Q4 2015 Highlights (compared to Q4 2014):
-
Total revenue, including royalties, rose 3.4% to $167.3 million and
grew 6.0% on a constant currency basis and with one less selling week
versus the prior year period
-
Product revenue rose 3.8% to $159.8 million and grew 6.5% on a
constant currency basis and with one less selling week versus the
prior year period
-
Masimo rainbow® revenue rose 35.0% to $19.1 million
-
SET® and rainbow SET™ units shipments were 48,500
-
GAAP net income of $24.1 million or $0.46 per diluted share versus
$21.2 million or $0.40 per diluted share in the year-ago period.
Included in the $0.46 per diluted share is a net gain of $0.06
resulting from various Q4 2015 adjustments.
-
Non-GAAP net income of $7.7 million, or $0.15 per diluted share versus
$21.5 million or $0.40 per diluted share in the year-ago period
FY 2015 Highlights (compared to FY 2014):
-
Total revenue, including royalties, rose 7.4% to $630.1 million and
grew 10.6% on a constant currency basis and with one less selling week
versus the prior year
-
Product revenue rose 7.6% to $599.3 million and grew 11.0% on a
constant currency basis and with one less selling week versus the
prior year
-
Masimo rainbow® revenue rose 19.4% to $61.8 million
-
SET® and rainbow SET™ units shipments were
182,600
-
GAAP net income of $83.3 million, or $1.55 per diluted share versus
$72.5 million or $1.30 per diluted share in the year-ago period.
Included in the $1.55 per diluted share is a net gain of $0.06
resulting from various Q4 2015 adjustments.
-
Non-GAAP net income of $74.3 million, or $1.38 per diluted share
versus $68.7 million or $1.24 per diluted share in the year-ago period
IRVINE, Calif.--(BUSINESS WIRE)--Feb. 23, 2016--
Masimo (NASDAQ: MASI) today announced its financial results for the
fourth quarter ended January 2, 2016.
Fourth quarter 2015 product revenues rose 3.8% to $159.8 million,
compared to $153.9 million for the fourth quarter of fiscal year 2014,
and total revenue, including royalties, rose 3.4% to $167.3 million, up
from $161.8 million for the fourth quarter of fiscal year 2014. The
unfavorable effect of foreign currency movements reduced fourth quarter
product revenues by approximately $4.2 million. Fourth quarter 2015
product revenues rose by 6.5% and total revenues rose by 6.0%, both in
constant currency and with one less selling week versus the prior year
period. The extra selling week in the fourth quarter of 2014 was the
result of the company’s 52-53 week fiscal year calendar, and the company
estimates that such an extra selling week, which was a short working
week due to holidays, contributed approximately $5.0 million of
additional product revenue.
The company’s worldwide direct product revenue in the fourth quarter of
2015 rose by 4.3% compared to the same period in 2014 and represented
86.3% of product revenue. OEM sales, which accounted for 13.7% of
product revenue, rose by 0.6% to $21.9 million in the fourth quarter of
2015 compared to the same period in 2014. Revenue from sales of Masimo
rainbow® products rose by 35.0% to $19.1 million in the
fourth quarter of 2015, compared to the same period in 2014.
GAAP net income for the fourth quarter of 2015 was $24.1 million, or
$0.46 per diluted share, compared to GAAP net income of $21.2 million,
or $0.40 per diluted share, in the fourth quarter of 2014. Net income
for the fourth quarter of 2015 included a net after tax benefit of $0.06
per diluted share related to the combined impact of a favorable $25.0
million legal settlement, offset by a $9.7 million inventory valuation
adjustment, a $6.1 million accrual for a recent legal decision and a
$5.0 million charitable contribution to the Masimo Foundation. Non-GAAP
net income for the fourth quarter was $7.7 million, or $0.15 per diluted
share, versus non-GAAP net income of $21.5 million or $0.40 per diluted
share in the year-ago period. During the fourth quarter of 2015, the
company shipped approximately 48,500 SET® pulse oximetry and
rainbow® Pulse CO-Oximetry™ units, excluding
handheld units. Masimo estimates its worldwide installed base as of
January 2, 2016 to be 1,414,000 units, up 7.7% from 1,313,000 units as
of January 3, 2015.
Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, “We
ended 2015 with a strong fourth quarter that included record shipments
of our SET® Pulse Oximetry and rainbow SET™ Pulse
CO-Oximetry technology. I am proud that our technologies are making a
very positive impact to patient care and happy that we were able to
exceed many of the financial and operational metrics that we set at the
start of the year and we look forward to realizing a continuation of
that momentum through 2016.”
As of January 2, 2016, the company’s total cash and cash investments
were $132.3 million compared to $134.5 million as of January 3, 2015.
During the fourth quarter, the company repurchased approximately 0.6
million shares of stock for $24.8 million, of which $20.0 million
settled during the quarter, resulting in a total 2015 stock repurchases
of approximately 4.1 million shares for $155.0 million, of which $150.2
million settled during the year.
2016 Financial Guidance
Masimo today is providing 2016 financial guidance. Masimo expects fiscal
2016 total product revenues to be approximately $670.0 million including
approximately $640.0 million in product revenues and $30.0 million in
royalty revenues. The $640.0 million in projected 2016 product revenues
include an estimated $4.0 million revenue reduction due to the impact of
our planned 2016 foreign exchange rates as compared to the actual 2015
foreign exchange rates. Masimo expects fiscal 2016 GAAP earnings per
diluted share to be approximately $1.69. Due to the impact of foreign
exchange rates and various other non-GAAP adjustments, Masimo also
expects fiscal 2016 non-GAAP earnings per diluted share to be
approximately $1.74. Masimo will provide additional financial
information during the conference call today. Each of the components of
Masimo’s guidance set forth above is an estimate only and actual
performance could differ.
Conference Call
Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET)
to discuss the results. A live webcast of the call will be available
online from the investor relations page of the company’s website at www.masimo.com.
The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706)
758-3929 for international callers. The reservation code for both
dial-in numbers is 40429223. After the live webcast, the call will be
available on Masimo’s website through March 22, 2016. In addition, a
telephonic replay of the call will be available through March 8, 2016.
The replay dial-in numbers are (855) 859-2056 for domestic callers and
+1 (404) 537-3406 for international callers. Please use reservation code
40429223.
About Masimo
Masimo (NASDAQ: MASI) is a global leader in innovative noninvasive
monitoring technologies. Our mission is to improve patient outcomes and
reduce the cost of care by taking noninvasive monitoring to new sites
and applications. In 1995, the company debuted Masimo SET®
Measure-through Motion and Low Perfusion™ pulse oximetry,
which has been shown in multiple studies to significantly reduce false
alarms and accurately monitor for true alarms. The benefits of Masimo SET®
have been proven in more than 100 independent and objective studies and
it is estimated to be used on more than 100 million patients in leading
hospitals and other healthcare settings around the world. In 2005,
Masimo introduced rainbow® Pulse CO-Oximetry technology,
allowing noninvasive and continuous monitoring of blood constituents
that previously could only be measured invasively, including total
hemoglobin (SpHb®), oxygen content (SpOC™),
carboxyhemoglobin (SpCO®), methemoglobin (SpMet®),
and more recently, Pleth Variability Index (PVI®) and Oxygen
Reserve Index (ORI™), in addition to SpO2, pulse rate, and
perfusion index (PI). In 2014, Masimo introduced Root®, an
intuitive open architecture patient monitoring and connectivity platform
designed to speed the pace of innovation and reduce the cost of care.
Masimo is also taking an active leadership role in mHealth with products
such as the Radius-7™ wearable patient monitor and the
MightySat™ fingertip pulse oximeter. Additional information
about Masimo and its products may be found at www.masimo.com.
