lease and Sublease Agreement - Effective December 2019, the Company entered into a lease agreement with Cercacor for approximately 34,000 square feet of office, research and development space at one of the Company’s owned facilities in Irvine (Cercacor Lease). The term of the Cercacor Lease expires on December 31, 2024. In March 2016, the Company entered into a sublease agreement with Cercacor for approximately 16,830 square feet of excess office and laboratory space located at 40 Parker, Irvine, California (Cercacor Sublease). The Cercacor Sublease began on May 1, 2016 and expired on December 15, 2019. The Company recognized approximately $0.3 million and $0.1 million of lease and sublease income for the three months ended June 27, 2020 and June 29, 2019, respectively. The Company recognized approximately
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Raw materials
|
$
|
87,562
|
|
|
$
|
55,913
|
|
Work-in-process
|
17,006
|
|
|
10,966
|
|
||
Finished goods
|
50,577
|
|
|
48,992
|
|
||
Total inventories
|
$
|
155,145
|
|
|
$
|
115,871
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Prepaid expenses
|
$
|
28,730
|
|
|
$
|
11,746
|
|
Lease receivable, current
|
21,217
|
|
|
20,250
|
|
||
Indirect taxes receivable
|
13,197
|
|
|
9,311
|
|
||
Restricted cash
|
3,226
|
|
|
230
|
|
||
Prepaid rebates and royalties, current
|
2,814
|
|
|
1,801
|
|
||
Customer notes receivable
|
2,272
|
|
|
4,847
|
|
||
Contract assets, current
|
1,630
|
|
|
1,486
|
|
||
Prepaid income taxes
|
960
|
|
|
7,330
|
|
||
Other current assets
|
2,662
|
|
|
3,070
|
|
||
Total other current assets
|
$
|
76,708
|
|
|
$
|
60,071
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Lease receivable
|
$
|
73,517
|
|
|
$
|
70,589
|
|
Allowance for credit loss
|
(182
|
)
|
|
(403
|
)
|
||
Lease receivable, net
|
73,335
|
|
|
70,186
|
|
||
Less: current portion of lease receivable
|
(21,217
|
)
|
|
(20,250
|
)
|
||
Lease receivable, noncurrent
|
$
|
52,118
|
|
|
$
|
49,936
|
|
Fiscal year
|
Amount
|
||
2020 (balance of year)
|
$
|
11,280
|
|
2021
|
19,461
|
|
|
2022
|
16,323
|
|
|
2023
|
12,036
|
|
|
2024
|
8,125
|
|
|
Thereafter
|
6,110
|
|
|
Total
|
$
|
73,335
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Prepaid contract allowances
|
$
|
7,837
|
|
|
$
|
8,098
|
|
Deferred commissions
|
5,941
|
|
|
5,260
|
|
||
Unbilled contract receivables, non-current
|
2,825
|
|
|
2,482
|
|
||
Equipment leased to customers
|
2,091
|
|
|
374
|
|
||
Deferred costs and other contract assets
|
$
|
18,694
|
|
|
$
|
16,214
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Building and building improvements
|
$
|
125,218
|
|
|
$
|
101,731
|
|
Machinery and equipment
|
64,396
|
|
|
58,864
|
|
||
Land
|
50,535
|
|
|
40,216
|
|
||
Aircraft and vehicles
|
32,231
|
|
|
29,934
|
|
||
Computer equipment and software
|
22,800
|
|
|
19,650
|
|
||
Leasehold improvements
|
17,488
|
|
|
15,921
|
|
||
Tooling
|
16,708
|
|
|
15,346
|
|
||
Furniture and office equipment
|
13,021
|
|
|
11,049
|
|
||
Demonstration units
|
834
|
|
|
836
|
|
||
Construction-in-progress (CIP)
|
43,011
|
|
|
39,107
|
|
||
Total property and equipment
|
386,242
|
|
|
332,654
|
|
||
Accumulated depreciation
|
(123,289
|
)
|
|
(113,102
|
)
|
||
Property and equipment, net
|
$
|
262,953
|
|
|
$
|
219,552
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Patents
|
$
|
27,527
|
|
|
$
|
23,242
|
|
Customer relationships
|
23,605
|
|
|
7,669
|
|
||
Acquired technologies
|
11,943
|
|
|
5,580
|
|
||
Trademarks
|
9,218
|
|
|
4,614
|
|
||
Licenses-related party
|
7,500
|
|
|
7,500
|
|
||
Capitalized software development costs
|
3,406
|
|
|
3,328
|
|
||
Other
|
7,060
|
|
|
5,466
|
|
||
Total intangible assets
|
90,259
|
|
|
57,399
|
|
||
Accumulated amortization
|
(32,907
|
)
|
|
(30,148
|
)
|
||
Intangible assets, net
|
$
|
57,352
|
|
|
$
|
27,251
|
|
Fiscal year
|
Amount
|
||
2020 (balance of year)
|
$
|
6,977
|
|
2021
|
7,106
|
|
|
2022
|
5,688
|
|
|
2023
|
5,151
|
|
|
2024
|
4,783
|
|
|
Thereafter
|
27,647
|
|
|
Total
|
$
|
57,352
|
|
|
Six Months Ended
June 27, 2020 |
||
Goodwill, beginning of period
|
$
|
22,350
|
|
