Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 01, 2017 | Apr. 28, 2017 | |
Entity Information [Line Items] | ||
Entity Registrant Name | FITBIT INC | |
Entity Central Index Key | 1,447,599 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 1, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 185,209,065 | |
Common Class B [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 43,306,048 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 374,279 | $ 301,320 |
Marketable securities | 351,837 | 404,693 |
Accounts receivable, net | 194,834 | 477,825 |
Inventories | 200,331 | 230,387 |
Prepaid expenses and other current assets | 58,775 | 66,346 |
Total current assets | 1,180,056 | 1,480,571 |
Property and equipment, net | 85,039 | 76,553 |
Goodwill | 51,036 | 51,036 |
Intangible assets, net | 26,145 | 27,521 |
Deferred tax assets | 184,040 | 174,097 |
Other assets | 12,340 | 10,448 |
Total assets | 1,538,656 | 1,820,226 |
Current liabilities: | ||
Accounts payable | 127,542 | 313,773 |
Accrued liabilities | 339,896 | 390,561 |
Deferred revenue | 46,904 | 49,904 |
Income taxes payable | 2,466 | 7,694 |
Total current liabilities | 516,808 | 761,932 |
Other liabilities | 56,280 | 59,762 |
Total liabilities | 573,088 | 821,694 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Class A and Class B common stock | 23 | 23 |
Additional paid-in capital | 882,544 | 859,345 |
Accumulated other comprehensive loss | (2,125) | (978) |
Retained earnings | 85,126 | 140,142 |
Total stockholders’ equity | 965,568 | 998,532 |
Total liabilities and stockholders’ equity | $ 1,538,656 | $ 1,820,226 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 298,942 | $ 505,356 |
Cost of revenue | 180,643 | 271,601 |
Gross profit | 118,299 | 233,755 |
Operating expenses: | ||
Research and development | 87,758 | 72,248 |
Sales and marketing | 91,174 | 107,051 |
General and administrative | 30,746 | 35,702 |
Total operating expenses | 209,678 | 215,001 |
Operating income (loss) | (91,379) | 18,754 |
Interest income, net | 1,096 | 582 |
Other income, net | 533 | 1,568 |
Income (loss) before income taxes | (89,750) | 20,904 |
Income tax expense (benefit) | (29,671) | 9,869 |
Net income (loss) | $ (60,079) | $ 11,035 |
Net income (loss) per share: | ||
Basic (in dollars per share) | $ (0.27) | $ 0.05 |
Diluted (in dollars per share) | $ (0.27) | $ 0.05 |
Shares used to compute net income (loss) per share: | ||
Basic (in shares) | 226,511 | 216,043 |
Diluted (in shares) | 226,511 | 242,009 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (60,079) | $ 11,035 |
Cash flow hedges: | ||
Change in unrealized gain (loss) on cash flow hedges, net of tax benefit (expense) of $(202) and $1,715, respectively | (1,160) | (2,533) |
Less: reclassification for realized net gains included in net income, net of tax expense (benefit) of $(38) and $725, respectively | 217 | (1,571) |
Net change, net of tax | (943) | (4,104) |
Change in foreign currency translation adjustment, net of tax | (271) | (72) |
Change in unrealized loss on available-for-sale investments, net of tax | 67 | 59 |
Comprehensive income (loss) | $ (61,226) | $ 6,918 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Change in unrealized gain (loss) on cash flow hedges, tax | $ (202) | $ 1,715 |
Reclassification for realized net gains included in net income, tax | $ (38) | $ 725 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ (60,079) | $ 11,035 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Provision for inventory obsolescence | 3,997 | 231 |
Depreciation | 9,140 | 6,475 |
Write-off of property and equipment | 0 | 484 |
Amortization of intangible assets | 1,377 | 533 |
Stock-based compensation | 22,493 | 17,770 |
Deferred income taxes | (5,005) | (4,581) |
Other | (183) | 547 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 282,917 | 129,218 |
Inventories | 27,193 | (34,149) |
Prepaid expenses and other assets | (976) | (16,547) |
Fitbit Force recall reserve | (295) | (783) |
Accounts payable | (176,619) | (16,317) |
Accrued liabilities and other liabilities | (52,173) | 38,729 |
Deferred revenue | (3,000) | 6,481 |
Income taxes payable | 351 | 4,317 |
Net cash provided by operating activities | 49,138 | 143,443 |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (28,157) | (16,676) |
Purchases of marketable securities | (129,661) | (62,576) |
Sales of marketable securities | 4,256 | 0 |
Maturities of marketable securities | 178,028 | 121,598 |
Net cash provided by investing activities | 24,466 | 42,346 |
Cash Flows from Financing Activities | ||
Payments of offering costs | 0 | (1,236) |
Proceeds from issuance of common stock | 2,581 | 2,374 |
Taxes paid related to net share settlement of restricted stock units | (3,127) | (574) |
Net cash provided by (used in) financing activities | (546) | 564 |
Net increase in cash and cash equivalents | 73,058 | 186,353 |
Effect of exchange rate on cash and cash equivalents | (99) | (137) |
Cash and cash equivalents at beginning of period | 301,320 | 535,846 |
Cash and cash equivalents at end of period | $ 374,279 | $ 722,062 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying condensed consolidated financial statements of Fitbit, Inc. (the “Company”) are unaudited. The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements of the Company. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and in management’s opinion, includes all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position, its results of operations, and cash flows for the interim periods presented. The results of operations for the three months ended April 1, 2017 are not necessarily indicative of the results to be expected for the full fiscal year or any other period. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission on March 1, 2017. There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K. The Company’s fiscal year ends on December 31 of each year. In the first quarter of 2016, the Company adopted a 4-4-5 week quarterly calendar. There were 91 and 92 days in the three months ended April 1, 2017 and April 2, 2016 , respectively. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. Reclassifications of certain prior period amounts in the condensed consolidated financial statements have been made to conform to the current period presentation. Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. The primary estimates and assumptions made by management are related to revenue recognition, reserves for sales returns and incentives, reserves for warranty, valuation of stock options, fair value of derivative assets and liabilities, allowance for doubtful accounts, inventory valuation, fair value of goodwill and acquired tangible and intangible assets and liabilities assumed during acquisitions, the number of reporting segments, the recoverability of intangible assets and their useful lives, contingencies, and the valuations of deferred income tax assets and uncertain tax positions. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Non-Monetary Transaction The Company entered into an agreement with a third party during 2016 to exchange inventory for advertising credits and cash. The Company recorded the transaction based on the estimated fair value of the products exchanged. The Company recorded $15.0 million of revenue during 2016 related to the transaction. The $13.0 million of unused advertising credits remaining as of December 31, 2016 were recorded in prepaid expenses and other current assets and other assets. Such credits are expected to be used over three years , and will be expensed as advertising services are received. During the three months ended April 1, 2017, $0.1 million of credits were utilized and there were $12.9 million in unused advertising credits remaining as of April 1, 2017. Out-of-Period Adjustment During the first quarter of 2016, the Company identified an error, which resulted in an understatement of income tax expense by $3.0 million for the year ended December 31, 2015. The Company recorded an out-of-period adjustment to correct the error in the quarter ended April 2, 2016. The Company assessed the materiality of this error and concluded the error was not material to the 2015 and 2016 consolidated financial statements, and therefore, the Company recorded the correction in the first quarter of 2016. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”), issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 will become effective for the Company on January 1, 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. In April 2016, the FASB issued ASU 2016-10, which clarifies guidance on identifying performance obligations and licensing implementation. The Company currently expects to adopt the new revenue recognition standard as of January 1, 2018, utilizing the modified retrospective transition method. Although the new standard may, in certain circumstances, impact the timing of when revenue is recognized for products shipped, and the timing and classification of certain sales incentives, the Company believes the new guidance is consistent with its current revenue recognition policy. Therefore, the Company does not currently expect adoption to have a material impact on its consolidated balances sheets or statements of operations. The Company is continuing to evaluate the impact of the adoption and preliminary assessments are subject to change. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lease assets and lease liabilities arising from leases, including operating leases, to be recognized on the balance sheet. ASU 2016-02 will become effective for the Company on January 1, 2019, and requires adoption using a modified retrospective approach. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. The Company anticipates that the adoption will have a material impact on its consolidated balance sheets; however, the Company does not expect the adoption to have a material impact on its consolidated statements of operations. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Upon adoption, ASU 2016-09 requires that excess tax benefits for share-based payments be recorded as a reduction of income tax expense and reflected within operating cash flows, rather than being recorded within equity and reflected within financing cash flows. ASU 2016-09 also permits the repurchase of more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on the Company’s cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. ASU 2016-09 became effective for the Company on January 1, 2017. The adoption of the standard resulted in a cumulative effect adjustment of $4.9 million to increase retained earnings as of January 1, 2017, related to the recognition of previously unrecognized excess tax benefits using the modified retrospective method. The Company elected to apply the change in presentation of excess tax benefits in the condensed consolidated statement of cash flows retrospectively, which resulted in an increase in net cash provided by operations and a decrease in net cash provided by financing activities of $6.0 million for the three months ended April 2, 2016. The Company also elected to make an accounting policy change to recognize forfeitures starting on January 1, 2017 on a prospective basis. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to accounts receivable and available for sale debt securities. ASU 2016-13 will become effective for the Company on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) . ASU 2016-15 provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 will become effective for the Company on January 1, 2018 and early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. The second step measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the new standard, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This ASU will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying values of the Company’s accounts receivable, accounts payable, and accrued liabilities approximated their fair values due to the short period of time to maturity or repayment. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): April 1, 2017 Level 1 Level 2 Total Assets: Money market funds $ 64,697 $ — $ 64,697 U.S. government agencies — 44,608 44,608 Corporate debt securities — 408,860 408,860 Derivative assets — 1,183 1,183 Total $ 64,697 $ 454,651 $ 519,348 Liabilities: Derivative liabilities $ — $ 1,635 $ 1,635 December 31, 2016 Level 1 Level 2 Total Assets: Money market funds $ 50,125 $ — $ 50,125 U.S. government agencies — 86,526 86,526 Corporate debt securities — 390,286 390,286 Derivative assets — 10,625 10,625 Total $ 50,125 $ 487,437 $ 537,562 Liabilities: Derivative liabilities $ — $ 3,780 $ 3,780 The fair value of the Company’s Level 1 financial instruments is based on quoted market prices in active markets for identical instruments. The fair value of the Company’s Level 2 financial instruments is based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data. In addition, Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, which are further discussed in Note 3. Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date using inputs such as spot rates, forward rates, and discount rates. There is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets. There were no Level 3 assets or liabilities as of April 1, 2017 and December 31, 2016. There have been no transfers between fair value measurement levels during the three months ended April 1, 2017 and April 2, 2016 . |
