ý
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ANNUAL 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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94-3267295
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.0001 par value
(Including associated Preferred Stock Purchase Rights)
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The NASDAQ Stock Market LLC
(NASDAQ Global Market)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
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Item 1.
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Business
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Executive Officers of the Registrant
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Consolidated Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Consolidated Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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Item 15.
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Exhibits, Financial Statement Schedules
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Signatures
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Fiscal Year
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|||||
Percentage of Net Revenues by Product
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2016
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2015
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2014
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|||
Clear Aligner Segment
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|||
Comprehensive Products
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72
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%
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78
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%
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77
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%
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Non-Comprehensive Products
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11
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11
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11
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Non-Case Products
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6
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6
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6
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Total Clear Aligner Segment
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89
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95
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94
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Scanners and Services Segment
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11
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5
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6
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Total Net Revenues
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100
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%
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100
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%
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100
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%
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•
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3D Progress Tracking - Ability to compare a patient’s new scan with a specific stage of their ClinCheck treatment plan to visually assess and communicate Invisalign treatment progress with an easy to read, color-coded tooth movement report that allows the doctor to know how each tooth is tracking.
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•
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Patient Simulation Sharing - Ability to easily share the patient’s 3D simulated Invisalign treatment outcome through a protected patient portal which can be viewed on smartphones, tablets and computers.
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1.
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International Expansion
. We expect to continue to grow and expand our business by investing in resources, infrastructure, and initiatives that will drive Invisalign treatment growth in our current and new international markets. As our core countries within the EMEA and APAC regions continue to grow in both number of new Invisalign providers and utilization, we strive to make sure we can support that growth through investments such as headcount, clinical support, education and advertising. Additionally, we are expanding our presence and entering new markets, such as India and Korea, by establishing a solid base of key opinion leaders and early adopters who can help build clinical confidence in the orthodontic community and create strong brand preference for Invisalign treatment among consumers. We have also transitioned most of our indirect smaller country markets to a direct sales model, and, while we do not expect a material impact from these countries for some time, in the near term, we will leverage our existing infrastructure in adjacent country markets as we build local sales organizations to drive long-term market penetration.
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2.
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Orthodontist Utilization.
We want all of our orthodontist providers to have the confidence and motivation to lead with Invisalign for every patient that walks into their practice. We strive to achieve this by increasing the product applicability and predictability for a wide range of complex cases within adults, teenagers and younger aged patients. As an example, in 2015, we launched Invisalign G6 clinical innovations for first premolar extractions. The nature of malocclusion that requires first premolar tooth extraction is an orthodontic problem that affects more than 50% of people in Asia, 20% in Europe and 12% in North America. In October 2016, we launched Invisalign G7, which builds on earlier Invisalign G-series releases with new features to fine-tune certain tooth movements and deliver treatment outcome quality that Invisalign providers expect, particularly with teenage patients. We also continue to make improvements to our Invisalign treatment software, ClinCheck Pro, designed to deliver an exceptional user experience and increase treatment control to help our doctors achieve their treatment goals.
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3.
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GP Dentist Treat & Refer.
We want to make it easier for GPs to identify the cases that they can treat and refer the cases that are too complex over to orthodontists. Although GPs have a larger pool of potential patients, which can expand the market for Invisalign treatment, overall, we need to provide them with tools to help them quickly identify cases they can treat, monitor patient progress or if needed, help refer them more easily to an orthodontist. The iTero scanner is an important component to that customer experience. In October 2016, we introduced a 3D progress tracking feature in the
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4.
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Patient Demand & Conversion.
Our goal is to make Invisalign a highly recognized name brand worldwide by creating awareness for Invisalign treatment among consumers and motiving potential patients to seek treatment from an Invisalign provider. In support of this objective, we invest in initiatives designed to strengthen our global brand name recognition, drive patient demand and covert that interest into Invisalign treatment case starts. We accomplish this objective through an integrated consumer marketing strategy that includes television, media, social networking and event marketing as well as educating patients on treatment options and directing them to high volume Invisalign providers.
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•
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effectiveness of treatment;
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•
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price;
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•
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software features;
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•
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aesthetic appeal of the treatment method;
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•
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customer support;
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customer online interface;
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brand awareness;
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innovation;
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•
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distribution network;
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•
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comfort associated with the treatment method;
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•
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oral hygiene;
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•
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ease of use; and
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•
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dental professionals’ chair time.
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Name
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Age
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Position
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Joseph M. Hogan
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59
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President and Chief Executive Officer
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John F. Morici
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50
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Chief Financial Officer
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Simon Beard
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50
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Vice President and Managing Director, EMEA
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Roger E. George
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51
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Vice President, Corporate and Legal Affairs and General Counsel
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Stuart Hockridge
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45
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Vice President, Global Human Resources
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Sreelakshmi Kolli
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42
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Vice President, Information Technology
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Jennifer Olson
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39
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Vice President and Managing Director, Doctor Directed Consumer Channel
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Raphael Pascaud
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45
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Chief Marketing Portfolio and Business Development Officer, and Vice President iTero Scanner and Services
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Lynn Pendergrass
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56
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Vice President and Managing Director, Americas
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Christopher C. Puco
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56
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Vice President and Managing Director, North America
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Zelko Relic
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52
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Vice President, Research & Development
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Julie Tay
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50
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Vice President and Managing Director, Asia Pacific
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Emory M. Wright
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47
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Vice President, Operations
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•
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difficulties in hiring and retaining employees generally, as well as difficulties in hiring and retaining employees with the necessary skills to perform the more technical aspects of our operations;
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difficulties in managing international operations, including any travel restrictions to or from our facilities located in Russia, Israel and other countries;
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fluctuations in currency exchange rates;
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increased income taxes, and other restrictions and limitations, if we were to decide to repatriate any of our foreign cash balances back to the U.S.;
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import and export license requirements and restrictions;
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controlling production volume and quality of the manufacturing process;
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political, social and economic instability, including as a result of increased levels of violence in Juarez, Mexico or the Middle East. We cannot predict the effect on us of any future armed conflict, political instability or violence in these regions. In addition, some of our employees in Israel are obligated to perform annual reserve duty in the Israeli military and are subject to being called for additional active duty under emergency circumstances. We cannot predict the full impact of these conditions on us in the future, particularly if emergency circumstances or an escalation in the political situation occurs. If many of our employees are called for active duty, our operations in Israel and our business may not be able to function at full capacity;
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acts of terrorism and acts of war;
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general geopolitical instability and the responses to it, such as the possibility of additional sanctions against Russia which continue to bring uncertainty to this region;
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interruptions and limitations in telecommunication services;
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product or material transportation delays or disruption, including as a result of increased levels of violence, acts of terrorism, acts of war or health epidemics restricting travel to and from our international locations or as a result of natural disasters, such as earthquakes or volcanic eruptions;
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burdens of complying with a wide variety of local country and regional laws, including the risks associated with the Foreign Corrupt Practices Act and local anti-bribery compliance;
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trade restrictions and changes in tariffs; and
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potential adverse tax consequences.
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local political and economic instability;
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the engagement of activities by our employees, contractors, partners and agents, especially in countries with developing economies, that are prohibited by international and local trade and labor laws and other laws prohibiting corrupt payments to government officials, including the Foreign Corrupt Practices Act, the UK Bribery Act of 2010 and export control laws, in spite of our policies and procedures designed to ensure compliance with these laws;
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although it is our intention to indefinitely reinvest earnings outside the U.S., restrictions on the transfer of funds held by our foreign subsidiaries, including with respect to restrictions on our ability to repatriate foreign cash to the U.S at favorable tax rates;
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fluctuations in currency exchange rates; and
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increased expense of developing, testing and making localized versions of our products.
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limited visibility into and difficulty predicting the level of activity in our customers’ practices from quarter to quarter;
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weakness in consumer spending as a result of the slowdown in the U.S. economy and global economies;
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changes in relationships with our distributors;
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changes in the timing of receipt of Invisalign case product orders during a given quarter which, given our cycle time and the delay between case receipts and case shipments, could have an impact on which quarter revenue can be recognized;
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fluctuations in currency exchange rates against the U.S. dollar;
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changes in product mix;
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our inability to scale production of our iTero Element scanner to meet customer demand;
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if participation in our customer rebate or discount programs increases our average selling price will be adversely affected;
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seasonal fluctuations in the number of doctors in their offices and their availability to take appointments;
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success of or changes to our marketing programs from quarter to quarter;
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our reliance on our contract manufacturers for the production of sub-assemblies for our intraoral scanners;
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timing of industry tradeshows;
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changes in the timing of when revenue is recognized, including as a result of the introduction of new products or promotions, modifications to our terms and conditions or as a result of changes to critical accounting estimates or new accounting pronouncements;
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changes to our effective tax rate;
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unanticipated delays in production caused by insufficient capacity or availability of raw materials;
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any disruptions in the manufacturing process, including unexpected turnover in the labor force or the introduction of new production processes, power outages or natural or other disasters beyond our control;
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the development and marketing of directly competitive products by existing and new competitors;
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disruptions to our business as a result of our agreement to manufacture clear aligners for SmileDirectClub, LLC ("SDC"), including, market acceptance of the SDC business model and product, possible adverse customer reaction and negative publicity about us and our products;
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impairments in the value of our strategic investments in SDC and other privately held companies could be material;
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major changes in available technology or the preferences of customers may cause our current product offerings to become less competitive or obsolete;
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aggressive price competition from competitors;
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costs and expenditures in connection with litigation;
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the timing of new product introductions by us and our competitors, as well as customer order deferrals in anticipation of enhancements or new products;
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unanticipated delays in our receipt of patient records made through an intraoral scanner for any reason;
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disruptions to our business due to political, economic or other social instability, including the impact of an epidemic any of which results in changes in consumer spending habits, consumers unable or unwilling to visit the orthodontist or general practitioners office, as well as any impact on workforce absenteeism;
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inaccurate forecasting of net revenues, production and other operating costs,
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investments in research and development to develop new products and enhancements;
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changes in accounting rules; and
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our ability to successfully hedge against a portion of our foreign currency-denominated assets and liabilities.
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correctly identify customer needs and preferences and predict future needs and preferences;
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include functionality and features that address customer requirements;
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ensure compatibility of our computer operating systems and hardware configurations with those of our customers;
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allocate our research and development funding to products with higher growth prospects;
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anticipate and respond to our competitors’ development of new products and technological innovations;
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differentiate our offerings from our competitors’ offerings;
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innovate and develop new technologies and applications;
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the availability of third-party reimbursement of procedures using our products;
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obtain adequate intellectual property rights; and
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encourage customers to adopt new technologies.
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agreements with distributors may terminate prematurely due to disagreements or may result in litigation between the partners;
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we may not be able to renew existing distributor agreements on acceptable terms;
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our distributors may not devote sufficient resources to the sale of products;
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our distributors may be unsuccessful in marketing our products;
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our existing relationships with distributors may preclude us from entering into additional future arrangements with other distributors; and
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we may not be able to negotiate future distributor agreements on acceptable terms.
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product design, development, manufacturing and testing;
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product labeling;
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product storage;
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pre-market clearance or approval;
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complaint handling and corrective actions;
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advertising and promotion; and
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product sales and distribution.
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warning letters, fines, injunctions, consent decrees and civil penalties;
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repair, replacement, refunds, recall or seizure of our products;
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operating restrictions or partial suspension or total shutdown of production;
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refusing our requests for 510(k) clearance or pre-market approval of new products, new intended uses, or modifications to existing products;
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withdrawing clearance or pre-market approvals that have already been granted; and
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criminal prosecution.
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storage, transmission and disclosure of medical information and healthcare records;
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prohibitions against the offer, payment or receipt of remuneration to induce referrals to entities providing healthcare services or goods or to induce the order, purchase or recommendation of our products; and
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the marketing and advertising of our products.
