[ X ] | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2018 or |
[ ] | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________ |
(Exact name of registrant as specified in its charter) |
Massachusetts | 04-2713778 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address, including zip code, and telephone number, including area code, of principal executive offices) |
Yes | X | No |
Yes | X | No |
Large accelerated filer | X | Accelerated filer | |||||
Non-accelerated filer | Smaller reporting company | ||||||
Emerging growth company | |||||||
Yes | No | X |
PART I | FINANCIAL INFORMATION | |
Financial Statements (interim periods unaudited) | ||
Three-months Ended | Nine-months Ended | ||||||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenue | $ | 232,221 | $ | 266,042 | $ | 613,052 | $ | 583,161 | |||||||
Cost of revenue | 58,860 | 68,061 | 153,227 | 142,757 | |||||||||||
Gross margin | 173,361 | 197,981 | 459,825 | 440,404 | |||||||||||
Research, development, and engineering expenses | 29,700 | 26,078 | 87,664 | 72,225 | |||||||||||
Selling, general, and administrative expenses | 65,817 | 61,054 | 196,266 | 160,093 | |||||||||||
Operating income | 77,844 | 110,849 | 175,895 | 208,086 | |||||||||||
Foreign currency gain (loss) | (379 | ) | (127 | ) | (708 | ) | (574 | ) | |||||||
Investment income | 3,937 | 2,475 | 10,736 | 6,625 | |||||||||||
Other income (expense) | (129 | ) | (445 | ) | (98 | ) | (344 | ) | |||||||
Income before income tax expense | 81,273 | 112,752 | 185,825 | 213,793 | |||||||||||
Income tax expense (benefit) | 837 | 10,259 | 11,976 | 9,334 | |||||||||||
Net income | $ | 80,436 | $ | 102,493 | $ | 173,849 | $ | 204,459 | |||||||
Net income per weighted-average common and common-equivalent share: | |||||||||||||||
Basic | $ | 0.47 | $ | 0.59 | $ | 1.01 | $ | 1.18 | |||||||
Diluted | $ | 0.45 | $ | 0.57 | $ | 0.98 | $ | 1.14 | |||||||
Weighted-average common and common-equivalent shares outstanding: | |||||||||||||||
Basic | 172,189 | 173,234 | 172,613 | 173,052 | |||||||||||
Diluted | 177,245 | 179,354 | 178,021 | 179,124 | |||||||||||
Cash dividends per common share | $ | 0.0450 | $ | 0.0425 | $ | 0.1350 | $ | 0.1225 |
Three-months Ended | Nine-months Ended | ||||||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Net income | $ | 80,436 | $ | 102,493 | $ | 173,849 | $ | 204,459 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Cash flow hedges: | |||||||||||||||
Net unrealized gain (loss), net of tax of $0 and ($8) in the three-month periods and net of tax of $0 and ($5) in the nine-month periods, respectively | — | (4 | ) | — | (16 | ) | |||||||||
Reclassification of net realized (gain) loss into current operations | — | (56 | ) | — | (21 | ) | |||||||||
Net change related to cash flow hedges | — | (60 | ) | — | (37 | ) | |||||||||
Available-for-sale investments: | |||||||||||||||
Net unrealized gain (loss), net of tax of $24 and $41 in the three-month periods and net of tax of ($82) and $191 in the nine-month periods, respectively | 522 | 419 | (180 | ) | 1,237 | ||||||||||
Reclassification of net realized (gain) loss into current operations | (266 | ) | (263 | ) | (535 | ) | (370 | ) | |||||||
Net change related to available-for-sale investments | 256 | 156 | (715 | ) | 867 | ||||||||||
Foreign currency translation adjustments: | |||||||||||||||
Foreign currency translation adjustments | (1,881 | ) | 5,753 | (5,078 | ) | 18,497 | |||||||||
Net change related to foreign currency translation adjustments | (1,881 | ) | 5,753 | (5,078 | ) | 18,497 | |||||||||
Other comprehensive income (loss), net of tax | (1,625 | ) | 5,849 | (5,793 | ) | 19,327 | |||||||||
Total comprehensive income | $ | 78,811 | $ | 108,342 | $ | 168,056 | $ | 223,786 |
September 30, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 107,371 | $ | 106,582 | |||
Short-term investments | 420,016 | 297,961 | |||||
Accounts receivable, less reserves of $1,508 and $1,568 in 2018 and 2017, respectively | 135,441 | 119,388 | |||||
Unbilled revenue | 13,948 | 7,454 | |||||
Inventories | 94,035 | 67,923 | |||||
Prepaid expenses and other current assets | 27,687 | 30,683 | |||||
Total current assets | 798,498 | 629,991 | |||||
Long-term investments | 281,929 | 423,441 | |||||
Property, plant, and equipment, net | 88,930 | 78,048 | |||||
Goodwill | 113,208 | 113,208 | |||||
Intangible assets, net | 10,882 | 13,189 | |||||
Deferred income taxes | 27,376 | 27,385 | |||||
Other assets | 3,873 | 2,491 | |||||
Total assets | $ | 1,324,696 | $ | 1,287,753 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 22,295 | $ | 23,463 | |||
Accrued expenses | 66,632 | 68,249 | |||||
Accrued income taxes | 8,974 | 11,503 | |||||
Deferred revenue and customer deposits | 13,252 | 9,420 | |||||
Total current liabilities | 111,153 | 112,635 | |||||
Deferred income taxes | 372 | 312 | |||||
Reserve for income taxes | 6,646 | 6,488 | |||||
Accrued income taxes | 51,607 | 66,741 | |||||
Other non-current liabilities | 5,474 | 5,904 | |||||
Total liabilities | 175,252 | 192,080 | |||||
Shareholders’ equity: | |||||||
