Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 27, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | CEPHEID | |
Entity Central Index Key | 1,037,760 | |
Trading Symbol | CPHD | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 73,007,168 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 115,718 | $ 112,568 |
Short-term investments | 253,457 | 210,147 |
Accounts receivable, less allowance for doubtful accounts of $446 as of September 30, 2016 and $383 as of December 31, 2015 | 81,910 | 66,550 |
Inventory, net | 155,720 | 148,690 |
Prepaid expenses and other current assets | 23,056 | 18,515 |
Total current assets | 629,861 | 556,470 |
Property and equipment, net | 151,227 | 127,639 |
Investments | 0 | 62,175 |
Other non-current assets | 5,632 | 4,205 |
Intangible assets, net | 20,956 | 25,241 |
Goodwill | 39,681 | 39,681 |
Total assets | 847,357 | 815,411 |
Current liabilities: | ||
Accounts payable | 56,046 | 57,771 |
Accrued compensation | 36,863 | 39,015 |
Accrued royalties | 4,309 | 5,469 |
Accrued and other liabilities | 30,919 | 27,451 |
Current portion of deferred revenue | 18,338 | 12,778 |
Total current liabilities | 146,475 | 142,484 |
Long-term portion of deferred revenue | 10,614 | 5,538 |
Convertible senior notes, net | 289,758 | 281,627 |
Other liabilities | 19,864 | 15,779 |
Total liabilities | 466,711 | 445,428 |
Commitments and contingencies (Note 8) | ||
Shareholders’ equity: | ||
Preferred stock, no par value; 5,000,000 shares authorized, none issued or outstanding | 0 | 0 |
Common stock, no par value; 150,000,000 shares authorized, 73,281,941 and 72,415,317 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 458,939 | 449,704 |
Additional paid-in capital | 292,763 | 263,429 |
Accumulated other comprehensive loss, net | (1,074) | (908) |
Accumulated deficit | (369,982) | (342,242) |
Total shareholders’ equity | 380,646 | 369,983 |
Total liabilities and shareholders’ equity | $ 847,357 | $ 815,411 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 446 | $ 383 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 73,281,941 | 72,415,317 |
Common stock, shares outstanding (in shares) | 73,281,941 | 72,415,317 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 158,488 | $ 126,465 | $ 449,269 | $ 391,577 |
Costs and operating expenses: | ||||
Cost of sales | 83,390 | 67,681 | 229,220 | 198,259 |
Collaboration profit sharing | 2,915 | 1,286 | 4,857 | 3,879 |
Research and development | 29,912 | 32,909 | 93,418 | 84,987 |
Sales and marketing | 29,302 | 28,664 | 87,971 | 82,678 |
General and administrative | 18,688 | 15,401 | 49,161 | 47,395 |
Total costs and operating expenses | 164,207 | 145,941 | 464,627 | 417,198 |
Loss from operations | (5,719) | (19,476) | (15,358) | (25,621) |
Other income (expense): | ||||
Interest income | 873 | 494 | 2,332 | 1,283 |
Interest expense | (3,856) | (3,687) | (11,433) | (10,937) |
Foreign currency exchange loss and other, net | (1,012) | (408) | (1,242) | (2,848) |
Other expense, net | (3,995) | (3,601) | (10,343) | (12,502) |
Loss before income taxes | (9,714) | (23,077) | (25,701) | (38,123) |
(Provision for) benefit from income taxes | (1,193) | 176 | (2,039) | (602) |
Net loss | $ (10,907) | $ (22,901) | $ (27,740) | $ (38,725) |
Basic net loss per share (in dollars per share) | $ (0.15) | $ (0.32) | $ (0.38) | $ (0.54) |
Diluted net loss per share (in dollars per share) | $ (0.15) | $ (0.32) | $ (0.38) | $ (0.54) |
Shares used in computing basic net loss per share (in shares) | 73,158 | 72,199 | 72,890 | 71,777 |
Shares used in computing diluted net loss per share (in shares) | 73,158 | 72,199 | 72,890 | 71,777 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (10,907) | $ (22,901) | $ (27,740) | $ (38,725) |
Change in unrealized gains and losses related to cash flow hedges: | ||||
Loss recognized in accumulated other comprehensive loss, net | (1,804) | (545) | (1,949) | (1,596) |
Loss reclassified from accumulated other comprehensive loss, net to the statement of operations | 320 | 369 | 1,006 | 414 |
Change in unrealized gains and losses related to available-for-sale investments: | ||||
Gain (loss) recognized in accumulated other comprehensive loss, net | (86) | (148) | 735 | (5) |
Gain (loss) reclassified from accumulated other comprehensive loss, net to the statement of operations | 52 | 0 | 42 | (3) |
Other comprehensive loss, before tax | (1,518) | (324) | (166) | (1,190) |
Income tax benefit (expense) related to items of accumulated other comprehensive loss, net | 497 | 0 | 0 | 100 |
Comprehensive loss | $ (11,928) | $ (23,225) | $ (27,906) | $ (39,815) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (27,740) | $ (38,725) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 24,092 | 20,170 |
Amortization of intangible assets | 4,286 | 4,814 |
Unrealized foreign exchange differences | (757) | 2,242 |
Amortization of debt discount and transaction costs | 8,130 | 7,627 |
Asset Impairment Charges | 1,286 | 224 |
Stock-based compensation expense | 29,546 | 25,752 |
Excess tax benefits from stock-based compensation expense | 0 | (53) |
Other non-cash items | 634 | 254 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (15,360) | 8,426 |
Inventory, net | (7,243) | (11,733) |
Prepaid expenses and other current assets | (3,693) | (9,691) |
Other non-current assets | (57) | (801) |
Accounts payable and other current and non-current liabilities | 3,877 | 12,297 |
Accrued compensation | (2,152) | (511) |
Deferred revenue | 10,634 | (795) |
Net cash provided by operating activities | 25,483 | 19,497 |
Cash flows from investing activities: | ||
Capital expenditures | (49,244) | (29,087) |
Cost of acquisitions, net | 0 | (3,000) |
Proceeds from sale of equipment and an intangible asset | 44 | 834 |
Proceeds from sales of marketable securities and investments | 86,310 | 49,173 |
Proceeds from maturities of marketable securities and investments | 177,479 | 175,272 |
Purchases of marketable securities and investments | (244,495) | (198,701) |
Transfer from (to) restricted cash | (2,335) | 1,792 |
Net cash used in investing activities | (32,241) | (3,717) |
Cash flows from financing activities: | ||
Net proceeds from the issuance of common shares and exercise of stock options | 9,288 | 26,444 |
Excess tax benefits from stock-based compensation expense | 0 | 53 |
Principal payment of notes payable | (128) | (121) |
Net cash provided by financing activities | 9,160 | 26,376 |
Effect of foreign exchange rate change on cash and cash equivalents | 748 | (2,332) |
Net increase in cash and cash equivalents | 3,150 | 39,824 |
Cash and cash equivalents at beginning of period | 112,568 | 96,663 |
Cash and cash equivalents at end of period | $ 115,718 | $ 136,487 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Organization and Basis of Presentation Cepheid (the “Company”) was incorporated in the State of California on March 4, 1996. The Company is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for diagnostic testing. The Company’s systems enable fast, sophisticated molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. Proposed Transaction with Danaher Corporation On September 2, 2016, Cepheid entered into a Merger Agreement (the "Merger Agreement") with Danaher Corporation (“Danaher”) pursuant to which Danaher has agreed to acquire Cepheid for $53.00 per share in an all-cash transaction valued at approximately $4.0 billion, inclusive of the Company's net cash (the "Merger"). The transaction is expected to close in the fourth quarter of fiscal 2016, subject to certain conditions, including shareholder approval and other customary closing conditions. Cepheid incurred transaction-related costs of $2.6 million during the three months ended September 30, 2016 in connection with the Merger and expect to incur additional costs related to the Merger during the fourth quarter of fiscal 2016 if the transaction is successfully completed. For additional information related to the Merger and the Merger Agreement, please refer to Cepheid’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on September 6, 2016 and the Definitive Proxy Statement on Schedule 14A filed with the SEC on October 7, 2016. The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement included as Exhibit 2.1 to Cepheid’s Current Report on Form 8-K filed September 6, 2016. Upon completion of the Merger, shares of Cepheid common stock will cease trading on The Nasdaq Global Select Market. Other than transaction expenses associated with the proposed Merger of $2.6 million, which were recorded to general and administrative expense in the Condensed Consolidated Statement of Operations, for the three and nine months ended September 30, 2016, the terms of the Merger Agreement did not impact the Company's Condensed Consolidated Financial Statements. Basis of Presentation The Condensed Consolidated Balance Sheet at September 30, 2016 , the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 , the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2016 and 2015 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 are unaudited. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments that management considers necessary for a fair presentation of the Company’s financial position at such dates, and the operating results and cash flows for those periods. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. The results of operations for such periods are not necessarily indicative of the results expected for the remainder of 2016 or for any future period. The Condensed Consolidated Balance Sheet as of December 31, 2015 is derived from audited consolidated financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 . Functional Currency The U.S. dollar is the functional currency of all of the Company’s subsidiaries. The Company remeasures its foreign subsidiaries’ monetary assets and liabilities to the U.S. dollar and records the net gains or losses resulting from remeasurement in “Foreign currency exchange loss and other, net” in the consolidated statements of operations. Use of Estimates The preparation of condensed consolidated financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates. Cash, Cash Equivalents, Short-Term Investments and Non-Current Investments Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company’s marketable debt securities have been classified and accounted for as available-for-sale. The Company determines the appropriate classification of its investments at the time of purchase and re-evaluates the designations at each balance sheet date. The Company classifies its marketable debt securities as cash equivalents, short-term investments or non-current investments based on each instrument’s underlying effective maturity date. All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Marketable debt securities with effective maturities of 12 months or less are classified as short-term, and marketable debt securities with effective maturities greater than 12 months are classified as non-current. All unrealized gains and losses associated with our investments were reported within accumulated other comprehensive loss, a component of shareholders’ equity. The cost of securities sold is based upon the specific identification method. Interest income includes interest, dividends, amortization of purchase premiums and discounts and realized gains and losses on sales of securities. The Company assesses whether an other-than-temporary impairment loss on its investments has occurred due to declines in fair value or other market conditions. With respect to the Company’s debt securities, this assessment takes into account the severity and duration of the decline in value, the Company’s intent to sell the security, whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and whether or not the Company expects to recover the entire amortized cost basis of the security (that is, a credit loss exists). See Note 3, “Investments”, for information and related disclosures regarding the Company’s investments. Restricted Cash Prepaid expense and other current assets included $3.7 million and $2.7 million of restricted cash as of September 30, 2016 and December 31, 2015 , respectively and other non-current assets included $3.4 million and $2.1 million of restricted cash as of September 30, 2016 and December 31, 2015 , respectively. The majority of this restricted cash is held as security for bank guarantees provided to a foreign customer contract. The Company is required to maintain such guarantees until its contractual obligations are satisfied under the contract. Concentration of Credit Risks and Other Uncertainties The carrying amounts for financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to their short maturities. Derivative instruments and investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s derivative instruments consist of large financial institutions of high credit standing. The Company’s main financial institution for banking operations held 65% and 66% of the Company’s cash and cash equivalents as of September 30, 2016 and December 31, 2015 , respectively. The Company’s accounts receivable are derived from sales to customers and distributors. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has not experienced significant losses to date. There was one direct customer whose accounts receivable balance represented 11% of total accounts receivable as of December 31, 2015 . No direct customer represented more than 10% of total accounts receivable as of September 30, 2016 . See Note 10, “Segment and Significant Concentrations,” for disclosure regarding total sales to direct customers and single countries. Inventory, net Inventory is stated at the lower of standard cost (which approximates actual cost) or market value, with cost determined on the first-in-first-out method. The allocation of production overhead to inventory costs is based on normal production capacity. Abnormal amounts of idle facility expense, freight, handling costs, and spoilage are expensed as incurred, and not included in overhead. The Company maintains provisions for excess and obsolete inventory based on management’s estimates of forecasted demand and, where applicable, product expiration. The components of inventories were as follows (in thousands): September 30, 2016 December 31, 2015 Raw Materials $ 44,108 $ 39,267 Work in Process 66,097 62,153 Finished Goods 45,515 47,270 Inventory, net $ 155,720 $ 148,690 In addition, capitalized stock-based compensation expense of $2.3 million and $2.5 million were included in inventory as of September 30, 2016 and December 31, 2015 , respectively. Revenue Recognition The Company recognizes revenue from sales when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. No right of return exists for the Company’s products except in the case of damaged goods. The Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of sales. In those cases where the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue. The Company sells service contracts for which revenue is deferred and recognized ratably over the contract period. The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. In situations with multiple deliverables, revenue is recognized upon the delivery of the separate elements. For multiple element arrangements, the total consideration for an arrangement is allocated among the separate elements in the arrangement based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on: (1) vendor specific objective evidence (“VSOE”), if available; (2) third party evidence of selling price if VSOE is not available; or (3) an estimated selling price, if neither VSOE nor third party evidence is available. Estimated selling price is the Company's best estimate of the selling price of an element in a transaction. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services or other future performance obligations. For sales that include customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. The Company may place an instrument at a customer site under a reagent rental agreement ("reagent rental"). Under a reagent rental, the Company retains title to the instrument and earns revenue for the usage of the instrument and related maintenance services through the amount charged for reagents and other disposables. Under a reagent rental, a customer may commit to purchasing minimum quantities of reagents at stated prices over a defined contract term, which is typically between three and five years. Revenue is recognized over the term of a reagent rental as reagents and other disposables are shipped and all other revenue recognition criteria have been met. All revenue recognized from reagent rentals is included in reagent and disposable sales in Note 10, “Segment and Significant Concentrations”. Revenue includes fees for research and development services earned under grants and collaboration agreements, which are recognized on a contract-specific basis. Revenue and profit under cost-plus service contracts are recognized as costs are incurred plus negotiated fees. For certain contracts, the Company utilizes the proportional performance method of revenue recognition, which requires that the Company estimate the total amount of costs to be expended for a project and recognize revenue equal to the portion of costs incurred to date. The Company exercises judgment when estimating the level of effort required to complete a project. The estimated total costs to complete a project are subject to revision from time-to-time. Earnings Per Share Basic earnings per share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options, employee stock purchases, restricted stock awards, restricted stock units and shares issuable upon a potential conversion of the convertible senior notes, using the treasury stock method. In loss periods, the earnings per share calculation excludes all common equivalent shares because their inclusion would be antidilutive. Antidilutive common equivalent shares totaled 10,439,000 and 9,007,000 for the three months ended September 30, 2016 and 2015 , respectively, and 11,361,000 and 8,771,000 for the nine months ended September 30, 2016 and 2015 , respectively. The following summarizes the computation of basic and diluted net loss per share (in thousands, except for per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Basic: Net loss $ (10,907 ) $ (22,901 ) $ (27,740 ) $ (38,725 ) Basic weighted shares outstanding 73,158 72,199 72,890 71,777 Net loss per share $ (0.15 ) $ (0.32 ) $ (0.38 ) $ (0.54 ) Diluted: Net loss $ (10,907 ) $ (22,901 ) $ (27,740 ) $ (38,725 ) Basic weighted shares outstanding 73,158 72,199 72,890 71,777 Effect of dilutive securities: Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes — — — — Diluted weighted shares outstanding 73,158 72,199 72,890 71,777 Net loss per share $ (0.15 ) $ (0.32 ) $ (0.38 ) $ (0.54 ) Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB") issued Accounting Standards Update (“ASU") No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This ASU addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash flow, and other Topics. The requirements of this ASU are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company is currently assessing the impact of this ASU on its financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. The requirements of this ASU are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of this ASU on its financial statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include – the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2016. The Company is currently assessing the impact of this ASU on its financial statements. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarified the implementation guidance on identifying promised goods or services and on evaluating whether an entity's promise to grant a license of intellectual property involves a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-11, Revenue Recognition and Derivatives and Hedging: Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, which rescinds certain SEC comments upon adoption of ASU 2014-09, including the SEC comments related to consideration given by a vendor to a customer. In May 2016, the FASB also issued ASU 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients, which provides narrow scope improvements and technical expedients on assessing collectability, presentation of sales taxes, evaluating contract modifications and completed contracts at transition and the disclosure requirement for the effect of the accounting change for the period of adoption. Collectively, all of these ASUs are intended to improve and clarify the implementation guidance of ASU No. 2014-09, Revenue from Contracts with Customers, and have the same effective date as the original standard. The Company is currently assessing the potential impact of this new guidance on its financial statements. In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments. The amendments clarify the steps required to assess whether a call or put option meets the criteria for bifurcation as an embedded derivative. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2016. The Company does not expect the adoption of this ASU to have a material impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. The Company is currently assessing the impact of this ASU on its financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on the balance sheet. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The Company early-adopted the provisions of this ASU as of December 31, 2015. The provisions have been applied prospectively and prior periods were not retrospectively adjusted, as permitted by the ASU. In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends limited sections within ASC Subtopic 835-30. ASU No. 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than an asset. Amortization of the costs will continue to be reported as interest expense. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015. The Company adopted ASU No. 2015-03 on January 1, 2016, and applied its provisions retrospectively for each period presented. The adoption of ASU No. 2015-03 resulted in the reclassification of approximately $6 million of unamortized debt issuance costs related to the Company's convertible senior notes from other non-current assets to convertible senior notes, net within our condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015. Other than this reclassification, the adoption of ASU No. 2015-03 did not have an impact on the Company's condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principal of ASU No. 2014-09 is to recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective transition methods. The Company has not yet selected a transition method nor has it determined the potential effects that the adoption of ASU No. 2014-09 will have on its consolidated financial statements. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value During the three months ended September 30, 2016 , the Company classified all investments, which are not considered cash equivalents as short-term investments as management no longer has the intent to hold such investments until their expected maturity. As a result, the Company reclassified less than $0.1 million of unrealized investment losses to the statement of operations as a component of other income (expense) in the Condensed Consolidated Statements of Operations. The following table summarizes the fair value hierarchy for the Company’s financial assets (cash, cash equivalents, short-term investments, non-current investments, and foreign currency derivatives) and financial liabilities (foreign currency derivatives) measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): Balance as of September 30, 2016: Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 90,126 $ 25,592 $ — $ 115,718 Short-term investments: Asset-backed securities — 58,975 — 58,975 Corporate debt securities — 96,125 — 96,125 Commercial paper — 90,341 — 90,341 Other securities — 8,016 — 8,016 Total short-term investments — 253,457 — 253,457 Foreign currency derivatives — 1,109 — 1,109 Total $ 90,126 $ 280,158 $ — $ 370,284 Liabilities: Foreign currency derivatives $ — $ 2,612 $ — $ 2,612 Total $ — $ 2,612 $ — $ 2,612 Balance as of December 31, 2015: Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 84,625 $ 27,943 $ — $ 112,568 Short-term investments: Asset-backed securities — 51,973 — 51,973 Corporate debt securities — 81,600 — 81,600 Commercial paper — 48,762 — 48,762 Government agency securities — 12,684 — 12,684 Other securities — 15,128 — 15,128 Total short-term investments — 210,147 — 210,147 Foreign currency derivatives — 1,431 — 1,431 Investments: Asset-backed securities — 11,818 — 11,818 Corporate debt securities — 36,414 — 36,414 Government agency securities — 11,944 — 11,944 Other securities — 1,999 — 1,999 Total investments — 62,175 — 62,175 Total $ 84,625 $ 301,696 $ — $ 386,321 Liabilities: Foreign currency derivatives $ — $ 1,298 $ — $ 1,298 Total $ — $ 1,298 $ — $ 1,298 The estimated fair values of the Company’s other financial instruments which are not measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 were as follows (in thousands): Balance as of September 30, 2016: Level 1 Level 2 Level 3 Total Liabilities: Convertible senior notes $ — $ 355,350 $ — $ 355,350 Total $ — $ 355,350 $ — $ 355,350 Balance as of December 31, 2015: Level 1 Level 2 Level 3 Total Liabilities: Convertible senior notes $ — $ 307,481 $ — $ 307,481 Total $ — $ 307,481 $ — $ 307,481 The Company utilized levels 1 and 2 to value its financial assets on a recurring basis. Level 1 instruments use quoted prices in active markets for identical assets or liabilities, which include the Company’s cash accounts, short-term deposits, and money market funds as these specific assets are liquid. Level 2 instruments are valued using the market approach, which uses quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 instruments include asset-backed securities, corporate debt securities, commercial paper, government agency securities, and other securities, as similar or identical instruments can be found in active markets. The Company recorded derivative assets and liabilities at fair value. The Company’s derivatives consist of foreign exchange forward contracts. The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically foreign currency spot rate and forward points) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR rates, credit default spot rates, and company specific LIBOR spread). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. The estimated fair value of the convertible senior notes, which have been classified as Level 2 financial instruments, was determined based on the quoted price of the convertible senior notes in an over-the-counter market on September 30, 2016 . |
Investments
Investments | 9 Months Ended |
Sep. 30, 2016 | |
Investments Schedule [Abstract] | |
Investments | Investments The Company’s marketable securities as of September 30, 2016 , were classified as available-for-sale securities, with changes in fair value recognized in Accumulated Other Comprehensive Income ("AOCI"), a component of shareholders’ equity. As discussed in Note 2 of Notes to Condensed Consolidated Financial Statements, the Company classified all investments, which are not considered cash equivalents as short-term investments as management no longer has the intent to hold such investments until their expected maturity. The following tables summarize available-for-sale marketable securities (in thousands): Balance as of September 30, 2016: Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Short-term investments: Asset-backed securities $ 58,914 $ 61 $ — $ 58,975 Commercial paper 115,902 31 — 115,933 Corporate debt securities 96,017 108 — 96,125 Other securities 8,000 16 — 8,016 Amounts classified as cash equivalents (25,586 ) (6 ) — (25,592 ) Total short-term investments $ 253,247 $ 210 $ — $ 253,457 Balance as of December 31, 2015: Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Short-term investments: Asset-backed securities $ 52,102 $ — $ (129 ) $ 51,973 Commercial paper 76,711 3 (9 ) 76,705 Corporate debt securities 81,777 — (177 ) 81,600 Government agency securities 12,701 — (17 ) 12,684 Other securities 15,122 7 (1 ) 15,128 Amounts classified as cash equivalents (27,943 ) — — (27,943 ) Total short-term investments $ 210,470 $ 10 $ (333 ) $ 210,147 Investments: Asset-backed securities $ 11,884 $ — $ (66 ) $ 11,818 Corporate debt securities 36,530 3 (119 ) 36,414 Government agency securities 11,999 — (55 ) 11,944 Other securities 2,001 — (2 ) 1,999 Total investments $ 62,414 $ 3 $ (242 ) $ 62,175 Proceeds from the sale of marketable securities were $86.3 million and $49.2 million for the nine months ended September 30, 2016 and 2015 , respectively. The Company determines gains and losses from sales of marketable securities based on specific identification of the securities sold. Realized gains and realized and unrealized losses from sales of marketable securities, all of which are reported as a component of other income (expense) in the Condensed Consolidated Statements of Operations, were immaterial for the three and nine months ended September 30, 2016 and 2015 . As discussed in Note 2 of Notes to Condensed Consolidated Financial Statements, the Company classified all investments, which are not considered cash equivalents as short-term investments as management no longer has the intent to hold such investments until their expected maturity. As a result, the Company recognized less than $0.1 million of unrealized investment losses to the statement of operations as a component of other income (expense) in the Condensed Consolidated Statements of Operations. The following table summarizes the fair value of the Company’s