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quarterly variations in our results of operations and liquidity;
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changes in recommendations by the investment community or in their estimates of our net revenues or operating results;
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speculation in the press or investment community concerning our business and results of operations;
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strategic actions by our competitors, such as product announcements or acquisitions;
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•
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announcements of technological innovations or new products by us, our customers or competitors; and
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•
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general economic market conditions.
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Location
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Lease/Own
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Primary Use
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Expiration of Lease
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San Jose, California
(1)
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Lease
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Office for corporate headquarters, research & development and administrative personnel
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August 2017
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Juarez, Mexico
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Own
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Manufacturing and office facilities for manufacturing and administrative personnel
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N/A
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San Jose, Costa Rica
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Lease
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Office for administrative personnel, treatment personnel, and customer care
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October 2018
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Or Yehuda, Israel
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Lease
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Manufacturing and office for manufacturing, administrative personnel, and research & development
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February 2022
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Amsterdam, The Netherlands
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Lease
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Office for international headquarters, sales and marketing and administrative personnel
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March 2020
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Moscow, Russia
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Lease
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Office for research & development
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July 2023
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Raleigh, North Carolina
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Lease
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Office for research & development and administrative personnel
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October 2024
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High
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Low
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||||
Year Ended December 31, 2016:
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|
|
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||||
Fourth quarter
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$
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102.10
|
|
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$
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83.27
|
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Third quarter
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$
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96.90
|
|
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$
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80.30
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Second quarter
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$
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81.98
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$
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70.03
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First quarter
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$
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73.55
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$
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57.31
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Year Ended December 31, 2015:
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|
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||||
Fourth quarter
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$
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68.48
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$
|
54.69
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Third quarter
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$
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66.53
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|
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$
|
52.01
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Second quarter
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$
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64.99
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|
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$
|
51.65
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First quarter
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$
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64.75
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|
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$
|
51.77
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Period
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Total Number of Shares Repurchased
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Average Price Paid per Share
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Total Number of Shares Repurchased as Part of Publicly Announced Program
|
|
Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Program
(1)
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||||||
October 1, 2016 through October 31, 2016
|
|
179,500
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|
|
$
|
89.28
|
|
|
179,500
|
|
|
$
|
325,777,042
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|
November 1, 2016 through November 30, 2016
|
|
126,000
|
|
|
$
|
92.36
|
|
|
126,000
|
|
|
$
|
314,139,921
|
|
December 1, 2016 through December 31, 2016
|
|
106,000
|
|
|
$
|
97.92
|
|
|
106,000
|
|
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$
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303,760,487
|
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◦
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April 2014 Repurchase Program.
In 2016, we repurchased $50.0 million of our common stock through an accelerated stock repurchase agreement and $46.2 million of stock repurchase in the open market.
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◦
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April 2016 Repurchase Program.
On April 28, 2016, we announced that our Board of Directors had authorized a plan to repurchase up to $300.0 million of our stock.
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◦
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Remaining Available Repurchases
. As of December 31, 2016, we have approximately $3.8 million remaining available under the April 2014 Repurchase Program and $300.0 million under the April 2016 Repurchase Plan (
Refer to Note 10 "Common Stock Repurchase Program" of the Notes to Consolidated Financial Statements
for details on common stock repurchase).
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Year Ended December 31,
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||||||||||||||||||
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2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Statements of Operations Data:
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|
|
|
|
|
|
|
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|
||||||||||
Net revenues
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$
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1,079,874
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|
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$
|
845,486
|
|
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$
|
761,653
|
|
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$
|
660,206
|
|
|
$
|
560,041
|
|
Gross profit
(1)
|
$
|
815,294
|
|
|
$
|
640,110
|
|
|
$
|
578,443
|
|
|
$
|
498,106
|
|
|
$
|
416,388
|
|
Income from operations
(2)
|
248,921
|
|
|
188,634
|
|
|
193,576
|
|
|
94,212
|
|
|
85,592
|
|
|||||
Interest and other income (expense), net
|
(6,355
|
)
|
|
(2,533
|
)
|
|
(3,207
|
)
|
|
(1,073
|
)
|
|
(1,296
|
)
|
|||||
Net income before provision for income taxes and equity in losses of investee
(2)
|
242,566
|
|
|
186,101
|
|
|
190,369
|
|
|
93,139
|
|
|
84,296
|
|
|||||
Provision for income taxes
(3)
|
51,200
|
|
|
42,081
|
|
|
44,537
|
|
|
28,844
|
|
|
25,605
|
|
|||||
Equity in losses of investee, net of tax
|
1,684
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
189,682
|
|
|
$
|
144,020
|
|
|
$
|
145,832
|
|
|
$
|
64,295
|
|
|
$
|
58,691
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
2.38
|
|
|
$
|
1.80
|
|
|
$
|
1.81
|
|
|
$
|
0.80
|
|
|
$
|
0.73
|
|
Diluted
|
$
|
2.33
|
|
|
$
|
1.77
|
|
|
$
|
1.77
|
|
|
$
|
0.78
|
|
|
$
|
0.71
|
|
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
79,856
|
|
|
79,998
|
|
|
80,754
|
|
|
80,551
|
|
|
80,529
|
|
|||||
Diluted
|
81,484
|
|
|
81,521
|
|
|
82,283
|
|
|
82,589
|
|
|
83,040
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
(4)
|
$
|
598,643
|
|
|
$
|
460,338
|
|
|
$
|
455,349
|
|
|
$
|
369,338
|
|
|
$
|
330,022
|
|
Total assets
|
1,396,151
|
|
|
1,158,633
|
|
|
987,997
|
|
|
832,147
|
|
|
756,312
|
|
|||||
Total long-term liabilities
|
46,427
|
|
|
39,035
|
|
|
33,415
|
|
|
22,839
|
|
|
19,224
|
|
|||||
Stockholders’ equity
|
$
|
995,389
|
|
|
$
|
847,926
|
|
|
$
|
752,771
|
|
|
$
|
633,970
|
|
|
$
|
581,317
|
|
(1)
|
Gross profit includes:
|
•
|
$1.7 million out of period adjustment in 2013
|
•
|
$0.2 million acquisition and integration related costs, $0.9 million amortization of intangible assets, and $0.5 million of exit costs in 2012
|
•
|
$40.7 million and $26.3 million of goodwill and long-lived asset impairment, respectively, in 2013
|
•
|
$1.9 million, net of tax, out of period adjustment in 2013
|
•
|
$36.6 million of goodwill impairment, $1.3 million acquisition and integration related costs, $4.5 million of amortization of intangible assets, and $0.8 million of exit costs in 2012
|
(3)
|
Provision for income taxes includes:
|
•
|
$1.8 million out of period income tax adjustment in 2014 (
Refer to Note 1 "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statement
s)
|
(4)
|
Working capital is calculated as the difference between total current assets and total current liabilities.
|
•
|
New Products, Feature Enhancements and Technology Innovation
. Product innovation drives greater treatment predictability and clinical applicability and ease of use for our customers which supports adoption of Invisalign in their practices. Increasing applicability and treating more complex cases requires that we move away from individual features to more comprehensive solutions so that Invisalign providers can more predictably treat the whole case, such as with our Invisalign "G-Series" of product innovations, including our most recent October 2016 release of Invisalign G7. Invisalign G7 delivers better upper lateral control, improved root control and features to address prevention of posterior open bites. Concurrently, we also announced ClinCheck Pro 5.0, which has new features designed to deliver an improved and user friendly experience and increased control to Invisalign providers. Since the iTero Element began shipping in September 2015, the use of iTero scanners for Invisalign case submissions in place of Polyvinyl-siloxane ("PVS") impressions has gradually increased to a record 51.3% of cases from North America and 24.9% of cases from international doctors as of the fourth quarter of 2016. We believe that over the long-term, clinical solutions and treatment tools will increase adoption of Invisalign and increase sales of our intraoral scanners; however, it is difficult to predict the rate of adoption which may vary by region and channel.
|
•
|
Invisalign Adoption.
Our goal is to establish Invisalign as the treatment of choice for treating malocclusion ultimately driving increased product adoption and frequency of use by dental professionals, also known as "utilization rates." Our quarterly utilization rates for the last 9 quarters are as follows:
|
◦
|
Total utilization in the fourth quarter of 2016 increased to 5.2 cases per doctor compared to 4.9 in the fourth quarter of 2015.
|
▪
|
North America:
Utilization among our North American orthodontist customers reached an all time high of 11.3 cases per doctor in the fourth quarter of 2016 compared to 9.9 in the fourth quarter of 2015. The increase in North America orthodontist utilization reflects improvements in product and technology which continues to strengthen our doctors’ clinical confidence in the use of Invisalign such that they now utilize Invisalign more often and on more complex cases, including their teenage patients.
|
▪
|
International:
International doctor utilization of 5.0 cases per doctor in the fourth quarter of 2016 was flat compared with the fourth quarter of 2015. The International utilization reflects growth in both the Europe, Middle East and Africa ("EMEA") and Asia Pacific ("APAC") regions due to increasing adoption of the product and its ability to treat more complex cases; however, utilization remained flat primarily due to the expansion of our customer base, particularly in APAC.
|
•
|
Number of New Invisalign Doctors Trained.
We continue to expand our Invisalign customer base through the training of new doctors. In 2016, Invisalign growth was driven primarily by increased utilization across all regions as well as by the continued expansion of our customer base as we trained a total of 11,680 new Invisalign doctors, of which 60% were trained internationally.
|
•
|
International Invisalign Growth.
We will continue to focus our efforts towards increasing Invisalign adoption by dental professionals in our direct international markets. On a year over year basis, international Invisalign volume increased 32.4% driven primarily by strong performance in our APAC and in Europe regions. In 2017, we are continuing to expand in our existing markets through targeted investments in sales coverage and professional marketing and education programs, along with consumer marketing in selected country markets. We expect international Invisalign revenues to continue to grow at a faster rate than North America for the foreseeable future due to our continued investment in international market expansion, the size of the market opportunity, and our relatively low market penetration in this region (
Refer to Item 1A Risk Factors
- “We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.”
for information on related risk factors).
|
•
|
Establish Regional Order Acquisition and Treatment Planning Facilities:
We intend to establish additional order acquisition and treatment planning facilities closer to our international customers in order to improve our operational efficiency and provide doctors with a great experience to further improve their confidence in using Invisalign to treat more patients and more often (
Refer to Item 1A Risk Factors - “As we continue to grow, we are subject to growth related risks, including risks related to excess or constrained capacity at our existing facilities.”
for information on related risk factors).
|
•
|
Operating Expenses.
We expect operating expenses to increase in 2017 due in part to:
|
◦
|
investments in international expansion in new country markets particularly in the APAC region;
|
◦
|
investments in manufacturing to enhance our regional capabilities;
|
◦
|
increases in legal expenses primarily related to the continued protection of our intellectual property rights, including our patents;
|
◦
|
increases in sales and customer support resources;
|
◦
|
increases in expenses related to the purchase of our new corporate headquarters in San Jose, California; and
|
◦
|
product and technology innovation to address such things as treatment times, indications unique to teens and predictability.
|
•
|
Stock Repurchases:
|
◦
|
April 2014 Repurchase Program.
In 2016, we repurchased $50.0 million of our common stock through an accelerated stock repurchase agreement and $46.2 million of stock repurchase in the open market.
|
◦
|
April 2016 Repurchase Program.
On April 28, 2016, we announced that our Board of Directors had authorized a plan to repurchase up to $300.0 million of our stock.
|
◦
|
Remaining Available Repurchases
. As of December 31, 2016, we have $3.8 million remaining under the April 2014 Repurchase Program and $300.0 million under the April 2016 Repurchase Plan
(Refer to Note 10 "Common Stock Repurchase Program" of the Notes to Consolidated Financial Statements
for details on stock repurchase program).
|
•
|
SmileDirectClub.