Forward-Looking Statements
All statements other than statements of historical facts included in
this press release that address activities, events or developments that
we expect, believe or anticipate will or may occur in the future are
forward-looking statements including, in particular, the statements
about our expectations for full fiscal year 2016 total product and
royalty revenues; the impact of 2016 foreign exchange rates; GAAP and
non-GAAP earnings per diluted share; demand for our products;
anticipated revenue and earnings growth; our financial condition,
results of operations and business generally; expectations regarding our
ability to design and deliver innovative new noninvasive technologies
and reduce the cost of care; and demand for our technologies. These
forward-looking statements are based on management’s current
expectations and beliefs and are subject to uncertainties and factors,
all of which are difficult to predict and many of which are beyond our
control and could cause actual results to differ materially and
adversely from those described in the forward-looking statements. These
risks include, but are not limited to, those related to: our dependence
on Masimo SET® and Masimo rainbow® SET®
products and technologies for substantially all of our revenue; any
failure in protecting our intellectual property exposure to competitors’
assertions of intellectual property claims; the highly competitive
nature of the markets in which we sell our products and technologies;
any failure to continue developing innovative products and technologies;
the lack of acceptance of any of our current or future products and
technologies; obtaining regulatory approval of our current and future
products and technologies; the risk that the implementation of our
international realignment will not continue to produce anticipated
operational and financial benefits, including a continued lower
effective tax rate; the loss of our customers; the failure to retain and
recruit senior management; product liability claims exposure; a failure
to obtain expected returns from the amount of intangible assets we have
recorded; the maintenance of our brand; the amount and type of equity
awards that we may grant to employees and service providers in the
future; our ongoing litigation and related matters; and other factors
discussed in the “Risk Factors” section of our most recent periodic
reports filed with the Securities and Exchange Commission (“SEC”),
including our most recent Form 10-K and Form 10-Q, all of which you may
obtain for free on the SEC’s website at www.sec.gov.
Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we do not know whether our
expectations will prove correct. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof, even if subsequently made available by us on our website or
otherwise. We do not undertake any obligation to update, amend or
clarify these forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under
applicable securities laws.
Masimo, SET, Signal Extraction Technology, Improving Patient Outcome
and Reducing Cost of Care... by Taking Noninvasive Monitoring to New
Sites and Applications, rainbow, SpHb, SpOC, SpCO, SpMet, PVI are
trademarks or registered trademarks of Masimo Corporation
MASIMO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
|
|
|
January 2, 2016
|
|
January 3, 2015
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
$
|
132,317
|
|
|
$
|
134,453
|
|
Accounts receivable, net of allowance for doubtful accounts
|
80,960
|
|
|
71,017
|
|
Inventories
|
62,038
|
|
|
69,718
|
|
Prepaid income taxes
|
2,404
|
|
|
417
|
|
Other current assets
|
21,423
|
|
|
21,471
|
|
Total current assets
|
299,142
|
|
|
297,076
|
|
Deferred cost of goods sold
|
66,844
|
|
|
67,485
|
|
Property and equipment, net
|
132,466
|
|
|
101,952
|
|
Intangible assets, net
|
27,556
|
|
|
27,771
|
|
Goodwill
|
20,394
|
|
|
20,979
|
|
Deferred income taxes, noncurrent
|
44,320
|
|
|
42,258
|
|
Other assets
|
11,013
|
|
|
7,485
|
|
Total assets