marketable securities with unrealized losses at December 31, 2015 , and the duration of time that such losses had been unrealized (in thousands): Balance as of December 31, 2015: Less Than 12 months More than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Asset-backed securities $ 57,866 $ (192 ) $ 5,923 $ (3 ) $ 63,789 $ (195 ) Corporate debt securities 101,701 (289 ) 8,911 (7 ) 110,612 (296 ) Government agency securities 24,628 (72 ) — — 24,628 (72 ) Commercial Paper 11,374 (9 ) — — 11,374 (9 ) Other securities 7,496 (3 ) — — 7,496 (3 ) Total $ 203,065 $ (565 ) $ 14,834 $ (10 ) $ 217,899 $ (575 ) The Company evaluated marketable securities, which consist of investments in asset-backed securities, corporate debt securities, government agency securities, commercial paper, and other securities as of December 31, 2015, and has determined that there was no indication of other-than-temporary impairments. This determination was based on several factors, including the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the debt issuer, and the Company’s intent and ability to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. The following table summarizes the amortized cost and estimated fair value of available-for-sale debt securities at September 30, 2016 and December 31, 2015 , by contractual maturity (in thousands): September 30, 2016 December 31, 2015 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Mature in one year or less $ 194,917 $ 194,997 $ 186,311 $ 186,118 Mature after one year through three years 75,623 75,750 106,377 106,086 Mature in more than three years 8,293 8,302 8,139 8,061 Total $ 278,833 $ 279,049 $ 300,827 $ 300,265 |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company uses derivatives to partially offset its exposure to foreign currency exchange risk. The Company may enter into foreign currency forward contracts to offset some of the foreign exchange risk on expected future cash flows on certain forecasted revenue and expenses and on certain existing assets and liabilities. To address fluctuations in foreign currency exchange rates, a portion of forecasted foreign currency revenue and expenses of certain of the Company’s subsidiaries are hedged. The Company hedges portions of its forecasted foreign currency exposure associated with revenue, cost of sales, and operating expenses for generally up to twelve months. The Company may also enter into foreign currency forward contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities. However, the Company may choose not to hedge certain foreign currency exchange exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. The Company does not hold or purchase any currency contracts for trading purposes. The Company records all derivatives in the Condensed Consolidated Balance Sheet at fair value. The Company’s accounting treatment of these instruments is based on whether the instruments are designated as hedge or non-hedge instruments. For derivative instruments that are designated and qualify as cash flow hedges, the Company initially records the effective portion of the gain or loss on the derivative instrument in AOCI, a separate component of shareholders’ equity and subsequently reclassifies these amounts into earnings within the same financial statement line item as the hedged item in the period during which the hedged transaction is recognized in earnings. The ineffective portions of cash flow hedges are recorded in foreign currency exchange gain (loss) and other, net. The Company had a net deferred loss of $1.4 million and net deferred loss of $0.4 million associated with cash flow hedges recorded in AOCI as of September 30, 2016 and December 31, 2015 , respectively. Deferred gains and losses associated with cash flow hedges of forecasted foreign currency revenue are recognized as a component of revenues in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of forecasted expenses are recognized as a component of cost of sales, research and development expense, sales and marketing expense and general and administrative expense in the same period as the related expenses are recognized. The Company’s hedged transactions as of September 30, 2016 are expected to occur within twelve months. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable that the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into foreign currency exchange loss and other, net. Any subsequent changes in fair value of such derivative instruments are reflected in foreign currency exchange gain (loss) and other, net unless they are re-designated as hedges of other transactions. The Company did not recognize any significant net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during the three and nine months ended September 30, 2016 and 2015 . Gains or losses on derivatives not designated as hedging instruments are recorded in foreign currency exchange gain (loss) and other, net. During the three months ended September 30, 2016 and 2015 , the Company recognized a loss of $2.4 million and a gain of $2.3 million , respectively, as a component of foreign currency exchange gain (loss) and other, net, related to derivative instruments not designated as hedging instruments. During the nine months ended September 30, 2016 and 2015 , the Company recognized a loss of $2.9 million and a gain of $4.0 million , respectively, as a component of foreign currency exchange gain (loss) and other, net, related to derivative instruments not designated as hedging instruments. These amounts represent the net gain or loss on the derivative contracts and do not include changes in the related exposures or ineffective portion or amounts excluded from the effectiveness testing of cash flow hedges. The notional principal amounts of the Company’s outstanding derivative instruments designated as cash flow hedges are $91.0 million and $117.6 million as of September 30, 2016 and December 31, 2015 , respectively. The notional principal amount of the Company’s outstanding derivative instruments not designated as cash flow hedges was $25.9 million as of December 31, 2015 . There was no outstanding derivative instruments not designated as cash flow hedges as of September 30, 2016 . The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 , respectively (in thousands): September 30, 2016 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative Assets (a): Foreign exchange contracts $ 1,109 $ — $ 1,109 Derivative Liabilities (b): Foreign exchange contracts (2,612 ) — (2,612 ) December 31, 2015 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative Assets (a): Foreign exchange contracts $ 1,390 $ 41 $ 1,431 Derivative Liabilities (b): Foreign exchange contracts (1,250 ) (48 ) (1,298 ) (a) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. (b) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued and other liabilities in the Condensed Consolidated Balance Sheets. The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Loss Recognized in OCI - Effective Portion Loss Reclassified from AOCI into Income - Effective Portion Loss Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing 2016 2015 2016 (a) 2015 (b) Location 2016 2015 Cash flow hedges: Foreign exchange contracts $ (1,804 ) $ (545 ) $ (320 ) $ (369 ) Foreign currency exchange loss and other, net $ (141 ) $ (45 ) Total $ (1,804 ) $ (545 ) $ (320 ) $ (369 ) $ (141 ) $ (45 ) (a) Includes gains and losses reclassified from AOCI into net loss for the effective portion of cash flow hedges, of which a $0.3 million loss within costs and operating expenses and less than a $0.1 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended September 30, 2016 . (b) Includes gains and losses reclassified from AOCI into net loss for the effective portion of cash flow hedges, of which a $1.2 million loss within costs and operating expenses and a $1.5 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended September 30, 2015 . Nine Months Ended September 30, Loss Recognized in OCI- Loss Reclassified from AOCI Loss Recognized - Ineffective Portion and 2016 2015 2016 (a) 2015 (b) Location 2016 2015 Cash flow hedges: Foreign exchange contracts $ (1,949 ) $ (1,596 ) $ (1,006 ) $ (414 ) Foreign currency exchange loss and other, net $ (491 ) $ (169 ) Total $ (1,949 ) $ (1,596 ) $ (1,006 ) $ (414 ) $ (491 ) $ (169 ) (a) Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $1.0 million loss within costs and operating expenses and a less than $0.1 million loss within revenue, were recognized within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2016 . (b) Includes gains and losses reclassified from AOCI into net loss for the effective portion of cash flow hedges, of which a $6.6 million loss within costs and operating expenses and a $6.2 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2015 . |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Intangible assets related to licenses are recorded at cost, less accumulated amortization. Intangible assets related to technology and other intangible assets acquired in acquisitions are recorded at fair value at the date of acquisition, less accumulated amortization. Intangible assets are amortized over their estimated useful lives, ranging from 3 to 15 years , on a straight-line basis. Amortization of intangible assets is primarily included in cost of sales, research and development and sales and marketing in the Condensed Consolidated Statements of Operations. The recorded value and accumulated amortization of major classes of intangible assets were as follows (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Balance, September 30, 2016 Licenses $ 11,256 $ (7,859 ) $ 3,397 Technology acquired in acquisitions 8,613 (8,613 ) — Customer relationships and other intangible assets acquired in acquisitions 35,849 (18,290 ) 17,559 $ 55,718 $ (34,762 ) $ 20,956 Balance, December 31, 2015 Licenses $ 11,454 $ (7,280 ) $ 4,174 Technology acquired in acquisitions 8,613 (8,613 ) — Customer relationships and other intangible assets acquired in acquisitions 35,849 (14,782 ) 21,067 $ 55,916 $ (30,675 ) $ 25,241 Intangible asset amortization expense was $1.4 million and $1.5 million for the three months ended September 30, 2016 and 2015 , respectively, and $4.3 million and $4.8 million for the nine months ended September 30, 2016 and 2015 , respectively. The following table summarizes the expected future annual amortization expense of intangible assets recorded on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2016 , assuming no impairment charges (in thousands): For the Years Ending December 31, Amortization Expense 2016 (remaining three months) $ 1,426 2017 5,343 2018 5,260 2019 4,235 2020 3,891 Thereafter 801 Total expected future amortization $ 20,956 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective December 31, 2015, the Company early-adopted ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on the balance sheet. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The provisions have been applied on a prospective basis and prior periods were not retrospectively adjusted, as permitted by the ASU. For the three and nine months ended September 30, 2016 , the Company recorded an income tax expense of $1.2 million and $2.0 million , respectively, primarily related to ordinary tax expense of the Company’s foreign subsidiaries. For the three and nine months ended September 30, 2015 , the Company recorded an income tax benefit of $0.2 million and tax expense of $0.6 million , respectively, comprised primarily of ordinary foreign tax expense of the Company’s foreign subsidiaries, partially offset by the tax effect of items in accumulated other comprehensive loss, net. The Company’s effective tax rate for the three and nine months ended September 30, 2016 and 2015 differs from the statutory federal income tax rate of 34% , primarily due to the impact of operations in foreign jurisdictions, as well as income or loss in the United States federal and state jurisdictions for which no tax expense or benefit is recorded. There is a difference in the effective tax rate for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 , which is primarily due to levels of losses in the United States for which no income tax benefit was recorded in relation to income generated in foreign jurisdictions. The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. The Company’s position is to record a valuation allowance when it is more likely than not that some of the deferred tax assets will not be realized. Based on all available objective evidence, the Company believes that it is more likely than not that the net United States deferred tax assets will not be fully realized. Accordingly, the Company continues to maintain a full valuation allowance on its United States deferred tax assets and will do so until there is sufficient evidence to support the reversal of all or some portion of this valuation allowance. The Company or one of its subsidiaries files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company’s United States and state income tax return years 1996 through 2015 remain open to examination. In addition, the Company files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from 2010 to 2015 . The Company anticipates that the total unrecognized tax benefits will not significantly change within the next 12 months due to the settlement of audits and the expiration of statutes of limitations. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the three and nine months ended September 30, 2016 and 2015 , the Company did not recognize any significant interest or penalties related to uncertain tax positions, nor had any been accrued for as of September 30, 2016 and December 31, 2015 . |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes In February 2014, the Company issued $345 million aggregate principal amount of 1.25% convertible senior notes (the “Notes”) due February 1, 2021 , unless earlier repurchased by the Company or converted by the holder pursuant to their terms. Interest is payable semiannually in arrears on February 1 and August 1 of each year, commencing on August 1, 2014. The Notes are governed by an Indenture between the Company, as issuer, and Wells Fargo Bank, National Association, as trustee. The Notes are unsecured and rank: senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated; effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Notes have an initial conversion rate of 15.3616 shares of common stock per $1,000 principal amount of Notes. This represents an initial effective conversion price of approximately $65.10 per share of common stock and approximately 5,300,000 shares upon conversion. Throughout the term of the Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by the cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a Note. Prior to the close of business on the business day immediately preceding August 1, 2020 , the Notes will be convertible at the option of holders during certain periods, only upon satisfaction of certain conditions set forth below. On or after August 1, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time regardless of whether the conditions set forth below have been met. Holders may convert all or a portion of their Notes prior to the close of business on the business day immediately preceding August 1, 2020, in multiples of $1,000 principal amount, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five business day period after any five consecutive trading day period (the “Notes Measurement Period”) in which the “trading price” (as the term is defined in the Indenture) per $1,000 principal amount of notes for each trading day of such Notes Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock on such trading day and the conversion rate on each such trading day; or • upon the occurrence of specified corporate events. As of September 30, 2016 , the Notes were not yet convertible. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its Notes to be approximately 5.0% , assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Notes, which resulted in a fair value of the liability component of $270 million upon issuance, calculated as the present value of implied future payments based on the $345 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the Notes. The $75 million difference between the aggregate principal amount of $345 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the Notes were not considered redeemable. In accounting for the transaction costs related to the issuance of the Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $7.2 million , are being amortized to expense over the term of the Notes, and transaction costs attributable to the equity component, totaling $2.0 million , and were netted with the equity component in shareholders’ equity. The Notes consist of the following (in thousands): September 30, 2016 December 31, 2015 Liability component: Principal $ 345,000 $ 345,000 Less: debt discount, net of amortization and reclassification of debt issuance costs (55,242 ) (63,373 ) Net carrying amount $ 289,758 $ 281,627 Equity component (a) $ 73,013 $ 73,013 (a) Recorded in the condensed consolidated balance sheets within additional paid-in capital, net of $2.0 million issuance costs in equity The following table sets forth total interest expense recognized related to the Notes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 1.25% coupon $ 1,078 $ 1,078 $ 3,234 $ 3,234 Amortization of debt issuance costs 203 157 573 435 Amortization of debt discount 2,551 2,427 7,558 7,193 $ 3,832 $ 3,662 $ 11,365 $ 10,862 As of September 30, 2016 and December 31, 2015 , the fair value of the Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands): September 30, 2016 December 31, 2015 Fair Value Carrying Value Fair Value Carrying Value Convertible Senior Notes $ 355,350 $ 289,758 $ 307,481 $ 281,627 In connection with the issuance of the Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and others. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the Notes, with an initial strike price of approximately $65.10 per share, which corresponds to the initial conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, and have a cap price of approximately $78.61 . The cost of the purchased capped calls of $25.1 million was recorded to shareholders’ equity and will not be re-measured. Based on the closing price of our common stock of $52.69 on September 30, 2016 , the if-converted value of the Notes was less than their respective principal amounts. On September 2, 2016, Cepheid entered into the Merger Agreement with Danaher. At the effective time of the Merger, holders of the Company's $345 million aggregate principal amount of Notes shall have the right to convert such Notes into conversion consideration pursuant to the terms of the indenture under which the Notes were issued. In connection with the closing of the Merger, the capped call transactions will also be settled pursuant to the terms thereof. |
Commitments, Contingencies and
Commitments, Contingencies and Legal Matters | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Legal Matters | Commitments, Contingencies and Legal Matters Purchase Commitments The following table summarizes the Company’s purchase commitments at September 30, 2016 (in thousands): Years Ending December 31, Purchase Commitments 2016 (remaining three months) $ 25,273 2017 3,230 2018 — 2019 — 2020 — Thereafter — Total minimum payments $ 28,503 Purchase commitments include non-cancellable purchase orders or contracts for the purchase of raw materials used in the manufacturing of the Company’s reagents and orders for purchase of systems and system modules. Legal Matters In May 2005, the Company entered into a license agreement with F. Hoffmann-La Roche Ltd. and Roche Molecular Systems, Inc. (“Roche”) that provided the Company with rights under a broad range of Roche patents, including patents relating to the polymerase chain reaction ("PCR") process, reverse transcription-based methods, nucleic acid quantification methods, real-time PCR detection process and composition, and patents relating to methods for detection of viral and cancer targets. A number of the licensed patents expired in the United States prior to the end of August of 2010 and in Europe prior to the end of August of 2011. In August 2010, the Company terminated the Company’s license to United States Patent No. 5,804,375 (the “375 Patent”) and ceased paying United States-related royalties. The Company terminated the entire license agreement in the fourth quarter of 2011. In August 2011, Roche initiated an arbitration proceeding against the Company in the International Chamber of Commerce pursuant to the terms of the terminated agreement. The Company filed an answer challenging arbitral jurisdiction over the issues submitted by Roche and denying that the Company violated any provision of the agreement. A three-member panel was convened to address these issues in confidential proceedings. On July 30, 2013, the panel determined that it had jurisdiction to decide the claims, a determination that the Company appealed to the Swiss Federal Supreme Court. On October 2, 2013, the arbitration panel determined that it would proceed with the arbitration while this appeal was pending. On February 27, 2014 the Swiss Federal Supreme Court upheld the jurisdiction of the arbitration panel to hear the case. On April 22, 2016, the arbitration panel transmitted a partial award holding that the Company was liable for damages for the manufacture and sale of certain accused products starting after the Company terminated the license until September 2015, with the final amount to be determined by audit. The partial award also denied Roche’s requests for an injunction, and allocated certain legal fees and costs between the parties. Based on its ongoing evaluation of the facts and circumstances of the case, including the partial award, the Company believes that it is probable that this arbitration proceeding could result in a material loss. Accordingly, the Company recorded an estimated charge of $20 million as its best estimate of the potential loss as of December 31, 2014, which amount was included in accrued and other liabilities in the Company’s consolidated balance sheets. Taking into account the partial award, this continues to be the Company's best estimate for this potential loss as of September 30, 2016 . Depending on the final ruling of the arbitrators, it is possible that the Company could also be responsible for certain fees, costs and/or interest, if any; however, the Company is unable at this time to determine the likelihood of whether these potential outcomes will occur or estimate their respective potential amounts. On August 21, 2012 the Company filed a lawsuit against Roche in the United States District Court for the Northern District of California (“the Court”), for a declaratory judgment of (a) invalidity, expiration, and non-infringement of the 375 Patent; and (b) invalidity, unenforceability, expiration and non-infringement of United States Patent No. 6,127,155 (the “155 Patent”). On January 17, 2013, the Court issued an order granting a motion by Roche to stay the suit with respect to the 375 Patent pending resolution of the above noted arbitration proceeding. In the same order, the Court dismissed the Company’s suit with respect to the 155 Patent for lack of subject matter jurisdiction, without considering or ruling on the merits of the Company’s case. The Court left open the possibility that the Company could re-file its case against the 155 Patent in the future. The Company believes that the possibility that these legal proceedings will result in a material adverse effect on the Company’s business is remote. On July 16, 2014 Roche filed a lawsuit in the Court, alleging that the Company’s Xpert MTB-RIF product infringes United States Patent No. 5,643,723 (the “723 Patent”), which expired on July 1, 2014. On September 15, 2014, the Company filed its answer and counterclaims denying Roche’s allegations of infringement and asking the Court to find the 723 Patent invalid, unenforceable, and not infringed. On November 10, 2014, the Company filed a petition for inter partes review (“IPR”) of the 723 Patent in the United States Patent and Trademark Office (the “USPTO”) and filed a motion with the Court to stay this lawsuit pending the outcome of the IPR. On January 7, 2015, the Court issued an order staying the lawsuit pending the outcome of the IPR. On March 16, 2015, the Company filed a second petition for IPR of an additional claim of the 723 Patent. On June 11, 2015, the USPTO issued a decision declining to institute the first requested IPR. On July 13, 2015, the Company filed a request for reconsideration of the first petition for IPR with respect to certain challenged claims. On September 16, 2015, the USPTO denied the request for reconsideration. On September 17, 2015, the USPTO decided to institute the Company's second petition for IPR. On May 18, 2016, the parties submitted a joint status update to the Court in which Roche stated that it had disclaimed and would not assert the claim the Company had challenged in the second petition for IPR. On May 20, 2016, the Court issued an order lifting the 2015 stay. On July 19, 2016, the Company filed a motion for summary judgment of patent ineligibility as to all asserted claims. The Court is scheduled to conduct an oral hearing on the motion on November 16, 2016, and the Company expects a decision on the motion by the end of 2016. The Company believes that the possibility that these legal proceedings will result in a material loss is remote. The Company may be subject to various additional claims, complaints and legal actions that arise from time to time in the normal course of business. Other than as described above, the Company does not believe it is party to any currently pending legal proceedings that will result in a material adverse effect on its business. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, consolidated financial position, results of operations or cash flows. |
Employee Equity Incentive Plans
Employee Equity Incentive Plans and Stock-Based Compensation Expense | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Employee Equity Incentive Plans and Stock-Based Compensation Expense | Employee Equity Incentive Plans and Stock-Based Compensation Expense The following table is a summary of the major categories of stock-based compensation expense recognized in accordance with ASC 718, “Compensation—Stock Compensation” (“ASC 718”) for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of sales $ 1,784 $ 1,128 $ 4,882 $ 3,177 Research and development 2,765 3,438 7,709 7,913 Sales and marketing 2,207 1,825 6,237 5,018 General and administrative 4,057 3,584 10,878 9,694 Total stock-based compensation expense $ 10,813 $ 9,975 $ 29,706 $ 25,802 The following table summarizes option activity under all plans (in thousands, except weighted average exercise price and weighted average remaining contractual term): Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding, December 31, 2015 5,442 $ 39.46 Granted 1,282 $ 34.54 Exercised (352 ) $ 13.31 Forfeited (213 ) $ 39.47 Outstanding, September 30, 2016 6,159 $ 39.90 4.21 $ 83,020 Exercisable, September 30, 2016 3,604 $ 38.18 3.10 $ 53,971 Vested and expected to vest, September 30, 2016 5,984 $ 39.85 4.15 $ 80,667 The following table summarizes all award activity, which consists of restricted stock awards and restricted stock units (in thousands, except weighted average grant date fair value): Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2015 1,000 $ 48.44 Granted 669 34.05 Vested (286 ) 48.70 Cancelled (69 ) 45.75 Outstanding, September 30, 2016 1,314 $ 41.20 Included in the restricted stock awards and restricted stock units granted during the nine months ended September 30, 2016 are 285,000 performance-based restricted stock units ("PRSUs"), which were granted to certain members of the Company's senior management team that vest upon the achievement of certain performance conditions, the performance period for which is the three-year period from January 1, 2016 to December 31, 2018. The number of PRSUs ultimately earned by each recipient will range from zero to 125% of the target PRSU number awarded to each recipient. Each PRSU will vest as to any earned PRSUs following determination and certification of the level of achievement of specified metrics by the Compensation Committee at the end of the performance period. To the extent earned, each PRSU will be settled by the issuance of one share of Cepheid common stock. Recipients of PRSUs generally must remain employed by Cepheid on a continuous basis through the end of the performance period in order to receive any amount of the PRSUs earned, except that recipients may be entitled to accelerated vesting of PRSUs in the case of the recipient’s death or disability or upon a change in control. In the proposed Merger with Danaher, the PRSUs will be treated as described in the Merger Agreement. The following table summarizes the assumptions used in determining the fair value of the Company’s stock options granted to employees and directors and shares purchased by employees under the Company’s 2012 Employee Stock Purchase Plan (“ESPP”): Three Months Ended Nine Months Ended 2016 2015 2016 2015 OPTION SHARES: Expected Term (in years) 4.38 4.49 4.45 4.46 Volatility 0.47 0.36 0.44 0.36 Expected Dividends — — — — Risk Free Interest Rates 1.14 % 1.54 % 1.38 % 1.46 % Estimated Forfeitures 6.01 % 6.14 % 6.01 % 6.14 % Weighted Average Fair Value Per Share $ 14.24 $ 16.91 $ 13.12 $ 17.93 ESPP SHARES: Expected Term (in years) 1.24 1.22 1.23 1.22 Volatility 0.52 0.34 0.49 0.34 Expected Dividends — — — — Risk Free Interest Rates 0.54 % 0.41 % 0.59 % 0.39 % Weighted Average Fair Value Per Share $ 13.63 $ 16.50 $ 10.20 $ 16.49 |