On July 25, 2016, we entered into a supply agreement with SmileDirectClub, LLC ("SDC") to manufacture clear aligners for SDC's doctor-led, at-home program for simple teeth straightening. In October 2016, we became SDC's exclusive third-party supplier and commercial supplying aligners for its minor tooth movement aligner program. As part of the transaction, we acquired a 17% equity interest in SDC for $46.7 million. We also provided a revolving line of credit to SDC of up to $15.0 million to fund their working capital and general corporate needs (
Refer to Note 4 "Equity Method Investments" of the Notes to Consolidated Financial Statement
s for details on accounting treatment).
|
•
|
New Corporate Headquarters Office Purchase Agreement.
On December 19, 2016, we entered into a Purchase and Sale Agreement (the "Purchase Agreement") with LBA RIV-COMPANY XXX, LLC ("Seller") to purchase the real property located in San Jose, California (the "Property") for the purchase price of $44.1 million. We closed the Purchase Agreement on January 26, 2017 (Refer to
Note 8 "Commitments and Contingencies"
of the Notes of Consolidated Financial Statements
for more information on the Purchase Agreement).
|
•
|
Our Clear Aligner segment consists of our Invisalign system which includes Invisalign Full, Teen and Assist ("Comprehensive Products"), Express/Lite ("Non-Comprehensive Products"), Vivera retainers, along with our training and ancillary products for treating malocclusion ("Non-Case"). Clear Aligner segment also include the sale of aligners to SDC under our supply agreement which commenced in the fourth quarter of 2016. SDC revenue is recorded after eliminating outstanding intercompany transactions.
|
•
|
Our Scanner segment consists of intraoral scanning systems and additional services available with the intraoral scanners that provide digital alternatives to the traditional cast models. This segment includes our iTero scanner and OrthoCAD services.
|
|
Year Ended
|
|
|
|
|
|
Year Ended
|
|
|
|
|
||||||||||||||||||
Net Revenues
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||||||||
Clear Aligner Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
North America
|
$
|
568.7
|
|
|
$
|
498.7
|
|
|
$
|
70.0
|
|
|
14.0
|
%
|
|
$
|
498.7
|
|
|
$
|
446.6
|
|
|
$
|
52.1
|
|
|
11.7
|
%
|
International
|
326.6
|
|
|
250.1
|
|
|
76.5
|
|
|
30.6
|
%
|
|
250.1
|
|
|
219.7
|
|
|
30.4
|
|
|
13.8
|
%
|
||||||
Non-Case
|
63.0
|
|
|
51.4
|
|
|
11.6
|
|
|
22.6
|
%
|
|
51.4
|
|
|
46.2
|
|
|
5.2
|
|
|
11.3
|
%
|
||||||
Total Clear Aligner net revenues
|
$
|
958.3
|
|
|
$
|
800.2
|
|
|
$
|
158.1
|
|
|
19.8
|
%
|
|
$
|
800.2
|
|
|
$
|
712.5
|
|
|
$
|
87.7
|
|
|
12.3
|
%
|
Scanner net revenues
|
$
|
121.5
|
|
|
$
|
45.3
|
|
|
$
|
76.2
|
|
|
168.2
|
%
|
|
$
|
45.3
|
|
|
$
|
49.1
|
|
|
$
|
(3.8
|
)
|
|
(7.7
|
)%
|
Total net revenues
|
$
|
1,079.8
|
|
|
$
|
845.5
|
|
|
$
|
234.3
|
|
|
27.7
|
%
|
|
$
|
845.5
|
|
|
$
|
761.6
|
|
|
$
|
83.9
|
|
|
11.0
|
%
|
|
Year Ended
|
|
|
|
|
|
Year Ended
|
|
|
|
|
||||||||||||
Region
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
North America
|
464.5
|
|
|
398.4
|
|
|
66.1
|
|
|
16.6
|
%
|
|
398.4
|
|
|
338.5
|
|
|
59.9
|
|
|
17.7
|
%
|
International
|
244.7
|
|
|
184.8
|
|
|
59.9
|
|
|
32.4
|
%
|
|
184.8
|
|
|
139.5
|
|
|
45.3
|
|
|
32.5
|
%
|
Total case volume
|
709.2
|
|
|
583.2
|
|
|
126.0
|
|
|
21.6
|
%
|
|
583.2
|
|
|
478.0
|
|
|
105.2
|
|
|
22.0
|
%
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
Clear Aligner
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of net revenues
|
$
|
210.8
|
|
|
$
|
172.0
|
|
|
$
|
38.8
|
|
|
$
|
172.0
|
|
|
$
|
149.7
|
|
|
$
|
22.3
|
|
% of net segment revenues
|
22.0
|
%
|
|
21.5
|
%
|
|
|
|
21.5
|
%
|
|
21.0
|
%
|
|
|
|
|||||||
Gross profit
|
$
|
747.5
|
|
|
$
|
628.2
|
|
|
$
|
119.3
|
|
|
$
|
628.2
|
|
|
$
|
562.9
|
|
|
$
|
65.3
|
|
Gross margin %
|
78.0
|
%
|
|
78.5
|
%
|
|
|
|
78.5
|
%
|
|
79.0
|
%
|
|
|
||||||||
Scanner
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of net revenues
|
$
|
53.7
|
|
|
$
|
33.4
|
|
|
$
|
20.3
|
|
|
$
|
33.4
|
|
|
$
|
33.6
|
|
|
$
|
(0.2
|
)
|
% of net segment revenues
|
44.2
|
%
|
|
73.7
|
%
|
|
|
|
73.7
|
%
|
|
68.3
|
%
|
|
|
|
|||||||
Gross profit
|
$
|
67.8
|
|
|
$
|
11.9
|
|
|
$
|
55.9
|
|
|
$
|
11.9
|
|
|
$
|
15.6
|
|
|
$
|
(3.7
|
)
|
Gross margin %
|
55.8
|
%
|
|
26.3
|
%
|
|
|
|
26.3
|
%
|
|
31.7
|
%
|
|
|
||||||||
Total cost of net revenues
|
$
|
264.6
|
|
|
$
|
205.4
|
|
|
$
|
59.2
|
|
|
$
|
205.4
|
|
|
$
|
183.2
|
|
|
$
|
22.2
|
|
% of net revenues
|
24.5
|
%
|
|
24.3
|
%
|
|
|
|
24.3
|
%
|
|
24.1
|
%
|
|
|
||||||||
Gross profit
|
$
|
815.3
|
|
|
$
|
640.1
|
|
|
$
|
175.2
|
|
|
$
|
640.1
|
|
|
$
|
578.4
|
|
|
$
|
61.7
|
|
Gross margin %
|
75.5
|
%
|
|
75.7
|
%
|
|
|
|
75.7
|
%
|
|
75.9
|
%
|
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
Selling, general and administrative
|
$
|
490.7
|
|
|
$
|
390.2
|
|
|
$
|
100.5
|
|
|
$
|
390.2
|
|
|
$
|
332.1
|
|
|
$
|
58.1
|
|
% of net revenues
|
45.4
|
%
|
|
46.2
|
%
|
|
|
|
46.2
|
%
|
|
43.6
|
%
|
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
Research and development
|
$
|
75.7
|
|
|
$
|
61.2
|
|
|
$
|
14.5
|
|
|
$
|
61.2
|
|
|
$
|
52.8
|
|
|
$
|
8.4
|
|
% of net revenues
|
7.0
|
%
|
|
7.2
|
%
|
|
|
|
7.2
|
%
|
|
6.9
|
%
|
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
Clear Aligner
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from operations
|
$
|
411.8
|
|
|
$
|
371.1
|
|
|
$
|
40.7
|
|
|
$
|
371.1
|
|
|
$
|
341.1
|
|
|
$
|
30.0
|
|
Operating margin %
|
43.0
|
%
|
|
46.4
|
%
|
|
|
|
46.4
|
%
|
|
47.9
|
%
|
|
|
||||||||
Scanner
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from operations
|
$
|
37.5
|
|
|
$
|
(12.3
|
)
|
|
$
|
49.8
|
|
|
$
|
(12.3
|
)
|
|
$
|
(8.5
|
)
|
|
$
|
(3.8
|
)
|
Operating margin %
|
30.9
|
%
|
|
(27.2
|
)%
|
|
|
|
(27.2
|
)%
|
|
(17.3
|
)%
|
|
|
||||||||
Total income from operations
(1)
|
$
|
248.9
|
|
|
$
|
188.6
|
|
|
$
|
60.3
|
|
|
$
|
188.6
|
|
|
$
|
193.6
|
|
|
$
|
(5.0
|
)
|
Operating margin %
|
23.1
|
%
|
|
22.3
|
%
|
|
|
|
22.3
|
%
|
|
25.4
|
%
|
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
Interest and other income (expense), net
|
$
|
(6.4
|
)
|
|
$
|
(2.5
|
)
|
|
$
|
(3.9
|
)
|
|
$
|
(2.5
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
0.7
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
Change
|
|
December 31, 2015
|
|
December 31, 2014
|
|
Change
|
||||||||
Equity in losses, net of tax
|
$
|
1.7
|
|
|
—
|
|
|
$
|
1.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||
|
December 31,
2016
|
|
December 31,
2015
|
|
Change
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Change
|
||||||||||||
Provision for income taxes
|
$
|
51.2
|
|
|
$
|
42.1
|
|
|
$
|
9.1
|
|
|
$
|
42.1
|
|
|
$
|
44.5
|
|
|
$
|
(2.4
|
)
|
Effective tax rates
|
21.1
|
%
|
|
22.6
|
%
|
|
|
|
22.6
|
%
|
|
23.4
|
%
|
|
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Cash and cash equivalents
|
$
|
389,275
|
|
|
$
|
167,714
|
|
Short-term marketable securities
|
250,981
|
|
|
359,581
|
|
||
Long-term marketable securities
|
59,783
|
|
|
151,370
|
|
||
Total
|
$
|
700,039
|
|
|
$
|
678,665
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash flow provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
247,654
|
|
|
$
|
237,997
|
|
|
$
|
226,899
|
|
Investing activities
|
72,848
|
|
|
(166,361
|
)
|
|
(201,627
|
)
|
|||
Financing activities
|
(95,524
|
)
|
|
(100,786
|
)
|
|
(66,420
|
)
|
|||
Effects of exchange rate changes on cash and cash equivalents
|
(3,417
|
)
|
|
(3,007
|
)
|
|
(1,934
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
221,561
|
|
|
$
|
(32,157
|
)
|
|
$
|
(43,082
|
)
|
•
|
Stock-based compensation was
$54.1 million
related to equity incentive compensation granted to employees and directors,
|
•
|
Depreciation and amortization of
$24.0 million
related to our fixed assets and acquired and purchased intangible assets,
|
•
|
Excess tax benefits from our share-based compensation arrangements of
$16.8 million
,
|
•
|
Net change in deferred tax assets of
$16.4 million
, and
|
•
|
Net tax benefits from stock based compensation of
$15.9 million
.
|
•
|
Increase of
$94.4 million
in accounts receivable which is a result of the increase in net revenues,
|
•
|
Increase of
$60.7 million
in deferred revenues corresponding to the increases in case shipments and full year effect of our additional aligner product policy effective in July 2015, and
|
•
|
Increase of
$37.6 million
in accrued and other long-term liabilities due to timing of payments and activities.
|
•
|
Stock-based compensation was $52.9 million related to our equity incentive compensation granted to employees and directors,
|
•
|
Depreciation and amortization of $18.0 million related to our fixed assets and acquired intangible assets, and
|
•
|
Excess tax benefits from our share-based compensation arrangements of $10.4 million.
|
•
|
Increase of $41.9 million in deferred revenues corresponding to higher product sales along with the increased deferrals as a result of the change to our new additional aligner product policy in July 2015,
|
•
|
Increase of $40.8 million in accounts receivable which is a result of the increase in net revenues, and
|
•
|
Increase of $19.5 million in accrued and other long-term liabilities primarily due to an increase in income tax payable along with other accruals due to timing of payment.
|
•
|
Stock-based compensation was $39.8 million related to our equity incentive compensation granted to employees and directors,
|
•
|
Excess tax benefits from our share-based compensation arrangements of $21.4 million, and
|
•
|
Depreciation and amortization of $17.9 million related to our fixed assets and acquired intangible assets.
|
•
|
Increase of $27.2 million in accounts receivable which is a result of the increase in net revenues,
|
•
|
Increase of $22.7 million in accrued and other long-term liabilities primarily due to an increase in income tax payable along with other accruals due to timing of payment, and
|
•
|
Increase of $15.8 million in deferred revenues corresponding to the increases in revenues.
|
◦
|
April 2014 Repurchase Program.