Common stock, $.002 par value – Authorized: 300,000 and 200,000 shares in 2018 and 2017, respectively, issued and outstanding: 172,191 and 173,507 shares in 2018 and 2017, respectively | 345 | 347 | |||||
Additional paid-in capital | 518,556 | 461,338 | |||||
Retained earnings | 670,935 | 668,587 | |||||
Accumulated other comprehensive loss, net of tax | (40,392 | ) | (34,599 | ) | |||
Total shareholders’ equity | 1,149,444 | 1,095,673 | |||||
$ | 1,324,696 | $ | 1,287,753 |
Nine-months Ended | |||||||
September 30, 2018 | October 1, 2017 | ||||||
(unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 173,849 | $ | 204,459 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Stock-based compensation expense | 31,339 | 23,355 | |||||
Depreciation of property, plant, and equipment | 13,474 | 9,811 | |||||
Amortization of intangible assets | 2,307 | 2,539 | |||||
Amortization of discounts or premiums on investments | 123 | 188 | |||||
Realized (gain) loss on sale of investments | (535 | ) | (370 | ) | |||
Revaluation of contingent consideration | (50 | ) | 88 | ||||
Change in deferred income taxes | 175 | (1,830 | ) | ||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | (18,136 | ) | (58,379 | ) | |||
Unbilled revenue | (6,542 | ) | (46,010 | ) | |||
Inventories | (27,699 | ) | (18,550 | ) | |||
Prepaid expenses and other current assets | (3,437 | ) | (14,666 | ) | |||
Accounts payable | (1,182 | ) | 19,132 | ||||
Accrued expenses | 2,266 | 8,819 | |||||
Accrued income taxes | (17,497 | ) | 3,724 | ||||
Deferred revenue and customer deposits | 4,841 | 5,883 | |||||
Other | (1,604 | ) | 1,861 | ||||
Net cash provided by operating activities | 151,692 | 140,054 | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | (616,047 | ) | (415,508 | ) | |||
Maturities and sales of investments | 635,119 | 428,076 | |||||
Purchases of property, plant, and equipment | (27,356 | ) | (20,044 | ) | |||
Cash paid for acquisition of business | — | (24,118 | ) | ||||
Legal fees paid from sale of discontinued business | — | (291 | ) | ||||
Net cash provided by (used in) investing activities | (8,284 | ) | (31,885 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of common stock under stock plans | 25,882 | 44,750 | |||||
Repurchase of common stock | (142,262 | ) | (99,347 | ) | |||
Payment of dividends | (23,283 | ) | (21,236 | ) | |||
Payment of contingent consideration | (1,000 | ) | (1,926 | ) | |||
Net cash provided by (used in) financing activities | (140,663 | ) | (77,759 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | (1,956 | ) | 1,298 | ||||
Net change in cash and cash equivalents | 789 | 31,708 | |||||
Cash and cash equivalents at beginning of period | 106,582 | 79,641 | |||||
Cash and cash equivalents at end of period | $ | 107,371 | $ | 111,349 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||
Shares | Par Value | |||||||||||||||||||||
Balance as of December 31, 2017 | 173,507 | $ | 347 | $ | 461,338 | $ | 668,587 | $ | (34,599 | ) | $ | 1,095,673 | ||||||||||
Issuance of common stock under stock plans | 1,434 | 3 | 25,879 | — | — | 25,882 | ||||||||||||||||
Repurchase of common stock | (2,750 | ) | (5 | ) | — | (142,257 | ) | — | (142,262 | ) | ||||||||||||
Stock-based compensation expense | — | — | 31,339 | — | — | 31,339 | ||||||||||||||||
Payment of dividends | — | — | — | (23,283 | ) | — | (23,283 | ) | ||||||||||||||
Adjustment as a result of the adoption of ASU 2016-06 "Income Taxes - Intra-Entity Transfers Other than Inventory" (Note 12) | — | — | — | (5,961 | ) | — | (5,961 | ) | ||||||||||||||
Net income | — | — | — | 173,849 | — | 173,849 | ||||||||||||||||
Net unrealized gain (loss) on available-for-sale investments, net of tax of ($82) | — | — | — | — | (180 | ) | (180 | ) | ||||||||||||||
Reclassification of net realized (gain) loss on the sale of available-for-sale investments | — | — | — | — | (535 | ) | (535 | ) | ||||||||||||||
Foreign currency translation adjustment | — | — | — | — | (5,078 | ) | (5,078 | ) | ||||||||||||||
Balance as of September 30, 2018 (unaudited) | 172,191 | $ | 345 | $ | 518,556 | $ | 670,935 | $ | (40,392 | ) | $ | 1,149,444 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||
Assets: | |||||||||||
Money market instruments | $ | 2,717 | $ | — | $ | — | |||||
Corporate bonds | — | 314,106 | — | ||||||||
Treasury bills | — | 226,058 | — | ||||||||
Asset-backed securities | — | 131,549 | — | ||||||||
Sovereign bonds | — | 14,437 | — | ||||||||
Agency bonds | — | 8,909 | — | ||||||||
Municipal bonds | — | 6,886 | — | ||||||||
Economic hedge forward contracts | — | 21 | — | ||||||||
Liabilities: | |||||||||||
Economic hedge forward contracts | — | 91 | — | ||||||||
Contingent consideration liabilities | — | — | 2,507 |
Balance as of December 31, 2017 | $ | 3,557 | |
Fair value adjustment to Manatee contingent consideration | (1,350 | ) | |
Fair value adjustment to GVi contingent consideration | 1,130 | ||
Fair value adjustment to Chiaro contingent consideration | 170 | ||
Payment of GVi contingent consideration | (1,000 | ) | |
Balance as of September 30, 2018 | $ | 2,507 |
September 30, 2018 | December 31, 2017 | ||||||
Cash | $ | 104,654 | $ | 97,951 | |||
Money market instruments | 2,717 | 8,631 | |||||
