UNITED STATES | ||||
SECURITIES AND EXCHANGE COMMISSION | ||||
Washington, D.C. 20549 | ||||
FORM 10-K |
ý | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2016 |
OR | |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . |
Commission file number: 000–33001 | ||||
Delaware | 77–0154833 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.001 par value per share | The NASDAQ Stock Market LLC (Nasdaq Global Select Market) |
Large accelerated filer ý | Accelerated filer ¨ | ||
Non-accelerated filer ¨ | Smaller reporting company ¨ | ||
(Do not check if a smaller reporting company) |
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• | Electroencephalography—Equipment, supplies and services used to monitor and visually display the electrical activity generated by the brain and other key physiological signals for both diagnosis and monitoring of neurological disorders in the hospital, research laboratory, clinician office and patient’s home. |
• | Electromyography—Equipment and supplies used to measure electrical activity in nerves, muscles, and critical pathways includes EMG, nerve conduction and evoked potential functionality. |
• | Polysomnography—Equipment and supplies used to measure a variety of respiratory and physiologic functions to assist in the diagnosis and monitoring of sleep disorders, such as insomnia and obstructive sleep apnea, a condition that causes a person to stop breathing intermittently during sleep. |
• | Intraoperative monitoring—Equipment and supplies used to monitor the functional integrity of certain neural structures (i.e. nerves, spinal cord and parts of the brain) during surgery. The goal of IOM is to provide real time guidance to the surgeon and anesthesiologist which will reduce the risk to the patient during surgery. |
• | Transcranial Doppler—Equipment and supplies used to measure blood flow parameters such as velocity in key vascular structures in the brain. This vascular information is helpful in identifying strokes, infarcts and vasospasms. |
• | NeuroWorks; Coherence; NicoletOne; Twin. Our EEG Systems include a broad range of products, from software licenses and ambulatory monitoring systems to advanced laboratory systems with multiple capabilities for EEG, ICU monitoring, long-term monitoring of up to 256 channels, and physician review stations with quantitative EEG analysis capabilities. |
• | Stellate/Gotman Spike and Seizure; GridView; NicoletOne Trends. Our proprietary spike and seizure detection algorithm detects, summarizes, and reports EEG events that save health care professionals time by increasing the speed and accuracy of interpretation. GridView is a tool that allows the clinician to correlate EEG patterns with electrode contacts on a 3D view of the patient brain using magnetic resonance (“MR”) or computed tomography (“CT”) images, thus enabling the visualization and annotation of the brain surface and internal structures involved in the diagnosis of epilepsy. NicoletOne Trends provides a comprehensive set of EEG analysis algorithms that are used to generate compressed trends of large amounts of data to assist in the clinical evaluation and data review process. |
• | Proprietary Signal Amplifiers. Our proprietary signal amplifiers function as the interface between the patient and the computer. The headbox connects electrodes attached to the patient’s head to our EEG monitoring systems. Our proprietary amplifier products are sold for a wide variety of applications under the following brand names: Xltek, Trex, EEG32U, EMU40EX, Brain Monitor, Quantum, Schwarzer EEG, Nicolet v32 and v44 models, C series and Nicolet Wireless 32- and 64- channel amplifiers. |
• | Nicolet Cortical Stimulator. This product is our proprietary device that provides cortical stimulation to the brain during functional brain mapping either before or during surgery to help the surgeon protect the eloquent parts of the brain. The device can be used as a standalone unit or with the fully integrated NicoletOne software that supports control of the device from the software, automated mapping and comprehensive report generation. |
• | Supplies. We also manufacture and market a full line of proprietary EEG needles and other supplies used in the electroencephalography field. |
• | Global Neuro-Diagnostic Services. GND provides ambulatory EEG services with and without video in the patient’s home. Other services such as Remote Monitoring, ICU monitoring, Virtual EMU monitoring and Detailed Video EEG Technical Descriptions with cloud-based test results are also provided. Our services are specifically designed to partner with hospitals and physicians to improve efficiency, results, and turn-around time, and to reduce costs. |
• | Dantec Keypoint. The Dantec Keypoint EMG and EP family of products features amplifiers, stimulators, and strong signal quality. The Keypoint is used for advanced neurodiagnostic applications such as single fiber EMG, visual and auditory evoked potentials, and in routine nerve conduction studies. The Keypoint system is also available in a portable laptop configuration. |
• | Dantec Clavis. The Dantec Clavis device is a hand-held EMG and current stimulation device that provides muscle and nerve localization information to assist with medication and botox injections. In conjunction with the Bo-ject hypodermic needle and electrodes, physicians can better localize the site of the injection. |
• | Nicolet EDX family. A hardware platform of amplifiers, base control units, stimulators and hand-held probes that are sold with Nicolet brand proprietary software. These mid to high end systems have full functionality, strong signal quality, and flexibility. They include EMG, NCS, EP’s, IOM and advanced data analysis features. |
• | Nicolet VikingQuest. An EMG system for the mid-range market. The device runs on our proprietary software. |
• | Natus Neurology UltraPro. This is a low to mid-level product that offers high quality data collection using the Dantec Keypoint amplifiers and the proprietary Natus EMG software. |
• | Supplies. We also manufacture and market a full line of proprietary EMG needles and other supplies used in the electrodiagnostic field. |
• | Embla REMlogic, and Sandman; Xltek SleepWorks; Schwartzer Coherence; and Grass Twin. Our diagnostic PSG systems capture and store all data digitally. The systems enable users to specify rules and personal preferences to be used during analysis, summarizing the results graphically and incorporating them in detailed reports. |
• | Proprietary Amplifiers. Our data acquisition systems incorporate recent developments in superior amplifiers for sleep analysis and are sold under brand names such as Embla and MPR, Xltek Trex and SleepWorks, and Schwarzer. Our amplifiers are used in both hospitals and stand-alone clinics. In addition to exceptional signal quality, headboxes include various tools such as built-in oximeters and controls to allow the user to start and stop a study or perform electrode impedance testing either at the patient’s bedside or from the monitoring room. |
• | Practice Management Software. Our Embla Enterprise Practice Management Software provides a solution for institutions as well as private labs and physicians for patient scheduling, inventory control, staff scheduling, data management, business reports and billing interfaces. Enterprise may be used in conjunction with many Natus PSG products. |
• | PMSD. PastuerMatic Sterile Dryers are used in hospital and clinic sleep laboratories to provide non-chemical sterilization of products used in sleep therapy. An environmentally friendly approach to disinfection, the PMSD products offer cost effective sterilization for sleep labs of all sizes. |
• | Supplies. We also market a broad line of supplies, disposable products and accessories for the PSG laboratory. |
• | Xltek Protektor. The Protektor system is an IOM system that provides medical professionals with all information necessary to make immediate and critical surgical decisions. The system combines flexibility with multi-modality allowing full coverage of IOM techniques. The Protektor comes in 16 or 32 channel options. |
• | Nicolet Endeavor. A dedicated multi-modality IOM system that offers complete flexibility in work flow and test protocols. |
• | Nicolet EDX. These combo systems are used in IOM applications where a smaller number of channels is sufficient. This approach is primarily followed in international markets that utilize the integrated system approach that allows for the use of the system in EMG clinical applications as well as in IOM applications. |
• | Sonara and Sonara Tek. The Sonara is an embedded system that is a self-contained unit that includes CPU, data display screen and speakers. It uses proprietary software with a touch screen menu. Sonara Tek is a small portable device used with a laptop. Both models enable the uploading of images to the hospital information system. |
• | Newborn Hearing Screening—Products used to screen hearing in newborns. |
• | Newborn Brain Injury—Products used to diagnose the severity of brain injury, monitor the effectiveness of drug therapies, detect seizure activity and monitor general neurological status. |
• | Thermoregulation—Products used to control the newborn environment including incubators and warmers. |
• | Jaundice Management—Products used to treat jaundice, the single largest cause for hospital readmission of newborns in the U.S. |
• | Diagnostic Hearing Assessment—Products used to screen for or diagnose hearing loss, or to identify abnormalities affecting the peripheral and central auditory nervous systems in patients of all ages. |
• | Balance and Mobility—Systems to diagnose and assist in treating balance disorders in an evidence-based, multidisciplinary approach. |
• | Pediatric Ocular Imaging—Imaging systems and products used in the advanced science and practice of neonatal and pediatric retinal imaging. |
• | NicView—Streaming video for families with babies in the neonatal intensive care unit (NICU) that enables family members and approved friends to see the new baby, 24/7, from anywhere in the world - from any device. |
• | Nursery Essentials—Products used in the everyday operation of a newborn intensive care unit (“NICU”) and well-baby nursery department within the hospital environment. These products include such items as: Biliband eye protectors, GumDrop pacifiers, MiniMuffs noise attenuators, NeatNick heel lancets, neonatal oxygen hoods, Olympic Circumstraint, Olympic Papoose Boards, Olympic Smart Scales, Olympic Warmettes, OraSwab oral care products, Save the Gonads x-ray protection devices, SugarPlum glucose lancets, SunFish temperature probe covers and TootSweet sucrose solutions. |
• | ALGO 5 and 3i Newborn Hearing Screeners. These AABR devices deliver thousands of soft audible clicks to the newborn’s ears through sound cables and disposable earphones connected to the instrument. Each click elicits an identifiable brain wave, which is detected by disposable electrodes placed on the head of the child and analyzed by the screening device. These devices use our proprietary AABR signal detection algorithm. |
• | ABaer Newborn Hearing Screener. The ABaer, which is a PC-based newborn hearing screening device, offers a combination of AABR, OAE, and diagnostic ABR technologies in one system. |
• | Echo-Screen. Our hand-held Echo-Screen products provide a choice or combination of proprietary ABR and OAE technologies that can also be used for children through adults. The Echo-Screen III device is a compact, multi-modality handheld hearing screener that is tightly integrated with audible Lite Hearing Screening Data Management. |
• | AuDX. Our AuDX product is a hand-held OAE screening device that can be used for newborn hearing screening, as well as patients of all ages, from children through adults. AuDX devices record and analyze OAEs generated by the cochlea through sound cables and disposable ear probes inserted into the patient’s ear canal. OAE technology is unable to detect hearing disorders affecting the neural pathways, such as auditory neuropathy. |
• | ABR Screening Supply Kits. Each ABR screen is carried out with single-use earphones and electrodes, which are alcohol and latex-free. The adhesives used in these supply products are specially formulated for use on the sensitive skin of newborns. To meet the needs of our customers we offer a variety of packaging options. Echo-Screen and ABaer offer the choice of either an earphone or use of ear tips for perform ABR screening. |
• | OAE Supply Products. Each OAE screen is carried out with single-use ear tips that are supplied in a variety of sizes and packaging options. |
• | Olympic Brainz Monitor. The Olympic Brainz Monitor is our latest generation Cerebral Function Monitor. The device can be used in single-channel, two-channel or three-channel modes to continuously monitor and record brain activity. |
• | Incubators. Our NatalCare incubators, including those used for transporting infants, provide high thermal performance with a double wall design, easy to use control panels and features such as improved weighing functionality with automatic centering and an electronic tilting mechanism. The easy to clean, smooth design, and choice of options make these customizable incubators appropriate for different use environments. |
• | neoBLUE Product Family. This product line consists of our neoBLUE, neoBLUE Mini, neoBLUE Cozy, neoBLUE Compact and neoBLUE blanket devices, which utilize light emitting diodes (“LEDs”) to generate a high-intensity, narrow spectrum of blue light that is clinically proven to be most effective in the treatment of newborn jaundice. Our neoBLUE phototherapy devices emit significantly less ultraviolet light and heat than conventional phototherapy devices, reducing the risk of skin damage and dehydration for infants undergoing treatment. Because of the high intensity of these lights, the treatment time associated with phototherapy is reduced. |
• | Medix MediLED Product Family. A full-size, free-standing LED phototherapy system and a MediLED mini light to be used on top of an incubator or attached to the Medix radiant warmer. The MediLED incorporates an array of blue and white LEDs, while the mini system utilizes blue “super LEDs” that provide high intensity phototherapy. |
• | Navigator PRO. Our Navigator PRO for hearing assessment consists of a base system that is augmented by discrete software applications that enhance the system. The Navigator Pro System is a PC-based, configurable device that utilizes evoked potentials, which are electrical signals recorded from the central nervous system that appear in response to repetitive stimuli, such as a clicking noise. The evoked potentials are used to record and display human physiological data associated with auditory and hearing-related disorders. The Navigator Pro System can be used for patients of all ages, from children to adults, including infants and geriatric patients. The device can be configured with additional proprietary software programs for various applications. These additional software programs include: MASTER, AEP, ABaer, and Scout. |
• | Scout SPORT. The Scout SPORT is a PC-based OAE system. The ultra-portable Scout Sport can be carried from one computer to another to test in different locations. For office-based environments, the Scout Sport can be used with a dedicated notebook computer to create an independent portable system. |
• | AuDX PRO. The AuDX PRO is a hand-held OAE screening device with a large color display that can be used for patients of all ages. The AuDX PRO records and analyzes OAEs generated by the cochlea through sound cables and disposable ear probes inserted into the patient’s ear canal. |
• | EquiTest. Proprietary protocols in the EquiTest family of devices objectively quantify and differentiate among sensory, motor, and central adaptive impairments to balance control. This approach is commonly referred to as computerized dynamic posturography (“CDP”). CDP is complementary to clinical tests designed to localize and categorize pathological mechanisms of balance disorders in that it can identify and differentiate the functional impairments associated with the identified disorders. |
• | Balance Master. A family of devices providing objective assessment and retraining of the sensory and voluntary motor control of balance. |
• | VSR and VSR Sport. The VSR provides objective assessment of sensory and voluntary motor control of balance with visual biofeedback. The VSR Sport is designed specifically for the athletic market as part of a concussion management program. It is portable, easy-to use and offers athletic trainers, sports medicine practitioners, and other sport professionals the data needed to make objective return-to-play decisions without relying on subjective evaluation. |
• | inVision. Our inVision device incorporates a set of proprietary diagnostic tests that quantify a patient’s ability to maintain visual acuity and stable gaze while actively moving the head. The objective information enables the clinician to assess the patient’s ability to live and move safely in a dynamic world and to participate in daily-life functions such as driving, walking through a grocery store, or actively engaging in family activities. |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Neurology | 62 | % | 63 | % | 65 | % | ||
Newborn Care | 38 | % | 37 | % | 35 | % | ||
Total | 100 | % | 100 | % | 100 | % |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Devices and Systems | 63 | % | 64 | % | 68 | % | ||
Supplies | 28 | % | 29 | % | 30 | % | ||
Services | 9 | % | 7 | % | 2 | % | ||
Total | 100 | % | 100 | % | 100 | % |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Backlog | $ | 10,555 | $ | 9,359 | $ | 12,429 |
• | Trade conference exhibits; and |
• | Direct presentations to healthcare professionals. |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Domestic revenue | 65.6 | % | 64.4 | % | 60.6 | % |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
International revenue | 34.4 | % | 35.6 | % | 39.4 | % |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Direct purchases by GPO members | 12.3 | % | 9.3 | % | 9.1 | % |
• | Level of specificity, sensitivity, and reliability of the product; |
• | Time required to obtain results with the product, such as to test for or treat a clinical condition; |
• | Relative ease of use of the product; |
• | Depth and breadth of the products features; |
• | Quality of customer support for the product; |
• | Frequency of product updates; |
• | Extent of third-party reimbursement of the cost of the product or procedure; |
• | Extent to which the products conform to standard of care guidelines; and |
• | Price of the product. |
• | Clearance via Section 510(k); or |
• | Premarket approval via Section 515 if the FDA has determined that the medical device in question poses a greater risk of injury. |
• | FDA quality system regulations which require manufacturers to create, implement, and follow design, testing, control, documentation, and other quality assurance procedures; |
• | Medical device reporting regulations, which require that manufacturers report to the FDA certain types of adverse and other events involving their products; and |
• | FDA general prohibitions against promoting products for unapproved uses. |
• | Issuance of a Form 483 citation; |
• | Fines, injunctions, and civil penalties; |
• | Recall or seizure of our products; |
• | Issuance of public notices or warnings; |
• | Imposition of operating restrictions, partial suspension, or total shutdown of production; |
• | Refusal of our requests for 510(k) clearance or pre-market approval of new products; |
• | Withdrawal of 510(k) clearance or pre-market approval already granted; or |
• | Criminal prosecution. |
Name | Age | Position(s) | |||
James B. Hawkins | 61 | President and Chief Executive Officer | |||
Jonathan Kennedy | 46 | Executive Vice President and Chief Financial Officer | |||
Austin F. Noll, III | 50 | Vice President and General Manager, Neurology SBU | |||
Kenneth M. Traverso | 56 | Vice President and General Manager, Newborn Care SBU | |||
D. Christopher Chung, M.D. | 53 | Vice President Medical Affairs, Quality & Regulatory |
• | Publication of clinical study results that demonstrate a lack of efficacy or cost-effectiveness of our products; |
• | Changing governmental and physician group guidelines; |
• | Actual or perceived performance, quality, price, and total cost of ownership deficiencies of our products relative to other competitive products; |
• | Our ability to maintain and enhance our existing relationships and to form new relationships with leading physicians, physician organizations, hospitals, state laboratory personnel, and third-party payers; |
• | Changes in federal, state and third-party payer reimbursement policies for our products; and |
• | Repeal of laws requiring universal newborn hearing screening and metabolic screening. |
• | Impact of possible recessions in economies outside the U.S.; |
• | Political and economic instability, including instability related to war and terrorist attacks; |
• | Contractual provisions governed by foreign law, such as local law rights to sales commissions by terminated distributors; |
• | Decreased healthcare spending by foreign governments that would reduce international demand for our products; |
• | Continued strengthening of the U.S. dollar relative to foreign currencies that could make our products less competitive because approximately half of our international sales are denominated in U.S. dollars; |
• | Greater difficulty in accounts receivable collection and longer collection periods; |
• | Difficulties of staffing and managing foreign operations; |
• | Reduced protection for intellectual property rights in some countries and potentially conflicting intellectual property rights of third parties under the laws of various foreign jurisdictions; |
• | Difficulty in obtaining and maintaining foreign regulatory approval; |