In 2016, we repurchased $50.0 million of our common stock through an accelerated stock repurchase agreement and $46.2 million of stock repurchase in the open market.
|
◦
|
April 2016 Repurchase Program.
On April 28, 2016, we announced that our Board of Directors had authorized a plan to repurchase up to $300.0 million of our stock.
|
◦
|
Remaining Available Repurchases
. As of December 31, 2016, we have $3.8 million remaining under the April 2014 Repurchase Program and $300.0 million under the April 2016 Repurchase Plan.
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More than
5 Years
|
||||||||||
Operating lease obligations
|
$
|
53,921
|
|
|
$
|
12,880
|
|
|
$
|
18,804
|
|
|
$
|
13,096
|
|
|
$
|
9,141
|
|
Unconditional purchase obligations
|
163,688
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
217,609
|
|
|
$
|
12,880
|
|
|
$
|
18,804
|
|
|
$
|
13,096
|
|
|
$
|
9,141
|
|
•
|
VSOE - In most instances, this applies to products and services that are sold separately in stand-alone arrangements. We determine VSOE based on pricing and discounting practices for the specific product or service when sold separately, considering geographical, customer, and other economic or marketing variables, as well as renewal rates or stand-alone prices for the service element(s).
|
•
|
TPE - If we cannot establish VSOE of selling price for a specific product or service included in a multiple-element arrangement, we use third-party evidence of selling price. We determine TPE based on sales of comparable amount of similar products or service offered by multiple third parties considering the degree of customization and similarity of product or service sold.
|
•
|
BESP - The best estimated selling price represents the price at which we would sell a product or service if it were sold on a stand-alone basis. When VSOE or TPE does not exist for all elements, we determine BESP for the arrangement element based on sales, cost and margin analysis, as well as other inputs based on our pricing practices. Adjustments for
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
|
December 31, 2015
|
|
September 30, 2015
|
|
June 30, 2015
|
|
March 31, 2015
|
||||||||||||||||
|
(in thousands, except per share data)
(unaudited )
|
||||||||||||||||||||||||||||||
Net revenues
|
$
|
293,203
|
|
|
$
|
278,589
|
|
|
$
|
269,362
|
|
|
$
|
238,720
|
|
|
$
|
230,276
|
|
|
$
|
207,636
|
|
|
$
|
209,488
|
|
|
$
|
198,086
|
|
Gross profit
|
220,249
|
|
|
209,202
|
|
|
205,216
|
|
|
180,627
|
|
|
172,810
|
|
|
157,576
|
|
|
158,634
|
|
|
151,090
|
|
||||||||
Income from operations
|
68,372
|
|
|
62,079
|
|
|
65,136
|
|
|
53,334
|
|
|
59,339
|
|
|
38,046
|
|
|
42,325
|
|
|
48,924
|
|
||||||||
Net income
|
47,621
|
|
|
51,367
|
|
|
50,148
|
|
|
40,546
|
|
|
48,877
|
|
|
27,616
|
|
|
31,350
|
|
|
36,177
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.60
|
|
|
$
|
0.64
|
|
|
$
|
0.63
|
|
|
$
|
0.51
|
|
|
$
|
0.61
|
|
|
$
|
0.35
|
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
Diluted
|
$
|
0.59
|
|
|
$
|
0.63
|
|
|
$
|
0.62
|
|
|
$
|
0.50
|
|
|
$
|
0.60
|
|
|
$
|
0.34
|
|
|
$
|
0.39
|
|
|
$
|
0.44
|
|
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
79,667
|
|
|
79,977
|
|
|
79,951
|
|
|
79,831
|
|
|
79,481
|
|
|
79,808
|
|
|
80,257
|
|
|
80,459
|
|
||||||||
Diluted
|
81,248
|
|
|
81,466
|
|
|
81,281
|
|
|
81,320
|
|
|
81,051
|
|
|
81,092
|
|
|
81,394
|
|
|
81,824
|
|
|
Page
|
Report of Management on Internal Control over Financial Reporting
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Stockholders’ Equity
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Align;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Align are being made only in accordance with authorizations of management and directors of Align; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Align's assets that could have a material effect on the financial statements.
|
|
/
S
/ JOSEPH M. HOGAN
|
Joseph M. Hogan
|
President and Chief Executive Officer
|
February 28, 2017
|
|
|
/
S
/ JOHN F. MORICI
|
John F. Morici
|
Chief Financial Officer
|
February 28, 2017
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net revenues
|
$
|
1,079,874
|
|
|
$
|
845,486
|
|
|
$
|
761,653
|
|
Cost of net revenues
|
264,580
|
|
|
205,376
|
|
|
183,210
|
|
|||
Gross profit
|
815,294
|
|
|
640,110
|
|
|
578,443
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
490,653
|
|
|
390,239
|
|
|
332,068
|
|
|||
Research and development
|
75,720
|
|
|
61,237
|
|
|
52,799
|
|
|||
Total operating expenses
|
566,373
|
|
|
451,476
|
|
|
384,867
|
|
|||
Income from operations
|
248,921
|
|
|
188,634
|
|
|
193,576
|
|
|||
Interest and other income (expense), net
|
(6,355
|
)
|
|
(2,533
|
)
|
|
(3,207
|
)
|
|||
Net income before provision for income taxes and equity in losses of investee
|
242,566
|
|
|
186,101
|
|
|
190,369
|
|
|||
Provision for income taxes
|
51,200
|
|
|
42,081
|
|
|
44,537
|
|
|||
Equity in losses of investee, net of tax
|
1,684
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
$
|
189,682
|
|
|
$
|
144,020
|
|
|
$
|
145,832
|
|
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.38
|
|
|
$
|
1.80
|
|
|
$
|
1.81
|
|
Diluted
|
$
|
2.33
|
|
|
$
|
1.77
|
|
|
$
|
1.77
|
|
Shares used in computing net income per share:
|
|
|
|
|
|
||||||
Basic
|
79,856
|
|
|
79,998
|
|
|
80,754
|
|
|||
Diluted
|
81,484
|
|
|
81,521
|
|
|
82,283
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
189,682
|
|
|
$
|
144,020
|
|
|
$
|
145,832
|
|
Net change in foreign currency translation adjustment
|
(670
|
)
|
|
(154
|
)
|
|
(196
|
)
|
|||
Change in unrealized gains (losses) on investments, net of tax
|
712
|
|
|
(686
|
)
|
|
(238
|
)
|
|||
Other comprehensive income (loss)
|
42
|
|
|
(840
|
)
|
|
(434
|
)
|
|||
Comprehensive income
|
$
|
189,724
|
|
|
$
|
143,180
|
|
|
$
|
145,398
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
389,275
|
|
|
$
|
167,714
|
|
Marketable securities, short-term
|
250,981
|
|
|
359,581
|
|
||
Accounts receivable, net of allowance for doubtful accounts and returns of $4,310 and $2,472, respectively
|
247,415
|
|
|
158,550
|
|
||
Inventories
|
27,131
|
|
|
19,465
|
|
||
Prepaid expenses and other current assets
|
38,176
|
|
|
26,700
|
|
||
Total current assets
|
952,978
|
|
|
732,010
|
|
||
Marketable securities, long-term
|
59,783
|
|
|
151,370
|
|
||
Property, plant and equipment, net
|
175,167
|
|
|
136,473
|
|
||
Equity method investments
|
45,061
|
|
|
—
|
|
||
Goodwill and intangible assets, net
|
81,998
|
|
|
79,162
|
|
||
Deferred tax assets
|
67,844
|
|
|
51,416
|
|
||
Other assets
|
13,320
|
|
|
8,202
|
|
||
Total assets
|
$
|
1,396,151
|
|
|
$
|
1,158,633
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
28,596
|
|
|
$
|
34,354
|
|
Accrued liabilities
|
134,332
|
|
|
107,765
|
|
||
Deferred revenues
|
191,407
|
|
|
129,553
|
|
||
Total current liabilities
|
354,335
|
|
|
271,672
|
|
||
Income tax payable
|
45,133
|
|
|
37,512
|
|
||
Other long-term liabilities
|
1,294
|
|
|
1,523
|
|
||
Total liabilities
|
400,762
|
|
|
310,707
|
|
||
Commitments and contingencies (
Notes 6 and 8
)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value (200,000 shares authorized; 79,553 and 79,500 issued and outstanding, respectively)
|
8
|
|
|
8
|
|
||
Additional paid-in capital
|
864,871
|
|
|
821,507
|
|
||
Accumulated other comprehensive income (loss), net
|
(938
|
)
|
|
(980
|
)
|
||
Retained earnings
|
131,448
|
|
|
27,391
|
|
||
Total stockholders’ equity
|
995,389
|
|
|
847,926
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,396,151
|
|
|
$
|
1,158,633
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss), Net
|
|
Retained Earnings (Deficit)
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at December 31, 2013
|
80,583
|
|
|
$
|
8
|
|
|
$
|
729,578
|
|
|
$
|
294
|
|
|
$
|
(95,910
|
)
|
|
$
|
633,970
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145,832
|
|
|
145,832
|
|
|||||
Net change in unrealized gains (losses) from investments
|
—
|
|
|
—
|
|
|
—
|
|
|
(238
|
)
|
|
—
|
|
|
(238
|
)
|
|||||
Net change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(196
|
)
|
|
—
|
|
|
(196
|
)
|
|||||
Issuance of common stock relating to employee equity compensation plans
|
1,536
|
|
|
—
|
|
|
18,028
|
|
|
—
|
|
|
—
|
|
|
18,028
|
|
|||||
Tax withholdings related to net share settlement of restricted stock units
|
—
|
|
|
—
|
|
|
(7,608
|
)
|
|
—
|
|
|
—
|
|
|
(7,608
|
)
|
|||||
Common stock repurchased and retired
|
(1,914
|
)
|
|
—
|
|
|
(17,804
|
)
|
|
—
|
|
|
(80,429
|
)
|
|
(98,233
|
)
|
|||||
Net tax benefits from stock-based awards
|
—
|
|
|
—
|
|
|
21,393
|
|
|
—
|
|
|
—
|
|
|
21,393
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
39,823
|
|
|
—
|
|
|
—
|
|
|
39,823
|
|
|||||
Balances at December 31, 2014
|
80,205