Financial Instruments
Financial Instruments | 3 Months Ended |
Apr. 01, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Financial Instruments | Financial Instruments Cash, Cash Equivalents, and Marketable Securities The Company’s marketable securities are classified as available-for-sale as of the balance sheet date and are reported at fair value with unrealized gains and losses reported, net of tax, as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity. Because the Company views marketable securities as available to support current operations as needed, it has classified all available-for-sale securities as current assets. Realized gains or losses and other-than-temporary impairments, if any, on available-for-sale securities are reported in other income (expense), net as incurred. Investments are reviewed periodically to identify potential other-than-temporary impairments. No impairment loss has been recorded on the securities included in the tables below because the Company believes that the decrease in fair value of these securities is temporary and expects to recover up to, or beyond, the initial cost of investment for these securities. The following table sets forth cash, cash equivalents, and marketable securities as of April 1, 2017 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 207,951 $ — $ — $ 207,951 $ 207,951 $ — Money market funds 64,697 — — 64,697 64,697 — U.S. government agencies 44,631 — (23 ) 44,608 7,098 37,510 Corporate debt securities 408,957 43 (140 ) 408,860 94,533 314,327 Total $ 726,236 $ 43 $ (163 ) $ 726,116 $ 374,279 $ 351,837 The following table sets forth cash, cash equivalents, and marketable securities as of December 31, 2016 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 179,076 $ — $ — $ 179,076 $ 179,076 $ — Money market funds 50,125 — — 50,125 50,125 — U.S. government agencies 86,533 8 (15 ) 86,526 — 86,526 Corporate debt securities 390,466 24 (204 ) 390,286 72,119 318,167 Total $ 706,200 $ 32 $ (219 ) $ 706,013 $ 301,320 $ 404,693 The gross unrealized gains or losses on marketable securities as of April 1, 2017 and December 31, 2016 were not material. There were no available-for-sale investments as of April 1, 2017 and December 31, 2016 that have been in a continuous unrealized loss position for greater than 12 months. The following table classifies marketable securities by contractual maturities (in thousands): April 1, 2017 December 31, 2016 Due in one year $ 336,733 $ 355,152 Due in one to two years 15,104 49,541 Total $ 351,837 $ 404,693 Derivative Financial Instruments The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies. In order to manage this risk, the Company may hedge a portion of its foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted revenues and expenses, using foreign currency exchange forward or option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The Company does not enter into derivative contracts for trading or speculative purposes. Cash Flow Hedges The Company has entered into foreign currency derivative contracts designated as cash flow hedges to hedge certain forecasted revenue and expense transactions denominated in currencies other than the U.S. dollar. The Company’s cash flow hedges consist of forward contracts with maturities of 12 months or less. The Company periodically assesses the effectiveness of its cash flow hedges. Effectiveness represents a derivative instrument’s ability to generate offsetting changes in cash flows related to the hedged risk. All elements of the hedged transaction are included in the effectiveness assessment. The Company records the gains or losses, net of tax, related to the effective portion of its cash flow hedges as a component of accumulated other comprehensive income (loss) in stockholders’ equity and subsequently reclassifies the gains or losses into revenue and operating expenses when the underlying hedged transactions are recognized. The Company records the gains or losses related to the ineffective portion of the cash flow hedges, if any, immediately in other income (expense), net. If the hedged transaction becomes probable of not occurring, the corresponding amounts in accumulated other comprehensive income (loss) would immediately be reclassified to other income (expense), net. Cash flows related to the Company’s cash flow hedging program are recognized as cash flows from operating activities in its statements of cash flows. The Company had outstanding contracts with a total notional amount of $294.8 million in cash flow hedges for forecasted revenue transactions as of April 1, 2017 , and $20.0 million and $20.9 million in cash flow hedges for forecasted revenue and expense transactions, respectively, as of December 31, 2016 . Balance Sheet Hedges The Company enters into foreign exchange contracts to hedge certain monetary assets and liabilities that are denominated in currencies other than the functional currency of its subsidiaries. These foreign exchange contracts are carried at fair value, do not qualify for hedge accounting treatment, and are not designated as hedging instruments. Changes in the value of the foreign exchange contracts are recognized in other income (expense), net and offset the foreign currency gain or loss on the underlying net monetary assets or liabilities. The Company had outstanding balance sheet hedges with a total notional amount of $84.7 million and $177.0 million as of April 1, 2017 and December 31, 2016 , respectively. Fair Value of Foreign Currency Derivatives The foreign currency derivative contracts that were not settled at the end of the period are recorded at fair value, on a gross basis, in the condensed consolidated balance sheets. The following table presents the fair value of the Company’s foreign currency derivative contracts as of the periods presented (in thousands): April 1, 2017 December 31, 2016 Balance Sheet Location Fair Value Derivative Assets Fair Value Derivative Liabilities Fair Value Derivative Assets Fair Value Derivative Liabilities Cash flow designated hedges Prepaid expenses and other current assets $ 912 $ — $ 813 $ — Cash flow designated hedges Accrued liabilities — 1,537 — 1,428 Hedges not designated Prepaid expenses and other current assets 271 — 9,812 — Hedges not designated Accrued liabilities — 98 — 2,352 Total fair value of derivative instruments $ 1,183 $ 1,635 $ 10,625 $ 3,780 Financial Statement Effect of Foreign Currency Derivative Contracts The following table presents the pre-tax impact of the Company’s foreign currency derivative contracts on other comprehensive income (“OCI”) and the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Income Statement Location April 1, 2017 April 2, 2016 Foreign exchange cash flow hedges: Gain (loss) recognized in OCI – effective portion $ (958 ) $ (4,248 ) Gain (loss) reclassified from OCI into income – effective portion Revenue $ 755 $ (169 ) Gain (loss) reclassified from OCI into income – effective portion Operating expenses $ (965 ) $ 1,015 Gain (loss) recognized in income – ineffective portion Other income (expense), net $ 21 $ (90 ) Gain (loss) recognized in income – excluded portion Other income (expense), net $ 183 $ — Foreign exchange balance sheet hedges: Gain (loss) recognized in income Other income (expense), net $ (3,046 ) $ (1,437 ) As of April 1, 2017 , all net derivative gains related to the Company’s cash flow hedges will be reclassified from OCI into revenue and operating expense within the next 12 months. Offsetting of Foreign Currency Derivative Contracts The Company presents its derivative assets and derivative liabilities at gross fair values in the condensed consolidated balance sheets. The Company generally enters into master netting arrangements, which mitigate credit risk by permitting net settlement of transactions with the same counterparty. The Company is not required to pledge, and is not entitled to receive, cash collateral related to these derivative instruments. The following tables set forth the available offsetting of net derivative assets under the master netting arrangements as of April 1, 2017 and December 31, 2016 (in thousands): Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets April 1, 2017 Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ 1,183 $ — $ 1,183 $ 1,183 $ — $ — Foreign exchange contracts liabilities $ 1,635 $ — $ 1,635 $ 1,183 $ — $ 452 Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets December 31, 2016 Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ 10,625 $ — $ 10,625 $ 3,780 $ — $ 6,845 Foreign exchange contracts liabilities $ 3,780 $ — $ 3,780 $ 3,780 $ — $ — |
Balance Sheet Components
Balance Sheet Components | 3 Months Ended |
Apr. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Balance Sheet Components Revenue Reserve Revenue returns reserve activities were as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Beginning balances $ 98,851 $ 74,045 Increases 41,626 34,215 Returns taken (72,160 ) (52,385 ) Ending balances $ 68,317 $ 55,875 Increases in the revenue returns reserve include provisions for open box returns and stock rotations. Inventories Inventories consisted of the following (in thousands): April 1, 2017 December 31, 2016 Components $ 514 $ 1,035 Finished goods 199,817 229,352 Total inventories $ 200,331 $ 230,387 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): April 1, 2017 December 31, 2016 Prepaid income taxes $ 19,073 $ 481 POP displays, net 12,209 22,804 Prepaid marketing 2,220 5,764 Derivative assets 1,183 10,625 Other 24,090 26,672 Total prepaid expenses and other current assets $ 58,775 $ 66,346 Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): April 1, 2017 December 31, 2016 Tooling and manufacturing equipment $ 63,969 $ 60,944 Furniture and office equipment 15,853 14,424 Purchased and internally-developed software 12,805 12,032 Leasehold improvements 34,025 28,489 Total property and equipment 126,652 115,889 Less: Accumulated depreciation and amortization (41,613 ) (39,336 ) Property and equipment, net $ 85,039 $ 76,553 Goodwill and Intangible Assets The carrying amount of goodwill was $ 51.0 million as of April 1, 2017 and December 31, 2016 . See Note 11 for additional information. The carrying amounts of the intangible assets as of April 1, 2017 and December 31, 2016 were as follows (in thousands, except useful life). In-process research and development is not amortized until the completion or abandonment of the related development. April 1, 2017 December 31, 2016 Weighted Average Remaining Useful Life (years) Gross Accumulated Amortization Net Gross Accumulated Amortization Net Developed technology $ 26,092 $ (4,566 ) $ 21,526 $ 26,092 $ (3,247 ) $ 22,845 4.4 Trademarks and other 1,278 (599 ) 679 1,278 (542 ) 736 3.0 Total finite-lived intangible assets subject to amortization, net 27,370 (5,165 ) 22,205 27,370 (3,789 ) 23,581 In-process research and development 3,940 — 3,940 3,940 — 3,940 Total intangible assets, net $ 31,310 $ (5,165 ) $ 26,145 $ 31,310 $ (3,789 ) $ 27,521 Total amortization expense related to intangible assets was $1.4 million and $0.5 million for the three months ended April 1, 2017 and April 2, 2016 , respectively. The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after April 1, 2017 , is as follows (in thousands): Cost of Revenue Operating Expenses Total Remaining 2017 $ 3,957 $ 173 $ 4,130 2018 5,276 230 5,506 2019 4,496 230 4,726 2020 3,716 46 3,762 2021 3,716 — 3,716 Thereafter 365 — 365 Total finite-lived intangible assets, net $ 21,526 $ 679 $ 22,205 Accrued Liabilities Accrued liabilities consisted of the following (in thousands): April 1, 2017 December 31, 2016 Product warranty $ 90,459 $ 99,923 Accrued manufacturing expense and freight 74,694 75,579 Accrued sales incentives 49,605 74,181 Accrued sales and marketing 24,460 41,948 Accrued co-op advertising and marketing development funds 16,598 40,002 Sales taxes and VAT payable 16,176 8,891 Employee related liabilities 15,713 13,934 Inventory received but not billed 14,815 7,363 Accrued legal fees 8,010 3,963 Customer deposits 3,488 1,923 Derivative liabilities 1,635 3,780 Other 24,243 19,074 Accrued liabilities $ 339,896 $ 390,561 Product warranty reserve activities were as follows (in thousands) (1) : Three Months Ended April 1, 2017 April 2, 2016 Beginning balances $ 99,923 $ 40,212 Charged to cost of revenue 18,937 37,241 Changes related to