Document and Entity Information
Document and Entity Information | 9 Months Ended |
Oct. 02, 2021shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Oct. 2, 2021 |
Document Transition Report | false |
Entity File Number | 001-33642 |
Entity Registrant Name | MASIMO CORP |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 33-0368882 |
Entity Address, Address Line One | 52 Discovery |
Entity Address, City or Town | Irvine, |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 92618 |
City Area Code | (949) |
Local Phone Number | 297-7000 |
Title of 12(b) Security | Common Stock, $0.001 par value |
Trading Symbol | MASI |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Smaller Reporting Company | false |
Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 55,221,689 |
Amendment Flag | false |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q3 |
Entity Central Index Key | 0000937556 |
Current Fiscal Year End Date | --01-01 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Oct. 02, 2021 | Jan. 02, 2021 |
Current assets | ||
Cash and cash equivalents | $ 652,354,000 | $ 641,447,000 |
Trade accounts receivable, net of allowance for credit losses | 191,332,000 | 141,350,000 |
Inventories | 202,328,000 | 215,952,000 |
Other current assets | 91,772,000 | 102,416,000 |
Total current assets | 1,137,786,000 | 1,101,165,000 |
Lease receivable, noncurrent | 66,955,000 | 57,666,000 |
Deferred costs and other contract assets | 22,599,000 | 20,076,000 |
Property and equipment, net | 274,929,000 | 272,511,000 |
Intangible assets, net | 74,089,000 | 73,923,000 |
Goodwill | 101,242,000 | 103,206,000 |
Deferred tax assets | 39,294,000 | 39,363,000 |
Other non-current assets | 49,886,000 | 44,642,000 |
Total assets | 1,766,780,000 | 1,712,552,000 |
Current liabilities | ||
Accounts payable | 60,710,000 | 64,061,000 |
Accrued compensation | 69,785,000 | 71,601,000 |
Deferred revenue and other contract liabilities, current | 46,641,000 | 44,935,000 |
Other current liabilities | 51,118,000 | 53,239,000 |
Total current liabilities | 228,254,000 | 233,836,000 |
Other non-current liabilities | 70,377,000 | 71,076,000 |
Total liabilities | 298,631,000 | 304,912,000 |
Commitments and contingencies - (Note 21) | ||
Stockholders’ equity | ||
Preferred Stock, Value, Outstanding | 0 | 0 |
Common Stock, Value, Outstanding | 55,000 | 55,000 |
Treasury Stock, Value | (767,653,000) | (638,736,000) |
Additional paid-in capital | 736,575,000 | 703,693,000 |
Accumulated other comprehensive (loss) income | (3,432,000) | 1,413,000 |
Retained earnings | 1,502,604,000 | 1,341,215,000 |
Stockholders' Equity Attributable to Parent | 1,468,149,000 | 1,407,640,000 |
Total liabilities and equity | $ 1,766,780,000 | $ 1,712,552,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 2,081 | $ 1,603 |
Preferred stock, par value | $ 1 | $ 1 |
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 | $ 1 | $ 1 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Outstanding | 55,222,000 | 55,251,000 |
Treasury Stock, Shares | 16,540,000 | 15,993,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations Condensed Consolidated Statement of Operations - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Income Statement [Abstract] | ||||
Product revenue | $ 307,414,000 | $ 278,112,000 | $ 911,575,000 | $ 848,690,000 |
Cost of goods sold | 103,750,000 | 99,186,000 | 318,124,000 | 292,551,000 |
Gross profit | 203,664,000 | 178,926,000 | 593,451,000 | 556,139,000 |
Selling, general and administrative | 100,647,000 | 90,376,000 | 291,180,000 | 278,714,000 |
Research and development | 35,406,000 | 28,852,000 | 103,860,000 | 86,971,000 |
Litigation awards | 0 | 0 | 0 | (474,000) |
Total operating expenses | 136,053,000 | 119,228,000 | 395,040,000 | 365,211,000 |
Operating income | 67,611,000 | 59,698,000 | 198,411,000 | 190,928,000 |
Non-operating (loss) income | (78,000) | 1,357,000 | (735,000) | 6,108,000 |
Income before provision for income taxes | 67,533,000 | 61,055,000 | 197,676,000 | 197,036,000 |
Provision for income taxes | 9,762,000 | 11,650,000 | 36,287,000 | 27,403,000 |
Net income | $ 57,771,000 | $ 49,405,000 | $ 161,389,000 | $ 169,633,000 |
Basic | $ 1.05 | $ 0.90 | $ 2.93 | $ 3.11 |
Diluted | $ 1 | $ 0.85 | $ 2.80 | $ 2.92 |
Basic | 55,143 | 54,997 | 55,125 | 54,543 |
Diluted | 57,664 | 58,280 | 57,651 | 58,033 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Income Statement [Abstract] | ||||
Net income | $ 57,771 | $ 49,405 | $ 161,389 | $ 169,633 |
Other comprehensive income, net of tax: | ||||
Unrealized (losses) gains from foreign currency translation adjustments | (3,165) | 2,653 | (4,845) | 1,504 |
Comprehensive income | $ 54,606 | $ 52,058 | $ 156,544 | $ 171,137 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings |
Shares, Issued, Beginning Balance at Dec. 28, 2019 | 53,696 | 15,530 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 28, 2019 | $ 1,167,874,000 | $ 54,000 | $ (526,580,000) | $ 600,624,000 | $ (6,718,000) | $ 1,100,494,000 |
Stock options exercised, shares | 384 | |||||
Stock options exercised, value | 13,495,000 | $ 0 | 13,495,000 | |||
Restricted/Performance stock units vested | 46 | |||||
Shares paid for tax withholding, shares | (8) | |||||
Shares paid for tax withholding, value | (1,424,000) | (1,424,000) | ||||
Share-based Compensation Expense | 11,272,000 | |||||
Share-based Compensation Expense | 11,272,000 | |||||
Repurchases of common stock, shares | (3) | (3) | ||||
Repurchases of common stock, value | (371,000) | $ (371,000) | ||||
Income Tax Effects Allocated Directly to Equity, Cumulative Effect of Change in Accounting Principle | 439,000 | |||||
Income Tax Effects Allocated Directly to Equity, Cumulative Effect of Change in Accounting Principle | Cumulative effect of adoption of ASU 2016-13 | 439,000 | |||||
Net income | 64,456,000 | 64,456,000 | ||||
Unrealized (losses) gains from foreign currency translation adjustments | (2,463,000) | (2,463,000) | ||||
Shares, Issued, Ending Balance at Mar. 28, 2020 | 54,115 | 15,533 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Mar. 28, 2020 | 1,253,278,000 | $ 54,000 | $ (526,951,000) | 623,967,000 | (9,181,000) | 1,165,389,000 |
Shares, Issued, Beginning Balance at Dec. 28, 2019 | 53,696 | 15,530 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 28, 2019 | $ 1,167,874,000 | $ 54,000 | $ (526,580,000) | 600,624,000 | (6,718,000) | 1,100,494,000 |
Repurchases of common stock, shares | (4) | |||||
Repurchases of common stock, value | $ (591,000) | |||||
Net income | 169,633,000 | |||||
Unrealized (losses) gains from foreign currency translation adjustments | 1,504,000 | |||||
Shares, Issued, Ending Balance at Sep. 26, 2020 | 55,055 | 15,534 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 26, 2020 | 1,414,804,000 | $ 55,000 | $ (527,171,000) | 676,568,000 | (5,214,000) | 1,270,566,000 |
Shares, Issued, Beginning Balance at Mar. 28, 2020 | 54,115 | 15,533 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Mar. 28, 2020 | 1,253,278,000 | $ 54,000 | $ (526,951,000) | 623,967,000 | (9,181,000) | 1,165,389,000 |
Stock options exercised, shares | 825 | |||||
Stock options exercised, value | 21,213,000 | $ 1,000 | 21,212,000 | |||
Restricted/Performance stock units vested | 9 | |||||
Share-based Compensation Expense | 13,188,000 | |||||
Share-based Compensation Expense | 13,188,000 | |||||
Repurchases of common stock, shares | (1) | (1) | ||||
Repurchases of common stock, value | (220,000) | $ (220,000) | ||||
Net income | 55,772,000 | 55,772,000 | ||||
Unrealized (losses) gains from foreign currency translation adjustments | 1,314,000 | 1,314,000 | ||||
Shares, Issued, Ending Balance at Jun. 27, 2020 | 54,948 | 15,534 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 27, 2020 | 1,344,545,000 | $ 55,000 | $ (527,171,000) | 658,367,000 | (7,867,000) | 1,221,161,000 |
Stock options exercised, shares | 107 | |||||
Stock options exercised, value | 6,314,000 | $ 0 | 6,314,000 | |||
Restricted/Performance stock units vested | 1 | |||||
Shares paid for tax withholding, shares | (1) | |||||
Shares paid for tax withholding, value | (25,000) | (25,000) | ||||
Share-based Compensation Expense | 11,912,000 | |||||
Share-based Compensation Expense | $ 11,912,000 | |||||
Repurchases of common stock, shares | 0 | |||||
Repurchases of common stock, value | $ 0 | |||||
Net income | 49,405,000 | 49,405,000 | ||||
Unrealized (losses) gains from foreign currency translation adjustments | 2,653,000 | 2,653,000 | ||||
Shares, Issued, Ending Balance at Sep. 26, 2020 | 55,055 | 15,534 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 26, 2020 | 1,414,804,000 | $ 55,000 | $ (527,171,000) | 676,568,000 | (5,214,000) | 1,270,566,000 |
Shares, Issued, Beginning Balance at Jan. 02, 2021 | 55,251 | 15,993 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Jan. 02, 2021 | 1,407,640,000 | $ 55,000 | $ (638,736,000) | 703,693,000 | 1,413,000 | 1,341,215,000 |
Stock options exercised, shares | 61 | |||||
Stock options exercised, value | 2,886,000 | $ 0 | 2,886,000 | |||
Restricted/Performance stock units vested | 303 | |||||
Shares paid for tax withholding, shares | (68) | |||||
Shares paid for tax withholding, value | (16,691,000) | (16,691,000) | ||||
Share-based Compensation Expense | 12,708,000 | |||||
Share-based Compensation Expense | 12,708,000 | |||||
Repurchases of common stock, shares | (547) | (547) | ||||
Repurchases of common stock, value | (128,917,000) | $ (128,917,000) | ||||
Net income | 53,383,000 | 53,383,000 | ||||
Unrealized (losses) gains from foreign currency translation adjustments | (2,884,000) | (2,884,000) | ||||
Shares, Issued, Ending Balance at Apr. 03, 2021 | 55,000 | 16,540 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Apr. 03, 2021 | 1,328,125,000 | $ 55,000 | $ (767,653,000) | 702,596,000 | (1,471,000) | 1,394,598,000 |
Shares, Issued, Beginning Balance at Jan. 02, 2021 | 55,251 | 15,993 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Jan. 02, 2021 | $ 1,407,640,000 | $ 55,000 | $ (638,736,000) | 703,693,000 | 1,413,000 | 1,341,215,000 |
Stock options exercised, shares | 278 | |||||
Repurchases of common stock, shares | (547) | |||||
Repurchases of common stock, value | $ (128,917,000) | |||||
Net income | 161,389,000 | |||||
Unrealized (losses) gains from foreign currency translation adjustments | (4,845,000) | |||||
Shares, Issued, Ending Balance at Oct. 02, 2021 | 55,222 | 16,540 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Oct. 02, 2021 | 1,468,149,000 | $ 55,000 | $ (767,653,000) | 736,575,000 | (3,432,000) | 1,502,604,000 |
Shares, Issued, Beginning Balance at Apr. 03, 2021 | 55,000 | 16,540 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Apr. 03, 2021 | 1,328,125,000 | $ 55,000 | $ (767,653,000) | 702,596,000 | (1,471,000) | 1,394,598,000 |
Stock options exercised, shares | 52 | |||||
Stock options exercised, value | 3,442,000 | $ 0 | 3,442,000 | |||
Restricted/Performance stock units vested | 4 | |||||
Shares paid for tax withholding, shares | 1 | |||||
Shares paid for tax withholding, value | (33,000) | (33,000) | ||||
Share-based Compensation Expense | 8,262,000 | |||||
Share-based Compensation Expense | 8,262,000 | |||||
Net income | 50,235,000 | 50,235,000 | ||||
Unrealized (losses) gains from foreign currency translation adjustments | 1,204,000 | 1,204,000 | ||||
Shares, Issued, Ending Balance at Jul. 03, 2021 | 55,057 | 16,540 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jul. 03, 2021 | 1,391,235,000 | $ 55,000 | $ (767,653,000) | 714,267,000 | (267,000) | 1,444,833,000 |
Stock options exercised, shares | 165 | |||||
Stock options exercised, value | 9,748,000 | $ 0 | 9,748,000 | |||
Share-based Compensation Expense | 12,560,000 | |||||
Share-based Compensation Expense | $ 12,560,000 | |||||
Repurchases of common stock, shares | 0 | |||||
Repurchases of common stock, value | $ 0 | |||||
Net income | 57,771,000 | 57,771,000 | ||||
Unrealized (losses) gains from foreign currency translation adjustments | (3,165,000) | (3,165,000) | ||||
Shares, Issued, Ending Balance at Oct. 02, 2021 | 55,222 | 16,540 | ||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Oct. 02, 2021 | $ 1,468,149,000 | $ 55,000 | $ (767,653,000) | $ 736,575,000 | $ (3,432,000) | $ 1,502,604,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 161,389,000 | $ 169,633,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 26,449,000 | 21,200,000 |
Stock-based compensation | 33,530,000 | 36,372,000 |
Loss on disposal of equipment, intangibles and other assets | 371,000 | 202,000 |
Provision for credit losses | 647,000 | 5,000 |
Provision for deferred income taxes | 0 | 136,000 |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable | (50,967,000) | (9,459,000) |
Decrease (increase) in inventories | 12,329,000 | (86,815,000) |
Decrease (increase) in other current assets | 4,433,000 | (23,461,000) |
Increase in lease receivable, net | (9,312,000) | (6,279,000) |
Increase in deferred costs and other contract assets | (2,573,000) | (1,964,000) |
Increase in other non-current assets | (144,000) | (775,000) |
(Decrease) increase in accounts payable | (4,290,000) | 31,793,000 |
(Decrease) increase in accrued compensation | (1,298,000) | 3,654,000 |
(Decrease) increase in accrued liabilities | (3,969,000) | 4,691,000 |
Decrease in income tax payable | (1,456,000) | (2,756,000) |
Increase in deferred revenue and other contract-related liabilities | 1,378,000 | 9,973,000 |
Increase in other non-current liabilities | 634,000 | 395,000 |
Net cash provided by operating activities | 167,151,000 | 146,545,000 |
Cash flows from investing activities: | ||
Maturities of short-term investments | 0 | (70,000,000) |
Purchases of property and equipment, net | (20,680,000) | (60,017,000) |
Increase in intangible assets | (8,185,000) | (5,763,000) |
Business combinations, net of cash acquired | 0 | 78,310,000 |
Other strategic investing activities | (2,600,000) | (6,750,000) |
Net cash used in investing activities | (31,465,000) | (80,840,000) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 18,975,000 | 40,994,000 |
Payroll tax withholdings on behalf of employees for vested equity awards | (16,724,000) | (1,449,000) |
Repurchases of common stock | (128,917,000) | (591,000) |
Net cash (used in) provided by financing activities | (126,666,000) | 38,954,000 |
Effect of foreign currency exchange rates on cash | (89,000) | (294,000) |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect | 8,931,000 | 104,365,000 |
Cash, cash equivalents and restricted cash at end of period | 652,354,000 | 669,056,000 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 653,935,000 | $ 672,440,000 |
Description of the Company
Description of the Company | 9 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [Abstract] | |
Description of the Company | 1. 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, hospital automation solutions, home monitoring devices and consumer products. The Company’s mission is to improve patient outcomes, reduce the cost of care and take noninvasive monitoring to new sites and applications. The Company’s patient monitoring solutions generally incorporate a monitor or circuit board, proprietary single-patient use or reusable sensors, software and/or cables. The Company primarily sells its products to hospitals, emergency medical service 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. Masimo’s core measurement technologies are based on Measure-through Motion and Low Perfusion ™ pulse oximetry, known as Masimo Signal Extraction Technology ® (SET ® ) pulse oximetry, and advanced rainbow ® Pulse CO-Oximetry parameters such as noninvasive hemoglobin (SpHb ® ), alongside many other modalities, including brain function monitoring, hemodynamic monitoring, regional oximetry, acoustic respiration rate monitoring, capnography, nasal high-flow respiratory support therapy, patient position and activity tracking and neuromodulation technology for the reduction of symptoms associated with opioid withdrawal. Masimo’s measurement technologies are available on many types of devices, from bedside hospital monitors like the Root ® Patient Monitoring and Connectivity Hub, to various handheld and portable devices, and to the tetherless Masimo SafetyNet ™ remote patient surveillance solution. The Masimo Hospital Automation ™ Platform facilitates data integration, connectivity, and interoperability through solutions like Patient SafetyNet ™(1) , Replica ® , and UniView ™ to facilitate more efficient clinical workflows and to help clinicians provide the best possible care, both in-person and remotely. Leveraging the Company’s expertise in hospital-grade technologies, the Company has also expanded its suite of products intended for use outside the hospital to products for consumers, including Sleep ™ , a sleep quality solution and the Radius Tº ™ wireless, wearable continuous thermometer. ______________ (1) The use of the trademark Patient SafetyNet ™ is under license from the University HealthSystem Consortium. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. 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 accompanying 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 accompanying condensed consolidated balance sheet as of January 2, 2021 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 2, 2021 (fiscal year 2020), filed with the SEC on February 23, 2021. The results for the three and nine months ended October 2, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending January 1, 2022 (fiscal year 2021) or for any other interim period or for any future year. Fiscal Periods The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 week fiscal year, a 52 week fiscal year includes four quarters of 13 weeks while a 53 week fiscal year includes three 13 week fiscal quarters and one 14 week fiscal quarter. The Company’s last 53 week fiscal year was fiscal year 2020. Fiscal year 2021 is a 52 week fiscal year ending January 1, 2022. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. Reclassifications Certain amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current period presentation. 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 standalone selling prices, variable consideration, total consideration allocated to each performance obligation within a contract, inventory valuation, valuation of the Company’s equity awards, valuation of identifiable assets and liabilities connected with business combinations, deferred taxes and any associated valuation allowances, deferred revenue, uncertain income tax positions, and litigation costs and related accruals. Actual results could differ from such estimates. Business Combinations The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired, liabilities assumed and noncontrolling interests in the acquired entity, if applicable, are recorded at their respective fair values at the date of acquisition. The excess of the purchase price over the fair values of identifiable assets, liabilities and noncontrolling interests in the acquired entity, if applicable, is recorded as goodwill. The Company finalizes the purchase price allocation within one year from the acquisition date. 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 to apply the fair value option under this guidance to specific assets or liabilities on a contract-by-contract basis. There were no transfers between Level 1, Level 2 and Level 3 inputs during either the nine months ended October 2, 2021 or September 26, 2020. The Company carries cash and cash equivalents, at cost, which approximates fair value. For certain other financial assets and liabilities, including restricted cash, accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily goodwill, intangible assets and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment. 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. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist of trade receivables recorded at the time of invoicing of product sales, 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 an evaluation of the customer’s financial condition. Collateral is generally not required. The Company records an allowance for credit losses that it does not expect to collect based on relevant information, including historical experience, current conditions, and reasonable and supportable forecasts. Accounts are charged off against the allowance when the Company believes they are uncollectible. Inventory Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory valuation adjustments are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory items that have a market price less than carrying value in inventory. The Company generally determines inventory valuation adjustments based on an evaluation of the expected future use of its inventory on an item by item basis and applies historical obsolescence rates to estimate the loss on inventory expected to have a recovery value below cost. The Company also records other specific inventory valuation adjustments when it becomes aware of unique events or circumstances that result in an expected recovery value below cost. For inventory items that have been written down, the reduced value becomes the new cost basis. 