|
|
|
8
|
|
|
783,410
|
|
|
(140
|
)
|
|
(30,507
|
)
|
|
752,771
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
144,020
|
|
|
144,020
|
|
|||||
Net change in unrealized gains (losses) from investments
|
—
|
|
|
—
|
|
|
—
|
|
|
(686
|
)
|
|
—
|
|
|
(686
|
)
|
|||||
Net change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(154
|
)
|
|
—
|
|
|
(164
|
)
|
|||||
Issuance of common stock relating to employee equity compensation plans
|
991
|
|
|
—
|
|
|
11,325
|
|
|
—
|
|
|
—
|
|
|
11,325
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
—
|
|
|
—
|
|
|
(20,716
|
)
|
|
—
|
|
|
—
|
|
|
(20,716
|
)
|
|||||
Common stock repurchased and retired
|
(1,696
|
)
|
|
—
|
|
|
(15,669
|
)
|
|
—
|
|
|
(86,122
|
)
|
|
(101,791
|
)
|
|||||
Net tax benefits from stock-based awards
|
—
|
|
|
—
|
|
|
10,224
|
|
|
—
|
|
|
—
|
|
|
10,224
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
52,943
|
|
|
—
|
|
|
—
|
|
|
52,943
|
|
|||||
Balances at December 31, 2015
|
79,500
|
|
|
8
|
|
|
821,507
|
|
|
(980
|
)
|
|
27,391
|
|
|
847,926
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189,682
|
|
|
189,682
|
|
|||||
Net change in unrealized gains (losses) from investments
|
—
|
|
|
—
|
|
|
—
|
|
|
712
|
|
|
—
|
|
|
712
|
|
|||||
Net change in foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(670
|
)
|
|
—
|
|
|
(670
|
)
|
|||||
Issuance of common stock relating to employee equity compensation plans
|
1,163
|
|
|
—
|
|
|
13,778
|
|
|
—
|
|
|
—
|
|
|
13,778
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
—
|
|
|
—
|
|
|
(29,857
|
)
|
|
—
|
|
|
—
|
|
|
(29,857
|
)
|
|||||
Common stock repurchased and retired
|
(1,110
|
)
|
|
—
|
|
|
(10,593
|
)
|
|
—
|
|
|
(85,625
|
)
|
|
(96,218
|
)
|
|||||
Net tax benefits from stock-based awards
|
—
|
|
|
—
|
|
|
15,888
|
|
|
—
|
|
|
—
|
|
|
15,888
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
54,148
|
|
|
—
|
|
|
—
|
|
|
54,148
|
|
|||||
Balances at December 31, 2016
|
79,553
|
|
|
$
|
8
|
|
|
$
|
864,871
|
|
|
$
|
(938
|
)
|
|
$
|
131,448
|
|
|
$
|
995,389
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
189,682
|
|
|
$
|
144,020
|
|
|
$
|
145,832
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Deferred taxes
|
(16,401
|
)
|
|
(11,424
|
)
|
|
4,088
|
|
|||
Depreciation and amortization
|
24,002
|
|
|
18,004
|
|
|
17,856
|
|
|||
Stock-based compensation
|
54,148
|
|
|
52,943
|
|
|
39,823
|
|
|||
Net tax benefits from stock-based awards
|
15,888
|
|
|
10,224
|
|
|
21,393
|
|
|||
Excess tax benefit from share-based payment arrangements
|
(16,773
|
)
|
|
(10,396
|
)
|
|
(21,393
|
)
|
|||
Equity in losses of investee
|
1,684
|
|
|
—
|
|
|
—
|
|
|||
Other non-cash operating activities
|
12,031
|
|
|
13,799
|
|
|
10,106
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(94,444
|
)
|
|
(40,775
|
)
|
|
(27,229
|
)
|
|||
Inventories
|
(7,663
|
)
|
|
(3,563
|
)
|
|
(1,999
|
)
|
|||
Prepaid expenses and other assets
|
(9,390
|
)
|
|
(3,726
|
)
|
|
(2,924
|
)
|
|||
Accounts payable
|
(3,395
|
)
|
|
7,575
|
|
|
2,887
|
|
|||
Accrued and other long-term liabilities
|
37,629
|
|
|
19,462
|
|
|
22,692
|
|
|||
Deferred revenues
|
60,656
|
|
|
41,854
|
|
|
15,767
|
|
|||
Net cash provided by operating activities
|
247,654
|
|
|
237,997
|
|
|
226,899
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchase of property, plant and equipment
|
(70,576
|
)
|
|
(53,451
|
)
|
|
(24,092
|
)
|
|||
Purchase of marketable securities
|
(405,612
|
)
|
|
(447,092
|
)
|
|
(437,152
|
)
|
|||
Proceeds from maturities of marketable securities
|
387,873
|
|
|
304,125
|
|
|
176,810
|
|
|||
Purchase of equity method investments
|
(46,745
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of marketable securities
|
216,119
|
|
|
30,011
|
|
|
82,990
|
|
|||
Other investing activities
|
(8,211
|
)
|
|
46
|
|
|
(183
|
)
|
|||
Net cash provided by (used in) investing activities
|
72,848
|
|
|
(166,361
|
)
|
|
(201,627
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
13,778
|
|
|
11,325
|
|
|
18,028
|
|
|||
Common stock repurchases
|
(96,218
|
)
|
|
(101,791
|
)
|
|
(98,233
|
)
|
|||
Excess tax benefit from share-based payment arrangements
|
16,773
|
|
|
10,396
|
|
|
21,393
|
|
|||
Employees’ taxes paid upon the vesting of restricted stock units
|
(29,857
|
)
|
|
(20,716
|
)
|
|
(7,608
|
)
|
|||
Net cash used in financing activities
|
(95,524
|
)
|
|
(100,786
|
)
|
|
(66,420
|
)
|
|||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(3,417
|
)
|
|
(3,007
|
)
|
|
(1,934
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
221,561
|
|
|
(32,157
|
)
|
|
(43,082
|
)
|
|||
Cash and cash equivalents, beginning of year
|
167,714
|
|
|
199,871
|
|
|
242,953
|
|
|||
Cash and cash equivalents, end of year
|
$
|
389,275
|
|
|
$
|
167,714
|
|
|
$
|
199,871
|
|
•
|
VSOE - In most instances, this applies to products and services that are sold separately in stand-alone arrangements. We determine VSOE based on pricing and discounting practices for the specific product or service when sold separately, considering geographical, customer, and other economic or marketing variables, as well as renewal rates or stand-alone prices for the service element(s).
|
•
|
TPE - If we cannot establish VSOE of selling price for a specific product or service included in a multiple-element arrangement, we use third-party evidence of selling price. We determine TPE based on sales of comparable amount of similar products or service offered by multiple third parties considering the degree of customization and similarity of product or service sold.
|
•
|
BESP - The best estimated selling price represents the price at which we would sell a product or service if it were sold on a stand-alone basis. When VSOE or TPE does not exist for all elements, we determine BESP for the arrangement element based on sales, cost and margin analysis, as well as other inputs based on our pricing practices. Adjustments for other market and company specific factors are made as deemed necessary in determining BESP. We regularly review our estimates of selling price and maintain internal controls over the establishment and update of these estimates.
|
December 31, 2016
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Commercial paper
|
$
|
42,397
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
42,391
|
|
Corporate bonds
|
122,788
|
|
|
22
|
|
|
(121
|
)
|
|
122,689
|
|
||||
Municipal securities
|
5,852
|
|
|
—
|
|
|
(5
|
)
|
|
5,847
|
|
||||
U.S. government agency bonds
|
28,903
|
|
|
9
|
|
|
(4
|
)
|
|
28,908
|
|
||||
U.S. government treasury bonds
|
45,146
|
|
|
7
|
|
|
(7
|
)
|
|
45,146
|
|
||||
Certificates of deposit
|
6,000
|
|
|
—
|
|
|
—
|
|
|
6,000
|
|
||||
Total Marketable Securities, Short-Term
|
$
|
251,086
|
|
|
$
|
38
|
|
|
$
|
(143
|
)
|
|
$
|
250,981
|
|
December 31, 2016
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
U.S. government agency bonds
|
$
|
6,805
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
6,789
|
|
Corporate bonds
|
40,889
|
|
|
8
|
|
|
(85
|
)
|
|
40,812
|
|
||||
U.S. government treasury bonds
|
12,016
|
|
|
5
|
|
|
(16
|
)
|
|
12,005
|
|
||||
Asset-backed securities
|
177
|
|
|
—
|
|
|
—
|
|
|
177
|
|
||||
Total Marketable Securities, Long-Term
|
$
|
59,887
|
|
|
$
|
13
|
|
|
$
|
(117
|
)
|
|
$
|
59,783
|
|
December 31, 2015
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Commercial paper
|
$
|
38,537
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,537
|
|
Corporate bonds
|
179,765
|
|
|
6
|
|
|
(251
|
)
|
|
179,520
|
|
||||
U.S. dollar dominated foreign corporate bonds
|
510
|
|
|
—
|
|
|
(2
|
)
|
|
508
|
|
||||
Municipal securities
|
14,209
|
|
|
7
|
|
|
(2
|
)
|
|
14,214
|
|
||||
U.S. government agency bonds
|
75,172
|
|
|
—
|
|
|
(53
|
)
|
|
75,119
|
|
||||
U.S. government treasury bonds
|
51,763
|
|
|
1
|
|
|
(81
|
)
|
|
51,683
|
|
||||
Total Marketable Securities, Short-Term
|
$
|
359,956
|
|
|
$
|
14
|
|
|
$
|
(389
|
)
|
|
$
|
359,581
|
|
December 31, 2015
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
U.S. government agency bonds
|
$
|
43,853
|
|
|
$
|
—
|
|
|
$
|
(178
|
)
|
|
$
|
43,675
|
|
Corporate bonds
|
64,012
|
|
|
9
|
|
|
(218
|
)
|
|
63,803
|
|
||||
U.S. government treasury bonds
|
37,673
|
|
|
—
|
|
|
(107
|
)
|
|
37,566
|
|
||||
Municipal securities
|
3,993
|
|
|
—
|
|
|
(2
|
)
|
|
3,991
|
|
||||
Asset-backed securities
|
2,338
|
|
|
—
|
|
|
(3
|
)
|
|
2,335
|
|
||||
Total Marketable Securities, Long-Term
|
$
|
151,869
|
|
|
$
|
9
|
|
|
$
|
(508
|
)
|
|
$
|
151,370
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
One year or less
|
|
$
|
250,981
|
|
|
$
|
359,581
|
|
Due in greater than one year
|
|
59,783
|
|
|
151,370
|
|
||
Total available for short-term and long-term marketable securities
|
|
$
|
310,764
|
|
|
$
|
510,951
|
|
Description
|