|
$
|
601,735
|
|
|
$
|
565,006
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable
|
$
|
25,865
|
|
|
$
|
38,045
|
|
Accrued compensation
|
38,415
|
|
|
33,600
|
|
Accrued liabilities
|
44,222
|
|
|
24,541
|
|
Income taxes payable
|
2,777
|
|
|
6,562
|
|
Deferred revenue
|
21,280
|
|
|
21,067
|
|
Current portion of capital lease obligations
|
74
|
|
|
79
|
|
Total current liabilities
|
132,633
|
|
|
123,894
|
|
Deferred revenue
|
298
|
|
|
453
|
|
Long term debt
|
185,071
|
|
|
125,145
|
|
Other liabilities
|
8,021
|
|
|
7,773
|
|
Total liabilities
|
326,023
|
|
|
257,265
|
|
Commitments and contingencies
|
|
|
|
Equity
|
|
|
|
Masimo Corporation stockholders’ equity:
|
|
|
|
Common stock
|
50
|
|
|
52
|
|
Treasury stock
|
(340,873
|
)
|
|
(185,906
|
)
|
Additional paid-in capital
|
332,417
|
|
|
288,686
|
|
Accumulated other comprehensive loss
|
(4,739
|
)
|
|
(2,093
|
)
|
Retained earnings
|
288,560
|
|
|
205,260
|
|
Total Masimo Corporation stockholders’ equity
|
275,415
|
|
|
305,999
|
|
Noncontrolling interest
|
297
|
|
|
1,742
|
|
Total equity
|
275,712
|
|
|
307,741
|
|
Total liabilities and equity
|
$
|
601,735
|
|
|
$
|
565,006
|
|
|
|
|
|
|
|
|
|
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
Revenue:
|
|
|
|
|
|
|
|
Product
|
$
|
159,762
|
|
|
$
|
153,897
|
|
|
$
|
599,334
|
|
|
$
|
556,764
|
|
Royalty
|
7,511
|
|
|
7,891
|
|
|
30,777
|
|
|
29,879
|
|
Total revenue
|
167,273
|
|
|
161,788
|
|
|
630,111
|
|
|
586,643
|
|
Cost of goods sold
|
65,528
|
|
|
52,629
|
|
|
220,128
|
|
|
195,864
|
|
Gross profit
|
101,745
|
|
|
109,159
|
|
|
409,983
|
|
|
390,779
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Selling, general and administrative
|
70,653
|
|
|
61,483
|
|
|
252,725
|
|
|
241,016
|
|
Research and development
|
13,809
|
|
|
15,029
|
|
|
56,617
|
|
|
56,581
|
|
Litigation settlement, award and/or defense costs
|
(19,609
|
)
|
|
—
|
|
|
(19,609
|
)
|
|
(10,331
|
)
|
Total operating expenses
|
64,853
|
|
|
76,512
|
|
|
289,733
|
|
|
287,266
|
|
Operating income
|
36,892
|
|
|
32,647
|
|
|
120,250
|
|
|
103,513
|
|
Non-operating expense
|
1,883
|
|
|
1,429
|
|
|
3,905
|
|
|
1,472
|
|
Income before provision for income taxes
|
35,009
|
|
|
31,218
|
|
|
116,345
|
|
|
102,041
|
|
Provision for income taxes
|
9,956
|
|
|
9,432
|
|
|
34,845
|
|
|
27,678
|
|
Net income including noncontrolling interest
|
25,053
|
|
|
21,786
|
|
|
81,500
|
|
|
74,363
|
|
Net income (loss) attributable to noncontrolling interest
|
952
|
|
|
565
|
|
|
(1,800
|
)
|
|
1,845
|
|
Net income attributable to Masimo Corporation stockholders
|
$
|
24,101
|
|
|
$
|
21,221
|
|
|
$
|
83,300
|
|
|
$
|
72,518
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to Masimo Corporation stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.48
|
|
|
$
|
0.40
|
|
|
$
|
1.62
|
|
|
$
|
1.33
|
|
Diluted
|
$
|
0.46
|
|
|
$
|
0.40
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in per share calculations:
|
|
|
|
|
|
|
|
Basic
|
50,286
|
|
|
52,438
|
|
|
51,311
|
|
|
54,708
|
|
Diluted
|
52,944
|
|
|
53,142
|
|
|
53,707
|
|
|
55,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents details of the share-based compensation
expense that is included in each functional line item in the condensed
consolidated statements of income (in thousands):
|
Three Months Ended
|
|
Twelve Months Ended
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
Cost of goods sold
|
$
|
78
|
|
|
$
|
103
|
|
|
$
|
348
|
|
|
$
|
436
|
Selling, general and administrative
|
2,087
|
|
|
2,498
|
|
|
8,139
|
|
|
8,812
|
Research and development
|
528
|
|
|
614
|
|
|
2,338
|
|
|
1,757
|
Total
|
$
|
2,693
|
|
|
$
|
3,215
|
|
|
$
|
10,825
|
|
|
$
|
11,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MASIMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
|
|
|
|
Twelve Months Ended
|
|
|
January 2, 2016
|
|
January 3, 2015
|
Cash flows from operating activities:
|
|
|
|
|
Net income including noncontrolling interest
|
|
$
|
81,500
|
|
|
$
|
74,363
|
|
Adjustments to reconcile net income including noncontrolling