Increase from business combinations
|
56,427
|
|
|
Foreign currency translation adjustment
|
(3
|
)
|
|
Goodwill, end of period
|
$
|
78,774
|
|
|
Balance sheet classification
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Lessee ROU assets
|
Other non-current assets
|
|
$
|
25,609
|
|
|
$
|
19,137
|
|
|
|
|
|
|
|
||||
Lessee current lease liabilities
|
Other current liabilities
|
|
4,776
|
|
|
4,653
|
|
||
Lessee non-current lease liabilities
|
Other non-current liabilities
|
|
22,384
|
|
|
15,834
|
|
||
Total operating lease liabilities
|
|
|
$
|
27,160
|
|
|
$
|
20,487
|
|
Fiscal year
|
Amount
|
||
2020 (balance of year)
|
$
|
2,863
|
|
2021
|
4,762
|
|
|
2022
|
3,694
|
|
|
2023
|
3,429
|
|
|
2024
|
2,863
|
|
|
Thereafter(1)
|
12,885
|
|
|
Total
|
30,496
|
|
|
Imputed interest
|
(3,336
|
)
|
|
Present value
|
$
|
27,160
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Operating lease costs
|
$
|
1,732
|
|
|
$
|
1,688
|
|
|
$
|
3,390
|
|
|
$
|
3,453
|
|
Short-term lease costs
|
—
|
|
|
3
|
|
|
1
|
|
|
12
|
|
||||
Sublease income
|
—
|
|
|
(52
|
)
|
|
—
|
|
|
(104
|
)
|
||||
Total lease costs
|
$
|
1,732
|
|
|
$
|
1,639
|
|
|
$
|
3,391
|
|
|
$
|
3,361
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Lessee ROU assets
|
$
|
25,609
|
|
|
$
|
19,137
|
|
Strategic investments
|
7,950
|
|
|
6,475
|
|
||
Prepaid deposits
|
3,262
|
|
|
3,022
|
|
||
Restricted cash, non-current(1)
|
150
|
|
|
157
|
|
||
Total other non-current assets
|
$
|
36,971
|
|
|
$
|
28,791
|
|
(1)
|
Restricted cash, non-current is generally related to collateral for certain lease deposits or other bank guarantees.
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Deferred revenue
|
$
|
30,809
|
|
|
$
|
13,998
|
|
Accrued rebates and allowances
|
9,806
|
|
|
8,436
|
|
||
Accrued customer reimbursements
|
4,571
|
|
|
5,739
|
|
||
Total deferred revenue and other contract liabilities
|
45,186
|
|
|
28,173
|
|
||
Less: Non-current portion of deferred revenue
|
(3,727
|
)
|
|
(2,234
|
)
|
||
Deferred revenue and other contract liabilities - current
|
$
|
41,459
|
|
|
$
|
25,939
|
|
|
Six Months Ended
June 27, 2020 |
||
Deferred revenue, beginning of the period
|
$
|
13,998
|
|
Increase from business combinations
|
10,064
|
|
|
Revenue deferred during the period
|
13,835
|
|
|
Recognition of revenue deferred in prior periods
|
(7,088
|
)
|
|
Deferred revenue, end of the period
|
$
|
30,809
|
|
|
Expected Future Revenue By Period
(in thousands)
|
||||||||||||||||||
|
Less than
1 Year
|
|
Between
1-3 Years
|
|
Between
3-5 Years
|
|
More than
5 Years
|
|
Total
|
||||||||||
Unrecognized contract revenue
|
$
|
220,841
|
|
|
$
|
355,722
|
|
|
$
|
166,663
|
|
|
$
|
43,054
|
|
|
$
|
786,280
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Income tax payable
|
$
|
7,384
|
|
|
$
|
7,142
|
|
Accrued indirect taxes payable
|
7,178
|
|
|
7,545
|
|
||
Accrued expenses
|
6,167
|
|
|
6,115
|
|
||
Lessee lease liabilities, current
|
4,776
|
|
|
4,653
|
|
||
Accrued warranty
|
3,636
|
|
|
3,395
|
|
||
Related party payables
|
3,098
|
|
|
3,024
|
|
||
Accrued legal fees
|
2,762
|
|
|
1,839
|
|
||
Accrued donations
|
1,966
|
|
|
966
|
|
||
Other
|
6,716
|
|
|
2,348
|
|
||
Total accrued and other current liabilities
|
$
|
43,683
|
|
|
$
|
37,027
|
|
|
June 27,
2020 |
|
December 28,
2019 |
||||
Lessee lease liabilities, non-current
|
$
|
22,384
|
|
|
$
|
15,834
|
|
Income tax payable, non-current
|
19,245
|
|
|
21,509
|
|
||
Unrecognized tax benefits
|
14,823
|
|
|
13,184
|
|
||
Deferred tax liabilities
|
3,129
|
|
|
3,052
|
|
||
Other
|
3,952
|
|
|
2,456
|
|
||
Total other non-current liabilities
|
$
|
63,533
|
|
|
$
|
56,035
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Shares repurchased(1)
|
1
|
|
|
208
|
|
|
4
|
|
|
208
|
|
||||
Average cost per share
|
$
|
213.91
|
|
|
$
|
134.03
|
|
|
$
|
164.44
|
|
|
$
|
134.03
|
|
Value of shares repurchased
|
$
|
220
|
|
|
$
|
27,854
|
|
|
$
|
591
|
|
|
$
|
27,854
|
|
(1)
|
Excludes shares withheld from the shares of its common stock actually issued in connection the vesting of PSU awards to satisfy certain U.S. federal and state tax withholding obligations.