Segment and Significant Concent
Segment and Significant Concentrations | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment and Significant Concentrations | Segment and Significant Concentrations The Company and its wholly owned subsidiaries operate in one business segment. The following table summarizes total revenue by type (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue: System and other revenue $ 27,496 $ 19,749 $ 76,618 $ 62,823 Reagent and disposable revenue 130,992 106,716 372,651 328,754 Total revenue $ 158,488 $ 126,465 $ 449,269 $ 391,577 The Company currently sells product through its direct sales force and through third-party distributors. No single customer or distributor accounted for more than 10% of total revenue for the three and nine months ended September 30, 2016 and 2015 . The following table summarizes revenue by geographic region (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Geographic revenue information: North America $ 89,122 $ 73,627 $ 252,714 $ 232,119 International 69,366 52,838 196,555 159,458 Total revenue $ 158,488 $ 126,465 $ 449,269 $ 391,577 The Company recognized revenue of $87.2 million and $70.7 million for sales to United States customers for the three months ended September 30, 2016 and 2015 , respectively, and $246.1 million and $220.3 million for the nine months ended September 30, 2016 and 2015 , respectively. No single country outside of the United States represented more than 10% of the Company’s total revenue for the three and nine months ended September 30, 2016 and 2015 . The following table summarizes long-lived assets, excluding intangible assets and goodwill, by geographic region (in thousands): September 30, 2016 December 31, 2015 United States $ 129,966 $ 108,210 Other regions 21,261 19,429 Total long-lived assets $ 151,227 $ 127,639 The Company does not hold a significant amount of long-lived assets in any single country outside of the United States as of September 30, 2016 and December 31, 2015 . |
Organization and Summary of S17
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Cepheid (the “Company”) was incorporated in the State of California on March 4, 1996. The Company is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for diagnostic testing. The Company’s systems enable fast, sophisticated molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. Proposed Transaction with Danaher Corporation On September 2, 2016, Cepheid entered into a Merger Agreement (the "Merger Agreement") with Danaher Corporation (“Danaher”) pursuant to which Danaher has agreed to acquire Cepheid for $53.00 per share in an all-cash transaction valued at approximately $4.0 billion, inclusive of the Company's net cash (the "Merger"). The transaction is expected to close in the fourth quarter of fiscal 2016, subject to certain conditions, including shareholder approval and other customary closing conditions. Cepheid incurred transaction-related costs of $2.6 million during the three months ended September 30, 2016 in connection with the Merger and expect to incur additional costs related to the Merger during the fourth quarter of fiscal 2016 if the transaction is successfully completed. For additional information related to the Merger and the Merger Agreement, please refer to Cepheid’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on September 6, 2016 and the Definitive Proxy Statement on Schedule 14A filed with the SEC on October 7, 2016. The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement included as Exhibit 2.1 to Cepheid’s Current Report on Form 8-K filed September 6, 2016. Upon completion of the Merger, shares of Cepheid common stock will cease trading on The Nasdaq Global Select Market. Other than transaction expenses associated with the proposed Merger of $2.6 million, which were recorded to general and administrative expense in the Condensed Consolidated Statement of Operations, for the three and nine months ended September 30, 2016, the terms of the Merger Agreement did not impact the Company's Condensed Consolidated Financial Statements. Basis of Presentation The Condensed Consolidated Balance Sheet at September 30, 2016 , the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 , the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2016 and 2015 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 are unaudited. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments that management considers necessary for a fair presentation of the Company’s financial position at such dates, and the operating results and cash flows for those periods. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. The results of operations for such periods are not necessarily indicative of the results expected for the remainder of 2016 or for any future period. The Condensed Consolidated Balance Sheet as of December 31, 2015 is derived from audited consolidated financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 . |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Functional Currency The U.S. dollar is the functional currency of all of the Company’s subsidiaries. The Company remeasures its foreign subsidiaries’ monetary assets and liabilities to the U.S. dollar and records the net gains or losses resulting from remeasurement in “Foreign currency exchange loss and other, net” in the consolidated statements of operations. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates. |
Cash, Cash Equivalents, Short-Term Investments and Non-Current Investments | Cash, Cash Equivalents, Short-Term Investments and Non-Current Investments Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company’s marketable debt securities have been classified and accounted for as available-for-sale. The Company determines the appropriate classification of its investments at the time of purchase and re-evaluates the designations at each balance sheet date. The Company classifies its marketable debt securities as cash equivalents, short-term investments or non-current investments based on each instrument’s underlying effective maturity date. All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Marketable debt securities with effective maturities of 12 months or less are classified as short-term, and marketable debt securities with effective maturities greater than 12 months are classified as non-current. All unrealized gains and losses associated with our investments were reported within accumulated other comprehensive loss, a component of shareholders’ equity. The cost of securities sold is based upon the specific identification method. Interest income includes interest, dividends, amortization of purchase premiums and discounts and realized gains and losses on sales of securities. The Company assesses whether an other-than-temporary impairment loss on its investments has occurred due to declines in fair value or other market conditions. With respect to the Company’s debt securities, this assessment takes into account the severity and duration of the decline in value, the Company’s intent to sell the security, whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and whether or not the Company expects to recover the entire amortized cost basis of the security (that is, a credit loss exists). See Note 3, “Investments”, for information and related disclosures regarding the Company’s investments. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash Prepaid expense and other current assets included $3.7 million and $2.7 million of restricted cash as of September 30, 2016 and December 31, 2015 , respectively and other non-current assets included $3.4 million and $2.1 million of restricted cash as of September 30, 2016 and December 31, 2015 , respectively. The majority of this restricted cash is held as security for bank guarantees provided to a foreign customer contract. The Company is required to maintain such guarantees until its contractual obligations are satisfied under the contract. |
Concentration of Credit Risks and Other Uncertainties | Concentration of Credit Risks and Other Uncertainties The carrying amounts for financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to their short maturities. Derivative instruments and investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s derivative instruments consist of large financial institutions of high credit standing. The Company’s main financial institution for banking operations held 65% and 66% of the Company’s cash and cash equivalents as of September 30, 2016 and December 31, 2015 , respectively. The Company’s accounts receivable are derived from sales to customers and distributors. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has not experienced significant losses to date. There was one direct customer whose accounts receivable balance represented 11% of total accounts receivable as of December 31, 2015 . No direct customer represented more than 10% of total accounts receivable as of September 30, 2016 . See Note 10, “Segment and Significant Concentrations,” for disclosure regarding total sales to direct customers and single countries. |
Inventory, Net | Inventory, net Inventory is stated at the lower of standard cost (which approximates actual cost) or market value, with cost determined on the first-in-first-out method. The allocation of production overhead to inventory costs is based on normal production capacity. Abnormal amounts of idle facility expense, freight, handling costs, and spoilage are expensed as incurred, and not included in overhead. The Company maintains provisions for excess and obsolete inventory based on management’s estimates of forecasted demand and, where applicable, product expiration. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from sales when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. No right of return exists for the Company’s products except in the case of damaged goods. The Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of sales. In those cases where the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue. The Company sells service contracts for which revenue is deferred and recognized ratably over the contract period. The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. In situations with multiple deliverables, revenue is recognized upon the delivery of the separate elements. For multiple element arrangements, the total consideration for an arrangement is allocated among the separate elements in the arrangement based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on: (1) vendor specific objective evidence (“VSOE”), if available; (2) third party evidence of selling price if VSOE is not available; or (3) an estimated selling price, if neither VSOE nor third party evidence is available. Estimated selling price is the Company's best estimate of the selling price of an element in a transaction. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services or other future performance obligations. For sales that include customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. The Company may place an instrument at a customer site under a reagent rental agreement ("reagent rental"). Under a reagent rental, the Company retains title to the instrument and earns revenue for the usage of the instrument and related maintenance services through the amount charged for reagents and other disposables. Under a reagent rental, a customer may commit to purchasing minimum quantities of reagents at stated prices over a defined contract term, which is typically between three and five years. Revenue is recognized over the term of a reagent rental as reagents and other disposables are shipped and all other revenue recognition criteria have been met. All revenue recognized from reagent rentals is included in reagent and disposable sales in Note 10, “Segment and Significant Concentrations”. Revenue includes fees for research and development services earned under grants and collaboration agreements, which are recognized on a contract-specific basis. Revenue and profit under cost-plus service contracts are recognized as costs are incurred plus negotiated fees. For certain contracts, the Company utilizes the proportional performance method of revenue recognition, which requires that the Company estimate the total amount of costs to be expended for a project and recognize revenue equal to the portion of costs incurred to date. The Company exercises judgment when estimating the level of effort required to complete a project. The estimated total costs to complete a project are subject to revision from time-to-time. |
Earnings per Share | Per Share Basic earnings per share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options, employee stock purchases, restricted stock awards, restricted stock units and shares issuable upon a potential conversion of the convertible senior notes, using the treasury stock method. In loss periods, the earnings per share calculation excludes all common equivalent shares because their inclusion would be antidilutive. Antidilutive common equivalent shares totaled 10,439,000 and 9,007,000 for the three months ended September 30, 2016 and 2015 , respectively, and 11,361,000 and 8,771,000 for the nine months ended September 30, 2016 and 2015 , respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB") issued Accounting Standards Update (“ASU") No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This ASU addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash flow, and other Topics. The requirements of this ASU are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company is currently assessing the impact of this ASU on its financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. The requirements of this ASU are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of this ASU on its financial statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include – the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2016. The Company is currently assessing the impact of this ASU on its financial statements. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarified the implementation guidance on identifying promised goods or services and on evaluating whether an entity's promise to grant a license of intellectual property involves a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-11, Revenue Recognition and Derivatives and Hedging: Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, which rescinds certain SEC comments upon adoption of ASU 2014-09, including the SEC comments related to consideration given by a vendor to a customer. In May 2016, the FASB also issued ASU 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients, which provides narrow scope improvements and technical expedients on assessing collectability, presentation of sales taxes, evaluating contract modifications and completed contracts at transition and the disclosure requirement for the effect of the accounting change for the period of adoption. Collectively, all of these ASUs are intended to improve and clarify the implementation guidance of ASU No. 2014-09, Revenue from Contracts with Customers, and have the same effective date as the original standard. The Company is currently assessing the potential impact of this new guidance on its financial statements. In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments. The amendments clarify the steps required to assess whether a call or put option meets the criteria for bifurcation as an embedded derivative. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2016. The Company does not expect the adoption of this ASU to have a material impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. The Company is currently assessing the impact of this ASU on its financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on the balance sheet. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The Company early-adopted the provisions of this ASU as of December 31, 2015. The provisions have been applied prospectively and prior periods were not retrospectively adjusted, as permitted by the ASU. In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends limited sections within ASC Subtopic 835-30. ASU No. 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than an asset. Amortization of the costs will continue to be reported as interest expense. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015. The Company adopted ASU No. 2015-03 on January 1, 2016, and applied its provisions retrospectively for each period presented. The adoption of ASU No. 2015-03 resulted in the reclassification of approximately $6 million of unamortized debt issuance costs related to the Company's convertible senior notes from other non-current assets to convertible senior notes, net within our condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015. Other than this reclassification, the adoption of ASU No. 2015-03 did not have an impact on the Company's condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principal of ASU No. 2014-09 is to recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective transition methods. The Company has not yet selected a transition method nor has it determined the potential effects that the adoption of ASU No. 2014-09 will have on its consolidated financial statements. |
Organization and Summary of S18
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of components of inventories | The components of inventories were as follows (in thousands): September 30, 2016 December 31, 2015 Raw Materials $ 44,108 $ 39,267 Work in Process 66,097 62,153 Finished Goods 45,515 47,270 Inventory, net $ 155,720 $ 148,690 |
Summary of computation of basic and diluted earnings per share | The following summarizes the computation of basic and diluted net loss per share (in thousands, except for per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Basic: Net loss $ (10,907 ) $ (22,901 ) $ (27,740 ) $ (38,725 ) Basic weighted shares outstanding 73,158 72,199 72,890 71,777 Net loss per share $ (0.15 ) $ (0.32 ) $ (0.38 ) $ (0.54 ) Diluted: Net loss $ (10,907 ) $ (22,901 ) $ (27,740 ) $ (38,725 ) Basic weighted shares outstanding 73,158 72,199 72,890 71,777 Effect of dilutive securities: Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes — — — — Diluted weighted shares outstanding 73,158 72,199 72,890 71,777 Net loss per share $ (0.15 ) $ (0.32 ) $ (0.38 ) $ (0.54 ) |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of assets and liabilities measured at fair value on recurring basis | The following table summarizes the fair value hierarchy for the Company’s financial assets (cash, cash equivalents, short-term investments, non-current investments, and foreign currency derivatives) and financial liabilities (foreign currency derivatives) measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): Balance as of September 30, 2016: Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 90,126 $ 25,592 $ — $ 115,718 Short-term investments: Asset-backed securities — 58,975 — 58,975 Corporate debt securities — 96,125 — 96,125 Commercial paper — 90,341 — 90,341 Other securities — 8,016 — 8,016 Total short-term investments — 253,457 — 253,457 Foreign currency derivatives — 1,109 — 1,109 Total $ 90,126 $ 280,158 $ — $ 370,284 Liabilities: Foreign currency derivatives $ — $ 2,612 $ — $ 2,612 Total $ — $ 2,612 $ — $ 2,612 Balance as of December 31, 2015: Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 84,625 $ 27,943 $ — $ 112,568 Short-term investments: Asset-backed securities — 51,973 — 51,973 Corporate debt securities — 81,600 — 81,600 Commercial paper — 48,762 — 48,762 Government agency securities — 12,684 — 12,684 Other securities — 15,128 — 15,128 Total short-term investments — 210,147 — 210,147 Foreign currency derivatives — 1,431 — 1,431 Investments: Asset-backed securities — 11,818 — 11,818 Corporate debt securities — 36,414 — 36,414 Government agency securities — 11,944 — 11,944 Other securities — 1,999 — 1,999 Total investments — 62,175 — 62,175 Total $ 84,625 $ 301,696 $ — $ 386,321 Liabilities: Foreign currency derivatives $ — $ 1,298 $ — $ 1,298 Total $ — $ 1,298 $ — $ 1,298 |
Schedule of other financial instruments measured at fair value on non-recurring basis | The estimated fair values of the Company’s other financial instruments which are not measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 were as follows (in thousands): Balance as of September 30, 2016: Level 1 Level 2 Level 3 Total Liabilities: Convertible senior notes $ — $ 355,350 $ — $ 355,350 Total $ — $ 355,350 $ — $ 355,350 Balance as of December 31, 2015: Level 1 Level 2 Level 3 Total Liabilities: Convertible senior notes $ — $ 307,481 $ — $ 307,481 Total $ — $ 307,481 $ — $ 307,481 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments Schedule [Abstract] | |
Schedule of available-for-sale marketable securities | The following tables summarize available-for-sale marketable securities (in thousands): Balance as of September 30, 2016: Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Short-term investments: Asset-backed securities $ 58,914 $ 61 $ — $ 58,975 Commercial paper 115,902 31 — 115,933 Corporate debt securities 96,017 108 — 96,125 Other securities 8,000 16 — 8,016 Amounts classified as cash equivalents (25,586 ) (6 ) — (25,592 ) Total short-term investments $ 253,247 $ 210 $ — $ 253,457 Balance as of December 31, 2015: Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Short-term investments: Asset-backed securities $ 52,102 $ — $ (129 ) $ 51,973 Commercial paper 76,711 3 (9 ) 76,705 Corporate debt securities 81,777 — (177 ) 81,600 Government agency securities 12,701 — (17 ) 12,684 Other securities 15,122 7 (1 ) 15,128 Amounts classified as cash equivalents (27,943 ) — — (27,943 ) Total short-term investments $ 210,470 $ 10 $ (333 ) $ 210,147 Investments: Asset-backed securities $ 11,884 $ — $ (66 ) $ 11,818 Corporate debt securities 36,530 3 (119 ) 36,414 Government agency securities 11,999 — (55 ) 11,944 Other securities 2,001 — (2 ) 1,999 Total investments $ 62,414 $ 3 $ (242 ) $ 62,175 |
Schedule of marketable securities with unrealized losses | The following table summarizes the fair value of the Company’s marketable securities with unrealized losses at December 31, 2015 , and the duration of time that such losses had been unrealized (in thousands): Balance as of December 31, 2015: Less Than 12 months More than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Asset-backed securities $ 57,866 $ (192 ) $ 5,923 $ (3 ) $ 63,789 $ (195 ) Corporate debt securities 101,701 (289 ) 8,911 (7 ) 110,612 (296 ) Government agency securities 24,628 (72 ) — — 24,628 (72 ) Commercial Paper 11,374 (9 ) — — 11,374 (9 ) Other securities 7,496 (3 ) — — 7,496 (3 ) Total $ 203,065 $ (565 ) $ 14,834 $ (10 ) $ 217,899 $ (575 ) |
Schedule of amortized cost and estimated fair value of available-for-sale debt securities by contractual maturity | The following table summarizes the amortized cost and estimated fair value of available-for-sale debt securities at September 30, 2016 and December 31, 2015 , by contractual maturity (in thousands): September 30, 2016 December 31, 2015 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Mature in one year or less $ 194,917 $ 194,997 $ 186,311 $ 186,118 Mature after one year through three years 75,623 75,750 106,377 106,086 Mature in more than three years 8,293 8,302 8,139 8,061 Total $ 278,833 $ 279,049 $ 300,827 $ 300,265 |
Derivative Financial Instrume21
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments at gross fair value reflected in condensed consolidated balance sheets | The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 , respectively (in thousands): September 30, 2016 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative Assets (a): Foreign exchange contracts $ 1,109 $ — $ 1,109 Derivative Liabilities (b): Foreign exchange contracts (2,612 ) — (2,612 ) December 31, 2015 Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Total Fair Value Derivative Assets (a): Foreign exchange contracts $ 1,390 $ 41 $ 1,431 Derivative Liabilities (b): Foreign exchange contracts (1,250 ) (48 ) (1,298 ) (a) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. (b) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued and other liabilities in the Condensed Consolidated Balance Sheets. |
Schedule of pre-tax effect of derivative instruments designated as cash flow hedges in condensed consolidated statements of operations | The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Loss Recognized in OCI - Effective Portion Loss Reclassified from AOCI into Income - Effective Portion Loss Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing 2016 2015 2016 (a) 2015 (b) Location 2016 2015 Cash flow hedges: Foreign exchange contracts $ (1,804 ) $ (545 ) $ (320 ) $ (369 ) Foreign currency exchange loss and other, net $ (141 ) $ (45 ) Total $ (1,804 ) $ (545 ) $ (320 ) $ (369 ) $ (141 ) $ (45 ) (a) Includes gains and losses reclassified from AOCI into net loss for the effective portion of cash flow hedges, of which a $0.3 million loss within costs and operating expenses and less than a $0.1 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended September 30, 2016 . (b) Includes gains and losses reclassified from AOCI into net loss for the effective portion of cash flow hedges, of which a $1.2 million loss within costs and operating expenses and a $1.5 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended September 30, 2015 . Nine Months Ended September 30, Loss Recognized in OCI- Loss Reclassified from AOCI Loss Recognized - Ineffective Portion and 2016 2015 2016 (a) 2015 (b) Location 2016 2015 Cash flow hedges: Foreign exchange contracts $ (1,949 ) $ (1,596 ) $ (1,006 ) $ (414 ) Foreign currency exchange loss and other, net $ (491 ) $ (169 ) Total $ (1,949 ) $ (1,596 ) $ (1,006 ) $ (414 ) $ (491 ) $ (169 ) (a) Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $1.0 million loss within costs and operating expenses and a less than $0.1 million loss within revenue, were recognized within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2016 . (b) Includes gains and losses reclassified from AOCI into net loss for the effective portion of cash flow hedges, of which a $6.6 million loss within costs and operating expenses and a $6.2 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2015 . |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of recorded value and accumulated amortization of major classes of intangible assets | The recorded value and accumulated amortization of major classes of intangible assets were as follows (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Balance, September 30, 2016 Licenses $ 11,256 $ (7,859 ) $ 3,397 Technology acquired in acquisitions 8,613 (8,613 ) — Customer relationships and other intangible assets acquired in acquisitions 35,849 (18,290 ) 17,559 $ 55,718 $ (34,762 ) $ 20,956 Balance, December 31, 2015 Licenses $ 11,454 $ (7,280 ) $ 4,174 Technology acquired in acquisitions 8,613 (8,613 ) — Customer relationships and other intangible assets acquired in acquisitions 35,849 (14,782 ) 21,067 $ 55,916 $ (30,675 ) $ 25,241 |
Schedule of expected future annual amortization expense of intangible assets | The following table summarizes the expected future annual amortization expense of intangible assets recorded on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2016 , assuming no impairment charges (in thousands): For the Years Ending December 31, Amortization Expense 2016 (remaining three months) $ 1,426 2017 5,343 2018 5,260 2019 4,235 2020 3,891 Thereafter 801 Total expected future amortization $ 20,956 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of convertible notes | The Notes consist of the following (in thousands): September 30, 2016 December 31, 2015 Liability component: Principal $ 345,000 $ 345,000 Less: debt discount, net of amortization and reclassification of debt issuance costs (55,242 ) (63,373 ) Net carrying amount $ 289,758 $ 281,627 Equity component (a) $ 73,013 $ 73,013 (a) Recorded in the condensed consolidated balance sheets within additional paid-in capital, net of $2.0 million issuance costs in equity |
Schedule of total interest expense related to notes | The following table sets forth total interest expense recognized related to the Notes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 1.25% coupon $ 1,078 $ 1,078 $ 3,234 $ 3,234 Amortization of debt issuance costs 203 157 573 435 Amortization of debt discount 2,551 2,427 7,558 7,193 $ 3,832 $ 3,662 $ 11,365 $ 10,862 |
Schedule of carrying value of debt instrument | As of September 30, 2016 and December 31, 2015 , the fair value of the Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands): September 30, 2016 December 31, 2015 Fair Value Carrying Value Fair Value Carrying Value Convertible Senior Notes $ 355,350 $ 289,758 $ 307,481 $ 281,627 |
Commitments, Contingencies an24
Commitments, Contingencies and Legal Matters (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of purchase commitments | The following table summarizes the Company’s purchase commitments at September 30, 2016 (in thousands): Years Ending December 31, Purchase Commitments 2016 (remaining three months) $ 25,273 2017 3,230 2018 — 2019 — 2020 — Thereafter — Total minimum payments $ 28,503 |
Employee Equity Incentive Pla25
Employee Equity Incentive Plans and Stock-Based Compensation Expense (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock-based compensation expense | The following table is a summary of the major categories of stock-based compensation expense recognized in accordance with ASC 718, “Compensation—Stock Compensation” (“ASC 718”) for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of sales $ 1,784 $ 1,128 $ 4,882 $ 3,177 Research and development 2,765 3,438 7,709 7,913 Sales and marketing 2,207 1,825 6,237 5,018 General and administrative 4,057 3,584 10,878 9,694 Total stock-based compensation expense $ 10,813 $ 9,975 $ 29,706 $ 25,802 |