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 and building improvements 7 to 39 years Computer equipment and software 2 to 12 years Demonstration units 3 years Furniture and office equipment 2 to 6 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 10 years Transportation, vehicles and other 4 to 20 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. Intangible Assets Intangible assets consist primarily of patents, trademarks, software development costs, customer relationships and acquired technology. Costs related to patents and trademarks, which include legal and application fees, are capitalized and amortized over the estimated useful lives using the straight-line method. Patent and trademark amortization commences once final approval of the patent or trademark has been obtained. Patent costs are amortized over the lesser of 10 years or the patent’s remaining legal life, which assumes renewals, and trademark costs are amortized over 17 years, and their associated amortization cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. For intangibles purchased in an asset acquisition or business combination, which mainly include patents, trademarks, customer relationships and acquired technologies, the useful life is determined largely by valuation estimates of remaining economic life. The Company’s policy is to renew its patents and trademarks. Costs to renew patents and trademarks are capitalized and amortized over the remaining useful life of the intangible asset. The Company periodically evaluates the amortization period and carrying basis of patents, trademarks and other intangible assets 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, Intangible Assets and Other Long-Lived 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, 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 a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if the Company elects to bypass the qualitative analysis, then the Company must perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit. 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 flows 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. Revenue Recognition, Deferred Revenue and Other Contract Liabilities The Company derives the majority of its product revenue from four primary sources: (i) direct sales under deferred equipment 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 customers; and (iv) sales of integrated circuit boards to OEM customers who incorporate the Company’s embedded software technology into their multiparameter monitoring devices. Subject to customer credit considerations, the majority of such sales are made on open account using industry standard payment terms based on the geography within which the specific customer is located. The Company generally recognizes revenue following a single, principles-based five-step model to be applied to all contracts with customers and generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers that are remitted to government authorities, when control over the promised goods or services are transferred to the customer. Revenue related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease. While the majority of the Company’s revenue contracts and transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation, judgment and analysis is required to determine the appropriate accounting, including: (i) the amount of the total consideration, as well as variable consideration, (ii) whether the arrangement contains an embedded lease, and if so, whether such embedded lease is a sales-type lease or an operating lease, (iii) the identification of the distinct performance obligations contained within the arrangement, (iv) how the arrangement consideration should be allocated to each performance obligation when multiple performance obligations exist, including the determination of standalone selling price, and (v) when to recognize revenue on the performance obligations. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. The Company enters into agreements to sell its monitoring solutions and services, sometimes as a part of arrangements with multiple performance obligations that include various combinations of product sales, equipment leases and services. In the case of contracts with multiple performance obligations, the authoritative guidance provides that the total consideration be allocated to each performance obligation on the basis of relative standalone selling prices. When a standalone selling price is not readily observable, the Company estimates the standalone selling price 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 other market conditions. Sales under deferred equipment agreements are generally structured such that the Company agrees to provide certain monitoring-related equipment, software, installation, training and/or warranty support at no up-front charge in exchange for the customer’s commitment to purchase sensors over the term of the agreement, which generally ranges from three years to six years. The Company allocates contract consideration under deferred equipment agreements containing fixed annual sensor purchase commitments to the underlying lease and non-lease components at contract inception. In determining whether any underlying lease components are related to a sales-type lease or an operating lease, the Company evaluates the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by the Company, as well as the Company’s expectations surrounding potential contract/lease extensions or renewals and the customer’s likelihood to exercise any purchase options. Revenue allocable to non-lease performance obligations is generally recognized as such non-lease performance obligations are satisfied. Revenue allocable to lease components under sales-type lease arrangements is generally recognized when control over the equipment is transferred to the customer. Revenue allocable to lease components under operating lease arrangements is generally recognized over the term of the operating lease. The Company generally does not expect to derive any significant value in excess of such asset’s unamortized book value from equipment underlying its operating lease arrangements after the end of the agreement. Revenue from the sale of products to end-user hospitals, emergency medical response organizations, other direct customers, distributors and OEM customers, is recognized by the Company when control of such products transfer to the customer based upon the terms of the contract or underlying purchase order. Revenue related to OEM rainbow ® parameter software licenses is recognized by the Company upon the OEM’s shipment of its product to its customer, as reported to the Company by the OEM. The Company provides certain customers with various sales incentives that may take the form of discounts or rebates. The Company records estimates related to these programs as a reduction to revenue at the time of sale. 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. The Company estimates the revenue constraints related to these forms of variable consideration based on various factors, including expected purchasing volumes, prior sales and returns history, and specific contractual terms and limitations. Shipping and Handling Costs and Fees All shipping and handling costs are expensed as incurred and are recorded as a component of cost of goods sold in the accompanying condensed consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of product revenue. Taxes Collected From Customers and Remitted to Governmental Authorities The Company’s policy is to present revenue net of taxes collected from customers and remitted to governmental authorities. Deferred Costs and Other Contract Assets The costs of monitoring-related equipment provided to customers under operating lease arrangements within the Company’s deferred equipment agreements are generally deferred and amortized to cost of goods sold over the life of the underlying contracts. Some of the Company’s deferred equipment agreements also contain provisions for certain allowances to be made directly to the end-user hospital customer at the inception of the arrangement. These allowances are generally allocated to the lease and non-lease components and recognized as a reduction to revenue as the underlying performance obligations are satisfied. The Company generally invoices its customers under deferred equipment agreements as sensors are provided to the customer. However, the Company may recognize revenue for certain non-lease performance obligations under deferred equipment agreements with fixed annual commitments at the time such performance obligations are satisfied and prior to the customer being invoiced. When this occurs, the Company records an unbilled contract receivable related to such revenue until the customer has been invoiced pursuant to the terms of the underlying deferred equipment agreement. The incremental costs of obtaining a contract with a customer are capitalized and deferred if the Company expects such costs to be recoverable over the life of the contract and the contract term is greater than one year. Such deferred costs generally relate to certain incentive sales commissions earned by the Company’s internal sales team in connection with the execution of deferred equipment agreements and are amortized to expense over the expected term of the underlying contract. Product Warranty The Company generally provides a warranty against defects in material and workmanship for a period ranging from six months to forty-eight months, depending on the product type. In traditional sales activities, including direct and OEM sales, the Company establishes an accrued liability for the estimated warranty costs at the time of revenue recognition, with a corresponding provision to cost of goods sold. Customers may also purchase extended warranty coverage or service level upgrades separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage and service level upgrades is generally recognized over the life of the contract, which reasonably approximates the period over which such services will be provided. The related extended warranty and service level upgrade costs are expensed as incurred. Changes in the product warranty accrual were as follows (in thousands): Nine Months Ended October 2, September 26, Warranty accrual, beginning of period $ 2,740 $ 3,395 Accrual for warranties issued 3,442 428 Changes in pre-existing warranties (including changes in estimates) (2,347) (97) Settlements made (891) (883) Warranty accrual, end of period $ 2,944 $ 2,843 Litigation Costs and Contingencies The Company records a charge equal to at least the minimum estimated liability for a loss contingency or litigation settlement when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements, and (ii) the range of loss can be reasonably estimated. The determination of whether a loss contingency or litigation settlement is probable or reasonably possible involves a significant amount of management judgment, as does the estimation of the range of loss given the nature of contingencies. Liabilities related to litigation settlements with multiple elements are recorded based on the fair value of each element. Legal and other litigation related expenses are recognized as the services are provided. The Company records insurance and other indemnity recoveries for litigation expenses when both of the following conditions are met: (a) the recovery is probable, and (b) collectability is reasonably assured. Insurance recoveries are only recorded to the extent the litigation costs to which they relate have been incurred and recognized in the financial statements. Comprehensive Income Comprehensive income includes foreign currency translation adjustments and any related tax benefits that have been excluded from net income and reflected in stockholders’ equity. Net Income Per Share A computation of basic and diluted net income per share is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Net income $ 57,771 $ 49,405 $ 161,389 $ 169,633 Basic net income per share: Weighted-average shares outstanding - basic 55,143 54,997 55,125 54,543 Net income per basic share $ 1.05 $ 0.90 $ 2.93 $ 3.11 Diluted net income per share: Weighted-average shares outstanding - basic 55,143 54,997 55,125 54,543 Diluted share equivalent: stock options, RSUs and PSUs 2,521 3,283 2,526 3,490 Weighted-average shares outstanding - diluted 57,664 58,280 57,651 58,033 Net income per diluted share $ 1.00 $ 0.85 $ 2.80 $ 2.92 Basic net income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Net income per diluted share is computed by dividing the net income by the weighted-average number of shares and potential shares outstanding during the period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options and the vesting of both restricted share units (RSUs) and performance share units (PSUs). For each of the three months ended October 2, 2021 and September 26, 2020, weighted options to purchase 0.1 million shares of common stock were outstanding but 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. For the nine months ended October 2, 2021 and September 26, 2020, weighted options to purchase 0.2 million and 0.3 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net i ncome per share because the effect of including such shares would have been antidilutive in the applicable period. Certain RSUs are considered contingently issuable shares as their vesting is contingent upon the occurrence of certain future events. Since such events had not occurred and were not considered probable of occurring as of each of October 2, 2021 and September 26, 2020, 2.7 million weighted-average shares related to such RSUs have been excluded from the calculation of potential shares for each of the three and nine month periods then ended. Supplemental Cash Flow Information Supplemental cash flow information includes the following (in thousands): Nine Months Ended October 2, September 26, Cash paid during the year for: Interest expense $ 202 $ 194 Income taxes 36,898 35,961 Operating lease liabilities 5,567 4,699 Non-cash operating activities: ROU assets obtained in exchange for lease liabilities $ 4,917 $ 9,900 Non-cash investing activities: Unpaid purchases of property and equipment $ 3,182 $ 3,988 Settlement of promissory note receivable in connection with business combination — 5,100 Unpaid strategic investments 3,400 — Deposit release to acquire noncontrolling interest (1) 3,374 — Non-cash financing activities: Unsettled common stock proceeds from option exercises $ 112 $ 27 Fair value of common stock received for payment of stock option exercise price — 220 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 652,354 $ 669,056 Restricted cash 1,581 3,384 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 653,935 $ 672,440 ______________ (1) See Note 5. Segment Information The Company uses the “management approach” in determining reportable business segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Based on this assessment, management has determined it operates in one reportable business segment, which is comprised of patient monitoring and related products. Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12). The standard simplifies the accounting for income taxes by removing exceptions to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the standard requires that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and specifies that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; however, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. The Company’s adoption of this standard, effective as of January 3, 2021, did not have a material impact on its consolidated financial statements. In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The standard provides updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within GAAP. ASU No. 2020-10 is effective after December 15, 2020 on a retrospective basis. Early adoption is permitted. The Company’s adoption of this standard, effective as of January 3, 2021, did not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) . The new standard provides temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). Entities can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply this standard prospectively through December 31, 2022. The relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. The Company is currently evaluating the expected impact of this standard, but does not expect it to have a material impact on its consolidated financial statements upon adoption. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (ASU 2021-01) . The new standard clarified the scope and application of |
Related Party Disclosures
Related Party Disclosures | 9 Months Ended |
Oct. 02, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure | 3. Related Party Transactions The Company’s Chairman and Chief Executive Officer (CEO) is also the Chairman and CEO of Cercacor Laboratories, Inc. (Cercacor). The Company is a party to the following agreements with Cercacor: • Cross-Licensing Agreement - The Company and Cercacor are parties to a cross-licensing agreement (Cross-Licensing Agreement), which governs each party’s rights to certain intellectual property held by the two companies. The Company is subject to certain annual minimum aggregate royalty obligations for use of the rainbow ® licensed technology. The current annual minimum royalty obligation is $5.0 million. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were $2.9 million and $3.5 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were $9.6 million and $9.7 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. • Administrative Services Agreement - The Company is a party to an administrative services agreement with Cercacor (G&A Services Agreement), which governs certain general and administrative services that the Company provides to Cercacor. Amounts charged by the Company pursuant to the G&A Services Agreement were less than $0.1 million for each of the three months ended October 2, 2021 and September 26, 2020. Amounts charged by the Company pursuant to the G&A Services Agreement were $0.2 million for each of the nine months ended October 2, 2021 and September 26, 2020. • Lease and Sublease Agreements - Effective December 2019, the Company entered into a lease agreement with Cercacor for approximately 34,000 square feet of office, research and development space at one of the Company’s owned facilities in Irvine (Cercacor Lease). The term of the Cercacor Lease expires on December 31, 2024. In March 2016, the Company entered into a sublease agreement with Cercacor for approximately 16,830 square feet of excess office and laboratory space located at 40 Parker, Irvine, California (Cercacor Sublease). The Cercacor Sublease began on May 1, 2016 and expired on December 15, 2019. The Company recognized approximately $0.3 million of lease income for each of the three months ended October 2, 2021 and September 26, 2020. The Company recognized approximately $0.9 million and $0.8 million of lease income for the nine months ended October 2, 2021 and September 26, 2020, respectively. Net amounts due to Cercacor at October 2, 2021 and January 2, 2021 were approximately $3.3 million and $3.6 million , respectively. The Company’s CEO is also the Chairman of the Masimo Foundation for Ethics, Innovation and Competition in Healthcare (Masimo Foundation), a non-profit organization that was founded in 2010 to provide a platform for encouraging ethics, innovation and competition in healthcare. In addition, the Company’s Executive Vice President (EVP), Chief Financial Officer (CFO) serves as the Treasurer of the Masimo Foundation and the Company’s EVP, General Counsel and Corporate Secretary serves as the Secretary for the Masimo Foundation. During the three months ended October 2, 2021 and September 26, 2020, the Company made no cash contributions to the Masimo Foundation. During the nine months ended October 2, 2021, the Company made no contributions to the Masimo Foundation. During the nine months ended September 26, 2020, the Company made cash contributions of approximately $1.5 million to the Masimo Foundation. During the three and nine months ended October 2, 2021 and September 26, 2020, the Company made various in-kind contributions to the Masimo Foundation, mainly in the form of donated administrative services. The Company’s CEO is also a co-founder and a member of the board of directors of Like Minded Media Ventures (LMMV), a team of storytellers that create content focused in the areas of true stories, social causes and science . LMMV creates stories with a multi-platform strategy, bridging the gap between film, television, digital and social media. The Company entered into a marketing service agreement with LMMV for audiovisual production services promoting brand awareness, including television commercials and digital advertising, during the second quarter of 2020. During the three and nine months ended October 2, 2021, the Company incurred no marketing expenses to LMMV under the marketing service agreement. During the three and nine months ended September 26, 2020, the Company incurred $0.2 million and $3.5 million, respectively, in marketing expenses to LMMV under the marketing service agreement. At October 2, 2021 and January 2, 2021, there was no amo unt due to LMMV for services rendered. The Company entered into a software license and professional services agreement with Like Minded Labs (LML), a subsidiary of LMMV, during the second quarter of 2021. Pursuant to the software license agreement, LML granted the Company a perpetual, non-exclusive and fully paid-up right and license to integrate LML’s software into the Company’s products in exchange for a $3.0 million one-time license fee. Pursuant to the professional services agreement, LML will provide professional services to the Company, including the development of custom software intended to support the integration of the licensed software into the Company’s products, as well as future support services upon the Company’s acceptance of deliverables. In July 2021, the Company entered into a patent purchase and option agreement with Vantrix Corporation (Vantrix), an acquiree of LML, for certain patents for $0.5 million, and the right to purchase two pools of additional patents from Vantrix for an exercise fee of up to $1.1 million. The agreements with LML and Vantrix include sublicensing provisions whereby the software and patents are licensed back to LML or Vantrix, respectively, for further advancement of the technologies. The Company maintains an aircraft time share agreement, pursuant to which the Company has agreed from time to time to make its aircraft available to the Company’s CEO for lease on a time-sharing basis. The Company charges the Company’s CEO for personal use based on agreed upon reimbursement rates. For each of the three and nine months ended October 2, 2021 and September 26, 2020, the Company charged the Company’s CEO less than $0.1 million related to such disbursements. |
Inventories
Inventories | 9 Months Ended |
Oct. 02, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories consist of the following (in thousands): October 2, January 2, Raw materials $ 121,593 $ 133,098 Work-in-process 14,383 15,985 Finished goods 66,352 66,869 Total inventories $ 202,328 $ 215,952 |
Other Current Assets
Other Current Assets | 9 Months Ended |
Oct. 02, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | 5. Other Current Assets Other current assets consist of the following (in thousands): October 2, January 2, Prepaid expenses $ 30,351 $ 30,235 Lease receivable, current 26,685 23,206 Prepaid income taxes 15,501 14,782 Indirect taxes receivable 10,715 14,545 Prepaid rebates and royalties, current 3,066 3,081 Restricted cash (1) 1,496 3,397 Customer notes receivable 1,359 2,283 Deposit to acquire noncontrolling interest (2) — 3,374 Other current assets 2,599 7,513 Total other current assets $ 91,772 $ 102,416 ______________ (1) Restricted cash includes funds received from the Bill and Melinda Gates Foundation. As the Company incurs costs associated with research and development related to this project, on a quarterly basis, the Company reclasses amounts from the grant to offset costs incurred. (2) During the year ended January 2, 2021, the Company obtained a controlling interest in a provider of advanced hemodynamic monitoring solutions. The Company made a deposit to acquire the noncontrolling interest of the acquiree. During the first quarter of 2021, the Company acquired the remaining noncontrolling interest. The impact of the noncontrolling interest is immaterial in all periods presented. |
Lease Receivable
Lease Receivable | 9 Months Ended |
Oct. 02, 2021 | |
Leases [Abstract] | |
Lease Receivable | 6. Lease Receivable The Company recognizes revenue and costs, as well as a lease receivable, at the time the lease commences pursuant to deferred equipment agreements containing embedded sales-type leases. Lease revenue related to both operating-type and sales-type leases for the three months ended October 2, 2021 and September 26, 2020 was approximately $12.0 million and $13.0 million, respectively, and is included within product revenue in the accompanying condensed consolidated statements of operations. Lease revenue related to both operating-type and sales-type leases for the nine months ended October 2, 2021 and September 26, 2020 was approximately $40.0 million and $31.0 million, respectively, and is included within product revenue in the accompanying condensed consolidated statements of operations. Costs related to embedded leases within the Company’s deferred equipment agreements are included in cost of goods sold in the accompanying condensed consolidated statements of operations. Lease receivable consists of the following (in thousands): October 2, January 2, Lease receivable $ 93,879 $ 81,074 Allowance for credit loss (239) (202) Lease receivable, net 93,640 80,872 Less: current portion of lease receivable (26,685) (23,206) Lease receivable, noncurrent $ 66,955 $ 57,666 As of October 2, 2021, estimated future maturities of customer sales-type lease receivables for each of the following fiscal years are as follows (in thousands): Fiscal year Amount 2021 (balance of year) $ 6,888 2022 25,995 2023 21,371 2024 17,349 2025 11,535 Thereafter 10,502 Total $ 93,640 Estimated future operating lease payments expected to be received from customers under deferred equipment agreements are not material as of October 2, 2021. |
Deferred Costs and Other Contra
Deferred Costs and Other Contract Assets | 9 Months Ended |
Oct. 02, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred Costs and Other Contract Assets | 7. Deferred Costs and Other Contract Assets Deferred costs and other contract assets consist of the following (in thousands): October 2, January 2, Deferred commissions $ 9,976 $ 7,477 Prepaid contract allowances 6,820 7,336 Unbilled contract receivables 4,317 3,925 Equipment leased to customers, net 1,486 1,338 Deferred costs and other contract assets $ 22,599 $ 20,076 |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Oct. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | 8. Property and Equipment, net Property and equipment, net, consists of the following (in thousands): October 2, January 2, Building and building improvements $ 141,990 $ 122,310 Machinery, equipment and tooling 101,833 90,843 Land 56,938 57,151 Transportation, vehicles and other 33,114 33,175 Computer equipment and software 32,131 24,693 Leasehold improvements 20,885 19,295 Furniture and office equipment 14,186 13,567 Demonstration units 1,049 1,024 Construction-in-progress (CIP) 23,955 44,589 Total property and equipment 426,081 406,647 Accumulated depreciation (151,152) (134,136) Property and equipment, net $ 274,929 $ 272,511 For the three months ended October 2, 2021 and September 26, 2020, depreciation expense of property and equipment was $6.5 million and $5.8 million, respectively. For the nine months ended October 2, 2021 and September 26, 2020, depreciation expense of property and equipment was $18.8 million and $16.0 million, respectively. The balance in CIP at October 2, 2021 related primarily to the capitalized implementation costs related to a new enterprise resource planning software system and costs related to equipment and other facility improvements, the underlying assets for which have not been completed or placed into service. The decrease in CIP balance from January 2, 2021 primarily relates to the Company’s European headquarters building in Switzerland being placed into service along with a phase of the new enterprise resource planning software system for certain subsidiaries being placed into service. The balance in CIP at January 2, 2021 related primarily to acquisition and improvement costs for a portion of the Company’s European headquarters building in Switzerland, capitalized implementation costs related to a new enterprise resource planning software system and costs related to manufacturing equipment and other facility improvements, the underlying assets for which had not been placed into service. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Oct. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 9. Intangible Assets, net Intangible assets, net, consist of the following (in thousands): October 2, January 2, Patents $ 30,528 $ 26,875 Acquired technologies 28,567 29,039 Customer relationships 24,636 24,666 Trademarks 12,080 11,708 Licenses 8,108 5,108 Licenses-related party 7,500 7,500 Other 6,257 5,693 Total intangible assets 117,676 110,589 Accumulated amortization (43,587) (36,666) Intangible assets, net $ 74,089 $ 73,923 Intangible assets have a weighted-average amortization period of twelve years. Total amortization expense for the three months ended October 2, 2021 and September 26, 2020 was $2.7 million and $1.6 million, respectively. Total amortization expense for the nine months ended October 2, 2021 and September 26, 2020 was $7.6 million and $5.2 million, respectively. Total renewal costs for patents and trademarks for the three months ended October 2, 2021 and September 26, 2020 were $0.9 million and $0.6 million, respectively. Total renewal costs for patents and trademarks for the nine months ended October 2, 2021 and September 26, 2020 were $1.3 million and $1.2 million, respectively. As of October 2, 2021, the weighted-average number of years until the next renewal was two years for patents and four years for trademarks. Estimated amortization expense for each of the next fiscal years is as follows (in thousands): Fiscal year Amount 2021 (balance of year) $ 9,211 2022 8,377 2023 7,964 2024 7,352 2025 6,274 Thereafter 34,911 Total $ 74,089 |
Goodwill
Goodwill | 9 Months Ended |
Oct. 02, 2021 | |
Goodwill [Abstract] | |
Goodwill | 10. Goodwill Changes in goodwill were as follows (in thousands): Nine Months Ended Goodwill, beginning of period $ 103,206 Foreign currency translation adjustment (1,964) Goodwill, end of period $ 101,242 |
Lessee ROU Assets and Lease Lia
Lessee ROU Assets and Lease Liabilities | 9 Months Ended |
Oct. 02, 2021 | |
Leases [Abstract] | |
Lessee, ROU Assets and Lease Liabilities | 11. Lessee ROU Assets and Lease Liabilities The Company leases certain facilities in North and South America, Europe, the Middle East and Asia-Pacific regions under operating lease agreements expiring at various dates through January 2032. In addition, the Company leases equipment in the U.S. and Europe, and these leases are classified as operating leases and expire at various dates through August 2026. The majority of these leases are non-cancellable and generally do not contain any material restrictive covenants, material residual value guarantees or other material guarantees. The Company recognizes lease costs under these agreements using a straight-line method based on total lease payments. Certain facility leases contain predetermined price escalations and in some cases renewal options, the longest of which is for five years. The Company generally estimates the applicabl e discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. As of October 2, 2021, the weighted-average discount rate used by the Company for all operating leases was approximately 2.6%. The balance sheet classifications for amounts related to the Company’s operating leases for which it is the lessee are as follows (in thousands): Balance sheet classification October 2, January 2, Lessee ROU assets Other non-current assets $ 31,561 $ 32,324 Lessee current lease liabilities Other current liabilities 6,147 5,975 Lessee non-current lease liabilities Other non-current liabilities 27,471 28,373 Total operating lease liabilities $ 33,618 $ 34,348 As of October 2, 2021 and January 2, 2021, accumulated amortization for lessee ROU assets was $13.0 million and $9.2 million, respectively. The weighted-average remaining lease term for the Company’s operating leases was 6.7 years as of October 2, 2021. As of October 2, 2021, estimated future operating lease payments for each of the following fiscal years were as follows (in thousands): Fiscal year Amount 2021 (balance of year) $ 1,509 2022 7,093 2023 6,649 2024 5,123 2025 3,998 Thereafter (1) 12,317 Total 36,689 Imputed interest (3,071) Present value $ 33,618 ______________ (1) Includes optional renewal period for certain leases. During the three months ended October 2, 2021 and September 26, 2020, operating lease costs were approximately $2.1 million and $1.8 million, respectively. During the nine months ended October 2, 2021 and September 26, 2020, operating lease costs were approximately $6.2 million and $5.2 million, respectively. |
Other Non-Current Assets
Other Non-Current Assets | 9 Months Ended |
Oct. 02, 2021 | |
Other Assets, Longterm [Abstract] | |
Other Non-Current Assets | 12. Other Non-Current Assets Other non-current assets consist of the following (in thousands): October 2, January 2, Lessee ROU assets, net $ 31,561 $ 32,324 Strategic investments 13,928 8,002 Prepaid deposits and other 4,397 4,316 Total other non-current assets $ 49,886 $ 44,642 |
Deferred Revenue and Other Cont
Deferred Revenue and Other Contract Liabilities | 9 Months Ended |
Oct. 02, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue and Other Contract Liabilities | 13. Deferred Revenue and Other Contract Liabilities, Current Deferred revenue and other contract liabilities consist of the following (in thousands): October 2, January 2, Deferred revenue $ 34,392 $ 33,221 Accrued rebates and allowances 11,322 12,127 Accrued customer reimbursements 4,744 3,829 Total deferred revenue and other contract liabilities 50,458 49,177 Less: Non-current portion of deferred revenue (3,817) (4,242) Deferred revenue and other contract liabilities - current $ 46,641 $ 44,935 Deferred revenue relates to contracted amounts that have been invoiced to customers for which remaining performance obligations must be completed before the Company can recognize the revenue. These amounts primarily relate to undelivered equipment, sensors and services under deferred equipment agreements, extended warranty agreements and maintenance agreements. Changes in deferred revenue were as follows (in thousands): Nine Months Ended Deferred revenue, beginning of the period $ 33,221 Revenue deferred during the period 23,425 Recognition of revenue deferred in prior periods (22,254) Deferred revenue, end of the period $ 34,392 Expected revenue from remaining contractual performance obligations (Unrecognized Contract Revenue) includes deferred revenue, as well as other amounts that will be invoiced and recognized as revenue in future periods, when the Company completes its performance obligations. While Unrecognized Contract Revenue is similar in concept to backlog, Unrecognized Contract Revenue excludes revenue allocable to monitoring-related equipment that is effectively leased to customers under deferred equipment agreements and other contractual obligations for which neither party has performed. As of October 2, 2021, the Company had approximately $987.3 million of Unrecognized Contract Revenue related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately $272.7 million of this amount as revenue within the next twelve months and the remaining balance thereafter. |
Other Current Liabilities
Other Current Liabilities | 9 Months Ended |
Oct. 02, 2021 | |
Accrued Liabilities [Abstract] | |
Other Current Liabilities | 14. Other Current Liabilities Other current liabilities consist of the following (in thousands): October 2, January 2, Accrued indirect taxes payable $ 12,081 $ 14,365 Accrued expenses 12,046 6,794 Lessee lease liabilities, current 6,147 5,975 Income tax payable 4,443 5,910 Accrued legal fees 3,947 4,058 Related party payables 3,446 3,655 Accrued warranty 2,944 2,740 Accrued property taxes 1,686 1,682 Accrued donations 1,307 495 Other current liabilities 3,071 4,096 Noncontrolling interest (1) — 3,469 Total other current liabilities $ 51,118 $ 53,239 ______________ (1) During the year ended January 2, 2021, the Company obtained a controlling interest in a provider of advanced hemodynamic monitoring solutions. The noncontrolling interest of the acquiree was recorded within other current liabilities as of January 2, 2021, as the noncontrolling interest shares were mandatorily redeemable. During the first quarter of 2021, the Company acquired the remaining noncontrolling interest. The impact of the noncontrolling interest is immaterial in all periods presented. |
Credit Facility
Credit Facility | 9 Months Ended |
Oct. 02, 2021 | |
Debt Disclosure [Abstract] | |
Credit Facility | 15. Credit Facility The Company currently maintains a credit facility with various lenders that provides for up to $150.0 million of unsecured borrowings, with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity up to $550.0 million in the future with such lenders and additional lenders, as required. The credit facility also provides for a sublimit of up to $25.0 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 credit facility will become due and payable on December 17, 2023. Proceeds from the credit facility are expected to be used for general corporate, capital investment and working capital needs. As of October 2, 2021 and January 2, 2021, the credit facility had no outstanding draws and $2.4 million and $1.7 million of outstanding letters of credit, respectively. The Company was in compliance with all covenants under the credit facility as of October 2, 2021 and January 2, 2021. |
Other Non-Current Liabilities
Other Non-Current Liabilities | 9 Months Ended |
Oct. 02, 2021 | |
Other Liabilities, Long Term [Abstract] | |
Other Non-Current Liabilities | 16. Other Non-Current Liabilities Other non-current liabilities consist of the following (in thousands): October 2, January 2, Lessee non-current lease liabilities $ 27,471 $ 28,373 Income tax payable, non-current 16,980 19,245 Unrecognized tax benefits 15,352 11,777 Deferred tax liabilities 6,063 6,247 Other 4,511 5,434 Total other non-current liabilities $ 70,377 $ 71,076 Unrecognized tax benefits relate to the Company’s long-term portion of tax liability associated with uncertain tax positions. Authoritative guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. See Note 20 to these condensed consolidated financial statements for further details. |
Stock Repurchase Program
Stock Repurchase Program | 9 Months Ended |
Oct. 02, 2021 | |
Equity [Abstract] | |