|
|
Six Months Ended
June 27, 2020 |
|||||
|
Shares
|
|
Weighted-Average
Exercise Price
|
|||
Options outstanding, beginning of period
|
5,212
|
|
|
$
|
54.23
|
|
Granted
|
374
|
|
|
184.72
|
|
|
Canceled
|
(121
|
)
|
|
120.37
|
|
|
Exercised
|
(1,209
|
)
|
|
28.71
|
|
|
Options outstanding, end of period
|
4,256
|
|
|
$
|
71.06
|
|
Options exercisable, end of period
|
2,580
|
|
|
$
|
41.36
|
|
|
Six Months Ended
June 27, 2020 |
|||||
|
Units
|
|
Weighted-Average Grant
Date Fair Value
|
|||
RSUs outstanding, beginning of period
|
2,797
|
|
|
$
|
96.85
|
|
Granted
|
79
|
|
|
183.43
|
|
|
Canceled
|
(3
|
)
|
|
144.90
|
|
|
Expired
|
—
|
|
|
—
|
|
|
Vested
|
(26
|
)
|
|
134.61
|
|
|
RSUs outstanding, end of period
|
2,847
|
|
|
$
|
98.85
|
|
|
Six Months Ended
June 27, 2020 |
|||||
|
Units
|
|
Weighted-Average Grant
Date Fair Value
|
|||
PSUs outstanding, beginning of period
|
412
|
|
|
$
|
102.22
|
|
Granted
|
97
|
|
|
179.42
|
|
|
Canceled
|
(7
|
)
|
|
122.13
|
|
|
Expired
|
—
|
|
|
—
|
|
|
Vested
|
(29
|
)
|
|
90.69
|
|
|
PSUs outstanding, end of period
|
473
|
|
|
$
|
118.47
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
Risk-free interest rate
|
0.3% to 0.6%
|
|
1.8% to 2.4%
|
|
0.3% to 1.7%
|
|
1.8% to 2.6%
|
Expected term (in years)
|
5.1
|
|
5.2
|
|
5.1
|
|
5.2
|
Estimated volatility
|
26.9% to 35.5%
|
|
28.3% to 28.9%
|
|
26.9% to 35.5%
|
|
28.3% to 30.0%
|
Expected dividends
|
0%
|
|
0%
|
|
0%
|
|
0%
|
Weighted-average fair value of options granted
|
$60.12
|
|
$41.90
|
|
$49.82
|
|
$41.30
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Interest income
|
$
|
1,478
|
|
|
$
|
3,609
|
|
|
$
|
4,323
|
|
|
$
|
7,042
|
|
Interest expense
|
(83
|
)
|
|
(80
|
)
|
|
(167
|
)
|
|
(161
|
)
|
||||
Realized and unrealized foreign currency gains
|
11
|
|
|
6
|
|
|
599
|
|
|
541
|
|
||||
Other
|
(1
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|
(7
|
)
|
||||
Total
|
$
|
1,405
|
|
|
$
|
3,529
|
|
|
$
|
4,751
|
|
|
$
|
7,415
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||||||||||||||
Geographic area by destination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
United States (U.S.)
|
$
|
194,721
|
|
|
64.7
|
%
|
|
$
|
155,513
|
|
|
67.8
|
%
|
|
$
|
384,240
|
|
|
67.3
|
%
|
|
$
|
312,181
|
|
|
67.9
|
%
|
Europe, Middle East and Africa
|
68,167
|
|
|
22.7
|
|
|
45,406
|
|
|
19.8
|
|
|
122,524
|
|
|
21.5
|
|
|
93,878
|
|
|
20.4
|
|
||||
Asia and Australia
|
26,259
|
|
|
8.7
|
|
|
21,685
|
|
|
9.4
|
|
|
45,572
|
|
|
8.0
|
|
|
39,803
|
|
|
8.7
|
|
||||
North and South America (excluding the U.S.)
