Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Apr. 04, 2015 | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | FALSE |
Document Period End Date | 4-Apr-15 |
Document Fiscal Year Focus | 2015 |
Document Fiscal Period Focus | Q1 |
Trading Symbol | MASI |
Entity Registrant Name | MASIMO CORP |
Entity Central Index Key | 937556 |
Current Fiscal Year End Date | -1 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 52,617,780 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Current assets | ||
Cash and cash equivalents | $135,720 | $134,453 |
Accounts receivable, net of allowance for doubtful accounts of $1,940 and $1,890 at April 4, 2015 and January 3, 2015, respectively | 68,071 | 71,017 |
Royalty Receivable | 7,000 | 7,200 |
Inventories | 69,572 | 69,718 |
Prepaid income taxes | 516 | 417 |
Deferred tax assets | 18,067 | 18,065 |
Other current assets | 23,560 | 21,471 |
Total current assets | 315,506 | 315,141 |
Deferred cost of goods sold | 66,923 | 67,485 |
Property and equipment, net | 108,665 | 101,952 |
Intangible assets, net | 27,355 | 27,771 |
Goodwill | 20,226 | 20,979 |
Deferred tax assets | 24,153 | 24,193 |
Other assets | 12,392 | 7,485 |
Total assets | 575,220 | 565,006 |
Current liabilities | ||
Accounts payable | 27,061 | 38,045 |
Accrued compensation | 22,364 | 33,600 |
Accrued liabilities | 37,615 | 24,541 |
Income taxes payable | 6,988 | 6,562 |
Deferred revenue | 23,052 | 21,067 |
Long-term Debt and Capital Lease Obligations, Current | 84 | 79 |
Total current liabilities | 117,164 | 123,894 |
Deferred revenue | 417 | 453 |
Long-term Debt and Capital Lease Obligations | 125,108 | 125,145 |
Other liabilities | 7,839 | 7,773 |
Total liabilities | 250,528 | 257,265 |
Commitments and contingencies | ||
Masimo Corporation stockholders’ equity: | ||
Preferred stock, $0.001 par value; 5,000 shares authorized; 0 shares issued and outstanding at April 4, 2015 and January 3, 2015 | 0 | 0 |
Common stock, $0.001 par value; 100,000 shares authorized; 52,617 and 52,594 shares outstanding at April 4, 2015 and January 3, 2015, respectively | 53 | 52 |
Treasury stock, 8,861 and 8,611 shares at April 4, 2015 and January 3, 2015, respectively | -194,139 | -185,906 |
Additional paid-in capital | 296,985 | 288,686 |
Accumulated other comprehensive loss | -5,035 | -2,093 |
Retained earnings | 225,783 | 205,260 |
Total Masimo Corporation stockholders’ equity | 323,647 | 305,999 |
Noncontrolling interest | 1,045 | 1,742 |
Total equity | 324,692 | 307,741 |
Total liabilities and equity | $575,220 | $565,006 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $1,940 | $1,890 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 52,617,000 | 52,594,000 |
Treasury stock, shares | 8,861,000 | 8,611,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Revenue: | ||
Product | $147,357 | $132,232 |
Royalty | 7,180 | 7,582 |
Total revenue | 154,537 | 139,814 |
Cost of goods sold | 51,432 | 47,513 |
Gross profit | 103,105 | 92,301 |
Operating expenses: | ||
Selling, general and administrative | 60,799 | 56,122 |
Research and development | 14,929 | 13,996 |
Litigation award and defense costs | 0 | -8,010 |
Total operating expenses | 75,728 | 62,108 |
Operating income | 27,377 | 30,193 |
Non-operating income | 153 | 200 |
Income before provision for income taxes | 27,530 | 30,393 |
Provision for income taxes | 7,708 | 7,902 |
Net income including noncontrolling interest | 19,822 | 22,491 |
Net loss attributable to the noncontrolling interest | -701 | -141 |
Net income attributable to Masimo Corporation stockholders | 20,523 | 22,632 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | -2,942 | 19 |
Other Comprehensive Income (Loss), Net of Tax | 16,880 | 22,510 |
Comprehensive income attributable to Masimo Corporation stockholders | $17,581 | $22,651 |
Net income per share attributable to Masimo Corporation stockholders: | ||
Basic (in usd per share) | $0.39 | $0.40 |
Diluted (in usd per share) | $0.38 | $0.39 |
Weighted-average shares used in per share calculations: | ||
Basic (in shares) | 52,687 | 56,705 |
Diluted (in shares) | 53,964 | 58,047 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Cash flows from operating activities: | ||
Net income including noncontrolling interest | $19,822 | $22,491 |
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities: | ||
Depreciation and amortization | 3,777 | 3,043 |
Share-based compensation | 2,894 | 2,601 |
Loss on disposal of property and equipment | 0 | 2 |
Provision for doubtful accounts | 51 | 232 |
Provision for deferred income taxes | 0 | 2,926 |
Income tax benefit from exercise of stock options granted prior to January 1, 2006 | 455 | 24 |
Excess tax deficit (benefit) from share-based compensation arrangements | 56 | -31 |
Changes in operating assets and liabilities: | ||
Decrease in accounts receivable | 2,777 | 2,469 |
(Increase) decrease in inventories | -88 | 1,288 |
Decrease (increase) in deferred cost of goods sold | 444 | -2,687 |
(Increase) decrease in prepaid income taxes | -104 | 2,832 |
Increase in other assets | -6,700 | -4,217 |
(Decrease) increase in accounts payable | -3,053 | 5,881 |
Decrease in accrued compensation | -10,817 | -6,996 |
Increase (decrease) in accrued liabilities | 7,183 | -6,587 |
Increase in income taxes payable | 411 | 156 |
Increase in deferred revenue | 1,949 | 929 |
Increase (decrease) in other liabilities | 67 | -130 |
Net cash provided by operating activities | 19,124 | 24,226 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -17,218 | -3,045 |
Increase in intangible assets | -679 | -886 |
Net cash used in investing activities | -17,897 | -3,931 |
Cash flows from financing activities: | ||
Repayments of capital lease obligations | -69 | -77 |
Proceeds from issuance of common stock | 4,612 | 1,918 |
Excess tax (deficit) benefit from share-based compensation arrangements | -56 | 31 |
Repurchases of common stock | -2,154 | 0 |
Issuance (repurchases) of equity by noncontrolling interest, net of equity issued | 3 | -42 |
Net cash provided by financing activities | 2,336 | 1,830 |
Effect of foreign currency exchange rates on cash | -2,296 | -62 |
Net increase in cash and cash equivalents | 1,267 | 22,063 |
Cash and cash equivalents at beginning of period | 134,453 | 95,466 |
Cash and cash equivalents at end of period | $135,720 | $117,529 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statement of Income Statement (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Product | $147,357 | $132,232 |
Royalty | 7,180 | 7,582 |
Total revenue | 154,537 | 139,814 |
Cost of goods sold | 51,432 | 47,513 |
Gross profit | 103,105 | 92,301 |
Selling, general and administrative | 60,799 | 56,122 |
Research and Development Expense | 14,929 | 13,996 |
Litigation award and defense costs | 0 | -8,010 |
Operating Expenses | 75,728 | 62,108 |
Operating income | 27,377 | 30,193 |
Nonoperating Income (Expense) | 153 | 200 |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | 27,530 | 30,393 |
Provision for income taxes | 7,708 | 7,902 |
Net income including noncontrolling interest | 19,822 | 22,491 |
Net loss attributable to noncontrolling interest | 701 | 141 |
Net income attributable to Masimo Corporation stockholders | 20,523 | 22,632 |
Foreign currency translation adjustments | -2,942 | 19 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $17,581 | $22,651 |
Basic (in usd per share) | $0.39 | $0.40 |
Diluted (in usd per share) | $0.38 | $0.39 |
Basic (in shares) | 52,687 | 56,705 |
Diluted (in shares) | 53,964 | 58,047 |
Description_of_the_Company
Description of the Company | 3 Months Ended |
Apr. 04, 2015 | |
Accounting Policies [Abstract] | |
Description of the Company | Description of the Company |
Masimo Corporation (the Company) is a global medical technology company that develops, manufactures and markets a variety of noninvasive patient monitoring technologies. The Company’s mission is to improve patient outcomes and reduce cost of care by taking noninvasive monitoring to new sites and applications. The Company’s patient monitoring solutions generally incorporate a monitor or circuit board, proprietary single-patient use, reusable or resposable sensors, software and/or cables. The Company primarily sells its products to hospitals, emergency medical service (EMS) providers, home care providers, physician offices, veterinarians, long term care facilities and consumers, through its direct sales force, distributors and original equipment manufacturer (OEM) partners. | |
The Company invented Masimo Signal Extraction Technology® (SET®), which provides the capabilities of measure-through-motion and low-perfusion pulse oximetry to address the primary limitations of conventional pulse oximetry. Over the years, the Company’s product offerings have expanded significantly to also include noninvasive optical blood constituent monitoring, optical organ oximetry monitoring, electrical brain function monitoring, acoustic respiration monitoring and optical gas monitoring. The Company also developed the Root® patient monitoring and connectivity platform and the Masimo Patient SafetyNet™ remote patient surveillance monitoring system. These solutions and related products are based upon Masimo SET®, rainbow® and other proprietary algorithms. These software-based technologies are incorporated into a variety of product platforms depending on customers’ specifications. This technology is supported by a substantial intellectual property portfolio that the Company has built through internal development and, to a lesser extent, acquisitions and license agreements. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||||||||||||||
Apr. 04, 2015 | ||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies | |||||||||||||||||||
Basis of Presentation | ||||||||||||||||||||
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, including normal recurring accruals, necessary to present fairly the Company’s condensed consolidated financial statements. The condensed consolidated balance sheet as of January 3, 2015 was derived from the Company’s audited consolidated financial statements at that date. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2015 (fiscal year 2014), filed with the SEC on February 17, 2015. The results for the three months ended April 4, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending January 2, 2016 (fiscal year 2015) or for any other interim period or for any future year. | ||||||||||||||||||||
Principles of Consolidation | ||||||||||||||||||||
The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and the variable interest entity (VIE) of which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. In accordance with GAAP, current authoritative guidance is applied when determining whether an entity is subject to consolidation. | ||||||||||||||||||||
Fiscal Periods | ||||||||||||||||||||
The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 fiscal year, a 52 week fiscal year includes four quarters of 13 fiscal weeks while a 53 week fiscal year includes three 13 fiscal week quarters and one 14 fiscal week quarter. The Company’s last 53 week fiscal year was fiscal year 2014. Fiscal year 2015 is a 52 week fiscal year. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. | ||||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of accounts receivable allowances, inventory reserves, warranty reserves, rebate accruals, valuation of the Company’s stock options, goodwill valuation, deferred taxes and any associated valuation allowances, distributor channel inventory, royalty revenues, deferred revenue, uncertain income tax positions, litigation costs and related accruals. Actual results could differ from such estimates. | ||||||||||||||||||||
Reclassifications | ||||||||||||||||||||
Certain amounts in the condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. | ||||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||
Authoritative guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: | ||||||||||||||||||||
● | Level 1—Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||||
● | Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||||
● | Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||||||||||||
Pursuant to current authoritative guidance, entities are allowed an irrevocable option to elect the fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract-by-contract basis. The Company did not elect the fair value option under this guidance as to specific assets or liabilities. There were no transfers between Level 1, Level 2 and Level 3 inputs during the three months ended April 4, 2015. The Company carries cash and cash equivalents at cost, which approximates fair value. As of April 4, 2015 and January 3, 2015, the Company did not have any short-term investments. | ||||||||||||||||||||
The following tables represent the Company’s financial assets (in thousands), measured at fair value on a recurring basis: | ||||||||||||||||||||
4-Apr-15 | Adjusted Basis | Gross Unrealized | Gross Unrealized | Estimated | Cash and Cash | |||||||||||||||
Cost | Gains | (Losses) | Fair Value | Equivalents | ||||||||||||||||
Cash | $ | 78,308 | $ | — | $ | — | $ | 78,308 | $ | 78,308 | ||||||||||
Level 1: | ||||||||||||||||||||
Bank Time Deposits | 43,500 | — | — | 43,500 | 43,500 | |||||||||||||||
U.S. Treasuries | — | — | — | — | — | |||||||||||||||
Money Market Funds | 13,912 | — | — | 13,912 | 13,912 | |||||||||||||||
Subtotal | 57,412 | — | — | 57,412 | 57,412 | |||||||||||||||
Level 2: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Level 3: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Total assets measured at fair value | $ | 135,720 | $ | — | $ | — | $ | 135,720 | $ | 135,720 | ||||||||||
3-Jan-15 | Adjusted Basis | Gross Unrealized | Gross Unrealized | Estimated | Cash and Cash | |||||||||||||||
Cost | Gains | (Losses) | Fair Value | Equivalents | ||||||||||||||||
Cash | $ | 92,888 | $ | — | $ | — | $ | 92,888 | $ | 92,888 | ||||||||||
Level 1: | ||||||||||||||||||||
Bank Time Deposits | 40,500 | — | — | 40,500 | 40,500 | |||||||||||||||
U.S. Treasuries | — | — | — | — | — | |||||||||||||||
Money Market Funds | 1,065 | — | — | 1,065 | 1,065 | |||||||||||||||
Subtotal | 41,565 | — | — | 41,565 | 41,565 | |||||||||||||||
Level 2: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Level 3: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Total assets measured at fair value | $ | 134,453 | $ | — | $ | — | $ | 134,453 | $ | 134,453 | ||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | ||||||||||||||||||||
Accounts receivable consist of trade receivables recorded upon recognition of revenue for product revenues, reduced by reserves for estimated bad debts and returns. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Credit is extended based on evaluation of the customer’s financial condition. Collateral is not required. The allowance for doubtful accounts is determined based on historical write-off experience, current customer information and other relevant factors, including specific identification of past due accounts, based on the age of the receivable in excess of the contemplated or contractual due date. Accounts are charged off against the allowance when the Company believes they are uncollectible. | ||||||||||||||||||||
Inventories | ||||||||||||||||||||
Inventories are stated at the lower of cost or market. Cost is determined using a standard cost method, which approximates FIFO (first in, first out) and includes material, labor and overhead costs. Inventory reserves are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory that has a market price less than the carrying value in inventory. | ||||||||||||||||||||
Property and Equipment | ||||||||||||||||||||
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: | ||||||||||||||||||||
Useful Lives | ||||||||||||||||||||
Building | 39 years | |||||||||||||||||||
Building improvements | 7 years | |||||||||||||||||||
Leasehold improvements | Lesser of useful life or term of lease | |||||||||||||||||||
Machinery and equipment | 5 years | |||||||||||||||||||
Vehicles | 5 years | |||||||||||||||||||
Tooling | 3 years | |||||||||||||||||||
Computer equipment | 2 to 6 years | |||||||||||||||||||
Furniture and office equipment | 2 to 6 years | |||||||||||||||||||
Demonstration units | 3 years | |||||||||||||||||||
Land is not depreciated and construction-in-progress is not depreciated until placed in service. Normal repair and maintenance costs are expensed as incurred, whereas significant improvements that materially increase values or extend useful lives are capitalized and depreciated over the remaining estimated useful lives of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss on the sale or retirement is recognized in income. | ||||||||||||||||||||
For the three months ended April 4, 2015 and March 29, 2014, depreciation and amortization expense of property and equipment was $2.7 million and $2.2 million, respectively. | ||||||||||||||||||||
Intangible Assets | ||||||||||||||||||||
Costs to renew intangible assets are capitalized and amortized over the remaining useful life of the intangible asset. Total renewal costs for patents and trademarks were $0.1 million for each of the three months ended April 4, 2015 and March 29, 2014. As of April 4, 2015, the weighted-average number of years until the next renewal was one year for patents and five years for trademarks. | ||||||||||||||||||||
The Company’s policy is to renew its patents and trademarks. The Company continually evaluates the amortization period and carrying basis of patents and trademarks to determine whether any events or circumstances warrant a revised estimated useful life or reduction in value. Capitalized application costs are charged to operations when it is determined that the patent or trademark will not be obtained or is abandoned. | ||||||||||||||||||||
Impairment of Goodwill and Intangible Assets | ||||||||||||||||||||
Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. In assessing goodwill impairment for each of its reporting units, the Company has the option to first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macroeconomic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if the Company concludes otherwise, then the Company is required to perform the first step of the two-step impairment test by comparing the fair value of the reporting unit, determined using future projected discounted operating cash flows, with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, goodwill is considered impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit goodwill with the carrying amount of goodwill. The Company also has the option to bypass the qualitative assessment and proceed directly to performing the first step of the two-step goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. The annual impairment test is performed during the fourth fiscal quarter. | ||||||||||||||||||||