Balance as of
December 31, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Other
Observable Inputs (Level 3) |
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
87,179
|
|
|
$
|
87,179
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
2,499
|
|
|
—
|
|
|
2,499
|
|
|
—
|
|
||||
Corporate bonds
|
750
|
|
|
—
|
|
|
750
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
42,391
|
|
|
—
|
|
|
42,391
|
|
|
—
|
|
||||
Corporate bonds
|
122,689
|
|
|
—
|
|
|
122,689
|
|
|
—
|
|
||||
Municipal securities
|
5,847
|
|
|
—
|
|
|
5,847
|
|
|
—
|
|
||||
U.S. government agency bonds
|
28,908
|
|
|
—
|
|
|
28,908
|
|
|
—
|
|
||||
U.S. government treasury bonds
|
45,146
|
|
|
45,146
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
6,000
|
|
|
—
|
|
|
6,000
|
|
|
—
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. government agency bonds
|
6,789
|
|
|
—
|
|
|
6,789
|
|
|
—
|
|
||||
Corporate bonds
|
40,812
|
|
|
—
|
|
|
40,812
|
|
|
—
|
|
||||
U.S. government treasury bonds
|
12,005
|
|
|
12,005
|
|
|
—
|
|
|
—
|
|
||||
Asset-backed securities
|
177
|
|
|
—
|
|
|
177
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Israeli funds
|
2,956
|
|
|
—
|
|
|
2,956
|
|
|
—
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Long-term notes receivable
|
2,047
|
|
|
—
|
|
|
—
|
|
|
2,047
|
|
||||
|
$
|
406,195
|
|
|
$
|
144,330
|
|
|
$
|
259,818
|
|
|
$
|
2,047
|
|
Description
|
Balance as of
December 31, 2015
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
70,148
|
|
|
$
|
70,148
|
|
|
$
|
—
|
|
Commercial paper
|
36,887
|
|
|
—
|
|
|
36,887
|
|
|||
U.S. government agency bonds
|
3,599
|
|
|
—
|
|
|
3,599
|
|
|||
Corporate bonds
|
625
|
|
|
—
|
|
|
625
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
38,537
|
|
|
—
|
|
|
38,537
|
|
|||
Corporate bonds
|
179,520
|
|
|
—
|
|
|
179,520
|
|
|||
U.S. dollar denominated foreign corporate bonds
|
508
|
|
|
—
|
|
|
508
|
|
|||
Municipal securities
|
14,214
|
|
|
—
|
|
|
14,214
|
|
|||
U.S. government agency bonds
|
75,119
|
|
|
—
|
|
|
75,119
|
|
|||
U.S. government treasury bonds
|
51,683
|
|
|
51,683
|
|
|
—
|
|
|||
Long-term investments:
|
|
|
|
|
|
||||||
U.S. government agency bonds
|
43,675
|
|
|
—
|
|
|
43,675
|
|
|||
Corporate bonds
|
63,803
|
|
|
—
|
|
|
63,803
|
|
|||
U.S. government treasury bonds
|
37,566
|
|
|
37,566
|
|
|
—
|
|
|||
Municipal securities
|
3,991
|
|
|
—
|
|
|
3,991
|
|
|||
Asset-backed securities
|
2,335
|
|
|
—
|
|
|
2,335
|
|
|||
Prepaid expenses and other assets:
|
|
|
|
|
|
||||||
Israeli funds
|
2,436
|
|
|
—
|
|
|
2,436
|
|
|||
|
$
|
624,646
|
|
|
$
|
159,397
|
|
|
$
|
465,249
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Raw materials
|
$
|
9,793
|
|
|
$
|
9,950
|
|
Work in process
|
10,773
|
|
|
7,067
|
|
||
Finished goods
|
6,565
|
|
|
2,448
|
|
||
Total Inventories
|
$
|
27,131
|
|
|
$
|
19,465
|
|
|
|
|
December 31,
|
||||||
|
Generally Used Estimated Useful Life
|
|
2016
|
|
2015
|
||||
Clinical and manufacturing equipment
|
Up to 10 years
|
|
$
|
153,938
|
|
|
$
|
128,044
|
|
Computer hardware
|
3 years
|
|
27,978
|
|
|
25,843
|
|
||
Computer software
|
3 years
|
|
59,997
|
|
|
21,451
|
|
||
Furniture and fixtures
|
5 years
|
|
10,306
|
|
|
8,855
|
|
||
Leasehold improvements
|
Lease term
(1)
|
|
22,370
|
|
|
20,172
|
|
||
Building
|
20 years
|
|
7,272
|
|
|
4,227
|
|
||
Land
|
—
|
|
3,072
|
|
|
3,072
|
|
||
CIP
|
—
|
|
25,948
|
|
|
42,846
|
|
||
Total
|
|
|
310,881
|
|
|
254,510
|
|
||
Less: Accumulated depreciation and amortization and impairment charges
|
|
|
(135,714
|
)
|
|
(118,037
|
)
|
||
Total Property, plant and equipment, net
|
|
|
$
|
175,167
|
|
|
$
|
136,473
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accrued payroll and benefits
|
$
|
79,214
|
|
|
$
|
55,430
|
|
Accrued sales and marketing expenses
|
11,970
|
|
|
7,071
|
|
||
Accrued sales rebate
|
10,342
|
|
|
8,486
|
|
||
Accrued sales tax and value added tax
|
5,032
|
|
|
4,801
|
|
||
Accrued income taxes
|
4,210
|
|
|
2,646
|
|
||
Accrued warranty
|
3,841
|
|
|
2,638
|
|
||
Accrued professional fees
|
3,604
|
|
|
2,775
|
|
||
Other accrued liabilities
|
16,119
|
|
|
23,918
|
|
||
Total Accrued Liabilities
|
$
|
134,332
|
|
|
$
|
107,765
|
|
Warranty accrual, December 31, 2014
|
$
|
3,148
|
|
Charged to cost of revenues
|
1,796
|
|
|
Actual warranty expenditures
|
(2,306
|
)
|
|
Warranty accrual, December 31, 2015
|
2,638
|
|
|
Charged to cost of revenues
|
4,894
|
|
|
Actual warranty expenditures
|
(3,691
|
)
|
|
Warranty accrual, December 31, 2016
|
$
|
3,841
|
|
|
Total
|
||
Balance as of December 31, 2014
|
$
|
61,369
|
|
Adjustments
(1)
|
(295
|
)
|
|
Balance as of December 31, 2015
|
61,074
|
|
|
Adjustments
(1)
|
(30
|
)
|
|
Balance as of December 31, 2016
|
$
|
61,044
|
|
|
Weighted Average Amortization Period (in years)
|
|
Gross Carrying Amount as of
December 31, 2016
|
|
Accumulated
Amortization
|
|
Accumulated Impairment Loss
|
|
Net Carrying
Value as of
December 31, 2016
|
||||||||
Trademarks
|
15
|
|
$
|
7,100
|
|
|
$
|
(1,631
|
)
|
|
$
|
(4,179
|
)
|
|
$
|
1,290
|
|
Existing technology
|
13
|
|
12,600
|
|
|
(4,141
|
)
|
|
(4,328
|
)
|
|
4,131
|
|
||||
Customer relationships
|
11
|
|
33,500
|
|
|
(12,819
|
)
|
|
(10,751
|
)
|
|
9,930
|
|
||||
Patents
|
8
|
|
6,316
|
|
|
(713
|
)
|
|
—
|
|
|
5,603
|
|
||||
Total Intangible Assets
|
|
|
$
|
59,516
|
|
|
$
|
(19,304
|
)
|
|
$
|
(19,258
|
)
|
|
$
|
20,954
|
|
|
Weighted Average Amortization Period (in years)
|
|
Gross Carrying
Amount as of
December 31, 2015
|
|
Accumulated
Amortization
|
|
Accumulated Impairment Loss
|
|
Net Carrying
Value as of
December 31, 2015
|
||||||||
Trademarks
|
15
|
|
$
|
7,100
|
|
|
$
|
(1,492
|
)
|
|
$
|
(4,179
|
)
|
|
$
|
1,429
|
|
Existing technology
|
13
|
|
12,600
|
|
|
(3,577
|
)
|
|
(4,328
|
)
|
|
4,695
|
|
||||
Customer relationships
|
11
|
|
33,500
|
|
|
(10,957
|
)
|
|
(10,751
|
)
|
|
11,792
|
|
||||
Patents
|
8
|
|
285
|
|
|
(113
|
)
|
|
—
|
|
|
172
|
|
||||
Total Intangible Assets
|
|
|
$
|
53,485
|
|
|
$
|
(16,139
|
)
|
|
$
|
(19,258
|
)
|
|
$
|
18,088
|
|
Fiscal Year
|
|
||
2017
|
$
|
3,355
|
|
2018
|
3,353
|
|
|
2019
|
3,346
|
|
|
2020
|
3,336
|
|
|
2021
|
3,334
|
|
|
Thereafter
|
4,230
|
|
|
Total
|
$
|
20,954
|
|
Fiscal Year
|
Operating Leases
|
||
2017
|
$
|
12,880
|
|
2018
|
10,338
|
|
|
2019
|
8,466
|
|
|
2020
|
6,849
|
|
|
2021
|
6,247
|
|
|
Thereafter
|
9,141
|
|
|
Total minimum lease payments
|
$
|
53,921
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of net revenues
|
$
|
3,966
|
|
|
$
|
3,938
|
|
|
$
|
3,616
|
|
Selling, general and administrative
|
42,612
|
|
|
40,813
|
|
|
29,625
|
|
|||
Research and development
|
7,570
|
|
|
8,192
|
|
|
6,582
|
|
|||
Total stock-based compensation
|
$
|
54,148
|
|
|
$
|
52,943
|
|
|
$
|
39,823
|
|
|
Stock Options
|
|||||||||||
|
Number of
Shares
Underlying
Stock Options
|
|
Weighted
Average
Exercise
Price per Share
|
|
Weighted Average
Remaining
Contractual Term
(in years )
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding as of December 31, 2015
|
496
|
|
|
15.14
|
|
|
|
|
|
|||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(274
|
)
|
|
15.33
|
|
|
|
|
|
|||
Cancelled or expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding as of December 31, 2016
|
222
|
|
|
$
|
14.90
|
|
|
1.12
|
|
$
|
18,058
|
|
Vested and expected to vest at December 31, 2016
|
222
|
|
|
$
|
14.90
|
|
|
1.12
|
|
$
|
18,058
|
|
Exercisable at December 31, 2016
|
222
|
|
|
$
|
14.90
|
|
|
1.12
|
|
$
|
18,058
|
|
|
Shares
Underlying RSUs
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted
Remaining
Vesting Period
(in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Nonvested as of December 31, 2015
|
2,079
|
|
|
$
|
49.45
|
|
|
|
|
|
||
Granted
|
714
|
|
|
67.82
|
|
|
|
|
|
|||
Vested and released
|
(859
|
)
|
|
45.45
|
|
|
|
|
|
|||
Forfeited
|
(145
|
)
|
|
53.36
|
|
|
|
|
|
|||
Nonvested as of December 31, 2016
|
1,789
|
|
|
$
|
58.39
|
|
|
1.12
|
|
$
|
171,934
|
|
|
Number of Shares
Underlying MSUs
(in thousands)
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average
Remaining
Vesting Period
(in years )
|
|
Aggregate
Intrinsic Value
(in thousands)
|
||||
Nonvested as of December 31, 2015
|
611
|
|
|
51.41
|
|
|
|
|
|
|
|
Granted
|
218
|
|
|
55.77
|
|
|
|
|
|
||
Vested and released
|
(270
|
)
|
|
36.73
|
|
|
|
|
|
||
Forfeited
|
(39
|
)
|
|
56.41
|
|
|
|
|
|
||
Nonvested as of December 31, 2016
|
520
|
|
|
60.49
|
|
|
1.1
|
|
$
|
50,021
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Expected term (in years)
|
3
|
|
|
3
|
|
|
3
|
|
|||
Expected volatility
|
34.0
|
%
|
|
36.9
|
%
|
|
46.0
|
%
|
|||
Risk-free interest rate
|
0.9
|
%
|
|
1.0
|
%
|
|
0.7
|
%
|
|||
Expected dividends
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average fair value per share at grant date
|
$