pre-existing warranties (2,440 ) — Settlement of claims (25,961 ) (26,784 ) Ending balances $ 90,459 $ 50,669 (1) Does not include reserves established as a result of the recall of the Fitbit Force. See the section titled “ — Fitbit Force Recall Reserve” in our Annual Report on Form 10-K for additional information regarding such reserves. In the first quarter of 2017, the Company corrected the allocation of customer support costs and freight and fulfillment to the amounts reported in Charged to cost of revenue and Settlement of claims. Those costs are included in the beginning and ending balances. Further, the Company does not consider this adjustment to be material and there was no impact to our condensed consolidated balance sheets and statements of operations. Restructuring In January 2017, the Company announced cost-efficiency measures to be implemented in 2017 that include realigning sales and marketing spend and improved optimization of research and development investments. In addition, the Company announced a reorganization, including a reduction in workforce. This reorganization impacted approximately 110 employees, or approximately 6% of the Company’s global workforce. The Company recorded $6.4 million in total restructuring expenses, substantially all of which were severance and related costs, in the first quarter of 2017. The Company anticipates that it will complete the reorganization by the end of the second quarter of 2017. The restructuring reserve activities were as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Beginning balance $ — $ — Restructuring charges 6,375 — Cash utilized (3,295 ) — Other - noncash (728 ) — Ending balance $ 2,352 $ — Accumulated Other Comprehensive Income (Loss) The components and activity of accumulated other comprehensive income (“AOCI”), net of tax, were as follows (in thousands): Unrealized Gains (Losses) on Cash Flow Hedges Currency Translation Adjustments Unrealized Gains (Losses) on Available-for-Sale Investments Total Balance at December 31, 2016 $ (477 ) $ (314 ) $ (187 ) $ (978 ) Other comprehensive income (loss) before reclassifications (1,160 ) (271 ) 76 (1,355 ) Amounts reclassified from AOCI 217 — (9 ) 208 Other comprehensive income (loss) (943 ) (271 ) 67 (1,147 ) Balance at April 1, 2017 $ (1,420 ) $ (585 ) $ (120 ) $ (2,125 ) |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 01, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt 2015 Credit Agreement In December 2015, the Company entered into a second amended and restated credit agreement (the “Senior Facility”), to replace the existing Asset-Based Credit Facility and Cash Flow Facility. This Senior Facility allows the Company to borrow up to $250.0 million , including up to $50.0 million for the issuance of letters of credit and up to $25.0 million for swing line loans. Borrowings under the Senior Facility may be drawn as Alternate Base Rate (“ABR”) loans or Eurodollar loans, and mature in December 2020. ABR loans bear interest at a variable rate equal to the applicable margin plus the highest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% , and (iii) the Eurodollar rate plus 1.0% , but in any case at a minimum rate of 3.25% per annum. Eurodollar loans bear interest at a variable rate based on the LIBOR rate and Eurodollar reserve requirements, but in any case at a minimum rate of 1.0% per annum. The Company has the option to repay its borrowings under the Senior Facility without penalty prior to maturity. The Senior Facility requires the Company to comply with certain financial covenants, including maintaining a consolidated fixed charge coverage ratio of at least 1.15 :1, and a consolidated leverage ratio of less than 3 :1. The Senior Facility also requires the Company to comply with certain non-financial covenants. The Senior Facility contains customary covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, sell certain assets, guarantee certain obligations of third parties, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions. Obligations under the Senior Facility are collateralized by substantially all of the Company’s assets, excluding the Company’s intellectual property. As of April 1, 2017 , there were no outstanding borrowings under the Senior Facility. Without these changes, it it likely that the Company would not have been in compliance with certain financial covenants as of April 1, 2017. The Company further amended the Senior Facility in May 2017. See Note 12 for additional information. Letters of Credit As of April 1, 2017 and December 31, 2016 , the Company had outstanding letters of credit totaling $38.0 million issued to cover various security deposits on the Company’s facility leases. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases The Company’s principal facility is located in San Francisco, California. The Company also leases office space in various locations with expiration dates between 2017 and 2024. The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal provisions and other provisions which require the Company to pay taxes, insurance, maintenance costs or defined rent increases. All of Company’s leases are accounted for as operating leases. Future minimum payments under the Company’s noncancelable lease agreements as of April 1, 2017 were $292.0 million . Legal Proceedings Jawbone. On May 27, 2015, Aliphcom, Inc. d/b/a Jawbone (“Jawbone”), filed a lawsuit in the Superior Court of California in the County of San Francisco against the Company and certain of its employees who were formerly employed by Jawbone, alleging trade secret misappropriation and unfair and unlawful business practices against all defendants, and alleging breach of contract and breach of implied covenant of good faith and fair dealing against the employee defendants. The complaint seeks unspecified damages, including punitive damages and injunctive relief. On June 23, 2016, Jawbone filed a Second Amended Complaint, adding an additional employee defendant and related allegations. No trial date has been set. On June 10, 2015, Jawbone and BodyMedia, Inc., a wholly-owned subsidiary of Jawbone (“BodyMedia”), filed a lawsuit against the Company in the U.S. District Court for the Northern District of California alleging that the Company infringes certain U.S. patents. The complaint seeks unspecified compensatory damages and attorneys’ fees from the Company and to permanently enjoin the Company from making, manufacturing, using, selling, importing, or offering the Company’s products for sale. The lawsuit has been stayed pending the investigation in the U.S. International Trade Commission (the “ITC”). On July 7, 2015, Jawbone and BodyMedia filed a complaint with the ITC requesting an investigation into purported violations of the Tariff Act of 1930 by the Company and Flextronics International Ltd. and Flextronics Sales and Marketing (A-P) Ltd. The complaint makes the same patent infringement and trade secret misappropriation claims as the two earlier cases. The complaint seeks a limited exclusion order and a cease and desist order halting the importation and sale of the infringing products. The ITC instituted the investigation on August 17, 2015. As a result of motions, all of the patent infringement claims were dismissed from the case. A trial on the trade secrets allegations took place from May 9, 2016 through May 17, 2016. On August 23, 2016, the ALJ concluded that the Company did not misappropriate any Jawbone trade secrets. On October 20, 2016, the ITC terminated the investigation in the ITC. On December 19, 2016, Jawbone filed a notice of appeal with the Federal Circuit. On September 3, 2015, the Company filed a complaint for patent infringement against Jawbone in the U.S. District Court for the District of Delaware, asserting that Jawbone’s activity trackers infringe certain U.S. patents. This case has been transferred to the U.S. District Court for the Northern District of California. On September 8, 2015, the Company filed a complaint for patent infringement against Jawbone in the U.S. District Court for the Northern District of California, asserting that Jawbone’s activity trackers infringe certain U.S. patents. On October 29, 2015, the Company filed a complaint for patent infringement against Jawbone in the United States District Court for the District of Delaware, asserting that Jawbone’s activity trackers infringe certain U.S. patents. That case had been stayed pending the ITC’s investigation of the Company’s complaint against Jawbone, and has now also been transferred to the U.S. District Court for the Northern District of California. On November 2, 2015, the Company filed a complaint with the ITC requesting an investigation into violations of the Tariff Act of 1930 by Jawbone and Body Media. The complaint asserts that Jawbone’s products infringe certain U.S. patents. The complaint seeks a limited exclusion order and a cease and desist order halting the importation and sale of infringing products. The ITC instituted the investigation on December 1, 2015. On December 23, 2016, the Company filed a motion to terminate the investigation, and the Commission terminated the investigation on February 1, 2017. On August 12, 2016, the Company was notified by Jawbone that Jawbone had received a confidential subpoena from the U.S. Attorney’s Office in the Northern District of California requesting certain Fitbit confidential business information that appeared to be related to Jawbone’s allegations of trade secret misappropriation. On February 17, 2017, the Company received a subpoena from the same office. The Company is cooperating with the U.S. Attorney’s Office. The Company intends to vigorously defend and prosecute each of the Jawbone litigation matters and, based on its review, the Company believes it has valid defenses and claims with respect to each of these matters. However, litigation is inherently uncertain, and any judgment or injunctive relief entered against the Company or any adverse settlement could materially and adversely impact its business, financial condition, operating results, and prospects. Regarding the Jawbone-related legal proceedings, because the outstanding matters are still in the early stages of litigation, the Company is unable to estimate a reasonably possible loss or range of loss, if any, that may result from these matters. In addition, these litigation matters are complex, likely to involve significant management time and attention, and the cost of defending and prosecuting these matters is likely to be expensive, regardless of outcome. Sleep Tracking . On May 8, 2015, a purported class action lawsuit was filed against the Company in the U.S. District Court for the Northern District of California, alleging that the sleep tracking function available in certain trackers does not perform as advertised. Plaintiffs seek class certification, restitution, an award of unspecified compensatory and punitive damages, an award of reasonable costs and expenses, including attorneys’ fees, and other further relief as the Court may deem just and proper. On January 31, 2017, plaintiffs filed a motion for class certification; a ruling has not yet issued. On April 20, 2017, the Company filed a motion for summary judgment; the hearing is scheduled for May 25, 2017. Trial is currently scheduled for July 10, 2017. The Company believes that the plaintiffs’ allegations are without merit, and intends to vigorously defend against the claims. Because the Company is in the early stages of this litigation matter, the Company is unable to estimate a reasonably possible loss or range of loss, if any, that may result from this matter. Heart Rate Tracking. On January 6, 2016 and February 16, 2016, two purported class action lawsuits were filed against the Company in the U.S. District Court for the Northern District of California, alleging that the PurePulse® heart rate tracking technology does not consistently and accurately record users’ heart rates. Plaintiffs allege common law claims as well as violations of various states’ false advertising and unfair competition statutes, and seek class certification, injunctive and declaratory relief, restitution, an award of unspecified compensatory damages, exemplary damages, punitive damages, and statutory penalties and damages, an award of reasonable costs and expenses, including attorneys’ fees, and other further relief as the Court may deem just and proper. On April 15, 2016, the plaintiffs filed a Consolidated Master Class Action Complaint and, on May 19, 2016, filed an Amended Consolidated Master Class Action Complaint. On January 9, 2017, the Company filed a motion to compel arbitration, and is currently awaiting a ruling from the courts. The Company believes that the plaintiffs’ allegations are without merit, and intends to vigorously defend against the claims. Because the Company is in the early stages of this litigation matter, the Company is unable to