• | Attitudes by clinicians, and cost reimbursement policies, towards use of disposable supplies that are potentially unfavorable to our business; |
• | Complying with U.S. regulations that apply to international operations, including trade laws, the U.S. Foreign Corrupt Practices Act, and anti-boycott laws, as well as international laws such as the U.K. Bribery Act; |
• | Loss of business through government tenders that are held annually in many cases; and |
• | Potentially negative consequences from changes in tax laws, including legislative changes concerning taxation of income earned outside of the U.S. |
• | Clearance via Section 510(k) of the Food, Drug, and Cosmetics Act of 1938, as amended; or |
• | Premarket approval via Section 515 of the Food, Drug, and Cosmetics Act if the FDA has determined that the medical device in question poses a greater risk of injury. |
• | Fines, injunctions and civil penalties; |
• | Recall or seizure of our products; |
• | Issuance of public notices or warnings; |
• | Imposition of operating restrictions, partial suspension, or total shutdown of production; |
• | Refusal of our requests for Section 510(k) clearance or premarket approval of new products; |
• | Withdrawal of Section 510(k) clearance or premarket approvals already granted; |
• | Criminal prosecution; or |
• | Domestic regulation of our products and manufacturing operations, other than that which is administered by the FDA, includes the Environmental Protection Act, the Occupational Safety and Health Act, and state and local counterparts to these Acts. |
• | Result in costly litigation and damage awards; |
• | Divert our management’s attention and resources; |
• | Cause product shipment delays or suspensions; or |
• | Require us to seek to enter into royalty or licensing agreements. |
• | general economic, industry and market conditions; |
• | actions by institutional or other large stockholders; |
• | the depth and liquidity of the market for our common stock; |
• | volume and timing of orders for our products; |
• | developments generally affecting medical device companies; |
• | the announcement of new products or product enhancements by us or our competitors; |
• | changes in earnings estimates or recommendations by securities analysts; |
• | investor perceptions of us and our business, including changes in market valuations of medical device companies; and |
• | our results of operations and financial performance. |
• | 116,000 square feet in Buenos Aires, Argentina, utilized substantially for manufacturing; |
• | 44,900 square feet in Oakville, Ontario, Canada, utilized substantially for research and development; |
• | 42,600 square feet in Gort, Ireland, utilized substantially for manufacturing; |
• | 26,000 square feet in Mundelein, Illinois, previously utilized substantially for manufacturing. Currently held for sale; and |
• | 6,400 square feet in Old Woking, England, utilized substantially for research and development. |
• | 124,000 square feet in Middleton, Wisconsin, pursuant to a lease that expires in April 2024, that is primarily utilized for manufacturing; |
• | 65,000 square feet in Seattle, Washington, pursuant to a lease that expires in December 2017, that is utilized substantially for manufacturing; |
• | 43,000 square feet in Planegg, Germany, pursuant to a lease that expires in December 2021 that is utilized substantially for manufacturing; and |
• | 14,300 square feet in Skovlunde, Denmark, pursuant to a lease that expires with six-month notice that is utilized for research and development. |
High | Low | ||||||
Fiscal Year Ended December 31, 2016: | |||||||
Fourth Quarter | $ | 43.85 | $ | 33.15 | |||
Third Quarter | 44.39 | 36.80 | |||||
Second Quarter | 39.81 | 29.54 | |||||
First Quarter | 47.24 | 32.00 | |||||
Fiscal Year Ended December 31, 2015: | |||||||
Fourth Quarter | $ | 51.05 | $ | 37.85 | |||
Third Quarter | 46.98 | 29.34 | |||||
Second Quarter | 44.37 | 35.73 | |||||
First Quarter | 40.05 | 33.85 |
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||
Natus Medical Inc. | Return % | 18.35 | 101.61 | 60.18 | 33.32 | (27.58 | ) | |||||||||||||
Cum $ | 100.00 | 118.35 | 283.60 | 382.18 | 509.54 | 369.03 | ||||||||||||||
NASDAQ Composite-Total Returns | Return % | 17.45 | 40.12 | 14.75 | 6.96 | 8.87 | ||||||||||||||
Cum $ | 100.00 | 117.45 | 164.57 | 188.84 | 201.98 | 219.89 | ||||||||||||||
S&P 500 Health Care Equipment Index | Return % | 17.27 | 27.69 | 26.28 | 5.97 | 6.48 | ||||||||||||||
Cum $ | 100.00 | 117.27 | 149.74 | 189.09 | 200.39 | 213.38 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
October 1, 2016—October 31, 2016 | 14,300 | $ | 40.01 | 629,234 | $ | 15,044,504 | |||||||
November 1, 2016—November 30, 2016 | 8,700 | $ | 39.63 | 638,082 | $ | 14,699,723 | |||||||
December 1, 2016—December 31, 2016 | 2,900 | $ | 35.29 | 644,312 | $ | 14,597,382 | |||||||
Total | 25,900 | $ | 39.78 | 644,312 | $ | 14,597,382 |
Year ended December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Consolidated Statement of Operations Data (a) (b): | |||||||||||||||||||
Revenue | $ | 381,892 | $ | 375,865 | $ | 355,834 | $ | 344,112 | $ | 292,280 | |||||||||
Cost of revenue | 144,632 | 145,492 | 138,480 | 138,788 | 126,430 | ||||||||||||||
Intangibles amortization | 2,327 | 2,836 | 2,967 | 2,912 | 2,524 | ||||||||||||||
Gross profit | 234,933 | 227,537 | 214,387 | 202,412 | 163,326 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Marketing and selling | 84,834 | 87,675 | 85,729 | 83,138 | 73,970 | ||||||||||||||
Research and development | 33,443 | 30,434 | 30,100 | 30,786 | 28,616 | ||||||||||||||
General and administrative | 50,877 | 46,363 | 45,444 | 43,380 | 40,568 | ||||||||||||||
Intangibles amortization | 8,983 | 7,447 | 3,025 | 5,681 | 6,246 | ||||||||||||||
Restructuring | 1,536 | 2,145 | 4,238 | 4,767 | 8,814 | ||||||||||||||
Total operating expense | 179,673 | 174,064 | 168,536 | 167,752 | 158,214 | ||||||||||||||
Income from operations | 55,260 | 53,473 | 45,851 | 34,660 | 5,112 | ||||||||||||||
Other income (expense), net | (357 | ) | (1,064 | ) | 158 | (2,716 | ) | (835 | ) | ||||||||||
Income before provision for income tax | 54,903 | 52,409 | 46,009 | 31,944 | 4,277 | ||||||||||||||
Provision for income tax | 12,309 | 14,485 | 13,531 | 8,797 | 454 | ||||||||||||||
Net income | $ | 42,594 | $ | 37,924 | $ | 32,478 | $ | 23,147 | $ | 3,823 | |||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 1.31 | $ | 1.17 | $ | 1.03 | $ | 0.77 | $ | 0.13 | |||||||||
Diluted | $ | 1.29 | $ | 1.14 | $ | 1.00 | $ | 0.75 | $ | 0.13 | |||||||||
Weighted average shares used in the calculation of earnings per share: | |||||||||||||||||||
Basic | 32,460 | 32,348 | 31,499 | 29,993 | 29,031 | ||||||||||||||
Diluted | 33,056 | 33,241 | 32,568 | 30,821 | 29,837 |
December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||
Cash, cash equivalents, and short-term investments | $ | 247,570 | $ | 82,469 | $ | 66,558 | $ | 56,106 | $ | 23,057 | |||||||||
Working capital | 325,858 | 164,248 | 148,665 | 118,585 | 71,893 | ||||||||||||||
Total assets | 649,012 | 479,496 | 434,821 | 429,457 | 394,492 | ||||||||||||||
Long-term debt (including current portion) and short-term borrowings | 140,000 | — | — | 38,017 | 32,860 | ||||||||||||||
Total stockholders’ equity | 417,374 | 390,710 | 352,715 | 308,214 | 270,380 |
(a) | Results of operations and financial position of the businesses we have acquired are included from their acquisition dates as follows: Nicolet in July 2012, Grass in February 2013, Peloton in January 2014, GND and NicView in January 2015, Monarch in November 2015, NeuroQuest in March 2016, and RetCam in July 2016. |
(b) | Data for 2014, 2013, and 2012 reflects reclassifications from Cost of revenue to Intangibles amortization, from Marketing and selling, Research and development, and General and administrative to Intangible amortization, and from General and administrative to Restructuring. |
• | Payment of marketing fees by Natus to the GPO, usually based on purchasing experience of group members; and |
• | Non-recourse cancellation provisions. |
Percent of Revenue Years Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of revenue | 37.9 | % | 38.7 | % | 38.9 | % | ||
Intangibles amortization | 0.6 | % | 0.8 | % | 0.8 | % | ||
Gross profit | 61.5 | % | 60.5 | % | 60.2 | % | ||
Operating expenses: | ||||||||
Marketing and selling | 22.2 | % | 23.3 | % | 24.1 | % | ||
Research and development | 8.8 | % | 8.1 | % | 8.5 | % | ||
General and administrative | 13.3 | % | 12.3 | % | 12.8 | % | ||
Intangibles amortization | 2.4 | % | 2.0 | % | 0.9 | % | ||
Restructuring | 0.4 | % | 0.6 | % | 1.2 | % | ||
Total operating expenses | 47.0 | % | 46.3 | % | 47.4 | % | ||
Income from operations | 14.5 | % | 14.2 | % | 12.9 | % | ||
Other income (expense), net | (0.1 | )% | (0.3 | )% | — | % | ||
Income before provision for income tax | 14.4 | % | 13.9 | % | 12.9 | % | ||
Provision for income tax expense | 3.2 | % | 3.9 | % | 3.8 | % | ||
Net income | 11.2 | % | 10.1 | % | 9.1 | % |
Year ended December 31, | ||||||||||
2016 | 2015 | Change | ||||||||
Neurology | ||||||||||
Devices and Systems | $ | 168,200 | $ | 168,776 | — | % | ||||
Supplies | 58,681 | 60,205 | (3 | )% | ||||||
Services | 11,641 | 8,320 | 40 | % | ||||||
Total Neurology Revenue | 238,522 | 237,301 | 1 | % | ||||||
Newborn Care | ||||||||||
Devices and Systems | 72,562 | 72,669 | — | % | ||||||
Supplies | 47,674 | 49,982 | (5 | )% | ||||||
Services | 23,134 | 15,913 | 45 | % | ||||||
Total Newborn Care Revenue | 143,370 | 138,564 | 3 | % | ||||||
Total Revenue | $ | 381,892 | $ | 375,865 | 2 | % |
Year ended December 31, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 381,892 | $ | 375,865 | |||
Cost of revenue | 144,632 | 145,492 | |||||
Intangibles amortization | 2,327 | 2,836 | |||||
Gross profit | 234,933 | 227,537 | |||||
Gross profit percentage | 61.5 | % | 60.5 | % |
Year ended December 31, | |||||||
2016 | 2015 | ||||||
Marketing and selling | $ | 84,834 | $ | 87,675 | |||
Percentage of revenue | 22.2 | % | 23.3 | % | |||
Research and development | $ | 33,443 | $ | 30,434 | |||
Percentage of revenue | 8.8 | % | 8.1 | % | |||
General and administrative | $ | 50,877 | $ | 46,363 | |||
Percentage of revenue | 13.3 | % | 12.3 | % | |||
Intangibles Amortization | $ | 8,983 | $ | 7,447 | |||
Percentage of revenue | 2.4 | % | 2.0 | % | |||
Restructuring | $ | 1,536 | $ | 2,145 | |||
Percentage of revenue | 0.4 | % | 0.6 | % |
Year ended December 31, | ||||||||||
2015 | 2014 | Change | ||||||||
Neurology | ||||||||||
Devices and Systems | $ | 168,776 | $ | 173,006 | (2 | )% | ||||
Supplies | 60,205 | 59,666 | 1 | % | ||||||
Services | 8,320 | — | — | % | ||||||
Total Neurology Revenue | 237,301 | 232,672 | 2 | % | ||||||
Newborn Care | ||||||||||
Devices and Systems | 72,669 | 67,354 | 8 | % | ||||||
Supplies | 49,982 | 48,697 | 3 | % | ||||||
Services | 15,913 | 7,111 | 124 | % | ||||||
Total Newborn Care Revenue | 138,564 | 123,162 | 13 | % | ||||||
Total Revenue | $ | 375,865 | $ | 355,834 | 6 | % |
Year ended December 31, | |||||||
2015 | 2014 | ||||||
Revenue | $ | 375,865 | $ | 355,834 | |||
Cost of revenue | 145,492 | 138,480 | |||||
Intangibles amortization | 2,836 | 2,967 | |||||
Gross profit | 227,537 | 214,387 | |||||
Gross profit percentage | 60.5 | % | 60.2 | % |
Year ended December 31, | |||||||
2015 | 2014 | ||||||
Marketing and selling | $ | 87,675 | $ | 85,729 | |||
Percentage of revenue | 23.3 | % | 24.1 | % | |||
Research and development | $ | 30,434 | $ | 30,100 | |||
Percentage of revenue | 8.1 | % | 8.5 | % | |||
General and administrative | $ | 46,363 | $ | 45,444 | |||
Percentage of revenue | 12.3 | % | 12.8 | % | |||
Intangibles Amortization | $ | 7,447 | $ | 3,025 | |||
Percentage of revenue | 2.0 | % | 0.9 | % | |||
Restructuring | $ | 2,145 | $ | 4,238 | |||
Percentage of revenue | 0.6 | % | 1.2 | % |
December 31, 2016 | December 31, 2015 | December 31, 2014 | |||||||||
Cash, cash equivalents, and investments | $ | 247,570 | $ | 82,469 | $ | 66,558 | |||||
Debt | 140,000 | — | — | ||||||||
Working capital | 325,858 | 164,248 | 148,665 |
Year Ended | |||||||||||
December 31, 2016 | December 31, 2015 | December 31, 2014 | |||||||||
Net cash provided by operating activities | $ | 72,687 | $ | 36,852 | $ | 42,143 | |||||
Net cash used in investing activities | (53,264 | ) | (19,478 | ) | (10,645 | ) | |||||
Net cash provided by (used in) financing activities | 118,417 | 832 | (20,914 | ) |
• | Amount and timing of revenue; |
• | Extent to which our existing and new products gain market acceptance; |
• | Extent to which we make acquisitions; |
• | Cost and timing of product development efforts and the success of these development efforts; |
• | Cost and timing of marketing and selling activities; and |
• | Availability of borrowings under line of credit arrangements and the availability of other means of financing. |
Payments Due by Period | |||||||||||||||||||
Total | Less than 1 Year | 1-3 Years | 4-5 Years | More than 5 Years | |||||||||||||||
Unconditional purchase obligations | $ | 48,756 | $ | 48,756 | $ | — | $ | — | $ | — | |||||||||
Operating lease obligations | 18,110 | 4,070 | 6,336 | 4,866 | 2,838 | ||||||||||||||
Total | $ | 66,866 | $ | 52,826 | $ | 6,336 | $ | 4,866 | $ | 2,838 |
Quarters Ended | |||||||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | ||||||||||||||||||||||||
(in thousands, except per amounts) | |||||||||||||||||||||||||||||||
Revenue | $ | 107,699 | $ | 90,906 | $ | 95,958 | $ | 87,329 | $ | 99,950 | $ | 94,583 | $ | 91,937 | $ | 89,395 | |||||||||||||||
Cost of revenue | 42,090 | 32,194 | 37,879 | 32,469 | 41,023 | 35,520 | 33,844 | 35,105 | |||||||||||||||||||||||
Intangibles amortization | 510 | 612 | 604 | 601 | 788 | 683 | 683 | 682 | |||||||||||||||||||||||
Gross profit | 65,099 | 58,100 | 57,475 | 54,259 | 58,139 | 58,380 | 57,410 | 53,608 | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||
Marketing and selling | 23,255 | 19,746 | 21,237 | 20,596 | 22,330 | 22,495 | 22,108 | 20,742 | |||||||||||||||||||||||
Research and development | 10,847 | 7,689 | 7,105 | 7,802 | 8,568 | 7,700 | 7,309 | 6,857 | |||||||||||||||||||||||
General and administrative | 13,652 | 12,821 | 11,923 | 12,481 | 13,124 | 10,031 | 11,656 | 11,552 | |||||||||||||||||||||||
Intangibles amortization | 2,243 | 2,409 | 2,197 | 2,134 | 2,282 | 2,036 | 2,174 | 955 | |||||||||||||||||||||||
Restructuring | 221 | 197 | 1,083 | 35 | 1,786 | 42 | 161 | 156 | |||||||||||||||||||||||
Total operating expenses | 50,218 | 42,862 | 43,545 | 43,048 | 48,090 | 42,304 | 43,408 | 40,262 | |||||||||||||||||||||||
Income from operations | 14,881 | 15,238 | 13,930 | 11,211 | 10,049 | 16,076 | 14,002 | 13,346 | |||||||||||||||||||||||
Other income (expense), net | 55 | (893 | ) | 25 | 456 | 138 | 7 | (380 | ) | (829 | ) | ||||||||||||||||||||
Income before provision for income tax | 14,936 | 14,345 | 13,955 | 11,667 | 10,187 | 16,083 | 13,622 | 12,517 | |||||||||||||||||||||||
Provision for income tax | 4,705 | 1,032 | 3,443 | 3,129 | 1,643 | 5,151 | 3,771 | 3,920 | |||||||||||||||||||||||
Net income | $ | 10,231 | $ | 13,313 | $ | 10,512 | $ | 8,538 | $ | 8,544 | $ | 10,932 | $ | 9,851 | $ | 8,597 | |||||||||||||||
Earnings per share: | |||||||||||||||||||||||||||||||
Basic | $ | 0.32 | $ | 0.41 | $ | 0.32 | $ | 0.26 | $ | 0.26 | $ | 0.34 | $ | 0.31 | $ | 0.27 | |||||||||||||||
Diluted | $ | 0.31 | $ | 0.40 | $ | 0.32 | $ | 0.26 | $ | 0.26 | $ | 0.33 | $ | 0.30 | $ | 0.26 | |||||||||||||||
Weighted average shares used in the calculation of net earnings per share: | |||||||||||||||||||||||||||||||
Basic | 32,405 | 32,388 | 32,438 | 32,606 | 32,554 | 32,432 | 32,273 | 32,127 | |||||||||||||||||||||||
Diluted | 33,009 | 32,981 | 32,983 | 33,222 | 33,327 | 33,253 | 33,204 | 33,097 |
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants, Awards and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants, Awards and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in the first column) | |||||||
Equity compensation plans approved by security holders | 962,843 | $ | 15.02 | 1,098,514 | ||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | 962,843 | 15.02 | 1,098,514 |
Balance at Beginning of Period | Additions Charged to Expense | Deductions | Balance at End of Period | ||||||||||||
Year ended December 31, 2016 | |||||||||||||||
Allowance for doubtful accounts | $ | 4,686 | $ | 1,123 | $ | (1,627 | ) | $ | 4,182 | ||||||
Valuation allowance | 3,972 | — | (266 | ) | 3,706 | ||||||||||
Year ended December 31, 2015 | |||||||||||||||
Allowance for doubtful accounts | $ | 4,324 | $ | 1,496 | $ | (1,134 | ) | $ | 4,686 | ||||||
Valuation allowance | 3,151 | 821 | — | 3,972 | |||||||||||
Year ended December 31, 2014 | |||||||||||||||
Allowance for doubtful accounts | $ | 2,962 | $ | 1,221 | $ | 141 | $ | 4,324 | |||||||
Valuation allowance | 5,043 | — | (1,892 | ) | 3,151 |
NATUS MEDICAL INCORPORATED | ||
By | /s/ JAMES B. HAWKINS | |
James B. Hawkins President and Chief Executive Officer | ||
By | /s/ JONATHAN A. KENNEDY | |
Jonathan A. Kennedy Executive Vice President and Chief Financial Officer |
Signature | Title | Date | ||
/S/ JAMES B. HAWKINS | President and Chief Executive Officer (Principal Executive Officer) | February 24, 2017 | ||
(James B. Hawkins) | ||||
/S/ JONATHAN A. KENNEDY | Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) | February 24, 2017 | ||
(Jonathan A. Kennedy) | ||||
/S/ ROBERT A. GUNST | Chairman of the Board of Directors | February 24, 2017 | ||
(Robert A. Gunst) | ||||
/S/ DORIS ENGIBOUS | Director | February 24, 2017 | ||
(Doris Engibous) | ||||
/S/ KENNETH E. LUDLUM | Director | February 24, 2017 | ||
(Kenneth E. Ludlum) | ||||
/S/ WILLIAM M. MOORE | Director | February 24, 2017 | ||
(William M. Moore) | ||||
/S/ BARBARA R. PAUL | Director | February 24, 2017 | ||
(Barbara R. Paul) |
December 31, | |||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 213,551 | $ | 82,469 | |||
Short-term investments | 34,019 | — | |||||
Accounts receivable, net of allowance for doubtful accounts of $4,182 and $4,686 | 86,638 | 99,080 | |||||
Inventories | 49,587 | 48,572 | |||||
Prepaid expenses and other current assets | 22,004 | 11,235 | |||||
Total current assets | 405,799 | 241,356 | |||||
Property and equipment, net | 17,333 | 16,967 | |||||
Intangible assets, net | 77,165 | 86,536 | |||||
Goodwill | 113,112 | 107,466 | |||||
Deferred income tax | 14,915 | 12,782 | |||||
Other assets | 20,688 | 14,389 | |||||
Total assets | $ | 649,012 | $ | 479,496 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 18,700 | $ | 23,660 | |||
Accrued liabilities | 37,895 | 42,137 | |||||
Deferred revenue | 23,346 | 11,311 | |||||
Total current liabilities | 79,941 | 77,108 | |||||
Long-term liabilities: | |||||||
Other liabilities | 8,013 | 7,781 | |||||
Long-term debt | 140,000 | — | |||||
Deferred income tax | 3,684 | 3,897 | |||||
Total liabilities | 231,638 | 88,786 | |||||
Commitments and contingencies (Note 20) | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.001 par value; 120,000,000 shares authorized; shares issued and outstanding 32,920,246 in 2016 and 33,153,500 in 2015 | 312,986 | 323,745 | |||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding in 2016 and in 2015 | — | — | |||||
Retained earnings | 149,408 | 106,814 | |||||
Accumulated other comprehensive loss | (45,020 | ) | (39,849 | ) | |||
Total stockholders’ equity | 417,374 | 390,710 | |||||
Total liabilities and stockholders’ equity | $ | 649,012 | $ | 479,496 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue | $ | 381,892 | $ | 375,865 | $ | 355,834 | |||||
Cost of revenue | 144,632 | 145,492 | 138,480 | ||||||||
Intangibles amortization | 2,327 | 2,836 | 2,967 | ||||||||
Gross profit | 234,933 | 227,537 | 214,387 | ||||||||
Operating expenses: | |||||||||||
Marketing and selling | 84,834 | 87,675 | 85,729 | ||||||||
Research and development | 33,443 | 30,434 | 30,100 | ||||||||
General and administrative | 50,877 | 46,363 | 45,444 | ||||||||
Intangibles amortization | 8,983 | 7,447 | 3,025 | ||||||||
Restructuring | 1,536 | 2,145 | 4,238 | ||||||||
Total operating expenses | 179,673 | 174,064 | 168,536 | ||||||||
Income from operations | 55,260 | 53,473 | 45,851 | ||||||||
Other income (expense), net | (357 | ) | (1,064 | ) | 158 | ||||||
Income before provision for income tax | 54,903 | 52,409 | 46,009 | ||||||||
Provision for income tax | 12,309 | 14,485 | 13,531 | ||||||||
Net income | $ | 42,594 | $ | 37,924 | $ | 32,478 | |||||
Net income per share: | |||||||||||
Basic | $ | 1.31 | $ | 1.17 | $ | 1.03 | |||||
Diluted | $ | 1.29 | $ | 1.14 | $ | 1.00 | |||||
Weighted average shares used in the calculation of net income per share: | |||||||||||
Basic | 32,460 | 32,348 | 31,499 | ||||||||
Diluted | 33,056 | 33,241 | 32,568 | ||||||||
Other Comprehensive income: | |||||||||||
Unrealized losses on available-for-sale investments | $ | (168 | ) | $ | — | $ | — | ||||
Foreign currency translation adjustment | (5,003 | ) | (8,378 | ) | (11,218 | ) | |||||
Total other comprehensive income | (5,171 | ) | (8,378 | ) | (11,218 | ) | |||||
Comprehensive income | $ | 37,423 | $ | 29,546 | $ | 21,260 |
Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Stockholders’ Equity | |||||||||||||||
Shares | Amount | |||||||||||||||||
Balances, December 31, 2013 | 31,401,602 | 292,055 | 36,412 | (20,253 | ) | 308,214 | ||||||||||||
Tax benefit of options exercises | — | 7,525 | — | — | 7,525 | |||||||||||||
Vesting of restricted stock units | 13,121 | — | — | — | — | |||||||||||||
Net issuance of restricted stock awards | 180,665 | — | — | — | — | |||||||||||||
Employee stock purchase plan | 45,625 | 1,197 | — | — | 1,197 | |||||||||||||
Stock-based compensation expense | — | 6,062 | — | — | 6,062 | |||||||||||||
Repurchase of company stock | (161,400 | ) | (4,633 | ) | — | — | (4,633 | ) | ||||||||||
Taxes paid related to net share settlement of equity awards | (73,134 | ) | (1,999 | ) | — | — | (1,999 | ) | ||||||||||