|
11,806
|
|
|
3.9
|
|
|
6,906
|
|
|
3.0
|
|
|
18,242
|
|
|
3.2
|
|
|
14,196
|
|
|
3.0
|
|
||||
Total product revenue
|
$
|
300,953
|
|
|
100.0
|
%
|
|
$
|
229,510
|
|
|
100.0
|
%
|
|
$
|
570,578
|
|
|
100.0
|
%
|
|
$
|
460,058
|
|
|
100.0
|
%
|
|
June 27,
2020 |
|
December 28,
2019 |
||||||||||
Long-lived assets by geographic area:
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
236,880
|
|
|
89.4
|
%
|
|
$
|
216,650
|
|
|
98.5
|
%
|
International
|
28,164
|
|
|
10.6
|
|
|
3,276
|
|
|
1.5
|
|
||
Total long-lived assets
|
$
|
265,044
|
|
|
100.0
|
%
|
|
$
|
219,926
|
|
|
100.0
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 27,
2020 |
|
Percentage
of Revenue |
|
June 29,
2019 |
|
Percentage
of Revenue |
|
June 27,
2020 |
|
Percentage
of Revenue
|
|
June 29,
2019 |
|
Percentage
of Revenue |
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
$
|
300,953
|
|
|
100.0
|
%
|
|
$
|
229,510
|
|
|
99.9
|
%
|
|
$
|
570,578
|
|
|
100.0
|
%
|
|
$
|
460,058
|
|
|
99.7
|
%
|
Royalty and other revenue
|
—
|
|
|
—
|
|
|
142
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
1,258
|
|
|
0.3
|
|
||||
Total revenue
|
300,953
|
|
|
100.0
|
|
|
229,652
|
|
|
100.0
|
|
|
570,578
|
|
|
100.0
|
|
|
461,316
|
|
|
100.0
|
|
||||
Cost of goods sold
|
109,369
|
|
|
36.3
|
|
|
75,313
|
|
|
32.8
|
|
|
193,365
|
|
|
33.9
|
|
|
155,335
|
|
|
33.7
|
|
||||
Gross profit
|
191,584
|
|
|
63.7
|
|
|
154,339
|
|
|
67.2
|
|
|
377,213
|
|
|
66.1
|
|
|
305,981
|
|
|
66.3
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative
|
98,461
|
|
|
32.7
|
|
|
78,160
|
|
|
34.0
|
|
|
188,338
|
|
|
33.0
|
|
|
152,364
|
|
|
33.0
|
|
||||
Research and development
|
30,878
|
|
|
10.3
|
|
|
24,175
|
|
|
10.5
|
|
|
58,119
|
|
|
10.2
|
|
|
45,590
|
|
|
9.9
|
|
||||
Litigation settlements (awards)
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(474
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||
Total operating expenses
|
129,364
|
|
|
43.0
|
|
|
102,335
|
|
|
44.6
|
|
|
245,983
|
|
|
43.1
|
|
|
197,954
|
|
|
42.9
|
|
||||
Operating income
|
62,220
|
|
|
20.7
|
|
|
52,004
|
|
|
22.6
|
|
|
131,230
|
|
|
23.0
|
|
|
108,027
|
|
|
23.4
|
|
||||
Non-operating income
|
1,405
|
|
|
0.5
|
|
|
3,529
|
|
|
1.5
|
|
|
4,751
|
|
|
0.8
|
|
|
7,415
|
|
|
1.6
|
|
||||
Income before provision for income taxes
|
63,625
|
|
|
21.1
|
|
|
55,533
|
|
|
24.2
|
|
|
135,981
|
|
|
23.8
|
|
|
115,442
|
|
|
25.0
|
|
||||
Provision for income taxes
|
7,853
|
|
|
2.6
|
|
|
10,645
|
|
|
4.6
|
|
|
15,753
|
|
|
2.8
|
|
|
21,232
|
|
|
4.6
|
|
||||
Net income
|
$
|
55,772
|
|
|
18.5
|
%
|
|
$
|
44,888
|
|
|
19.5
|
%
|
|
$
|
120,228
|
|
|
21.1
|
%
|
|
$
|
94,210
|
|
|
20.4
|
%
|
|
Three Months Ended
|
|||||||||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
Increase/
(Decrease)
|
|
Percentage
Change
|
|||||||||||||
United States (U.S.)