The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. | ||||||||||||||||||||
No impairment of goodwill, intangible assets or other long-lived assets was recorded during the three months ended April 4, 2015 or March 29, 2014. | ||||||||||||||||||||
Revenue Recognition and Deferred Revenue | ||||||||||||||||||||
The Company follows the current authoritative guidance for revenue recognition. Based on these requirements, the Company recognizes revenue from the sale of products or services when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable, and (iv) collectability is reasonably assured. In the case of the license or sale of software that does not function together with hardware components to provide the essential functionality of the hardware, revenue is recognized pursuant to the software revenue recognition guidance. | ||||||||||||||||||||
The Company derives the majority of its revenue from four primary sources: (i) direct sales under long-term sensor purchase agreements with end-user hospitals where the Company provides up-front monitoring equipment at no up-front charge in exchange for a multi-year sensor purchase commitment, (ii) other direct sales of noninvasive monitoring solutions to end-user hospitals, emergency medical response organizations and other direct customers; (iii) sales of noninvasive monitoring solutions to distributors who then typically resell to end-user hospitals, emergency medical response organizations and other direct customers; (iv) sales of integrated circuit boards to original equipment manufacturer (OEM) customers who incorporate the Company’s embedded software technology into their multi-parameter monitoring devices. | ||||||||||||||||||||
The Company enters into agreements to sell its noninvasive monitoring solutions and services, sometimes as part of multiple deliverable arrangements that include various combinations of products and services. While the majority of the Company’s sales transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation and analysis is sometimes required to determine the appropriate accounting including: (i) how the arrangement consideration should be allocated among the deliverables when multiple deliverables exist, (ii) when to recognize revenue on the deliverables, and (iii) whether undelivered elements are essential to the functionality of the delivered elements. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. | ||||||||||||||||||||
In the case of multiple deliverable arrangements, the authoritative guidance provides a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE), and (iii) best estimate of the selling price (ESP). VSOE of fair value is defined as the price charged when the same element is sold separately. VSOE generally exists only when the deliverable is sold separately and is the price actually charged for that deliverable. TPE generally does not exist for the majority of the Company’s products. The objective of ESP is to determine the price at which the Company would transact a sale if the product was sold on a stand-alone basis. In the absence of VSOE and TPE, the Company determines ESP for its products by considering multiple factors including, but not limited to, features and functionality of the product, geographies, type of customer, contractual prices pursuant to Group Purchasing Organization (GPO) contracts, the Company’s pricing and discount practices, and market conditions. | ||||||||||||||||||||
A deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis. Most of the Company’s products in a multiple deliverable arrangement qualify as separate units of accounting. In the case of the Company’s monitoring equipment containing embedded Masimo SET® or rainbow® SET software, the Company has determined that the hardware and software components function together to deliver the equipment’s essential functionality and, therefore, represent a single deliverable. However, software deliverables, such as rainbow® parameter software, which do not function together with hardware components to provide the equipment’s essential functionality, are accounted for under software revenue recognition guidance. The revenue for these multiple-element arrangements is allocated to the software deliverables and the non-software deliverables based on the relative selling prices of all of the deliverables in the arrangement using the hierarchy in the revenue recognition accounting guidance for arrangements with multiple deliverables. | ||||||||||||||||||||
Sales under long-term sensor purchase contracts are generally structured such that the Company agrees to provide at no up-front charge certain monitoring equipment, software, installation, training and/or warranty support in exchange for the hospital’s agreement to purchase sensors over the term of the agreement, which generally ranges from three to six years. The sensors are essential to the functionality of the monitoring equipment and, therefore, represent a substantive performance obligation. The Company does not recognize any revenue when the monitoring and related equipment and software are delivered to the hospitals. The Company recognizes revenue for these delivered elements, on a pro-rata basis when installation and training are complete, as the sensors are delivered under the long-term purchase commitment. The cost of the monitoring equipment initially placed at the hospitals is deferred and amortized to cost of goods sold over the life of the underlying long-term sensor purchase contract. | ||||||||||||||||||||
Many of the Company’s distributors purchase sensor products which they then resell to end-user hospitals that are typically fulfilling their purchase obligations to the Company under such end-user hospital’s long-term sensor purchase commitments. Upon shipment to the distributor, revenue is deferred until the distributor ships the product to the Company’s end-user customers based on an estimate of the inventory held by these distributors at the end of the accounting period. | ||||||||||||||||||||
The Company also earns revenue from the sale of integrated circuit boards and other products, as well as from rainbow® parameter software licenses, to OEMs under various agreements. Revenue from the sale of products to the OEMs is generally recognized at the time of shipment. Revenue related to software licenses to OEMs is generally recognized upon shipment of the OEM’s product to its customers, as represented to the Company by the OEM. | ||||||||||||||||||||
The Company also provides certain customers with the ability to purchase sensors under rebate programs. Under these programs, the customers may earn rebates based on their purchasing activity. The Company estimates and provides allowances for these programs at the time of sale as a reduction to revenue. | ||||||||||||||||||||
In general, customers do not have a right of return for credit or refund. However, the Company allows returns under certain circumstances. At the end of each period, the Company estimates and accrues for these returns as a reduction to revenue and accounts receivable. The Company estimates returns based on several factors, including contractual limitations and past returns history. | ||||||||||||||||||||
The Company’s royalty revenue arises from one agreement with Covidien, which was recently acquired by Medtronic plc, and is due and payable quarterly based on U.S. sales of Covidien’s infringing products. An estimate of these royalty revenues is recorded quarterly in the period earned based on the prior quarter’s historical results, adjusted for any new information or trends known to management at the time of estimation. This estimated revenue is adjusted prospectively when the Company receives the Covidien royalty report, approximately 60 days after the end of the previous quarter. | ||||||||||||||||||||
Product Warranty | ||||||||||||||||||||
The Company provides a warranty against defects in material and workmanship for a period ranging from six to fifteen months, depending on the product type. In the case of long-term sales agreements, the Company typically warrants the products for the term of the agreement, which generally ranges from three to six years. In traditional sales activities, including direct and OEM sales, the Company establishes an accrual for the estimated costs of warranty at the time of revenue recognition. Estimated warranty expenses are recorded as an accrued liability, with a corresponding provision to cost of sales. In long-term sales agreements, revenue related to extended warranty is recognized over the life of the contract, while the product warranty costs related to the long-term sales agreements are expensed as incurred. | ||||||||||||||||||||
Changes in the product warranty accrual were as follows (in thousands): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, | March 29, | |||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Warranty accrual, beginning of period | $ | 1,416 | $ | 1,161 | ||||||||||||||||
Accrual for warranties issued | 339 | 278 | ||||||||||||||||||
Changes to pre-existing warranties (including changes in estimates) | (17 | ) | (76 | ) | ||||||||||||||||
Settlements made | (258 | ) | (242 | ) | ||||||||||||||||
Warranty accrual, end of period | $ | 1,480 | $ | 1,121 | ||||||||||||||||
Comprehensive Income | ||||||||||||||||||||
Authoritative accounting guidance establishes requirements for reporting and disclosure of comprehensive income and its components. Comprehensive income includes foreign currency translation adjustments and any related tax benefits that have been excluded from net income including noncontrolling interest, and reflected in Masimo Corporation stockholders’ equity. | ||||||||||||||||||||
The change in accumulated other comprehensive loss was as follows (in thousands): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, 2015 | ||||||||||||||||||||
Accumulated other comprehensive loss, beginning of period | $ | (2,093 | ) | |||||||||||||||||
Foreign currency translation adjustments | (2,942 | ) | ||||||||||||||||||
Accumulated other comprehensive loss, end of period | $ | (5,035 | ) | |||||||||||||||||
Net Income Per Share | ||||||||||||||||||||
Basic net income per share attributable to Masimo Corporation for the three months ended April 4, 2015 and March 29, 2014 is computed by dividing net income attributable to Masimo Corporation stockholders by the weighted-average number of shares outstanding during each period. The diluted net income per share attributable to Masimo Corporation stockholders for the three months ended April 4, 2015 and March 29, 2014 is computed by dividing the net income attributable to Masimo Corporation stockholders by the weighted-average number of shares and potential shares outstanding during each period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options. For the three months ended April 4, 2015 and March 29, 2014, weighted options to purchase 3.2 million and 2.8 million shares of common stock, respectively, were outstanding, but were not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. Based on authoritative accounting guidance, the Company adjusted its net income including noncontrolling interest by the amount of net (income) loss attributable to the noncontrolling interest for the three months ended April 4, 2015 and March 29, 2014, to determine its net income attributable to its stockholders. A reconciliation of basic and diluted net income per share attributable to Masimo Corporation stockholders is as follows (in thousands, except per share amounts): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, | March 29, | |||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Net income attributable to Masimo Corporation stockholders: | ||||||||||||||||||||
Net income including noncontrolling interest | $ | 19,822 | $ | 22,491 | ||||||||||||||||
Net loss attributable to the noncontrolling interest | 701 | 141 | ||||||||||||||||||
Net income attributable to Masimo Corporation stockholders | $ | 20,523 | $ | 22,632 | ||||||||||||||||
Basic net income per share attributable to Masimo Corporation stockholders: | ||||||||||||||||||||
Net income attributable to Masimo Corporation stockholders | $ | 20,523 | $ | 22,632 | ||||||||||||||||
Weighted-average shares outstanding - basic | 52,687 | 56,705 | ||||||||||||||||||
Basic net income per share attributable to Masimo Corporation stockholders | $ | 0.39 | $ | 0.4 | ||||||||||||||||
Diluted net income per share attributable to Masimo Corporation stockholders: | ||||||||||||||||||||
Weighted-average shares outstanding - basic | 52,687 | 56,705 | ||||||||||||||||||
Diluted share equivalent: stock options | 1,277 | 1,342 | ||||||||||||||||||
Weighted-average shares outstanding - diluted | 53,964 | 58,047 | ||||||||||||||||||
Diluted net income per share attributable to Masimo Corporation stockholders | $ | 0.38 | $ | 0.39 | ||||||||||||||||
Supplemental Cash Flow Information | ||||||||||||||||||||
Supplemental cash flow information includes the following (in thousands): | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, | March 29, | |||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Cash paid during the year for: | ||||||||||||||||||||
Interest (net of amounts capitalized) | $ | 413 | $ | 15 | ||||||||||||||||
Income taxes | 6,673 | 1,838 | ||||||||||||||||||
Noncash investing and financing activities: | ||||||||||||||||||||
Assets acquired under capital leases | $ | 36 | $ | — | ||||||||||||||||
Unpaid purchases of property, plant and equipment | 4,346 | 302 | ||||||||||||||||||
Unsettled common stock proceeds from option exercises | 395 | — | ||||||||||||||||||
Unsettled stock repurchases | 6,079 | — | ||||||||||||||||||
Seasonality | ||||||||||||||||||||
The healthcare business in the United States and overseas is typically subject to quarterly fluctuations in hospital and other alternative care admissions. Historically, the Company’s third fiscal quarter revenues have generally experienced a sequential decline from its second fiscal quarter revenues. The Company believes this is primarily due to the summer vacation season during which people tend to avoid elective procedures. Another factor affecting the seasonality of the Company’s revenues is the traditional “flu season” that often increases hospital and acute care facility admissions in the first and fourth calendar quarters. Because the Company’s non-sales variable operating expenses often do not fluctuate in the same manner as its quarterly product sales, its quarterly operating income may fluctuate disproportionately to its quarterly revenue. | ||||||||||||||||||||
Recently Issued Accounting Pronouncements | ||||||||||||||||||||
In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new standard requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. ASU 2015-03 requires retrospective application and represents a change in accounting principle. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements. | ||||||||||||||||||||
In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (ASU 2015-02). The amended standard applies to entities in all industries and eliminates the deferral of certain consolidation standards for entities considered to be investment companies as well as modifies the consolidation analysis performed on certain types of legal entities. ASU 2015-02 is effective for annual and interim fiscal reporting periods beginning after December 15, 2015, and may be applied retrospectively, with early application permitted. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements. | ||||||||||||||||||||
In May 2014, the FASB issued Accounting Standard Update No. 2014-09, Revenue (Topic 606): Revenue from Contracts with Customer (ASU 2014-09). The new standard provides a single, principles-based five-step model to be applied to all contracts with customers while enhancing disclosures about revenue, providing additional guidance for transactions that were not previously addressed comprehensively and improving guidance for multiple-element arrangements. ASU 2014-09 is effective for annual and interim fiscal reporting periods beginning after December 15, 2016. In April 2015, the FASB proposed a one-year deferral of the standard’s effective date, while permitting entities to still adopt one year earlier on the original effective date. A final determination will be made after a public comment period. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements. |
Variable_Interest_Entity_VIE
Variable Interest Entity (VIE) | 3 Months Ended | |||
Apr. 04, 2015 | ||||
Variable Interest Entity [Abstract] | ||||
Variable Interest Entity (VIE) | Variable Interest Entity (VIE) | |||
The Company follows authoritative guidance for the consolidation of its VIE, which requires an enterprise to determine whether its variable interest gives it a controlling financial interest in a VIE. Determination about whether an enterprise should consolidate a VIE is required to be evaluated continuously as changes to existing relationships or future transactions may result in consolidating or deconsolidating the VIE. | ||||
Cercacor Laboratories, Inc. (Cercacor) | ||||
Cercacor is an independent entity spun off from the Company to its stockholders in 1998. Joe Kiani, the Company’s Chairman and Chief Executive Officer, is also the Chairman and Chief Executive Officer of Cercacor. The Company is a party to a Cross-Licensing Agreement with Cercacor, which was most recently amended and restated effective January 1, 2007 (the Cross-Licensing Agreement), that governs each party’s rights to certain intellectual property held by the two companies. In addition, the Company entered into a Services Agreement with Cercacor effective January 1, 2007, which governs the general and administrative services the Company provides to Cercacor. | ||||