Exercise of stock options | 1,242,679 | 15,089 | — | — | 15,089 | |||||||||||||
Other comprehensive income | — | — | — | (11,218 | ) | (11,218 | ) | |||||||||||
Net income | — | — | 32,478 | — | 32,478 | |||||||||||||
Balances, December 31, 2014 | 32,649,158 | 315,296 | 68,890 | (31,471 | ) | 352,715 | ||||||||||||
Tax benefit of options exercises | — | 7,104 | — | — | 7,104 | |||||||||||||
Vesting of restricted stock units | 21,619 | — | — | — | — | |||||||||||||
Net issuance of restricted stock awards | 199,620 | — | — | — | — | |||||||||||||
Employee stock purchase plan | 35,467 | 1,251 | — | — | 1,251 | |||||||||||||
Stock-based compensation expense | — | 6,953 | — | — | 6,953 | |||||||||||||
Repurchase of company stock | (281,915 | ) | (11,526 | ) | — | — | (11,526 | ) | ||||||||||
Taxes paid related to net share settlement of equity awards | (102,112 | ) | (4,341 | ) | — | — | (4,341 | ) | ||||||||||
Exercise of stock options | 631,663 | 9,008 | — | — | 9,008 | |||||||||||||
Other comprehensive income | — | — | — | (8,378 | ) | (8,378 | ) | |||||||||||
Net income | — | — | 37,924 | — | 37,924 | |||||||||||||
Balances, December 31, 2015 | 33,153,500 | $ | 323,745 | $ | 106,814 | $ | (39,849 | ) | $ | 390,710 | ||||||||
Vesting of restricted stock units | 20,937 | — | — | — | — | |||||||||||||
Net issuance of restricted stock awards | 191,492 | — | — | — | — | |||||||||||||
Employee stock purchase plan | 45,515 | 1,360 | — | — | 1,360 | |||||||||||||
Stock-based compensation expense | — | 9,008 | — | — | 9,008 | |||||||||||||
Repurchase of company stock | (545,109 | ) | (19,289 | ) | — | — | (19,289 | ) | ||||||||||
Taxes paid related to net share settlement of equity awards | (97,231 | ) | (4,107 | ) | — | — | (4,107 | ) | ||||||||||
Exercise of stock options | 151,142 | 2,269 | — | — | 2,269 | |||||||||||||
Other comprehensive income | — | — | — | (5,171 | ) | (5,171 | ) | |||||||||||
Net income | — | — | 42,594 | — | 42,594 | |||||||||||||
Balances, December 31, 2016 | 32,920,246 | $ | 312,986 | $ | 149,408 | $ | (45,020 | ) | $ | 417,374 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Operating activities: | |||||||||||
Net income | $ | 42,594 | $ | 37,924 | $ | 32,478 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Provision for losses on accounts receivable | 1,123 | 1,496 | 991 | ||||||||
Excess tax benefit on the exercise of stock options | — | (7,104 | ) | (7,525 | ) | ||||||
Depreciation and amortization | 16,879 | 15,987 | 11,759 | ||||||||
Gain on disposal of property and equipment | (29 | ) | (5 | ) | — | ||||||
Impairment of intangible assets | — | — | 598 | ||||||||
Impairment of property and equipment | — | — | 2,177 | ||||||||
Warranty reserve | 2,934 | 10,729 | 2,306 | ||||||||
Stock-based compensation | 9,008 | 6,953 | 6,062 | ||||||||
Changes in operating assets and liabilities, net of assets and liabilities acquired in acquisitions: | |||||||||||
Accounts receivable | 19,723 | (15,272 | ) | (2,431 | ) | ||||||
Inventories | (7,668 | ) | (12,232 | ) | (2,017 | ) | |||||
Other assets | (11,387 | ) | 858 | (3,667 | ) | ||||||
Accounts payable | (4,965 | ) | 3,270 | (7,648 | ) | ||||||
Accrued liabilities | (6,967 | ) | (6,177 | ) | 6,595 | ||||||
Deferred revenue | 13,879 | (1,118 | ) | (775 | ) | ||||||
Deferred taxes | (2,437 | ) | 1,543 | 3,240 | |||||||
Net cash provided by operating activities | 72,687 | 36,852 | 42,143 | ||||||||
Investing activities: | |||||||||||
Acquisition of businesses, net of cash acquired | (15,849 | ) | (14,284 | ) | (4,925 | ) | |||||
Acquisition of property and equipment | (3,186 | ) | (4,068 | ) | (4,239 | ) | |||||
Acquisition of intangible assets | (210 | ) | (1,126 | ) | (1,481 | ) | |||||
Purchases of short-term investments | (34,019 | ) | — | — | |||||||
Net cash used in investing activities | (53,264 | ) | (19,478 | ) | (10,645 | ) | |||||
Financing activities: | |||||||||||
Proceeds from stock option exercises and ESPP | 3,630 | 10,258 | 16,210 | ||||||||
Excess tax benefit on the exercise of stock options | — | 7,104 | 7,525 | ||||||||
Repurchase of company stock | (19,289 | ) | (11,525 | ) | (4,633 | ) | |||||
Taxes paid related to net share settlement of equity awards | (4,107 | ) | (4,341 | ) | (1,999 | ) | |||||
Proceeds from short-term borrowings | 16,000 | — | — | ||||||||
Proceeds from long-term borrowings | 140,000 | — | — | ||||||||
Deferred debt issuance costs | (533 | ) | — | — | |||||||
Contingent consideration earn-out | (1,284 | ) | (664 | ) | — | ||||||
Payments on borrowings | (16,000 | ) | — | (38,017 | ) | ||||||
Net cash (used in)/provided by financing activities | 118,417 | 832 | (20,914 | ) | |||||||
Exchange rate effect on cash and cash equivalents | (6,758 | ) | (2,295 | ) | (132 | ) | |||||
Net increase in cash and cash equivalents | 131,082 | 15,911 | 10,452 | ||||||||
Cash and cash equivalents, beginning of year | 82,469 | 66,558 | 56,106 | ||||||||
Cash and cash equivalents, end of year | $ | 213,551 | $ | 82,469 | $ | 66,558 | |||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 41 | $ | — | $ | 434 | |||||
Cash paid for income taxes | $ | 16,344 | $ | 10,164 | $ | 5,672 | |||||
Non-cash investing activities: | |||||||||||
Property and equipment included in accounts payable | $ | 134 | $ | 289 | $ | 122 | |||||
Inventory transferred to property and equipment | $ | 1,303 | $ | 1,056 | $ | 1,350 |
• | Payment of marketing fees by Natus to the GPO, usually based on purchasing experience of group members; and |
• | Non-recourse cancellation provisions. |
December 31, 2016 | December 31, 2015 | ||||
Cash and cash equivalents: | |||||
Cash | 213,551 | 82,469 | |||
Short-term investments: | |||||
U.S. investment grade bonds | 24,477 | — | |||
Developed investment grade bonds | 9,542 | — | |||
Total short-term investments | 34,019 | — | |||
Total cash, cash equivalents and short-term investments | 247,570 | 82,469 |
December 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||
Aggregated Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Aggregated Fair Value | Aggregated Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Aggregated Fair Value | ||||||||||||||||||||||||
U.S. investment grade bonds | 24,531 | — | (54 | ) | 24,477 | — | — | — | — | ||||||||||||||||||||||
Developed investment grade bonds | 9,567 | — | (25 | ) | 9,542 | — | — | — | — | ||||||||||||||||||||||
Total short-term investments | $ | 34,098 | $ | — | $ | (79 | ) | $ | 34,019 | $ | — | $ | — | $ | — | $ | — |
December 31, 2016 | December 31, 2015 | ||||||
Investments | Investments | ||||||
Due in one year or less | $ | 21,655 | $ | — | |||
Due after one year through five years | 12,364 | — | |||||
Total short-term investment | $ | 34,019 | $ | — |
December 31, | |||||||
2016 | 2015 | ||||||
Raw materials and subassemblies | $ | 28,245 | $ | 19,041 | |||
Work in process | 1,507 | 1,343 | |||||
Finished goods | 34,908 | 36,149 | |||||
Total Inventories | 64,660 | 56,533 | |||||
Less: Non-current Inventories | (15,073 | ) | (7,961 | ) | |||
Inventories | $ | 49,587 | $ | 48,572 |
December 31, | |||||||
2016 | 2015 | ||||||
Land | $ | 2,856 | $ | 2,918 | |||
Buildings | 5,219 | 5,662 | |||||
Leasehold improvements | 2,386 | 2,345 | |||||
Office furniture and equipment | 18,398 | 15,602 | |||||
Computer software and hardware | 9,100 | 8,752 | |||||
Demonstration and loaned equipment | 11,393 | 11,216 | |||||
49,352 | 46,495 | ||||||
Accumulated depreciation | (32,019 | ) | (29,528 | ) | |||
Total | $ | 17,333 | $ | 16,967 |
December 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Impairment | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Impairment | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||
Technology | $ | 62,563 | — | $ | (34,683 | ) | $ | 27,880 | $ | 63,668 | — | $ | (31,600 | ) | $ | 32,068 | |||||||||||||
Customer related | 38,087 | — | (17,610 | ) | 20,477 | 35,529 | — | (14,352 | ) | 21,177 | |||||||||||||||||||
Trade names | 32,106 | (3,290 | ) | (7,135 | ) | 21,681 | 31,837 | (3,340 | ) | (3,052 | ) | 25,445 | |||||||||||||||||
Internally developed software | 16,978 | — | (10,220 | ) | 6,758 | 15,513 | — | (8,155 | ) | 7,358 | |||||||||||||||||||
Patents | 2,620 | — | (2,251 | ) | 369 | 2,663 | — | (2,175 | ) | 488 | |||||||||||||||||||
Total Definite-lived intangible assets | 152,354 | (3,290 | ) | (71,899 | ) | 77,165 | 149,210 | (3,340 | ) | (59,334 | ) | 86,536 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Technology | $ | 3,407 | $ | 3,916 | $ | 3,993 | |||||
Customer related | 3,452 | 2,938 | 1,892 | ||||||||
Trade names | 4,115 | 3,159 | — | ||||||||
Internally developed software | 2,069 | 1,620 | 1,434 | ||||||||
Patents | 112 | 112 | 113 | ||||||||
Total amortization | $ | 13,155 | $ | 11,745 | $ | 7,432 |
2017 | $ | 13,130 | |
2018 | 12,908 | ||
2019 | 11,753 | ||
2020 | 9,558 | ||
2021 | 8,270 | ||
Thereafter | 21,546 | ||
Total expected amortization expense | $ | 77,165 |
As of December 31, 2014 | $ | 96,316 | |
Acquisitions/Purchase Accounting Adjustments | 13,547 | ||
Foreign currency translation | (2,397 | ) | |
As of December 31, 2015 | $ | 107,466 | |
Acquisitions/Purchase Accounting Adjustments | 6,705 | ||
Foreign currency translation | (1,059 | ) | |
As of December 31, 2016 | $ | 113,112 |
December 31, | |||||||
2016 | 2015 | ||||||
Compensation and related benefits | $ | 16,064 | $ | 16,752 | |||
Accrued federal, state, and local taxes | 4,160 | 4,707 | |||||
Warranty reserve | 10,670 | 10,386 | |||||
Accrued professional fees | 1,191 | 520 | |||||
Contingent consideration | 3,043 | 6,209 | |||||
Other | 2,767 | 3,563 | |||||
Total | $ | 37,895 | $ | 42,137 |
December 31, | |||||||
2016 | 2015 | ||||||
Contingent tax obligations | $ | 6,125 | $ | 6,376 | |||
Non-current deferred revenue | 1,885 | 1,401 | |||||
Other | 3 | 4 | |||||
Total | $ | 8,013 | $ | 7,781 |
December 31, | |||||||
2016 | 2015 | ||||||
Revolving credit facility of $140 million, interest at LIBOR plus 1.75% | $ | 140,000 | $ | — | |||
Less: current portion of long-term debt | — | — | |||||
Total long-term debt | $ | 140,000 | $ | — |
December 31, | |||||||
2016 | 2015 | ||||||
2017 | $ | — | $ | — | |||
2018 | — | — | |||||
2019 | — | $ | — | ||||
Thereafter | 140,000 | — | |||||
Total | $ | 140,000 | $ | — |
Balance at Beginning of Period | Assumed Through Acquisitions | Additions Charged to Expense | Reductions | Balance at End of Period | |||||||||||||||
December 31, 2016 | $ | 10,386 | $ | 222 | $ | 2,711 | $ | (2,649 | ) | $ | 10,670 | ||||||||
December 31, 2015 | $ | 2,753 | $ | — | $ | 10,729 | $ | (3,096 | ) | $ | 10,386 | ||||||||
December 31, 2014 | $ | 3,143 | $ | — | $ | 2,306 | $ | (2,696 | ) | $ | 2,753 |
December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net income | $ | 42,594 | $ | 37,924 | $ | 32,478 | |||||
Weighted average common shares | 32,460 | 32,348 | 31,499 | ||||||||
Dilutive effect of stock based awards | 596 | 893 | 1,069 | ||||||||
Diluted Shares | 33,056 | 33,241 | 32,568 | ||||||||
Basic earnings per share | $ | 1.31 | $ | 1.17 | $ | 1.03 | |||||
Diluted earnings per share | $ | 1.29 | $ | 1.14 | $ | 1.00 | |||||
Shares excluded from calculation of diluted EPS | 2 | — | 239 |
December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Cost of revenue | $ | 219 | $ | 156 | $ | 143 | |||||
Marketing and selling | 821 | 808 | 977 | ||||||||
Research and development | 1,515 | 1,264 | 664 | ||||||||
General and administrative | 6,453 | 4,725 | 4,278 | ||||||||
Total expense | 9,008 | 6,953 | 6,062 |
• | Incentive stock options to employees; |
• | Non-statutory stock options to employees, directors and consultants; |
• | Restricted stock awards and restricted stock units; |
• | Stock bonuses; and |
• | Stock appreciation rights. |
Number of Shares | Weighted Average Exercise Price | |||||
Outstanding, December 31, 2015 (737,032 shares exercisable at a weighted average exercise price of $14.40 per share) | 1,105,182 | $ | 15.07 | |||
Granted | — | $ | — | |||
Exercised | (151,142 | ) | $ | 15.01 | ||
Forfeited | (18,600 | ) | $ | 17.62 | ||
Expired | (2,500 | ) | $ | 16.78 | ||
Outstanding, December 31, 2016 (816,691 shares exercisable at a weighted average exercise price of $14.54 per share) | 932,940 | $ | 15.02 |
Shares | Weighted Average Grant Date Fair Value | |||||
Unvested at December 31, 2015 | 535,208 | $ | 24.87 | |||
Granted | 205,234 | $ | 44.22 | |||
Vested | (212,811 | ) | $ | 19.75 | ||
Forfeited | (21,242 | ) | $ | 26.69 | ||
Unvested at December 31, 2016 | 506,389 | $ | 34.82 |
Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding at December 31, 2015 | 45,483 | $ | 24.57 | |||
Awarded | 11,860 | $ | 45.23 | |||
Released | (24,687 | ) | $ | 21.52 | ||
Forfeited | (2,753 | ) | $ | 26.42 | ||
Outstanding at December 31, 2016 | 29,903 | $ | 34.39 |
Personnel Related | Facility Related | Total | ||||||||
Balance as of December 31, 2013 | $ | 335 | — | $ | 335 | |||||
Additions | 1,209 | 680 | 1,889 | |||||||
Reversals | (52 | ) | — | (52 | ) | |||||
Payments | (1,124 | ) | (680 | ) | (1,804 | ) | ||||
Balance as of December 31, 2014 | 368 | — | 368 | |||||||
Additions | 1,905 | 156 | 2,061 | |||||||
Reversals | (124 | ) | — | (124 | ) | |||||
Payments | (473 | ) | (156 | ) | (629 | ) | ||||
Balance as of December 31, 2015 | 1,676 | — | 1,676 | |||||||
Additions | 1,093 | 725 | 1,818 | |||||||
Reversals | (436 | ) | — | (436 | ) | |||||
Payments | (1,990 | ) | (573 | ) | (2,563 | ) | ||||
Balance as of December 31, 2016 | $ | 343 | 152 | $ | 495 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Interest income | $ | 315 | $ | 27 | $ | 119 | |||||
Interest expense | (430 | ) | (352 | ) | (438 | ) | |||||
Foreign currency loss | (359 | ) | (1,415 | ) | (37 | ) | |||||
Other | 117 | 676 | 514 | ||||||||
Total other income (expense), net | $ | (357 | ) | $ | (1,064 | ) | $ | 158 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
U.S. | $ | 68 | $ | 20,507 | $ | 16,621 | |||||
Foreign | 54,835 | 31,902 | 29,388 | ||||||||
Income before provision for income tax | $ | 54,903 | $ | 52,409 | $ | 46,009 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current | |||||||||||
U.S. Federal | $ | (1,388 | ) | $ | 13,497 | $ | 6,514 | ||||
U.S. State and local | 692 | 1,984 | 1,082 | ||||||||
Non-U.S. | 15,069 | 2,239 | 6,874 | ||||||||
Total current tax expense | 14,373 | 17,720 | 14,470 | ||||||||
Deferred | |||||||||||
U.S. Federal | (1,534 | ) | (3,410 | ) | (728 | ) | |||||
U.S. State and local | (378 | ) | (385 | ) | (37 | ) | |||||
Non-U.S. | (152 | ) | 560 | (174 | ) | ||||||
Total deferred tax benefit | (2,064 | ) | (3,235 | ) | (939 | ) | |||||
Total income tax expense | $ | 12,309 | $ | 14,485 | $ | 13,531 |
December 31, | |||||||
2016 | 2015 | ||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 6,557 | $ | 5,174 | |||
Credit carryforwards | 2,512 | 2,078 | |||||
Accruals deductible in different periods | 16,157 | 18,721 | |||||
Employee benefits | 2,389 | 2,081 | |||||
Total deferred tax assets | 27,615 | 28,054 | |||||
Valuation allowance | (3,706 | ) | (3,972 | ) | |||
Total net deferred tax assets | $ | 23,909 | $ | 24,082 | |||
Deferred tax liabilities: | |||||||
Basis difference in fixed and intangible assets | (12,678 | ) | (15,197 | ) | |||
Total deferred tax liabilities | (12,678 | ) | (15,197 | ) | |||
Total net deferred tax assets | $ | 11,231 | $ | 8,885 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Federal statutory tax expense | $ | 19,216 | $ | 18,343 | $ | 16,103 | |||||
State tax expense | 188 | 1,249 | 892 | ||||||||
Foreign taxes at rates less than U.S. rates | (6,838 | ) | (1,760 | ) | (3,097 | ) | |||||
Deferred charges on sales of U.S. intellectual property | 980 | (5,878 | ) | — | |||||||
Equity compensation | (530 | ) | 204 | 93 | |||||||
Tax credits | (911 | ) | (935 | ) | (862 | ) | |||||
Uncertain tax position | 485 | 3,897 | 1,163 | ||||||||
Lapse of statute | (495 | ) | (784 | ) | (652 | ) | |||||
Change of valuation allowance on foreign tax credit | — | — | (491 | ) | |||||||
Earnout adjustment | (1,184 | ) | — | — | |||||||
Tax audits | 543 | — | — | ||||||||
Other | 855 | 149 | 382 | ||||||||
Total expense | $ | 12,309 | $ | 14,485 | $ | 13,531 |
Balance at January 1, 2014 | $ | 3,387 | |
Increases for tax positions related to prior years | 493 | ||
Increases for tax positions related to the current year | 73 | ||
Lapse of statutes of limitations | (558 | ) | |
Balance at January 1, 2015 | $ | 3,395 | |
Increases for tax positions related to prior years | 281 | ||
Increases for tax positions related to the current year | 3,302 | ||
Lapse of statutes of limitations | (664 | ) | |
Balance at January 1, 2016 | $ | 6,314 | |
Increases for tax positions related to prior years | 174 | ||
Increases for tax positions related to the current year | 70 | ||
Lapse of statutes of limitations | (475 | ) | |
Foreign exchange difference | (185 | ) | |
Balance at December 31, 2016 | $ | 5,898 |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue: | |||||||||||
United States | $ | 250,694 | $ | 242,050 | $ | 215,543 | |||||
Foreign countries | 131,198 | 133,815 | 140,291 | ||||||||
$ | 381,892 | $ | 375,865 | $ | 355,834 | ||||||
Revenue by Operating Segment: | |||||||||||
Neurology | |||||||||||
Devices and Systems | $ | 168,200 | $ | 168,776 | $ | 173,006 | |||||
Supplies | 58,681 | 60,205 | 59,666 | ||||||||
Services | 11,641 | 8,320 | — | ||||||||
Total Neurology Revenue | $ | 238,522 | $ | 237,301 | $ | 232,672 | |||||
Newborn Care | |||||||||||
Devices and Systems | $ | 72,562 | $ | 72,669 | $ | 67,354 | |||||
Supplies | 47,674 | 49,982 | 48,697 | ||||||||
Services | 23,134 | 15,913 | 7,111 | ||||||||
Total Newborn Care Revenue | $ | 143,370 | $ | 138,564 | $ | 123,162 | |||||
Total Revenue | $ | 381,892 | $ | 375,865 | $ | 355,834 | |||||
Property and equipment, net: | |||||||||||
United States | $ | 7,024 | $ | 6,664 | |||||||
Canada | 4,941 | 5,165 | |||||||||
Ireland | 2,530 | 1,651 | |||||||||
Argentina | 2,121 | 2,361 | |||||||||
Other foreign countries | 717 | 1,126 | |||||||||
$ | 17,333 | $ | 16,967 |
Operating Leases | |||
Year Ending December 31, | |||
2017 | $ | 3,985 | |
2018 | 3,186 | ||
2019 | 2,996 | ||
2020 | 2,590 | ||
2021 | 2,250 | ||
Thereafter | 2,838 | ||
Total minimum lease payments | $ | 17,845 |
December 31, 2015 | Additions | Payments | Adjustments | December 31, 2016 | |||||||||||||||
Liabilities: | |||||||||||||||||||
Contingent consideration | $ | 6,209 | $ | 2,500 | $ | (2,284 | ) | $ | (3,382 | ) | $ | 3,043 | |||||||
Total | $ | 6,209 | $ | 2,500 | $ | (2,284 | ) | $ | (3,382 | ) | $ | 3,043 |
December 31, 2016 | |||||||||||
Level I | Level II | Level III | Total | ||||||||
Short term investments | |||||||||||
U.S. Treasury Bills | — | 7,688 | — | 7,688 | |||||||
U.S. investment grade bonds | — | 16,789 | — | 16,789 | |||||||
Developed investment grade bonds | — | 9,542 | — | 9,542 | |||||||
Total short term investments | — | 34,019 | — | 34,019 |
Incorporated By Reference | |||||||||||
Exhibit No. | Exhibit | Filing | Exhibit No. | File No. | File Date | ||||||
3.1 | Natus Medical Incorporated Amended and Restated Certificate of Incorporation | S-1 | 3.1.1 | 333-44138 | 8/18/2000 | ||||||
3.2 | Natus Medical Incorporated Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock | 8-A | 3.1.2 | 000-33001 | 9/6/2002 | ||||||
3.3 | Bylaws of Natus Medical Incorporated | 8-K | 3.1 | 000-33001 | 6/18/2008 | ||||||
10.1 | Form of Indemnification Agreement between Natus Medical Incorporated and each of its directors and officers | S-1 | 10.1 | 333-44138 | 8/18/2000 | ||||||
10.2* | Natus Medical Incorporated Amended and Restated 2000 Stock Awards Plan | 8-K | 10.1 | 000-33001 | 1/4/2006 | ||||||
10.2.1* | Form of Option Agreement under the Amended and Restated 2000 Stock Awards Plan | S-1 | 10.3.1 | 333-44138 | 8/18/2000 | ||||||
10.2.2* | Form of Restricted Stock Purchase Agreement under the Amended and Restated 2000 Stock Awards Plan | 10-Q | 10.2 | 000-33001 | 8/9/2006 | ||||||
10.2.3* | Form of Restricted Stock Unit Agreement under the Amended and Restated 2000 Stock Awards Plan | 10-K | 10.2.3 | 000-33001 | 3/14/2008 | ||||||
10.3* | Natus Medical Incorporated 2000 Director Option Plan | 10-Q | 10.02 | 000-33001 | 5/9/2008 | ||||||
10.3.1* | Form of Option Agreement under the 2000 Director Option Plan | S-1 | 10.4.1 | 333-44138 | 8/18/2000 | ||||||
10.4* | Natus Medical Incorporated 2000 Supplemental Stock Option Plan | S-1 | 10.15 | 333-44138 | 2/9/2001 | ||||||
10.4.1* | Form of Option Agreement for 2000 Supplemental Stock Option Plan | S-1 | 10.15.1 | 333-44138 | 2/9/2001 | ||||||
10.5* | Natus Medical Incorporated 2000 Employee Stock Purchase Plan and form of subscription agreement thereunder | 8-K | 10.2 | 000-33001 | 1/4/2006 | ||||||
10.6* | [Amended] 2011 Stock Awards Plan | 14-A | — | 000-33001 | 4/20/2011 | ||||||
10.6.1* | Form of Stock Option Award Agreement under the [Amended] 2011 Stock Plan | 10-Q | 10.1 | 000-33001 | 11/7/2011 | ||||||
10.6.2* | Form of Restricted Stock Award Purchase Agreement | 10-Q | 10.2 | 000-33001 | 11/7/2011 | ||||||
10.6.3* | Form of Restricted Stock Unit Agreement | 10-Q | 10.3 | 000-33001 | 11/7/2011 | ||||||
10.7* | 2011 Employee Stock Purchase Plan | 14-A | — | 000-33001 | 4/20/2011 | ||||||
10.7.1* | 2011 Employee Stock Purchase Plan Subscription Agreement | 14-A | — | 000-33001 | 4/20/2011 | ||||||
10.8* | Form of Employment Agreement between Natus Medical Incorporated and each of its executive officers other than its Chief Executive Officer and Chief Financial Officer | 10-K | 10.10 | 000-33001 | 3/10/2009 | ||||||
10.8.1* | Form of Amendment to Employment Agreement between Natus Medical Incorporated and each of its executive officers other than its Chief Executive Officer and Chief Financial Officer |
Incorporated By Reference | |||||||||||
Exhibit No. | Exhibit | Filing | Exhibit No. | File No. | File Date | ||||||