|
$
|
194,721
|
|
|
64.7
|
%
|
|
$
|
155,513
|
|
|
67.8
|
%
|
|
$
|
39,208
|
|
|
25.2
|
%
|
Europe, Middle East and Africa
|
68,167
|
|
|
22.7
|
|
|
45,406
|
|
|
19.8
|
|
|
22,761
|
|
|
50.1
|
|
|||
Asia and Australia
|
26,259
|
|
|
8.7
|
|
|
21,685
|
|
|
9.4
|
|
|
4,574
|
|
|
21.1
|
|
|||
North and South America (excluding the U.S.)
|
11,806
|
|
|
3.9
|
|
|
6,906
|
|
|
3.0
|
|
|
4,900
|
|
|
71.0
|
|
|||
Total product revenue
|
$
|
300,953
|
|
|
100.0
|
%
|
|
$
|
229,510
|
|
|
100.0
|
%
|
|
$
|
71,443
|
|
|
31.1
|
%
|
Royalty and other revenue
|
—
|
|
|
|
|
142
|
|
|
|
|
(142
|
)
|
|
(100.0
|
)
|
|||||
Total revenue
|
$
|
300,953
|
|
|
|
|
$
|
229,652
|
|
|
|
|
$
|
71,301
|
|
|
31.0
|
%
|
|
Three Months Ended
|
|||||||||||||||||||
|
June 27,
2020 |
|
Gross Profit
Percentage |
|
June 29,
2019 |
|
Gross Profit
Percentage |
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||
Product gross profit
|
$
|
191,584
|
|
|
63.7
|
%
|
|
$
|
154,229
|
|
|
67.2
|
%
|
|
$
|
37,355
|
|
|
24.2
|
%
|
Royalty and other revenue gross profit
|
—
|
|
|
—
|
|
|
110
|
|
|
77.5
|
|
|
(110
|
)
|
|
(100.0
|
)
|
|||
Total gross profit
|
$
|
191,584
|
|
|
63.7
|
%
|
|
$
|
154,339
|
|
|
67.2
|
%
|
|
$
|
37,245
|
|
|
24.1
|
%
|
Research and Development
|
|||||
Three Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Three Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$30,878
|
10.3%
|
$24,175
|
10.5%
|
$6,703
|
27.7%
|
Non-operating Income
|
|||||
Three Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Three Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$1,405
|
0.5%
|
$3,529
|
1.5%
|
$(2,124)
|
(60.2)%
|
Provision for Income Taxes
|
|||||
Three Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Three Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$7,853
|
2.6%
|
$10,645
|
4.6%
|
$(2,792)
|
(26.2)%
|
|
Six Months Ended
|
|||||||||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
Increase/
(Decrease)
|
|
Percentage
Change
|
|||||||||||||
United States (U.S.)
|
$
|
384,240
|
|
|
67.3
|
%
|
|
$
|
312,181
|
|
|
67.9
|
%
|
|
$
|
72,059
|
|
|
23.1
|
%
|
Europe, Middle East and Africa
|
122,524
|
|
|
21.5
|
|
|
93,878
|
|
|
20.4
|
|
|
28,646
|
|
|
30.5
|
|
|||
Asia and Australia
|
45,572
|
|
|
8.0
|
|
|
39,803
|
|
|
8.7
|
|
|
5,769
|
|
|
14.5
|
|
|||
North and South America (excluding the U.S.)
|
18,242
|
|
|
3.2
|
|
|
14,196
|
|
|
3.0
|
|
|
4,046
|
|
|
28.5
|
|
|||
Total product revenue
|
$
|
570,578
|
|
|
100.0
|
%
|
|
$
|
460,058
|
|
|
100.0
|
%
|
|
$
|
110,520
|
|
|
24.0
|
%
|
Royalty and other revenue
|
—
|
|
|
|
|
1,258
|
|
|
|
|
(1,258
|
)
|
|
(100.0
|
)
|
|||||
Total revenue
|
$
|
570,578
|
|
|
|
|
$
|
461,316
|
|
|
|
|
$
|
109,262
|
|
|
23.7
|
%
|
|
Six Months Ended
|
|||||||||||||||||||
|
June 27, 2020
|
|
Gross Profit
Percentage |
|
June 29, 2019
|
|
Gross Profit
Percentage |
|
Increase/
(Decrease) |
|
Percentage
Change |
|||||||||
Product gross profit
|
$
|
377,213
|
|
|
66.1
|
%
|
|
$
|
304,822
|
|
|
66.3
|
%
|
|
$
|
72,391
|
|
|
23.7
|
%
|
Royalty and other revenue gross profit
|
—
|
|
|
—
|
|
|
1,159
|
|
|
92.1
|
|
|
(1,159
|
)
|
|
(100.0
|
)
|
|||
Total gross profit
|
$
|
377,213
|
|
|
66.1
|
%
|
|
$
|
305,981
|
|
|
66.3
|
%
|
|
$
|
71,232
|
|
|
23.3
|
%
|
Selling, General and Administrative
|
|||||
Six Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$188,338
|
33.0%
|
$152,364
|
33.0%
|
$35,974
|
23.6%
|
Research and Development
|
|||||
Six Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$58,119
|
10.2%
|
$45,590
|
9.9%
|
$12,529
|
27.5%
|
Non-operating Income
|
|||||
Six Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$4,751
|
0.8%
|
$7,415
|
1.6%
|
$(2,664)
|
(35.9)%
|
Provision for Income Taxes
|
|||||
Six Months Ended
June 27, 2020 |
Percentage of
Net Revenues |
Six Months Ended
June 29, 2019 |
Percentage of
Net Revenues |
Increase/
(Decrease) |
Percentage
Change |
$15,753
|
2.8%
|
$21,232
|
4.6%
|
$(5,479)
|
(25.8)%
|
|
|
Six Months Ended
|
||||||
|
|
June 27,
2020 |
|
June 29,
2019 |
||||
Net cash provided by (used in):
|
|
|
|
|||||
Operating activities
|
$
|
106,060
|
|
|
$
|
100,779
|
|
|
Investing activities
|
(70,645
|
)
|
|
(229,342
|
)
|
|||
Financing activities
|
32,614
|
|
|
(15,107
|
)
|
|||
Effect of foreign currency exchange rates on cash
|
(847
|
)
|
|
(32
|
)
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
67,182
|
|
|
$
|
(143,702
|
)
|
•
|
perceived clinical benefits from our products;
|
•
|
perceived cost effectiveness of our products;
|
•
|
perceived safety and effectiveness of our products;
|
•
|