interest to net cash provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
15,684
|
|
|
12,818
|
|
Share-based compensation
|
|
10,825
|
|
|
11,005
|
|
Loss on disposal of property, equipment and intangibles
|
|
608
|
|
|
918
|
|
Provision for doubtful accounts
|
|
342
|
|
|
583
|
|
Benefit from deferred income taxes
|
|
(1,974
|
)
|
|
(320
|
)
|
Income tax benefit from exercise of stock options granted prior to
January 1, 2006
|
|
2,055
|
|
|
264
|
|
Excess tax (benefit) deficit from share-based compensation
arrangements
|
|
(3,003
|
)
|
|
396
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
(9,900
|
)
|
|
4,862
|
|
Decrease (increase) in inventories
|
|
7,505
|
|
|
(13,434
|
)
|
Decrease (increase) in deferred cost of goods sold
|
|
452
|
|
|
(5,888
|
)
|
(Increase) decrease in prepaid income taxes
|
|
(1,992
|
)
|
|
3,316
|
|
Increase in other assets
|
|
(3,542
|
)
|
|
(2,619
|
)
|
Decrease in accounts payable
|
|
(4,319
|
)
|
|
(1,375
|
)
|
Increase in accrued compensation
|
|
5,334
|
|
|
4,948
|
|
Increase in accrued liabilities
|
|
19,902
|
|
|
1,837
|
|
(Decrease) increase in income taxes payable
|
|
(739
|
)
|
|
3,909
|
|
Increase in deferred revenue
|
|
58
|
|
|
199
|
|
(Decrease) increase in other liabilities
|
|
(4,587
|
)
|
|
227
|
|
Net cash provided by operating activities
|
|
114,209
|
|
|
96,009
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property and equipment
|
|
(50,393
|
)
|
|
(75,061
|
)
|
Increase in intangible assets
|
|
(4,201
|
)
|
|
(3,903
|
)
|
Net cash used in investing activities
|
|
(54,594
|
)
|
|
(78,964
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Borrowings under revolving line of credit
|
|
130,000
|
|
|
125,000
|
|
Repayments under revolving line of credit
|
|
(70,000
|
)
|
|
—
|
|
Debt issuance costs
|
|
—
|
|
|
(436
|
)
|
Repayments on capital lease obligations
|
|
(80
|
)
|
|
(111
|
)
|
Proceeds from issuance of common stock
|
|
28,285
|
|
|
4,680
|
|
Payroll tax withholdings on behalf of employee for stock options
|
|
(472
|
)
|
|
—
|
|
Excess tax benefit (deficit) from share-based compensation
arrangements
|
|
3,003
|
|
|
(396
|
)
|
Repurchases of common stock
|
|
(150,152
|
)
|
|
(102,453
|
)
|
Net equity issuances (repurchases) by noncontrolling interest
|
|
346
|
|
|
(38
|
)
|
Net cash provided by (used in) financing activities
|
|
(59,070
|
)
|
|
26,246
|
|
Effect of foreign currency exchange rates on cash
|
|
(2,681
|
)
|
|
(4,304
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
(2,136
|
)
|
|
38,987
|
|
Cash and cash equivalents at beginning of period
|
|
134,453
|
|
|
95,466
|
|
Cash and cash equivalents at end of period
|
|
$
|
132,317
|
|
|
$
|
134,453
|
|
|
|
|
|
|
|
|
|
|
MASIMO CORPORATION
SUPPLEMENTAL NON-GAAP INFORMATION
(unaudited in thousands, except percentages and per share
amounts)
|
|
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP NET INCOME ATTRIBUTABLE TO MASIMO SHAREHOLDERS:
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP net income attributable to Masimo Corporation stockholders
|
|
$
|
24,101
|
|
|
$
|
21,221
|
|
|
$
|
83,300
|
|
|
$
|
72,518
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Constant currency F/X adjustments:
|
|
|
|
|
|
|
|
|
|
Product revenue
|
|
4,154
|
|
|
—
|
|
|
18,640
|
|
|
—
|
|
|
Cost of goods sold
|
|
(1,107
|
)
|
|
—
|
|
|
(4,266
|
)
|
|
—
|
|
|
Operating expenses
|
|
(1,602
|
)
|
|
—
|
|
|
(7,250
|
)
|
|
—
|
|
|
Non-operating income
|
|
(245
|
)
|
|
—
|
|
|
428
|
|
|
—
|
|
|
Subtotal - Constant currency F/X adjustments
|
|
1,200
|
|
|
—
|
|
|
7,552
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related
intangible assets:
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
115
|
|
|
114
|
|
|
458
|
|
|
458
|
|
|
Operating expenses
|
|
273
|
|
|
274
|
|
|
1,094
|
|
|
1,094
|
|
|
Subtotal - Amortization of acquisition-related intangible assets
|
|
388
|
|
|
388
|
|
|
1,552
|
|
|
1,552
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement awards, damages and/or
defense costs:
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
(19,609
|
)
|
|
—
|
|
|
(19,609
|
)
|
|
(10,331
|
)
|
|
Non-operating income
|
|
741
|
|
|
—
|
|
|
741
|
|
|
—
|
|
|
Noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,321
|
|
|
Subtotal - Litigation settlement awards, damages and/or defense costs
|
|
(18,868
|
)
|
|
—
|
|
|
(18,868
|
)
|
|
(8,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net tax impact of above items
|
|
913
|
|
|
(88
|
)
|
|
764
|
|
|
2,979
|
|
|
Net tax impact of noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(341
|
)
|
|
Net tax impact of above items
|
|
913
|
|
|
(88
|
)
|
|
764
|
|
|
2,638
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-GAAP adjustments
|
|
(16,367
|
)
|
|
300
|
|
|
(9,000
|
)
|
|
(3,820
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to Masimo Corporation stockholders
|
|
$
|
7,734
|
|
|
$
|
21,521
|
|
|
$
|
74,300
|
|
|
$
|
68,698
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted share attributable to Masimo Corporation
stockholders:
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted share
|
|
$
|
0.46
|
|
|
$
|
0.40
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
|
Non-GAAP Adjustments per diluted share
|
|
(0.31
|
)
|
|
—
|
|
|
(0.17
|
)
|
|
(0.06
|
)
|
|
Non-GAAP net income per diluted share
|
|
$
|
0.15
|
|
|
$
|
0.40
|
|
|
$
|
1.38
|
|
|
$
|
1.24
|
|
RECONCILIATION OF GAAP TO NON-GAAP EPS
GUIDANCE:
|
|
|
|
|
Fiscal Year Ending
|
|
|
|
December 31, 2016
|
GAAP EPS guidance
|
|
$
|
1.69
|
|
|
Constant currency F/X adjustments
|
|
0.03
|
|
|
Amortization of acquisition-related intangible assets
|
|
0.03
|
|
|
Litigation settlement awards, damages and/or defense costs
|
|
—
|
|
|
Net tax impact of above items
|
|
(0.01
|
)
|
|
Total non-GAAP EPS adjustments
|
|
0.05
|
|
Non-GAAP EPS guidance
|
|
$
|
1.74
|
|
Non-GAAP Financial Measures
The non-GAAP financial measures contained herein are a supplement to the
corresponding financial measures prepared in accordance with U.S.
generally accepted accounting principles (GAAP). The non-GAAP financial
measures presented exclude the items summarized in the above table that
are more fully described below. Management believes that adjustments for
these items assist investors in making comparisons of period-to-period
operating results and that these items are not indicative of the
company’s on-going core operating performance. These non-GAAP financial
measures have certain limitations in that they do not reflect all of the
costs associated with the operations of the company’s business as
determined in accordance with GAAP. Therefore, investors should consider
non-GAAP financial measures in addition to, and not as a substitute for,
or as superior to, measures of financial performance prepared in
accordance with GAAP. The non-GAAP financial measures presented by the
company may be different from the non-GAAP financial measures used by
other companies.
The company has presented the following non-GAAP measures on a basis
consistent with its historical presentation, to assist investors in
understanding the company’s core net operating results on an on-going
basis: (i) non-GAAP net income attributable to Masimo Corporation
stockholders, (ii) non-GAAP product revenue, (iii) non-GAAP gross
profit, (iv) non-GAAP operating expenses, (v) non-GAAP non-operating
income (expense), (vi) non-GAAP noncontrolling interest, and (vii)
non-GAAP net income per diluted share attributable to Masimo Corporation
stockholders. These non-GAAP financial measures may also assist
investors in making comparisons of the company’s core operating results
with those of other companies. Management believes non-GAAP product
revenue, non-GAAP gross profit, non-GAAP net income attributable to
Masimo Corporation stockholders and non-GAAP net income per diluted
share attributable to Masimo Corporation stockholders are important
measures in the evaluation of the Company’s performance and uses these
measures to better understand and evaluate our business.