estimate a reasonably possible loss or range of loss, if any, that may result from this matter. Securities Litigation. On January 11, 2016, a putative securities class action was filed in the U.S. District Court for the Northern District of California naming as defendants the Company, certain of its officers and directors, and the underwriters of the Company’s initial public offering (“IPO”). On May 10, 2016, the Court appointed the Fitbit Investor Group (consisting of five individual investors) as lead plaintiff, and an Amended Complaint was filed on July 1, 2016. Plaintiffs allege violations of the Securities Act of 1933, as amended, (“the Securities Act”), and the Securities Exchange Act of 1934, as amended, based on alleged materially false and misleading statements about the Company’s products between October 27, 2014 and November 23, 2015. Plaintiffs seek to represent a class of persons who purchased or otherwise acquired the Company’s securities (i) on the open market between June 18, 2015 and May 19, 2016; and/or (ii) pursuant to or traceable to the IPO. Plaintiffs seek class certification, an award of unspecified compensatory damages, an award of reasonable costs and expenses, including attorneys’ fees, and other further relief as the Court may deem just and proper. On April 28, 2016, a putative class action lawsuit alleging violations of the Securities Act was filed in the Superior Court of California, County of San Mateo, naming as defendants the Company, certain of its officers, and directors, the underwriters of the IPO, and a number of its investors. Plaintiff alleges that the IPO registration statement contained material misstatements about the Company’s products. Plaintiff seeks to represent a class of persons who purchased the Company’s common stock in and/or traceable to the IPO and/or the Secondary Offering. Plaintiff seeks class certification, an award of unspecified compensatory damages, an award of reasonable costs and expenses, including attorneys’ fees, and other further relief as the Court may deem just and proper. On May 17, 2016, a similar class action lawsuit was filed in the Superior Court of California, County of San Francisco. The cases have now been consolidated in the County of San Francisco. On April 7, 2017, the court granted a motion to dismiss the Section 11 claim based on the Secondary Offering and stayed the cases. On November 11, 2016, a derivative lawsuit was filed in the U.S. District Court for the Northern District of California naming as defendants the Company and certain of its officers and directors. Plaintiffs allege breach of fiduciary duty based on the same alleged set of facts in the federal and state securities class action litigation. On February 3, 2017, a second derivative lawsuit was filed in the District of Delaware on the same allegations. Both courts have ordered a stay in the cases. The Company believes that the plaintiffs’ allegations in these actions are without merit, and intends to vigorously defend against the claims. Because the Company is in the early stages of this litigation matter, the Company is unable to estimate a reasonably possible loss or range of loss, if any, that may result from this matter. Other. The Company is and, from time to time, may in the future become, involved in other legal proceedings in the ordinary course of business. The Company currently believes that the outcome of any of these existing legal proceedings, including the aforementioned cases, either individually or in the aggregate, will not have a material impact on the operating results, financial condition or cash flows of the Company. With respect to existing legal proceedings, the Company has either determined that the existence of a material loss is not reasonably possible or that it is unable to estimate a reasonably possible loss or range of loss. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings. Indemnifications In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company also currently has directors’ and officers’ insurance. |
Stock Plan
Stock Plan | 3 Months Ended |
Apr. 01, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Plan | Stock Plan Equity Incentive Plans In May 2015, the Company’s board of directors and stockholders adopted and approved the 2015 Equity Incentive Plan, (the “2015 Plan”). The 2015 Plan became effective on June 16, 2015 and serves as the successor to the Amended and Restated 2007 Stock Plan (the “2007 Plan”). The Company ceased granting awards under the 2007 Plan, and any outstanding stock options and restricted stock units (“RSUs”), granted under the 2007 Plan will remain subject to the terms of the 2007 Plan. As of April 1, 2017 , 10.4 million shares of Class A common stock were reserved and available for future issuance under the 2015 Plan. Employee Stock Purchase Plan In May 2015, the Company’s board of directors adopted the 2015 Employee Stock Purchase Plan (the “2015 ESPP”), which became effective on June 17, 2015. A total of 3.8 million shares of Class A common stock were initially reserved for issuance under the 2015 ESPP. The 2015 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock through payroll deductions at a price per share equal to 85% of the lesser of the fair market value of the Company’s Class A common stock (i) on the first trading day of the applicable offering period and (2) the last trading day of each purchase period in the applicable offering period. Except for the initial offering period, the 2015 ESPP provides for 6 -month offering periods beginning in May and November of each year. The initial offering period began June 17, 2015 and ended in May 2016. Stock Options Stock option activity under the equity incentive plans was as follows: Stock Options Outstanding Number of Shares Subject to Stock Options Weighted– Average Exercise Price Aggregate Intrinsic Value (1) (in thousands) (in thousands) Balance—December 31, 2016 34,454 $ 3.85 Granted — Exercised (1,800 ) $ 1.43 Forfeited or canceled (521 ) $ 10.12 Balance—April 1, 2017 32,133 $ 3.88 $ 98,335 Stock options exercisable—April 1, 2017 21,030 $ 2.88 $ 78,649 Stock options vested and expected to vest—April 1, 2017 31,784 $ 3.86 $ 97,766 (1) The aggregate intrinsic values of stock options outstanding, exercisable, vested, and expected to vest as of April 1, 2017 were calculated as the difference between the exercise price of the stock options and the fair value of the Class A common stock of $5.92 as of March 31, 2017. Restricted Stock Units RSU activity under the equity incentive plans was as follows: RSUs Outstanding Weighted- Average Grant Date Fair Value (in thousands) Unvested balance—December 31, 2016 11,578 $ 16.85 Granted 9,418 5.75 Vested (1,353 ) 15.67 Forfeited or canceled (756 ) 14.30 Unvested balance—April 1, 2017 18,887 11.50 Stock-Based Compensation Expense Total stock-based compensation expense recognized was as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Cost of revenue $ 18 $ 1,309 Research and development 14,685 10,393 Sales and marketing 3,635 2,535 General and administrative 4,155 3,533 Total stock-based compensation expense $ 22,493 $ 17,770 As of April 1, 2017 , the total unrecognized stock-based compensation expense related to unvested stock options and RSUs was $240.9 million , which the Company expects to recognize over an estimated weighted average period of 2.6 years . |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 01, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. For the three months ended April 1, 2017 , the Company recorded a benefit for income taxes of $(29.7) million for an effective tax rate of 33.1% . The effective tax rate for the three months ended April 1, 2017 was different than the statutory federal tax rate, primarily due to research and development credits, non-deductible stock-based compensation expense, unrecognized tax benefits, the foregone benefit of a permanent domestic production activities deduction in prior periods, and the mix of income between U.S. and foreign jurisdictions. For the three months ended April 2, 2016 , the Company recorded an expense for income taxes of $9.9 million for an effective tax rate of 47.2% . The effective tax rate for the three months ended April 2, 2016 was higher than the statutory federal tax rate, primarily due to an out-of-period adjustment recorded in the three months ended April 2, 2016 and non-deductible stock-based compensation expense, which were partially offset by the effect of the growth of international operations in lower tax jurisdictions and a permanent domestic production activities deduction. As of April 1, 2017, the total amount of gross unrecognized tax benefits was $34.2 million , all of which would affect the effective tax rate if recognized. The Company does not have any tax positions as of April 1, 2017 for which it is reasonably possible that the total amount of gross unrecognized tax benefits will increase or decrease within the following 12 months. The Company adopted ASU 2016-09, effective January 1, 2017. Adoption of ASU 2016-09 resulted in the recognition of net stock compensation shortfalls in the Company’s provision for income taxes rather than paid-in capital of $2.8 million for the three months ended April 1, 2017. These expenses are recorded discretely in the quarter. The Company’s rate will continue to fluctuate based upon its stock price and the amount of stock options exercised and equity awards vested in a particular quarter. |
Net Income (Loss) per Share
Net Income (Loss) per Share | 3 Months Ended |
Apr. 01, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) per Share | Net Income (Loss) per Share The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except per share amounts): Three Months Ended April 1, 2017 April 2, 2016 Numerator: Net income (loss) $ (60,079 ) $ 11,035 Denominator: Weighted-average shares of common stock—basic for Class A and Class B 226,511 216,043 Effect of dilutive securities — 25,966 Weighted-average shares of common stock—diluted for Class A and Class B 226,511 242,009 Net income (loss) per share: Basic $ (0.27 ) $ 0.05 Diluted $ (0.27 ) $ 0.05 The following potentially dilutive common shares were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Stock options to purchase common stock 22,718 3,234 Restricted stock units 11,143 3,513 Diluted impact of ESPP 233 — Diluted common stock subject to vesting 129 — Total 34,223 6,747 |
Significant Customer Informatio
Significant Customer Information and Other Information | 3 Months Ended |
Apr. 01, 2017 | |
Risks and Uncertainties [Abstract] | |
Significant Customer Information and Other Information | Significant Customer Information and Other Information Retailer and Distributor Concentration Retailers and distributors with revenue equal to or greater than 10% of total revenue for the three months ended April 1, 2017 and April 2, 2016 were as follows: Three Months Ended April 1, 2017 April 2, 2016 A 10 % 18 % F 10 * C * 12 * Represents less than 10%. Retailers and distributors that accounted for equal to or greater than 10% of accounts receivable at April 1, 2017 and December 31, 2016 were as follows: April 1, December 31, A 27 % 20 % B 12 14 C 12 15 Geographic and Other Information Revenue by geographic region, based on ship-to destinations, was as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 United States $ 170,420 $ 351,685 Americas excluding United States 19,968 23,394 Europe, Middle East, and Africa 87,772 74,724 APAC 20,782 55,553 Total $ 298,942 $ 505,356 As of April 1, 2017 and December 31, 2016 , long-lived assets, which represent property and equipment, located outside the United States were $32.8 million and $30.1 million , respectively. |
Acquisitions
Acquisitions | 3 Months Ended |