reimbursement available through government and private healthcare programs for using some of our products; and
|
•
|
introduction and acceptance of competing products or technologies.
|
•
|
an exclusive, perpetual and worldwide license, with sublicense rights, to use all Masimo SET® technology owned by us, including all improvements to this technology, for the monitoring of non-vital signs parameters and to develop and sell devices incorporating Masimo SET® for monitoring non-vital signs parameters in any product market in which a product is intended to be used by a patient or pharmacist rather than by a professional medical caregiver, which we refer to as the Cercacor Market; and
|
•
|
a non-exclusive, perpetual and worldwide license, with sublicense rights, to use all Masimo SET® technology owned by us for measurement of vital signs in the Cercacor Market.
|
•
|
be expensive and time-consuming to defend and result in payment of significant damages to third parties;
|
•
|
force us to stop making or selling products that incorporate the intellectual property;
|
•
|
require us to redesign, reengineer or rebrand our products, product candidates and technologies;
|
•
|
require us to enter into royalty agreements that would increase the costs of our products;
|
•
|
require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims;
|
•
|
divert the attention of our management and other key employees; and
|
•
|
result in our customers or potential customers deferring or limiting their purchase or use of the affected products impacted by the claims until the claims are resolved;
|
•
|
warning letters or untitled letters issued by the FDA;
|
•
|
fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution;
|
•
|
import alerts;
|
•
|
unanticipated expenditures to address or defend such actions;
|
•
|
delays in clearing or approving, or refusal to clear or approve, our products;
|
•
|
withdrawals or suspensions of clearance or approval of our products or those of our third-party suppliers by the FDA or other regulatory bodies;
|
•
|
product recalls or seizures;
|
•
|
orders for physician notification or device repair, replacement or refund;
|
•
|
interruptions of production or inability to export to certain foreign countries; and
|
•
|
operating restrictions.
|
•
|
the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any bribe, kickback or other remuneration intended to induce the purchase, order or recommendation of an item or service reimbursable under a federal healthcare program (such as the Medicare or Medicaid programs);
|
•
|
the federal False Claims Act and other federal laws which prohibit, among other things, knowingly and willfully presenting, or causing to be presented, claims for payment from Medicare, Medicaid, other government payers or other third-party payers that are false or fraudulent;
|
•
|
the Physician Payments Sunshine Act, which requires medical device companies to track and publicly report, with limited exceptions, all payments and transfers of value to physicians and teaching hospitals in the U.S; and
|
•
|
state laws analogous to each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by governmental programs and non-governmental third-party payers, including commercial insurers.
|
•
|
the imposition of additional U.S. and foreign governmental controls or regulations;
|
•
|
the imposition of costly and lengthy new export licensing requirements;
|
•
|
a shortage of high-quality sales people and distributors;
|
•
|
the loss of any key personnel that possess proprietary knowledge, or who are otherwise important to our success in certain international markets;
|
•
|
changes in duties and tariffs, license obligations and other non-tariff barriers to trade;
|
•
|
the imposition of new trade restrictions;
|
•
|
the imposition of restrictions on the activities of foreign agents, representatives and distributors;
|
•
|
compliance with foreign tax laws, regulations and requirements;
|
•
|
pricing pressure;
|
•
|
changes in foreign currency exchange rates;
|
•
|
laws and business practices favoring local companies;
|
•
|
political instability and actual or anticipated military or political conflicts;
|
•
|
financial and civil unrest worldwide;
|
•
|
outbreaks of illnesses, pandemics or other local or global health issues;
|
•
|
the inability to collect amounts paid by foreign government customers to our appointed foreign agents;
|
•
|
longer payment cycles, increased credit risk and different collection remedies with respect to receivables; and
|
•
|
difficulties in enforcing or defending intellectual property rights.