Stock Repurchase Program | 17. Stock Repurchase Program In October 2021, the Company’s Board of Directors (Board) approved a stock repurchase program, authorizing the Company to purchase up to 3.0 million shares of its common stock over a period of up to three years (2021 Repurchase Program). The Company expects to fund the 2021 Repurchase Program through its available cash, cash expected to be generated from future operations, the credit facility and other potential sources of capital. The 2021 Repurchase Program can be carried out at the discretion of a committee comprised of the CEO and CFO through open market purchases, one or more Rule 10b5-1 trading plans, block trades and privately negotiated transactions. In July 2018, the Company’s Board approved a stock repurchase program, authorizing the Company to purchase up to 5.0 million additional shares of its common stock over a period of up to three years (2018 Repurchase Program). During the third quarter of 2021, the 2018 Repurchase Program expired. The following table provides a summary of the Company’s stock repurchase activities (in thousands, except per share amounts): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Shares repurchased (1) — — 547 4 Average cost per share $ — $ — $ 235.88 $ 164.44 Value of shares repurchased $ — $ — $ 128,917 $ 591 ______________ (1) Excludes shares withheld from the shares of its common stock actually issued in connection with the vesting of PSU or RSU awards to satisfy certain U.S. federal and state tax withholding obligations. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Oct. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | 18. Stock-Based Compensation Total stock-based compensation expense for the three months ended October 2, 2021 and September 26, 2020 was $12.6 million and $11.9 million, respectively. Total stock-based compensation expense for the nine months ended October 2, 2021 and September 26, 2020 was $33.5 million and $36.4 million, respectively. As of October 2, 2021, an aggregate of 10.7 million shares of common stock were reserved for future issuance under the Company’s equity plans, of which 4.4 million shares were available for future grant under the Masimo Corporation 2017 Equity Incentive Plan (2017 Equity Plan). Additional information related to the Company’s current equity incentive plans, stock-based award activity and valuation of stock-based awards is included below. Equity Incentive Plans 2017 Equity Incentive Plan On June 1, 2017, the Company’s stockholders ratified and approved the 2017 Equity Plan. The 2017 Equity Plan permits the grant of stock options, restricted stock, RSUs, stock appreciation rights, PSUs, performance shares, performance bonus awards and other stock or cash awards to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. Upon its effectiveness, an aggregate of 5.0 million shares were available for issuance under the 2017 Equity Plan. In May 2020, the Company’s stockholders approved an increase of 2.5 million shares to the 2017 Equity Plan. The aggregate number of shares that may be awarded under the 2017 Equity Plan is 7.5 million shares. The 2017 Equity Plan provides that at least 95% of the equity awards issued under the 2017 Equity Plan must vest over a period of not less than one year following the date of grant. The exercise price per share of each option granted under the 2017 Equity Plan may not be less than the fair market value of a share of the Company’s common stock on the date of grant, which is generally equal to the closing price of the Company’s common stock on the Nasdaq Global Select Market on the grant date. 2007 Stock Incentive Plan Effective June 1, 2017, upon the approval and ratification of the 2017 Equity Plan, the Company’s 2007 Stock Incentive Plan (2007 Equity Plan) terminated, provided that awards outstanding under the 2007 Equity Plan will continue to be governed by the terms of that plan. In addition, upon the effectiveness of the 2017 Equity Plan, an aggregate of 5.0 million shares of the Company’s common stock registered under prior registration statements for issuance pursuant to the 2007 Equity Plan were deregistered and concurrently registered under the 2017 Equity Plan. Stock-Based Award Activity Stock Options The number and weighted-average exercise price of options issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted-average exercise prices): Nine Months Ended Shares Weighted-Average Options outstanding, beginning of period 3,448 $ 77.44 Granted 85 250.15 Canceled (150) 146.62 Exercised (278) 57.88 Options outstanding, end of period 3,105 $ 80.55 Options exercisable, end of period 2,255 $ 55.57 Total stock option expense for the three months ended October 2, 2021 and September 26, 2020 was $3.2 million and $3.8 million, respectively. Total stock option expense for the nine months ended October 2, 2021 and September 26, 2020 was $9.9 million and $11.9 million, respectively. As of October 2, 2021, the Company had $30.7 million of unrecognized compensation cost related to non-vested stock options that are expected to vest over a weighted-average period of approximately 2.6 years. 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 October 2, 2021 was 5.3 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 October 2, 2021, was 4.4 years. RSUs The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted-average grant date fair value amounts): Nine Months Ended Units Weighted-Average Grant RSUs outstanding, beginning of period 2,862 $ 99.66 Granted 89 248.57 Canceled (17) 199.02 Expired — — Vested (34) 163.57 RSUs outstanding, end of period 2,900 $ 102.88 Total RSU expense for the three months ended October 2, 2021 and September 26, 2020 was $2.4 million and $1.5 million, respectively. Total RSU expense for the nine months ended October 2, 2021 and September 26, 2020 was $6.7 million and $4.0 million, respectively. As of October 2, 2021, the Company had $34.7 million of unrecognized compensation cost related to non-vested RSU awards expected to be recognized and vest over a weighted-average period of approximately 3.6 years. PSUs The number of PSUs outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted-average grant date fair value amounts): Nine Months Ended Units Weighted-Average Grant PSUs outstanding, beginning of period 444 $ 120.28 Granted (1) 148 162.99 Canceled (17) 166.84 Expired — — Vested (273) 86.95 PSUs outstanding, end of period 302 $ 168.68 ______________ (1) On February 22, 2021, the Audit Committee approved the weighted payout percentage for the 2018 PSU awards (three-year performance period), which were based upon the actual fiscal 2020 performance against pre-established performance objectives. Included in the granted amount are those additional PSUs earned based on actual performance achieved. These PSUs were originally awarded at target. During the first quarter of 2021, the Company awarded 68,600 PSUs that will vest three years from the award date, based on the achievement of certain 2024 performance criteria approved by the Board. If earned, the PSUs granted will vest upon achievement of the performance criteria after the year in which the performance achievement level has been determined. The number of shares that may be earned can range from 0% to 200% of the target amount; therefore, the maximum number of shares that can be issued under these awards is twice the original award of 68,600 PSUs, or 137,200 shares. Based on management’s estimate of the number of units expected to vest, total PSU expense for the three months ended October 2, 2021 and September 26, 2020 was $7.0 million and $6.6 million, respectively. Based on management’s estimate of the number of units expected to vest, total PSU expense for the nine months ended October 2, 2021 and September 26, 2020 was $16.9 million and $20.5 million, respectively. As of October 2, 2021, the Company had $41.1 million of unrecognized compensation cost related to non-vested PSU awards expected to be recognized and vest over a weighted-average period of approximately 1.1 years. Valuation of Stock-Based Award Activity The fair value of each RSU and PSU is determined based on the closing price of the Company’s common stock on the grant date. The Black-Scholes option pricing model is used to estimate the fair value of options granted under the Company’s stock-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 Nine Months Ended October 2, 2021 (1) September 26, October 2, September 26, Risk-free interest rate —% 0.2% to 0.3% 0.3% to 0.9% 0.2% to 1.7% Expected term (in years) 0.0 5.1 5.6 5.1 Estimated volatility —% 32.7% to 33.6% 30.9% to 34.7% 26.9% to 35.5% Expected dividends 0% 0% 0% 0% Weighted-average fair value of options granted $— $66.24 $75.72 $50.39 __________________ (1) No stock options were granted during the three months ended October 2, 2021. |
Non-operating income
Non-operating income | 9 Months Ended |
Oct. 02, 2021 | |
Nonoperating Income (Expense) [Abstract] | |
Non-operating income | 19. Non-operating (loss) income Non-operating (loss) income consists of the following (in thousands): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Interest income $ 242 $ 797 $ 677 $ 5,120 Interest expense (87) (84) (259) (250) Realized and unrealized foreign currency (losses) gains (233) 647 (1,153) 1,246 Other — (3) — (8) Total $ (78) $ 1,357 $ (735) $ 6,108 |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 20. Income Taxes The Company has provided for income taxes in fiscal year 2021 interim periods based on the estimated effective income tax rate for the complete fiscal year, as adjusted for discrete tax events, including excess tax benefits or deficiencies related to stock-based compensation, in the period such events occur. The estimated annual effective tax rate is computed based on the expected annual pretax income of the consolidated entities located within each taxing jurisdiction based on legislation enacted as of the balance sheet date. For the three months ended October 2, 2021 and September 26, 2020, the Company recorded discrete tax benefits of approximately $6.4 million and $3.1 million, respectively, related to excess tax benefits realized from stock-based compensation. For the nine months ended October 2, 2021 and September 26, 2020, the Company recorded discrete tax benefits of approximately $12.0 million and $20.2 million, respectively, related to excess tax benefits realized from stock-based compensation. 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 judgment by the Company’s management. The judgment of the Company’s management 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. As of October 2, 2021, the liability for income taxes associated with uncertain tax positions was approximately $21.6 million. If fully recognized, approximately $19.6 million (net of federal benefit on state taxes) would impact the Company’s effective tax rate. 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 2016. All material state, local and foreign income tax matters have been concluded through fiscal year 2012. The Company does not believe that the results of any tax authority examination would have a significant impact on its consolidated financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 02, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 21. Commitments and Contingencies Employee Retirement Savings Plan The Company sponsors a qualified defined contribution plan or 401(k) plan, the Masimo Retirement Savings Plan (MRSP), 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 MRSP on a discretionary basis. The Company contributed $0.9 million and $0.8 million to the MRSP for the three months ended October 2, 2021 and September 26, 2020, respectively, all in the form of matching contributions. The Company contributed $2.8 million and $2.4 million to the MRSP for the nine months ended October 2, 2021 and September 26, 2020, respectively, all in the form of matching contributions. In addition, the Company sponsors various defined contribution plans in certain locations outside of the United States, the contributions to which were not material for any period. Employment and Severance Agreements In July 2017, the Company entered into the First Amendment to the certain Amended and Restated Employment Agreement entered into between the Company and Mr. Kiani on November 4, 2015 (as amended, the Amended Employment Agreement). Pursuant to the terms of the Amended Employment Agreement, upon a “Qualifying Termination” (as defined in the Amended Employment Agreement), Mr. Kiani will be entitled to receive a cash severance benefit equal to two times the sum of his then-current base salary and the average annual bonus paid to Mr. Kiani during the immediately preceding three years, the full amount of the “Award Shares” (as defined in the Amended Employment Agreement) and the full amount of the “Cash Payment” (as defined in the Amended Employment Agreement). In addition, in the event of a “Change in Control” (as defined in the Amended Employment Agreement) prior to a Qualifying Termination, on each of the first and second anniversaries of the Change in Control, 50% of the Cash Payment and 50% of the Award Shares will vest, subject in each case to Mr. Kiani’s continuous employment through each such anniversary date; however, in the event of a Qualifying Termination or a termination of Mr. Kiani’s employment due to death or disability prior to either of such anniversaries, any unvested amount of the Cash Payment and all of the unvested Award Shares shall vest and be paid in full. Additionally, in the event of a Change in Control prior to a Qualifying Termination, Mr. Kiani’s stock options and any other equity awards will vest in accordance with their terms, but in no event later than in two equal installments on each of the one year and two year anniversaries of the Change in Control, subject in each case to Mr. Kiani’s continuous employment through each such anniversary date. As of October 2, 2021, the expense related to the Award Shares and Cash Payment that would be recognized in the Company’s consolidated financial statements upon the occurrence of a Qualifying Termination under the Restated Employment Agreement was approximately $292.9 million. As of October 2, 2021, the Company had severance plan participation agreements wit h five exe cutive 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 $155.9 million of purchase commitments as of October 2, 2021 that 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, other critical inventory and manufacturing supplies, 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 October 2, 2021, the Company had approximately $3.4 million in outstanding unsecured bank guarantees. In certain circumstances, the Company also provides limited indemnification within its various customer contracts whereby the Company indemnifies 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 October 2, 2021, the Company had 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 a portion of its excess cash with major financial institutions. As of October 2, 2021, the Company had $652.4 million of bank balances, of which $5.0 million was covered by either the U.S. Federal Deposit Insurance Corporation limit or foreign countries’ deposit insurance organizations. 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 October 2, 2021 and September 26, 2020, revenue from the sale of the Company’s products to customers that are members of GPOs approximated 55.0% and 48.1% of product revenue, respectively. During the nine months ended October 2, 2021 and September 26, 2020, revenue from the sale of the Company’s products to customers that are members of GPOs approximated 51.8% and 49.6% of product revenue, r espectively. For the three months ended October 2, 2021, the Company had sales through two just-in-time distributors that represented 15.0% and 10.4% of product revenue, respectively. For the three months ended September 26, 2020, the Company had sales through the same two just-in-time distributors that represented 11.0% and 9.3% of product revenue, respectively. For the nine months ended October 2, 2021, the Company had sales through two just-in-time distributors that represented 14.6% and 10.4% of product revenue, respectively. For the nine months ended September 26, 2020, the Company had sales through the same two just-in-time distributors that represented 11.2% and 10.0% of product revenue, respectively. As of October 2, 2021 and January 2, 2021, one customer represented 9.4% and 9.1%, respectively, of the Company’s accounts receivable balance. The receivable balance related to such customer is fully secured by a letter of credit. Litigation During the third quarter of fiscal year 2017, the Company became aware that certain amounts had been paid by a foreign government customer to the Company’s former appointed foreign agent in connection with a foreign government tender, but had not been remitted by such agent to the Company in accordance with the agency agreement. On December 28, 2017, the Company initiated arbitration proceedings against this foreign agent after unsuccessful attempts to recover such remittances. As a result, the Company recorded a net charge of approximately $10.5 million during the fourth quarter of fiscal year 2017 in connection with this dispute, of which $2.0 million was recovered during the year ended December 28, 2019. An arbitration hearing was held on February 11, 2019. On July 8, 2019, the arbitrator awarded the Company $10.5 million in damages, fees and costs. On January 12, 2020, the Company received notice that bankruptcy restructuring proceedings had been initiated for the foreign agent. The Company filed its claim with the bankruptcy trustee on January 16, 2020. In July 2020, the Company was notified that a bankruptcy reorganization proposal had been submitted for voting by creditors in August 2020. The reorganization proposal was rejected by a vote of the creditors on August 26, 2020. On October 22, 2020, the Company filed a petition seeking to enforce the arbitration award. Although the Company intends to vigorously pursue the collection of the arbitration award, there is no guarantee that the Company will be successful in these efforts. 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 (District Court) 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 March 26, 2019, an amended complaint was filed adding Radha Geismann, M.D. PC as an additional named plaintiff. On June 17, 2019, the plaintiffs filed their motion for class certification. On September 10, 2019, the parties filed motions for summary judgment. On September 30, 2019, the Company filed its opposition to the motion for class certification, and the plaintiffs filed their reply on October 7, 2019. On November 21, 2019, the District Court issued an order denying the plaintiffs’ motion for class certification and granting in part and denying in part the Company’s motion for summary judgment, and deferring ruling on the plaintiffs’ motion for summary judgment. On December 5, 2019, the plaintiffs filed a petition for permission to appeal the order denying class certification, which was denied on January 24, 2020. Trial of the individual plaintiffs’ claims was scheduled for June 2, 2020, but on April 1, 2020, the District Court vacated the trial date and directed the parties to conduct an in-person mediation. The mediation has not occurred and no new trial date has been set. On July 13, 2020, the District Court issued an order granting in part and denying in part the plaintiffs’ motion for summary judgment. The Company believes it has good and substantial defenses to the claims, but there is no guarantee that the Company will prevail. The Company is unable to determine whether any loss will ultimately occur or to estimate the range of such loss; therefore, no amount of loss has been accrued by the Company in the accompanying condensed consolidated financial statements. On January 9, 2020, the Company filed a complaint against Apple Inc. (Apple) in the District Court for infringement of a number of patents, for trade secret misappropriation, and for ownership and correction of inventorship of a number of Apple patents listing one of its former employees as an inventor. Apple filed petitions for Inter Partes review of the asserted patents in the U.S. Patent and Trademark Office (PTO). The PTO has instituted Inter Partes review of the asserted patents. On October 13, 2020, the District Court stayed the patent infringement claims pending completion of the Inter Partes review proceedings. On February 5, 2021, the Company filed a fourth amended complaint. On February 26, 2021, Apple filed a partial motion to dismiss the trade secrets claim in the fourth amended complaint. On April 21, 2021, the District Court issued an order granting in part and denying in part the motion to dismiss. On May 5, 2021, Apple filed its answer to the fourth amended complaint. The Company is seeking damages, injunctive relief, and declaratory judgment regarding ownership of the Apple patents. On June 30, 2021, the Company filed a complaint with the U.S. International Trade Commission (ITC) against Apple for infringement of a number of other patents. The Company filed an amended complaint on July 12, 2021. On August 13, 2021, the ITC issued a Notice of Institution of Investigation on the asserted patents. An evidentiary hearing is scheduled for June 6-10, 2022, and the target date for completion of the ITC investigation is January 16, 2023. The Company is seeking an exclusion order and a permanent cease and desist order. Although the Company intends to vigorously pursue all of its legal remedies, there is no guarantee that the Company will be successful in these efforts. 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 Enterpr