Under the Cross-Licensing Agreement, the Company granted Cercacor an exclusive, perpetual and worldwide license, with sublicense rights, to use all Masimo SET® owned by the Company, including all improvements on this technology, for the monitoring of non-vital signs measurements and to develop and sell devices incorporating Masimo SET® for monitoring non-vital signs measurements in any product market in which a product is intended to be used by a patient or pharmacist rather than a professional medical caregiver. The Company refers to this market as the Cercacor Market. The Company also granted Cercacor a non-exclusive, perpetual and worldwide license, with sublicense rights, to use all Masimo SET® for the measurement of vital signs in the Cercacor Market. | ||||
The Company exclusively licenses from Cercacor the right to make and distribute products in the professional medical caregiver markets, which the Company refers to as the Masimo Market, that utilize rainbow® technology for certain non-invasive measurements, including carbon monoxide, methemoglobin, fractional arterial oxygen saturation and hemoglobin. The Company also has the option to obtain exclusive licenses to make and distribute products that utilize rainbow® technology for the monitoring of other non-vital signs measurements, including blood glucose, in product markets where the product is intended to be used by a professional medical caregiver. To date, the Company has developed and commercially released devices that measure carbon monoxide, methemoglobin and hemoglobin using licensed rainbow® technology. The Company also markets certain other rainbow technologies, such as rainbow Acoustic Monitoring™, the rights to which are owned by the Company and for which no licensing fee is paid to Cercacor. | ||||
The Company’s license to rainbow® technology for these parameters in these markets is exclusive on the condition that the Company continues to pay Cercacor royalties on its products incorporating rainbow® technology, subject to certain minimum aggregate royalty thresholds, and that the Company uses commercially reasonable efforts to develop or market products incorporating the licensed rainbow® technology. The royalty rate is up to 10% of the rainbow® royalty base, which includes handhelds, tabletop and multi-parameter devices. Handheld products incorporating rainbow® technology will carry up to a 10% royalty rate. For other products, only the proportional amount attributable to that portion of the Company’s devices used to monitor non-vital signs measurements, rather than to monitor vital signs measurements, and sensors and accessories for measuring only non-vital signs parameters, will be included in the 10% rainbow® royalty base. Effective January 2009, for multi-parameter devices, the rainbow® royalty base includes the percentage of the revenue based on the number of rainbow® enabled measurements. For hospital contracts where the Company places equipment and enters into a sensor contract, the Company pays a royalty to Cercacor on the total sensor contract revenues based on the ratio of rainbow® enabled devices to total devices. | ||||
The current annual minimum aggregate royalty obligation under the license is $5.0 million. Actual aggregate royalty liabilities to Cercacor under the license were $1.3 million and $1.5 million for the three months ended April 4, 2015 and March 29, 2014, respectively. In connection with a change in control of the Company, as defined in the Cross-Licensing Agreement, the minimum aggregate annual royalties for licensed rainbow® measurements payable to Cercacor related to carbon monoxide, methemoglobin, fractional arterial oxygen saturation, hemoglobin and blood glucose will increase to $15.0 million, plus up to $2.0 million for other rainbow® measurements. | ||||
In February 2009, in order to accelerate the product development of an improved hemoglobin spot-check measurement device, Pronto-7®, the Company’s board of directors agreed to fund additional engineering expenses of Cercacor. Specifically, these expenses included third-party engineering materials and supplies expense as well as 50% of Cercacor’s total engineering and engineering-related payroll expenses. Beginning in 2012, the Company’s board of directors approved an increase in the percentage of Cercacor’s total engineering and engineering-related payroll expenses funded by the Company from 50% to 60%. This arrangement was discontinued by mutual agreement effective as of January 4, 2015. For each of the three months ended April 4, 2015 and March 29, 2014, the expenses for these additional services, materials and supplies totaled $0.1 million and $0.9 million, respectively. | ||||
Pursuant to authoritative accounting guidance, Cercacor is consolidated within the Company’s financial statements for all periods presented. The Company is required to consolidate Cercacor since the Company is currently deemed to be the primary beneficiary of Cercacor’s activities. This determination is based primarily on the facts that the Company is Cercacor’s sole customer and Cercacor is currently financially dependent on the Company for funding. Accordingly, all intercompany royalties, option and license fees and other charges between the Company and Cercacor, as well as all intercompany payables and receivables, have been eliminated in the consolidation. Also, all direct engineering expenses that have been incurred by the Company and charged to Cercacor, or that have been incurred by Cercacor and charged to the Company, have not been eliminated and are included as research and development expense in the Company’s condensed consolidated statements of comprehensive income. Upon consolidation, $6.4 million and $6.5 million of deferred revenue related to technology licensed to the Company as of April 4, 2015 and January 3, 2015, respectively, were eliminated. In addition, net receivables of $2.0 million due from the Company for both April 4, 2015 and January 3, 2015 were eliminated. | ||||
Assets of Cercacor can only be used to settle obligations of Cercacor and creditors of Cercacor have no recourse to the general credit of the Company. The condensed consolidated balance sheets include a noncontrolling interest in Cercacor of $1.0 million and $1.7 million as of April 4, 2015 and January 3, 2015, respectively, which represents the value of common stock, additional paid-in capital and retained earnings of Cercacor that are not available to the Company. In addition, the condensed consolidated balance sheets include, net of intercompany eliminations, total assets of $6.5 million and $7.2 million as of April 4, 2015 and January 3, 2015, respectively, related to Cercacor. Cercacor’s total assets as of April 4, 2015 included $4.8 million for intangible assets and $1.0 million for property and equipment. Cercacor’s total assets as of January 3, 2015 included $4.7 million for intangible assets and $1.2 million for property and equipment. The Company’s condensed consolidated balance sheets include total liabilities related to Cercacor, net of intercompany eliminations, of $1.5 million as of April 4, 2015 and $1.2 million as of January 3, 2015. | ||||
For the foreseeable future, the Company anticipates that it will continue to consolidate Cercacor pursuant to the current authoritative accounting guidance; however, in the event that Cercacor is no longer considered a VIE under such accounting guidance, the Company may discontinue consolidating the entity. | ||||
The changes in noncontrolling interest for Cercacor were as follows (in thousands): | ||||
Three Months Ended | ||||
April 4, 2015 | ||||
Noncontrolling interest, beginning of period | $ | 1,742 | ||
Increase in additional paid-in capital of noncontrolling interest | 4 | |||
Net loss attributable to noncontrolling interest | 701 | |||
Noncontrolling interest, end of period | $ | 1,045 | ||
Cash_and_Cash_Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Apr. 04, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
The Company considers all highly liquid investments with an original maturity from date of purchase of three months or less, or highly liquid investments that are readily convertible into known amounts of cash, to be cash equivalents. As of April 4, 2015, the Company’s cash balance was $78.3 million, which was comprised of checking accounts. Additionally, the Company had cash equivalents of $57.4 million, which consisted of $43.5 million of bank time deposits and $13.9 million of money market funds. As of January 3, 2015, the Company’s cash balance was $92.9 million, comprised of primarily checking accounts. Additionally, the Company had cash equivalents of $41.6 million, consisting of $40.5 million of bank time deposits and $1.1 million of money market funds. |
Inventories
Inventories | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Inventories | Inventories | |||||||
Inventories consist of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Raw materials | $ | 37,289 | $ | 33,056 | ||||
Work-in-process | 6,839 | 6,020 | ||||||
Finished goods | 25,444 | 30,642 | ||||||
Total inventories | $ | 69,572 | $ | 69,718 | ||||
Property_and_Equipment_Propert
Property and Equipment Property, Plant and Equipment | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property and Equipment | Property and Equipment | |||||||
Property and equipment, net, consists of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Machinery and equipment | $ | 39,383 | $ | 38,588 | ||||
Building and improvements | 38,027 | 30,678 | ||||||
Land | 22,894 | 22,894 | ||||||
Computer equipment | 13,563 | 13,035 | ||||||
Tooling | 12,603 | 12,317 | ||||||
Leasehold improvements | 9,800 | 9,912 | ||||||
Furniture and office equipment | 6,965 | 4,864 | ||||||
Demonstration units | 948 | 972 | ||||||
Vehicles | 45 | 45 | ||||||
Construction-in-progress | 23,139 | 25,731 | ||||||
Total property and equipment | 167,367 | 159,036 | ||||||
Accumulated depreciation and amortization | (58,702 | ) | (57,084 | ) | ||||
Property and equipment, net | $ | 108,665 | $ | 101,952 | ||||
Approximately $20.2 million of construction-in-progress is related to the purchase and renovation costs incurred in connection with the Company’s new corporate headquarters and research and development facility in Irvine, California, of which approximately $4.1 million is still recorded in accounts payable. | ||||||||
The gross value of furniture and office equipment under capital lease obligations was $0.6 million as of both April 4, 2015 and January 3, 2015, with accumulated depreciation of $0.4 million for each April 4, 2015 and January 3, 2015, respectively. |
Intangible_Assets_Intangible_A
Intangible Assets Intangible Assets | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||
Intangible Assets | Intangible Assets | |||||||
Intangible assets, net, consist of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Cost: | ||||||||
Patents | $ | 20,755 | $ | 20,459 | ||||
Customer relationships | 7,669 | 7,669 | ||||||
Acquired technology | 5,580 | 5,580 | ||||||
Trademarks | 3,681 | 3,562 | ||||||
Capitalized software development costs | 2,066 | 2,066 | ||||||
Other | 1,505 | 1,450 | ||||||
Total cost | $ | 41,256 | $ | 40,786 | ||||
Accumulated amortization: | ||||||||
Patents | (6,988 | ) | (6,649 | ) | ||||
Customer relationships | (2,045 | ) | (1,853 | ) | ||||
Acquired technology | (1,531 | ) | (1,392 | ) | ||||
Trademarks | (924 | ) | (866 | ) | ||||
Capitalized software development costs | (1,477 | ) | (1,440 | ) | ||||
Other | (936 | ) | (815 | ) | ||||
Total accumulated amortization | $ | (13,901 | ) | $ | (13,015 | ) | ||
Net carrying amount | $ | 27,355 | $ | 27,771 | ||||
Total amortization expense for the three months ended April 4, 2015 and March 29, 2014 was $1.2 million and $0.8 million, respectively. All of these intangible assets have a 10 year weighted average amortization period. Estimated amortization expense for future fiscal years is as follows (in thousands): | ||||||||
Fiscal year | Amount | |||||||
2015 (balance of year) | $ | 3,272 | ||||||
2016 | 3,081 | |||||||
2017 | 2,961 | |||||||
2018 | 2,608 | |||||||
2019 | 2,341 | |||||||
Thereafter | 13,092 | |||||||
Total | $ | 27,355 | ||||||
Longterm_debt_Debt_instruments
Long-term debt Debt instruments (Notes) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Line of Credit | Long Term Debt | |||||||
Long term debt consists of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Revolving line of credit | $ | 125,000 | $ | 125,000 | ||||
Long term portion of capital lease obligations acquisition | 108 | 145 | ||||||
Total long term debt | $ | 125,108 | $ | 125,145 | ||||
In September 2014, the Company executed Amendment No. 1 to Credit Agreement (Amendment 1) with JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender (JPMorgan), and Bank of America, N.A., as a Lender (BofA). Amendment 1 modified the credit agreement dated April 23, 2014, by and among the Company, the Lenders from time to time party thereto and JPMorgan (the Credit Agreement and collectively with Amendment 1, the Amended Credit Agreement). The Amended Credit Agreement increased the Company’s borrowing capacity by $125.0 million, bringing the total available borrowing capacity to $250.0 million with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity up to $350.0 million in the future. The Amended Credit Agreement also provides for a sublimit of up to $50.0 million for the issuance of letters of credit and a sublimit of $75.0 million for borrowings in specified foreign currencies. All unpaid principal under the Amended Credit Agreement will become due and payable on September 29, 2019. | ||||||||
Borrowings under the Amended Credit Agreement will be deemed, at the Company’s election, either: (i) an ABR Loan, which bears interest at the Alternate Base Rate (as defined below), plus a spread (ABR Spread) based upon a Company leverage ratio, or (ii) a Eurodollar Loan, which bears interest at the Adjusted LIBO Rate (as defined below), plus a spread (Eurodollar Spread) based upon a Company leverage ratio. The ABR Spread is 0.125% to 1.00% and the Eurodollar Spread is 1.125% to 2.000%. Subject to certain conditions, the Company may also request swingline loans from time to time (Swingline Loans) that bear interest similar to an ABR Loan. | ||||||||
The Alternate Base Rate is determined by taking the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.50%, and (iii) the one-month Adjusted LIBO Rate plus 1.0%. The Adjusted LIBO Rate is equal to LIBOR for the applicable interest period multiplied by the statutory reserve rate for such period. | ||||||||
The Company is obligated under the Amended Credit Agreement to pay a fee ranging from 0.175% to 0.300% per annum, based upon a Company leverage ratio, with respect to any unused portion of the line of credit. This fee and interest on any ABR Loan are due and payable quarterly in arrears. Interest on any Eurodollar Loan is due and payable at the end of the applicable interest period (or at each three month interval in the case of loans with interest periods greater than three months). Interest on any Swingline Loan is due and payable on the date that the Swingline Loan is required to be repaid. The Company may prepay the loans and terminate the commitments in whole at any time, without premium or penalty, subject to reimbursement of certain costs in the case of Eurodollar Loans. | ||||||||
Pursuant to the terms of the Amended Credit Agreement, the Company is subject to certain covenants, including financial covenants related to a leverage ratio and an interest charge coverage ratio, and other customary negative covenants. The Company’s obligations under the Amended Credit Agreement are secured by substantially all of the Company’s personal property, including all equity interests in domestic subsidiaries and first-tier foreign subsidiaries. | ||||||||
As of April 4, 2015, the Amended Credit Agreement had an outstanding Eurodollar draw of $125.0 million at an effective interest rate of 1.4375%, and the Company was in compliance with all of its covenants. |
Stock_Repurchase_Program
Stock Repurchase Program | 3 Months Ended |
Apr. 04, 2015 | |
Equity [Abstract] | |
Stock Repurchase Program | Stock Repurchase Program |
In February 2013, the Company’s board of directors authorized the repurchase of up to 6.0 million shares of the Company’s common stock under a stock repurchase program. In October 2014, the Company’s board of directors increased the number of shares of the Company’s common stock authorized for repurchase by 3.0 million shares, bringing the total number of shares of the Company’s common stock authorized under such repurchase program from inception to 9.0 million. The stock repurchase program may be carried out at the discretion of a committee comprised of the Company’s Chief Executive Officer and Chief Financial Officer through open market purchases, one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions. During the three months ended April 4, 2015, approximately 0.3 million shares were repurchased at an average cost of $32.89 per share for a total repurchase cost of $8.2 million, of which approximately $6.1 million is recorded in accrued liabilities as of April 4, 2015. During the three months ended March 29, 2014, no shares were repurchased. |
ShareBased_Compensation
Share-Based Compensation | 3 Months Ended | ||||||
Apr. 04, 2015 | |||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||
Share-Based Compensation | Share-Based Compensation | ||||||
The number and weighted-average exercise price of options issued and outstanding under all of the Company’s stock option plans are as follows (in thousands, except for exercise prices): | |||||||
Three Months Ended | |||||||
April 4, 2015 | |||||||
Shares | Average | ||||||
Exercise Price | |||||||
Options outstanding, beginning of period | 9,956 | $ | 23.59 | ||||
Granted | 282 | $ | 30.41 | ||||
Canceled | (52 | ) | $ | 22.46 | |||
Exercised | (273 | ) | $ | 18.31 | |||
Options outstanding, end of period | 9,913 | $ | 23.93 | ||||
Options exercisable, end of period | 6,114 | $ | 24.07 | ||||
Options available for grant, end of period | 5,528 | ||||||
The Black-Scholes option pricing model is used to estimate the fair value of options granted under the Company’s share-based compensation plans. The range of assumptions used and the resulting weighted-average fair value of options granted at the date of grant were as follows: | |||||||
Three Months Ended | |||||||
April 4, | March 29, | ||||||
2015 | 2014 | ||||||
Risk-free interest rate | 1.3% to 1.8% | 1.5% to 1.6% | |||||
Expected term (in years) | 5.5 | 5.1 | |||||
Estimated volatility | 33.5% to 37.4% | 32.5% to 32.8% | |||||