Summary of option activity | The following table summarizes option activity under all plans (in thousands, except weighted average exercise price and weighted average remaining contractual term): Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Intrinsic Value Outstanding, December 31, 2015 5,442 $ 39.46 Granted 1,282 $ 34.54 Exercised (352 ) $ 13.31 Forfeited (213 ) $ 39.47 Outstanding, September 30, 2016 6,159 $ 39.90 4.21 $ 83,020 Exercisable, September 30, 2016 3,604 $ 38.18 3.10 $ 53,971 Vested and expected to vest, September 30, 2016 5,984 $ 39.85 4.15 $ 80,667 |
Summary of restricted stock plan activity | The following table summarizes all award activity, which consists of restricted stock awards and restricted stock units (in thousands, except weighted average grant date fair value): Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2015 1,000 $ 48.44 Granted 669 34.05 Vested (286 ) 48.70 Cancelled (69 ) 45.75 Outstanding, September 30, 2016 1,314 $ 41.20 |
Summary of assumptions to estimate fair value | The following table summarizes the assumptions used in determining the fair value of the Company’s stock options granted to employees and directors and shares purchased by employees under the Company’s 2012 Employee Stock Purchase Plan (“ESPP”): Three Months Ended Nine Months Ended 2016 2015 2016 2015 OPTION SHARES: Expected Term (in years) 4.38 4.49 4.45 4.46 Volatility 0.47 0.36 0.44 0.36 Expected Dividends — — — — Risk Free Interest Rates 1.14 % 1.54 % 1.38 % 1.46 % Estimated Forfeitures 6.01 % 6.14 % 6.01 % 6.14 % Weighted Average Fair Value Per Share $ 14.24 $ 16.91 $ 13.12 $ 17.93 ESPP SHARES: Expected Term (in years) 1.24 1.22 1.23 1.22 Volatility 0.52 0.34 0.49 0.34 Expected Dividends — — — — Risk Free Interest Rates 0.54 % 0.41 % 0.59 % 0.39 % Weighted Average Fair Value Per Share $ 13.63 $ 16.50 $ 10.20 $ 16.49 |
Segment and Significant Conce26
Segment and Significant Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |
Revenue Information by Segments | The following table summarizes total revenue by type (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue: System and other revenue $ 27,496 $ 19,749 $ 76,618 $ 62,823 Reagent and disposable revenue 130,992 106,716 372,651 328,754 Total revenue $ 158,488 $ 126,465 $ 449,269 $ 391,577 |
Segment Revenue by Geography Region | The following table summarizes revenue by geographic region (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Geographic revenue information: North America $ 89,122 $ 73,627 $ 252,714 $ 232,119 International 69,366 52,838 196,555 159,458 Total revenue $ 158,488 $ 126,465 $ 449,269 $ 391,577 |
Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block] | The following table summarizes long-lived assets, excluding intangible assets and goodwill, by geographic region (in thousands): September 30, 2016 December 31, 2015 United States $ 129,966 $ 108,210 Other regions 21,261 19,429 Total long-lived assets $ 151,227 $ 127,639 |
Organization and Summary of S27
Organization and Summary of Significant Accounting Policies - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016USD ($)shares | Sep. 30, 2015shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2015shares | Dec. 31, 2015USD ($)customer | |
Concentration Risk [Line Items] | |||||
Percentage of cash and cash equivalents held by the Company's main financial institution | 65.00% | 66.00% | |||
Capitalized stock-based compensation expense included in inventory | $ 2.3 | $ 2.5 | |||
Total anti-dilutive common stock equivalent shares (in shares) | shares | 10,439,000 | 9,007,000 | 11,361,000 | 8,771,000 | |
Reclassification Of Debt Issuance Costs From Other Noncurrent Assets To Long Term Debt | $ 6 | $ 6 | |||
Accounts receivable | Credit concentration risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 11.00% | ||||
Number of customers | customer | 1 | ||||
Prepaid expenses and other current assets | |||||
Concentration Risk [Line Items] | |||||
Restricted cash | 3.7 | 3.7 | $ 2.7 | ||
Other Noncurrent Assets [Member] | |||||
Concentration Risk [Line Items] | |||||
Restricted cash | $ 3.4 | $ 3.4 | $ 2.1 |
Organization and Summary of S28
Organization and Summary of Significant Accounting Policies - Components of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 44,108 | $ 39,267 |
Work in Process | 66,097 | 62,153 |
Finished Goods | 45,515 | 47,270 |
Inventory, net | $ 155,720 | $ 148,690 |
Organization and Summary of S29
Organization and Summary of Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic: | ||||
Net loss | $ (10,907) | $ (22,901) | $ (27,740) | $ (38,725) |
Basic weighted shares outstanding (in shares) | 73,158 | 72,199 | 72,890 | 71,777 |
Net loss per share (in dollars per share) | $ (0.15) | $ (0.32) | $ (0.38) | $ (0.54) |
Diluted: | ||||
Net loss | $ (10,907) | $ (22,901) | $ (27,740) | $ (38,725) |
Basic weighted shares outstanding (in shares) | 73,158 | 72,199 | 72,890 | 71,777 |
Effect of dilutive securities: | ||||
Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes (in shares) | 0 | 0 | 0 | 0 |
Diluted weighted shares outstanding (in shares) | 73,158 | 72,199 | 72,890 | 71,777 |
Net loss per share (in dollars per share) | $ (0.15) | $ (0.32) | $ (0.38) | $ (0.54) |
Fair Value - Assets and Liabili
Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 115,718 | $ 112,568 |
Total short-term investments | 253,457 | 210,147 |
Foreign currency derivatives | 1,109 | 1,431 |
Total investments | 0 | 62,175 |
Assets, Total | 370,284 | 386,321 |
Foreign currency derivatives | 2,612 | 1,298 |
Liabilities, Total | 2,612 | 1,298 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 58,975 | 51,973 |
Total investments | 11,818 | |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 96,125 | 81,600 |
Total investments | 36,414 | |
Government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 12,684 | |
Total investments | 11,944 | |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 90,341 | 48,762 |
Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 8,016 | 15,128 |
Total investments | 1,999 | |
Fair value, measurements, recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 90,126 | 84,625 |
Total short-term investments | 0 | 0 |
Foreign currency derivatives | 0 | 0 |
Total investments | 0 | |
Assets, Total | 90,126 | 84,625 |
Foreign currency derivatives | 0 | 0 |
Liabilities, Total | 0 | 0 |
Fair value, measurements, recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 25,592 | 27,943 |
Total short-term investments | 253,457 | 210,147 |
Foreign currency derivatives | 1,109 | 1,431 |
Total investments | 62,175 | |
Assets, Total | 280,158 | 301,696 |
Foreign currency derivatives | 2,612 | 1,298 |
Liabilities, Total | 2,612 | 1,298 |
Fair value, measurements, recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Total short-term investments | 0 | 0 |
Foreign currency derivatives | 0 | 0 |
Total investments | 0 | |
Assets, Total | 0 | 0 |
Foreign currency derivatives | 0 | 0 |
Liabilities, Total | 0 | 0 |
Fair value, measurements, recurring | Asset-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Total investments | 0 | |
Fair value, measurements, recurring | Asset-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 58,975 | 51,973 |
Total investments | 11,818 | |
Fair value, measurements, recurring | Asset-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Total investments | 0 | |
Fair value, measurements, recurring | Corporate debt securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Total investments | 0 | |
Fair value, measurements, recurring | Corporate debt securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 96,125 | 81,600 |
Total investments | 36,414 | |
Fair value, measurements, recurring | Corporate debt securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Total investments | 0 | |
Fair value, measurements, recurring | Government agency securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | |
Total investments | 0 | |
Fair value, measurements, recurring | Government agency securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 12,684 | |
Total investments | 11,944 | |
Fair value, measurements, recurring | Government agency securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | |
Total investments | 0 | |
Fair value, measurements, recurring | Commercial paper | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Fair value, measurements, recurring | Commercial paper | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 90,341 | 48,762 |
Fair value, measurements, recurring | Commercial paper | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Fair value, measurements, recurring | Other securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 0 | 0 |
Total investments | 0 | |
Fair value, measurements, recurring | Other securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | 8,016 | 15,128 |
Total investments | 1,999 | |
Fair value, measurements, recurring | Other securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total short-term investments | $ 0 | 0 |
Total investments | $ 0 |
Fair Value - Liabilities Measur
Fair Value - Liabilities Measured at Fair Value on Non-Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Liabilities: | ||
Convertible senior notes | $ 355,350 | $ 307,481 |
Total | 355,350 | 307,481 |
Level 2 | ||
Liabilities: | ||
Convertible senior notes | 355,350 | 307,481 |
Fair value, measurements, nonrecurring | Level 1 | ||
Liabilities: | ||
Convertible senior notes | 0 | 0 |
Total | 0 | 0 |
Fair value, measurements, nonrecurring | Level 2 | ||
Liabilities: | ||
Convertible senior notes | 355,350 | 307,481 |
Total | 355,350 | 307,481 |
Fair value, measurements, nonrecurring | Level 3 | ||
Liabilities: | ||
Convertible senior notes | 0 | 0 |
Total | $ 0 | $ 0 |
Investments - Schedule of Avail
Investments - Schedule of Available-for-Sale Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Short-term investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | $ 253,247 | $ 210,470 |
Gross Unrealized Gain | 210 | 10 |
Gross Unrealized Loss | 0 | 333 |
Estimated Fair Value | 253,457 | 210,147 |
Short-term investments | Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 58,914 | 52,102 |
Gross Unrealized Gain | 61 | 0 |
Gross Unrealized Loss | 0 | 129 |
Estimated Fair Value | 58,975 | 51,973 |
Short-term investments | Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 115,902 | 76,711 |
Gross Unrealized Gain | 31 | 3 |
Gross Unrealized Loss | 0 | 9 |
Estimated Fair Value | 115,933 | 76,705 |
Short-term investments | Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 96,017 | 81,777 |
Gross Unrealized Gain | 108 | 0 |
Gross Unrealized Loss | 0 | 177 |
Estimated Fair Value | 96,125 | 81,600 |
Short-term investments | Government agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 12,701 | |
Gross Unrealized Gain | 0 | |
Gross Unrealized Loss | 17 | |
Estimated Fair Value | 12,684 | |
Short-term investments | Other securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 8,000 | 15,122 |
Gross Unrealized Gain | 16 | 7 |
Gross Unrealized Loss | 0 | 1 |
Estimated Fair Value | 8,016 | 15,128 |
Short-term investments | Amounts classified as cash equivalents | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 25,586 | 27,943 |
Gross Unrealized Gain | 6 | 0 |
Gross Unrealized Loss | 0 | 0 |
Estimated Fair Value | $ 25,592 | 27,943 |
Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 62,414 | |
Gross Unrealized Gain | 3 | |
Gross Unrealized Loss | 242 | |
Estimated Fair Value | 62,175 | |
Investments | Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 11,884 | |
Gross Unrealized Gain | 0 | |
Gross Unrealized Loss | 66 | |
Estimated Fair Value | 11,818 | |
Investments | Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 36,530 | |
Gross Unrealized Gain | 3 | |
Gross Unrealized Loss | 119 | |
Estimated Fair Value | 36,414 | |
Investments | Government agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 11,999 | |
Gross Unrealized Gain | 0 | |
Gross Unrealized Loss | 55 | |
Estimated Fair Value | 11,944 | |
Investments | Other securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 2,001 | |
Gross Unrealized Gain | 0 | |
Gross Unrealized Loss | 2 | |
Estimated Fair Value | $ 1,999 |
Investments - Additional Inform
Investments - Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | ||
Proceeds from sales of marketable securities | $ 86,310 | $ 49,173 |
Investments - Schedule of Marke
Investments - Schedule of Marketable Securities with Unrealized Losses (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Fair Value | |
Less Than 12 months | $ 203,065 |
More than 12 months | 14,834 |
Total | 217,899 |
Unrealized Loss | |
Less Than 12 months | (565) |
More than 12 months | (10) |
Total | (575) |
Asset-backed securities | |
Fair Value | |
Less Than 12 months | 57,866 |
More than 12 months | 5,923 |
Total | 63,789 |
Unrealized Loss | |
Less Than 12 months | (192) |
More than 12 months | (3) |
Total | (195) |
Corporate debt securities | |
Fair Value | |
Less Than 12 months | 101,701 |
More than 12 months | 8,911 |
Total | 110,612 |
Unrealized Loss | |
Less Than 12 months | (289) |
More than 12 months | (7) |
Total | (296) |
Commercial paper | |
Fair Value | |
Less Than 12 months | 11,374 |
More than 12 months | 0 |
Total | 11,374 |
Unrealized Loss | |
Less Than 12 months | (9) |
More than 12 months | 0 |
Total | (9) |
Government agency securities | |
Fair Value | |
Less Than 12 months | 24,628 |
More than 12 months | 0 |
Total | 24,628 |
Unrealized Loss | |
Less Than 12 months | (72) |
More than 12 months | 0 |
Total | (72) |
Other securities | |
Fair Value | |
Less Than 12 months | 7,496 |
More than 12 months | 0 |
Total | 7,496 |
Unrealized Loss | |
Less Than 12 months | (3) |
More than 12 months | 0 |
Total | $ (3) |
Investments - Schedule of Amort
Investments - Schedule of Amortized Cost and Estimated Fair Value of Available-for-Sale Debt Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Amortized Cost | ||
Mature in one year or less | $ 194,917 | $ 186,311 |
Mature after one year through three years | 75,623 | 106,377 |
Mature in more than three years | 8,293 | 8,139 |
Total | 278,833 | 300,827 |
Estimated Fair Value | ||
Mature in one year or less | 194,997 | 186,118 |
Mature after one year through three years | 75,750 | 106,086 |
Mature in more than three years | 8,302 | 8,061 |
Total | $ 279,049 | $ 300,265 |
Derivative Financial Instrume36
Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Derivatives, Fair Value [Line Items] | |||||
Net deferred gain (loss) associated with cash flow hedges | $ (1,400) | $ (1,400) | $ (400) | ||
Gains (losses) related to loss of hedge designation on discontinued cash flow hedges | 0 | $ 0 | 0 | $ 0 | |