The non-GAAP financial measures reflect adjustments for the following
items, as well as the related income tax effects thereof:
Constant currency F/X adjustments. Some of
our sales agreements with foreign customers provide for payment in
currencies other than the U.S. Dollar. Similarly, certain of our product
costs and operating expenses, and the related balance sheet payables and
accruals, are denominated in foreign currencies other than the U.S.
Dollar. These foreign currency revenues, costs and expenses,
receivables, payables and accruals, when converted into U.S. Dollars,
can vary significantly from period to period depending on the average
and quarter-end exchange rates during a respective period. We believe
that comparing these foreign currency denominated revenues, costs and
expenses, receivables, payables and accruals by holding the exchange
rates constant with the prior year period is useful to management and
investors in evaluating the performance of our ongoing operations on a
period-to-period basis. We anticipate that fluctuations in foreign
exchange rates and these related constant currency and other foreign
exchange adjustments will continue to occur in future periods.
Amortization of acquisition-related intangibles.
Amortization of intangibles generally represents costs incurred by an
acquired company or other third party to build value prior to our
acquisition of the intangible assets. As such, it is effectively part of
the transaction costs of the acquisition rather than ongoing costs of
operating our core business. As a result, we believe that exclusion of
these costs in presenting non-GAAP financial measures provides
management and investors a more effective means of evaluating its
historical performance and projected costs and the potential for
realizing cost efficiencies within our core business. Amortization of
intangibles will recur in future periods.
Litigation settlement awards, damages and/or
defense costs. In connection with litigation proceedings arising
in the course of our business, we have recorded expenses as a defendant
in such proceedings in the form of damages and directly-related legal
fees, reversals of such damages and directly-related legal fee expenses
upon a court vacating a prior award against us, and re-accruals of such
damages, as well as estimated interest, based on our reassessment of the
probable outcome of the subsequent appeal. In addition, we have also
recorded recoveries of damages and directly-related legal fees as a
plaintiff in litigation proceedings. We believe that exclusion of these
expenses, expense reversals and recoveries is useful to management and
investors in evaluating the performance of our ongoing operations on a
period-to-period basis. In this regard, we note that these expenses,
expense reversals and recoveries are generally unrelated to our core
business and/or infrequent in nature.
Reconciliations between the GAAP and non-GAAP amounts for each financial
statement line item are as follows:
RECONCILIATION OF GAAP REVENUE TO
NON-GAAP REVENUE:
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP product revenue
|
|
$
|
159,762
|
|
|
$
|
153,897
|
|
|
$
|
599,334
|
|
|
$
|
556,764
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
|
|
|
|
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
4,154
|
|
|
—
|
|
|
18,640
|
|
|
—
|
|
|
Total non-GAAP product revenue adjustments
|
|
4,154
|
|
|
—
|
|
|
18,640
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP product revenue
|
|
$
|
163,916
|
|
|
$
|
153,897
|
|
|
$
|
617,974
|
|
|
$
|
556,764
|
|
|
|
|
|
|
|
|
|
|
|
GAAP royalty revenue
|
|
$
|
7,511
|
|
|
$
|
7,891
|
|
|
$
|
30,777
|
|
|
$
|
29,879
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP total revenue
|
|
$
|
171,427
|
|
|
$
|
161,788
|
|
|
$
|
648,751
|
|
|
$
|
586,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP GROSS PROFIT TO
NON-GAAP GROSS PROFIT:
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP gross profit
|
|
$
|
101,745
|
|
|
$
|
109,159
|
|
|
$
|
409,983
|
|
|
$
|
390,779
|
|
|
GAAP product gross profit %
|
|
59.0
|
%
|
|
65.8
|
%
|
|
63.3
|
%
|
|
64.8
|
%
|
|
GAAP total gross profit %
|
|
60.8
|
%
|
|
67.5
|
%
|
|
65.1
|
%
|
|