Apr. 01, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions 2016 Acquisitions In December 2016, the Company completed a purchase of certain assets from Pebble Industries, Inc., a privately-held company, which was accounted for as a business combination, for total cash consideration of $23.4 million , of which $9.6 million was allocated to developed technology intangible assets, $14.4 million to goodwill, and $0.6 million to assumed liabilities. Approximately $3.5 million of the consideration payable to Pebble Industries, Inc. was held as partial security for certain indemnification obligations, and will be held back for payment until March 2018. The acquisition is expected to enhance the features and functionality of the Company’s devices. The amortization period of the acquired developed technology is approximately 5 years . Goodwill is deductible for tax purposes. In December 2016, the Company completed a purchase of certain assets from Vector Watch S.R.L., a privately-held company, which was accounted for as a business combination, for total cash consideration of $15.0 million , of which $3.9 million was allocated to developed technology intangible assets, $11.4 million to goodwill, and $0.3 million to assumed liabilities. Approximately $2.3 million of the consideration payable to Vector Watch S.R.L. was held as partial security for certain indemnification obligations, and will be held back for payment until December 2018. The acquisition is expected to enhance the features and functionality of the Company’s devices. The amortization period of the acquired developed technology is approximately 2.5 years . Goodwill is deductible for tax purposes. In May 2016, the Company completed a purchase of certain assets from Coin, Inc., a privately-held company, which was accounted for as a business combination, for total cash consideration of $7.0 million , of which $3.9 million was allocated to in-process research and development intangible assets, and $3.1 million to goodwill. The acquisition is expected to enhance the features and functionality of the Company’s devices. In-process research and development is not amortized until the completion or abandonment of the related development. Goodwill is deductible for tax purposes. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 01, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Stock Option Exchange On April 14, 2017, the Company filed its definitive proxy statement, submitting to stockholders a proposal for a stock option exchange program (the "Program"). The Program will allow the Company's employees including its executive officers other than its President, Chief Executive Officer, and Chairman, Chief Technology Officer, and Chief Financial Officer (“Eligible Employees”) to exchange out-of-the-money or “underwater” options to purchase shares of its Class A common stock or Class B common stock currently held by such Eligible Employees for a lesser number of RSUs that may be settled for shares of its Class A common stock, (“New RSUs”), under its 2015 Plan. Each New RSU will represent an unfunded right to receive one share of the Company’s Class A common stock on a date in the future, which generally is the date on which the New RSU will vest. Eligible Employees participating in the Program will receive one New RSU for every two shares subject to “out-of-the-money “option. The New RSUs will generally vest over the remaining vesting period of the exchanged option (subject to a one-year minimum vesting period). None of the members of our board of directors would be eligible to participate in the Program. If approved by stockholders, the Company will commence the Program by filing with the Securities and Exchange Commission a tender offer statement on Schedule TO. 2015 Credit Agreement Amendment On May 3, 2017, the Company entered into a first amendment to the Senior Facility (the “Senior Facility Amendment”), pursuant to which the aggregate amount the Company can borrow under the Senior Facility was reduced from $250.0 million to $100.0 million , with up to $50.0 million available for the issuance of letters of credit and up to $25.0 million available for swing line loans. In addition, pursuant to the Senior Facility Amendment, the applicable margin in respect of the interest rates under the Senior Facility were amended to be based on the Company’s level of liquidity (defined as the sum of the Company’s aggregate cash holdings and the amount available under the Company’s revolving commitments) and range from, with respect to ABR loans, 0.5% to 1.0% , and, with respect to LIBOR loans, 1.5% to 2.0% . Among other changes, the Senior Facility Amendment also removed the fixed charge coverage ratio covenant and the consolidated leverage ratio covenant, and added a general liquidity covenant requiring the Company to maintain liquidity of at least $200.0 million in unrestricted cash, of which $100.0 million in cash or cash equivalents must be held in accounts subject to control agreements with, and maintained by, Silicon Valley Bank or its affiliates. Without these changes, it is likely that the Company would not have been in compliance with certain financial covenants as of April 1, 2017. |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | The accompanying condensed consolidated financial statements of Fitbit, Inc. (the “Company”) are unaudited. The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements of the Company. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and in management’s opinion, includes all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position, its results of operations, and cash flows for the interim periods presented. The results of operations for the three months ended April 1, 2017 are not necessarily indicative of the results to be expected for the full fiscal year or any other period. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission on March 1, 2017. There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K. The Company’s fiscal year ends on December 31 of each year. In the first quarter of 2016, the Company adopted a 4-4-5 week quarterly calendar. There were 91 and 92 days in the three months ended April 1, 2017 and April 2, 2016 , respectively. |
Principles of Consolidation | The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. The primary estimates and assumptions made by management are related to revenue recognition, reserves for sales returns and incentives, reserves for warranty, valuation of stock options, fair value of derivative assets and liabilities, allowance for doubtful accounts, inventory valuation, fair value of goodwill and acquired tangible and intangible assets and liabilities assumed during acquisitions, the number of reporting segments, the recoverability of intangible assets and their useful lives, contingencies, and the valuations of deferred income tax assets and uncertain tax positions. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”), issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 will become effective for the Company on January 1, 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. In April 2016, the FASB issued ASU 2016-10, which clarifies guidance on identifying performance obligations and licensing implementation. The Company currently expects to adopt the new revenue recognition standard as of January 1, 2018, utilizing the modified retrospective transition method. Although the new standard may, in certain circumstances, impact the timing of when revenue is recognized for products shipped, and the timing and classification of certain sales incentives, the Company believes the new guidance is consistent with its current revenue recognition policy. Therefore, the Company does not currently expect adoption to have a material impact on its consolidated balances sheets or statements of operations. The Company is continuing to evaluate the impact of the adoption and preliminary assessments are subject to change. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lease assets and lease liabilities arising from leases, including operating leases, to be recognized on the balance sheet. ASU 2016-02 will become effective for the Company on January 1, 2019, and requires adoption using a modified retrospective approach. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. The Company anticipates that the adoption will have a material impact on its consolidated balance sheets; however, the Company does not expect the adoption to have a material impact on its consolidated statements of operations. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Upon adoption, ASU 2016-09 requires that excess tax benefits for share-based payments be recorded as a reduction of income tax expense and reflected within operating cash flows, rather than being recorded within equity and reflected within financing cash flows. ASU 2016-09 also permits the repurchase of more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on the Company’s cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. ASU 2016-09 became effective for the Company on January 1, 2017. The adoption of the standard resulted in a cumulative effect adjustment of $4.9 million to increase retained earnings as of January 1, 2017, related to the recognition of previously unrecognized excess tax benefits using the modified retrospective method. The Company elected to apply the change in presentation of excess tax benefits in the condensed consolidated statement of cash flows retrospectively, which resulted in an increase in net cash provided by operations and a decrease in net cash provided by financing activities of $6.0 million for the three months ended April 2, 2016. The Company also elected to make an accounting policy change to recognize forfeitures starting on January 1, 2017 on a prospective basis. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to accounts receivable and available for sale debt securities. ASU 2016-13 will become effective for the Company on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) . ASU 2016-15 provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 will become effective for the Company on January 1, 2018 and early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. The second step measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the new standard, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This ASU will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets and liabilities measured on recurring basis | The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): April 1, 2017 Level 1 Level 2 Total Assets: Money market funds $ 64,697 $ — $ 64,697 U.S. government agencies — 44,608 44,608 Corporate debt securities — 408,860 408,860 Derivative assets — 1,183 1,183 Total $ 64,697 $ 454,651 $ 519,348 Liabilities: Derivative liabilities $ — $ 1,635 $ 1,635 December 31, 2016 Level 1 Level 2 Total Assets: Money market funds $ 50,125 $ — $ 50,125 U.S. government agencies — 86,526 86,526 Corporate debt securities — 390,286 390,286 Derivative assets — 10,625 10,625 Total $ 50,125 $ 487,437 $ 537,562 Liabilities: Derivative liabilities $ — $ 3,780 $ 3,780 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of available for sale securities including fair value and gross unrealized losses | The following table sets forth cash, cash equivalents, and marketable securities as of April 1, 2017 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 207,951 $ — $ — $ 207,951 $ 207,951 $ — Money market funds 64,697 — — 64,697 64,697 — U.S. government agencies 44,631 — (23 ) 44,608 7,098 37,510 Corporate debt securities 408,957 43 (140 ) 408,860 94,533 314,327 Total $ 726,236 $ 43 $ (163 ) $ 726,116 $ 374,279 $ 351,837 The following table sets forth cash, cash equivalents, and marketable securities as of December 31, 2016 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 179,076 $ — $ — $ 179,076 $ 179,076 $ — Money market funds 50,125 — — 50,125 50,125 — U.S. government agencies 86,533 8 (15 ) 86,526 — 86,526 Corporate debt securities 390,466 24 (204 ) 390,286 72,119 318,167 Total $ 706,200 $ 32 $ (219 ) $ 706,013 $ 301,320 $ 404,693 The following table classifies marketable securities by contractual maturities (in thousands): April 1, 2017 December 31, 2016 Due in one year $ 336,733 $ 355,152 Due in one to two years 15,104 49,541 Total $ 351,837 $ 404,693 |
Schedule of derivative instruments in statement of financial position, fair value | The following table presents the fair value of the Company’s foreign currency derivative contracts as of the periods presented (in thousands): April 1, 2017 December 31, 2016 Balance Sheet Location Fair Value Derivative Assets Fair Value Derivative Liabilities Fair Value Derivative Assets Fair Value Derivative Liabilities Cash flow designated hedges Prepaid expenses and other current assets $ 912 $ — $ 813 $ — Cash flow designated hedges Accrued liabilities — 1,537 — 1,428 Hedges not designated Prepaid expenses and other current assets 271 — 9,812 — Hedges not designated Accrued liabilities — 98 — 2,352 Total fair value of derivative instruments $ 1,183 $ 1,635 $ 10,625 $ 3,780 |
Schedule of cash flow hedging instruments, statement of operations | The following table presents the pre-tax impact of the Company’s foreign currency derivative contracts on other comprehensive income (“OCI”) and the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Income Statement Location April 1, 2017 April 2, 2016 Foreign exchange cash flow hedges: Gain (loss) recognized in OCI – effective portion $ (958 ) $ (4,248 ) Gain (loss) reclassified from OCI into income – effective portion Revenue $ 755 $ (169 ) Gain (loss) reclassified from OCI into income – effective portion Operating expenses $ (965 ) $ 1,015 Gain (loss) recognized in income – ineffective portion Other income (expense), net $ 21 $ (90 ) Gain (loss) recognized in income – excluded portion Other income (expense), net $ 183 $ — Foreign exchange balance sheet hedges: Gain (loss) recognized in income Other income (expense), net $ (3,046 ) $ (1,437 ) |