Expected dividends | 0% | 0% | |||||
Weighted-average fair value of options granted | $10.35 | $8.89 | |||||
The total share-based compensation expense for the three months ended April 4, 2015 and March 29, 2014 was $2.9 million and $2.6 million, respectively. | |||||||
The aggregate intrinsic value of options is calculated as the positive difference, if any, between the market value of the Company’s common stock on the date of exercise or the respective period end, as appropriate, and the exercise price of the options. The aggregate intrinsic value of options outstanding, with an exercise price less than the closing price of the Company’s common stock, as of April 4, 2015 was $95.7 million. The aggregate intrinsic value of options exercisable, with an exercise price less than the closing price of the Company’s common stock, as of April 4, 2015 was $58.6 million. The aggregate intrinsic value of options exercised during the three months ended April 4, 2015 and March 29, 2014 was $3.3 million and $1.5 million, respectively. | |||||||
The unrecognized share-based compensation as of April 4, 2015 was $23.1 million related to unvested options granted after January 1, 2006. The weighted-average remaining contractual term of options outstanding, with an exercise price less than the closing price of the Company’s common stock, as of April 4, 2015 was 5.9 years. The weighted-average remaining contractual term of options exercisable, with an exercise price less than the closing price of the Company’s common stock, as of April 4, 2015 was 4.3 years. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |||||||||||
Apr. 04, 2015 | ||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||
Commitments and Contingencies | 13. Commitments and Contingencies | |||||||||||
Leases | ||||||||||||
The Company leases its facilities in North America, Europe and Asia under operating lease agreements expiring at various dates through December 2020. Certain facility leases contain predetermined price escalations and in some cases renewal options. The Company recognizes the lease costs using a straight-line method based on total lease payments. The Company has received leasehold improvement incentives in connection with certain leased facilities in the U.S. These leasehold improvement incentives have been recorded as deferred rent and are being amortized as a reduction to rent expense on a straight-line basis over the life of the lease. As of April 4, 2015 and January 3, 2015, rent expense accrued in excess of the amount paid aggregated $0.4 million for each period, which is classified as other liabilities in the accompanying condensed consolidated balance sheets. In addition, the Company leases automobiles in Europe that are classified as operating leases and expire at various dates through January 2016. The majority of these leases are non-cancelable. The Company also has outstanding capital leases for office equipment and computer equipment, all of which are non-cancelable. | ||||||||||||
Future minimum lease payments under operating and capital leases for each of the following fiscal years ending on or about December 31 are (in thousands) (including interest): | ||||||||||||
As of April 4, 2015 | ||||||||||||
Operating | Capital | Total | ||||||||||
Leases | Leases | |||||||||||
2015 (balance of year) | $ | 3,838 | $ | 16 | $ | 3,854 | ||||||
2016 | 4,253 | 88 | 4,341 | |||||||||
2017 | 2,642 | 82 | 2,724 | |||||||||
2018 | 2,083 | 8 | 2,091 | |||||||||
2019 | 1,908 | 8 | 1,916 | |||||||||
Thereafter | 1,033 | 3 | 1,036 | |||||||||
Total | $ | 15,757 | $ | 205 | $ | 15,962 | ||||||
Rental expense related to operating leases was $1.5 million and $1.6 million for the three months ended April 4, 2015 and March 29, 2014, respectively. The Company leases office equipment and computer equipment, which have interest rates ranging from 4.3% to 12.0% per year and mature on various dates from May 2015 through February 2017. | ||||||||||||
Employee Retirement Savings Plan | ||||||||||||
The Company maintains a 401(k) plan, the Masimo Retirement Savings Plan (the Plan), covering the Company’s full-time U.S. employees who meet certain eligibility requirements. In general, the Company matches an employee’s contribution up to 3% of the employee’s compensation, subject to a maximum amount. The Company may also contribute to the Plan on a discretionary basis. The Company contributed $0.6 million to the Plan for each of the three months ended April 4, 2015 and March 29, 2014. | ||||||||||||
Employment and Severance Agreements | ||||||||||||
As of April 4, 2015, the Company had an employment agreement with one of its key employees that provides for an aggregate annual base salary with annual increases at the discretion of the Compensation Committee of the Company’s board of directors. The employment agreement provides for an annual bonus based on the Company’s attainment of certain objectives and goals. The agreement has an initial term of three years, with automatic daily renewal, unless either the Company or the executive notifies the other party of non-renewal of the agreement. Also, under this employment agreement, the key employee may be entitled to receive certain salary, equity, tax, medical and life insurance benefits if he is terminated by the Company, if he terminates his employment for good reason under certain circumstances or if there is a change in control of the Company. | ||||||||||||
As of April 4, 2015, the Company had severance plan participation agreements with seven of its executive officers. The participation agreements (the Agreements) are governed by the terms and conditions of the Company’s 2007 Severance Protection Plan (the Severance Plan), which became effective on July 19, 2007 and which was amended effective December 31, 2008. Under each of the Agreements, the applicable executive officer may be entitled to receive certain salary, equity, medical and life insurance benefits if he is terminated by the Company without cause or if he terminates his employment for good reason under certain circumstances. The executive officers are also required to give the Company six months advance notice of their resignation under certain circumstances. | ||||||||||||
Purchase Commitments | ||||||||||||
Pursuant to contractual obligations with vendors, the Company had $71.6 million of purchase commitments as of April 4, 2015, which are expected to be purchased within one year. These purchase commitments have been made for certain inventory items in order to secure sufficient levels of those items and to achieve better pricing. | ||||||||||||
Other Contractual Commitments | ||||||||||||
In the normal course of business, the Company may provide bank guarantees to support government hospital tenders in certain foreign jurisdictions. As of April 4, 2015, there were approximately $0.4 million of such unsecured bank guarantees outstanding. | ||||||||||||
The Company also provides limited indemnification within its various customer contracts whereby the Company indemnifies, in certain circumstances, the parties to whom it sells its products with respect to potential infringement of intellectual property, and against bodily injury caused by a defective Company product. It is not possible to predict the maximum potential amount of future payments under these or similar agreements, due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved. As of April 4, 2015, the Company has not incurred any significant costs related to contractual indemnification of its customers. | ||||||||||||
Concentrations of Risk | ||||||||||||
The Company is exposed to credit loss for the amount of its cash deposits with financial institutions in excess of federally insured limits. The Company invests its excess cash deposits in U.S. Treasury bills and money market accounts with major financial institutions. As of April 4, 2015, the Company had $78.3 million of bank balances, of which $3.2 million was covered by either the U.S. Federal Deposit Insurance Corporation limit or foreign countries’ deposit insurance organizations. As of April 4, 2015, the Company had $13.9 million in money market funds and $43.5 million of bank time deposits that are not guaranteed by the U.S. Federal government. | ||||||||||||
While the Company and its contract manufacturers rely on sole source suppliers for certain components, steps have been taken to minimize the impact of a shortage or stoppage of shipments, such as maintaining a safety stock of inventory and designing products that may be easily modified to use a different component. However, there can be no assurance that a shortage or stoppage of shipments of the materials or components that the Company purchases will not result in a delay in production or adversely affect the Company’s business. | ||||||||||||
The Company’s ability to sell its products to U.S. hospitals depends in part on its relationships with GPOs. Many existing and potential customers for the Company’s products become members of GPOs. GPOs negotiate pricing arrangements and contracts, sometimes exclusively, with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO’s affiliated hospitals and other members. During the three months ended April 4, 2015 and March 29, 2014, revenue from the sale of the Company’s products to U.S. hospitals that are members of GPOs amounted to $86.3 million and $75.2 million, respectively. | ||||||||||||
As of April 4, 2015, two different just-in-time distributors each represented 11% and 7% of the accounts receivable balance, respectively. As of January 3, 2015, three different just-in-time distributors each represented 9%, 6% and 5% of the accounts receivable balance, respectively. | ||||||||||||
For the three months ended April 4, 2015, the Company had sales through two just-in-time distributors, which each represented 14% and 13% of the total revenue, respectively. For the three months ended March 29, 2014, the Company had sales through two just-in-time distributors, which each represented 15% and 9% of the total revenue, respectively. | ||||||||||||
For the three months ended April 4, 2015 and March 29, 2014, the Company recorded $7.2 million and $7.6 million, respectively, in royalty revenues from Covidien pursuant to the original settlement agreement and amendments. In exchange for these royalty payments, the Company has provided Covidien the ability to ship its patent infringing product with a covenant not to sue Covidien as long as Covidien abides by the terms of the agreement. The current royalty rate is 7.75% and the amended agreement can be terminated by Covidien upon 60 days written notice. | ||||||||||||
Litigation | ||||||||||||
On February 3, 2009, the Company filed a patent infringement suit in the U.S. District Court for the District of Delaware against Philips Electronics North America Corporation and Philips Medizin Systeme Böblingen GmbH (collectively, Philips) related to Philips’ FAST pulse oximetry technology and certain of Philips’ patient monitors. On June 15, 2009, Philips answered the Company’s complaint and Philips Electronics North America Corporation filed antitrust and patent infringement counterclaims against the Company as well as counterclaims seeking declaratory judgments of invalidity of the patents asserted by the Company against Philips. On July 9, 2009, the Company filed its answer denying Philips’ counterclaims and asserting various defenses. The Company also asserted counterclaims against Philips for fraud, intentional interference with prospective economic advantage and for declaratory judgments of noninfringement and invalidity with respect to the patents asserted by Philips against the Company. Philips later added a claim for infringement of one additional patent. Subsequently, the Court bifurcated Philips’ antitrust claims and its patent misuse defense, as well as stayed the discovery phase on those claims pending trial in the patent case. In addition, the Company asserted additional patents in 2012, and the Court ordered that these patents and some of the originally asserted patents be tried in a second phase. On May 23, 2014, Philips filed a motion for leave to amend its answer and counterclaims to allege inequitable conduct. The Court granted Philips’ motion for leave to amend. A jury trial commenced on September 15, 2014 with respect to two of the Company’s patents and one of Philips’ patents. On October 1, 2014, the jury determined that both of the Company’s patents were valid and that the damages amount for Philips’ infringement was $466.8 million. The jury also determined that the Company did not infringe the Philips patent. Philips has indicated that it intends to file post-trial motions and to appeal the jury verdict. The Court held a bench trial on the remaining equitable defenses raised by Philips and heard oral arguments on the post-trial motions. The trial schedule for the patents in the second phase has not yet been set. The Company believes that it has good and substantial defenses to the antitrust and patent infringement claims asserted by Philips. There is no guarantee that the Company will prevail in this suit or receive any damages or other relief if it does prevail. | ||||||||||||
On December 21, 2012, the Company filed suit against Mindray DS USA, Inc. and Shenzhen Mindray Bio-Medical Electronics Co, Ltd. (Shenzhen Mindray) in the U.S. District Court for the Central District of California. The complaint alleges patent infringement, breach of contract and other claims. Mindray DS USA, Inc. was dismissed from the case based on venue. On June 3, 2013, Shenzhen Mindray answered the Company’s complaint and filed antitrust and related counterclaims against the Company, as well as counterclaims seeking declaratory judgments of invalidity and non-infringement of the patents asserted by the Company against Shenzhen Mindray. On June 24, 2013, the Company filed its answer denying Shenzhen Mindray’s counterclaims and asserting various defenses. On July 17, 2013, the Court granted Shenzhen Mindray’s motion to dismiss the patent claims without prejudice to allow the Company to amend the complaint to provide additional detail supporting Shenzhen Mindray’s direct and indirect infringement of the Company’s patents. On the same day, the Court denied Shenzhen Mindray’s motion to dismiss the Company’s non-patent claims. On August 5, 2013, the Company filed a first amended complaint. On August 21, 2013, Shenzhen Mindray answered the Company’s complaint and reasserted the counterclaims it asserted on June 3, 2013, as well as two additional counterclaims alleging patent infringement. On September 16, 2013, the Company filed its answer denying Shenzhen Mindray’s counterclaims and asserting various defenses. On October 31, 2013, the Court issued a scheduling order setting a trial date of November 4, 2014. On December 10, 2013, Shenzhen Mindray filed a second amended answer and counterclaims, including a new counterclaim for tortious interference. On January 2, 2014, the Company filed a motion for judgment on the pleadings as to Shenzhen Mindray’s antitrust counterclaims and inequitable conduct counterclaims and defenses. The Court granted judgment on the pleadings with leave to amend. On March 27, 2014, Shenzhen Mindray filed a third amended answer and counterclaims. On April 10, 2014, Shenzhen Mindray filed a fourth amended answer and counterclaims. On May 5, 2014, Shenzhen Mindray filed a partial motion for summary judgment of no patent infringement, which the Court denied on June 19, 2014. On May 19, 2014, Shenzhen Mindray filed a motion for judgment on the pleadings contending that Masimo International SARL (a subsidiary of the Company), not Masimo Corporation, has standing to assert its claims relating to breach of contract. The Company opposed this motion and filed a motion to add Masimo International SARL as a plaintiff. On June 26, 2014, the Court granted the Company’s motion and denied Shenzhen Mindray’s motion. The Court also vacated the case schedule. On July 7, 2014, the Company filed a second amended complaint adding Masimo International SARL as a plaintiff. On August 18, 2014, the Court adopted the Company’s proposed case schedule, setting a new trial date of December 1, 2015. The Company believes that it has good and substantial defenses to the antitrust, patent infringement and other counterclaims asserted by Shenzhen Mindray. There is no guarantee that the Company will prevail in this suit or receive any damages or other relief if it does prevail. | ||||||||||||
On March 6, 2013, Shenzhen Mindray filed a complaint against the Company under the Anti-Unfair Competition Law of the People’s Republic of China before the Shenzhen Municipal Intermediate People’s Court, alleging violation of PRC competition laws. On March 10, 2014, the Guangdong Higher People’s Court of PRC held that the Shenzhen Court did not have jurisdiction. On December 23, 2014, the Supreme People’s Court of PRC reversed the Guangdong Court’s ruling. Following the Supreme People’s Court’s ruling, the case was remanded to the Shenzhen Court for a ruling on the merits of Shenzhen Mindray’s claims. Shenzhen Mindray also filed a complaint in Shenzhen Intermediate People’s Court against the Company and Shenzhen Comen Medical Instruments on February 6, 2015, alleging infringement of Chinese Patent No. 00808884.5. Additionally, there was a separate lawsuit filed against Masimo Sweden AB on the same day and in the same court alleging infringement of Chinese Patent No. 200710305061.9. The Company believes it has good and substantial defenses to Shenzhen Mindray’s claims, but here is no guarantee the Company will prevail in these suits. | ||||||||||||
On December 10, 2013, the Company filed suit against Mindray DS USA, Inc., Shenzhen Mindray and Mindray Medical International Ltd. in the Superior Court of New Jersey. The complaint alleges breach of contract and related claims. In January 2014, Mindray USA removed the case to the U.S. District Court for the District of New Jersey. In February 2014, the Company filed a motion to remand the action to the Superior Court of New Jersey. In May 2014, Mindray USA, Inc. filed an answer and counterclaims in the U.S. District Court asserting patent infringement and federal antitrust counterclaims. On January 7, 2015, the U.S. District Court remanded the action to the Superior Court of New Jersey. On January 22, 2015, Mindray USA filed an answer and counterclaims in the Superior Court of New Jersey asserting patent infringement and federal antitrust counterclaims, and again removed the case to the U.S. District Court of the District of New Jersey. On January 29, 2015, Mindray USA, Shenzhen Mindray and Mindray Medical International, Ltd. filed separate motions to dismiss the action, each of which is currently pending before the U.S. District Court. On February 23, 2015, the Company filed a motion to remand the case to the Superior Court of New Jersey, which is currently pending before the U.S. District Court. There is no guarantee that the Company will prevail in this suit or receive any damages or other relief if it does prevail. | ||||||||||||