|
68.88
|
|
|
$
|
61.73
|
|
|
$
|
50.46
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Expected term (in years)
|
1.2
|
|
|
1.2
|
|
|
1.2
|
|
|||
Expected volatility
|
30.5
|
%
|
|
31.1
|
%
|
|
38.8
|
%
|
|||
Risk-free interest rate
|
0.7
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
|||
Expected dividends
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average fair value at grant date
|
$
|
22.23
|
|
|
$
|
16.19
|
|
|
$
|
17.15
|
|
|
Year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic
|
$
|
118,871
|
|
|
$
|
87,803
|
|
|
$
|
94,784
|
|
Foreign
|
123,695
|
|
|
98,298
|
|
|
95,585
|
|
|||
Net income before provision for income taxes and equity in losses of investee
|
$
|
242,566
|
|
|
$
|
186,101
|
|
|
$
|
190,369
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Federal
|
|
|
|
|
|
||||||
Current
|
$
|
40,235
|
|
|
$
|
28,596
|
|
|
$
|
1,569
|
|
Deferred
|
24,794
|
|
|
6,679
|
|
|
37,570
|
|
|||
|
65,029
|
|
|
35,275
|
|
|
39,139
|
|
|||
State
|
|
|
|
|
|
||||||
Current
|
2,603
|
|
|
3,271
|
|
|
2,162
|
|
|||
Deferred
|
2,636
|
|
|
(703
|
)
|
|
971
|
|
|||
|
5,239
|
|
|
2,568
|
|
|
3,133
|
|
|||
Foreign
|
|
|
|
|
|
||||||
Current
|
8,964
|
|
|
4,305
|
|
|
1,596
|
|
|||
Deferred
|
(28,032
|
)
|
|
(67
|
)
|
|
669
|
|
|||
|
(19,068
|
)
|
|
4,238
|
|
|
2,265
|
|
|||
Provision for income taxes
|
$
|
51,200
|
|
|
$
|
42,081
|
|
|
$
|
44,537
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
U.S. federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal tax benefit
|
2.1
|
|
|
1.5
|
|
|
1.6
|
|
Impact of differences in foreign tax rates
|
(6.3
|
)
|
|
(16.2
|
)
|
|
(16.4
|
)
|
Valuation allowance release for Israel
|
(12.9
|
)
|
|
—
|
|
|
—
|
|
Stock-based compensation
|
1.2
|
|
|
1.6
|
|
|
1.0
|
|
Other items not individually material
|
2.0
|
|
|
0.7
|
|
|
2.2
|
|
|
21.1
|
%
|
|
22.6
|
%
|
|
23.4
|
%
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss and capital loss carryforwards
|
$
|
25,445
|
|
|
$
|
31,247
|
|
Reserves and accruals
|
22,954
|
|
|
17,455
|
|
||
Stock-based compensation
|
16,399
|
|
|
16,523
|
|
||
Deferred revenue
|
13,975
|
|
|
24,432
|
|
||
Net translation losses
|
1,634
|
|
|
649
|
|
||
Credit carryforwards
|
679
|
|
|
1,932
|
|
||
|
81,086
|
|
|
92,238
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
12,034
|
|
|
8,555
|
|
||
Prepaid expenses
|
969
|
|
|
601
|
|
||
|
13,003
|
|
|
9,156
|
|
||
Net deferred tax assets before valuation allowance
|
68,083
|
|
|
83,082
|
|
||
Valuation allowance
|
(256
|
)
|
|
(31,685
|
)
|
||
Net deferred tax assets
|
$
|
67,827
|
|
|
$
|
51,397
|
|
Unrecognized tax benefit as of December 31, 2013
|
$
|
26,668
|
|
Tax positions related to current year:
|
|
||
Additions for uncertain tax positions
|
6,659
|
|
|
Tax positions related to prior year:
|
|
||
Reductions for uncertain tax positions
|
(260
|
)
|
|
Unrecognized tax benefit as of December 31, 2014
|
33,067
|
|
|
Tax positions related to current year:
|
|
||
Additions for uncertain tax positions
|
6,346
|
|
|
Unrecognized tax benefit as of December 31, 2015
|
39,413
|
|
|
Tax positions related to current year:
|
|
||
Additions for uncertain tax positions
|
6,971
|
|
|
Unrecognized tax benefit as of December 31, 2016
|
$
|
46,384
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
189,682
|
|
|
$
|
144,020
|
|
|
$
|
145,832
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding, basic
|
79,856
|
|
|
79,998
|
|
|
80,754
|
|
|||
Dilutive effect of potential common stock
|
1,628
|
|
|
1,523
|
|
|
1,529
|
|
|||
Total shares, diluted
|
81,484
|
|
|
81,521
|
|
|
82,283
|
|
|||
Net income per share, basic
|
$
|
2.38
|
|
|
$
|
1.80
|
|
|
$
|
1.81
|
|
Net income per share, diluted
|
$
|
2.33
|
|
|
$
|
1.77
|
|
|
$
|
1.77
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Taxes paid
|
$
|
47,289
|
|
|
$
|
40,621
|
|
|
$
|
5,666
|
|
Non-cash investing activities:
|
|
|
|
|
|
||||||
Fixed assets acquired with accounts payable or accrued liabilities
|
$
|
4,434
|
|
|
$
|
14,636
|
|
|
$
|
4,899
|
|
•
|
Our Clear Aligner segment consists of our Invisalign System which includes Invisalign Full, Express/Lite, Teen, Assist, Vivera Retainers, along with our training and ancillary products for treating malocclusion. Clear Aligner segment also include the sale of aligners to SDC under our supply agreement which commenced in the fourth quarter of 2016. SDC revenue is recorded after eliminating outstanding intercompany transactions.
|
•
|
Our Scanner and Services ("Scanner") segment consists of intraoral scanning systems and additional services available with the intraoral scanners that provide digital alternatives to the traditional cast models. This segment includes our iTero scanner and OrthoCAD services.
|
|
For the Year Ended December 31,
|
||||||||||
Net Revenues
|
2016
|
|
2015
|
|
2014
|
||||||
Clear Aligner
|
$
|
958,327
|
|
|
$
|
800,186
|
|
|
$
|
712,549
|
|
Scanner
|
121,547
|
|
|
45,300
|
|
|
49,104
|
|
|||
Total net revenues
|
$
|
1,079,874
|
|
|
$
|
845,486
|
|
|
$
|
761,653
|
|
Gross Profit
|
|
|
|
|
|
||||||
Clear Aligner
|
$
|
747,494
|
|
|
$
|
628,187
|
|
|
$
|
562,889
|
|
Scanner
|
67,800
|
|
|
11,923
|
|
|
15,554
|
|
|||
Total gross profit
|
$
|
815,294
|
|
|
$
|
640,110
|
|
|
$
|
578,443
|
|
Income from Operations
|
|
|
|
|
|
||||||
Clear Aligner
|
$
|
411,817
|
|
|
$
|
371,113
|
|
|
$
|
341,055
|
|
Scanner
|
37,498
|
|
|
(12,337
|
)
|
|
(8,483
|
)
|
|||
Unallocated corporate expenses
|
(200,394
|
)
|
|
(170,142
|
)
|
|
(138,996
|
)
|
|||
Total income from operations
|
$
|
248,921
|
|
|
$
|
188,634
|
|
|
$
|
193,576
|
|
Depreciation and Amortization
|
|
|
|
|
|
||||||
Clear Aligner
|
$
|
13,742
|
|
|
$
|
9,842
|
|
|
$
|
8,706
|
|
Scanner
|
3,871
|
|
|
3,839
|
|
|
4,498
|
|
|||
Unallocated corporate expenses
|
6,389
|
|
|
4,323
|
|
|
4,652
|
|
|||
Total depreciation and amortization
|
$
|
24,002
|
|
|
$
|
18,004
|
|
|
$
|
17,856
|
|
|
For the Year Ended December 31,
|
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
|
||||||
Total segment income from operations
|
$
|
449,315
|
|
|
$
|
358,776
|
|
|
$
|
332,572
|
|
|
Unallocated corporate expenses
|
(200,394
|
)
|
|
(170,142
|
)
|
|
(138,996
|
)
|
|
|||
Total income from operations
|
248,921
|
|
|
188,634
|
|
|
193,576
|
|
|
|||
Interest and other income (expense), net
|
(6,355
|
)
|
|
(2,533
|
)
|
|
(3,207
|
)
|
|
|||
Net income before provision for income taxes and equity losses of investee
|
$
|
242,566
|
|
|
$
|
186,101
|
|
|
$
|
190,369
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net revenues
(1)
:
|
|
|
|
|
|
||||||
United States
(2)
|
$
|
692,254
|
|
|
$
|
585,874
|
|
|
$
|
532,569
|
|
The Netherlands
(2)
|
291,053
|
|
|
167,128
|
|
|
156,817
|
|
|||
Other International
|
96,567
|
|
|
92,484
|
|
|
72,267
|
|
|||
Total net revenues
|
$
|
1,079,874
|
|
|
$
|
845,486
|
|
|
$
|
761,653
|
|
(1)
|
Net revenues are attributed to countries based on location of where revenue is recognized.
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Long-lived assets
(1)
:
|
|
|
|
||||
The Netherlands
(2)
|
$
|
111,515
|
|
|
$
|
486
|
|
United States
(2)
|
43,278
|
|
|
112,632
|
|
||
Mexico
|
17,918
|
|
|
15,422
|
|
||
Other International
|
2,456
|
|
|
7,933
|
|
||
Total long-lived assets
|
$
|
175,167
|
|
|
$
|
136,473
|
|
Plan Category
|
Number of securities
to be issued upon exercise
of outstanding options
and restricted stock
units(a)
|
|
Weighted average
exercise price of
outstanding
options(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column(a))
|
|
||||
Equity compensation plans approved by security holders
|
2,531,027
|
|
1
|
$
|
14.90
|
|
|
9,454,960
|
|
2, 3
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
2,531,027
|
|
|
$
|
14.90
|
|
|
9,454,960
|
|
|
1
|
Includes 1,788,372 restricted stock units and 520,350 market-performance based restricted stock units at target, which have an exercise price of zero.
|
2
|
Includes 936,867 shares available for issuance under our ESPP. We are unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights or the weighted average exercise price of outstanding rights under the ESPP.
|
3
|
Excludes 494,333 of potentially issuable MSUs if performance targets are achieved at maximum payout.
|
(a)
|
Financial Statements
|
1.
|
Consolidated financial statements
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Operations for the year ended December 31, 2016, 2015 and 2014
|
|
Consolidated Statements of Comprehensive Income for the year ended December 31, 2016, 2015 and 2014
|
|
Consolidated Balance Sheets as of December 31, 2016 and 2015
|
|
Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2016, 2015 and 2014
|
|
Consolidated Statements of Cash Flows for the year ended December 31, 2016, 2015 and 2014
|
|
Notes to Consolidated Financial Statements
|
2.