Cash and cash equivalents | 107,371 | 106,582 | |||||
Treasury bills | 193,347 | 150,371 | |||||
Corporate bonds | 138,099 | 47,395 | |||||
Asset-backed securities | 71,438 | 59,203 | |||||
Sovereign bonds | 8,119 | 21,579 | |||||
Municipal bonds | 6,044 | 8,805 | |||||
Agency bonds | 2,969 | 10,608 | |||||
Short-term investments | 420,016 | 297,961 | |||||
Corporate bonds | 176,007 | 296,014 | |||||
Asset-backed securities | 60,111 | 71,727 | |||||
Treasury bills | 32,711 | 23,459 | |||||
Sovereign bonds | 6,318 | 13,147 | |||||
Agency bonds | 5,940 | 14,890 | |||||
Municipal bonds | 842 | 4,204 | |||||
Long-term investments | 281,929 | 423,441 | |||||
$ | 809,316 | $ | 827,984 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term: | |||||||||||||||
Treasury bills | $ | 193,631 | $ | — | $ | (284 | ) | $ | 193,347 | ||||||
Corporate bonds | 138,383 | 56 | (340 | ) | 138,099 | ||||||||||
Asset-backed securities | 71,646 | 1 | (209 | ) | 71,438 | ||||||||||
Sovereign bonds | 8,172 | — | (53 | ) | 8,119 | ||||||||||
Municipal bonds | 6,050 | — | (6 | ) | 6,044 | ||||||||||
Agency bonds | 2,969 | — | — | 2,969 | |||||||||||
Long-term: | |||||||||||||||
Corporate bonds | 175,881 | 469 | (343 | ) | 176,007 | ||||||||||
Asset-backed securities | 60,276 | 33 | (198 | ) | 60,111 | ||||||||||
Treasury bills | 32,718 | 7 | (14 | ) | 32,711 | ||||||||||
Sovereign bonds | 6,286 | 32 | — | 6,318 | |||||||||||
Agency bonds | 5,930 | 10 | — | 5,940 | |||||||||||
Municipal bonds | 855 | — | (13 | ) | 842 | ||||||||||
$ | 702,797 | $ | 608 | $ | (1,460 | ) | $ | 701,945 |
Unrealized Loss Position For: | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Treasury bills | $ | 137,108 | $ | (174 | ) | $ | 63,030 | $ | (124 | ) | $ | 200,138 | $ | (298 | ) | ||||||||
Corporate bonds | 116,028 | (386 | ) | 42,922 | (297 | ) | 158,950 | (683 | ) | ||||||||||||||
Asset-backed securities | 57,678 | (207 | ) | 38,256 | (200 | ) | 95,934 | (407 | ) | ||||||||||||||
Sovereign bonds | 3,527 | (6 | ) | 4,592 | (47 | ) | 8,119 | (53 | ) | ||||||||||||||
Municipal bonds | 2,854 | (6 | ) | 842 | (13 | ) | 3,696 | (19 | ) | ||||||||||||||
$ | 317,195 | $ | (779 | ) | $ | 149,642 | $ | (681 | ) | $ | 466,837 | $ | (1,460 | ) |
<1 year | 1-2 Years | 2-3 Years | 3-4 Years | 4-5 Years | 5-7 Years | Total | |||||||||||||||||||||
Corporate bonds | $ | 138,099 | $ | 80,605 | $ | 68,684 | $ | 22,429 | $ | 1,434 | $ | 2,855 | $ | 314,106 | |||||||||||||
Treasury bills | 193,347 | 32,711 | — | — | — | — | 226,058 | ||||||||||||||||||||
Asset-backed securities | 71,438 | 30,840 | 5,431 | 12,102 | 5,138 | 6,600 | 131,549 | ||||||||||||||||||||
Sovereign bonds | 8,119 | 6,318 | — | — | — | — | 14,437 | ||||||||||||||||||||
Agency bonds | 2,969 | — | — | 5,940 | — | — | 8,909 | ||||||||||||||||||||
Municipal bonds | 6,044 | 842 | — | — | — | — | 6,886 | ||||||||||||||||||||
$ | 420,016 | $ | 151,316 | $ | 74,115 | $ | 40,471 | $ | 6,572 | $ | 9,455 | $ | 701,945 |
September 30, 2018 | December 31, 2017 | ||||||
Raw materials | $ | 46,660 | $ | 33,927 | |||
Work-in-process | 4,071 | 2,114 | |||||
Finished goods | 43,304 | 31,882 | |||||
$ | 94,035 | $ | 67,923 |
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
Distribution networks | $ | 38,060 | $ | 38,060 | $ | — | |||||
Completed technologies | 13,687 | 6,010 | 7,677 | ||||||||
Customer relationships | 8,607 | 5,587 | 3,020 | ||||||||
Non-compete agreements | 370 | 185 | 185 | ||||||||
Balance as of September 30, 2018 | $ | 60,724 | $ | 49,842 | $ | 10,882 | |||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
Distribution networks | $ | 38,060 | $ | 38,060 | $ | — | |||||
Completed technologies | 13,687 | 4,181 | 9,506 | ||||||||
Customer relationships | 8,607 | 5,202 | 3,405 | ||||||||
Non-compete agreements | 370 | 92 | 278 | ||||||||
Balance as of December 31, 2017 | $ | 60,724 | $ | 47,535 | $ | 13,189 |
Year Ended December 31, | Amount | |||
Remainder of fiscal 2018 | $ | 769 | ||
2019 | 2,701 | |||
2020 | 2,185 | |||
2021 | 2,017 | |||
2022 | 1,691 | |||
2023 | 989 | |||
Thereafter | 530 | |||
$ | 10,882 |
Balance as of December 31, 2017 | $ | 4,701 | |
Provisions for warranties issued during the period | 3,376 | ||
Fulfillment of warranty obligations | (3,223 | ) | |
Foreign exchange rate changes | (117 | ) | |
Balance as of September 30, 2018 | $ | 4,737 |
September 30, 2018 | December 31, 2017 | ||||||||||||
Currency | Notional Value | USD Equivalent | Notional Value | USD Equivalent | |||||||||
Derivatives Not Designated as Hedging Instruments: | |||||||||||||
Euro | 19,500 | $ | 22,602 | — | $ | — | |||||||
Japanese Yen | 455,000 | 4,018 | 455,000 | 4,049 | |||||||||
British Pound | 2,100 | 2,742 | 1,650 | 2,232 | |||||||||
Hungarian Forint | 700,000 | 2,513 | 545,000 | 2,110 | |||||||||
Korean Won | 2,050,000 | 1,847 | 1,825,000 | 1,708 | |||||||||
Taiwanese Dollar | 49,000 | 1,615 | 37,725 | 1,278 | |||||||||
Canadian Dollar | 800 | 616 | — | — | |||||||||
Singapore Dollar | 760 | 557 | — | — | |||||||||
Swiss Franc | — | — | 1,365 | 1,401 |
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Balance | Fair Value | Balance | Fair Value | ||||||||||||||||