In September 2012, a shareholder derivative lawsuit was filed in the U.S. District Court for the District of Delaware by Joseph Ausikaitis naming certain of the Company’s directors and certain executive officers as defendants and the Company as the nominal defendant. The lawsuit alleges claims of breach of fiduciary duty and unjust enrichment in connection with the grant or receipt of stock options under the Company’s 2007 Stock Incentive Plan and related policies. The lawsuit seeks unspecified money damages on the Company’s behalf from the officer and director defendants, various forms of equitable and/or injunctive relief, attorneys’ and other professional fees and costs and various other forms of relief. In November 2012, the defendants filed a motion to dismiss the action, which was denied by the Court in July 2013. On October 14, 2014, the Company filed motions for summary judgment. On October 15, 2014, the plaintiff filed a motion for summary judgment. On April 10, 2015, the Company entered into a binding Memorandum of Understanding providing for an agreement to settle the lawsuit, subject to Court approval. The settlement was memorialized in a written Stipulation of Settlement, which was presented to the Court for approval, and the Court has vacated all trial and other dates pending a motion for approval of the settlement. Under the terms of the proposed settlement, the Company would not pay or receive any money. Consequently, the Company does not expect this case to have a material impact on its consolidated financial position, results of operations or cash flows. | ||||||||||||
In April 2011, the Company was informed by the United States Attorney’s Office for the Central District of California, Civil Division, that a qui tam complaint had been filed against the Company in the U.S. District Court for the Central District of California by three of the Company’s former physician office sales representatives. The qui tam complaint alleged, among other things, that the Company’s noninvasive hemoglobin products failed to meet their accuracy specifications, and that the Company misled the U.S. Food and Drug Administration (FDA) and customers regarding the accuracy of the products. In November 2011, the United States declined to intervene in the case, and in October 2013, the District Court granted summary judgment in the Company’s favor. The former sales representatives have appealed the District Court’s decision. | ||||||||||||
In September 2011, two of the same former sales representatives filed employment-related claims against the Company in arbitration also stemming from their allegations regarding the Company’s noninvasive hemoglobin products. On January 16, 2014, the Company was notified that the arbitrator awarded the plaintiffs approximately $5.4 million in damages, which the Company accrued in fiscal 2013. In addition, the Company’s insurance carrier notified the Company that it believed certain defense costs related to the arbitration may no longer be reimbursable in view of the arbitration decision. As a result, the Company accrued a liability of $2.6 million in fiscal 2013 for the costs estimated to have been paid by the insurance carrier. The Company challenged the arbitration award in the U.S. District Court for the Central District of California, and on April 3, 2014, the District Court vacated the award. Accordingly, the Company reversed the $8.0 million charge in the quarter ended March 29, 2014. The former sales representatives have appealed the District Court’s decision. The Company is unable to predict the final outcome of the qui tam and employment matters. A reversal of the District Court’s decision in either matter could have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. | ||||||||||||
In the third quarter of 2013, the Company was notified that the FDA and the United States Attorney’s Office for the Central District of California, Criminal Division, are investigating the allegations regarding its noninvasive hemoglobin products. In the second quarter of 2014, the Company received grand jury subpoenas requesting documents pertaining to, among other things, the testing, marketing and sales of its Pronto® and Pronto-7® products. The Company and several of its executives, including the CEO, have signed agreements tolling the statute of limitations as to any charges that may be brought. The Company is fully cooperating with the investigation but cannot predict its outcome. | ||||||||||||
On January 2, 2014, a putative class action complaint was filed against the Company in the U.S. District Court for the Central District of California by Physicians Healthsource, Inc. The complaint alleges that the Company sent unsolicited facsimile advertisements in violation of the Junk Fax Protection Act of 2005 and related regulations. The complaint seeks $500 for each alleged violation, treble damages if the District Court finds the alleged violations to be knowing, plus interest, costs and injunctive relief. On April 14, 2014, the Company filed a motion to stay the case pending a decision on a related petition filed by the Company with the Federal Communications Commission (FCC). On May 22, 2014, the District Court granted the motion and stayed the case pending a ruling by the FCC on the petition. On October 30, 2014, the FCC granted some of the relief and denied some of the relief requested in the petition. Both parties appealed the FCC’s decision on the petition. On November 25, 2014, the District Court granted the parties’ joint request that the stay remain in place pending a decision on the appeal. The Company believes it has good and substantial defenses to the claims, but there is no guarantee that the Company will prevail. | ||||||||||||
On January 31, 2014, an amended putative class action complaint was filed against the Company in the U.S. District Court for the Northern District of Alabama by and on behalf of two participants in the Surfactant, Positive Pressure, and Oxygenation Randomized Trial at the University of Alabama. On April 21, 2014, a further amended complaint was filed adding a third participant. The complaint alleges product liability and negligence claims in connection with pulse oximeters the Company modified and provided at the request of study investigators for use in the trial. A previous version of the complaint also alleged a wrongful death claim, which the Court dismissed on January 22, 2014. The amended complaint seeks unspecified damages, costs, interest, attorney fees and injunctive and other relief. On January 30, 2015, the Company filed a motion for summary judgment, which is currently pending before the Court. The Company believes it has good and substantial defenses to the remaining claims, but there is no guarantee that the Company will prevail. | ||||||||||||
From time to time, the Company may be involved in other litigation and investigations relating to claims and matters arising out of its operations in the normal course of business. The Company believes that it currently is not a party to any other legal proceedings which, individually or in the aggregate, would have a material adverse effect on its consolidated financial position, results of operations or cash flows. |
Segment_Information_and_Enterp
Segment Information and Enterprise Reporting | 3 Months Ended | |||||||||||||
Apr. 04, 2015 | ||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||
Segment Information and Enterprise Reporting | Segment Information and Enterprise Reporting | |||||||||||||
The Company’s chief decision maker, the Chief Executive Officer, reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by geographic region, for purposes of making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in a single reporting segment, specifically noninvasive patient monitoring solutions and related products. The Company does not assess the performance of its geographic regions on other measures of income or expense, such as depreciation and amortization, operating income or net income including noncontrolling interest. In addition, the Company’s assets are primarily located in the U.S. The Company does not produce reports for, or measure the performance of, its geographic regions on any asset-based metrics. Therefore, geographic information is presented only for revenues. | ||||||||||||||
The following schedule presents an analysis of the Company’s product revenues based upon the geographic area to which the product was shipped (in thousands, except percentages): | ||||||||||||||
Three Months Ended | ||||||||||||||
April 4, 2015 | March 29, 2014 | |||||||||||||
Geographic Area by Destination | ||||||||||||||
North and South America | $ | 111,478 | 75.7 | % | $ | 92,652 | 70.1 | % | ||||||
Europe, Middle East and Africa | 24,061 | 16.3 | 27,012 | 20.4 | ||||||||||
Asia and Australia | 11,818 | 8 | 12,568 | 9.5 | ||||||||||
Total product revenue | $ | 147,357 | 100 | % | $ | 132,232 | 100 | % | ||||||
United States | $ | 107,276 | $ | 88,047 | ||||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Apr. 04, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
The Company has provided for income taxes in fiscal 2015 interim periods based on the estimated effective income tax rate for the complete fiscal year. The income tax provision is computed on the estimated pretax income of the consolidated entities located within each taxing jurisdiction based on legislation enacted as of the balance sheet date. Deferred tax assets and liabilities are determined based on the future tax consequences associated with temporary differences between income and expenses reported for accounting and tax purposes. A valuation allowance for deferred tax assets is recorded to the extent that the Company cannot determine that the ultimate realization of the net deferred tax assets is more likely than not. | |
Realization of deferred tax assets is principally dependent upon the achievement of future taxable income, the estimation of which requires significant management judgment. The Company’s judgment regarding future profitability may change due to many factors, including future market conditions and the Company’s ability to successfully execute its business plans or tax planning strategies. These changes, if any, may require material adjustments to these deferred tax asset balances. A valuation allowance has been previously recorded against all of the deferred tax assets of Cercacor. On a quarterly basis, Cercacor’s management reassesses the need for these valuation allowances based on operating results and its assessment of the likelihood of future taxable income and developments in the relevant tax jurisdictions. Cercacor continues to maintain a full valuation allowance as of April 4, 2015 against its net deferred tax assets. | |
As of April 4, 2015, the liability for income taxes associated with uncertain tax positions was approximately $8.3 million. If fully recognized, approximately $6.9 million (net of federal benefit on state taxes) would impact the Company’s effective tax rate. The remaining balance relates to timing differences. It is reasonably possible that the amount of unrecognized tax benefits in various jurisdictions may change in the next twelve months due to the expiration of statutes of limitation and audit settlements. However, due to the uncertainty surrounding the timing of these events, an estimate of the change within the next twelve months cannot currently be made. | |
The Company conducts business in multiple jurisdictions and, as a result, one or more of the Company’s subsidiaries files income tax returns in U.S. federal, various state, local and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters through fiscal year 2010. All material state, local and foreign income tax matters have been concluded through fiscal year 2007. |
Other_Current_Assets_Notes
Other Current Assets (Notes) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Other Current Assets [Text Block] | 6. Other Current Assets | |||||||
Other current assets consist of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Royalties receivable | $ | 7,000 | $ | 7,200 | ||||
Prepaid expenses | 9,197 | 9,816 | ||||||
Employee loans and advances | 377 | 385 | ||||||
Other current assets | 6,986 | 4,070 | ||||||
Total other current assets | $ | 23,560 | $ | 21,471 | ||||
Accrued_Liabilities_Notes
Accrued Liabilities (Notes) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Schedule of Accrued Liabilities [Table Text Block] | 9. Accrued Liabilities | |||||||
Accrued liabilities consist of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Accrued customer rebates, fees and reimbursements | $ | 17,720 | $ | 11,645 | ||||
Accrued stock repurchases | 6,078 | — | ||||||
Accrued taxes | 2,991 | 4,372 | ||||||
Accrued warranty | 1,480 | 1,416 | ||||||
Accrued other | 9,346 | 7,108 | ||||||
Total accrued liabilities | $ | 37,615 | $ | 24,541 | ||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Accounting Policies [Abstract] | ||||||||
Basis of Presentation | Basis of Presentation | |||||||
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, including normal recurring accruals, necessary to present fairly the Company’s condensed consolidated financial statements. The condensed consolidated balance sheet as of January 3, 2015 was derived from the Company’s audited consolidated financial statements at that date. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2015 (fiscal year 2014), filed with the SEC on February 17, 2015. The results for the three months ended April 4, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending January 2, 2016 (fiscal year 2015) or for any other interim period or for any future year. | ||||||||
Principles of Consolidation | Principles of Consolidation | |||||||
The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and the variable interest entity (VIE) of which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. In accordance with GAAP, current authoritative guidance is applied when determining whether an entity is subject to consolidation. | ||||||||
Fiscal Periods | Fiscal Periods | |||||||
The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 fiscal year, a 52 week fiscal year includes four quarters of 13 fiscal weeks while a 53 week fiscal year includes three 13 fiscal week quarters and one 14 fiscal week quarter. The Company’s last 53 week fiscal year was fiscal year 2014. Fiscal year 2015 is a 52 week fiscal year. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. | ||||||||
Use of Estimates | Use of Estimates | |||||||
The Company prepares its financial statements in conformity with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the determination of accounts receivable allowances, inventory reserves, warranty reserves, rebate accruals, valuation of the Company’s stock options, goodwill valuation, deferred taxes and any associated valuation allowances, distributor channel inventory, royalty revenues, deferred revenue, uncertain income tax positions, litigation costs and related accruals. Actual results could differ from such estimates. | ||||||||
Reclassification, Policy [Policy Text Block] | Reclassifications | |||||||
Certain amounts in the condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. | ||||||||
Fair Value Measurements | Fair Value Measurements | |||||||
Authoritative guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: | ||||||||
● | Level 1—Quoted prices in active markets for identical assets or liabilities. | |||||||
● | Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||
● | Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||
Pursuant to current authoritative guidance, entities are allowed an irrevocable option to elect the fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract-by-contract basis. The Company did not elect the fair value option under this guidance as to specific assets or liabilities. There were no transfers between Level 1, Level 2 and Level 3 inputs during the three months ended April 4, 2015. The Company carries cash and cash equivalents at cost, which approximates fair value. As of April 4, 2015 and January 3, 2015, the Company did not have any short-term investments. | ||||||||
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts | |||||||
Accounts receivable consist of trade receivables recorded upon recognition of revenue for product revenues, reduced by reserves for estimated bad debts and returns. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Credit is extended based on evaluation of the customer’s financial condition. Collateral is not required. The allowance for doubtful accounts is determined based on historical write-off experience, current customer information and other relevant factors, including specific identification of past due accounts, based on the age of the receivable in excess of the contemplated or contractual due date. Accounts are charged off against the allowance when the Company believes they are uncollectible. | ||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment | |||||||
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: | ||||||||
Useful Lives | ||||||||
Building | 39 years | |||||||
Building improvements | 7 years | |||||||
Leasehold improvements | Lesser of useful life or term of lease | |||||||
Machinery and equipment | 5 years | |||||||
Vehicles | 5 years | |||||||
Tooling | 3 years | |||||||
Computer equipment | 2 to 6 years | |||||||
Furniture and office equipment | 2 to 6 years | |||||||
Demonstration units | 3 years | |||||||
Land is not depreciated and construction-in-progress is not depreciated until placed in service. Normal repair and maintenance costs are expensed as incurred, whereas significant improvements that materially increase values or extend useful lives are capitalized and depreciated over the remaining estimated useful lives of the related assets. Upon sale or retirement of depreciable assets, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss on the sale or retirement is recognized in income. | ||||||||