Segment Information and Enterprise Reporting | 9 Months Ended |
Oct. 02, 2021 | |
Segment Reporting [Abstract] | |
Segment Information and Enterprise Reporting | 22. Segment Information and Enterprise Reporting The Company operates in one segment based upon the Company’s organizational structure and the way in which the Company’s chief operating decision maker, the CEO, 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. 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 and long-lived assets. 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 Nine Months Ended October 2, September 26, October 2, September 26, Geographic area by destination: United States (U.S.) $ 207,060 67.4 % $ 186,919 67.2 % $ 613,197 67.3 % $ 571,158 67.3 % Europe, Middle East and Africa 56,223 18.3 54,257 19.5 177,053 19.4 176,781 20.8 Asia and Australia 34,878 11.3 27,583 9.9 94,134 10.3 73,155 8.6 North and South America (excluding the U.S.) 9,252 3.0 9,353 3.4 27,190 3.0 27,596 3.3 Product revenue $ 307,413 100.0 % $ 278,112 100.0 % $ 911,574 100.0 % $ 848,690 100.0 % The Company’s consolidated long-lived assets (tangible non-current assets) by geographic area are (in thousands, except percentages): October 2, January 2, Long-lived assets by geographic area: United States $ 239,435 86.6 % $ 238,094 86.9 % International 36,980 13.4 35,755 13.1 Total long-lived assets $ 276,415 100.0 % $ 273,849 100.0 % |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 02, 2021 | |
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 accompanying 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 accompanying condensed consolidated balance sheet as of January 2, 2021 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 2, 2021 (fiscal year 2020), filed with the SEC on February 23, 2021. The results for the three and nine months ended October 2, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending January 1, 2022 (fiscal year 2021) or for any other interim period or for any future year. |
Fiscal Periods | Fiscal Periods The Company follows a conventional 52/53 week fiscal year. Under a conventional 52/53 week fiscal year, a 52 week fiscal year includes four quarters of 13 weeks while a 53 week fiscal year includes three 13 week fiscal quarters and one 14 week fiscal quarter. The Company’s last 53 week fiscal year was fiscal year 2020. Fiscal year 2021 is a 52 week fiscal year ending January 1, 2022. All references to years in these notes to condensed consolidated financial statements are fiscal years unless otherwise noted. |
Reclassifications | Reclassifications Certain amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current period presentation. |
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 standalone selling prices, variable consideration, total consideration allocated to each performance obligation within a contract, inventory valuation, valuation of the Company’s equity awards, valuation of identifiable assets and liabilities connected with business combinations, deferred taxes and any associated valuation allowances, deferred revenue, uncertain income tax positions, and litigation costs and related accruals. Actual results could differ from such estimates. |
Business Combinations | Business Combinations The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired, liabilities assumed and noncontrolling interests in the acquired entity, if applicable, are recorded at their respective fair values at the date of acquisition. The excess of the purchase price over the fair values of identifiable assets, liabilities and noncontrolling interests in the acquired entity, if applicable, is recorded as goodwill. The Company finalizes the purchase price allocation within one year from the acquisition date. |
Fair Value of 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 to apply the fair value option under this guidance to specific assets or liabilities on a contract-by-contract basis. There were no transfers between Level 1, Level 2 and Level 3 inputs during either the nine months ended October 2, 2021 or September 26, 2020. The Company carries cash and cash equivalents, at cost, which approximates fair value. For certain other financial assets and liabilities, including restricted cash, accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily goodwill, intangible assets and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment. |
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. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable consist of trade receivables recorded at the time of invoicing of product sales, 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 an evaluation of the customer’s financial condition. Collateral is generally not required. The Company records an allowance for credit losses that it does not expect to collect based on relevant information, including historical experience, current conditions, and reasonable and supportable forecasts. Accounts are charged off against the allowance when the Company believes they are uncollectible. |
Inventory | Inventory Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard cost method, which approximates the first in, first out method, and includes material, labor and overhead costs. Inventory valuation adjustments are recorded for inventory items that have become excess or obsolete or are no longer used in current production and for inventory items that have a market price less than carrying value in inventory. The Company generally determines inventory valuation adjustments based on an evaluation of the expected future use of its inventory on an item by item basis and applies historical obsolescence rates to estimate the loss on inventory expected to have a recovery value below cost. The Company also records other specific inventory valuation adjustments when it becomes aware of unique events or circumstances that result in an expected recovery value below cost. For inventory items that have been written down, the reduced value becomes the new cost basis. |
Property and Equipment | 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 and building improvements 7 to 39 years Computer equipment and software 2 to 12 years Demonstration units 3 years Furniture and office equipment 2 to 6 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 10 years Transportation, vehicles and other 4 to 20 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. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of patents, trademarks, software development costs, customer relationships and acquired technology. Costs related to patents and trademarks, which include legal and application fees, are capitalized and amortized over the estimated useful lives using the straight-line method. Patent and trademark amortization commences once final approval of the patent or trademark has been obtained. Patent costs are amortized over the lesser of 10 years or the patent’s remaining legal life, which assumes renewals, and trademark costs are amortized over 17 years, and their associated amortization cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. For intangibles purchased in an asset acquisition or business combination, which mainly include patents, trademarks, customer relationships and acquired technologies, the useful life is determined largely by valuation estimates of remaining economic life. The Company’s policy is to renew its patents and trademarks. Costs to renew patents and trademarks are capitalized and amortized over the remaining useful life of the intangible asset. The Company periodically evaluates the amortization period and carrying basis of patents, trademarks and other intangible assets 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, Intangible Assets and Other Long-Lived Assets | Impairment of Goodwill, Intangible Assets and Other Long-Lived 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, 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 a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if the Company elects to bypass the qualitative analysis, then the Company must perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit. 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 flows 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. |
Revenue Recognition, and Deferred Revenue and Other Contract Liabilities | Revenue Recognition, Deferred Revenue and Other Contract Liabilities The Company derives the majority of its product revenue from four primary sources: (i) direct sales under deferred equipment 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 customers; and (iv) sales of integrated circuit boards to OEM customers who incorporate the Company’s embedded software technology into their multiparameter monitoring devices. Subject to customer credit considerations, the majority of such sales are made on open account using industry standard payment terms based on the geography within which the specific customer is located. The Company generally recognizes revenue following a single, principles-based five-step model to be applied to all contracts with customers and generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers that are remitted to government authorities, when control over the promised goods or services are transferred to the customer. Revenue related to equipment supplied under sales-type lease arrangements is recognized once control over the equipment is transferred to the customer, while revenue related to equipment supplied under operating-type lease arrangements is generally recognized on a straight-line basis over the term of the lease. While the majority of the Company’s revenue contracts and transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions. As a result, contract interpretation, judgment and analysis is required to determine the appropriate accounting, including: (i) the amount of the total consideration, as well as variable consideration, (ii) whether the arrangement contains an embedded lease, and if so, whether such embedded lease is a sales-type lease or an operating lease, (iii) the identification of the distinct performance obligations contained within the arrangement, (iv) how the arrangement consideration should be allocated to each performance obligation when multiple performance obligations exist, including the determination of standalone selling price, and (v) when to recognize revenue on the performance obligations. Changes in judgments on these assumptions and estimates could materially impact the timing of revenue recognition. The Company enters into agreements to sell its monitoring solutions and services, sometimes as a part of arrangements with multiple performance obligations that include various combinations of product sales, equipment leases and services. In the case of contracts with multiple performance obligations, the authoritative guidance provides that the total consideration be allocated to each performance obligation on the basis of relative standalone selling prices. When a standalone selling price is not readily observable, the Company estimates the standalone selling price 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 other market conditions. Sales under deferred equipment agreements are generally structured such that the Company agrees to provide certain monitoring-related equipment, software, installation, training and/or warranty support at no up-front charge in exchange for the customer’s commitment to purchase sensors over the term of the agreement, which generally ranges from three years to six years. The Company allocates contract consideration under deferred equipment agreements containing fixed annual sensor purchase commitments to the underlying lease and non-lease components at contract inception. In determining whether any underlying lease components are related to a sales-type lease or an operating lease, the Company evaluates the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by the Company, as well as the Company’s expectations surrounding potential contract/lease extensions or renewals and the customer’s likelihood to exercise any purchase options. Revenue allocable to non-lease performance obligations is generally recognized as such non-lease performance obligations are satisfied. Revenue allocable to lease components under sales-type lease arrangements is generally recognized when control over the equipment is transferred to the customer. Revenue allocable to lease components under operating lease arrangements is generally recognized over the term of the operating lease. The Company generally does not expect to derive any significant value in excess of such asset’s unamortized book value from equipment underlying its operating lease arrangements after the end of the agreement. Revenue from the sale of products to end-user hospitals, emergency medical response organizations, other direct customers, distributors and OEM customers, is recognized by the Company when control of such products transfer to the customer based upon the terms of the contract or underlying purchase order. Revenue related to OEM rainbow ® parameter software licenses is recognized by the Company upon the OEM’s shipment of its product to its customer, as reported to the Company by the OEM. The Company provides certain customers with various sales incentives that may take the form of discounts or rebates. The Company records estimates related to these programs as a reduction to revenue at the time of sale. 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. The Company estimates the revenue constraints related to these forms of variable consideration based on various factors, including expected purchasing volumes, prior sales and returns history, and specific contractual terms and limitations. |
Shipping and Handling Costs and Fees | Shipping and Handling Costs and Fees All shipping and handling costs are expensed as incurred and are recorded as a component of cost of goods sold in the accompanying condensed consolidated statements of operations. Charges for shipping and handling billed to customers are included as a component of product revenue. |
Taxes Collected From Customers And Remitted To Governmental Authorities | Taxes Collected From Customers and Remitted to Governmental Authorities The Company’s policy is to present revenue net of taxes collected from customers and remitted to governmental authorities. |
Deferred Costs and Other Contract Assets | Deferred Costs and Other Contract Assets The costs of monitoring-related equipment provided to customers under operating lease arrangements within the Company’s deferred equipment agreements are generally deferred and amortized to cost of goods sold over the life of the underlying contracts. Some of the Company’s deferred equipment agreements also contain provisions for certain allowances to be made directly to the end-user hospital customer at the inception of the arrangement. These allowances are generally allocated to the lease and non-lease components and recognized as a reduction to revenue as the underlying performance obligations are satisfied. The Company generally invoices its customers under deferred equipment agreements as sensors are provided to the customer. However, the Company may recognize revenue for certain non-lease performance obligations under deferred equipment agreements with fixed annual commitments at the time such performance obligations are satisfied and prior to the customer being invoiced. When this occurs, the Company records an unbilled contract receivable related to such revenue until the customer has been invoiced pursuant to the terms of the underlying deferred equipment agreement. The incremental costs of obtaining a contract with a customer are capitalized and deferred if the Company expects such costs to be recoverable over the life of the contract and the contract term is greater than one year. Such deferred costs generally relate to certain incentive sales commissions earned by the Company’s internal sales team in connection with the execution of deferred equipment agreements and are amortized to expense over the expected term of the underlying contract. |
Product Warranty | Product Warranty The Company generally provides a warranty against defects in material and workmanship for a period ranging from six months to forty-eight months, depending on the product type. In traditional sales activities, including direct and OEM sales, the Company establishes an accrued liability for the estimated warranty costs at the time of revenue recognition, with a corresponding provision to cost of goods sold. Customers may also purchase extended warranty coverage or service level upgrades separately or as part of a deferred equipment agreement. Revenue related to extended warranty coverage and service level upgrades is generally recognized over the life of the contract, which reasonably approximates the period over which such services will be provided. The related extended warranty and service level upgrade costs are expensed as incurred. Changes in the product warranty accrual were as follows (in thousands): Nine Months Ended October 2, September 26, Warranty accrual, beginning of period $ 2,740 $ 3,395 Accrual for warranties issued 3,442 428 Changes in pre-existing warranties (including changes in estimates) (2,347) (97) Settlements made (891) (883) Warranty accrual, end of period $ 2,944 $ 2,843 |
Litigation Costs and Contingencies | Litigation Costs and Contingencies The Company records a charge equal to at least the minimum estimated liability for a loss contingency or litigation settlement when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements, and (ii) the range of loss can be reasonably estimated. The determination of whether a loss contingency or litigation settlement is probable or reasonably possible involves a significant amount of management judgment, as does the estimation of the range of loss given the nature of contingencies. Liabilities related to litigation settlements with multiple elements are recorded based on the fair value of each element. Legal and other litigation related expenses are recognized as the services are provided. The Company records insurance and other indemnity recoveries for litigation expenses when both of the following conditions are met: (a) the recovery is probable, and (b) collectability is reasonably assured. Insurance recoveries are only recorded to the extent the litigation costs to which they relate have been incurred and recognized in the financial statements. |
Comprehensive Income | Comprehensive Income Comprehensive income includes foreign currency translation adjustments and any related tax benefits that have been excluded from net income and reflected in stockholders’ equity. |
Net Income Per Share | Net Income Per Share A computation of basic and diluted net income per share is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Net income $ 57,771 $ 49,405 $ 161,389 $ 169,633 Basic net income per share: Weighted-average shares outstanding - basic 55,143 54,997 55,125 54,543 Net income per basic share $ 1.05 $ 0.90 $ 2.93 $ 3.11 Diluted net income per share: Weighted-average shares outstanding - basic 55,143 54,997 55,125 54,543 Diluted share equivalent: stock options, RSUs and PSUs 2,521 3,283 2,526 3,490 Weighted-average shares outstanding - diluted 57,664 58,280 57,651 58,033 Net income per diluted share $ 1.00 $ 0.85 $ 2.80 $ 2.92 Basic net income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Net income per diluted share is computed by dividing the net income by the weighted-average number of shares and potential shares outstanding during the period, if the effect of potential shares is dilutive. Potential shares include incremental shares of stock issuable upon the exercise of stock options and the vesting of both restricted share units (RSUs) and performance share units (PSUs). For each of the three months ended October 2, 2021 and September 26, 2020, weighted options to purchase 0.1 million shares of common stock were outstanding but 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. For the nine months ended October 2, 2021 and September 26, 2020, weighted options to purchase 0.2 million and 0.3 million shares of common stock, respectively, were outstanding but not included in the computation of diluted net i ncome per share because the effect of including such shares would have been antidilutive in the applicable period. Certain RSUs are considered contingently issuable shares as their vesting is contingent upon the occurrence of certain future events. Since such events had not occurred and were not considered probable of occurring as of each of October 2, 2021 and September 26, 2020, 2.7 million weighted-average shares related to such RSUs have been excluded from the calculation of potential shares for each of the three and nine month periods then ended. |