Sheet Location | September 30, 2018 | December 31, 2017 | Sheet Location | September 30, 2018 | December 31, 2017 | ||||||||||||||
Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||||
Economic hedge forward contracts | Prepaid expenses and other current assets | $ | 21 | $ | 16 | Accrued expenses | $ | 91 | $ | 13 |
Asset Derivatives | Liability Derivatives | |||||||||||||||||
September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | |||||||||||||||
Gross amounts of recognized assets | $ | 21 | $ | 16 | Gross amounts of recognized liabilities | $ | 91 | $ | 13 | |||||||||
Gross amounts offset | — | — | Gross amounts offset | — | — | |||||||||||||
Net amount of assets presented | $ | 21 | $ | 16 | Net amount of liabilities presented | $ | 91 | $ | 13 |
Location in Financial Statements | Three-months Ended | Nine-months Ended | |||||||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||
Gains (losses) recorded in shareholders' equity (effective portion) | Accumulated other comprehensive income (loss), net of tax | $ | — | $ | — | $ | — | $ | — | ||||||||
Gains (losses) reclassified from accumulated other comprehensive income (loss) into current operations (effective portion) | Revenue | $ | — | $ | 56 | $ | — | $ | 10 | ||||||||
Research, development, and engineering expenses | — | — | — | 3 | |||||||||||||
Selling, general, and administrative expenses | — | — | — | 8 | |||||||||||||
Total gains (losses) reclassified from accumulated other comprehensive income (loss) into current operations | $ | — | $ | 56 | $ | — | $ | 21 | |||||||||
Gains (losses) recognized in current operations (ineffective portion and discontinued derivatives) | Foreign currency gain (loss) | $ | — | $ | — | $ | — | $ | — | ||||||||
Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||
Gains (losses) recognized in current operations | Foreign currency gain (loss) | $ | 299 | $ | 43 | $ | (366 | ) | $ | 139 |
Statement of Operations | |||||||||||||||||||||||
Three-months Ended | Nine-months Ended | ||||||||||||||||||||||
October 1, 2017 | October 1, 2017 | ||||||||||||||||||||||
As previously reported | Adjustment | As restated | As previously reported | Adjustment | As restated | ||||||||||||||||||
Revenue | $ | 259,739 | $ | 6,303 | $ | 266,042 | $ | 567,585 | $ | 15,576 | $ | 583,161 | |||||||||||
Cost of revenue | 62,360 | 5,701 | 68,061 | 128,056 | 14,701 | 142,757 | |||||||||||||||||
Gross margin | 197,379 | 602 | 197,981 | 439,529 | 875 | 440,404 | |||||||||||||||||
Operating income | 110,247 | 602 | 110,849 | 207,211 | 875 | 208,086 | |||||||||||||||||
Income before income tax expense | 112,150 | 602 | 112,752 | 212,918 | 875 | 213,793 | |||||||||||||||||
Income tax expense (benefit) | 9,802 | 457 | 10,259 | 8,843 | 491 | 9,334 | |||||||||||||||||
Net income | $ | 102,348 | $ | 145 | $ | 102,493 | $ | 204,075 | $ | 384 | $ | 204,459 | |||||||||||
Net income per weighted-average common and common-equivalent share: | |||||||||||||||||||||||
Basic | $ | 0.59 | $ | — | $ | 0.59 | $ | 1.18 | $ | — | $ | 1.18 | |||||||||||
Diluted | $ | 0.57 | $ | — | $ | 0.57 | $ | 1.14 | $ | — | $ | 1.14 |
Balance Sheet | |||||||||||
December 31, 2017 | |||||||||||
As previously reported | Adjustment | As restated | |||||||||
Prepaid expenses and other current assets | $ | 30,800 | $ | (117 | ) | $ | 30,683 | ||||
Accrued income taxes | 11,391 | 112 | 11,503 | ||||||||
Deferred revenue and customer deposits | 9,969 | (549 | ) | 9,420 | |||||||
Retained earnings | 668,267 | 320 | 668,587 |
Three-months Ended | Nine-months Ended | |||||||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | |||||||||||||
Europe | $ | 115,592 | $ | 146,230 | $ | 242,161 | $ | 252,386 | ||||||||
Americas | 58,830 | 54,902 | 189,859 | 155,977 | ||||||||||||
Greater China | 32,796 | 35,546 | 101,130 | 84,764 | ||||||||||||
Other Asia | 25,003 | 29,364 | 79,902 | 90,034 | ||||||||||||
$ | 232,221 | $ | 266,042 | $ | 613,052 | $ | 583,161 |
Three-months Ended | Nine-months Ended | |||||||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | |||||||||||||
Standard products and services | $ | 150,993 | $ | 159,981 | $ | 493,019 | $ | 453,464 | ||||||||
Application-specific customer solutions | 81,228 | 106,061 | 120,033 | 129,697 | ||||||||||||
$ | 232,221 | $ | 266,042 | $ | 613,052 | $ | 583,161 |
Amount | |||
Balance as of December 31, 2017 | $ | 9,420 | |
Increases to deferred revenue and customer deposits | 55,408 | ||
Recognition of revenue | (50,590 | ) | |
Foreign exchange rate changes | (986 | ) | |
Balance as of September 30, 2018 | $ | 13,252 |
Shares (in thousands) | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding as of December 31, 2017 | 12,726 | $ | 25.24 | |||||||||
Granted | 2,318 | 55.66 | ||||||||||
Exercised | (1,434 | ) | 18.06 | |||||||||
Forfeited or expired | (429 | ) | 33.24 | |||||||||
Outstanding as of September 30, 2018 | 13,181 | $ | 31.11 | 7.48 | $ | 329,301 | ||||||
Exercisable as of September 30, 2018 | 4,327 | $ | 20.14 | 6.01 | $ | 154,377 | ||||||
Options vested or expected to vest as of September 30, 2018 (1) | 11,916 | $ | 29.99 | 7.37 | $ | 310,772 |
Three-months Ended | Nine-months Ended | ||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||