|
The following financial statement schedule is filed as part of this Annual Report on Form 10-K:
|
|
Balance at
Beginning
of Period
|
|
Additions
(Reductions)
to Costs
and
Expenses
|
|
Write
Offs
|
|
Balance at
End of Period
|
||||||||
|
(in thousands)
|
||||||||||||||
Allowance for doubtful accounts and returns:
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2014
|
$
|
1,733
|
|
|
$
|
6,563
|
|
|
$
|
(6,733
|
)
|
|
$
|
1,563
|
|
Year ended December 31, 2015
|
$
|
1,563
|
|
|
$
|
8,944
|
|
|
$
|
(8,035
|
)
|
|
$
|
2,472
|
|
Year ended December 31, 2016
|
$
|
2,472
|
|
|
$
|
8,585
|
|
|
$
|
(6,747
|
)
|
|
$
|
4,310
|
|
Valuation allowance for deferred tax assets:
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2014
|
$
|
35,108
|
|
|
$
|
(1,793
|
)
|
|
$
|
(817
|
)
|
|
$
|
32,498
|
|
Year ended December 31, 2015
|
$
|
32,498
|
|
|
$
|
(813
|
)
|
|
$
|
—
|
|
|
$
|
31,685
|
|
Year ended December 31, 2016
|
$
|
31,685
|
|
|
$
|
(31,429
|
)
|
|
$
|
—
|
|
|
$
|
256
|
|
(b)
|
The following Exhibits are included in this Annual Report on Form 10-K:
|
Exhibit
Number |
Description
|
Form
|
Date
|
Exhibit
Number Incorporated by Reference herein |
|
Filed
herewith |
3.1
|
Amended and Restated Certificate of Incorporation of registrant
|
Form S-1, as amended (File No. 333-49932)
|
12/28/2000
|
3.1
|
|
|
3.2
|
Amended and Restated Bylaws of registrant
|
Form 8-K
|
2/29/2012
|
3.2
|
|
|
3.3
|
Certificate of Designations of Rights, Preferences and Privileges of Series A Participating Preferred Stock registrant
|
Form 8-K
|
10/27/2005
|
3.1
|
|
|
4.1
|
Form of Specimen Common Stock Certificate
|
Form S-1, as amended (File No. 333-49932)
|
1/17/2001
|
4.1
|
|
|
10.1†
|
Registrant's 2005 Incentive Plan (as amended May 2016)
|
|
|
|
|
*
|
10.2†
|
Form of RSU agreement under Registrant's 2005 Incentive Plan (Officer Form for officers appointed after September 2016)
|
|
|
|
|
*
|
10.2A†
|
Form of RSU agreement under Registrant's 2005 Incentive Plan (Officer Form for officers appointed prior to September 2016)
|
|
|
|
|
*
|
10.3
|
Align’s 2010 Employee Stock Purchase Plan
|
Form 8-K
|
5/25/2010
|
10.2
|
|
|
10.4†
|
Form of Indemnification Agreement by and between registrant and its Board of Directors and its executive officers
|
Form S-1 as amended (File No. 333-49932)
|
1/17/2001
|
10.15
|
|
|
10.5†
|
Form of restricted stock unit award agreement under registrant’s 2005 Incentive Plan (General Form; Director Form)
|
Form 10-Q
|
11/5/2007
|
10.1A,
10.1C |
|
|
10.6†
|
Form of option award agreement under registrant’s 2005 Incentive Plan
|
Form 10-Q
|
8/4/2005
|
10.4
|
|
|
10.7†
|
Form of Employment Agreement entered into by and between registrant and each executive officer (other than CEO for executives appointed prior to September 2016)
|
Form 10-Q
|
5/8/2008
|
10.2
|
|
|
10.8†
|
Form of Employment entered into by and between registrant and each executive officer (other than CEO for executives appointed after September 2016)
|
|
|
|
|
*
|
10.9
|
Credit Agreement dated March 22, 2013 between registrant and Wells Fargo National Association
|
Form 8-K
|
3/27/2013
|
10.1
|
|
|
10.10†
|
Summary of 2016 Incentive Awards and Base Salaries
|
Form 8-K
|
2/6/2017
|
|
|
|
10.11†
|
Form of Market Stock Unit Agreement (officer)
|
Form 8-K
|
2/23/2011
|
10.1
|
|
|
10.12†
|
Form of Market Stock Unit Agreement (CEO)
|
Form 8-K
|
2/23/2011
|
10.2
|
|
|
10.13†
|
Description of Executive Officer Incentive Plan
|
Form 8-K
|
2/23/2011
|
Item 5.02
|
|
|
10.14
|
Fixed Dollar Accelerated Repurchase Transaction Agreement dated May 3, 2016 between Morgan Stanley & Co and registrant
|
Form 10-Q
|
8/4/2016
|
10.1
|
|
|
10.15†
|
Amended and Restated Chief Executive Officer Employment Agreement between Align Technology, Inc. and Joseph Hogan
|
Form 10-Q
|
5/1/2015
|
10.30
|
|
|
Exhibit
Number |
Description
|
Form
|
Date
|
Exhibit
Number Incorporated by Reference herein |
|
Filed
herewith |
10.16†
|
2005 Incentive Plan Notice of Grant of Restricted Stock units (Chief Executive Officer)
|
Form 10-Q
|
7/30/2015
|
10.31
|
|
|
10.17†
|
Amended and Restated 2005 Incentive Plan Notice of Grant of Market Stock Units (Chief Executive Officer)
|
Form 10-Q
|
7/30/2015
|
10.34
|
|
|
10.18†
|
Employment Agreement between registrant and John Morici
|
Form 10-Q
|
11/8/2016
|
10.2
|
|
|
10.19
|
Purchase and Sale Agreement between registrant and LBA RIV-Company XXX, LLC dated December 19, 2016
|
Form 8-K
|
12/23/2016
|
10.1
|
|
|
10.20
|
Class C Non-Incentive Unit Purchase Agreement dated July 25, 2016
|
Form 8-K
|
7/28/2016
|
10.1
|
|
|
10.30
|
Fifth Amendment to Credit Agreement
|
Form 8-K
|
2/13/2017
|
10.1
|
|
|
21.1
|
Subsidiaries of Align Technology, Inc.
|
|
|
|
|
*
|
23.1
|
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
*
|
31.1
|
Certifications of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2003
|
|
|
|
|
*
|
31.2
|
Certifications of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2003
|
|
|
|
|
*
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2003
|
|
|
|
|
*
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
*
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
*
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
*
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
*
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
*
|
†
|
Management contract or compensatory plan or arrangement filed as an Exhibit to this form pursuant to Items 14(a) and 14(c) of Form 10-K.
|
††
|
Portions of the exhibit have been omitted pursuant to a request for confidential treatment. The confidential portions have been filed with the SEC.
|
|
|
ALIGN TECHNOLOGY, INC.
|
|
|
|
By:
|
/
S
/ JOSEPH M. HOGAN
|
|
Joseph M. Hogan
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/S/ JOSEPH M. HOGAN
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
February 28, 2017
|
Joseph M. Hogan
|
|
|
||
|
|
|
|
|
/S/ JOHN F. MORICI
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 28, 2017
|
John F. Morici
|
|
|
||
|
|
|
|
|
/S/ JOSEPH LACOB
|
|
Director
|
|
February 28, 2017
|
Joseph Lacob
|
|
|
||
|
|
|
|
|
/S/ C. RAYMOND LARKIN
|
|
Director
|
|
February 28, 2017
|
C. Raymond Larkin
|
|
|
||
|
|
|
|
|
/S/ GEORGE J. MORROW
|
|
Director
|
|
February 28, 2017
|
George J. Morrow
|
|
|
||
|
|
|
|
|
|
|
|
|
|
/S/ ANDREA L. SAIA
|
|
Director
|
|
February 28, 2017
|
Andrea L. Saia
|
|
|
||
|
|
|
|
|
/S/ GREG J. SANTORA
|
|
Director
|
|
February 28, 2017
|
Greg J. Santora
|
|
|
||
|
|
|
|
|
/S/ THOMAS M. PRESCOTT
|
|
Director
|
|
February 28, 2017
|
Thomas M. Prescott
|
|
|
||
|
|
|
|
|
/S/ WARREN S. THALER
|
|
Director
|
|
February 28, 2017
|
Warren S. Thaler
|
|
|
|
|
Exhibit
Number |
Description
|
Form
|
Date
|
Exhibit
Number Incorporated by reference herein |
|
Filed
herewith |
3.1
|
Amended and Restated Certificate of Incorporation of registrant
|
Form S-1, as amended (File No. 333-49932)
|
12/28/2000
|
3.1
|
|
|
3.2
|
Amended and Restated Bylaws of registrant
|
Form 8-K
|
2/29/2012
|
3.2
|
|
|
3.3
|
Certificate of Designations of Rights, Preferences and Privileges of Series A Participating Preferred Stock registrant
|
Form 8-K
|
10/27/2005
|
3.1
|
|
|
4.1
|
Form of Specimen Common Stock Certificate
|
Form S-1, as amended (File No. 333-49932)
|
1/17/2001
|
4.1
|
|
|
10.1†
|
Registrant's 2005 Incentive Plan (as amended May 2016)
|
|
|
|
|
*
|
10.2†
|
Form of RSU agreement under Registrant's 2005 Incentive Plan (Officer Form for officers appointed after September 2016)
|
|
|
|
|
*
|
10.2A†
|
Form of RSU agreement under Registrant's 2005 Incentive Plan (Officer Form for officers appointed prior to September 2016)
|
|
|
|
|
*
|
10.3
|
Align’s 2010 Employee Stock Purchase Plan
|
Form 8-K
|
5/25/2010
|
10.2
|
|
|
10.4†
|
Form of Indemnification Agreement by and between registrant and its Board of Directors and its executive officers
|
Form S-1 as amended (File No. 333-49932)
|
1/17/2001
|
10.15
|
|
|
10.5†
|
Form of restricted stock unit award agreement under registrant’s 2005 Incentive Plan (General Form; Director Form)
|
Form 10-Q
|
11/5/2007
|
10.1A,
10.1C |
|
|
10.6†
|
Form of option award agreement under registrant’s 2005 Incentive Plan
|
Form 10-Q
|
8/4/2005
|
10.40
|
|
|
10.7†
|
Form of Employment Agreement entered into by and between registrant and each executive officer (other than CEO for executives appointed prior to September 2016)
|
Form 10-Q
|
5/8/2008
|
10.2
|
|
|
10.8†
|
Form of Employment entered into by and between registrant and each executive officer (other than CEO for executives appointed after September 2016)
|
|
|
|
|
*
|
10.9
|
Credit Agreement dated March 22, 2013 between registrant and Wells Fargo National Association
|
Form 8-K
|
3/27/2013
|
10.10
|
|
|
10.10†
|
Summary of 2016 Incentive Awards and Base Salaries
|
Form 8-K
|
2/6/2017
|
|
|
|
10.11†
|
Form of Market Stock Unit Agreement (officer)
|
Form 8-K
|
2/23/2011
|
10.1
|
|
|
10.12†
|
Form of Market Stock Unit Agreement (CEO)
|
Form 8-K
|
2/23/2011
|
10.2
|
|
|
10.13†
|
Description of Executive Officer Incentive Plan
|
Form 8-K
|
2/23/2011
|
Item 5.02
|
|
|
10.14
|
Fixed Dollar Accelerated Repurchase Transaction Agreement dated May 3, 2016 between Morgan Stanley & Co and registrant
|
Form 10-Q
|
8/4/2016
|
10.1
|
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10.15†
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Amended and Restated Chief Executive Officer Employment Agreement between Align Technology, Inc. and Joseph Hogan
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Form 10-Q
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5/1/2015
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10.3
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10.16†
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2005 Incentive Plan Notice of Grant of Restricted Stock units (Chief Executive Officer)
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Form 10-Q
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7/30/2015
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10.3
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Exhibit
Number |
Description
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Form
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Date
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Exhibit
Number Incorporated by reference herein |
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Filed
herewith |
10.17†
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Amended and Restated 2005 Incentive Plan Notice of Grant of Market Stock Units (Chief Executive Officer)
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Form 10-Q
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7/30/2015
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10.3
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10.18†
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Employment Agreement between registrant and John Morici
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Form 10-Q
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11/8/2016
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10.2
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10.19
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Purchase and Sale Agreement between registrant and LBA RIV-Company XXX, LLC dated December 19, 2016
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Form 8-K
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12/23/2016
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10.1
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10.20
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Class C Non-Incentive Unit Purchase Agreement dated July 25, 2016
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Form 8-K
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7/28/2016
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10.1
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10.30
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Fifth Amendment to Credit Agreement
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Form 8-K
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2/13/2017
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10.1
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21.1
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Subsidiaries of Align Technology, Inc.
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*
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23.1
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Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
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*
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31.1
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Certifications of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2003
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*
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31.2
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Certifications of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2003
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*
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32
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2003
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*
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101.INS
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XBRL Instance Document
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*
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101.SCH
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XBRL Taxonomy Extension Schema Document
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*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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*
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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*
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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*
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†
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Management contract or compensatory plan or arrangement filed as an Exhibit to this form pursuant to Items 14(a) and 14(c) of Form 10-K.
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††
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Portions of the exhibit have been omitted pursuant to a request for confidential treatment. The confidential portions have been filed with the SEC.
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•
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Award Number:
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•
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Date of Grant:
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•
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Vesting Commencement Date:
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•
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Total Number of Restricted Stock Units:
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•
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the Award shall terminate and expire on
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PARTICIPANT:
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Signature
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Print Name
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ALIGN TECHNOLOGY INC.
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/S/ Joseph Hogan
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By: Joseph Hogan
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President and Chief Executive Officer
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TO:
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ALIGN TECHNOLOGY, INC.
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SUBJECT:
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Previous Inventions
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Entity
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Align Tech De Costa Rica, Costa Rica
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Align Technology, B.V., Netherlands
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Aligntech de Mexico, S. de, Mexico
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Align Technology, Inc., Delaware
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Align Tech (Shanghai), China
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Malocclusion C.V., Netherlands
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1.
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I have reviewed this annual report on Form 10-K of Align Technology, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(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 annual report is being prepared;
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(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)
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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)
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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
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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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
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(b)
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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.
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/
S
/ JOSEPH M. HOGAN
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Joseph M. Hogan
President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Align Technology, Inc.;
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2.
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Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(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 annual report is being prepared;
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(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)
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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)
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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
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5.
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The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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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
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(b)
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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.
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/
S
/ JOHN F. MORICI
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John F. Morici
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Chief Financial Officer
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By:
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/S/ JOSEPH M. HOGAN
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Date: February 28, 2017
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Name:
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Joseph M. Hogan
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Title:
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President and Chief Executive Officer
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By:
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/
S
/ JOHN F. MORICI
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Date: February 28, 2017
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Name:
|
John F. Morici
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Title:
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Chief Financial Officer
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