For the three months ended April 4, 2015 and March 29, 2014, depreciation and amortization expense of property and equipment was $2.7 million and $2.2 million, respectively. | ||||||||
Intangible Assets | Intangible Assets | |||||||
Costs to renew intangible assets are capitalized and amortized over the remaining useful life of the intangible asset. Total renewal costs for patents and trademarks were $0.1 million for each of the three months ended April 4, 2015 and March 29, 2014. As of April 4, 2015, the weighted-average number of years until the next renewal was one year for patents and five years for trademarks. | ||||||||
The Company’s policy is to renew its patents and trademarks. The Company continually evaluates the amortization period and carrying basis of patents and trademarks to determine whether any events or circumstances warrant a revised estimated useful life or reduction in value. Capitalized application costs are charged to operations when it is determined that the patent or trademark will not be obtained or is abandoned. | ||||||||
Impairment of Goodwill and Intangible assets | Impairment of Goodwill and Intangible Assets | |||||||
Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. In assessing goodwill impairment for each of its reporting units, the Company has the option to first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macroeconomic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if the Company concludes otherwise, then the Company is required to perform the first step of the two-step impairment test by comparing the fair value of the reporting unit, determined using future projected discounted operating cash flows, with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, goodwill is considered impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit goodwill with the carrying amount of goodwill. The Company also has the option to bypass the qualitative assessment and proceed directly to performing the first step of the two-step goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. The annual impairment test is performed during the fourth fiscal quarter. | ||||||||
The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. | ||||||||
No impairment of goodwill, intangible assets or other long-lived assets was recorded during the three months ended April 4, 2015 or March 29, 2014. | ||||||||
Revenue Recognition | Revenue Recognition and Deferred Revenue | |||||||
The Company follows the current authoritative guidance for revenue recognition. Based on these requirements, the Company recognizes revenue from the sale of products or services when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable, and (iv) collectability is reasonably assured. In the case of the license or sale of software that does not function together with hardware components to provide the essential functionality of the hardware, revenue is recognized pursuant to the software revenue recognition guidance. | ||||||||
The Company derives the majority of its revenue from four primary sources: (i) direct sales under long-term sensor purchase agreements with end-user hospitals where the Company provides up-front monitoring equipment at no up-front charge in exchange for a multi-year sensor purchase commitment, (ii) other direct sales of noninvasive monitoring solutions to end-user hospitals, emergency medical response organizations and other direct customers; (iii) sales of noninvasive monitoring solutions to distributors who then typically resell to end-user hospitals, emergency medical response organizations and other direct customers; (iv) sales of integrated circuit boards to original equipment manufacturer (OEM) customers who incorporate the Company’s embedded software technology into their multi-parameter monitoring devices. | ||||||||
The Company enters into agreements to sell its noninvasive monitoring solutions and services, sometimes as part of multiple deliverable arrangements that include various combinations of products and services. While the majority of the Company’s sales transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation and analysis is sometimes required to determine the appropriate accounting including: (i) how the arrangement consideration should be allocated among the deliverables when multiple deliverables exist, (ii) when to recognize revenue on the deliverables, and (iii) whether undelivered elements are essential to the functionality of the delivered elements. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. | ||||||||
In the case of multiple deliverable arrangements, the authoritative guidance provides a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE), and (iii) best estimate of the selling price (ESP). VSOE of fair value is defined as the price charged when the same element is sold separately. VSOE generally exists only when the deliverable is sold separately and is the price actually charged for that deliverable. TPE generally does not exist for the majority of the Company’s products. The objective of ESP is to determine the price at which the Company would transact a sale if the product was sold on a stand-alone basis. In the absence of VSOE and TPE, the Company determines ESP for its products by considering multiple factors including, but not limited to, features and functionality of the product, geographies, type of customer, contractual prices pursuant to Group Purchasing Organization (GPO) contracts, the Company’s pricing and discount practices, and market conditions. | ||||||||
A deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis. Most of the Company’s products in a multiple deliverable arrangement qualify as separate units of accounting. In the case of the Company’s monitoring equipment containing embedded Masimo SET® or rainbow® SET software, the Company has determined that the hardware and software components function together to deliver the equipment’s essential functionality and, therefore, represent a single deliverable. However, software deliverables, such as rainbow® parameter software, which do not function together with hardware components to provide the equipment’s essential functionality, are accounted for under software revenue recognition guidance. The revenue for these multiple-element arrangements is allocated to the software deliverables and the non-software deliverables based on the relative selling prices of all of the deliverables in the arrangement using the hierarchy in the revenue recognition accounting guidance for arrangements with multiple deliverables. | ||||||||
Sales under long-term sensor purchase contracts are generally structured such that the Company agrees to provide at no up-front charge certain monitoring equipment, software, installation, training and/or warranty support in exchange for the hospital’s agreement to purchase sensors over the term of the agreement, which generally ranges from three to six years. The sensors are essential to the functionality of the monitoring equipment and, therefore, represent a substantive performance obligation. The Company does not recognize any revenue when the monitoring and related equipment and software are delivered to the hospitals. The Company recognizes revenue for these delivered elements, on a pro-rata basis when installation and training are complete, as the sensors are delivered under the long-term purchase commitment. The cost of the monitoring equipment initially placed at the hospitals is deferred and amortized to cost of goods sold over the life of the underlying long-term sensor purchase contract. | ||||||||
Many of the Company’s distributors purchase sensor products which they then resell to end-user hospitals that are typically fulfilling their purchase obligations to the Company under such end-user hospital’s long-term sensor purchase commitments. Upon shipment to the distributor, revenue is deferred until the distributor ships the product to the Company’s end-user customers based on an estimate of the inventory held by these distributors at the end of the accounting period. | ||||||||
The Company also earns revenue from the sale of integrated circuit boards and other products, as well as from rainbow® parameter software licenses, to OEMs under various agreements. Revenue from the sale of products to the OEMs is generally recognized at the time of shipment. Revenue related to software licenses to OEMs is generally recognized upon shipment of the OEM’s product to its customers, as represented to the Company by the OEM. | ||||||||
The Company also provides certain customers with the ability to purchase sensors under rebate programs. Under these programs, the customers may earn rebates based on their purchasing activity. The Company estimates and provides allowances for these programs at the time of sale as a reduction to revenue. | ||||||||
In general, customers do not have a right of return for credit or refund. However, the Company allows returns under certain circumstances. At the end of each period, the Company estimates and accrues for these returns as a reduction to revenue and accounts receivable. The Company estimates returns based on several factors, including contractual limitations and past returns history. | ||||||||
The Company’s royalty revenue arises from one agreement with Covidien, which was recently acquired by Medtronic plc, and is due and payable quarterly based on U.S. sales of Covidien’s infringing products. An estimate of these royalty revenues is recorded quarterly in the period earned based on the prior quarter’s historical results, adjusted for any new information or trends known to management at the time of estimation. This estimated revenue is adjusted prospectively when the Company receives the Covidien royalty report, approximately 60 days after the end of the previous quarter. | ||||||||
Product Warranty | Product Warranty | |||||||
The Company provides a warranty against defects in material and workmanship for a period ranging from six to fifteen months, depending on the product type. In the case of long-term sales agreements, the Company typically warrants the products for the term of the agreement, which generally ranges from three to six years. In traditional sales activities, including direct and OEM sales, the Company establishes an accrual for the estimated costs of warranty at the time of revenue recognition. Estimated warranty expenses are recorded as an accrued liability, with a corresponding provision to cost of sales. In long-term sales agreements, revenue related to extended warranty is recognized over the life of the contract, while the product warranty costs related to the long-term sales agreements are expensed as incurred. | ||||||||
Changes in the product warranty accrual were as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
April 4, | March 29, | |||||||
2015 | 2014 | |||||||
Warranty accrual, beginning of period | $ | 1,416 | $ | 1,161 | ||||
Accrual for warranties issued | 339 | 278 | ||||||
Changes to pre-existing warranties (including changes in estimates) | (17 | ) | (76 | ) | ||||
Settlements made | (258 | ) | (242 | ) | ||||
Warranty accrual, end of period | $ | 1,480 | $ | 1,121 | ||||
Comprehensive Income | Comprehensive Income | |||||||
Authoritative accounting guidance establishes requirements for reporting and disclosure of comprehensive income and its components. Comprehensive income includes foreign currency translation adjustments and any related tax benefits that have been excluded from net income including noncontrolling interest, and reflected in Masimo Corporation stockholders’ equity. | ||||||||
The change in accumulated other comprehensive loss was as follows (in thousands): | ||||||||
Net Income Per Share | Net Income Per Share | |||||||
Basic net income per share attributable to Masimo Corporation for the three months ended April 4, 2015 and March 29, 2014 is computed by dividing net income attributable to Masimo Corporation stockholders by the weighted-average number of shares outstanding during each period. The diluted net income per share attributable to Masimo Corporation stockholders for the three months ended April 4, 2015 and March 29, 2014 is computed by dividing the net income attributable to Masimo Corporation stockholders by the weighted-average number of shares and potential shares outstanding during each period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options. For the three months ended April 4, 2015 and March 29, 2014, weighted options to purchase 3.2 million and 2.8 million shares of common stock, respectively, were outstanding, but were not included in the computation of diluted net income per share because the effect of including such shares would have been antidilutive in the applicable period. Based on authoritative accounting guidance, the Company adjusted its net income including noncontrolling interest by the amount of net (income) loss attributable to the noncontrolling interest for the three months ended April 4, 2015 and March 29, 2014, to determine its net income attributable to its stockholders. A reconciliation of basic and diluted net income per share attributable to Masimo Corporation stockholders is as follows (in thousands, except per share amounts): | ||||||||
New Accounting Pronouncement | Recently Issued Accounting Pronouncements | |||||||
In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new standard requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. ASU 2015-03 requires retrospective application and represents a change in accounting principle. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements. | ||||||||
In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (ASU 2015-02). The amended standard applies to entities in all industries and eliminates the deferral of certain consolidation standards for entities considered to be investment companies as well as modifies the consolidation analysis performed on certain types of legal entities. ASU 2015-02 is effective for annual and interim fiscal reporting periods beginning after December 15, 2015, and may be applied retrospectively, with early application permitted. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements. | ||||||||
In May 2014, the FASB issued Accounting Standard Update No. 2014-09, Revenue (Topic 606): Revenue from Contracts with Customer (ASU 2014-09). The new standard provides a single, principles-based five-step model to be applied to all contracts with customers while enhancing disclosures about revenue, providing additional guidance for transactions that were not previously addressed comprehensively and improving guidance for multiple-element arrangements. ASU 2014-09 is effective for annual and interim fiscal reporting periods beginning after December 15, 2016. In April 2015, the FASB proposed a one-year deferral of the standard’s effective date, while permitting entities to still adopt one year earlier on the original effective date. A final determination will be made after a public comment period. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements. | ||||||||
Inventory, Policy [Policy Text Block] | Inventories | |||||||
Inventories are stated at the lower of cost or market. Cost is determined using a standard cost method, which approximates FIFO (first in, first out) and includes material, labor and overhead costs. Inventory reserves are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory that has a market price less than the carrying value in inventory. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||||||||||||||
Apr. 04, 2015 | ||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||
Fair Value Hierarchy for Financial Assets | ||||||||||||||||||||
3-Jan-15 | Adjusted Basis | Gross Unrealized | Gross Unrealized | Estimated | Cash and Cash | |||||||||||||||
Cost | Gains | (Losses) | Fair Value | Equivalents | ||||||||||||||||
Cash | $ | 92,888 | $ | — | $ | — | $ | 92,888 | $ | 92,888 | ||||||||||
Level 1: | ||||||||||||||||||||
Bank Time Deposits | 40,500 | — | — | 40,500 | 40,500 | |||||||||||||||
U.S. Treasuries | — | — | — | — | — | |||||||||||||||
Money Market Funds | 1,065 | — | — | 1,065 | 1,065 | |||||||||||||||
Subtotal | 41,565 | — | — | 41,565 | 41,565 | |||||||||||||||
Level 2: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Level 3: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Total assets measured at fair value | $ | 134,453 | $ | — | $ | — | $ | 134,453 | $ | 134,453 | ||||||||||
The following tables represent the Company’s financial assets (in thousands), measured at fair value on a recurring basis: | ||||||||||||||||||||
4-Apr-15 | Adjusted Basis | Gross Unrealized | Gross Unrealized | Estimated | Cash and Cash | |||||||||||||||
Cost | Gains | (Losses) | Fair Value | Equivalents | ||||||||||||||||
Cash | $ | 78,308 | $ | — | $ | — | $ | 78,308 | $ | 78,308 | ||||||||||
Level 1: | ||||||||||||||||||||
Bank Time Deposits | 43,500 | — | — | 43,500 | 43,500 | |||||||||||||||
U.S. Treasuries | — | — | — | — | — | |||||||||||||||
Money Market Funds | 13,912 | — | — | 13,912 | 13,912 | |||||||||||||||
Subtotal | 57,412 | — | — | 57,412 | 57,412 | |||||||||||||||
Level 2: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Level 3: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Total assets measured at fair value | $ | 135,720 | $ | — | $ | — | $ | 135,720 | $ | 135,720 | ||||||||||
3-Jan-15 | Adjusted Basis | Gross Unrealized | Gross Unrealized | Estimated | Cash and Cash | |||||||||||||||
Cost | Gains | (Losses) | Fair Value | Equivalents | ||||||||||||||||
Cash | $ | 92,888 | $ | — | $ | — | $ | 92,888 | $ | 92,888 | ||||||||||
Level 1: | ||||||||||||||||||||
Bank Time Deposits | 40,500 | — | — | 40,500 | 40,500 | |||||||||||||||
U.S. Treasuries | — | — | — | — | — | |||||||||||||||
Money Market Funds | 1,065 | — | — | 1,065 | 1,065 | |||||||||||||||
Subtotal | 41,565 | — | — | 41,565 | 41,565 | |||||||||||||||
Level 2: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Level 3: | ||||||||||||||||||||
None | — | — | — | — | — | |||||||||||||||
Total assets measured at fair value | $ | 134,453 | $ | — | $ | — | $ | 134,453 | $ | 134,453 | ||||||||||
Changes in Product Warranty Accrual | Changes in the product warranty accrual were as follows (in thousands): | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, | March 29, | |||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Warranty accrual, beginning of period | $ | 1,416 | $ | 1,161 | ||||||||||||||||