Risk-free rate | 2.9 | % | 2.4 | % | 2.9 | % | 2.4 | % | |||
Expected dividend yield | 0.32 | % | 0.39 | % | 0.32 | % | 0.39 | % | |||
Expected volatility | 39 | % | 41 | % | 39 | % | 41 | % | |||
Expected term (in years) | 5.4 | 5.1 | 5.3 | 5.3 |
Shares (in thousands) | Weighted-Average Grant Fair Value | Aggregate Intrinsic Value (in thousands) | ||||||||
Nonvested as of December 31, 2017 | 20 | $ | 17.03 | |||||||
Granted | ||||||||||
Vested | (20 | ) | 17.03 | 993 | ||||||
Forfeited or expired | ||||||||||
Nonvested as of September 30, 2018 | — | $ | — | $ | — |
Three-months Ended | Nine-months Ended | ||||||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||||||
Cost of revenue | $ | 544 | $ | 520 | $ | 1,898 | $ | 1,404 | |||||||
Research, development, and engineering | 3,197 | 2,765 | 11,166 | 8,090 | |||||||||||
Selling, general, and administrative | 5,402 | 4,741 | 18,275 | 13,861 | |||||||||||
$ | 9,143 | $ | 8,026 | $ | 31,339 | $ | 23,355 |
Three-months Ended | Nine-months Ended | ||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||
Income tax provision at federal statutory corporate tax rate | 21 | % | 35 | % | 21 | % | 35 | % | |||
State income taxes, net of federal benefit | 1 | % | 1 | % | 1 | % | 1 | % | |||
Foreign tax rate differential | (7 | )% | (18 | )% | (7 | )% | (18 | )% | |||
Tax credit | — | % | (1 | )% | — | % | (1 | )% | |||
Discrete tax benefit related to Tax Act 2017 | (9 | )% | — | % | (4 | )% | — | % | |||
Discrete tax benefit related to stock option exercises | (4 | )% | (7 | )% | (5 | )% | (13 | )% | |||
Other discrete tax events | (2 | )% | (2 | )% | (1 | )% | (1 | )% | |||
Other | 1 | % | 1 | % | 1 | % | 1 | % | |||
Income tax provision | 1 | % | 9 | % | 6 | % | 4 | % |
Three-months Ended | Nine-months Ended | ||||||||||
September 30, 2018 | October 1, 2017 | September 30, 2018 | October 1, 2017 | ||||||||
Basic weighted-average common shares outstanding | 172,189 | 173,234 | 172,613 | 173,052 | |||||||
Effect of dilutive stock options | 5,056 | 6,120 | 5,408 | 6,072 | |||||||
Weighted-average common and common-equivalent shares outstanding | 177,245 | 179,354 | 178,021 | 179,124 |
Three-month period | Nine-month period | ||||||
RD&E expense in 2017 | $ | 26,078 | $ | 72,225 | |||
Personnel-related costs | 2,534 | 8,127 | |||||
Stock-based compensation expense | 444 | 2,989 | |||||
Prototyping materials | (129 | ) | 1,343 | ||||
Foreign currency exchange rate changes | (102 | ) | 1,346 | ||||
Other | 875 | 1,634 | |||||
RD&E expenses in 2018 | $ | 29,700 | $ | 87,664 |
Three-month period | Nine-month period | ||||||
SG&A expenses in 2017 | $ | 61,054 | $ | 160,093 | |||
Personnel-related costs | 8,631 | 28,040 | |||||
Stock-based compensation expense | 675 | 4,272 | |||||
Foreign currency exchange rate changes | (190 | ) | 3,552 | ||||
Depreciation expense | 1,049 | 2,932 | |||||
Incentive compensation plans | (3,709 | ) | (6,053 | ) | |||
Other | (1,693 | ) | 3,430 | ||||
SG&A expenses in 2018 | $ | 65,817 | $ | 196,266 |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
July 2 - July 29, 2018 | — | $ | — | — | $ | 73,892,000 | |||||||
July 30 - August 26, 2018 | 141,750 | 52.59 | 141,750 | 66,437,000 | |||||||||
August 27 - September 30, 2018 | 252,000 | 53.57 | 252,000 | 52,938,000 | |||||||||
Total | 393,750 | $ | 53.22 | 393,750 | $ | 52,938,000 |
Exhibit Number | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101 | xBRL (Extensible Business Reporting Language) | ||
The following materials from Cognex Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, formatted in xBRL: (i) Consolidated Statements of Operations for the three-month and nine-month periods ended September 30, 2018 and October 1, 2017; (ii) Consolidated Statements of Comprehensive Income for the three-month and nine-month periods ended September 30, 2018 and October 1, 2017; (iii) Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017; (iv) Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2018 and October 1, 2017; (v) Consolidated Statement of Shareholders’ Equity for the nine-month period ended September 30, 2018; and (vi) Notes to Consolidated Financial Statements. | |||
* | Filed herewith | ||
** | Furnished herewith |
Date: | October 29, 2018 | COGNEX CORPORATION | ||
By: | /s/ Robert J. Willett | |||
Robert J. Willett | ||||
President and Chief Executive Officer | ||||
(principal executive officer) | ||||
By: | /s/ John J. Curran | |||
John J. Curran | ||||
Senior Vice President of Finance, Chief Financial Officer, and Treasurer | ||||
(principal financial and accounting officer) |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 29, 2018 | By: | /s/ Robert J. Willett | ||
Robert J. Willett | |||||
President and Chief Executive Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 29, 2018 | By: | /s/ John J. Curran | ||
John J. Curran | |||||
Senior Vice President of Finance, Chief Financial Officer, and Treasurer |
Date: | October 29, 2018 | By: | /s/ Robert J. Willett | |
Robert J. Willett | ||||
President and Chief Executive Officer | ||||
(principal executive officer) |
* | This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