Gain recognized for foreign currency forward contracts | (2,400) | $ 2,300 | (2,900) | $ 4,000 | |
Cash flow hedges | Fair value of derivatives designated as hedge instruments | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional principle amounts of Company's derivative instruments | 91,000 | 91,000 | 117,600 | ||
Cash flow hedges | Fair value of derivatives not designated as hedge instruments | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional principle amounts of Company's derivative instruments | $ 0 | $ 0 | $ 25,900 |
Derivative Financial Instrume37
Derivative Financial Instruments - Derivative Instruments at Gross Fair Value Reflected in Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Foreign exchange contracts, Assets | $ 1,109 | $ 1,431 |
Foreign exchange contracts, Liabilities | (2,612) | (1,298) |
Fair Value of Derivatives Designated as Hedge Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Foreign exchange contracts, Assets | 1,109 | 1,390 |
Foreign exchange contracts, Liabilities | (2,612) | (1,250) |
Fair Value of Derivatives Not Designated as Hedge Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Foreign exchange contracts, Assets | 0 | 41 |
Foreign exchange contracts, Liabilities | $ 0 | $ (48) |
Derivative Financial Instrume38
Derivative Financial Instruments - Pre-tax Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss Recognized in OCI - Effective Portion | $ (1,804) | $ (545) | $ (1,949) | $ (1,596) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | (320) | (369) | (1,006) | (414) |
Cash flow hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss Recognized in OCI - Effective Portion | (1,804) | (545) | (1,949) | (1,596) |
Loss Reclassified from AOCI into Income - Effective Portion | (320) | (369) | (1,006) | (414) |
Loss Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing | (141) | (45) | (491) | (169) |
Foreign exchange contracts | Cash flow hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | (1,804) | (545) | (1,949) | (1,596) |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | (320) | (369) | (1,006) | (414) |
Foreign exchange contracts | Cash flow hedges | Foreign currency exchange loss and other, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing | $ (141) | $ (45) | $ (491) | $ (169) |
Derivative Financial Instrume39
Derivative Financial Instruments - Pre-tax Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Parenth) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain recognized for foreign currency forward contracts | $ (2.4) | $ 2.3 | $ (2.9) | $ 4 |
Operating expense | Accumulated net gain (loss) from designated or qualifying cash flow hedges | Reclassified from AOCI | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (0.3) | (1.2) | (1) | (6.6) |
Revenue | Accumulated net gain (loss) from designated or qualifying cash flow hedges | Reclassified from AOCI | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 1.5 | $ 0 | $ 6.2 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible asset amortization expense | $ 1,400 | $ 1,500 | $ 4,286 | $ 4,814 |
Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets | 3 years | |||
Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets | 15 years |
Intangible Assets - Net Carryin
Intangible Assets - Net Carrying Value and Accumulated Amortization of Major Classes of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 55,718 | $ 55,916 |
Accumulated Amortization | (34,762) | (30,675) |
Net Carrying Amount | 20,956 | 25,241 |
Licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 11,256 | 11,454 |
Accumulated Amortization | (7,859) | (7,280) |
Net Carrying Amount | 3,397 | 4,174 |
Technology acquired in acquisitions | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,613 | 8,613 |
Accumulated Amortization | (8,613) | (8,613) |
Net Carrying Amount | 0 | 0 |
Customer relationships and other intangible assets acquired in acquisitions | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 35,849 | 35,849 |
Accumulated Amortization | (18,290) | (14,782) |
Net Carrying Amount | $ 17,559 | $ 21,067 |
Intangible Assets - Expected Fu
Intangible Assets - Expected Future Annual Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2016 (remaining three months) | $ 1,426 | |
2,016 | 5,343 | |
2,017 | 5,260 | |
2,018 | 4,235 | |
2,019 | 3,891 | |
Thereafter | 801 | |
Net Carrying Amount | $ 20,956 | $ 25,241 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Tax Contingency [Line Items] | |||||
Provision (benefit) for income taxes | $ 1,193,000 | $ (176,000) | $ 2,039,000 | $ 602,000 | |
Percentage of federal statutory tax rate | 34.00% | 34.00% | |||
Income tax expense or benefit recorded in US federal and state tax jurisdictions | 0 | ||||
Uncertain tax positions, interest and penalties | $ 0 | 0 | |||
Accrued interest or penalties | $ 0 | $ 0 | $ 300,000 | ||
Domestic | Earliest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examination, open tax year | 1,996 | ||||
Domestic | Latest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examination, open tax year | 2,015 | ||||
Foreign | Earliest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examination, open tax year | 2,010 | ||||
Foreign | Latest Tax Year | |||||
Income Tax Contingency [Line Items] | |||||
Income tax examination, open tax year | 2,015 |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Feb. 28, 2014 | Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||
Convertible notes issued | $ 289,758,000 | $ 281,627,000 | |
Initial strike price of common stock (in dollars per share) | $ 65.10 | ||
Conversion of notes, cap price (in dollars per share) | $ 78.61 | ||
Cost of purchased capped calls | $ 25,100,000 | ||
Closing price of common stock (in dollars per share) | $ 52.69 | ||
Convertible senior notes | |||
Debt Instrument [Line Items] | |||
Convertible notes issued | $ 345,000,000 | ||
Convertible notes fixed rate (as percent) | 1.25% | ||
Convertible notes, maturity date | Feb. 1, 2021 | ||
Convertible debt, conversion rate | 0.0153616 | ||
Conversion price per share of common stock (in dollars per share) | $ 65.10 | ||
Debt converted into number of common shares (in shares) | 5,300,000 | ||
Convertible debt maturity date | Aug. 1, 2020 | ||
Convertible debt, interest rate | 5.00% | ||
Convertible debt, fair value of liability | $ 270,000,000 | ||
Convertible debt discount, recorded in additional paid in capital | $ 75,000,000 | ||
Debt instrument transaction costs | 7,200,000 | ||
Convertible senior notes | Scenario One | |||
Debt Instrument [Line Items] | |||
Debt instrument trading days | 20 days | ||
Consecutive trading days | 30 days | ||
Percentage of conversion price | 130.00% | ||
Convertible senior notes | Scenario Two | |||
Debt Instrument [Line Items] | |||
Notes Measurement Period | 5 days | ||
Consecutive trading days | 5 days | ||
Percentage of conversion price | 98.00% | ||
Equity component | |||
Debt Instrument [Line Items] | |||
Debt instrument transaction costs | $ 2,000,000 | $ 2,000,000 |
Convertible Senior Notes - Sche
Convertible Senior Notes - Schedule of Convertible Notes (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Feb. 28, 2014 |
Liability component: | |||
Net carrying amount | $ 289,758,000 | $ 281,627,000 | |
Equity component | 73,013,000 | 73,013,000 | |
Convertible senior notes | |||
Liability component: | |||
Principal | 345,000,000 | 345,000,000 | |
Less: debt discount, net of amortization and reclassification of debt issuance costs | $ 55,242,000 | $ 63,373,000 | |
Net carrying amount | $ 345,000,000 |
Convertible Senior Notes - Sc46
Convertible Senior Notes - Schedule of Convertible Notes (Parenth) (Details) $ in Millions | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Feb. 28, 2014 | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | |
Equity component | |||
Debt Instrument [Line Items] | |||
Debt instrument transaction costs | $ 2 | $ 2 | |
Convertible senior notes | |||
Debt Instrument [Line Items] | |||
Debt instrument transaction costs | $ 7.2 | ||
Convertible debt, conversion rate | 0.0153616 |
Convertible Senior Notes - Sc47
Convertible Senior Notes - Schedule of Total Interest Expense Related to Notes (Details) - Convertible senior notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Interest Expense [Line Items] | ||||
1.25% coupon | $ 1,078 | $ 1,078 | $ 3,234 | $ 3,234 |
Amortization of debt issuance costs | 203 | 157 | 573 | 435 |
Amortization of debt discount | 2,551 | 2,427 | 7,558 | 7,193 |
Total interest expense | $ 3,832 | $ 3,662 | $ 11,365 | $ 10,862 |
Convertible Senior Notes - Sc48
Convertible Senior Notes - Schedule of Carrying Value of Debt Instrument (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Fair Value | $ 355,350 | $ 307,481 |
Carrying Value | 289,758 | 281,627 |
Level 2 | ||
Debt Instrument [Line Items] | ||
Fair Value | 355,350 | 307,481 |
Carrying Value | $ 289,758 | $ 281,627 |
Commitments, Contingencies an49
Commitments, Contingencies and Legal Matters - Summary of Purchase Commitments (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Years Ending December 31, | |
2016 (remaining three months) | $ 25,273 |
2,017 | 3,230 |
2,018 | 0 |
2,019 | 0 |
2,020 | 0 |
Thereafter | 0 |
Total minimum payments | $ 28,503 |
Commitments, Contingencies an50
Commitments, Contingencies and Legal Matters - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Accrued and other liabilities | ||
Loss Contingencies [Line Items] | ||
Estimated arbitration proceeding charge | $ 20 | $ 20 |
Employee Equity Incentive Pla51
Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 10,813 | $ 9,975 | $ 29,706 | $ 25,802 |
Cost of sales | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 1,784 | 1,128 | 4,882 | 3,177 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 2,765 | 3,438 | 7,709 | 7,913 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 2,207 | 1,825 | 6,237 | 5,018 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 4,057 | $ 3,584 | $ 10,878 | $ 9,694 |
Employee Equity Incentive Pla52
Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding, December 31, 2015 | shares | 5,442 |
Granted | shares | 1,282 |
Exercised | shares | (352) |
Forfeited | shares | (213) |
Outstanding, September 30, 2016 | shares | 6,159 |
Exercisable, September 30, 2016 | shares | 3,604 |
Vested and expected to vest, September 30, 2016 | shares | 5,984 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Outstanding, December 31, 2015 | $ / shares | $ 39.46 |
Granted | $ / shares | 34.54 |
Exercised | $ / shares | 13.31 |
Forfeited | $ / shares | 39.47 |
Outstanding, September 30, 2016 | $ / shares | 39.90 |
Exercisable, September 30, 2016 | $ / shares | 38.18 |
Vested and expected to vest, September 30, 2016 | $ / shares | $ 39.85 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | |
Weighted Average Remaining Contractual Term (in years), Outstanding, September 30, 2015 | 4 years 75 days |
Weighted Average Remaining Contractual Term (in years), Exercisable, September 30, 2015 | 3 years 35 days |
Weighted Average Remaining Contractual Term (in years), Vested and expected to vest, September 30, 2015 | 4 years 55 days |
Intrinsic Value, Outstanding, September 30, 2015 | $ | $ 83,020 |
Intrinsic Value, Exercisable, September 30, 2015 | $ | 53,971 |
Intrinsic Value, Vested and expected to vest, September 30, 2015 | $ | $ 80,667 |
Employee Equity Incentive Pla53
Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Restricted Stock Plan Activity (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding, Beginning Balance (in shares) | shares | 1,000 |
Granted (in shares) | shares | 669 |
Vested (in shares) | shares | (286) |
Cancelled (in shares) | shares | (69) |
Outstanding, Ending Balance (in shares) | shares | 1,314 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding, Beginning Balance (in dollars per share) | $ / shares | $ 48.44 |
Granted (in dollars per share) | $ / shares | 34.05 |
Vested (in dollars per share) | $ / shares | 48.70 |
Cancelled (in dollars per share) | $ / shares | 45.75 |
Outstanding, Ending Balance (in dollars per share) | $ / shares | $ 41.20 |
Employee Equity Incentive Pla54
Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Assumptions to Estimate Fair Value (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
OPTION SHARES | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected Term (in years) | 4 years 138 days | 4 years 5 months 26 days | 4 years 164 days | 4 years 5 months 14 days |
Volatility (as percent) | 47.00% | 36.00% | 44.00% | 36.00% |
Expected Dividends (as percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Risk Free Interest Rates (as percent) | 1.14% | 1.54% | 1.38% | 1.46% |
Estimated Forfeitures (as percent) | 6.01% | 6.14% | 6.01% | 6.14% |
Weighted Average Fair Value Per Share (in dollars per share) | $ 14.24 | $ 16.91 | $ 13.12 | $ 17.93 |
ESPP SHARES | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected Term (in years) | 1 year 88 days | 1 year 80 days | 1 year 85 days | 1 year 80 days |
Volatility (as percent) | 52.00% | 34.00% | 49.00% | 34.00% |
Expected Dividends (as percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Risk Free Interest Rates (as percent) | 0.54% | 0.41% | 0.59% | 0.39% |
Weighted Average Fair Value Per Share (in dollars per share) | $ 13.63 | $ 16.50 | $ 10.20 | $ 16.49 |
Segment and Significant Conce55
Segment and Significant Concentrations - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of operating business segment | segment | 1 | |||
Product sales to customers | $ 158,488 | $ 126,465 | $ 449,269 | $ 391,577 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Product sales to customers | $ 87,200 | $ 70,700 | $ 246,100 | $ 220,300 |
Segment and Significant Conce56
Segment and Significant Concentrations - Revenue Information by Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue from External Customer [Line Items] | ||||
Total revenue | $ 158,488 | $ 126,465 | $ 449,269 | $ 391,577 |
System and other revenue | ||||
Revenue from External Customer [Line Items] | ||||
Total revenue | 27,496 | 19,749 | 76,618 | 62,823 |
Reagent and disposable revenue | ||||
Revenue from External Customer [Line Items] | ||||
Total revenue | $ 130,992 | $ 106,716 | $ 372,651 | $ 328,754 |
Segment and Significant Conce57
Segment and Significant Concentrations - Segment Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | $ 158,488 | $ 126,465 | $ 449,269 | $ 391,577 | |
Long-lived assets | 151,227 | 151,227 | $ 127,639 | ||
North America | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | 89,122 | 73,627 | 252,714 | 232,119 | |
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | 87,200 | 70,700 | 246,100 | 220,300 | |
Long-lived assets | 129,966 | 129,966 | 108,210 | ||
Non-US | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-lived assets | 21,261 | 21,261 | $ 19,429 | ||
International Countries [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | $ 69,366 | $ 52,838 | $ 196,555 | $ 159,458 |