Segment Information | Segment Information The Company uses the “management approach” in determining reportable business segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Based on this assessment, management has determined it operates in one reportable business segment, which is comprised of patient monitoring and related products. |
Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12). The standard simplifies the accounting for income taxes by removing exceptions to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the standard requires that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and specifies that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; however, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. The Company’s adoption of this standard, effective as of January 3, 2021, did not have a material impact on its consolidated financial statements. In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The standard provides updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within GAAP. ASU No. 2020-10 is effective after December 15, 2020 on a retrospective basis. Early adoption is permitted. The Company’s adoption of this standard, effective as of January 3, 2021, did not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) . The new standard provides temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). Entities can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply this standard prospectively through December 31, 2022. The relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. The Company is currently evaluating the expected impact of this standard, but does not expect it to have a material impact on its consolidated financial statements upon adoption. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (ASU 2021-01) . The new standard clarified the scope and application of the original guidance. ASU No. 2021-01 is effective as of March 12, 2020 through December 31, 2022 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company is currently evaluating the expected impact of this standard, but does not expect it to have a material impact on its consolidated financial statements upon adoption. In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (ASU 2021-04) . The new standard addresses modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another topic. ASU No. 2021-04 is effective after December 15, 2021 on a prospective basis, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period and should be applied as of the beginning of the fiscal year that includes the interim period. The Company is currently evaluating the expected impact of this standard, but does not expect it to have a material impact on its consolidated financial statements upon adoption. In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842), Lessors - Certain Leases with Variable Lease Payments (ASU 2021-05) . This new standard amends the original ASU No. 2016-02 lease standard by requiring lessors to classify leases as operating leases if they have variable lease payments that do not depend on an index or rate and would have selling losses at lease commencement if they were classified as sales-type. ASU 2021-05 is effective for annual reporting periods beginning after December 15, 2021, and for interim periods within those years, and may be adopted either prospectively or on a retrospective basis for leases that commenced or were modified after the date of initial adoption of ASC 842. Early adoption is permitt ed. The Company is currently evaluating the expected impact of this standard on its consolidated financial statements upon adoption, but anticipates that, among other things, the classification of certain leases for which the Company is the lessor will change from sales-type leases to operating leases under this new standard, resulting in the initial deferral and subsequent expensing of equipment costs over time under certain leases that are currently recognized immediately upon lease commencement. Similarly, any revenue that is currently recognized for these leases on the date of lease commencement will now be recognized over the term of the operating lease upon adoption of this new standard. The Company currently expects to complete its assessment of the full financial impact of this new standard during the next three to six months. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [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 and building improvements 7 to 39 years Computer equipment and software 2 to 12 years Demonstration units 3 years Furniture and office equipment 2 to 6 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 10 years Transportation, vehicles and other 4 to 20 years Property and equipment, net, consists of the following (in thousands): October 2, January 2, Building and building improvements $ 141,990 $ 122,310 Machinery, equipment and tooling 101,833 90,843 Land 56,938 57,151 Transportation, vehicles and other 33,114 33,175 Computer equipment and software 32,131 24,693 Leasehold improvements 20,885 19,295 Furniture and office equipment 14,186 13,567 Demonstration units 1,049 1,024 Construction-in-progress (CIP) 23,955 44,589 Total property and equipment 426,081 406,647 Accumulated depreciation (151,152) (134,136) Property and equipment, net $ 274,929 $ 272,511 |
Changes in Product Warranty Accrual | Changes in the product warranty accrual were as follows (in thousands): Nine Months Ended October 2, September 26, Warranty accrual, beginning of period $ 2,740 $ 3,395 Accrual for warranties issued 3,442 428 Changes in pre-existing warranties (including changes in estimates) (2,347) (97) Settlements made (891) (883) Warranty accrual, end of period $ 2,944 $ 2,843 |
Reconciliation of Basic and Diluted Net Income Per Share | A computation of basic and diluted net income per share is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Net income $ 57,771 $ 49,405 $ 161,389 $ 169,633 Basic net income per share: Weighted-average shares outstanding - basic 55,143 54,997 55,125 54,543 Net income per basic share $ 1.05 $ 0.90 $ 2.93 $ 3.11 Diluted net income per share: Weighted-average shares outstanding - basic 55,143 54,997 55,125 54,543 Diluted share equivalent: stock options, RSUs and PSUs 2,521 3,283 2,526 3,490 Weighted-average shares outstanding - diluted 57,664 58,280 57,651 58,033 Net income per diluted share $ 1.00 $ 0.85 $ 2.80 $ 2.92 |
Supplemental Cash Flow Information | Supplemental cash flow information includes the following (in thousands): Nine Months Ended October 2, September 26, Cash paid during the year for: Interest expense $ 202 $ 194 Income taxes 36,898 35,961 Operating lease liabilities 5,567 4,699 Non-cash operating activities: ROU assets obtained in exchange for lease liabilities $ 4,917 $ 9,900 Non-cash investing activities: Unpaid purchases of property and equipment $ 3,182 $ 3,988 Settlement of promissory note receivable in connection with business combination — 5,100 Unpaid strategic investments 3,400 — Deposit release to acquire noncontrolling interest (1) 3,374 — Non-cash financing activities: Unsettled common stock proceeds from option exercises $ 112 $ 27 Fair value of common stock received for payment of stock option exercise price — 220 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 652,354 $ 669,056 Restricted cash 1,581 3,384 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 653,935 $ 672,440 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | Inventories consist of the following (in thousands): October 2, January 2, Raw materials $ 121,593 $ 133,098 Work-in-process 14,383 15,985 Finished goods 66,352 66,869 Total inventories $ 202,328 $ 215,952 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Non-Current Assets | Other current assets consist of the following (in thousands): October 2, January 2, Prepaid expenses $ 30,351 $ 30,235 Lease receivable, current 26,685 23,206 Prepaid income taxes 15,501 14,782 Indirect taxes receivable 10,715 14,545 Prepaid rebates and royalties, current 3,066 3,081 Restricted cash (1) 1,496 3,397 Customer notes receivable 1,359 2,283 Deposit to acquire noncontrolling interest (2) — 3,374 Other current assets 2,599 7,513 Total other current assets $ 91,772 $ 102,416 ______________ (1) Restricted cash includes funds received from the Bill and Melinda Gates Foundation. As the Company incurs costs associated with research and development related to this project, on a quarterly basis, the Company reclasses amounts from the grant to offset costs incurred. (2) During the year ended January 2, 2021, the Company obtained a controlling interest in a provider of advanced hemodynamic monitoring solutions. The Company made a deposit to acquire the noncontrolling interest of the acquiree. During the first quarter of 2021, the Company acquired the remaining noncontrolling interest. The impact of the noncontrolling interest is immaterial in all periods presented. Other non-current assets consist of the following (in thousands): October 2, January 2, Lessee ROU assets, net $ 31,561 $ 32,324 Strategic investments 13,928 8,002 Prepaid deposits and other 4,397 4,316 Total other non-current assets $ 49,886 $ 44,642 |
Lease Receivable (Tables)
Lease Receivable (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Leases [Abstract] | |
Sale-Type Lease Receivable | Lease receivable consists of the following (in thousands): October 2, January 2, Lease receivable $ 93,879 $ 81,074 Allowance for credit loss (239) (202) Lease receivable, net 93,640 80,872 Less: current portion of lease receivable (26,685) (23,206) Lease receivable, noncurrent $ 66,955 $ 57,666 |
Sales-type Lease, Lease Receivable, Maturity | As of October 2, 2021, estimated future maturities of customer sales-type lease receivables for each of the following fiscal years are as follows (in thousands): Fiscal year Amount 2021 (balance of year) $ 6,888 2022 25,995 2023 21,371 2024 17,349 2025 11,535 Thereafter 10,502 Total $ 93,640 |
Deferred Costs and Other Cont_2
Deferred Costs and Other Contract Assets (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Costs and Other Contract Assets | Deferred costs and other contract assets consist of the following (in thousands): October 2, January 2, Deferred commissions $ 9,976 $ 7,477 Prepaid contract allowances 6,820 7,336 Unbilled contract receivables 4,317 3,925 Equipment leased to customers, net 1,486 1,338 Deferred costs and other contract assets $ 22,599 $ 20,076 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of 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 and building improvements 7 to 39 years Computer equipment and software 2 to 12 years Demonstration units 3 years Furniture and office equipment 2 to 6 years Leasehold improvements Lesser of useful life or term of lease Machinery, equipment and tooling 3 to 10 years Transportation, vehicles and other 4 to 20 years Property and equipment, net, consists of the following (in thousands): October 2, January 2, Building and building improvements $ 141,990 $ 122,310 Machinery, equipment and tooling 101,833 90,843 Land 56,938 57,151 Transportation, vehicles and other 33,114 33,175 Computer equipment and software 32,131 24,693 Leasehold improvements 20,885 19,295 Furniture and office equipment 14,186 13,567 Demonstration units 1,049 1,024 Construction-in-progress (CIP) 23,955 44,589 Total property and equipment 426,081 406,647 Accumulated depreciation (151,152) (134,136) Property and equipment, net $ 274,929 $ 272,511 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets, net, consist of the following (in thousands): October 2, January 2, Patents $ 30,528 $ 26,875 Acquired technologies 28,567 29,039 Customer relationships 24,636 24,666 Trademarks 12,080 11,708 Licenses 8,108 5,108 Licenses-related party 7,500 7,500 Other 6,257 5,693 Total intangible assets 117,676 110,589 Accumulated amortization (43,587) (36,666) Intangible assets, net $ 74,089 $ 73,923 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for each of the next fiscal years is as follows (in thousands): Fiscal year Amount 2021 (balance of year) $ 9,211 2022 8,377 2023 7,964 2024 7,352 2025 6,274 Thereafter 34,911 Total $ 74,089 |
Goodwill (Table)
Goodwill (Table) | 9 Months Ended |
Oct. 02, 2021 | |
Goodwill [Abstract] | |
Schedule of Goodwill | Changes in goodwill were as follows (in thousands): Nine Months Ended Goodwill, beginning of period $ 103,206 Foreign currency translation adjustment (1,964) Goodwill, end of period $ 101,242 |
Lessee ROU Assets and Lease L_2
Lessee ROU Assets and Lease Liabilities (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Leases [Abstract] | |
Lessee Operating Lease Balance Sheet Classification | The balance sheet classifications for amounts related to the Company’s operating leases for which it is the lessee are as follows (in thousands): Balance sheet classification October 2, January 2, Lessee ROU assets Other non-current assets $ 31,561 $ 32,324 Lessee current lease liabilities Other current liabilities 6,147 5,975 Lessee non-current lease liabilities Other non-current liabilities 27,471 28,373 Total operating lease liabilities $ 33,618 $ 34,348 |
Lessee, Operating Lease, Liability, Maturity | As of October 2, 2021, estimated future operating lease payments for each of the following fiscal years were as follows (in thousands): Fiscal year Amount 2021 (balance of year) $ 1,509 2022 7,093 2023 6,649 2024 5,123 2025 3,998 Thereafter (1) 12,317 Total 36,689 Imputed interest (3,071) Present value $ 33,618 ______________ (1) Includes optional renewal period for certain leases. |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Other Assets, Longterm [Abstract] | |
Schedule of Other Non-Current Assets | Other current assets consist of the following (in thousands): October 2, January 2, Prepaid expenses $ 30,351 $ 30,235 Lease receivable, current 26,685 23,206 Prepaid income taxes 15,501 14,782 Indirect taxes receivable 10,715 14,545 Prepaid rebates and royalties, current 3,066 3,081 Restricted cash (1) 1,496 3,397 Customer notes receivable 1,359 2,283 Deposit to acquire noncontrolling interest (2) — 3,374 Other current assets 2,599 7,513 Total other current assets $ 91,772 $ 102,416 ______________ (1) Restricted cash includes funds received from the Bill and Melinda Gates Foundation. As the Company incurs costs associated with research and development related to this project, on a quarterly basis, the Company reclasses amounts from the grant to offset costs incurred. (2) During the year ended January 2, 2021, the Company obtained a controlling interest in a provider of advanced hemodynamic monitoring solutions. The Company made a deposit to acquire the noncontrolling interest of the acquiree. During the first quarter of 2021, the Company acquired the remaining noncontrolling interest. The impact of the noncontrolling interest is immaterial in all periods presented. Other non-current assets consist of the following (in thousands): October 2, January 2, Lessee ROU assets, net $ 31,561 $ 32,324 Strategic investments 13,928 8,002 Prepaid deposits and other 4,397 4,316 Total other non-current assets $ 49,886 $ 44,642 |
Deferred Revenue and Other Co_2
Deferred Revenue and Other Contract Liabilities (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Contract with Customer, Asset and Liability | Deferred revenue and other contract liabilities consist of the following (in thousands): October 2, January 2, Deferred revenue $ 34,392 $ 33,221 Accrued rebates and allowances 11,322 12,127 Accrued customer reimbursements 4,744 3,829 Total deferred revenue and other contract liabilities 50,458 49,177 Less: Non-current portion of deferred revenue (3,817) (4,242) Deferred revenue and other contract liabilities - current $ 46,641 $ 44,935 Changes in deferred revenue were as follows (in thousands): Nine Months Ended Deferred revenue, beginning of the period $ 33,221 Revenue deferred during the period 23,425 Recognition of revenue deferred in prior periods (22,254) Deferred revenue, end of the period $ 34,392 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Accrued Liabilities [Abstract] | |
Schedule Other Current Liabilities | Other current liabilities consist of the following (in thousands): October 2, January 2, Accrued indirect taxes payable $ 12,081 $ 14,365 Accrued expenses 12,046 6,794 Lessee lease liabilities, current 6,147 5,975 Income tax payable 4,443 5,910 Accrued legal fees 3,947 4,058 Related party payables 3,446 3,655 Accrued warranty 2,944 2,740 Accrued property taxes 1,686 1,682 Accrued donations 1,307 495 Other current liabilities 3,071 4,096 Noncontrolling interest (1) — 3,469 Total other current liabilities $ 51,118 $ 53,239 ______________ (1) During the year ended January 2, 2021, the Company obtained a controlling interest in a provider of advanced hemodynamic monitoring solutions. The noncontrolling interest of the acquiree was recorded within other current liabilities as of January 2, 2021, as the noncontrolling interest shares were mandatorily redeemable. During the first quarter of 2021, the Company acquired the remaining noncontrolling interest. The impact of the noncontrolling interest is immaterial in all periods presented. |
Other Non-Current Liabilities (
Other Non-Current Liabilities (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Other Liabilities, Long Term [Abstract] | |
Schedule of Components Of Other Liabilities Long Term Table | Other non-current liabilities consist of the following (in thousands): October 2, January 2, Lessee non-current lease liabilities $ 27,471 $ 28,373 Income tax payable, non-current 16,980 19,245 Unrecognized tax benefits 15,352 11,777 Deferred tax liabilities 6,063 6,247 Other 4,511 5,434 Total other non-current liabilities $ 70,377 $ 71,076 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Number and Weighted Average Exercise Price of Options Issued and Outstanding under all Stock Option Plans | The number and weighted-average exercise price of options issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted-average exercise prices): Nine Months Ended Shares Weighted-Average Options outstanding, beginning of period 3,448 $ 77.44 Granted 85 250.15 Canceled (150) 146.62 Exercised (278) 57.88 Options outstanding, end of period 3,105 $ 80.55 Options exercisable, end of period 2,255 $ 55.57 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The number of RSUs issued and outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted-average grant date fair value amounts): Nine Months Ended Units Weighted-Average Grant RSUs outstanding, beginning of period 2,862 $ 99.66 Granted 89 248.57 Canceled (17) 199.02 Expired — — Vested (34) 163.57 RSUs outstanding, end of period 2,900 $ 102.88 |
Schedule of Nonvested Performance-based Units Activity | The number of PSUs outstanding under all of the Company’s equity plans are as follows (in thousands, except for weighted-average grant date fair value amounts): Nine Months Ended Units Weighted-Average Grant PSUs outstanding, beginning of period 444 $ 120.28 Granted (1) 148 162.99 Canceled (17) 166.84 Expired — — Vested (273) 86.95 PSUs outstanding, end of period 302 $ 168.68 ______________ (1) On February 22, 2021, the Audit Committee approved the weighted payout percentage for the 2018 PSU awards (three-year performance period), which were based upon the actual fiscal 2020 performance against pre-established performance objectives. Included in the granted amount are those additional PSUs earned based on actual performance achieved. These PSUs were originally awarded at target. |
Schedule of 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 Nine Months Ended October 2, 2021 (1) September 26, October 2, September 26, Risk-free interest rate —% 0.2% to 0.3% 0.3% to 0.9% 0.2% to 1.7% Expected term (in years) 0.0 5.1 5.6 5.1 Estimated volatility —% 32.7% to 33.6% 30.9% to 34.7% 26.9% to 35.5% Expected dividends 0% 0% 0% 0% Weighted-average fair value of options granted $— $66.24 $75.72 $50.39 __________________ (1) No stock options were granted during the three months ended October 2, 2021. |