|
•
|
payment of above-market prices for acquisitions and higher than anticipated acquisition costs;
|
•
|
issuance of common stock as part of the acquisition price or a need to issue stock options or other equity to newly-hired employees of target companies, resulting in dilution of ownership to our existing stockholders;
|
•
|
reduced profitability if an acquisition is not accretive to our business over either the short-term or the long-term;
|
•
|
difficulties in integrating any acquired companies, personnel, products and other assets into our existing business;
|
•
|
delays in realizing the benefits of the acquired company, products or other assets;
|
•
|
regulatory challenges;
|
•
|
cybersecurity and compliance-related issues;
|
•
|
diversion of our management’s time and attention from other business concerns;
|
•
|
limited or no direct prior experience in new markets or countries we may enter;
|
•
|
unanticipated issues dealing with unfamiliar suppliers, service providers or other collaborators of the acquired company;
|
•
|
higher costs of integration than we anticipated;
|
•
|
write-downs or impairments of goodwill or other intangible assets associated with the acquired company;
|
•
|
difficulties in retaining key employees of the acquired business who are necessary to manage these acquisitions;
|
•
|
negative impacts on our relationships with our employees, clients or collaborators;
|
•
|
litigation or other claims in connection with the acquisition; and
|
•
|
changes in the overall financial model as certain acquired companies may have a different revenue, gross profit margin or operating expense profile.
|
•
|
incurring specified types of additional indebtedness (including guarantees or other contingent obligations);
|
•
|
paying dividends on, repurchasing or making distributions in respect of our common stock or making other restricted payments, subject to specified exceptions;
|
•
|
making specified investments (including loans and advances);
|
•
|
selling or transferring certain assets;
|
•
|
creating certain liens;
|
•
|
consolidating, merging, selling or otherwise disposing of all or substantially all of our assets; and
|
•
|
entering into certain transactions with any of our affiliates.
|
•
|
actual or anticipated fluctuations in our operating results or future prospects;
|
•
|
our announcements or our competitors’ announcements of new products;
|
•
|
the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
|
•
|
strategic actions by us or our competitors, such as acquisitions or restructurings;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
changes in our growth rates or our competitors’ growth rates;
|
•
|
developments regarding our patents or proprietary rights or those of our competitors;
|
•
|
ongoing legal proceedings;
|
•
|
our inability to raise additional capital as needed;
|
•
|
concerns or allegations as to the safety or efficacy of our products;
|
•
|
changes in financial markets or general economic conditions, including the effects of recession or slow economic growth in the U.S. and abroad;
|
•
|
effects of public health crises, epidemics and pandemics, such as the COVID-19 pandemic;
|
•
|
sales of stock by us or members of our management team, our Board of Directors (Board) or certain institutional stockholders; and
|
•
|
changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally.
|
Period
|
Total Number
of Shares Purchased or Withheld |
|
Average Price
Paid Per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs |
|
Maximum Number
of Shares that May Yet Be Purchased Under the Plans or Programs(1) |
||||||
March 29, 2020 to April 25, 2020
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
4,722,518
|
|
|
April 26, 2020 to May 23, 2020
|
1,027
|
|
(2
|
)
|
213.91
|
|
|
278,509
|
|
|
4,721,491
|
|
|
May 24, 2020 to June 27, 2020
|
—
|
|
|
—
|
|
|
—
|
|
|
4,721,491
|
|
||
Total
|
1,027
|
|
|
$
|
213.91
|
|
|
278,509
|
|
|
4,721,491
|
|
(1)
|
In July 2018, our Board authorized the 2018 Repurchase Program, whereby we were authorized to repurchase up to 5.0 million shares of our common stock. The 2018 Repurchase Program can be carried out at the discretion of a committee comprised of our CEO and CFO through open market purchases, one or more Rule 10b5-1 trading plans, block trades and privately negotiated transactions.
|
(2)
|
The shares repurchased by us were owned by one of our non-employee directors who paid the exercise price for exercising an option by delivering 1,027 shares to us.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Shares withheld
|
—
|
|
|
—
|
|
|
9,084
|
|
|
1,163
|
|
||||
Average cost per share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
156.76
|
|
|
$
|
105.52
|
|
Value of shares withheld
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,423,995
|
|
|
$
|
122,720
|
|
(1)
|
Incorporated by reference to the exhibits to the Company’s Registration Statement on Form S-1 (No. 333-142171), originally filed on April 17, 2007. The number given in parentheses indicates the corresponding exhibit number in such Form S-1, as amended.