66.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
|
|
|
|
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
3,047
|
|
|
—
|
|
|
14,374
|
|
|
—
|
|
|
Amortization of acquisition-related intangible assets
|
|
115
|
|
|
114
|
|
|
458
|
|
|
458
|
|
|
Total non-GAAP gross profit adjustments
|
|
3,162
|
|
|
114
|
|
|
14,832
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross profit
|
|
$
|
104,907
|
|
|
$
|
109,273
|
|
|
$
|
424,815
|
|
|
$
|
391,237
|
|
|
Non-GAAP product gross profit %
|
|
59.4
|
%
|
|
65.9
|
%
|
|
63.8
|
%
|
|
64.9
|
%
|
|
Non-GAAP total gross profit %
|
|
61.2
|
%
|
|
67.5
|
%
|
|
65.5
|
%
|
|
66.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING EXPENSES
TO NON-GAAP OPERATING EXPENSES:
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP operating expenses
|
|
$
|
64,853
|
|
|
$
|
76,512
|
|
|
$
|
289,733
|
|
|
$
|
287,266
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
|
|
|
|
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
1,602
|
|
|
—
|
|
|
7,250
|
|
|
—
|
|
|
Amortization of acquisition-related intangible assets
|
|
(273
|
)
|
|
(274
|
)
|
|
(1,094
|
)
|
|
(1,094
|
)
|
|
Litigation settlement awards, damages and/or defense costs
|
|
19,609
|
|
|
—
|
|
|
19,609
|
|
|
10,331
|
|
|
Total non-GAAP operating expenses adjustments
|
|
20,938
|
|
|
(274
|
)
|
|
25,765
|
|
|
9,237
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating expenses
|
|
$
|
85,791
|
|
|
$
|
76,238
|
|
|
$
|
315,498
|
|
|
$
|
296,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NON-OPERATING
INCOME TO NON-GAAP NON-OPERATING INCOME:
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP non-operating income (expense)
|
|
1,883
|
|
|
1,429
|
|
|
3,905
|
|
|
1,472
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
|
|
|
|
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
245
|
|
|
—
|
|
|
(428
|
)
|
|
—
|
|
|
Litigation settlement awards, damages and/or defense costs
|
|
(741
|
)
|
|
—
|
|
|
(741
|
)
|
|
—
|
|
|
Total non-GAAP non-operating income adjustments
|
|
(496
|
)
|
|
—
|
|
|
(1,169
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP non-operating income (expense)
|
|
$
|
1,387
|
|
|
$
|
1,429
|
|
|
$
|
2,736
|
|
|
$
|
1,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NONCONTROLLING
INTEREST TO NON-GAAP NONCONTROLLING INTEREST:
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP noncontrolling interest
|
|
952
|
|
|
565
|
|
|
(1,800
|
)
|
|
1,845
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
|
|
|
|
|
|
|
|
|
|
Litigation settlement awards, damages and/or defense costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,321
|
)
|
|
Tax impact of above items
|
|
—
|
|
|
—
|
|
|
—
|
|
|
341
|
|
|
Total non-GAAP noncontrolling interest adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,980
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP noncontrolling interest
|
|
$
|
952
|
|
|
$
|
565
|
|
|
$
|
(1,800
|
)
|
|
$
|
(135
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME PER
DILUTED SHARE TO NON-GAAP NET INCOME PER DILUTED SHARE:
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
January 2, 2016
|
|
January 3, 2015
|
|
January 2, 2016
|
|
January 3, 2015
|
GAAP net income per diluted share attributable to Masimo Corporation
stockholders
|
|
$
|
0.46
|
|
|
$
|
0.40
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
|
|
|
|
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
0.02
|
|
|
—
|
|
|
0.14
|
|
|
—
|
|
|
Amortization of acquisition-related intangible assets
|
|
0.01
|
|
|
0.01
|
|
|
0.03
|
|
|
0.03
|
|
|
Litigation settlement awards, damages and/or defense costs
|
|
(0.36
|
)
|
|
—
|
|
|
(0.35
|
)
|
|
(0.14
|
)
|
|
Net tax impact of above items
|
|
0.02
|
|
|
(0.01
|
)
|
|
0.01
|
|
|
0.05
|
|
|
Total non-GAAP net income per diluted share adjustments
|
|
(0.31
|
)
|
|
—
|
|
|
(0.17
|
)
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per diluted share attributable to Masimo
Corporation stockholders
|
|
$
|
0.15
|
|
|
$
|
0.40
|
|
|
$
|
1.38
|
|
|
$
|
1.24
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160223006903/en/
Source: Masimo
Masimo
Investor Contact: Eli Kammerman
(949) 297-7077
ekammerman@masimo.com
or
Media
Contact: Irene Paigah
(858) 858-7001
irenap@masimo.com