Schedule of cash flow hedging instruments, comprehensive income | The following table presents the pre-tax impact of the Company’s foreign currency derivative contracts on other comprehensive income (“OCI”) and the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Income Statement Location April 1, 2017 April 2, 2016 Foreign exchange cash flow hedges: Gain (loss) recognized in OCI – effective portion $ (958 ) $ (4,248 ) Gain (loss) reclassified from OCI into income – effective portion Revenue $ 755 $ (169 ) Gain (loss) reclassified from OCI into income – effective portion Operating expenses $ (965 ) $ 1,015 Gain (loss) recognized in income – ineffective portion Other income (expense), net $ 21 $ (90 ) Gain (loss) recognized in income – excluded portion Other income (expense), net $ 183 $ — Foreign exchange balance sheet hedges: Gain (loss) recognized in income Other income (expense), net $ (3,046 ) $ (1,437 ) |
Schedule of offsetting of foreign currency derivative contracts | The following tables set forth the available offsetting of net derivative assets under the master netting arrangements as of April 1, 2017 and December 31, 2016 (in thousands): Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets April 1, 2017 Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ 1,183 $ — $ 1,183 $ 1,183 $ — $ — Foreign exchange contracts liabilities $ 1,635 $ — $ 1,635 $ 1,183 $ — $ 452 Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets December 31, 2016 Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ 10,625 $ — $ 10,625 $ 3,780 $ — $ 6,845 Foreign exchange contracts liabilities $ 3,780 $ — $ 3,780 $ 3,780 $ — $ — |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of accounts receivable reserves | Revenue returns reserve activities were as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Beginning balances $ 98,851 $ 74,045 Increases 41,626 34,215 Returns taken (72,160 ) (52,385 ) Ending balances $ 68,317 $ 55,875 |
Schedule of inventories | Inventories consisted of the following (in thousands): April 1, 2017 December 31, 2016 Components $ 514 $ 1,035 Finished goods 199,817 229,352 Total inventories $ 200,331 $ 230,387 |
Schedule of prepaid expenses and other current asset | Prepaid expenses and other current assets consisted of the following (in thousands): April 1, 2017 December 31, 2016 Prepaid income taxes $ 19,073 $ 481 POP displays, net 12,209 22,804 Prepaid marketing 2,220 5,764 Derivative assets 1,183 10,625 Other 24,090 26,672 Total prepaid expenses and other current assets $ 58,775 $ 66,346 |
Schedule of property and equipment | Property and equipment, net, consisted of the following (in thousands): April 1, 2017 December 31, 2016 Tooling and manufacturing equipment $ 63,969 $ 60,944 Furniture and office equipment 15,853 14,424 Purchased and internally-developed software 12,805 12,032 Leasehold improvements 34,025 28,489 Total property and equipment 126,652 115,889 Less: Accumulated depreciation and amortization (41,613 ) (39,336 ) Property and equipment, net $ 85,039 $ 76,553 |
Schedule of intangible assets (excluding goodwill) | The carrying amounts of the intangible assets as of April 1, 2017 and December 31, 2016 were as follows (in thousands, except useful life). In-process research and development is not amortized until the completion or abandonment of the related development. April 1, 2017 December 31, 2016 Weighted Average Remaining Useful Life (years) Gross Accumulated Amortization Net Gross Accumulated Amortization Net Developed technology $ 26,092 $ (4,566 ) $ 21,526 $ 26,092 $ (3,247 ) $ 22,845 4.4 Trademarks and other 1,278 (599 ) 679 1,278 (542 ) 736 3.0 Total finite-lived intangible assets subject to amortization, net 27,370 (5,165 ) 22,205 27,370 (3,789 ) 23,581 In-process research and development 3,940 — 3,940 3,940 — 3,940 Total intangible assets, net $ 31,310 $ (5,165 ) $ 26,145 $ 31,310 $ (3,789 ) $ 27,521 |
Schedule of estimated future amortization expense | The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after April 1, 2017 , is as follows (in thousands): Cost of Revenue Operating Expenses Total Remaining 2017 $ 3,957 $ 173 $ 4,130 2018 5,276 230 5,506 2019 4,496 230 4,726 2020 3,716 46 3,762 2021 3,716 — 3,716 Thereafter 365 — 365 Total finite-lived intangible assets, net $ 21,526 $ 679 $ 22,205 |
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands): April 1, 2017 December 31, 2016 Product warranty $ 90,459 $ 99,923 Accrued manufacturing expense and freight 74,694 75,579 Accrued sales incentives 49,605 74,181 Accrued sales and marketing 24,460 41,948 Accrued co-op advertising and marketing development funds 16,598 40,002 Sales taxes and VAT payable 16,176 8,891 Employee related liabilities 15,713 13,934 Inventory received but not billed 14,815 7,363 Accrued legal fees 8,010 3,963 Customer deposits 3,488 1,923 Derivative liabilities 1,635 3,780 Other 24,243 19,074 Accrued liabilities $ 339,896 $ 390,561 |
Schedule of product warranty reserves | Product warranty reserve activities were as follows (in thousands) (1) : Three Months Ended April 1, 2017 April 2, 2016 Beginning balances $ 99,923 $ 40,212 Charged to cost of revenue 18,937 37,241 Changes related to pre-existing warranties (2,440 ) — Settlement of claims (25,961 ) (26,784 ) Ending balances $ 90,459 $ 50,669 (1) Does not include reserves established as a result of the recall of the Fitbit Force. See the section titled “ — Fitbit Force Recall Reserve” in our Annual Report on Form 10-K for additional information regarding such reserves. |
Schedule of product recall reserves | The restructuring reserve activities were as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Beginning balance $ — $ — Restructuring charges 6,375 — Cash utilized (3,295 ) — Other - noncash (728 ) — Ending balance $ 2,352 $ — |
Schedule of accumulated other comprehensive income | The components and activity of accumulated other comprehensive income (“AOCI”), net of tax, were as follows (in thousands): Unrealized Gains (Losses) on Cash Flow Hedges Currency Translation Adjustments Unrealized Gains (Losses) on Available-for-Sale Investments Total Balance at December 31, 2016 $ (477 ) $ (314 ) $ (187 ) $ (978 ) Other comprehensive income (loss) before reclassifications (1,160 ) (271 ) 76 (1,355 ) Amounts reclassified from AOCI 217 — (9 ) 208 Other comprehensive income (loss) (943 ) (271 ) 67 (1,147 ) Balance at April 1, 2017 $ (1,420 ) $ (585 ) $ (120 ) $ (2,125 ) |
Stock Plan (Tables)
Stock Plan (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | Stock option activity under the equity incentive plans was as follows: Stock Options Outstanding Number of Shares Subject to Stock Options Weighted– Average Exercise Price Aggregate Intrinsic Value (1) (in thousands) (in thousands) Balance—December 31, 2016 34,454 $ 3.85 Granted — Exercised (1,800 ) $ 1.43 Forfeited or canceled (521 ) $ 10.12 Balance—April 1, 2017 32,133 $ 3.88 $ 98,335 Stock options exercisable—April 1, 2017 21,030 $ 2.88 $ 78,649 Stock options vested and expected to vest—April 1, 2017 31,784 $ 3.86 $ 97,766 (1) The aggregate intrinsic values of stock options outstanding, exercisable, vested, and expected to vest as of April 1, 2017 were calculated as the difference between the exercise price of the stock options and the fair value of the Class A common stock of $5.92 as of March 31, 2017. |
Schedule of restricted stock unit activity | RSU activity under the equity incentive plans was as follows: RSUs Outstanding Weighted- Average Grant Date Fair Value (in thousands) Unvested balance—December 31, 2016 11,578 $ 16.85 Granted 9,418 5.75 Vested (1,353 ) 15.67 Forfeited or canceled (756 ) 14.30 Unvested balance—April 1, 2017 18,887 11.50 |
Schedule of stock-based compensation expense | Total stock-based compensation expense recognized was as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Cost of revenue $ 18 $ 1,309 Research and development 14,685 10,393 Sales and marketing 3,635 2,535 General and administrative 4,155 3,533 Total stock-based compensation expense $ 22,493 $ 17,770 |
Net Income (Loss) per Share (Ta
Net Income (Loss) per Share (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income (loss) per share | The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except per share amounts): Three Months Ended April 1, 2017 April 2, 2016 Numerator: Net income (loss) $ (60,079 ) $ 11,035 Denominator: Weighted-average shares of common stock—basic for Class A and Class B 226,511 216,043 Effect of dilutive securities — 25,966 Weighted-average shares of common stock—diluted for Class A and Class B 226,511 242,009 Net income (loss) per share: Basic $ (0.27 ) $ 0.05 Diluted $ (0.27 ) $ 0.05 |
Schedule of antidilutive securities excluded from earnings per share | The following potentially dilutive common shares were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive (in thousands): Three Months Ended April 1, 2017 April 2, 2016 Stock options to purchase common stock 22,718 3,234 Restricted stock units 11,143 3,513 Diluted impact of ESPP 233 — Diluted common stock subject to vesting 129 — Total 34,223 6,747 |
Significant Customer Informat25
Significant Customer Information and Other Information (Tables) | 3 Months Ended |
Apr. 01, 2017 | |
Risks and Uncertainties [Abstract] | |
Schedules of concentration of risk | Retailers and distributors with revenue equal to or greater than 10% of total revenue for the three months ended April 1, 2017 and April 2, 2016 were as follows: Three Months Ended April 1, 2017 April 2, 2016 A 10 % 18 % F 10 * C * 12 * Represents less than 10%. Retailers and distributors with revenue equal to or greater than 10% of total revenue for the three months ended April 1, 2017 and April 2, 2016 were as follows: Three Months Ended April 1, 2017 April 2, 2016 A 10 % 18 % F 10 * C * 12 * Represents less than 10%. Retailers and distributors that accounted for equal to or greater than 10% of accounts receivable at April 1, 2017 and December 31, 2016 were as follows: April 1, December 31, A 27 % 20 % B 12 14 C 12 15 Revenue by geographic region, based on ship-to destinations, was as follows (in thousands): Three Months Ended April 1, 2017 April 2, 2016 United States $ 170,420 $ 351,685 Americas excluding United States 19,968 23,394 Europe, Middle East, and Africa 87,772 74,724 APAC 20,782 55,553 Total $ 298,942 $ 505,356 |
Basis of Presentation and Sum26
Basis of Presentation and Summary of Significant Accounting Policies - Non-Monetary Transaction (Details) - Advertising Barter Transactions [Member] - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 01, 2017 | Dec. 31, 2016 | |
Nonmonetary Transaction [Line Items] | ||
Revenue recognized | $ 15 | |
Remaining advertising credit | $ 12.9 | $ 13 |
Advertising credit, expected period of use (over) | 3 years | |
Nonmonetary transaction in the period | $ 0.1 |
Basis of Presentation and Sum27
Basis of Presentation and Summary of Significant Accounting Policies - Out of Period Adjustments (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Understated Income Tax Expense [Member] | |
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |
Out-of-period adjustment | $ 3 |
Basis of Presentation and Sum28
Basis of Presentation and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Significant Accounting Policies [Line Items] | ||
Decrease in cash provided by financing activities | $ (546,000) | $ 564,000 |
Increase in cash provided by operating activities | 49,138,000 | 143,443,000 |
Accounting Standards Update 2016-09 [Member] | ||
Significant Accounting Policies [Line Items] | ||
Decrease in cash provided by financing activities | (6,000,000) | |
Increase in cash provided by operating activities | $ 6,000 | |
Accounting Standards Update 2016-09 [Member] | Retained Earnings [Member] | ||
Significant Accounting Policies [Line Items] | ||
Cumulative effect of adjustment | $ 4,900,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 3 Months Ended | ||
Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 | |
Assets: | |||
Available for sale securities | $ 351,837,000 | $ 404,693,000 | |
Liabilities: | |||
Transfers between fair value levels | 0 | $ 0 | |
U.S. government agencies [Member] | |||
Assets: | |||
Available for sale securities | 37,510,000 | 86,526,000 | |
Corporate debt securities [Member] | |||
Assets: | |||
Available for sale securities | 314,327,000 | 318,167,000 | |
Fair Value, Measurements, Recurring [Member] | |||
Assets: | |||
Money market funds | 64,697,000 | 50,125,000 | |
Derivative assets | 1,183,000 | 10,625,000 | |
Total | 519,348,000 | 537,562,000 | |
Liabilities: | |||
Derivative liabilities | 1,635,000 | 3,780,000 | |
Fair Value, Measurements, Recurring [Member] | U.S. government agencies [Member] | |||
Assets: | |||
Available for sale securities | 44,608,000 | 86,526,000 | |
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member] | |||
Assets: | |||
Available for sale securities | 408,860,000 | 390,286,000 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||