|
(2)
|
Incorporated by reference to the exhibit to the Company’s Current Report on Form 8-K filed on October 30, 2019. The number given in parentheses indicates the corresponding exhibit number in such Form 8-K.
|
(3)
|
Incorporated by reference to the exhibit to the Company’s Registration Statement on Form S-8 filed on February 11, 2008. The number given in parentheses indicates the corresponding exhibit number in such Form S-8.
|
(4)
|
Incorporated by reference to Appendix D of the Company’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 16, 2020.
|
#
|
Indicates management or compensatory plan.
|
*
|
Filed herewith.
|
|
|
|
|
MASIMO CORPORATION
|
||||
|
|
|
|
|
|
|
||
Date: July 28, 2020
|
|
|
|
By:
|
|
/s/ JOE KIANI
|
||
|
|
|
|
|
|
Joe Kiani
|
||
|
|
|
|
|
|
Chief Executive Officer and Chairman
|
||
|
|
|
|
|
|
|
||
Date: July 28, 2020
|
|
|
|
By:
|
|
/s/ MICAH YOUNG
|
||
|
|
|
|
|
|
Micah Young
|
||
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
•
|
to attract and retain the best available personnel for positions of substantial responsibility;
|
•
|
to provide additional incentive to Employees, Directors and Consultants;
|
•
|
to promote the success of the Company’s business; and
|
•
|
to replace the Masimo Corporation 2007 Stock Incentive Plan (the “Existing Plan”).
|
Subsidiaries of the Registrant - 2020
|
|
The following are wholly-owned subsidiaries of the registrant, Masimo Corporation, a Delaware corporation:
|
|
|
|
Name of Subsidiary
|
State or Jurisdiction of Incorporation or Organization
|
Masimo Americas, Inc.
|
Delaware
|
Masimo de Mexico Holdings I LLC
|
Delaware
|
Masimo de Mexico Holdings II LLC
|
Delaware
|
Masimo Holdings LLC
|
Delaware
|
SpO2.com, Inc.
|
Delaware
|
SEDLine, Inc.
|
Delaware
|
Masimo Australia Pty Ltd
|
Australia
|
Masimo Öesterreich GmbH
|
Austria
|
Masimo Importacao e Distribuicao de Produtos Medicos Ltda
|
Brazil
|
Masimo Holdings LP
|
Cayman
|
Masimo China Medical Technology Co., Ltd.
|
China
|
Masimo Europe Ltd.
|
England and Wales
|
Masimo Hong Kong Limited
|
Hong Kong
|
Masimo Medical Technologies India Private Limited
|
India
|
Masimo Japan Kabushiki Kaisha
|
Japan
|
Masimo Mexico, S. de R.L. de C.V.
|
Mexico
|
Masimo Canada ULC
|
Nova Scotia
|
Masimo Peru Srl
|
Peru
|
Masimo Asia Pacific PTE. Ltd.
|
Singapore
|
Masimo International SARL
|
Switzerland
|
Masimo International Technologies SARL
|
Switzerland
|
Masimo Medikal Ürünler Ticaret Limited Şirketi
|
Turkey
|
Masimo Semiconductor, Inc.
|
Delaware
|
Masimo Sweden AB
|
Sweden
|
52 Discovery, LLC
|
California
|
Masimo 25 Sagamore, LLC
|
New Hampshire
|
Masimo Korea, LLC
|
South Korea
|
Masimo Polska sp. Z.o.o.
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Poland
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Masimo 17, LLC
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California
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Masimo (Shanghai) Industrial Co., Ltd.
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China
|
Patient Doctor Technologies, Inc.
|
Delaware
|
Name of Subsidiary
|
State or Jurisdiction of Incorporation or Organization
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Alton Office Property, LLC
|
Delaware
|
Alton Office Holdings, LLC
|
Delaware
|
OC Property Ventures LLC
|
Delaware
|
OC Property Shelter LLC
|
Delaware
|
Masimo Saudi Arabia for Trading, LLC
|
Saudi Arabia
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VCCB Holdings, Inc.
|
Delaware
|
TNI medical AG
|
Germany
|
Masimo Technology Café LLC
|
California
|
a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ JOE KIANI
|
Date: July 28, 2020
|
Joe Kiani
|
|
Chairman of the Board and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ MICAH YOUNG
|
Date: July 28, 2020
|
Micah Young
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
/s/ JOE KIANI
|
Date: July 28, 2020
|
Joe Kiani
|
|
Chairman of the Board and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ MICAH YOUNG
|
Date: July 28, 2020
|
Micah Young
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|