Accrual for warranties issued | 339 | 278 | ||||||||||||||||||
Changes to pre-existing warranties (including changes in estimates) | (17 | ) | (76 | ) | ||||||||||||||||
Settlements made | (258 | ) | (242 | ) | ||||||||||||||||
Warranty accrual, end of period | $ | 1,480 | $ | 1,121 | ||||||||||||||||
Schedule of Change in Accumulated Other Comprehensive Income | The change in accumulated other comprehensive loss was as follows (in thousands): | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, 2015 | ||||||||||||||||||||
Accumulated other comprehensive loss, beginning of period | $ | (2,093 | ) | |||||||||||||||||
Foreign currency translation adjustments | (2,942 | ) | ||||||||||||||||||
Accumulated other comprehensive loss, end of period | $ | (5,035 | ) | |||||||||||||||||
Reconciliation of Basic and Diluted Net Income Per Share | A reconciliation of basic and diluted net income per share attributable to Masimo Corporation stockholders is as follows (in thousands, except per share amounts): | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
April 4, | March 29, | |||||||||||||||||||
2015 | 2014 | |||||||||||||||||||
Net income attributable to Masimo Corporation stockholders: | ||||||||||||||||||||
Net income including noncontrolling interest | $ | 19,822 | $ | 22,491 | ||||||||||||||||
Net loss attributable to the noncontrolling interest | 701 | 141 | ||||||||||||||||||
Net income attributable to Masimo Corporation stockholders | $ | 20,523 | $ | 22,632 | ||||||||||||||||
Basic net income per share attributable to Masimo Corporation stockholders: | ||||||||||||||||||||
Net income attributable to Masimo Corporation stockholders | $ | 20,523 | $ | 22,632 | ||||||||||||||||
Weighted-average shares outstanding - basic | 52,687 | 56,705 | ||||||||||||||||||
Basic net income per share attributable to Masimo Corporation stockholders | $ | 0.39 | $ | 0.4 | ||||||||||||||||
Diluted net income per share attributable to Masimo Corporation stockholders: | ||||||||||||||||||||
Weighted-average shares outstanding - basic | 52,687 | 56,705 | ||||||||||||||||||
Diluted share equivalent: stock options | 1,277 | 1,342 | ||||||||||||||||||
Weighted-average shares outstanding - diluted | 53,964 | 58,047 | ||||||||||||||||||
Diluted net income per share attributable to Masimo Corporation stockholders | $ | 0.38 | $ | 0.39 | ||||||||||||||||
Variable_Interest_Entity_VIE_T
Variable Interest Entity (VIE) (Tables) | 3 Months Ended | |||
Apr. 04, 2015 | ||||
Variable Interest Entity [Abstract] | ||||
Changes in Noncontrolling Interest for Cercacor | ||||
Three Months Ended | ||||
April 4, 2015 | ||||
Noncontrolling interest, beginning of period | $ | 1,742 | ||
Increase in additional paid-in capital of noncontrolling interest | 4 | |||
Net loss attributable to noncontrolling interest | 701 | |||
Noncontrolling interest, end of period | $ | 1,045 | ||
Inventories_Tables
Inventories (Tables) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Components of Inventory | Inventories consist of the following (in thousands): | |||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Raw materials | $ | 37,289 | $ | 33,056 | ||||
Work-in-process | 6,839 | 6,020 | ||||||
Finished goods | 25,444 | 30,642 | ||||||
Total inventories | $ | 69,572 | $ | 69,718 | ||||
Property_and_Equipment_Propert1
Property and Equipment Property and Equipment (Tables) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Plant and Equipment | Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over estimated useful lives as follows: | |||||||
Useful Lives | ||||||||
Building | 39 years | |||||||
Building improvements | 7 years | |||||||
Leasehold improvements | Lesser of useful life or term of lease | |||||||
Machinery and equipment | 5 years | |||||||
Vehicles | 5 years | |||||||
Tooling | 3 years | |||||||
Computer equipment | 2 to 6 years | |||||||
Furniture and office equipment | 2 to 6 years | |||||||
Demonstration units | 3 years | |||||||
Property and equipment, net, consists of the following (in thousands): | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Machinery and equipment | $ | 39,383 | $ | 38,588 | ||||
Building and improvements | 38,027 | 30,678 | ||||||
Land | 22,894 | 22,894 | ||||||
Computer equipment | 13,563 | 13,035 | ||||||
Tooling | 12,603 | 12,317 | ||||||
Leasehold improvements | 9,800 | 9,912 | ||||||
Furniture and office equipment | 6,965 | 4,864 | ||||||
Demonstration units | 948 | 972 | ||||||
Vehicles | 45 | 45 | ||||||
Construction-in-progress | 23,139 | 25,731 | ||||||
Total property and equipment | 167,367 | 159,036 | ||||||
Accumulated depreciation and amortization | (58,702 | ) | (57,084 | ) | ||||
Property and equipment, net | $ | 108,665 | $ | 101,952 | ||||
Intangible_Assets_Intangible_A1
Intangible Assets Intangible Assets (Tables) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||
Schedule of Finite-Lived Intangible Assets | Intangible assets, net, consist of the following (in thousands): | |||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Cost: | ||||||||
Patents | $ | 20,755 | $ | 20,459 | ||||
Customer relationships | 7,669 | 7,669 | ||||||
Acquired technology | 5,580 | 5,580 | ||||||
Trademarks | 3,681 | 3,562 | ||||||
Capitalized software development costs | 2,066 | 2,066 | ||||||
Other | 1,505 | 1,450 | ||||||
Total cost | $ | 41,256 | $ | 40,786 | ||||
Accumulated amortization: | ||||||||
Patents | (6,988 | ) | (6,649 | ) | ||||
Customer relationships | (2,045 | ) | (1,853 | ) | ||||
Acquired technology | (1,531 | ) | (1,392 | ) | ||||
Trademarks | (924 | ) | (866 | ) | ||||
Capitalized software development costs | (1,477 | ) | (1,440 | ) | ||||
Other | (936 | ) | (815 | ) | ||||
Total accumulated amortization | $ | (13,901 | ) | $ | (13,015 | ) | ||
Net carrying amount | $ | 27,355 | $ | 27,771 | ||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | timated amortization expense for future fiscal years is as follows (in thousands): | |||||||
Fiscal year | Amount | |||||||
2015 (balance of year) | $ | 3,272 | ||||||
2016 | 3,081 | |||||||
2017 | 2,961 | |||||||
2018 | 2,608 | |||||||
2019 | 2,341 | |||||||
Thereafter | 13,092 | |||||||
Total | $ | 27,355 | ||||||
Longterm_debt_Debt_disclosure_
Long-term debt Debt disclosure (Tables) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Debt Instrument [Line Items] | ||||||||
Schedule of Debt [Table Text Block] | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Revolving line of credit | $ | 125,000 | $ | 125,000 | ||||
Long term portion of capital lease obligations acquisition | 108 | 145 | ||||||
Total long term debt | $ | 125,108 | $ | 125,145 | ||||
ShareBased_Compensation_Tables
Share-Based Compensation (Tables) | 3 Months Ended | ||||||
Apr. 04, 2015 | |||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||
Number and Weighted Average Exercise Price of Options Issued and Outstanding under all Stock Option Plans | Share-Based Compensation | ||||||
The number and weighted-average exercise price of options issued and outstanding under all of the Company’s stock option plans are as follows (in thousands, except for exercise prices): | |||||||
Three Months Ended | |||||||
April 4, 2015 | |||||||
Shares | Average | ||||||
Exercise Price | |||||||
Options outstanding, beginning of period | 9,956 | $ | 23.59 | ||||
Granted | 282 | $ | 30.41 | ||||
Canceled | (52 | ) | $ | 22.46 | |||
Exercised | (273 | ) | $ | 18.31 | |||
Options outstanding, end of period | 9,913 | $ | 23.93 | ||||
Options exercisable, end of period | 6,114 | $ | 24.07 | ||||
Options available for grant, end of period | 5,528 | ||||||
Range of Assumptions Used and Resulting Weighted-Average Fair Value of Options Granted at Date of Grant | The range of assumptions used and the resulting weighted-average fair value of options granted at the date of grant were as follows: | ||||||
Three Months Ended | |||||||
April 4, | March 29, | ||||||
2015 | 2014 | ||||||
Risk-free interest rate | 1.3% to 1.8% | 1.5% to 1.6% | |||||
Expected term (in years) | 5.5 | 5.1 | |||||
Estimated volatility | 33.5% to 37.4% | 32.5% to 32.8% | |||||
Expected dividends | 0% | 0% | |||||
Weighted-average fair value of options granted | $10.35 | $8.89 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | |||||||||||
Apr. 04, 2015 | ||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||
Future Minimum Lease Payments Under Operating and Capital Leases | Future minimum lease payments under operating and capital leases for each of the following fiscal years ending on or about December 31 are (in thousands) (including interest): | |||||||||||
As of April 4, 2015 | ||||||||||||
Operating | Capital | Total | ||||||||||
Leases | Leases | |||||||||||
2015 (balance of year) | $ | 3,838 | $ | 16 | $ | 3,854 | ||||||
2016 | 4,253 | 88 | 4,341 | |||||||||
2017 | 2,642 | 82 | 2,724 | |||||||||
2018 | 2,083 | 8 | 2,091 | |||||||||
2019 | 1,908 | 8 | 1,916 | |||||||||
Thereafter | 1,033 | 3 | 1,036 | |||||||||
Total | $ | 15,757 | $ | 205 | $ | 15,962 | ||||||
Segment_Information_and_Enterp1
Segment Information and Enterprise Reporting (Tables) | 3 Months Ended | |||||||||||||
Apr. 04, 2015 | ||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||
Analysis of Product Revenues Based upon Geographic Area Shipped | The following schedule presents an analysis of the Company’s product revenues based upon the geographic area to which the product was shipped (in thousands, except percentages): | |||||||||||||
Three Months Ended | ||||||||||||||
April 4, 2015 | March 29, 2014 | |||||||||||||
Geographic Area by Destination | ||||||||||||||
North and South America | $ | 111,478 | 75.7 | % | $ | 92,652 | 70.1 | % | ||||||
Europe, Middle East and Africa | 24,061 | 16.3 | 27,012 | 20.4 | ||||||||||
Asia and Australia | 11,818 | 8 | 12,568 | 9.5 | ||||||||||
Total product revenue | $ | 147,357 | 100 | % | $ | 132,232 | 100 | % | ||||||
United States | $ | 107,276 | $ | 88,047 | ||||||||||
Other_Current_Assets_Tables
Other Current Assets (Tables) | 3 Months Ended | |||||||
Apr. 04, 2015 | ||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Schedule of Other Assets [Table Text Block] | ||||||||
April 4, | January 3, | |||||||
2015 | 2015 | |||||||
Royalties receivable | $ | 7,000 | $ | 7,200 | ||||
Prepaid expenses | 9,197 | 9,816 | ||||||
Employee loans and advances | 377 | 385 | ||||||
Other current assets | 6,986 | 4,070 | ||||||
Total other current assets | $ | 23,560 | $ | 21,471 | ||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Fair Value Hierarchy for Financial Assets (Detail) (Recurring, USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | $135,720 | $134,453 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 135,720 | 134,453 |
Cash and Cash Equivalents | 135,720 | 134,453 |
Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 78,308 | 92,888 |
Gross Unrealized Gains | 0 | |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 78,308 | 92,888 |
Cash and Cash Equivalents | 78,308 | 92,888 |
Level 1: | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 57,412 | 41,565 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 57,412 | 41,565 |
Cash and Cash Equivalents | 57,412 | 41,565 |
Level 1: | Bank Time Deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 43,500 | 40,500 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 43,500 | 40,500 |
Cash and Cash Equivalents | 43,500 | 40,500 |
Level 1: | U.S. Treasuries | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 0 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 0 | 0 |
Cash and Cash Equivalents | 0 | 0 |
Level 1: | Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 13,912 | 1,065 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 13,912 | 1,065 |
Cash and Cash Equivalents | 13,912 | 1,065 |
Level 2: | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 0 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 0 | 0 |
Cash and Cash Equivalents | 0 | 0 |
Level 3: | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Adjusted Basis Cost | 0 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | 0 | 0 |
Cash and Cash Equivalents | $0 | $0 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | |
Share data in Millions, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
segment | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Number of Sources of Product Revenue | 4 | |
Interest Paid, Net | $413,000 | $15,000 |
Depreciation | 2,700,000 | 2,200,000 |
Impairment of goodwill, intangible assets and other long-lived assets | 0 | |
Number of days royalty revenue is adjusted subsequent to quarter end | 60 days | |
Warranty period, minimum, long-term sales agreement | 3 years | |
Warranty period, maximum, long-term sales agreement | 6 years | |
Options to purchase of shares of common stock | 3.2 | 2.8 |
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Impairment of Goodwill and Intangible Assets | |
Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. In assessing goodwill impairment for each of its reporting units, the Company has the option to first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macroeconomic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if the Company concludes otherwise, then the Company is required to perform the first step of the two-step impairment test by comparing the fair value of the reporting unit, determined using future projected discounted operating cash flows, with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, goodwill is considered impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit goodwill with the carrying amount of goodwill. The Company also has the option to bypass the qualitative assessment and proceed directly to performing the first step of the two-step goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period. The annual impairment test is performed during the fourth fiscal quarter. | ||
The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. | ||
No impairment of goodwill, intangible assets or other long-lived assets was recorded during the three months ended April 4, 2015 or March 29, 2014. | ||
Income Taxes Paid | 6,673,000 | 1,838,000 |
Capital Lease Obligations Incurred | 36,000 | 0 |
Capital Expenditures Incurred but Not yet Paid | 4,346,000 | 302,000 |
Stock repurchased, unsettled at period end | 6,079 | 0 |
Patents | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Finite-Lived Intangible Assets, Cost Incurred to Renew or Extend | $100,000 | $200,000 |
Weighted average number of years until the next renewal | 1 year | |
Trademarks | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Weighted average number of years until the next renewal | 5 years | |
Minimum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Warranty period for defects in material and workmanship | 6 months | |
Maximum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Warranty period for defects in material and workmanship | 15 months | |
Building [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 39 years | |
Leasehold improvements | Minimum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 2 years | |
Leasehold improvements | Maximum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 6 years | |
Building Improvements [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Computer equipment | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Demonstration units | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Tooling | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Furniture and Office Equipment [Member] | Minimum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 2 years | |
Furniture and Office Equipment [Member] | Maximum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 6 years | |
Demonstration Units [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies - Changes in Product Warranty Accrual (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Warranty accrual, beginning of period | $1,416 | $1,161 |
Provision for warranty costs | 339 | 278 |
Product Warranty Accrual, Preexisting, Increase (Decrease) | -17 | -76 |
Settlements made | -258 | -242 |
Warranty accrual, end of period | $1,480 | $1,121 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies - Schedule of Change in Accumulated Other Comprehensive Income (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Accounting Policies [Abstract] | ||
Accumulated other comprehensive loss, beginning of period | ($2,093) | |
Foreign currency translation adjustments | -2,942 | 19 |
Accumulated other comprehensive loss, end of period | ($5,035) |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Net Income Per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Accounting Policies [Abstract] | ||
Options to purchase of shares of common stock | 3,200,000 | 2,800,000 |
Net income attributable to stockholders of Masimo Corporation: | ||
Net income including noncontrolling interest | $19,822 | $22,491 |
Net loss attributable to the noncontrolling interest | -701 | -141 |
Net income attributable to Masimo Corporation stockholders | 20,523 | 22,632 |
Basic net income per share attributable to Masimo Corporation stockholders: | ||
Net income attributable to Masimo Corporation stockholders | $20,523 | $22,632 |
Weighted average shares outstanding - basic (in shares) | 52,687,000 | 56,705,000 |
Basic net income per share attributable to Masimo Corporation stockholders (in usd per share) | $0.39 | $0.40 |
Diluted net income per share attributable to Masimo Corporation stockholders: | ||
Weighted average shares outstanding - basic (in shares) | 52,687,000 | 56,705,000 |
Diluted share equivalent: stock options (in shares) | 1,277,000 | 1,342,000 |
Weighted average shares outstanding - diluted (in shares) | 53,964,000 | 58,047,000 |
Diluted net income per share attributable to Masimo Corporation stockholders (in usd per share) | $0.38 | $0.39 |
Variable_Interest_Entity_VIE_A
Variable Interest Entity (VIE) - Additional Information (Detail) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Apr. 04, 2015 | Feb. 28, 2009 | Mar. 29, 2014 | Sep. 28, 2013 | Dec. 31, 2011 | Jan. 03, 2015 | |
Variable Interest Entity [Line Items] | ||||||
Noncontrolling interest | 1,045,000 | $1,742,000 | ||||
Licensed rainbow parameters | ||||||
Variable Interest Entity [Line Items] | ||||||
Percentage of royalty expense | 10.00% | |||||
Handheld Products Incorporating Rainbow Technology | ||||||