Non-operating income (Tables)
Non-operating income (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Nonoperating Income (Expense) [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | Non-operating (loss) income consists of the following (in thousands): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Interest income $ 242 $ 797 $ 677 $ 5,120 Interest expense (87) (84) (259) (250) Realized and unrealized foreign currency (losses) gains (233) 647 (1,153) 1,246 Other — (3) — (8) Total $ (78) $ 1,357 $ (735) $ 6,108 |
Segment Information and Enter_2
Segment Information and Enterprise Reporting (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | 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 Nine Months Ended October 2, September 26, October 2, September 26, Geographic area by destination: United States (U.S.) $ 207,060 67.4 % $ 186,919 67.2 % $ 613,197 67.3 % $ 571,158 67.3 % Europe, Middle East and Africa 56,223 18.3 54,257 19.5 177,053 19.4 176,781 20.8 Asia and Australia 34,878 11.3 27,583 9.9 94,134 10.3 73,155 8.6 North and South America (excluding the U.S.) 9,252 3.0 9,353 3.4 27,190 3.0 27,596 3.3 Product revenue $ 307,413 100.0 % $ 278,112 100.0 % $ 911,574 100.0 % $ 848,690 100.0 % |
Schedule of Long-lived Assets by Geographic Areas | The Company’s consolidated long-lived assets (tangible non-current assets) by geographic area are (in thousands, except percentages): October 2, January 2, Long-lived assets by geographic area: United States $ 239,435 86.6 % $ 238,094 86.9 % International 36,980 13.4 35,755 13.1 Total long-lived assets $ 276,415 100.0 % $ 273,849 100.0 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenue, Performance Obligation (Details) | Oct. 02, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Summary Of Significant Accounting Policies [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-03 | Minimum | |
Summary Of Significant Accounting Policies [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01 | |
Summary Of Significant Accounting Policies [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-03 | Maximum | |
Summary Of Significant Accounting Policies [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 6 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Changes in Product Warranty Accrual (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Warranty accrual, beginning of period | $ 2,740 | $ 3,395 |
Accrual for warranties issued | 3,442 | 428 |
Changes in pre-existing warranties (including changes in estimates) | (2,347) | (97) |
Settlements made | (891) | (883) |
Warranty accrual, end of period | $ 2,944 | $ 2,843 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Net income attributable to stockholders of Masimo Corporation: | ||||||||
Net income | $ 57,771 | $ 50,235 | $ 53,383 | $ 49,405 | $ 55,772 | $ 64,456 | $ 161,389 | $ 169,633 |
Basic net income per share: | ||||||||
Weighted-average shares outstanding - basic | 55,143 | 54,997 | 55,125 | 54,543 | ||||
Net income per basic share | $ 1.05 | $ 0.90 | $ 2.93 | $ 3.11 | ||||
Diluted net income per share: | ||||||||
Weighted-average shares outstanding - basic | 55,143 | 54,997 | 55,125 | 54,543 | ||||
Diluted share equivalent: stock options, RSUs and PSUs | 2,521 | 3,283 | 2,526 | 3,490 | ||||
Weighted-average shares outstanding - diluted | 57,664 | 58,280 | 57,651 | 58,033 | ||||
Net income per diluted share | $ 1 | $ 0.85 | $ 2.80 | $ 2.92 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Detail) - USD ($) | 9 Months Ended | |||
Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | Dec. 28, 2019 | |
Accounting Policies [Abstract] | ||||
Interest expense | $ 202,000 | $ 194,000 | ||
Income taxes | 36,898,000 | 35,961,000 | ||
Operating lease liabilities | 5,567,000 | 4,699,000 | ||
ROU assets obtained in exchange for lease liabilities | 4,917,000 | 9,900,000 | ||
Unpaid purchases of property and equipment | 3,182,000 | 3,988,000 | ||
Settlement of promissory note receivable in connection with business combination | $ 0 | 5,100,000 | ||
Transfer to Investments | 3,400 | |||
Deposit release to acquire noncontrolling interest(1) | $ 3,374,000 | 0 | ||
Unsettled common stock proceeds from option exercises | 112,000 | 27,000 | ||
Fair value of common stock received for payment of stock option exercise price | 0 | 220,000 | ||
Cash and cash equivalents | 652,354,000 | 669,056,000 | $ 641,447,000 | |
Restricted cash | 1,581,000 | 3,384,000 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 653,935,000 | $ 672,440,000 | $ 645,004,000 | $ 568,075,000 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Additional Information (Detail) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021shares | Sep. 26, 2020shares | Oct. 02, 2021segmentshares | Sep. 26, 2020shares | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of Sources of Product Revenue | segment | 4 | |||
Options to purchase of shares of common stock | 100 | 100 | 200 | 300 |
Patents | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||
Trademarks | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 17 years | |||
Demonstration units | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 3 years | |||
Restricted Stock Units (RSUs) | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 89 | |||
Restricted Stock Units (RSUs) | Chief Executive Officer | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 2,700 | 2,700 | ||
Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Warranty period for defects in material and workmanship | 6 months | |||
Minimum | Building and building improvements | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 7 years | |||
Minimum | Computer equipment and software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 2 years | |||
Minimum | Furniture and office equipment | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 2 years | |||
Minimum | Machinery, equipment and tooling | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 3 years | |||
Minimum | Transportation, vehicles and other | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 4 years | |||
Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Warranty period for defects in material and workmanship | 48 months | |||
Maximum | Building and building improvements | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 39 years | |||
Maximum | Computer equipment and software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 12 years | |||
Maximum | Furniture and office equipment | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 6 years | |||
Maximum | Machinery, equipment and tooling | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 10 years | |||
Maximum | Transportation, vehicles and other | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 20 years |
Related Party Transactions Rela
Related Party Transactions Related Party Transactions - (Details) | Jul. 08, 2021USD ($) | Oct. 02, 2021USD ($) | Sep. 26, 2020USD ($) | Oct. 02, 2021USD ($)ft² | Sep. 26, 2020USD ($) | Jan. 02, 2021USD ($) |
Related Party Transaction [Line Items] | ||||||
Related Party Transactions Disclosure | 3. Related Party Transactions The Company’s Chairman and Chief Executive Officer (CEO) is also the Chairman and CEO of Cercacor Laboratories, Inc. (Cercacor). The Company is a party to the following agreements with Cercacor: • Cross-Licensing Agreement - The Company and Cercacor are parties to a cross-licensing agreement (Cross-Licensing Agreement), which governs each party’s rights to certain intellectual property held by the two companies. The Company is subject to certain annual minimum aggregate royalty obligations for use of the rainbow ® licensed technology. The current annual minimum royalty obligation is $5.0 million. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were $2.9 million and $3.5 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Aggregate liabilities payable to Cercacor arising under the Cross-Licensing Agreement were $9.6 million and $9.7 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. • Administrative Services Agreement - The Company is a party to an administrative services agreement with Cercacor (G&A Services Agreement), which governs certain general and administrative services that the Company provides to Cercacor. Amounts charged by the Company pursuant to the G&A Services Agreement were less than $0.1 million for each of the three months ended October 2, 2021 and September 26, 2020. Amounts charged by the Company pursuant to the G&A Services Agreement were $0.2 million for each of the nine months ended October 2, 2021 and September 26, 2020. • Lease and Sublease Agreements - Effective December 2019, the Company entered into a lease agreement with Cercacor for approximately 34,000 square feet of office, research and development space at one of the Company’s owned facilities in Irvine (Cercacor Lease). The term of the Cercacor Lease expires on December 31, 2024. In March 2016, the Company entered into a sublease agreement with Cercacor for approximately 16,830 square feet of excess office and laboratory space located at 40 Parker, Irvine, California (Cercacor Sublease). The Cercacor Sublease began on May 1, 2016 and expired on December 15, 2019. The Company recognized approximately $0.3 million of lease income for each of the three months ended October 2, 2021 and September 26, 2020. The Company recognized approximately $0.9 million and $0.8 million of lease income for the nine months ended October 2, 2021 and September 26, 2020, respectively. Net amounts due to Cercacor at October 2, 2021 and January 2, 2021 were approximately $3.3 million and $3.6 million , respectively. The Company’s CEO is also the Chairman of the Masimo Foundation for Ethics, Innovation and Competition in Healthcare (Masimo Foundation), a non-profit organization that was founded in 2010 to provide a platform for encouraging ethics, innovation and competition in healthcare. In addition, the Company’s Executive Vice President (EVP), Chief Financial Officer (CFO) serves as the Treasurer of the Masimo Foundation and the Company’s EVP, General Counsel and Corporate Secretary serves as the Secretary for the Masimo Foundation. During the three months ended October 2, 2021 and September 26, 2020, the Company made no cash contributions to the Masimo Foundation. During the nine months ended October 2, 2021, the Company made no contributions to the Masimo Foundation. During the nine months ended September 26, 2020, the Company made cash contributions of approximately $1.5 million to the Masimo Foundation. During the three and nine months ended October 2, 2021 and September 26, 2020, the Company made various in-kind contributions to the Masimo Foundation, mainly in the form of donated administrative services. The Company’s CEO is also a co-founder and a member of the board of directors of Like Minded Media Ventures (LMMV), a team of storytellers that create content focused in the areas of true stories, social causes and science . LMMV creates stories with a multi-platform strategy, bridging the gap between film, television, digital and social media. The Company entered into a marketing service agreement with LMMV for audiovisual production services promoting brand awareness, including television commercials and digital advertising, during the second quarter of 2020. During the three and nine months ended October 2, 2021, the Company incurred no marketing expenses to LMMV under the marketing service agreement. During the three and nine months ended September 26, 2020, the Company incurred $0.2 million and $3.5 million, respectively, in marketing expenses to LMMV under the marketing service agreement. At October 2, 2021 and January 2, 2021, there was no amo unt due to LMMV for services rendered. The Company entered into a software license and professional services agreement with Like Minded Labs (LML), a subsidiary of LMMV, during the second quarter of 2021. Pursuant to the software license agreement, LML granted the Company a perpetual, non-exclusive and fully paid-up right and license to integrate LML’s software into the Company’s products in exchange for a $3.0 million one-time license fee. Pursuant to the professional services agreement, LML will provide professional services to the Company, including the development of custom software intended to support the integration of the licensed software into the Company’s products, as well as future support services upon the Company’s acceptance of deliverables. In July 2021, the Company entered into a patent purchase and option agreement with Vantrix Corporation (Vantrix), an acquiree of LML, for certain patents for $0.5 million, and the right to purchase two pools of additional patents from Vantrix for an exercise fee of up to $1.1 million. The agreements with LML and Vantrix include sublicensing provisions whereby the software and patents are licensed back to LML or Vantrix, respectively, for further advancement of the technologies. The Company maintains an aircraft time share agreement, pursuant to which the Company has agreed from time to time to make its aircraft available to the Company’s CEO for lease on a time-sharing basis. The Company charges the Company’s CEO for personal use based on agreed upon reimbursement rates. For each of the three and nine months ended October 2, 2021 and September 26, 2020, the Company charged the Company’s CEO less than $0.1 million related to such disbursements. | |||||
Cercacor Laboratories | ||||||
Related Party Transaction [Line Items] | ||||||
Payments for Royalties | $ 2,900,000 | $ 3,500,000 | $ 9,600,000 | $ 9,700,000 | ||
Payment for Administrative Fees | 100,000 | 100,000 | $ 200,000 | 200,000 | ||
Related Party Transaction, Date | Dec. 31, 2024 | |||||
Sublease Income | 300,000 | 300,000 | $ 900,000 | 800,000 | ||
Related Party Transaction, Due from (to) Related Party | (3,300,000) | $ (3,300,000) | $ (3,600,000) | |||
Leased Property | ||||||
Related Party Transaction [Line Items] | ||||||
Property Plant and Equipment, Occupied Square Feet | ft² | 34,000 | |||||
Subleased Property | ||||||
Related Party Transaction [Line Items] | ||||||
Property Plant and Equipment, Occupied Square Feet | ft² | 16,830 | |||||
Not for Profit Organization | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | 0 | 0 | $ 0 | 1,500,000 | ||
Like Minded Media Ventures | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Due from (to) Related Party | 0 | 0 | $ 0 | |||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 200,000 | 0 | 3,500,000 | ||
Reimbursement Fee | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Expenses from Transactions with Related Party | 100,000 | $ 100,000 | 100,000 | $ 100,000 | ||
Like Minded Labs | ||||||
Related Party Transaction [Line Items] | ||||||
Finite-Lived License Agreements, Gross | $ 3,000,000 | 3,000,000 | ||||
Vantrix Corp | Purchase Commitment | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Purchases from Related Party | $ 500,000 | |||||
Vantrix Corp | Options Held | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Purchases from Related Party | $ 1,100,000 | |||||
Minimum | ||||||
Related Party Transaction [Line Items] | ||||||
Payments for Royalties | $ 5,000,000 |
Inventories - Components of Inv
Inventories - Components of Inventory (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 121,593 | $ 133,098 |
Work-in-process | 14,383 | 15,985 |
Finished goods | 66,352 | 66,869 |
Total inventories | $ 202,328 | $ 215,952 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) | Oct. 02, 2021 | Jan. 02, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 30,351,000 | $ 30,235,000 |
Lease receivable, current | 26,685,000 | 23,206,000 |
Prepaid income taxes | 15,501,000 | 14,782,000 |
Indirect taxes receivable | 10,715,000 | 14,545,000 |
Prepaid rebates and royalties, current | 3,066,000 | 3,081,000 |
Restricted cash(1) | 1,496,000 | 3,397,000 |
Customer notes receivable | 1,359,000 | 2,283,000 |
Deposit to acquire noncontrolling interest(2) | 0 | 3,374,000 |
Other current assets | 2,599,000 | 7,513,000 |
Total other current assets | $ 91,772,000 | $ 102,416,000 |
Lease Receivable (Details)
Lease Receivable (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Leases [Abstract] | ||||
Operating Lease, Variable Lease Income | $ 12 | $ 13 | $ 40 | $ 31 |
Lease Receivable Sales-Type (De
Lease Receivable Sales-Type (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Leases [Abstract] | ||
Lease receivable | $ 93,879 | $ 81,074 |
Allowance for credit loss | (239) | (202) |
Lease receivable, net | 93,640 | 80,872 |
Less: current portion of lease receivable | (26,685) | (23,206) |
Lease receivable, noncurrent | $ 66,955 | $ 57,666 |
Lease Receivable Sales-type Lea
Lease Receivable Sales-type Lease, Maturity (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Leases [Abstract] | ||
2021 (balance of year) | $ 6,888 | |
2022 | 25,995 | |
2023 | 21,371 | |
2024 | 17,349 | |
2025 | 11,535 | |
Thereafter | 10,502 | |
Total | $ 93,640 | $ 80,872 |
Deferred Costs and Other Cont_3
Deferred Costs and Other Contract Assets (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred commissions | $ 9,976 | $ 7,477 |
Prepaid contract allowances | 6,820 | 7,336 |
Unbilled contract receivables | 4,317 | 3,925 |
Equipment leased to customers, net | 1,486 | 1,338 |
Deferred costs and other contract assets | $ 22,599 | $ 20,076 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 426,081 | $ 426,081 | $ 406,647 | ||
Accumulated depreciation | (151,152) | (151,152) | (134,136) | ||
Property and equipment, net | 274,929 | 274,929 | 272,511 | ||
Depreciation | 6,500 | $ 5,800 | 18,800 | $ 16,000 | |
Building and building improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 141,990 | 141,990 | 122,310 | ||
Machinery, equipment and tooling | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 101,833 | 101,833 | 90,843 | ||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 56,938 | 56,938 | 57,151 | ||
Transportation, vehicles and other | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 33,114 | 33,114 | 33,175 | ||
Computer equipment and software | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 32,131 | 32,131 | 24,693 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 20,885 | 20,885 | 19,295 | ||
Furniture and office equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 14,186 | 14,186 | 13,567 | ||
Demonstration units | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 1,049 | 1,049 | 1,024 | ||
Construction-in-progress (CIP) | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 23,955 | $ 23,955 | $ 44,589 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 117,676 | $ 110,589 |
Accumulated amortization | (43,587) | (36,666) |
Intangible assets, net | 74,089 | 73,923 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 30,528 | 26,875 |
Acquired technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 28,567 | 29,039 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 24,636 | 24,666 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 12,080 | 11,708 |
Licenses-related party | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 8,108 | 5,108 |
Licenses-related party | Cercacor Laboratories | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 7,500 | 7,500 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 6,257 | $ 5,693 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 12 years | |||
Amortization of Intangible Assets | $ 2.7 | $ 1.6 | $ 7.6 | $ 5.2 |
Patents | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average number of years until the next renewal | 2 years | |||
Trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average number of years until the next renewal | 4 years | |||
Patents And Trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Cost Incurred to Renew or Extend | 0.9 | 0.6 | $ 1.3 | 1.2 |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Cost Incurred to Renew or Extend | $ 0.9 | $ 0.6 | $ 1.3 | $ 1.2 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 (balance of year) | $ 9,211 | |
2022 | 8,377 | |
2023 | 7,964 | |
2024 | 7,352 | |
2025 | 6,274 | |
Thereafter | 34,911 | |
Intangible assets, net | $ 74,089 | $ 73,923 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 02, 2021 | Jan. 02, 2021 | |
Goodwill [Line Items] | ||
Goodwill | $ 101,242 | $ 103,206 |
Foreign currency translation adjustment | $ (1,964) |
Lessee ROU Assets and Lease L_3
Lessee ROU Assets and Lease Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | |
Leases [Abstract] | |||||
Lessee, Operating Lease, Renewal Term | 5 years | 5 years | |||