Date: | October 29, 2018 | By: | /s/ John J. Curran | |
John J. Curran | ||||
Senior Vice President of Finance, Chief Financial Officer, and Treasurer | ||||
(principal financial officer) |
* | This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Document And Entity Information [Abstract] | |
Entity Registrant Name | COGNEX CORP |
Entity Central Index Key | 0000851205 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2018 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 172,191,187 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Income Statement [Abstract] | ||||
Revenue | $ 232,221 | $ 266,042 | $ 613,052 | $ 583,161 |
Cost of revenue | 58,860 | 68,061 | 153,227 | 142,757 |
Gross margin | 173,361 | 197,981 | 459,825 | 440,404 |
Research, development, and engineering expenses | 29,700 | 26,078 | 87,664 | 72,225 |
Selling, general, and administrative expenses | 65,817 | 61,054 | 196,266 | 160,093 |
Operating income | 77,844 | 110,849 | 175,895 | 208,086 |
Foreign currency gain (loss) | (379) | (127) | (708) | (574) |
Investment income | 3,937 | 2,475 | 10,736 | 6,625 |
Other income (expense) | (129) | (445) | (98) | (344) |
Income before income tax expense | 81,273 | 112,752 | 185,825 | 213,793 |
Income tax expense (benefit) | 837 | 10,259 | 11,976 | 9,334 |
Net Income | $ 80,436 | $ 102,493 | $ 173,849 | $ 204,459 |
Net income per weighted-average common and common-equivalent share: | ||||
Basic (usd per share) | $ 0.47 | $ 0.59 | $ 1.01 | $ 1.18 |
Diluted (usd per share) | $ 0.45 | $ 0.57 | $ 0.98 | $ 1.14 |
Weighted-average common and common-equivalent shares outstanding: | ||||
Basic (shares) | 172,189 | 173,234 | 172,613 | 173,052 |
Diluted (shares) | 177,245 | 179,354 | 178,021 | 179,124 |
Cash dividends per common share (usd per share) | $ 0.0450 | $ 0.0425 | $ 0.1350 | $ 0.1225 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax effect on cash flow hedges | $ 0 | $ (8) | $ 0 | $ (5) |
Tax effect of unrealized gain (loss) on available-for-sale investments | 24 | 41 | (82) | 191 |
Tax effect of foreign currency translation adjustment | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Reserves for accounts receivable | $ 1,501 | $ 1,568 |
Common stock, par value | $ 0.002 | $ 0.002 |
Common stock, shares authorized | 300,000,000 | 200,000,000 |
Common stock, shares issued | 172,032,000 | 173,507,000 |
Consolidated Statement of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Tax effect of unrealized gain (loss) on available-for-sale investments | $ 24 | $ 41 | $ (82) | $ 191 |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies As permitted by the rules of the Securities and Exchange Commission applicable to Quarterly Reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles (GAAP). As a result of the adoption of ASC 606 "Revenue from Contracts with Customers," Cognex Corporation (the "Company") has provided disclosures related to revenue recognition in this Quarterly Report on Form 10-Q. Reference should be made to the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for a full description of significant accounting policies. In the opinion of the management of the Company, the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments and financial statement reclassifications, necessary to present fairly the Company’s financial position as of September 30, 2018, and the results of its operations for the three-month and nine-month periods ended September 30, 2018 and October 1, 2017, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented. The results disclosed in the Consolidated Statements of Operations for the three-month and nine-month periods ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers.” The core principle of ASC 606 is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The framework in support of this core principle includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the performance obligations are satisfied. Identifying the Contract with the Customer The Company identifies contracts with customers as agreements that create enforceable rights and obligations, which typically take the form of customer contracts or purchase orders. Identifying the Performance Obligations in the Contract The Company identifies performance obligations as promises in contracts to transfer distinct goods or services. Standard products and services that the Company regularly sells separately are accounted for as distinct performance obligations. Application-specific customer solutions that are comprised of a combination of products and services are accounted for as one performance obligation to deliver a total solution to the customer. On-site support services that are provided to the customer after the solution is deployed are accounted for as a separate performance obligation. These solutions are provided to customers in a variety of industries, including the consumer electronics, logistics, and automotive industries. Shipping and handling activities for which the Company is responsible under the terms and conditions of the sale are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the goods and are expensed when revenue is