10.9* | Amended employment agreement between Natus Medical Incorporated and its Chief Executive Officer, James B. Hawkins dated April 19, 2013 | 8-K | 99.1 | 000-33001 | 4/22/2013 | ||||||
10.10* | Form of Employment Agreement between Natus Medical Incorporated and Jonathan A. Kennedy dated April 8, 2013 | 10-Q | 10.1 | 000-33001 | 8/8/2013 | ||||||
10.11 | Credit Agreement between Natus Medical Incorporated and CitiBank, NA dated October 9, 2015 | 8-K | 10.1 | 000-33001 | 10/9/2015 | ||||||
10.12 | Agreement For the Acquisition of Medical Devices between Medix ICSA and the Ministry of Health of the Republic of Venezuela dated October 15, 2015 | 8-K | 000-33001 | 10/15/2015 | |||||||
10.13 | Amendment to Agreement For the Acquisition of Medical Devices between Medix ICSA and the Ministry of Health of the Republic of Venezuela dated October 15, 2015 | 10-Q | 10.2 | 000-33001 | 11/3/2016 | ||||||
10.14 | Credit Agreement, dated September 23, 2016, between the Company, JP Morgan Chase Bank, N.A. and Citibank, N.A. | 10-Q | 10.1 | 000-33001 | 11/3/2016 | ||||||
10.15 | Master Purchase Agreement, dated September 25, 2016, between GN Hearing A/S, GN Nord A/S and the Company | 10-Q | 10.3 | 000-33001 | 11/3/2016 | ||||||
16.1 | Letter Regarding Change in Certifying Accountant | 8-K | 16.1 | 000-33001 | 3/28/2014 | ||||||
21.1 | Significant Subsidiaries of the Registrant | ||||||||||
23.1 | Consent of Independent Registered Public Accounting Firm | ||||||||||
23.2 | Consent of Independent Registered Public Accounting Firm | ||||||||||
24.1 | Power of Attorney (included on signature page) | ||||||||||
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||||
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||||
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||||||
101.INS | XBRL Instance Document | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||
101.CAL | XBRL Taxonomy Extension Label Calculation Linkbase Document | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Document | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
STATE or JURISDICTION of INCORPORATION | PERCENT of OWNERSHIP | |||||
Natus Medical Incorporated | Delaware | |||||
Natus Neurology Incorporated | Delaware | 100 | % | |||
Natus Manufacturing Ireland, Ltd. | Ireland | 100 | % | |||
Natus Europe Gmbh | Germany | 100 | % | |||
Excel Tech Corp. (Xltek) | Canada | 100 | % | |||
Medix I.C.S.A. | Argentina | 100 | % | |||
Embla Systems, Ltd. | Canada | 100 | % |
Date: | February 24, 2017 | |||||
/s/ James B. Hawkins | ||||||
James B. Hawkins | ||||||
President and Chief Executive Officer |
Date: | February 24, 2017 | |||||
/s/ Jonathan A. Kennedy | ||||||
Jonathan A. Kennedy | ||||||
Executive Vice President | ||||||
and Chief Financial Officer |
/s/ James B. Hawkins | |
Print Name: James B. Hawkins | |
Title: President and Chief Executive Officer | |
Date: | February 24, 2017 |
/s/ Jonathan A. Kennedy | |
Print Name: Jonathan A. Kennedy | |
Title: Executive Vice President and Chief Financial Officer | |
Date: | February 24, 2017 |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Feb. 17, 2017 |
Jun. 30, 2016 |
|
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | BABY | ||
Entity Registrant Name | NATUS MEDICAL INC | ||
Entity Central Index Key | 0000878526 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 32,866,703 | ||
Entity Public Float | $ 1,408,062,148 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 4,686 | $ 4,686 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 120,000,000 | 120,000,000 |
Common Stock, shares issued | 32,920,246 | 33,153,500 |
Common Stock, shares outstanding | 32,920,246 | 33,153,500 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Statement [Abstract] | |||
Revenue | $ 381,892 | $ 375,865 | $ 355,834 |
Cost of revenue | 144,632 | 145,492 | 138,480 |
Intangibles amortization | 2,327 | 2,836 | 2,967 |
Gross profit | 234,933 | 227,537 | 214,387 |
Operating expenses: | |||
Marketing and selling | 84,834 | 87,675 | 85,729 |
Research and development | 33,443 | 30,434 | 30,100 |
General and administrative | 50,877 | 46,363 | 45,444 |
Intangibles amortization | 8,983 | 7,447 | 3,025 |
Restructuring | 1,536 | 2,145 | 4,238 |
Total operating expenses | 179,673 | 174,064 | 168,536 |
Income from operations | 55,260 | 53,473 | 45,851 |
Other income (expense), net | (357) | (1,064) | 158 |
Income before provision for income tax | 54,903 | 52,409 | 46,009 |
Provision for income tax | 12,309 | 14,485 | 13,531 |
Net income | $ 42,594 | $ 37,924 | $ 32,478 |
Weighted average shares used in the calculation of net income per share: | |||
Basic | $ 1.31 | $ 1.17 | $ 1.03 |
Diluted (in dollars per share) | $ 1.29 | $ 1.14 | $ 1.00 |
Diluted | |||
Basic (shares) | 32,460 | 32,348 | 31,499 |
Diluted (shares) | 33,056 | 33,241 | 32,568 |
Other Comprehensive income: | |||
Unrealized losses on available-for-sale investments | $ (168) | $ 0 | $ 0 |
Foreign currency translation adjustment | (5,003) | (8,378) | (11,218) |
Total other comprehensive income | (5,171) | (8,378) | (11,218) |
Basic | $ 37,423 | $ 29,546 | $ 21,260 |
Organization and Significant Accounting Policies |
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Dec. 31, 2016 | |||||||||
Accounting Policies [Abstract] | |||||||||
Organization and Significant Accounting Policies | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization Natus Medical Incorporated (“Natus”, the “Company”) was incorporated in California in May 1987 and reincorporated in Delaware in August 2000. Natus is a leading provider of newborn care and neurology healthcare products and services used for the screening, diagnosis, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, neuromuscular diseases and balance and mobility disorders. Product offerings include computerized neurodiagnostic systems for audiology, neurology, polysomnography, and neonatology, as well as newborn care products such as hearing screening systems, phototherapy devices for the treatment of newborn jaundice, head-cooling products for the treatment of brain injury in newborns, incubators to control the newborn’s environment, and software systems for managing and tracking disorders and diseases for public health laboratories. Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications to the prior periods have been made to conform to the current period presentation. The consolidated statements of income for 2014 reflect reclassifications from Cost of revenue to Intangibles amortization, from Marketing and selling, Research and development, and General and administrative to Intangible amortization, and from General and administrative to Restructuring. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the Consolidated Financial Statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, goodwill, share-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates. Revenue recognition Revenue, net of discounts, is recognized from sales of medical devices and supplies, including sales to distributors, when the following conditions have been met: a purchase order has been received, title has transferred, the selling price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Terms of sale for most domestic sales are FOB origin, reflecting that title and risk of loss are assumed by the purchaser at the shipping point; however, terms of sale for some neurology, sleep-diagnostic, and head cooling systems are FOB destination, reflecting that title and risk of loss are assumed by the purchaser upon delivery. Terms of sales to international distributors are generally EXW, reflecting that goods are shipped “ex works,” in which title and risk of loss are assumed by the distributor at the shipping point. For products shipped under FOB origin or EXW terms, delivery is generally considered to have occurred when the product is shipped. Freight charges billed to customers are included in revenue and freight-related expenses are charged to cost of revenue. The Company generally does not provide rights of return on products. For products containing embedded software, the Company has determined that the hardware and software components function together to deliver the products’ essential functionality, and therefore, the revenue from the sale of these products does not fall within the scope of the software revenue recognition rules. The Company's revenue recognition policies for sales of these products are substantially the same as for other tangible products. Revenue from sales of certain products that remain within the scope of the software revenue recognition rules under ASC Subtopic 985-605 is not significant. Revenue from extended service and maintenance agreements, for both medical devices and data management systems, is recognized ratably over the service period. Revenue from installation or training services is deferred until such time service is provided. Hearing screening and ambulatory EEG monitoring revenue is recorded when the procedure is performed at the estimated net realizable value based on contractual agreements with payers and historical collections. Certain revenue transactions include multiple element arrangements. The Company allocates revenue in these arrangements to each unit of accounting using the relative selling price method. The selling prices used during the allocation process are based on vendor specific objective evidence (“VSOE”) if available, third party evidence (“TPE”) if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE or TPE is available. Group purchasing organization (“GPOs”) negotiate volume purchase prices for member hospitals, group practices, and other clinics. The Company's agreements with GPOs typically contain preferential terms for the GPO and its members, including provisions for some, if not all, of the following:
Natus does not sell products to GPOs. Hospitals, group practices, and other clinics that are members of a GPO purchase products directly from the Company under the terms negotiated by the GPO. Negotiated pricing and discounts are recognized as a reduction of the selling price of products at the time of the sale. Revenue from sales to members of GPOs is otherwise consistent with general revenue recognition policies as previously described. Inventory Inventories are carried at the lower of cost or market, with cost being determined using the first-in, first-out method. The carrying value of the Company's inventories is reduced for any difference between cost and estimated market value of inventories that is determined to be obsolete or unmarketable, based upon assumptions about future demand and market conditions. Adjustments to the value of inventory establish a new cost basis and are considered permanent even if circumstances later suggest that increased carrying amounts are recoverable. If demand is higher than expected, Natus may sell inventory that had previously been impaired. Carrying value of intangible assets and goodwill The Company amortizes intangible assets with finite lives over the useful lives; any future changes that would limit the useful lives or any determination that these assets are carried at amounts greater than the estimated fair value could result in additional charges. Goodwill is not amortized but is subject to an annual impairment analysis, which is performed as of October 1st; this assessment is also performed whenever there is a change in circumstances that indicates the carrying value of goodwill may be impaired. In 2016, 2015 and 2014, the Company performed a qualitative assessment to test goodwill for impairment. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance and other relevant events and factors affecting each reporting unit. Based on the qualitative assessment, the Company determined that the fair value was more likely than not to be greater than its carrying amount, and no further analysis was needed. If the fair value was less than its carrying amount, the Company would perform a two-step impairment test on goodwill. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit to its carrying value, including goodwill. The Company uses a projected discounted cash flow model to determine the fair value of a reporting unit. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required. The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. Prior to the assignment of definite lives to trade names in the second quarter of 2015 (See Note 6 - Intangible Assets), the Company tested indefinite lived intangibles for impairment by comparing the carrying value of those assets to be fair value as of the assessment date. The Company used the relief from royalty method to determine the fair value of the assets. This analysis is dependent upon a number of quantitative and qualitative factors including estimates of forecasted revenue, royalty rate, and taxes. The discount rate applied also has an impact on the estimates of fair value, as use of a higher rate will result in a lower estimate of fair value. As of the October 1, 2014 testing dates, the Company determined that certain trade names were impaired and the Company recorded impairment charges of $0.6 million. Long lived assets The Company continually monitors events and changes in circumstances that could indicate that carrying amounts of its long-lived assets, including property and equipment and intangible assets, may not be recoverable. When such events or changes in circumstances occur, the Company assess the recoverability by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, the Company will recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Liability for product warranties The Company provides a warranty for products that is generally one year in length. In some cases, regulations may require the Company to provide repair or remediation beyond the typical warranty period. If any products contain defects, the Company may be required to incur additional repair and remediation costs. Service for domestic customers is provided by Company-owned service centers that perform all service, repair, and calibration services. Service for international customers is provided by a combination of Company-owned facilities and vendors on a contract basis. A warranty reserve is included in accrued liabilities for the expected future costs of servicing products. Additions to the reserve are based on management’s best estimate of probable liability. The Company considers a combination of factors including material and labor costs, regulatory requirements, and other judgments in determining the amount of the reserve. The reserve is reduced as costs are incurred to honor existing warranty and regulatory obligations. Share-based compensation The Company recognizes share-based compensation expense associated with employee stock options under the single-option straight line method over the requisite service period, which is generally a four-year vesting period and ten-year contractual term pursuant to ASC Topic 718, Compensation-Stock Compensation. See Note 14 of the Consolidated Financial Statements. For employee stock options, the value of each option is estimated on the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of freely traded options. Similar to other option pricing models, the Black-Scholes method requires the input of highly subjective assumptions, including stock price volatility. Changes in the subjective input assumptions can materially affect the estimated fair value of the employee stock options. The Company recognizes share-based compensation associated with Restricted Stock Awards (“RSA”) and Restricted Stock Units (“RSU”). RSAs and RSUs vest ratably over a three-year period for employees. RSAs and RSUs for executives vest over a four-year period; 50% on the second anniversary of the awarded date and 25% on each of the third and fourth anniversaries. RSAs and RSUs for non employees (Board of Directors) vest over a one-year period; 100% on the first anniversary. The value is estimated based on the market value of Natus common stock on the date of issuance pursuant to ASC Topic 718, Compensation-Stock Compensation. The Company issues new shares of common stock upon the exercise of stock options and the vesting of RSAs and RSUs. Forfeitures of employee stock options and awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation expense is recorded net of estimated forfeitures, such that expense is recorded only for those share-based awards that are expected to vest. The Company elected to early adopt ASU 2016-09 in the first quarter of 2016. In 2015 and 2014, the cash flow from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for employee options (excess tax benefits) was classified as a cash inflow from financing activities and a cash outflow from operating activities in the Statement of Cash Flows. The Company treated tax deductions from certain stock option exercises as being realized when the Company reduced taxes payable in accordance with relevant tax law. Cash Equivalents and Short-term Investments All highly liquid investments purchased with an original maturity of three months or less are classified as cash equivalents. Investments with maturities greater than one year are classified as current because management considers all investments to be available for current operations. Cash equivalents and investments are stated at amounts that approximate fair value based on quoted market prices. The Company's investments have been classified and accounted for as available-for-sale. Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of comprehensive income until realized. Realized gains and losses on sales of investments, if any, are determined on the specific identification method and are reclassified from accumulated other comprehensive loss to results of operations as other income (expense). Allowance for Doubtful Accounts The Company estimates the allowance for potentially uncollectible accounts receivable based on historical collection experience within the markets in which the Company operates and other customer-specific information, such as bankruptcy filings or customer liquidity problems. When all internal efforts have been exhausted to collect the receivable, it is written off and relieved from the reserve. Fair Value of Financial Instruments Financial instruments include cash and cash equivalents, investments, accounts receivable, and accounts payable. Cash is reported at its fair value on the balance sheet dates. The recorded carrying amounts of investments, accounts receivable and accounts payable approximate the fair values due to the short-term maturities. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the respective assets, which are three to ten years for office furniture and equipment, three to five years or the length of the license for computer software and hardware, three to five years for demonstration and loaned equipment, and 30 to 40 years for buildings. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life. Land is not depreciated. Costs associated with acquiring and installing software to be used for internal purposes are capitalized and amortized on a straight-line basis over three years. Research & Development Costs Costs incurred in research and development are charged to operations as incurred. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records net deferred tax assets to the extent it is more likely than not that the assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. To the extent that previously reserved deferred tax assets are estimated to be realizable, the Company adjusts the valuation allowance which reduces the provision for income taxes. The Company recognizes the tax benefit of uncertain tax positions in the financial statements in accordance with ASC Topic 740, Income Tax. When the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement, in accordance with ASC 740-10-05. Foreign Currency The functional currency of the Company's subsidiaries outside of North America is generally the local currency of the country where the subsidiary is located. Accordingly, foreign currency translation adjustments relating to the translation of foreign subsidiary financial statements are included as a component of accumulated other comprehensive loss. The Company recorded $5.0 million, $8.4 million, and $11.2 million of foreign currency translation losses for the years ended December 31, 2016, 2015 and 2014, respectively. Gains and losses from transactions denominated in currencies other than the functional currencies are included in other income and expense. In 2016, 2015, and 2014, net foreign currency transaction losses were $0.4 million, $1.4 million, and $0.0 million, respectively. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar, Canadian Dollar, Euro, Argentine Peso, British Pound, and Danish Kroner. Comprehensive Income The Company reports by major components and as a single total the change in net assets during the period from non-owner sources in accordance with ASC Topic 220, Comprehensive Income. The consolidated statement of comprehensive income has been included with the consolidated statements of operations. Accumulated other comprehensive income consists of translation gains and losses on foreign subsidiary financial statements as well as unrealized gains and losses on investments. Basic and Diluted Net Income per Share Natus computes net income per share in accordance with ASC Topic 260, Earnings per Share. Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents are options granted and shares of restricted stock issued under the stock awards plans and are calculated under the treasury stock method. Common equivalent shares from unexercised stock options and restricted stock are excluded from the computation when there is a loss as the effect is anti-dilutive, or if the exercise price of such options is greater than the average market price of the stock for the period. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2041-09”), which supersedes nearly all existing revenue recognition guidance. The standard's core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction's price to the separate performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (i) the entity's contracts with customers; (ii) the significant judgments, and changes in judgments, made in applying the guidance to those contracts; and (iii) any assets recognized from the costs to obtain or fulfill a contract with a customer. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 616) - Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to interim and annual periods beginning January 1, 2018. The standard allows entities to apply the standard retrospectively to each prior period presented (“full retrospective adoption”) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (“modified retrospective adoption”). The Company plans to adopt this guidance on January 1, 2018, and continues to evaluate the impact of adopting under the modified retrospective adoption versus the full retrospective method. The Company is currently in the process of determining the impact of the new revenue recognition guidance on its revenue transactions, including any impacts on associated processes, systems, and internal controls. The Company's preliminary assessment indicates implementation of this standard will not have a material impact on financial results. The Company's evaluation has included determining whether the unit of account (i.e., performance obligations) will change as compared to current GAAP, as well as determining the standalone selling price of each performance obligation. Standalone selling prices under the new guidance may not be substantially different from the Company's current methodologies of establishing fair value on multiple element arrangements. The Company continues to evaluate the impact of this guidance and its subsequent amendments on the consolidated financial position, results of operations, and cash flows, and any preliminary assessments are subject to change. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330). This standard requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company plans to adopt ASU 2015-11 on January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires a lessee to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position. Qualitative along with specific quantitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. The Company is currently evaluating the impact that will result from adopting ASU 2016-02. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting. The new standard contains several amendments that simplify the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The changes in the new standard eliminate the accounting for excess tax benefits to be recognized in additional paid-in capital and tax deficiencies recognized either in the income tax provision or in additional paid-in capital. The Company elected to early adopt ASU 2016-09 in the first quarter of 2016 which was applied using a modified retrospective approach. For the year ended December 31, 2016, the Company recognized all excess tax benefits and tax deficiencies as income tax expense or benefit as discrete items. An income tax benefit of approximately $1.6 million was recognized in the year ended December 31, 2016 as a result of the adoption of ASU 2016-09. There was no cumulative-effect adjustment required to retained earnings under the modified retrospective method as of the beginning of the year because all tax benefits had been previously recognized when the tax deductions related to stock compensation were utilized to reduce taxes payable. The Company is not recording deferred tax assets or tax losses as the result of the adoption of ASU 2016-09. The treatment of forfeitures has not changed as the Company is electing to continue the current process of estimating the number of forfeitures. With the early adoption of 2016-09, the Company has elected to present the cash flow statement on a prospective transition method and no prior periods have been adjusted. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard provides guidance for eight cash flow classification issues in current GAAP. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company elected to early adopt ASU 2016-15 in the first quarter of 2016 including Contingent Consideration Payments Made after a Business Combination. For the year ended December 31, 2016, the Company recognized $1.0 million as a cash outflow for investing activities on the Statement of Cash Flows. This payment was made soon after the acquisition date of a business combination to settle the contingent consideration from the Monarch acquisition. |
Business Combinations |
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Business Combinations [Abstract] | |
Business Combinations | BUSINESS COMBINATIONS The assets acquired and liabilities assumed at the date of acquisition are recorded in the Consolidated Financial Statements at the respective fair values as of the acquisition date. The excess of the purchase price over the fair value of the acquired net assets is recorded as goodwill. The determination of estimated fair value of acquired assets and liabilities requires management to make significant estimates and assumptions. The Company determines the fair value by applying established valuation techniques, based on information that management believes to be relevant to this determination. The Company also utilizes independent third parties to assist in the valuation of goodwill and intangible assets. The results of operations from acquisitions are included in the Consolidated Financial Statements from the date of the acquisition. RetCam On July 6, 2016, the Company acquired the portfolio of RetCam Imaging Systems ("RetCam") from Clarity Medical Systems, Inc. for $10.6 million in cash. RetCam is an imaging system used to diagnose and monitor a range of ophthalmic maladies in premature infants. The purchase agreement also included a holdback of $2.0 million which is contingent upon completion of certain modifications to RetCam 3 no later than March 31, 2017. Subsequent to the acquisition, an additional $1.1 million was paid by the Company to Clarity Medical Systems as a result of a working capital adjustment. Results of operations for RetCam are included in the consolidated financial statements from the date of acquisition. The total purchase price was allocated $7.2 million to tangible assets, $3.3 million to intangible assets with an assigned weighted average life of 5 years being amortized on the straight line method, and $3.2 million to goodwill, offset by $2.0 million to net liabilities. Pro forma financial information for the RetCam acquisition is not presented as it is not considered material. NeuroQuest On March 2, 2016, the Company acquired NeuroQuest, LLC (“NeuroQuest”) through an asset purchase. NeuroQuest complements the Global Neuro-Diagnostics and Monarch Medical Diagnostics, LLC ("Monarch") acquisitions which offer patients a convenient way to complete routine-electroencephalography and extended video electronencephalography ("VEEG") testing. The cash consideration for NeuroQuest was $4.6 million. The purchase agreement included a consideration holdback of $0.5 million which will be held until March 2, 2017. The total purchase price was allocated to $0.5 million of tangible assets, $1.3 million of intangible assets with an assigned weighted average life of 5 years being amortized on the straight line method, and $3.5 million of goodwill, offset by $0.1 million of net liabilities. Pro forma financial information for the NeuroQuest acquisition is not presented as it is not considered material. Monarch The Company acquired Monarch Medical Diagnostics, LLC ("Monarch") through an asset purchase on November 13, 2015. Monarch's service compliments the Global Neuro-Diagnostics acquisition which offers patients a more convenient way to complete routine diagnostic electroencephalography and video electromyography testing which can be performed at the home, hospital or physician's office. The service also provides comprehensive reporting and support to the physician. The cash consideration for Monarch was $2.7 million. The purchase agreement also included contingent consideration which was paid on January 11, 2016 of $1.0 million. The total purchase price was allocated to $112,000 of tangible assets, $1.2 million of intangible assets with an assigned weighted average life of 5 years being amortized on the straight line method, and $2.4 million of goodwill. Pro forma financial information for the Monarch acquisition is not presented as it is not considered material. Global Neuro-Diagnostics The Company acquired GND through an equity purchase on January 23, 2015. GND's service offers patients a more convenient way to complete routine EEG and EMG testing which can be performed at the home, hospital or physician's office. The service also provides comprehensive reporting and support to the physician. The cash consideration for GND was $11.4 million, which consists primarily of $1.5 million of tangible assets, $4.8 million of intangible assets with an assigned weighted average life of 5 years being amortized on the straight line method, and $8.9 million of goodwill, offset by $0.5 million of net liabilities. The purchase agreement also included an earn-out condition which was originally estimated to be $3.2 million. The earn-out condition was subsequently estimated to be $0.5 million in the fourth quarter of 2016. The earn-out is contingent upon GND achieving certain revenue milestones in 2017. Pro forma financial information for the GND acquisition is not presented as it is not considered material. NicView On January 2, 2015, the Company purchased the assets of NicView. NicView provides streaming video for families with babies in the neonatal intensive care unit. The cash consideration for NicView was $1.1 million, of which $0.3 million was allocated to tangible assets and $2.7 million to goodwill, offset by $0.6 million allocated to net liabilities. The asset purchase agreement included an earn-out condition contingent upon orders received in and installed by February 28, 2016. The Company settled this earnout for $1.3 million in March 2016. Pro forma financial information for the NicView acquisition is not presented as it is not considered material. Hearing Screening as a Service In the first quarter of 2014, the Company entered into two asset purchase agreements for companies in the newborn hearing screening services market for total cash consideration of $2.6 million. The purchase agreements also included earn-out conditions contingent upon annual revenue growth through 2016. These earn-outs, originally estimated at $0.8 million, were settled during the second quarter of 2015 for $0.7 million. Both acquisitions support the entry into this market, which complements the newborn hearing screening device business. This hearing screening services business operates under the name Peloton. Pro forma financial information for these two acquisitions is not presented as it is not considered material. |
Cash, Cash Equivalents, and Short-term Investments |
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Cash, Cash Equivalents, and Short-term Investments | CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS The Company has invested its excess cash in highly liquid marketable securities such as corporate debt instruments, U.S. government agency securities and asset-backed securities. Investments with maturities greater than one year are classified as current because management considers all investments to be available for current operations. The Company's investments are designed to provide liquidity, preserve capital and maximize total return on invested assets with a focus on high credit-quality securities. The Company's investments have been classified and accounted for as available-for-sale. Such investments are recorded at fair value, and unrealized holding gains and losses are reported as a separate component of accumulated other comprehensive income (loss) in the stockholders' equity until realized. Realized gains and losses on sales of investments, if any, are determined on the specific identification method and are reclassified from accumulated other comprehensive income (loss) to results of operations as other income (expense). The Company, to date, has not determined that any of the unrealized losses on its investments are considered to be other-than-temporary. The Company reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period any such determination is made. In making this judgment, the Company evaluates, among other things: the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and any changes thereto; and the Company's intent and ability to hold its investment for a period of time sufficient to allow for any anticipated recovery in market value, or whether the Company will more likely than not be required to sell the security before recovery of its aggregated cost basis. Cash, cash equivalents and short-term investments consisted of the following (in thousands):
Short-term investments by investment type are as follows (in thousands):
Short-term investments by contractual maturity are as follows (in thousands):
See Note 21 to these Consolidated Financial Statements for additional discussion regarding the fair value of the Company's short-term investments. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES Inventories consist of (in thousands):
At December 31, 2016 and 2015, the Company has classified $15.1 million and $8.0 million, respectively, of inventories as non-current. This inventory consists of service components used to repair products held by customers pursuant to warranty obligations and extended service contracts, including service components for products that the Company no longer sells, inventory purchased for lifetime buys, and inventory that will be shipped when the ship hold on the NeoBLUE® products is released. The Company believes that these inventories will be utilized for the intended purpose. |
Property and Equipment |
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Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment consist of (in thousands):
Depreciation expense of property and equipment was $3.7 million, $4.2 million, and $4.3 million in the years ending December 31, 2016, 2015 and 2014, respectively. In the third quarter of 2014 the Company's manufacturing facility in Mundelein, Illinois was listed for sale. This asset was measured at fair value less cost to sell as of September 30, 2014 based on market price and Level 2 inputs and resulted in a $2.2 million impairment. The Company continues to actively market this facility. The impairment was recorded in restructuring expenses and the asset was reclassified from property and equipment, net to other current assets. |
Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Goodwill | GOODWILL The carrying amount of goodwill and the changes in those balances are as follows (in thousands):
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | INTANGIBLE ASSETS The following table summarizes the components of gross and net intangible asset balances (in thousands):
Finite lived intangible assets are amortized over their weighted average lives, which are 13 years for patents, 17 years for technology, 11 years for customer-related intangibles, 7 years for trade names, and 5 years for internally developed software. Internally developed software consists of $14.8 million relating to costs incurred for development of internal use computer software and $2.2 million for development of software to be sold. During the year ended December 31, 2014 the Company recorded a charge of $0.6 million related to the impairment of the Grass trade name. This impairment was the result of deterioration of expected future cash flows. Impairments were determined by performing a discounted cash flow analysis on intangibles assets. This charge was recorded in Intangible amortization. Amortization expense related to intangible assets with finite lives was as follows (in thousands):
Expected annual amortization expense related to amortizable intangible assets is as follows (in thousands):
During the second quarter of 2015 the Company initiated a strategy to increase the brand strength of Natus by replacing acquired product trade names with Natus branded products over time. The implementation of this strategy placed definite expected future lives on the acquired trade names which previously had indefinite lives. The Company assigned these trade names lives of seven years based on the timeline of the Company's branding strategy. The Company will continue to assess the lives of these assets based on the timing and execution of this strategy. Amortization expense for trade names is recorded as a component of operating expense. |
Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | ACCRUED LIABILITIES Accrued liabilities consist of (in thousands):
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Long-Term Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Other Liabilities | LONG-TERM OTHER LIABILITIES Long-term other liabilities consist of (in thousands):
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Reserve for Product Warranties |
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Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for Product Warranties | RESERVE FOR PRODUCT WARRANTIES The Company provides a warranty for products that is generally one year in length and in some cases, regulations may require them to provide repair or remediation beyond the typical warranty period. If any of the products contain defects, the Company may be required to incur additional repair and remediation costs. Service for domestic customers is provided by Company-owned service centers that perform all service, repair and calibration services. Service for international customers is provided by a combination of Company-owned facilities and vendors on a contract basis. A warranty reserve is included in accrued liabilities for the expected future costs of servicing products. Additions to the reserve are based on management's best estimate of probable liability. The Company considers a combination of factors including material and labor costs, regulatory requirements, and other judgments in determining the amount of reserve. The reserve is reduced as costs are incurred to honor existing warranty and regulatory obligations. As of December 31, 2016 the Company has accrued $6.6 million to bring certain NeoBLUE® phototherapy products into U.S. regulatory compliance. The Company's estimate of the costs associated with bringing the NeoBLUE® phototherapy products into compliance is primarily based upon the number of units outstanding that may require the repair, costs associated with shipping and repairing the product, and the assumption that the FDA will approve the Company's plan for compliance. The Company expects that costs associated with bringing the products back into compliance will not be incurred until the second quarter of 2017. The details of activity in the warranty reserve are as follows (in thousands):
The estimates the Company uses in projecting future product warranty costs may prove to be incorrect. Any future determination that product warranty reserves are understated could result in increases to cost of sales and reductions in operating profits and results of operations. |
Stockholders' Equity |
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Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Common Stock—The Company has 120,000,000 shares of common stock authorized at a par value or $0.001 per share. Preferred Stock—The Company has 10,000,000 shares of preferred stock authorized at a par value of $0.001 per share. In accordance with the terms of the amended and restated certificate of incorporation, the Board of Directors is authorized to provide for the issuance of one or more series of preferred stock, including increases or decreases to the series. The Board of Directors has the authority to set the rights, preferences, and terms of such shares. As of December 31, 2016, no shares of preferred stock were issued and outstanding. |
Earnings Per Share |
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Earnings Per Share | EARNINGS PER SHARE The components of basic and diluted EPS are as follows (in thousands, except per share amounts):
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Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | SHARE-BASED COMPENSATION Share-Based Compensation Expense—The Company accounts for share-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation. Share-based compensation was recognized as follows in the consolidated statement of income (in thousands):
Stock Awards Plans—Natus' 2011 Stock Awards Plan (the “Plan”) provides for the granting of the following:
As of December 31, 2016, there were 1,098,514 shares available for future awards under the plan. Under the Plan, stock options may be issued at not less than the fair market value of the common stock on the date of grant, as determined by the Board of Directors. Options issued under the Plan become exercisable as determined by the Board of Directors and expire no more than six years after the date of grant. Most options vest ratably over four years. Stock Option Activity—Stock option activity under the stock awards plans for the year ended December 31, 2016 is summarized as follows:
As of December 31, 2016, unrecognized compensation related to the unvested portion of stock options was approximately $0.6 million, which is expected to be recognized over a weighted average period of 0.8 years. The intrinsic value of options exercised, representing the difference between the closing stock price of common stock on the date of the exercise and the exercise price, in the years ended December 31, 2016, 2015 and 2014 was $3.4 million, $17.7 million, and $20.6 million, respectively. As of December 31, 2016, there were: (i) 930,544 options vested and expected to vest with a weighted average exercise price of $15.01, an intrinsic value of $18.4 million, and a weighted average remaining contractual term of 2.1 years; and (ii) 816,691 options exercisable with a weighted average exercise price of $14.54, an intrinsic value of $16.5 million, and a weighted average remaining contractual term of 2.0 years. The expected life of options is based primarily on historical share option exercise experience of the employees for options granted by the Company. All options are treated as a single group in the determination of expected life, as the Company does not currently expect substantially different exercise or post-vesting termination behavior among the employee population. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant. Expected volatility is based primarily on historical volatility data of the Company's common stock. The Company has no history or expectation of paying dividends on common stock. Share-based compensation expense associated with options is based on awards ultimately expected to vest. At the time of an option grant, the Company estimates the expected future rate of forfeitures based on historical experience. These estimates are revised, if necessary, in subsequent periods if actual forfeiture rates differ from those estimates. If the actual forfeiture rate is lower than estimated the Company will record additional expense and if the actual forfeiture is higher than estimated the Company will record a recovery of prior expense. Restricted Stock Awards Activity—The following table summarizes the activity for restricted stock awards during the year ended December 31, 2016:
As of December 31, 2016, unrecognized compensation related to the unvested portion of stock awards was $9.2 million, which is expected to be recognized over a weighted average period of 2.2 years. The fair market value of outstanding restricted stock awards at December 31, 2016 was $17.6 million. For the restricted stock awards units that vested during the years ended December 31, 2016, 2015, and 2014, the total intrinsic value was $9.0 million, $10.3 million, and $6.0 million, respectively. Restricted Stock Units Activity—The following table summarizes restricted stock units activity for the year ended December 31, 2016:
As of December 31, 2016, unrecognized compensation related to the unvested portion of stock units was $0.5 million, which is expected to be recognized over a weighted average period of 1.6 years. The aggregate intrinsic value of outstanding restricted stock units at December 31, 2016 was $1.0 million. For the restricted stock units that vested during the years ended December 31, 2016, 2015, and 2014, the total intrinsic value was $0.9 million, $0.9 million, and $0.4 million, respectively. Employee Stock Purchase Plan—Under Natus' 2011 Employee Stock Purchase Plan (the “ESPP”), U.S. employees can elect to have salary withholdings of up to 15% of eligible compensation to a maximum of $10,625 per offering period, to purchase shares of common stock on April 30 and October 31 of each year. The purchase price for shares acquired under the ESPP is 85% of the fair market value on the last day of the offering period. As of December 31, 2016, there were 165,740 shares reserved for future issuance under the ESPP. Because the ESPP does not have a “look back” feature, the compensation expense associated with the Plan is not measured by the use of the Black-Scholes pricing model, but rather by measuring the difference between the fair market value of common stock on the last day of the offering period and the purchase price for the offering period, which is 85% of the fair market value. Compensation expense associated with the ESPP for the years ended December 31, 2016, 2015 and 2014, respectively, was $0.2 million, $0.2 million, and $0.2 million. |
Restructuring Reserve |
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Restructuring Reserve | RESTRUCTURING RESERVE The Company has historically incurred an ongoing level of restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization resulting from acquisitions. The balance of the restructuring reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Employee termination benefits are included as a part of restructuring expenses. Activity in the restructuring reserves for these plans for the years ended December 31, 2016, 2015 and 2014 is as follows (in thousands):
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Other Income (Expense), Net |
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Other Income (Expense), Net | OTHER INCOME (EXPENSE), NET Other income (expense), net consists of (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Income before provision for income tax is as follows (in thousands):
The components of income tax expense for the years ended December 31, 2016, 2015 and 2014 (in thousands):
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows (in thousands):
The income tax expense in the accompanying statements of income differs from the provision calculated by applying the U.S. federal statutory income tax rate of 35% in 2016, 2015, and 2014 to income before taxes due to the following:
At December 31, 2016, the Company had U.S. federal and state net operating loss carryforwards of $7.7 million and $7.9 million, respectively. These net operating loss carryforwards will begin to expire in 2036 and 2017, respectively. As December 31, 2016, the Company had U.S. federal and state R&D credit carryforwards of $0.5 million and $0.2 million, respectively. These R&D credit carryforwards will begin to expire in 2036 and 2021, respectively. At December 31, 2016, the Company had $1.7 million of U.S. foreign tax credit carryforwards that can be used to offset future U.S. tax liabilities related to foreign source taxable income. The foreign tax credits will start to expire in 2022. At December 31, 2016, certain foreign subsidiaries had deferred tax assets attributable to net operating loss carryforwards as follows: $1.9 million in France, $0.7 million in Canada, and $0.5 million in United Kingdom. These foreign net operating loss carryforwards, if not utilized to offset taxable income in future periods, will expire in various amounts beginning in 2028. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, valuation allowances of $3.7 million and $4.0 million were recorded at December 31, 2016 and 2015, respectively. The decrease of $0.3 million of valuation allowance was primarily due to a partial release of valuation allowance against the Company's net operating loss carryforward in the United Kingdom. The realizability of the deferred tax assets is primarily dependent on the Company's ability to generate sufficient taxable income in future periods. The Company's management weighed the aggregate effect of all positive evidence and negative evidence in determining the likelihood of realization of the deferred tax assets. The factors used by management to collect evidence included historical earnings of the applicable taxing jurisdiction, the cash refund opportunity to utilize the tax losses, and the future forecast of profitability in the jurisdiction. Weighing all the positive and negative evidence, the Company has recorded a valuation allowance related primarily to net operating losses in certain foreign jurisdictions and U.S. foreign tax credits where it is more likely than not that the tax benefit of the net operating losses and tax credits will not be realized. The Company elected to early adopt ASU 2016-09 in the first quarter of 2016 which was applied using a modified retrospective approach. For the year ended December 31, 2016, the Company recorded all excess tax benefits and tax deficiencies as income tax expense or benefit. The Company receives tax deductions from the gains recognized by employees on the exercise of certain non-qualified stock options, vesting activities related to restricted shares and certain non-qualified disposition of shares acquired from employee stock purchase plan program. During the year to December 31, 2016, the Company recorded a tax benefit resulting from the tax deduction of $1.9 million and $0.3 million tax expense from shortfall transactions in writing off certain deferred tax assets. The Company has not provided for U.S. federal income and foreign withholding taxes on the majority of undistributed earnings from non-U.S. operations because such earnings are intended to be reinvested indefinitely outside of the U.S. As of December 31, 2016, the amount of undistributed earnings for which no taxes were provided was $147.0 million. The Company intends to reinvest these earnings in foreign subsidiaries in these regions for foreign acquisitions. If these earnings were distributed to the U.S. in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes and foreign withholding taxes. As of December 31, 2016, the tax impact of undistributed earnings from non-U.S. operations has not been estimated as the determination is not practicable. The Company's foreign subsidiaries held $155.8 million of cash and short term investments out of the Company's total cash and short term investments of $248.0 million. If the foreign earnings were repatriated, the cash and short term investments available for other foreign financing activities will be reduced by the foreign withholding taxes paid on the repatriation of earnings in these regions. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):
For the year ended December 31, 2016, unrecognized tax benefits decreased by $0.4 million and $0.2 million of tax benefits in the income tax provision were recorded. The decrease was primarily attributable to the lapse of applicable statute of limitations in certain jurisdictions. The unrecognized tax benefits for the tax years ended December 31, 2016, 2015 and 2014 were $5.9 million, $6.3 million and $3.4 million, respectively which include $2.5 million, $2.4 million and $2.0 million, respectively that would impact the effective tax rate if recognized. The Company expects a range from zero to $1.5 million of unrecognized tax benefit that will impact the effective tax rate in the next 12 months due to the lapse of statute of limitations provided that no taxing authority conducts a new examination. At December 31, 2016, 2015 and 2014, the Company had cumulatively accrued $0.6 million, $0.4 million, and $0.3 million for estimated interest and penalties related to uncertain tax positions. The Company records interest and penalties related to unrecognized tax positions as a component of income tax expense (benefit), which totaled $0.2 million, $0.1 million, and $0.0 million for the years ended December 31, 2016, 2015, and 2014, respectively. The Company is currently unaware of any uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate over the next 12 months. The Company's tax returns remain open to examination as follows: U.S. federal, 2013 through 2016; U.S. states, generally 2012 through 2016; and significant foreign jurisdictions, generally 2012 through 2016. |
Employee Benefit Plan |
12 Months Ended |
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Dec. 31, 2016 | |
Postemployment Benefits [Abstract] | |
Employee Benefit Plan | EMPLOYEE BENEFIT PLAN The Company offers pre-tax and after-tax 401(k) savings plan options under which eligible U.S. employees may elect to have a portion of their salary deferred and contributed to the plan. Employer matching contributions are determined by management and are discretionary. Employer matching contributions were $1.5 million, $1.3 million, and $1.2 million respectively, in the years ended December 31, 2016, 2015, and 2014. For new hires, employer contributions vest ratably over the first two years of employment. |
Segment, Customer and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment, Customer and Geographic Information | SEGMENT, CUSTOMER, AND GEOGRAPHIC INFORMATION The Company operates in one reportable segment, which is presented as the aggregation of the Neurology and Newborn Care operating segments. Through the one reportable segment the Company is organized on the basis of the healthcare products and services provided which are used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, and sleep disorders. End-users customer base includes hospitals, clinics, laboratories, physicians, nurses, audiologists, and governmental agencies. Most of the Company's international sales are to distributors who resell products to end users or sub-distributors. The Company's foreign countries’ revenue is determined based on the customer’s billing address. Revenue and long-lived asset information by geographic region is as follows (in thousands):
During the years ended December 31, 2016, 2015 and 2014, no single customer or foreign country contributed to more than 10% of revenue. |
Debt and Credit Arrangements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Credit Arrangements | DEBT AND CREDIT ARRANGEMENTS The Company has a Credit Agreement with JP Morgan Chase Bank ("JP Morgan") and Citibank, NA (“Citibank”). The Credit Agreement provides for an aggregate $150 million of secured revolving credit facility. The Credit Agreement contains covenants, including covenants which the Company is in compliance with, relating to maintenance of books and records, financial reporting and notification, compliance with laws, maintenance of properties and insurance, and limitations on guaranties, investments, issuance of debt, lease obligations and capital expenditures, and is secured by virtually all of the Company's assets. The Credit Agreement provides for events of default, including failure to pay any principal or interest when due, failure to perform or observe covenants, bankruptcy or insolvency events and the occurrence of a material adverse effect. The Company has no other significant credit facilities. As of December 31, 2016, the Company had $140 million outstanding under the Credit Agreement. The Company financed a portion of Otometrics acquisition, which closed in January 2017, with borrowing under the revolving credit facility, as well as existing cash. Refer to Note 22 - Subsequent Events for further discussion of the Otometrics acquisition. Pursuant to the terms of the Credit Agreement, the outstanding principal balance will bear interest at either (a) a fluctuating rate per annum equal to the Applicable Rate, as defined in the Credit Agreement, depending on the leverage ratio plus the higher of (i) the federal funds rate plus one-half of one percent per annum; (ii) the prime rate in effect on such a day; and (iii) the LIBOR rate plus one percent, or (b) a fluctuating rate per annum of LIBOR Rate plus the Applicable Rate. The Credit Agreement matures on September 23, 2021, at which time all principal amounts outstanding under the Credit Agreement will be due and payable. Due to the execution of the Credit Agreement mentioned above, the Company terminated a previously existing credit agreement between the Company and Citibank. Under this agreement, the Company borrowed and repaid a total of $16.0 million during the year ended December 31, 2016. Long-term debt consists of (in thousands):
Maturities of long-term debt as of December 31, 2016 are as follows (in thousands):
As of December 31, 2016, the carrying value of total debt approximated fair market value. The fair value of the Company's debt is considered a Level 2 measurement. Refer to Note 21 - Fair Value Measurement for further discussion |
Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES Leases—The Company has entered into noncancelable operating leases for some of the facilities including related office equipment located in the U.S. and Europe through 2024. Minimum lease payments under noncancelable operating leases as of December 31, 2016 are as follows (in thousands):
Rent expense, which is recorded on the straight-line method from commencement over the period of the lease, totaled $5.3 million, $4.4 million and $4.3 million in 2016, 2015, and 2014, respectively. Purchase commitments—The Company has various purchase obligations for goods or services totaling $48.8 million at December 31, 2016, which are expected to be paid within the next year. Indemnifications—Under the bylaws, the Company has agreed to indemnify the officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The Company has a director and officer liability insurance policy that limits the exposure under these indemnifications and enables them to recover a portion of any future loss arising out of them. In addition, the Company entered into indemnification agreements with other parties in the ordinary course of business. The Company has determined that these agreements fall within the scope of ASC 460, Guarantees. In some cases liability insurance is obtained to provide coverage that limits its exposure for these other indemnified matters. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. The Company believes the estimated fair value of these indemnification agreements is minimal and have not recorded a liability for these agreements as of December 31, 2016. Legal matters—The Company may from time to time become a party to various legal proceedings or claims that arise in the ordinary course of business. The Company does not believe that any current legal or administrative proceedings are likely to have a material effect on business, financial condition, or results of operations. On January 30, 2017, an alleged class action entitled Badger v. Natus Medical Incorporated, et al., No. 3:17-cv-00458-JSW, was filed in the United States District Court for the Northern District of California against the Company and two of our officers. The suit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for allegedly misleading statements regarding our business (including a contract entered into by a subsidiary of the Company), guidance and financial results. The suit is purportedly brought on behalf of purchasers of our common stock between October 16, 2015 and April 3, 2016, and seeks compensatory damages, fees and costs. The Company believes the claims are without merit and intend to defend them vigorously. Due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of this manner. The Company is unable at this time to determine whether the outcome of the litigation would have a material impact on results of operations, financial condition or cash flow. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes the following three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value: Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The Company does not have any financial assets or liabilities measured at fair value on a recurring basis. The following financial instruments are not measured at fair value on the consolidated balance sheet as of December 31, 2016 and 2015, but require disclosure of fair values: cash and cash equivalents, accounts receivable, and accounts payable. The carrying value of these financial instruments approximates fair values because of the relatively short maturity. During the third quarter of 2014, the Company listed the facility in Mundelein, Illinois for sale. This asset was measured at fair value less cost to sell as of September 30, 2014 based on market price and Level 2 inputs. The book value of this asset on June 30, 2014 was $3.6 million. The Company expensed $2.2 million during the third quarter of 2014 for this impairment. As of December 31, 2016 the Company is carrying the asset as held for sale its fair value of $1.4 million. For the year ended December 31, 2014 the Company recorded a charge of $0.6 million, related to impairment of trademarks and trade names. The Company measures these non-financial assets at fair value on a nonrecurring basis subsequent to the initial recognition. The fair value of these non-financial assets was measured using Level 3 inputs. See Note 6—Intangible Assets. The Company also has contingent consideration associated with earnouts from acquisitions. Contingent consideration liabilities are classified as Level 3 liabilities, as the Company use unobservable inputs to value them, which is a probability-based income approach. Contingent considerations are classified as accrued liabilities on the consolidated balance sheets. Subsequent changes in the fair value of contingent consideration liabilities are recorded within the income statement as an operating expense. Contingent consideration associated with earnouts from acquisitions is as follows (in thousands):
The significant unobservable inputs used in the fair value measurement of contingent consideration related to the acquisitions are annualized revenue forecasts developed by the Company considering the probability of achievement of those revenue forecasts. Significant increases (decreases) in these unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. The Company's Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spread, benchmark securities, prepayment/default projections based on historical data and other observable inputs. The Company validates the prices provided by its third-party pricing services by understanding the models used, obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming those securities traded in active markets. See Note 4 to these Consolidated Financial Statements for further information regarding the Company's financial instruments. Short term investments are as follows (in thousands):
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Schedule II: Valuation And Qualifying Accounts |
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Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II: of Valuation and Qualifying Accounts | SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS For the years ended December 31, 2016, 2015 and 2014 (In thousands)
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Subsequent Events |