Assets: | |||
Money market funds | 64,697,000 | 50,125,000 | |
Derivative assets | 0 | 0 | |
Total | 64,697,000 | 50,125,000 | |
Liabilities: | |||
Derivative liabilities | 0 | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. government agencies [Member] | |||
Assets: | |||
Available for sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Corporate debt securities [Member] | |||
Assets: | |||
Available for sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||
Assets: | |||
Money market funds | 0 | 0 | |
Derivative assets | 1,183,000 | 10,625,000 | |
Total | 454,651,000 | 487,437,000 | |
Liabilities: | |||
Derivative liabilities | 1,635,000 | 3,780,000 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. government agencies [Member] | |||
Assets: | |||
Available for sale securities | 44,608,000 | 86,526,000 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Corporate debt securities [Member] | |||
Assets: | |||
Available for sale securities | 408,860,000 | 390,286,000 | |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||
Assets: | |||
Total | $ 0 | $ 0 |
Financial Instruments - Amortiz
Financial Instruments - Amortized to fair value (Details) - USD ($) | 3 Months Ended | |||
Apr. 01, 2017 | Dec. 31, 2016 | Apr. 02, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | ||||
Impairment losses recorded on available-for-sale securities | $ 0 | |||
Cash and cash equivalents | 374,279,000 | $ 301,320,000 | $ 722,062,000 | $ 535,846,000 |
Available-for-sale debt securities, gross unrealized gains | 43,000 | 32,000 | ||
Available-for-sale debt securities, gross unrealized losses | (163,000) | (219,000) | ||
Cash, cash equivalents, and available-for-sale securities, amortized cost | 726,236,000 | 706,200,000 | ||
Cash, cash equivalents, available-for-sale securities, fair value | 726,116,000 | 706,013,000 | ||
Total | 351,837,000 | 404,693,000 | ||
U.S. government agencies [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Cash and cash equivalents | 7,098,000 | 0 | ||
Available-for-sale debt securities, amortized cost | 44,631,000 | 86,533,000 | ||
Available-for-sale debt securities, gross unrealized gains | 0 | 8,000 | ||
Available-for-sale debt securities, gross unrealized losses | (23,000) | (15,000) | ||
Cash, cash equivalents, available-for-sale securities, fair value | 44,608,000 | 86,526,000 | ||
Total | 37,510,000 | 86,526,000 | ||
Corporate debt securities [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Cash and cash equivalents | 94,533,000 | 72,119,000 | ||
Available-for-sale debt securities, amortized cost | 408,957,000 | 390,466,000 | ||
Available-for-sale debt securities, gross unrealized gains | 43,000 | 24,000 | ||
Available-for-sale debt securities, gross unrealized losses | (140,000) | (204,000) | ||
Cash, cash equivalents, available-for-sale securities, fair value | 408,860,000 | 390,286,000 | ||
Total | 314,327,000 | 318,167,000 | ||
Cash [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Cash and cash equivalents | 207,951,000 | 179,076,000 | ||
Money market funds [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Cash and cash equivalents | $ 64,697,000 | $ 50,125,000 |
Financial Instruments - Unreali
Financial Instruments - Unrealized Loss Position (Details) | Apr. 01, 2017USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale securities in continuous loss position for one year or more, gross unrealized losses | $ 0 |
Financial Instruments - Contrac
Financial Instruments - Contractual maturity dates (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Investments, Debt and Equity Securities [Abstract] | ||
Due in one year | $ 336,733 | $ 355,152 |
Due in one to two years | 15,104 | 49,541 |
Total | $ 351,837 | $ 404,693 |
Financial Instruments - Additio
Financial Instruments - Additional Derivative Information (Details) - Foreign currency exchange contract [Member] - USD ($) $ in Millions | Apr. 01, 2017 | Dec. 31, 2016 |
Not designated as hedging instrument [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 84.7 | $ 177 |
Cash flow hedges [Member] | Designated as hedging instrument [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount based on forecasted revenue | $ 294.8 | 20 |
Derivative, notional amount based on forecasted expense | $ 20.9 |
Financial Instruments - Financi
Financial Instruments - Financial Position, Fair Value (Details) - Foreign currency exchange contract [Member] - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | $ 1,183 | $ 10,625 |
Fair Value Derivative Liabilities | 1,635 | 3,780 |
Designated as hedging instrument [Member] | Prepaid expenses and other current assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | 912 | 813 |
Fair Value Derivative Liabilities | 0 | 0 |
Designated as hedging instrument [Member] | Accrued liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | 0 | 0 |
Fair Value Derivative Liabilities | 1,537 | 1,428 |
Not designated as hedging instrument [Member] | Prepaid expenses and other current assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | 271 | 9,812 |
Fair Value Derivative Liabilities | 0 | 0 |
Not designated as hedging instrument [Member] | Accrued liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | 0 | 0 |
Fair Value Derivative Liabilities | $ 98 | $ 2,352 |
Financial Instruments - Stateme
Financial Instruments - Statement of Operations and Other Comprehensive Income (Details) - Foreign currency exchange contract [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Designated as hedging instrument [Member] | Cash flow hedges [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in OCI – effective portion | $ (958) | $ (4,248) |
Revenue [Member] | Designated as hedging instrument [Member] | Cash flow hedges [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from OCI into income – effective portion | 755 | (169) |
Operating expenses [Member] | Designated as hedging instrument [Member] | Cash flow hedges [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from OCI into income – effective portion | (965) | 1,015 |
Other Income (Expense), Net [Member] | Designated as hedging instrument [Member] | Cash flow hedges [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in income – ineffective portion | 21 | (90) |
Derivative Instruments, Gain Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing | 183 | 0 |
Other Income (Expense), Net [Member] | Not designated as hedging instrument [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in income | $ (3,046) | $ (1,437) |
Financial Instruments - Offsett
Financial Instruments - Offsetting of Foreign Currency Derivative Contracts (Details) - Foreign currency exchange contract [Member] - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Offsetting Liabilities [Line Items] | ||
Gross Assets Recognized | $ 1,635 | $ 3,780 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented in Condensed Consolidated Balance Sheets | 1,635 | 3,780 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Financial Instruments | 1,183 | 3,780 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Cash Collateral Pledged | 0 | 0 |
Net Amount | 452 | 0 |
Offsetting Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 1,183 | 10,625 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented in Condensed Consolidated Balance Sheets | 1,183 | 10,625 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Financial Instruments | 1,183 | 3,780 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Cash Collateral Received | 0 | 0 |
Net Amount | $ 0 | $ 6,845 |
Balance Sheet Components - Acco
Balance Sheet Components - Account Receivable Reserves (Details) - Revenue Reserve [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Beginning balance | $ 98,851 | $ 74,045 |
Increases | 41,626 | 34,215 |
Returns taken | (72,160) | (52,385) |
Ending balances | $ 68,317 | $ 55,875 |
Balance Sheet Components - Inve
Balance Sheet Components - Inventories (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Components | $ 514 | $ 1,035 |
Finished goods | 199,817 | 229,352 |
Total inventories | $ 200,331 | $ 230,387 |
Balance Sheet Components - Prep
Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid income taxes | $ 19,073 | $ 481 |
POP displays, net | 12,209 | 22,804 |
Prepaid marketing | 2,220 | 5,764 |
Derivative assets | 1,183 | 10,625 |
Other | 24,090 | 26,672 |
Total prepaid expenses and other current assets | $ 58,775 | $ 66,346 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, Net (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 126,652 | $ 115,889 |
Less: Accumulated depreciation and amortization | (41,613) | (39,336) |
Property and equipment, net | 85,039 | 76,553 |
Tooling and manufacturing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 63,969 | 60,944 |
Furniture and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 15,853 | 14,424 |
Purchased and internally-developed software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 12,805 | 12,032 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 34,025 | $ 28,489 |
Balance Sheet Components - Good
Balance Sheet Components - Goodwill (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Goodwill | $ 51,036 | $ 51,036 |
Balance Sheet Components - Inta
Balance Sheet Components - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross | $ 27,370 | $ 27,370 | |
Accumulated Amortization | (5,165) | (3,789) | |
Net | 22,205 | 23,581 | |
Intangible assets, gross | 31,310 | 31,310 | |
Intangible assets, net | 26,145 | 27,521 | |
Amortization of intangible assets | 1,377 | $ 533 | |
Developed technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 26,092 | 26,092 | |
Accumulated Amortization | (4,566) | (3,247) | |
Net | $ 21,526 | 22,845 | |
Weighted Average Remaining Useful Life (years) | 4 years 5 months | ||
Trademarks and other [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | $ 1,278 | 1,278 | |
Accumulated Amortization | (599) | (542) | |
Net | $ 679 | 736 | |
Weighted Average Remaining Useful Life (years) | 3 years | ||
In Process Research and Development [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 3,940 | $ 3,940 |
Balance Sheet Components - Esti
Balance Sheet Components - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Remaining 2,017 | $ 4,130 | |
2,018 | 5,506 | |
2,019 | 4,726 | |
2,020 | 3,762 | |
2,021 | 3,716 | |
Thereafter | 365 | |
Net | 22,205 | $ 23,581 |
Cost of revenue [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining 2,017 | 3,957 | |
2,018 | 5,276 | |
2,019 | 4,496 | |
2,020 | 3,716 | |
2,021 | 3,716 | |
Thereafter | 365 | |
Net | 21,526 | |
Operating expenses [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining 2,017 | 173 | |
2,018 | 230 | |
2,019 | 230 | |
2,020 | 46 | |
2,021 | 0 | |
Thereafter | 0 | |
Net | $ 679 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands | Apr. 01, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Product warranty | $ 90,459 | $ 99,923 |
Accrued manufacturing expense and freight | 74,694 | 75,579 |
Accrued sales incentives | 49,605 | 74,181 |
Accrued sales and marketing | 24,460 | 41,948 |
Accrued co-op advertising and marketing development funds | 16,598 | 40,002 |
Sales taxes and VAT payable | 16,176 | 8,891 |
Employee related liabilities | 15,713 | 13,934 |
Inventory received but not billed | 14,815 | 7,363 |
Accrued legal fees | 8,010 | 3,963 |
Customer deposits | 3,488 | 1,923 |
Derivative liabilities | 1,635 | 3,780 |
Other | 24,243 | 19,074 |
Accrued liabilities | $ 339,896 | $ 390,561 |
Balance Sheet Components - Prod
Balance Sheet Components - Product Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning balances | $ 99,923 | $ 40,212 |
Charged to cost of revenue | 18,937 | 37,241 |
Changes related to pre-existing warranties | (2,440) | 0 |
Settlement of claims | (25,961) | (26,784) |
Ending balances | $ 90,459 | $ 50,669 |
Balance Sheet Components - Rest
Balance Sheet Components - Restructuring (Details) - Employee Severance [Member] $ in Thousands | 3 Months Ended | |
Apr. 01, 2017USD ($)employee | Apr. 02, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Expected number of positions eliminated | employee | 110 | |
Number of positions eliminated in the period, percent | 6.00% | |
Severance costs | $ 6,400 | |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 0 | $ 0 |
Restructuring charges | 6,375 | 0 |
Cash utilized | (3,295) | 0 |
Other - noncash | (728) | 0 |
Restructuring Reserve | $ 2,352 | $ 0 |
Balance Sheet Components - Accu
Balance Sheet Components - Accumulated Other Comprehensive Income (Loss) (Details) $ in Thousands | 3 Months Ended |
Apr. 01, 2017USD ($) | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Balance, beginning of period | $ 998,532 |
Balance, end of period | 965,568 |
Unrealized Gains (Losses) on Cash Flow Hedges [Member] | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Balance, beginning of period | (477) |