Operating Lease, Weighted Average Discount Rate, Percent | 2.60% | 2.60% | |||
Operating Lease, Right-of-Use Asset, Accumulated Amortization | $ 13,000 | $ 13,000 | $ 9,200 | ||
Operating Lease, Weighted Average Remaining Lease Term | 6 years 8 months 12 days | 6 years 8 months 12 days | |||
Operating lease costs | $ 2,100 | $ 1,800 | $ 6,200 | $ 5,200 |
Lessee ROU Assets and Lease L_4
Lessee ROU Assets and Lease Liabilities Lessee Operating Lease Balance Sheet Classification (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Leases [Abstract] | ||
Lessee ROU assets, net | $ 31,561 | $ 32,324 |
Lessee lease liabilities, current | 6,147 | 5,975 |
Lessee non-current lease liabilities | 27,471 | 28,373 |
Present value | $ 33,618 | $ 34,348 |
Lessee ROU Assets and Lease L_5
Lessee ROU Assets and Lease Liabilities Future Maturities Operating Lease Payments (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Leases [Abstract] | ||
2021 (balance of year) | $ 1,509 | |
2022 | 7,093 | |
2023 | 6,649 | |
2024 | 5,123 | |
2025 | 3,998 | |
Thereafter(1) | 12,317 | |
Total | 36,689 | |
Imputed interest | (3,071) | |
Present value | $ 33,618 | $ 34,348 |
Other Non-Current Assets (Detai
Other Non-Current Assets (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Other Assets, Longterm [Abstract] | ||
Lessee ROU assets, net | $ 31,561 | $ 32,324 |
Strategic investments | 13,928 | 8,002 |
Prepaid deposits and other | 4,397 | 4,316 |
Other non-current assets | $ 49,886 | $ 44,642 |
Deferred Revenue and Other Co_3
Deferred Revenue and Other Contract Liabilities (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Unrecognized contract revenue | $ 987,300 | |
Deferred revenue | 34,392 | $ 33,221 |
Accrued rebates and allowances | 11,322 | 12,127 |
Accrued customer reimbursements | 4,744 | 3,829 |
Total deferred revenue and other contract liabilities | 50,458 | 49,177 |
Less: Non-current portion of deferred revenue | (3,817) | (4,242) |
Deferred revenue and other contract liabilities - current | 46,641 | $ 44,935 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Unrecognized contract revenue | $ 272,700 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01 | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Deferred Revenue and Other Co_4
Deferred Revenue and Other Contract Liabilities - Changes in Deferred Revenue (Details) $ in Thousands | 9 Months Ended |
Oct. 02, 2021USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Deferred revenue, beginning of the period | $ 33,221 |
Revenue deferred during the period | 23,425 |
Recognition of revenue deferred in prior periods | (22,254) |
Deferred revenue, end of the period | $ 34,392 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) | Oct. 02, 2021 | Jan. 02, 2021 |
Accrued Liabilities [Abstract] | ||
Accrued indirect taxes payable | $ 12,081,000 | $ 14,365,000 |
Accrued expenses | 12,046,000 | 6,794,000 |
Lessee lease liabilities, current | 6,147,000 | 5,975,000 |
Income tax payable | 4,443,000 | 5,910,000 |
Accrued legal fees | 3,947,000 | 4,058,000 |
Related party payables | 3,446,000 | 3,655,000 |
Accrued warranty | 2,944,000 | 2,740,000 |
Accrued property taxes | 1,686,000 | 1,682,000 |
Accrued donations | 1,307,000 | 495,000 |
Other current liabilities | 3,071,000 | 4,096,000 |
Noncontrolling interest(1) | 0 | 3,469,000 |
Total other current liabilities | $ 51,118,000 | $ 53,239,000 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | Dec. 17, 2018 | |
Debt Instrument [Line Items] | ||||||
Letters of Credit Outstanding, Amount | $ 2,400,000 | $ 2,400,000 | $ 1,700,000 | |||
Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Maximum Sublimit | $ 25,000,000 | |||||
Foreign Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Maximum Sublimit | 75,000,000 | |||||
Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Borrowing Capacity | 150,000,000 | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 550,000,000 | |||||
Long-term Line of Credit, Noncurrent | 0 | 0 | $ 0 | |||
Interest Expense, Debt | $ 100,000 | $ 100,000 | $ 200,000 | $ 200,000 |
Other Non-Current Liabilities -
Other Non-Current Liabilities - (Detail) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 |
Other Liabilities, Long Term [Abstract] | ||
Lessee non-current lease liabilities | $ 27,471 | $ 28,373 |
Income tax payable, non-current | 16,980 | 19,245 |
Unrecognized tax benefits | 15,352 | 11,777 |
Deferred tax liabilities | 6,063 | 6,247 |
Other | 4,511 | 5,434 |
Total other non-current liabilities | $ 70,377 | $ 71,076 |
Stock Repurchase Program - Addi
Stock Repurchase Program - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 36 Months Ended | ||||||||
Oct. 02, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Oct. 29, 2024 | Sep. 11, 2021 | Oct. 29, 2021 | Jul. 01, 2018 | |
Class of Stock [Line Items] | |||||||||||
Treasury Stock, Shares, Acquired | 0 | 0 | 547,000 | 4,000 | |||||||
Treasury Stock Acquired, Average Cost Per Share | $ 0 | $ 0 | $ 235.88 | $ 164.44 | |||||||
Value of shares repurchased | $ 0 | $ 128,917 | $ 0 | $ 220 | $ 371 | $ 128,917 | $ 591 | ||||
Stock Repurchase Program | 17. Stock Repurchase Program In October 2021, the Company’s Board of Directors (Board) approved a stock repurchase program, authorizing the Company to purchase up to 3.0 million shares of its common stock over a period of up to three years (2021 Repurchase Program). The Company expects to fund the 2021 Repurchase Program through its available cash, cash expected to be generated from future operations, the credit facility and other potential sources of capital. The 2021 Repurchase Program can be carried out at the discretion of a committee comprised of the CEO and CFO through open market purchases, one or more Rule 10b5-1 trading plans, block trades and privately negotiated transactions. In July 2018, the Company’s Board approved a stock repurchase program, authorizing the Company to purchase up to 5.0 million additional shares of its common stock over a period of up to three years (2018 Repurchase Program). During the third quarter of 2021, the 2018 Repurchase Program expired. The following table provides a summary of the Company’s stock repurchase activities (in thousands, except per share amounts): Three Months Ended Nine Months Ended October 2, September 26, October 2, September 26, Shares repurchased (1) — — 547 4 Average cost per share $ — $ — $ 235.88 $ 164.44 Value of shares repurchased $ — $ — $ 128,917 $ 591 ______________ (1) Excludes shares withheld from the shares of its common stock actually issued in connection with the vesting of PSU or RSU awards to satisfy certain U.S. federal and state tax withholding obligations. | ||||||||||
2021 Repurchase Program | Common Stock | Subsequent Event | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of common shares authorized to be repurchased under new stock repurchase program | 3,000,000 | ||||||||||
Stock Repurchase Program, Period | 3 years | ||||||||||
2018 Repurchase Program | Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of common shares authorized to be repurchased under new stock repurchase program | 5,000,000 | ||||||||||
Stock Repurchase Program, Period | 3 years |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 12.6 | $ 11.9 | $ 33.5 | $ 36.4 | |
Common Stock, Capital Shares Reserved for Future Issuance | 10,700,000 | 10,700,000 | |||
Options available for grant, end of period | 4,400,000 | 4,400,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 3,105,000 | 3,105,000 | 3,448,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | three years | ||||
Aggregate intrinsic value of options outstanding | $ 589.6 | $ 589.6 | |||
Aggregate intrinsic value of options exercisable | 484.5 | 484.5 | |||
Aggregate intrinsic value of options exercised | 35.4 | 56.9 | |||
Employee Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | 3.2 | 3.8 | 9.9 | 11.9 | |
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | 30.7 | $ 30.7 | |||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 7 months 6 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 5 years 3 months 18 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 4 years 4 months 24 days | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | 2.4 | 1.5 | $ 6.7 | 4 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 34.7 | $ 34.7 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 3 years 7 months 6 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 2,900,000 | 2,900,000 | 2,862,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 89,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 17,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 102.88 | $ 102.88 | $ 99.66 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 248.57 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 199.02 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 163.57 | ||||
Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ 7 | $ 6.6 | $ 16.9 | $ 20.5 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 41.1 | $ 41.1 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 1 year 1 month 6 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 302,000 | 302,000 | 444,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 17,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 168.68 | $ 168.68 | $ 120.28 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 162.99 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 166.84 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 86.95 | ||||
Performance Shares | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 148,000 | ||||
Performance Shares | Minimum | 2021 PSU Grant [Domain] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 68,600 | ||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 0.00% | 0.00% | |||
Performance Shares | Maximum | 2021 PSU Grant [Domain] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 137,200 | ||||
Share-based compensation arrangement by share-based payment award, range of percentage payout | 200.00% | 200.00% | |||
Chief Executive Officer | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 2,700,000 | 2,700,000 | |||
2017 Equity Incentive Plan [Domain] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 2,500,000 | ||||
2017 Equity Incentive Plan [Domain] | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 5,000,000 | 5,000,000 | |||
2017 Equity Incentive Plan [Domain] | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 7,500,000 | 7,500,000 | |||
2007 Stock Incentive Plan [Domain] | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options available for grant, end of period | 5,000,000 | 5,000,000 |
Stock-Based Compensation - Numb
Stock-Based Compensation - Number and Weighted Average Exercise Price of Options Issued and Outstanding under all Stock Option Plans (Detail) - $ / shares shares in Thousands | 9 Months Ended |
Oct. 02, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding, beginning of period | 3,448 |
Granted | 85 |
Canceled | (150) |
Exercised | (278) |
Options outstanding, end of period | 3,105 |
Options exercisable, end of period | 2,255 |
Weighted-Average Exercise Price | |
Options outstanding, beginning of period | $ 77.44 |
Granted | 250.15 |
Canceled | 146.62 |
Exercised | 57.88 |
Options outstanding, end of period | 80.55 |
Options exercisable, end of period | $ 55.57 |
Stock-Based Compensation Stock-
Stock-Based Compensation Stock-Based Compensation - Summary of Unvested RSU Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 2,900,000 | 2,862,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 89,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (17,000) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (34,000) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 102.88 | $ 99.66 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 248.57 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 199.02 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired, Weighed Average Grant Date Fair Value | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 163.57 | ||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 34.7 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 3 years 7 months 6 days | ||
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 302,000 | 444,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (17,000) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired in Period | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (273,000) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 168.68 | $ 120.28 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 162.99 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 166.84 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expired, Weighed Average Grant Date Fair Value | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 86.95 | ||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 41.1 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 1 year 1 month 6 days | ||
Chief Executive Officer | Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 2,700,000 | 2,700,000 |
Stock-Based Compensation - Rang
Stock-Based Compensation - Range of Assumptions Used and Resulting Weighted-Average Fair Value of Options Granted at Date of Grant (Detail) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Range of assumptions used and resulting weighted-average fair value of options granted at the date of grant | ||||
Risk-free interest rate, minimum | 0.00% | 0.20% | 0.30% | 0.20% |
Risk-free interest rate, maximum | 0.30% | 0.90% | 1.70% | |
Expected term (in years) | 0 years | 5 years 1 month 6 days | 5 years 7 months 6 days | 5 years 1 month 6 days |
Estimated volatility, minimum | 0.00% | 32.70% | 30.90% | 26.90% |
Estimated volatility, maximum | 33.60% | 34.70% | 35.50% | |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Weighted-average fair value of options granted | $ 0 | $ 66.24 | $ 75.72 | $ 50.39 |
Non-operating income (Detail)
Non-operating income (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Nonoperating Income (Expense) [Abstract] | ||||
Interest income | $ 242,000 | $ 797,000 | $ 677,000 | $ 5,120,000 |
Interest expense | (87,000) | (84,000) | (259,000) | (250,000) |
Realized and unrealized foreign currency (losses) gains | (233,000) | 647,000 | (1,153,000) | 1,246,000 |
Other | 0 | (3,000) | 0 | (8,000) |
Non-operating (loss) income | $ (78,000) | $ 1,357,000 | $ (735,000) | $ 6,108,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Other Tax Expense (Benefit) | $ 6.4 | $ 3.1 | $ 12 | $ 20.2 |
Gross unrecognized tax benefit | 21.6 | 21.6 | ||
Unrecognized tax benefit that would affect effective tax rate | $ 19.6 | $ 19.6 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Jul. 08, 2019USD ($) | Jul. 27, 2017 | Jan. 03, 2014USD ($) | Oct. 02, 2021USD ($)distributorCustomerAgreement | Sep. 26, 2020USD ($)distributor | Jun. 30, 2018USD ($) | Jun. 27, 2020USD ($) | Oct. 02, 2021USD ($)distributorCustomerAgreement | Sep. 26, 2020USD ($)distributor | Jan. 02, 2021 |
Contingencies And Commitments [Line Items] | ||||||||||
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 | $ 900,000 | $ 800,000 | $ 2,800,000 | $ 2,400,000 | ||||||
Severance plan participation agreements | Agreement | 5 | 5 | ||||||||
Supplemental Unemployment Benefits, Severance Benefits, Required Notice of Resignation | 6 months | |||||||||
Purchase Commitment, Remaining Minimum Amount Committed | $ 155,900,000 | $ 155,900,000 | ||||||||
Other Commitment | 3,400,000 | 3,400,000 | ||||||||
Bank Balances | 652,400,000 | 652,400,000 | ||||||||
Bank balance covered by Federal Deposit Insurance Corporation limit | $ 5,000,000 | $ 5,000,000 | ||||||||
Percentage Of Revenue One Customer | 15.00% | 11.00% | 14.60% | 11.20% | ||||||
Percentage Of Revenue Two Customer | 10.40% | 9.30% | 10.40% | 10.00% | ||||||
Concentration Risk, AR Balance One Customer | Customer | 1 | 1 | ||||||||
Loss Contingency, Damages Awarded, Value | $ 10,500,000 | |||||||||
Sales | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Concentration Risk, Just-in-time Distributors | distributor | 2 | 2 | 2 | 2 | ||||||
Accounts Receivable | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Percentage of Accounts Receivable Balance | 9.40% | 9.40% | 9.10% | |||||||
Sales Revenue, Product Line | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Percentage of Revenue - Customer Concentration | 55.00% | 48.10% | 51.80% | 49.60% | ||||||
Masimo vs Former Agency Tender | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Litigation Settlement, Expense | $ 10,500,000 | |||||||||
Proceeds from Legal Settlements | $ 2,000,000 | |||||||||
Masimo vs. Physicians Healthsource, Inc. | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Loss contingency, damages sought | $ 500 | |||||||||
Chief Executive Officer | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Employment Agreement, Severance Benefits, Special Payment, Qualifying Termination | $ 292,900,000 | |||||||||
Chief Executive Officer | Cash Distribution | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Employment Agreement, Severance Terms | 50.00% | |||||||||
Chief Executive Officer | Restricted Stock Units (RSUs) | ||||||||||
Contingencies And Commitments [Line Items] | ||||||||||
Employment Agreement, Severance Terms | 50.00% |
Segment Information and Enter_3
Segment Information and Enterprise Reporting - Analysis of Product Revenues Based upon Geographic Area Shipped (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | |
Revenue, Major Customer [Line Items] | ||||
Product revenue | $ 307,413 | $ 278,112 | $ 911,574 | $ 848,690 |
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
United States (U.S.) | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Product revenue | $ 207,060 | $ 186,919 | $ 613,197 | $ 571,158 |
Europe, Middle East and Africa | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Product revenue | 56,223 | 54,257 | 177,053 | 176,781 |
Asia and Australia | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Product revenue | 34,878 | 27,583 | 94,134 | 73,155 |
North and South America (excluding the U.S.) | Reportable Geographical Components | ||||
Revenue, Major Customer [Line Items] | ||||
Product revenue | $ 9,252 | $ 9,353 | $ 27,190 | $ 27,596 |
Segment Information and Enter_4
Segment Information and Enterprise Reporting Long-lived assets by geographic area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 02, 2021 | Sep. 26, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Jan. 02, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-Lived Assets | $ 276,415 | $ 276,415 | $ 273,849 | ||
Concentration Risk, Long-lived Asset Geographic Area, Percentage | 100.00% | 100.00% | 100.00% | ||
Product | $ 307,413 | $ 278,112 | $ 911,574 | $ 848,690 | |
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% | |
United States (U.S.) | Geographic Concentration Risk | Revenue Benchmark | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Concentration Risk, Percentage | 67.40% | 67.20% | 67.30% | 67.30% | |
EMEA [Member] | Geographic Concentration Risk | Revenue Benchmark | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Concentration Risk, Percentage | 18.30% | 19.50% | 19.40% | 20.80% | |
Asia Pacific [Member] | Geographic Concentration Risk | Revenue Benchmark | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Concentration Risk, Percentage | 11.30% | 9.90% | 10.30% | 8.60% | |
North and South America (excluding the U.S.) | Geographic Concentration Risk | Revenue Benchmark | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Concentration Risk, Percentage | 3.00% | 3.40% | 3.00% | 3.30% | |
Reportable Geographical Components | United States (U.S.) | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-Lived Assets | $ 239,435 | $ 239,435 | $ 238,094 | ||
Concentration Risk, Long-lived Asset Geographic Area, Percentage | 86.60% | 86.60% | 86.90% | ||
Product | $ 207,060 | $ 186,919 | $ 613,197 | $ 571,158 | |
Reportable Geographical Components | International | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-Lived Assets | $ 36,980 | $ 36,980 | $ 35,755 | ||
Concentration Risk, Long-lived Asset Geographic Area, Percentage | 13.40% | 13.40% | 13.10% | ||
Reportable Geographical Components | EMEA [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Product | $ 56,223 | 54,257 | $ 177,053 | 176,781 | |
Reportable Geographical Components | Asia Pacific [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Product | 34,878 | 27,583 | 94,134 | 73,155 | |
Reportable Geographical Components | North and South America (excluding the U.S.) | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Product | $ 9,252 | $ 9,353 | $ 27,190 | $ 27,596 |