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Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Pursuant to a Purchase Agreement that was entered into on September 26, 2016, the Company completed the acquisition of the Otometrics business from GN Store Nord A/S on January 3, 2017 for a cash purchase price of $149.2 million, including $4.2 million of net working capital adjustment. Otometrics is a manufacturer of hearing diagnostics and balance assessment equipment, disposables & software. Otometrics provides computer-based audiological, otoneurologic and vestibular instrumentation and sound rooms to hearing and balance care professionals worldwide. Otometrics has a complete product and brand portfolio known for its sophisticated design technology in the hearing and balance assessment markets. The Company will account for the acquisition under the acquisition method of accounting for business combinations. The results of Otometrics will be included in the Company’s results of operations beginning on January 3, 2017. Upon receipt of the Otometrics opening balance sheet as of January 3, 2017, the Company, with assistance from independent valuation specialists, will allocate the purchase price to acquired tangible assets and assumed liabilities, and identified intangible assets based on their respective fair values. Approximately $1.5 million of direct costs associated with the Otometrics acquisition were charged to general and administrative expense during the year ended December 31, 2016. Purchase price allocation is currently being determined at this time. The Company funded the Otometrics acquisition with a combination of existing cash and borrowings under the revolving credit facility. |
Organization and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||
Principles of Consolidation | Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the Consolidated Financial Statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, goodwill, share-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates. |
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Revenue recognition | Revenue recognition Revenue, net of discounts, is recognized from sales of medical devices and supplies, including sales to distributors, when the following conditions have been met: a purchase order has been received, title has transferred, the selling price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Terms of sale for most domestic sales are FOB origin, reflecting that title and risk of loss are assumed by the purchaser at the shipping point; however, terms of sale for some neurology, sleep-diagnostic, and head cooling systems are FOB destination, reflecting that title and risk of loss are assumed by the purchaser upon delivery. Terms of sales to international distributors are generally EXW, reflecting that goods are shipped “ex works,” in which title and risk of loss are assumed by the distributor at the shipping point. For products shipped under FOB origin or EXW terms, delivery is generally considered to have occurred when the product is shipped. Freight charges billed to customers are included in revenue and freight-related expenses are charged to cost of revenue. The Company generally does not provide rights of return on products. For products containing embedded software, the Company has determined that the hardware and software components function together to deliver the products’ essential functionality, and therefore, the revenue from the sale of these products does not fall within the scope of the software revenue recognition rules. The Company's revenue recognition policies for sales of these products are substantially the same as for other tangible products. Revenue from sales of certain products that remain within the scope of the software revenue recognition rules under ASC Subtopic 985-605 is not significant. Revenue from extended service and maintenance agreements, for both medical devices and data management systems, is recognized ratably over the service period. Revenue from installation or training services is deferred until such time service is provided. Hearing screening and ambulatory EEG monitoring revenue is recorded when the procedure is performed at the estimated net realizable value based on contractual agreements with payers and historical collections. Certain revenue transactions include multiple element arrangements. The Company allocates revenue in these arrangements to each unit of accounting using the relative selling price method. The selling prices used during the allocation process are based on vendor specific objective evidence (“VSOE”) if available, third party evidence (“TPE”) if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE or TPE is available. Group purchasing organization (“GPOs”) negotiate volume purchase prices for member hospitals, group practices, and other clinics. The Company's agreements with GPOs typically contain preferential terms for the GPO and its members, including provisions for some, if not all, of the following:
Natus does not sell products to GPOs. Hospitals, group practices, and other clinics that are members of a GPO purchase products directly from the Company under the terms negotiated by the GPO. Negotiated pricing and discounts are recognized as a reduction of the selling price of products at the time of the sale. Revenue from sales to members of GPOs is otherwise consistent with general revenue recognition policies as previously described. |
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Inventory | Inventory Inventories are carried at the lower of cost or market, with cost being determined using the first-in, first-out method. The carrying value of the Company's inventories is reduced for any difference between cost and estimated market value of inventories that is determined to be obsolete or unmarketable, based upon assumptions about future demand and market conditions. Adjustments to the value of inventory establish a new cost basis and are considered permanent even if circumstances later suggest that increased carrying amounts are recoverable. If demand is higher than expected, Natus may sell inventory that had previously been impaired. |
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Carrying value of intangible assets and goodwill | Carrying value of intangible assets and goodwill The Company amortizes intangible assets with finite lives over the useful lives; any future changes that would limit the useful lives or any determination that these assets are carried at amounts greater than the estimated fair value could result in additional charges. Goodwill is not amortized but is subject to an annual impairment analysis, which is performed as of October 1st; this assessment is also performed whenever there is a change in circumstances that indicates the carrying value of goodwill may be impaired. In 2016, 2015 and 2014, the Company performed a qualitative assessment to test goodwill for impairment. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance and other relevant events and factors affecting each reporting unit. Based on the qualitative assessment, the Company determined that the fair value was more likely than not to be greater than its carrying amount, and no further analysis was needed. If the fair value was less than its carrying amount, the Company would perform a two-step impairment test on goodwill. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit to its carrying value, including goodwill. The Company uses a projected discounted cash flow model to determine the fair value of a reporting unit. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required. The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. Prior to the assignment of definite lives to trade names in the second quarter of 2015 (See Note 6 - Intangible Assets), the Company tested indefinite lived intangibles for impairment by comparing the carrying value of those assets to be fair value as of the assessment date. The Company used the relief from royalty method to determine the fair value of the assets. This analysis is dependent upon a number of quantitative and qualitative factors including estimates of forecasted revenue, royalty rate, and taxes. The discount rate applied also has an impact on the estimates of fair value, as use of a higher rate will result in a lower estimate of fair value. |
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Long lived assets | Long lived assets The Company continually monitors events and changes in circumstances that could indicate that carrying amounts of its long-lived assets, including property and equipment and intangible assets, may not be recoverable. When such events or changes in circumstances occur, the Company assess the recoverability by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, the Company will recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. |
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Liability for product warranties | Liability for product warranties The Company provides a warranty for products that is generally one year in length. In some cases, regulations may require the Company to provide repair or remediation beyond the typical warranty period. If any products contain defects, the Company may be required to incur additional repair and remediation costs. Service for domestic customers is provided by Company-owned service centers that perform all service, repair, and calibration services. Service for international customers is provided by a combination of Company-owned facilities and vendors on a contract basis. A warranty reserve is included in accrued liabilities for the expected future costs of servicing products. Additions to the reserve are based on management’s best estimate of probable liability. The Company considers a combination of factors including material and labor costs, regulatory requirements, and other judgments in determining the amount of the reserve. The reserve is reduced as costs are incurred to honor existing warranty and regulatory obligations. |
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Share-based compensation | Share-based compensation The Company recognizes share-based compensation expense associated with employee stock options under the single-option straight line method over the requisite service period, which is generally a four-year vesting period and ten-year contractual term pursuant to ASC Topic 718, Compensation-Stock Compensation. See Note 14 of the Consolidated Financial Statements. For employee stock options, the value of each option is estimated on the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of freely traded options. Similar to other option pricing models, the Black-Scholes method requires the input of highly subjective assumptions, including stock price volatility. Changes in the subjective input assumptions can materially affect the estimated fair value of the employee stock options. The Company recognizes share-based compensation associated with Restricted Stock Awards (“RSA”) and Restricted Stock Units (“RSU”). RSAs and RSUs vest ratably over a three-year period for employees. RSAs and RSUs for executives vest over a four-year period; 50% on the second anniversary of the awarded date and 25% on each of the third and fourth anniversaries. RSAs and RSUs for non employees (Board of Directors) vest over a one-year period; 100% on the first anniversary. The value is estimated based on the market value of Natus common stock on the date of issuance pursuant to ASC Topic 718, Compensation-Stock Compensation. The Company issues new shares of common stock upon the exercise of stock options and the vesting of RSAs and RSUs. Forfeitures of employee stock options and awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation expense is recorded net of estimated forfeitures, such that expense is recorded only for those share-based awards that are expected to vest. The Company elected to early adopt ASU 2016-09 in the first quarter of 2016. In 2015 and 2014, the cash flow from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for employee options (excess tax benefits) was classified as a cash inflow from financing activities and a cash outflow from operating activities in the Statement of Cash Flows. The Company treated tax deductions from certain stock option exercises as being realized when the Company reduced taxes payable in accordance with relevant tax law. |
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Cash Equivalents | Cash Equivalents and Short-term Investments All highly liquid investments purchased with an original maturity of three months or less are classified as cash equivalents. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company estimates the allowance for potentially uncollectible accounts receivable based on historical collection experience within the markets in which the Company operates and other customer-specific information, such as bankruptcy filings or customer liquidity problems. When all internal efforts have been exhausted to collect the receivable, it is written off and relieved from the reserve. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments include cash and cash equivalents, investments, accounts receivable, and accounts payable. Cash is reported at its fair value on the balance sheet dates. The recorded carrying amounts of investments, accounts receivable and accounts payable approximate the fair values due to the short-term maturities. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the respective assets, which are three to ten years for office furniture and equipment, three to five years or the length of the license for computer software and hardware, three to five years for demonstration and loaned equipment, and 30 to 40 years for buildings. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life. Land is not depreciated. Costs associated with acquiring and installing software to be used for internal purposes are capitalized and amortized on a straight-line basis over three years. |
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Research & Development Costs | Research & Development Costs Costs incurred in research and development are charged to operations as incurred. |
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Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records net deferred tax assets to the extent it is more likely than not that the assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. To the extent that previously reserved deferred tax assets are estimated to be realizable, the Company adjusts the valuation allowance which reduces the provision for income taxes. The Company recognizes the tax benefit of uncertain tax positions in the financial statements in accordance with ASC Topic 740, Income Tax. When the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement, in accordance with ASC 740-10-05. |
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Foreign Currency | Foreign Currency The functional currency of the Company's subsidiaries outside of North America is generally the local currency of the country where the subsidiary is located. Accordingly, foreign currency translation adjustments relating to the translation of foreign subsidiary financial statements are included as a component of accumulated other comprehensive loss. The Company recorded $5.0 million, $8.4 million, and $11.2 million of foreign currency translation losses for the years ended December 31, 2016, 2015 and 2014, respectively. Gains and losses from transactions denominated in currencies other than the functional currencies are included in other income and expense. In 2016, 2015, and 2014, net foreign currency transaction losses were $0.4 million, $1.4 million, and $0.0 million, respectively. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar, Canadian Dollar, Euro, Argentine Peso, British Pound, and Danish Kroner. |
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Comprehensive Income | Comprehensive Income The Company reports by major components and as a single total the change in net assets during the period from non-owner sources in accordance with ASC Topic 220, Comprehensive Income. The consolidated statement of comprehensive income has been included with the consolidated statements of operations. Accumulated other comprehensive income consists of translation gains and losses on foreign subsidiary financial statements as well as unrealized gains and losses on investments. |
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Basic and Diluted Net Income per Share | Basic and Diluted Net Income per Share Natus computes net income per share in accordance with ASC Topic 260, Earnings per Share. Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents are options granted and shares of restricted stock issued under the stock awards plans and are calculated under the treasury stock method. Common equivalent shares from unexercised stock options and restricted stock are excluded from the computation when there is a loss as the effect is anti-dilutive, or if the exercise price of such options is greater than the average market price of the stock for the period. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2041-09”), which supersedes nearly all existing revenue recognition guidance. The standard's core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction's price to the separate performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (i) the entity's contracts with customers; (ii) the significant judgments, and changes in judgments, made in applying the guidance to those contracts; and (iii) any assets recognized from the costs to obtain or fulfill a contract with a customer. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 616) - Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to interim and annual periods beginning January 1, 2018. The standard allows entities to apply the standard retrospectively to each prior period presented (“full retrospective adoption”) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (“modified retrospective adoption”). The Company plans to adopt this guidance on January 1, 2018, and continues to evaluate the impact of adopting under the modified retrospective adoption versus the full retrospective method. The Company is currently in the process of determining the impact of the new revenue recognition guidance on its revenue transactions, including any impacts on associated processes, systems, and internal controls. The Company's preliminary assessment indicates implementation of this standard will not have a material impact on financial results. The Company's evaluation has included determining whether the unit of account (i.e., performance obligations) will change as compared to current GAAP, as well as determining the standalone selling price of each performance obligation. Standalone selling prices under the new guidance may not be substantially different from the Company's current methodologies of establishing fair value on multiple element arrangements. The Company continues to evaluate the impact of this guidance and its subsequent amendments on the consolidated financial position, results of operations, and cash flows, and any preliminary assessments are subject to change. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330). This standard requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company plans to adopt ASU 2015-11 on January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires a lessee to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position. Qualitative along with specific quantitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. The Company is currently evaluating the impact that will result from adopting ASU 2016-02. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting. The new standard contains several amendments that simplify the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The changes in the new standard eliminate the accounting for excess tax benefits to be recognized in additional paid-in capital and tax deficiencies recognized either in the income tax provision or in additional paid-in capital. The Company elected to early adopt ASU 2016-09 in the first quarter of 2016 which was applied using a modified retrospective approach. For the year ended December 31, 2016, the Company recognized all excess tax benefits and tax deficiencies as income tax expense or benefit as discrete items. An income tax benefit of approximately $1.6 million was recognized in the year ended December 31, 2016 as a result of the adoption of ASU 2016-09. There was no cumulative-effect adjustment required to retained earnings under the modified retrospective method as of the beginning of the year because all tax benefits had been previously recognized when the tax deductions related to stock compensation were utilized to reduce taxes payable. The Company is not recording deferred tax assets or tax losses as the result of the adoption of ASU 2016-09. The treatment of forfeitures has not changed as the Company is electing to continue the current process of estimating the number of forfeitures. With the early adoption of 2016-09, the Company has elected to present the cash flow statement on a prospective transition method and no prior periods have been adjusted. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard provides guidance for eight cash flow classification issues in current GAAP. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company elected to early adopt ASU 2016-15 in the first quarter of 2016 including Contingent Consideration Payments Made after a Business Combination. For the year ended December 31, 2016, the Company recognized $1.0 million as a cash outflow for investing activities on the Statement of Cash Flows. This payment was made soon after the acquisition date of a business combination to settle the contingent consideration from the Monarch acquisition. |
Cash, Cash Equivalents, and Short-term Investments (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Short-term Investments | Cash, cash equivalents and short-term investments consisted of the following (in thousands):