Other comprehensive income (loss) before reclassifications | (1,160) |
Amounts reclassified from AOCI | 217 |
Other comprehensive income (loss) | (943) |
Balance, end of period | (1,420) |
Currency Translation Adjustments [Member] | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Balance, beginning of period | (314) |
Other comprehensive income (loss) before reclassifications | (271) |
Amounts reclassified from AOCI | 0 |
Other comprehensive income (loss) | (271) |
Balance, end of period | (585) |
Unrealized Gains (Losses) on Available-for-Sale Investments [Member] | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Balance, beginning of period | (187) |
Other comprehensive income (loss) before reclassifications | 76 |
Amounts reclassified from AOCI | (9) |
Other comprehensive income (loss) | 67 |
Balance, end of period | (120) |
AOCI Attributable to Parent [Member] | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Balance, beginning of period | (978) |
Other comprehensive income (loss) before reclassifications | (1,355) |
Amounts reclassified from AOCI | 208 |
Other comprehensive income (loss) | (1,147) |
Balance, end of period | $ (2,125) |
Long-Term Debt (Details)
Long-Term Debt (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Apr. 01, 2017USD ($) | Dec. 31, 2016USD ($) | |
Line of Credit [Member] | 2015 Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, borrowing capacity | $ 250,000,000 | $ 250,000,000 | |
Credit facility, minimum fixed charge coverage ratio | 1.15 | ||
Credit facility, amount outstanding | $ 0 | ||
Line of Credit [Member] | 2015 Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Letter of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, amount outstanding | $ 38,000,000 | $ 0 | |
Letter of Credit [Member] | 2015 Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, borrowing capacity | $ 50,000,000 | ||
Swing Line Loan [Member] | 2015 Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, borrowing capacity | $ 25,000,000 | ||
Revolving Credit Facility [Member] | 2015 Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, minimum leverage ratio | 3 | ||
Revolving Credit Facility [Member] | 2015 Credit Agreement [Member] | Federal Funds Effective Rate [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
Revolving Credit Facility [Member] | 2015 Credit Agreement [Member] | Eurodollar [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Minimum [Member] | Line of Credit [Member] | 2015 Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, minimal stated interest rate | 3.25% |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Millions | May 10, 2016investor | Feb. 16, 2016lawsuit | Apr. 01, 2017USD ($) |
Loss Contingencies [Line Items] | |||
Future minimum payments under leases | $ | $ 292 | ||
Loss contingency, individual investors named as lead plaintiffs | investor | 5 | ||
PurePulse Class Action Lawsuit [Member] | Pending Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Loss contingency, number of lawsuits filed | lawsuit | 2 |
Stock Plan - Narrative (Details
Stock Plan - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended |
May 31, 2015 | Apr. 01, 2017 | |
Employee Stock Options And Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense related to unvested options | $ 240.9 | |
Unrecognized compensation expense related to unvested options, estimated weighted average period | 2 years 7 months 6 days | |
Common Class A [Member] | 2015 Equity Incentive Plan [Member] | Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock reserved for future issuance (in shares) | 10.4 | |
Common Class A [Member] | 2015 Employee Stock Purchase Plan [Member] | Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock reserved for future issuance (in shares) | 3.8 | |
Percent of share price available to employees | 85.00% | |
Offering period | 6 months |
Stock Plan - Stock Option Activ
Stock Plan - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Balance, beginning of period (in shares) | 34,454 | |
Granted (in shares) | 0 | |
Exercised (in shares) | (1,800) | |
Canceled (in shares) | (521) | |
Balance, end of period (in shares) | 32,133 | |
Options exercisable (in shares) | 21,030 | |
Options vested and expected to vest (in shares) | 31,784 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Balance, weighted average exercise price, beginning of period (in dollars per share) | $ 3.85 | |
Granted, weighted average exercise price (in dollars per share) | ||
Exercised, weighted average exercise price (in dollars per share) | 1.43 | |
Canceled, weighted average exercise price (in dollars per share) | 10.12 | |
Balance, weighted average exercise price, end of period (in dollars per share) | 3.88 | |
Options exercisable, weighted average exercise price (in dollars per share) | 2.88 | |
Options vested and expected to vest, weighted average exercise price (in dollars per share) | $ 3.86 | |
Options outstanding, aggregate intrinsic value, end of period | $ 98,335 | |
Options exercisable, aggregate intrinsic value | 78,649 | |
Options vested and expected to vest, aggregate intrinsic value | $ 97,766 | |
Fair value of the Class A common stock (in dollars per share) | $ 5.92 |
Stock Plan - Restricted Stock U
Stock Plan - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 3 Months Ended |
Apr. 01, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested balance—December 31, 2016 (in shares) | shares | 11,578 |
Granted (in shares) | shares | 9,418 |
Vested (in shares) | shares | (1,353) |
Forfeited or canceled (in shares) | shares | (756) |
Unvested balance—April 1, 2017 (in shares) | shares | 18,887 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Unvested balance—December 31, 2016 (in dollars per share) | $ / shares | $ 16.85 |
Granted (in dollars per share) | $ / shares | 5.75 |
Vested (in dollars per share) | $ / shares | 15.67 |
Forfeited or canceled (in dollars per share) | $ / shares | 14.30 |
Unvested balance—April 1, 2017 (in dollars per share) | $ / shares | $ 11.50 |
Stock Plan - Stock Compensation
Stock Plan - Stock Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | $ 22,493 | $ 17,770 |
Cost of revenue [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | 18 | 1,309 |
Research and development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | 14,685 | 10,393 |
Sales and marketing [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | 3,635 | 2,535 |
General and administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | $ 4,155 | $ 3,533 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Income Tax Contingency [Line Items] | ||
Income tax expense (benefit) | $ (29,671) | $ 9,869 |
Effective income tax rate | 33.10% | 47.20% |
Unrecognized tax benefits | $ 34,200 | |
Accounting Standards Update 2016-09 [Member] | Additional Paid-in Capital [Member] | ||
Income Tax Contingency [Line Items] | ||
Cumulative effect of adjustment | $ 2,800 |
Net Income (Loss) per Share (De
Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Numerator: | ||
Net income (loss) | $ (60,079) | $ 11,035 |
Denominator: | ||
Weighted-average shares of common stock—basic (in shares) | 226,511 | 216,043 |
Effect of dilutive securities (in shares) | 0 | 25,966 |
Weighted-average shares of common stock—diluted (in shares) | 226,511 | 242,009 |
Net income (loss) per share: | ||
Basic (in dollars per share) | $ (0.27) | $ 0.05 |
Diluted (in dollars per share) | $ (0.27) | $ 0.05 |
Net Income (Loss) per Share - A
Net Income (Loss) per Share - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 34,223 | 6,747 |
Redeemable convertible preferred stock and stock options to purchase common stock [Member] | Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 22,718 | 3,234 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 11,143 | 3,513 |
Diluted Impact of ESPP [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 233 | 0 |
Diluted Common Stock Subject to Vesting [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 129 | 0 |
Significant Customer Informat57
Significant Customer Information and Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 01, 2017 | Apr. 02, 2016 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||
Revenue | $ 298,942 | $ 505,356 | |
Geographic Concentration Risk [Member] | Non-US [Member] | |||
Concentration Risk [Line Items] | |||
Long-lived assets including property and equipment | $ 32,800 | $ 30,100 | |
Revenue [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 18.00% | |
Revenue [Member] | Customer Concentration Risk [Member] | Customer F [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Revenue [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | ||
Revenue [Member] | Geographic Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Revenue | $ 298,942 | $ 505,356 | |
Revenue [Member] | Geographic Concentration Risk [Member] | United States [Member] | |||
Concentration Risk [Line Items] | |||
Revenue | 170,420 | 351,685 | |
Revenue [Member] | Geographic Concentration Risk [Member] | Americas excluding United States [Member] | |||
Concentration Risk [Line Items] | |||
Revenue | 19,968 | 23,394 | |
Revenue [Member] | Geographic Concentration Risk [Member] | Europe, Middle East, and Africa [Member] | |||
Concentration Risk [Line Items] | |||
Revenue | 87,772 | 74,724 | |
Revenue [Member] | Geographic Concentration Risk [Member] | APAC [Member] | |||
Concentration Risk [Line Items] | |||
Revenue | $ 20,782 | $ 55,553 | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 27.00% | 20.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 14.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 15.00% |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Dec. 31, 2016 | May 31, 2016 | Apr. 01, 2017 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 51,036 | $ 51,036 | |
Pebble Industries, Inc [Member] | |||
Business Acquisition [Line Items] | |||
Cash paid for acquisition | 23,400 | ||
Goodwill | 14,400 | ||
Assumed liabilities | 600 | ||
Consideration held as security for indemnifications obligations | 3,500 | ||
Pebble Industries, Inc [Member] | In Process Research and Development [Member] | |||
Business Acquisition [Line Items] | |||
Intangibles acquired | $ 9,600 | ||
Amortization period | 5 years | ||
Vector Watch S.R.L. [Member] | |||
Business Acquisition [Line Items] | |||
Cash paid for acquisition | $ 15,000 | ||
Goodwill | 11,400 | ||
Assumed liabilities | 300 | ||
Consideration held as security for indemnifications obligations | 2,300 | ||
Vector Watch S.R.L. [Member] | In Process Research and Development [Member] | |||
Business Acquisition [Line Items] | |||
Intangibles acquired | $ 3,900 | ||
Amortization period | 2 years 6 months | ||
Coin, Inc [Member] | |||
Business Acquisition [Line Items] | |||
Cash paid for acquisition | $ 7,000 | ||
Goodwill | 3,100 | ||
Coin, Inc [Member] | In Process Research and Development [Member] | |||
Business Acquisition [Line Items] | |||
Intangibles acquired | $ 3,900 |
Subsequent Events (Details)
Subsequent Events (Details) | May 03, 2017USD ($) | Apr. 14, 2017shares | Dec. 31, 2015USD ($) | Dec. 31, 2016USD ($) |
2015 Credit Agreement [Member] | Letter of Credit [Member] | ||||
Subsequent Event [Line Items] | ||||
Credit facility, borrowing capacity | $ 50,000,000 | |||
2015 Credit Agreement [Member] | Swing Line Loan [Member] | ||||
Subsequent Event [Line Items] | ||||
Credit facility, borrowing capacity | 25,000,000 | |||
2015 Credit Agreement [Member] | Line of Credit [Member] | ||||
Subsequent Event [Line Items] | ||||
Credit facility, borrowing capacity | $ 250,000,000 | $ 250,000,000 | ||
2015 Credit Agreement [Member] | Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Letter of Credit [Member] | ||||
Subsequent Event [Line Items] | ||||
Credit facility, borrowing capacity | $ 50,000,000 | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Swing Line Loan [Member] | ||||
Subsequent Event [Line Items] | ||||
Credit facility, borrowing capacity | 25,000,000 | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Line of Credit [Member] | ||||
Subsequent Event [Line Items] | ||||
Credit facility, borrowing capacity | 100,000,000 | |||
Unrestricted cash liquidity requirement | $ 200,000,000 | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Line of Credit [Member] | Base Rate [Member] | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Line of Credit [Member] | Base Rate [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Subsequent Event [Member] | 2015 Credit Agreement [Member] | Silicon Valley Bank [Member] | Line of Credit [Member] | ||||
Subsequent Event [Line Items] | ||||
Unrestricted cash liquidity requirement | $ 100,000,000 | |||
Subsequent Event [Member] | Restricted Stock Units (RSUs) [Member] | 2015 Equity Incentive Plan [Member] | Eligible Employees [Member] | ||||
Subsequent Event [Line Items] | ||||
Unfunded right to receive stock on a date in time in the future | shares | 1 | |||
Unfunded option exchange ratio | 500 |