Variable Interest Entity [Line Items] | ||||||
Percentage of royalty expense | 10.00% | |||||
Variable Interest Entity, Primary Beneficiary | ||||||
Variable Interest Entity [Line Items] | ||||||
Minimum aggregate royalty payments | 1,300,000 | 1,500,000 | ||||
Increase in royalties payable in current year | 15,000,000 | |||||
Increase in the minimum aggregate annual royalties payment | 2,000,000 | |||||
Percentage reimbursed | 60.00% | 50.00% | ||||
Total expenses for additional services, materials and supplies | 100,000 | 900,000 | ||||
Deferred revenue related to technology eliminated upon consolidation | 6,400,000 | 6,500,000 | ||||
Accounts receivable (payable) eliminated upon consolidation, net | 2,000,000 | |||||
Noncontrolling interest | 1,000,000 | 1,700,000 | ||||
Total assets, net of intercompany eliminations | 6,500,000 | 7,200,000 | ||||
Intangible assets | 4,800,000 | 4,700,000 | ||||
Property and equipment | 1,000,000 | 1,200,000 | ||||
Total liabilities, net of intercompany eliminations | 1,500,000 | 1,200,000 | ||||
Variable Interest Entity, Primary Beneficiary | ||||||
Variable Interest Entity [Line Items] | ||||||
Percentage reimbursed | 50.00% | |||||
Minimum | Variable Interest Entity, Primary Beneficiary | ||||||
Variable Interest Entity [Line Items] | ||||||
Minimum aggregate royalty payments | 5,000,000 |
Variable_Interest_Entity_VIE_C
Variable Interest Entity (VIE) - Changes in Noncontrolling Interest for Cercacor (Detail) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 | |||
Variable Interest Entity [Abstract] | |||||
Noncontrolling Interest Table [Table Text Block] | |||||
Three Months Ended | |||||
April 4, 2015 | |||||
Noncontrolling interest, beginning of period | $ | 1,742 | |||
Increase in additional paid-in capital of noncontrolling interest | 4 | ||||
Net loss attributable to noncontrolling interest | 701 | ||||
Noncontrolling interest, end of period | $ | 1,045 | |||
Noncontrolling interest, beginning of period | $1,742 | ||||
Increase in additional paid-in capital of noncontrolling interest | 4 | ||||
Net loss attributable to noncontrolling interest | 701 | 141 | |||
Noncontrolling interest, end of period | $1,045 |
Cash_and_Cash_Equivalents_Addi
Cash and Cash Equivalents - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 04, 2015 | Jan. 03, 2015 |
Cash and Cash Equivalents [Abstract] | ||
Highly liquid investments maximum maturity period | Three months or less | |
Cash balance | $78.30 | $92.90 |
Cash equivalents | 57.4 | 41.6 |
Time Deposits, at Carrying Value | 43.5 | 40.5 |
Money market funds | $13.90 | $1.10 |
Royalties_Receivable_Additiona
Royalties Receivable - Additional Information (Detail) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Royalties Receivable [Abstract] | ||
Royalty receivable | $7,000 | $7,200 |
Inventories_Components_of_Inve
Inventories - Components of Inventory (Detail) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Raw materials | $37,289 | $33,056 |
Work-in-process | 6,839 | 6,020 |
Finished goods | 25,444 | 30,642 |
Total inventories | $69,572 | $69,718 |
Property_and_Equipment_Propert2
Property and Equipment Property and Equipment (Details) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $167,367,000 | $159,036,000 |
Accumulated depreciation and amortization | -58,702,000 | -57,084,000 |
Property and equipment, net | 108,665,000 | 101,952,000 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 39,383,000 | 38,588,000 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 38,027,000 | 30,678,000 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 22,894,000 | 22,894,000 |
Tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 12,603,000 | 12,317,000 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 13,563,000 | 13,035,000 |
Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Capital Leased Assets, Gross | 600,000 | 600,000 |
Property, plant and equipment, gross | 6,965,000 | 4,864,000 |
Demonstration Units [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 948,000 | 972,000 |
Demonstration units | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 45,000 | 45,000 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 9,800,000 | 9,912,000 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 23,139,000 | 25,731,000 |
Capital Lease Obligations [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Accumulated depreciation and amortization | ($400,000) | ($400,000) |
Property_and_Equipment_Propert3
Property and Equipment Property and Equipment Narrative (Details) (USD $) | 3 Months Ended | ||
Apr. 04, 2015 | Mar. 29, 2014 | Jan. 03, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $2,700,000 | $2,200,000 | |
Depreciation and amortization | 3,777,000 | 3,043,000 | |
Property, plant and equipment, gross | 167,367,000 | 159,036,000 | |
Accumulated depreciation | 58,702,000 | 57,084,000 | |
Construction-in-progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 23,139,000 | 25,731,000 | |
Furniture and office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 6,965,000 | 4,864,000 | |
Capital Leased Assets, Gross | 600,000 | 600,000 | |
Capital Lease Obligations [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Accumulated depreciation | 400,000 | 400,000 | |
Irvine, California | Construction-in-progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 20,200,000 | ||
Accounts Payable | Irvine, California | Construction-in-progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $4,100,000 |
Intangible_Assets_Intangible_A2
Intangible Assets Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | $41,256 | $40,786 |
Total accumulated amortization | -13,901 | -13,015 |
Net carrying amount | 27,355 | 27,771 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | 20,755 | 20,459 |
Total accumulated amortization | -6,988 | -6,649 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | 7,669 | 7,669 |
Total accumulated amortization | -2,045 | -1,853 |
Acquired technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | 5,580 | 5,580 |
Total accumulated amortization | -1,531 | -1,392 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | 3,681 | 3,562 |
Total accumulated amortization | -924 | -866 |
Capitalized software development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | 2,066 | 2,066 |
Total accumulated amortization | -1,477 | -1,440 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total cost | 1,505 | 1,450 |
Total accumulated amortization | ($936) | ($815) |
Intangible_Assets_Intangible_A3
Intangible Assets Intangible Assets - Additional Information (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |
Amortization of Intangible Assets | $1.20 | $0.80 |
Intangible_Assets_Intangible_A4
Intangible Assets Intangible Assets - Future Amortization Expense (Details) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2014 | $3,272 | |
2015 | 3,081 | |
2016 | 2,961 | |
2017 | 2,608 | |
2018 | 2,341 | |
Thereafter | 13,092 | |
Net carrying amount | $27,355 | $27,771 |
Longterm_debt_Debt_Instrument
Long-term debt Debt Instrument (USD $) | 0 Months Ended | ||
Sep. 29, 2014 | Apr. 04, 2015 | Jan. 03, 2015 | |
Line of Credit Facility [Line Items] | |||
Long-term Line of Credit | $125,000,000 | $125,000,000 | |
Capital Lease Obligations, Noncurrent | 108,000 | 145,000 | |
Long-term Debt and Capital Lease Obligations | 125,108,000 | 125,145,000 | |
Adjusted London Interbank Offered Rate (LIBOR) | Minimum | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.13% | ||
Adjusted London Interbank Offered Rate (LIBOR) | Maximum | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Increase to borrowing capacity | 125,000,000 | ||
Line of Credit Facility, Current Borrowing Capacity | 250,000,000 | ||
Line of Credit Facility, Maximum Borrowing Capacity | 350,000,000 | ||
Line of Credit Facility, Maximum Sublimit | 50,000,000 | ||
Long-term Line of Credit, Noncurrent | 125,000,000 | ||
Revolving Credit Facility [Member] | Base Rate | Minimum | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.13% | ||
Revolving Credit Facility [Member] | Base Rate | Maximum | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | ||
Revolving Credit Facility [Member] | Foreign Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Maximum Sublimit | 75,000,000 | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Interest Rate at Period End | 1.44% | ||
Revolving Credit Facility [Member] | Minimum | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.18% | ||
Revolving Credit Facility [Member] | Maximum | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.30% | ||
Revolving Credit Facility [Member] | One Month Adjusted London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | ||
Revolving Credit Facility [Member] | Federal Fund | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.50% |
Stock_Repurchase_Program_Addit
Stock Repurchase Program - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | ||
Oct. 29, 2014 | Apr. 04, 2015 | Mar. 29, 2014 | Feb. 28, 2013 | |
Class of Stock [Line Items] | ||||
Number of common shares authorized to be repurchased under new stock repurchase program | 9,000,000 | 6,000,000 | ||
Stock Repurchase Program, Number of Additional Shares Authorized in the Period | 3,000,000 | |||
Stock repurchase program, number of shares repurchased | 300,000 | 0 | ||
Stock repurchase program, average price per share | $32.89 | |||
Stock repurchase program, total value | $8,200,000 | |||
Accrued Stock Repurchases | $6,078,000 |
ShareBased_Compensation_Additi
Share-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based compensation expense | $2.90 | $2.60 |
Aggregate intrinsic value of options outstanding | 95.7 | |
Aggregate intrinsic value of options exercisable | 58.6 | |
Aggregate intrinsic value of options exercised | 3.3 | 1.5 |
Unrecognized share-based compensation related to unvested options granted | $23.10 | |
Unrecognized share-based compensation related to unvested options granted, term | 5 years 10 months 24 days | |
Weighted average remaining contractual term of options exercisable, years | 4 years 3 months 18 days |
ShareBased_Compensation_Number
Share-Based Compensation - Number and Weighted Average Exercise Price of Options Issued and Outstanding under all Stock Option Plans (Detail) (USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Apr. 04, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding, beginning of period | 9,956 |
Granted | 282 |
Canceled | -52 |
Exercised | -273 |
Options outstanding, end of period | 9,913 |
Options exercisable, end of period | 6,114 |
Options available for grant, end of period | 5,528 |
Average Exercise Price | |
Options outstanding, beginning of period | $23.59 |
Granted | $30.41 |
Canceled | $22.46 |
Exercised | $18.31 |
Options outstanding, end of period | $23.93 |
Options exercisable, end of period | $24.07 |
ShareBased_Compensation_Range_
Share-Based Compensation - Range of Assumptions Used and Resulting Weighted-Average Fair Value of Options Granted at Date of Grant (Detail) (USD $) | 3 Months Ended | |
Apr. 04, 2015 | Mar. 29, 2014 | |
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | ||
Risk-free interest rate, minimum | 1.50% | 0.70% |
Risk-free interest rate, maximum | 1.80% | 1.60% |
Expected term (in years) | 5 years 5 months 23 days | 5 years 1 month 6 days |
Estimated volatility, minimum | 32.20% | 36.20% |
Estimated volatility, maximum | 33.10% | 37.70% |
Expected dividends | 0.00% | 0.00% |
Weighted-average fair value of options granted | $10.35 | $8.89 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||
Oct. 01, 2014 | Sep. 30, 2011 | Apr. 04, 2015 | Mar. 29, 2014 | Jan. 03, 2015 | Jul. 09, 2009 | Aug. 21, 2013 | Jan. 16, 2014 | Dec. 28, 2013 | Jan. 03, 2014 | Jan. 31, 2014 | |
sales_representatives | Agreement | distributor | patent | claim | participant | ||||||
Contingencies And Commitments [Line Items] | |||||||||||
Accrued rent expense | $400,000 | ||||||||||
Rental expense related to operating leases | 1,500,000 | 1,600,000 | |||||||||
Company contribution percentage based on employee contribution of up to 3% of employee's compensation | 3.00% | ||||||||||
Company's contribution to employee retirement savings plan | 600,000 | 600,000 | |||||||||
Initial term of agreement | 3 years | ||||||||||
Severance plan participation agreements | 7 | ||||||||||
Supplemental Unemployment Benefits, Severance Benefits, Required Notice of Resignation | 6 months | ||||||||||
Purchase Commitment, Remaining Minimum Amount Committed | 71,600,000 | ||||||||||
Bank balances | 78,300,000 | 92,900,000 | |||||||||
Bank balance covered by Federal Deposit Insurance Corporation limit | 3,200,000 | ||||||||||
Money Market Funds, at Carrying Value | 13,900,000 | 1,100,000 | |||||||||
Money market funds | 400,000 | ||||||||||
Percentage of revenue one customer | 14.00% | 15.00% | |||||||||
Percentage of revenue two customer | 13.00% | 9.00% | |||||||||
Royalty | 7,180,000 | 7,582,000 | |||||||||
Royalty Rate Percentage | 7.75% | ||||||||||
Number of former sales representatives | 2 | ||||||||||
Litigation settlement amount | 466,800,000 | ||||||||||
Increase (decrease) in loss contingency accrual | -8,000,000 | ||||||||||
Number of participants in the surfactant, positive pressure, and oxygenation randomized trial | 2 | ||||||||||
Sales | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Concentration risk, just-in-time distributors | 2 | 2 | 3 | ||||||||
Minimum | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Interest rates on capital lease | 4.30% | ||||||||||
Maximum | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Interest rates on capital lease | 12.00% | ||||||||||
Sales Revenue, Product Line [Member] | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Sale of company's products to customers | 86,300,000 | 75,200,000 | |||||||||
Just in time distributor one | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Percentage Of Accounts Receivable Balance From Three Just In Time Distributors | 6.00% | ||||||||||
Percentage of accounts receivable balance from two just-in-time distributor | 11.00% | ||||||||||
Just in time distributor two | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Percentage Of Accounts Receivable Balance From Three Just In Time Distributors | 9.00% | ||||||||||
Percentage of accounts receivable balance from two just-in-time distributor | 7.00% | ||||||||||
Just In Time Distributor Three [Member] | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Percentage Of Accounts Receivable Balance From Three Just In Time Distributors | 5.00% | ||||||||||
Masimo vs. Philips | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Number of patents allegedly infringed | 1 | ||||||||||
Masimo vs. Mindray DS USA, Inc. and Shenzhen Mindray Bio-Medical Electronics | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Loss contingency, new claims filed | 2 | ||||||||||
Masimo vs Former Physician Office Sales Representatives | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Litigation settlement amount | 5,400,000 | ||||||||||
Litigation settlement expense | 2,600,000 | ||||||||||
Masimo vs. Physicians Healthsource, Inc. | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Loss contingency, damages sought | $500 | ||||||||||
Parent Company [Member] | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Number of patents allegedly infringed | 2 | ||||||||||
Philips Patent [Member] | |||||||||||
Contingencies And Commitments [Line Items] | |||||||||||
Number of patents allegedly infringed | 1 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Future Minimum Lease Payments Under Operating and Capital Leases (Detail) (USD $) | Apr. 04, 2015 |
In Thousands, unless otherwise specified | |
Operating Leases | |
2015 (balance of year) | $3,838 |
2015 | 4,253 |
2016 | 2,642 |
2017 | 2,083 |
2018 | 1,908 |
Thereafter | 1,033 |
Total | 15,757 |
Capital Leases | |
2015 (balance of year) | 16 |
2015 | 88 |
2016 | 82 |
2017 | 8 |
2018 | 8 |
Thereafter | 3 |
Total | 205 |
Total | |
2015 (balance of year) | 3,854 |
2015 | 4,341 |
2016 | 2,724 |
2017 | 2,091 |
2018 | 1,916 |
Thereafter | 1,036 |
Total | $15,962 |
Segment_Information_and_Enterp2
Segment Information and Enterprise Reporting - Analysis of Product Revenues Based upon Geographic Area Shipped (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Analysis of Product Revenues Based upon the Geographic Area Shipped | ||
Total product revenue | $147,357 | $132,232 |
Total product revenue, in percentage | 100.00% | 100.00% |
North and South America | Reportable Geographical Components | ||
Analysis of Product Revenues Based upon the Geographic Area Shipped | ||
Total product revenue | 111,478 | 92,652 |
Total product revenue, in percentage | 75.70% | 70.10% |
Europe, Middle East and Africa | Reportable Geographical Components | ||
Analysis of Product Revenues Based upon the Geographic Area Shipped | ||
Total product revenue | 24,061 | 27,012 |
Total product revenue, in percentage | 16.30% | 20.40% |
Asia and Australia | Reportable Geographical Components | ||
Analysis of Product Revenues Based upon the Geographic Area Shipped | ||
Total product revenue | 11,818 | 12,568 |
Total product revenue, in percentage | 8.00% | 9.50% |
United States | Reportable Geographical Components | ||
Analysis of Product Revenues Based upon the Geographic Area Shipped | ||
Total product revenue | $107,276 | $88,047 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | Apr. 04, 2015 |
In Millions, unless otherwise specified | |
Income Tax Disclosure [Abstract] | |
Gross unrecognized tax benefit | $8.30 |
Unrecognized tax benefit that would affect effective tax rate | $6.90 |
Other_Current_Assets_Details
Other Current Assets (Details) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Royalty Receivable | $7,000 | $7,200 |
Other Assets, Miscellaneous, Current | 6,986 | 4,070 |
Prepaid Expense, Current | 9,197 | 9,816 |
Due from Employees, Current | 377 | 385 |
Other current assets | $23,560 | $21,471 |
Accrued_Liabilities_Details
Accrued Liabilities (Details) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 | Mar. 29, 2014 | Dec. 28, 2013 |
In Thousands, unless otherwise specified | ||||
Accrued customer rebates, fees and reimbursement | $17,720 | $11,645 | ||
Accrued Stock Repurchase | 6,078 | 0 | ||
Accrued Income Taxes | 2,991 | 4,372 | ||
Income taxes payable | 6,988 | 6,562 | ||
Product Warranty Accrual | 1,480 | 1,416 | 1,121 | 1,161 |
Other Accrued Liabilities, Current | 9,346 | 7,108 | ||
Accrued liabilities | $37,615 | $24,541 |