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Unrealized Gain (Loss) on Investments | Short-term investments by investment type are as follows (in thousands):
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Investments Classified by Contractual Maturity Date | Short-term investments by contractual maturity are as follows (in thousands):
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consist of (in thousands):
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Property and Equipment (Tables) |
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Property and Equipment | Property and equipment consist of (in thousands):
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Goodwill | The carrying amount of goodwill and the changes in those balances are as follows (in thousands):
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Intangible Assets (Tables) |
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Components of Gross and Net Intangible Asset Balances | The following table summarizes the components of gross and net intangible asset balances (in thousands):
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Amortization expense related to intangible assets with definite lives | Amortization expense related to intangible assets with finite lives was as follows (in thousands):
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Expected annual amortization expense related to amortizable intangible assets | Expected annual amortization expense related to amortizable intangible assets is as follows (in thousands):
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Accrued Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued liabilities consist of (in thousands):
|
Long-Term Other Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Other Liabilities | Long-term other liabilities consist of (in thousands):
|
Reserve for Product Warranties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserves for Product Warranties | The details of activity in the warranty reserve are as follows (in thousands):
|
Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Basic and Diluted EPS | The components of basic and diluted EPS are as follows (in thousands, except per share amounts):
|
Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Expense | Share-based compensation was recognized as follows in the consolidated statement of income (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Activity | Stock Option Activity—Stock option activity under the stock awards plans for the year ended December 31, 2016 is summarized as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Awards Activity | Restricted Stock Awards Activity—The following table summarizes the activity for restricted stock awards during the year ended December 31, 2016:
|
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Restricted Stock Units Activity | Restricted Stock Units Activity—The following table summarizes restricted stock units activity for the year ended December 31, 2016:
|
Restructuring Reserve (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detail of Activity in the Restructuring Reserve | Activity in the restructuring reserves for these plans for the years ended December 31, 2016, 2015 and 2014 is as follows (in thousands):
|
Other Income (expense), net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income (expense), net | Other income (expense), net consists of (in thousands):
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before provision (benefit) for income tax | Income before provision for income tax is as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of components of income tax expense | The components of income tax expense for the years ended December 31, 2016, 2015 and 2014 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets and liabilities | Significant components of deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of effective income tax rate | The income tax expense in the accompanying statements of income differs from the provision calculated by applying the U.S. federal statutory income tax rate of 35% in 2016, 2015, and 2014 to income before taxes due to the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Uncertain Tax Positions | A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):
|
Segment, Customer and Geographic Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and long-lived asset information by geographic region | Revenue and long-lived asset information by geographic region is as follows (in thousands):
|
Debt and Credit Arrangements Debt and Credit Arrangements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consists of (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | Maturities of long-term debt as of December 31, 2016 are as follows (in thousands):
|
Commitments And Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Minimum Future Leases Payments Receivable | Minimum lease payments under noncancelable operating leases as of December 31, 2016 are as follows (in thousands):
|
Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in fair value of contingent consideration | also has contingent consideration associated with earnouts from acquisitions. Contingent consideration liabilities are classified as Level 3 liabilities, as the Company use unobservable inputs to value them, which is a probability-based income approach. Contingent considerations are classified as accrued liabilities on the consolidated balance sheets. Subsequent changes in the fair value of contingent consideration liabilities are recorded within the income statement as an operating expense. Contingent consideration associated with earnouts from acquisitions is as follows (in thousands):
|
Cash, Cash Equivalents, and Short-term Investments - Schedule of cash, cash equivalents and short-term investments (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|---|
Cash and cash equivalents: | ||||
Cash and Cash Equivalents, at Carrying Value | $ 213,551 | $ 82,469 | $ 66,558 | $ 56,106 |
Short-term investments: | ||||
Total short-term investment | 34,019 | 0 | ||
Total cash, cash equivalents and short-term investments | 247,570 | 82,469 | ||
U.S. investment grade bonds | ||||
Short-term investments: | ||||
Total short-term investment | 24,477 | 0 | ||
Developed investment grade bonds | ||||
Short-term investments: | ||||
Total short-term investment | $ 9,542 | $ 0 |
Cash, Cash Equivalents, and Short-term Investments - Unrealized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Aggregated Cost Basis | $ 34,098 | $ 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (79) | 0 |
Aggregated Fair Value | 34,019 | 0 |
U.S. investment grade bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Aggregated Cost Basis | 24,531 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (54) | 0 |
Aggregated Fair Value | 24,477 | 0 |
Developed investment grade bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Aggregated Cost Basis | 9,567 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (25) | 0 |
Aggregated Fair Value | $ 9,542 | $ 0 |
Cash, Cash Equivalents, and Short-term Investments - Investments Classified by Contractual Maturity Date (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Due in one year or less | $ 21,655 | $ 0 |
Due after one year through five years | 12,364 | 0 |
Total short-term investment | $ 34,019 | $ 0 |
Inventories (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and subassemblies | $ 28,245 | $ 19,041 |
Work in process | 1,507 | 1,343 |
Finished goods | 34,908 | 36,149 |
Total Inventories | 64,660 | 56,533 |
Less: Non-current Inventories | (15,073) | (7,961) |
Inventories | $ 49,587 | $ 48,572 |
Inventories (Textual) (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Non-current Inventories | $ 15,073 | $ 7,961 |
Property and Equipment (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 49,352 | $ 46,495 |
Accumulated depreciation | (32,019) | (29,528) |
Total | 17,333 | 16,967 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 2,856 | 2,918 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 5,219 | 5,662 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 2,386 | 2,345 |
Office furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 18,398 | 15,602 |
Computer software and hardware [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 9,100 | 8,752 |
Demonstration and loaned equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 11,393 | $ 11,216 |
Property and Equipment (Textual) (Detail) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment, Net [Abstract] | ||||
Depreciation expense | $ 3.7 | $ 4.2 | $ 4.3 | |
Asset held for sale, impairment | $ 2.2 |
Goodwill (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill [Roll Forward] | ||
Beginning Balance | $ 107,466 | $ 96,316 |
Acquisitions/Purchase Accounting Adjustments | 6,705 | 13,547 |
Foreign currency translation | (1,059) | (2,397) |
Ending Balance | $ 113,112 | $ 107,466 |
Intangible Assets - Amortization Expense (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization | $ 13,155 | $ 11,745 | $ 7,432 |
Technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization | 3,407 | 3,916 | 3,993 |
Customer related [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization | 3,452 | 2,938 | 1,892 |
Trade names [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization | 4,115 | 3,159 | 0 |
Internally Developed Software [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization | 2,069 | 1,620 | 1,434 |
Patents [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization | $ 112 | $ 112 | $ 113 |
Intangible Assets - Expected Annual Amortization Expense (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2017 | $ 13,130 | |
2018 | 12,908 | |
2019 | 11,753 | |
2020 | 9,558 | |
2021 | 8,270 | |
Thereafter | 21,546 | |
Total expected amortization expense | $ 77,165 | $ 86,536 |
Accrued Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Compensation and related benefits | $ 16,064 | $ 16,752 |
Accrued federal, state, and local taxes | 4,160 | 4,707 |
Warranty reserve | 10,670 | 10,386 |
Accrued professional fees | 1,191 | 520 |
Contingent consideration | 3,043 | 6,209 |
Other | 2,767 | 3,563 |
Total | $ 37,895 | $ 42,137 |
Long-Term Other Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Contingent tax obligations | $ 6,125 | $ 6,376 |
Non-current deferred revenue | 1,885 | 1,401 |
Other | 3 | 4 |
Total | $ 8,013 | $ 7,781 |
Reserve for Product Warranties (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Product Warranties Disclosures [Abstract] | |||
Product warranty period | 1 year | ||
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | |||
Balance at Beginning of Period | $ 10,386 | $ 2,753 | $ 3,143 |
Assumed Through Acquisitions | 222 | 0 | 0 |
Additions Charged to Expense | 2,711 | 10,729 | 2,306 |
Reductions | (2,649) | (3,096) | (2,696) |
Balance at End of Period | 10,670 | $ 10,386 | $ 2,753 |
Certain NeoBLUE Phototherapy Products [Member] | |||
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | |||
Balance at End of Period | $ 6,600 |
Stockholders' Equity (Detail) - USD ($) $ / shares in Units, $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Class of Stock [Line Items] | ||
Common Stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock issued | 0 | 0 |
Preferred stock outstanding | 0 | 0 |
Restricted Stock Awards [Member] | ||
Class of Stock [Line Items] | ||
Unrecognized compensation of unvested awards | $ 9.2 |
Earnings Per Share Components of Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Earnings Per Share [Abstract] | |||
Net income | $ 42,594 | $ 37,924 | $ 32,478 |
Weighted average common shares | 32,460 | 32,348 | 31,499 |
Dilutive effect of stock based awards | 596 | 893 | 1,069 |
Diluted Shares (in dollars per share) | 33,056 | 33,241 | 32,568 |
Basic earnings per share (in dollars per share) | $ 1.31 | $ 1.17 | $ 1.03 |
Diluted earnings per share (in dollars per share) | $ 1.29 | $ 1.14 | $ 1.00 |
Shares excluded from calculations of diluted EPS | 2 | 0 | 239 |
Share-Based Compensation - Allocation (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total expense | $ 9,008 | $ 6,953 | $ 6,062 |
Cost of revenue [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total expense | 219 | 156 | 143 |
Marketing and sales [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total expense | 821 | 808 | 977 |
Research and development [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total expense | 1,515 | 1,264 | 664 |
General and administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total expense | $ 6,453 | $ 4,725 | $ 4,278 |
Share-Based Compensation - Stock Option Activity (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2016
$ / shares
shares
| |
Number of Shares | |
Outstanding, beginning of period (shares) | shares | 1,105,182 |
Granted (shares) | shares | 0 |
Exercised (shares) | shares | (151,142) |
Cancelled (shares) | shares | (18,600) |
Expired (shares) | shares | 2,500 |
Outstanding, end of period (shares) | shares | 932,940 |
Weighted Average Exercise Price | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 15.07 |
Granted (in dollars per share) | $ / shares | 0.00 |
Exercised (in dollars per share) | $ / shares | 15.01 |
Cancelled (in dollars per share) | $ / shares | 17.62 |
Expired (in dollars per share) | $ / shares | 16.78 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 15.02 |
Share-Based Compensation - Restricted Unit Activity (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of options vested and expected to vest | $ 9.0 | ||
Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of options vested and expected to vest | $ 0.9 | $ 0.9 | $ 0.4 |
Restructuring Reserves (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Restructuring Reserve [Roll Forward] | |||
Beginning balance | $ 1,676 | $ 368 | $ 335 |
Restructuring | 1,536 | 2,145 | 4,238 |
Additions | 1,818 | 2,061 | 1,889 |
Reversals | (436) | (124) | (52) |
Payments | (2,563) | (629) | (1,804) |
Ending balance | 495 | 1,676 | 368 |
Personnel Related [Member] | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 1,676 | 368 | 335 |
Additions | 1,093 | 1,905 | 1,209 |
Reversals | (436) | (124) | (52) |
Payments | (1,990) | (473) | (1,124) |
Ending balance | 343 | 1,676 | 368 |
Facility Closing [Member] | |||
Restructuring Reserve [Roll Forward] | |||
Beginning balance | 0 | 0 | 0 |
Restructuring | 725 | 156 | 680 |
Reversals | 0 | 0 | 0 |
Payments | (573) | (156) | (680) |
Ending balance | $ 152 | $ 0 | $ 0 |
Other Income (Expense), net (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Other expense, net | |||
Interest income | $ 315 | $ 27 | $ 119 |
Interest expense | (430) | (352) | (438) |
Foreign currency loss | (359) | (1,415) | (37) |
Other | 117 | 676 | 514 |
Total other income (expense), net | $ (357) | $ (1,064) | $ 158 |
Income Taxes - Income Loss before Provision (Benefit) for Income Tax (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
U.S. | $ 68 | $ 20,507 | $ 16,621 |
Foreign | 54,835 | 31,902 | 29,388 |
Income before provision for income tax | $ 54,903 | $ 52,409 | $ 46,009 |
Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current | |||
U.S. Federal | $ (1,388) | $ 13,497 | $ 6,514 |
U.S. State and local | 692 | 1,984 | 1,082 |
Non-U.S. | 15,069 | 2,239 | 6,874 |
Total current tax expense | 14,373 | 17,720 | 14,470 |
Deferred | |||
U.S. Federal | (1,534) | (3,410) | (728) |
U.S. State and local | (378) | (385) | (37) |
Non-U.S. | (152) | 560 | (174) |
Total deferred tax expense (benefit) | (2,064) | (3,235) | (939) |
Total expense | $ 12,309 | $ 14,485 | $ 13,531 |
Income Taxes - Components of Deferred Tax Asset and Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax assets: | ||
Net operating loss carryforwards | $ 6,557 | $ 5,174 |
Credit carryforwards | 2,512 | 2,078 |
Accruals deductible in different periods | 16,157 | 18,721 |
Employee benefits | 2,389 | 2,081 |
Total deferred tax assets | 27,615 | 28,054 |
Valuation allowance | (3,706) | (3,972) |
Total net deferred tax assets | 23,909 | 24,082 |
Deferred tax liabilities: | ||
Basis difference in fixed and intangible assets | (12,678) | (15,197) |
Total deferred tax liabilities | (12,678) | (15,197) |
Total net deferred tax assets | $ 11,231 | $ 8,885 |
Income Taxes - Reconciliation of Income tax Expense from Continuous Operation (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Federal statutory tax expense | $ 19,216 | $ 18,343 | $ 16,103 |
State tax expense | 188 | 1,249 | 892 |
Foreign taxes at rates less than U.S. rates | (6,838) | (1,760) | (3,097) |
Deferred charges on sales of U.S. intellectual property | 980 | (5,878) | 0 |
Stock compensation expense on incentive stock options | (530) | 204 | 93 |
Tax credits | (911) | (935) | (862) |
Uncertain tax position | 485 | 3,897 | 1,163 |
Lapse of statute | (495) | (784) | (652) |
Change of valuation allowance on foreign tax credit | 0 | 0 | (491) |
Earnout adjustment | (1,184) | 0 | 0 |
Tax audits | 543 | 0 | 0 |
Other | 855 | 149 | 382 |
Total expense | $ 12,309 | $ 14,485 | $ 13,531 |
Income Taxes - Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning-Unrecognized Tax Benefits | $ 6,314 | $ 3,395 | $ 3,387 |
Increases for tax positions related to prior years | 174 | 281 | 493 |
Increases for tax positions related to the current year | 70 | 3,302 | 73 |
Lapse of statutes of limitations | (475) | (664) | (558) |
Ending-Unrecognized Tax Benefits | 5,898 | $ 6,314 | $ 3,395 |
Unrecognized Tax Benefits, Decrease Resulting from Foreign Currency Translation | $ 185 |
Employee Benefit Plan (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |||
Employer matching contributions | $ 1.5 | $ 1.3 | $ 1.2 |
Segment, Customer and Geographic Information (Textual) (Detail) - Segment |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Segment Reporting Information [Line Items] | |||
Number of reporting segments | 1 | ||
Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Percentage of revenue represented by major customers | 10.00% | 10.00% | 10.00% |
Revenue from Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Percentage of revenue represented by major customers | 10.00% | 10.00% | 10.00% |
Debt and Credit Arrangements (Textual) (Detail) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Revolving credit facility [Member] | Line of Credit [Member] | |
Debt Instrument [Line Items] | |
Revolving credit facility with Wells Fargo Bank | $ 150.0 |
Available amount under credit facility | 140.0 |
Credit Agreement [Member] | Citibank, National Association [Member] | |
Debt Instrument [Line Items] | |
Proceeds from Lines of Credit | $ 16.0 |
Debt and Credit Arrangements - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | ||
Revolving credit facility of $140 million, interest at LIBOR plus 1.75% | $ 140,000 | $ 0 |
Less: current portion of long-term debt | 0 | 0 |
Total long-term debt | 140,000 | 0 |
Revolving credit facility [Member] | Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Revolving credit facility of $140 million, interest at LIBOR plus 1.75% | 140,000 | $ 0 |
Face amount of debt | $ 140,000 | |
Revolving credit facility [Member] | Line of Credit [Member] | LIBOR [Member] | ||
Debt Instrument [Line Items] | ||
Interest at LIBOR (rate) | 1.75% |
Debt and Credit Arrangements - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 0 | $ 0 |
2018 | 0 | 0 |
2019 | 0 | 0 |
Thereafter | 140,000 | 0 |
Long-term Debt | $ 140,000 | $ 0 |
Commitments and Contingencies - Minimum Lease Payment under Non Cancelable Operating Lease (Detail) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2016 | $ 3,985 |
2017 | 3,186 |
2018 | 2,996 |
2019 | 2,590 |
2020 | 2,250 |
Thereafter | 2,838 |
Total minimum lease payments | $ 17,845 |
Commitment and Contingencies (Textual) (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 5.3 | $ 4.4 | $ 4.3 |
Purchase commitments for inventory, total | $ 48.8 |
Fair Value Measurements (Textual) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2014 |
Sep. 30, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Jun. 30, 2014 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Impairment of asset | $ 2,200 | |||||
Impairment of certain indefinite live intangible assets | $ 0 | $ 0 | $ 598 | |||
Trademarks and trade names [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Impairment of certain indefinite live intangible assets | $ 600 | |||||
Mundelein Facility [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Book value of asset | $ 3,600 | |||||
Impairment of asset | $ 2,200 | |||||
Asset held-for-sale at fair value | $ 1,400 |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration, beginning balance | $ 6,209 | |
Additions | 2,500 | |
Payments | (2,284) | |
Adjustments | (3,382) | |
Contingent consideration, ending balance | 3,043 | $ 6,209 |
Contingent Consideration [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration, beginning balance | 6,209 | |
Additions | 2,500 | |
Payments | 2,284 | |
Adjustments | 3,382 | |
Contingent consideration, ending balance | $ 3,043 | $ 6,209 |
Schedule II: Valuation And Qualifying Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 3,972 | $ 3,151 | $ 5,043 |
Additions Charged to Expense | 0 | 821 | 0 |
Deductions | (266) | 0 | (1,892) |
Balance at End of Period | 3,706 | 3,972 | 3,151 |
Allowance for Doubtful Accounts [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 4,686 | 4,324 | 2,962 |
Additions Charged to Expense | 1,123 | 1,496 | 1,221 |
Deductions | (1,627) | (1,134) | 141 |
Balance at End of Period | $ 4,182 | $ 4,686 | $ 4,324 |
Subsequent Events (Details) - Subsequent event [Member] - Otometrics [Member] $ in Millions |
Jan. 03, 2017
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Purchase price paid in cash to acquire entity | $ 149.2 |
Inventory purchase commitment | 4.2 |
Direct costs | $ 1.5 |
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