recognized. The Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract. If revenue is recognized before immaterial promises have been completed, then the costs related to such immaterial promises are accrued at the time of sale. Determining the Transaction Price The Company determines the transaction price as the amount of consideration it expects to receive in exchange for transferring promised goods or services to the customer. Amounts collected from customers for sales taxes are excluded from the transaction price. If a contract includes a variable amount, such as a rebate, then the Company estimates the transaction price using either the expected value or the most likely amount of consideration to be received, depending upon the specific facts and circumstances. The Company includes estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of revenue will not occur when the uncertainty is resolved. The Company updates its estimate of variable consideration at the end of each reporting period to reflect changes in facts and circumstances. Allocating the Transaction Price to the Performance Obligations The Company allocates the transaction price to each performance obligation at contract inception based on a relative stand-alone selling price basis, or the price at which the Company would sell the good or service separately to similar customers in similar circumstances. Recognizing Revenue When (or As) the Performance Obligations are Satisfied The Company recognizes revenue when it transfers the promised goods or services to the customer. Revenue for standard products is recognized at the point in time when the customer obtains control of the goods, which is typically upon delivery when the customer has legal title, physical possession, the risks and rewards of ownership, and an enforceable obligation to pay for the products. Revenue for services, which are not material, is typically recognized over the time the service is provided. Revenue for application-specific customer solutions is recognized at the point in time when the solution is validated, which is the point in time when the Company can objectively determine that the agreed-upon specifications in the contract have been met and the customer will accept the performance obligations in the arrangement. Although the customer may have taken legal title and physical possession of the goods when they arrived at the customer’s designated site, the significant risks and rewards of ownership transfer to the customer only upon validation. Revenue for on-site support services related to these solutions is recognized over the time the service is provided. In certain instances, an arrangement may include customer-specified acceptance provisions or performance guarantees that allow the customer to accept or reject delivered products that do not meet the customer’s specifications. If the Company can objectively determine that control of a good or service has been transferred to the customer in accordance with the agreed-upon specifications in the contract, then customer acceptance is a formality. If acceptance provisions are presumed to be substantive, then revenue is deferred until customer acceptance. For the Company’s standard products and services, revenue recognition and billing typically occur at the same time. For application-specific customer solutions, however, the agreement with the customer may provide for billing terms which differ from revenue recognition criteria, resulting in either deferred revenue or unbilled revenue. Credit assessments are performed to determine payment terms, which vary by region, industry, and customer. Prepayment terms result in contract liabilities for customer deposits. When credit is granted to customers, payment is typically due 30 to 90 days from billing. The Company's contracts have an original expected duration of less than one year, and therefore as a practical expedient, the Company has elected to ignore the impact of the time value of money on a contract and to expense sales commissions. The Company recognizes an asset for costs to fulfill a contract if the costs relate directly to the contract and to future performance, and the costs are expected to be recovered. Management exercises judgment when determining the amount of revenue to be recognized each period. Such judgments include, but are not limited to, assessing the customer’s ability and intention to pay substantially all of the contract consideration when due, determining when two or more contracts should be combined and accounted for as a single contract, determining whether a contract modification has occurred, assessing whether promises are immaterial in the context of the contract, determining whether material promises in a contract represent distinct performance obligations, estimating the transaction price for a contract that contains variable consideration, determining the stand-alone selling price of each performance obligation, determining whether control is transferred over time or at a point in time for performance obligations, and assessing whether formal customer acceptance provisions are substantive. |
New Pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Pronouncements | New Pronouncements Accounting Standards Update (ASU) 2016-02 and 2018-11, "Leases" ASU 2016-02 creates Topic 842, Leases. The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet, and disclosing key information about leasing arrangements. This ASU applies to any entity that enters into a lease, although lessees will see the most significant changes. The main difference between current GAAP and Topic 842 is the recognition of lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current GAAP. Topic 842 distinguishes between finance leases and operating leases, which are substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. For public companies, the guidance in ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. In July 2018, the Financial Accounting Standards Board issued ASU 2018-11 to amend ASU 2016-02 and provided an additional (and optional) transition method to adopt the new lease standard. This transition method allows entities to apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption instead of using the original modified retrospective transition method of adoption which required the restatement of all prior period financial statements. Under this new transition method, the comparative periods presented in the financial statements will continue to be in accordance with current GAAP (Topic 840, Leases). Management will adopt the new lease standard using this new transition method under ASU 2018-11. As of the date of this report, management has determined the scope of leases subject to the new accounting requirements, has selected a software package to assist with compliance, and has reviewed all leases in scope. Management is in the process of completing the implementation of the lease accounting software, training relevant employees, and finalizing the internal lease accounting policy and the related processes, internal controls, and disclosures. Accounting Standards Update (ASU) 2016-13, "Financial Instruments - Measurement of Credit Losses" ASU 2016-13 applies to all reporting entities holding financial assets that are not accounted for at fair value through net income (debt securities). The amendments in this ASU eliminate the probable initial recognition threshold to recognize a credit loss under current GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. In addition, this ASU broadens the information an entity must consider in developing the credit loss estimate, including the use of reasonable and supportable forecasted information. The amendments in this ASU require that credit losses on available-for-sale debt securities be presented as an allowance rather than as a write-down and an entity will be able to record reversals of credit losses in current period net income. For public companies, the guidance in ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. This ASU should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management does not expect ASU 2016-13 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2017-08, "Receivables - Nonrefundable Fees and Other Costs - Premium Amortization on Purchased Callable Debt Securities" ASU 2017-08 applies to all reporting entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. Under current GAAP, premiums and discounts on callable debt securities generally are amortized to the maturity date. If that callable debt security is subsequently called, the entity records a loss equal to the unamortized premium. The amendments in this ASU more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. For public companies, the amendments in ASU 2017-08 are effective for annual periods beginning after December 15, 2019, and interim reporting periods within fiscal years beginning after December 15, 2020. This ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption, and, in the period of adoption, the entity is required to provide disclosures about the change in accounting principle. Early adoption is permitted, including adoption in an interim period. Management does not expect ASU 2017-08 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2017-12, "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities" ASU 2017-12 applies to all reporting entities that elect to apply hedge accounting. The hedge accounting requirements under current GAAP sometimes do not permit an entity to properly recognize the economic results of the hedging strategy in the financial statements, and they are difficult to understand and interpret. The amendments in this ASU make certain targeted improvements to simplify the application of the hedge accounting guidance. Also, they better align the risk management activities and financial reporting for hedging relationships through changes to both 1) the designation and measurement guidance for qualifying hedging relationships and 2) the presentation of hedge results. For public companies, the amendments in ASU 2017-12 are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those fiscal years. Early adoption is permitted including adoption in any interim period after issuance of the ASU. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this ASU. The amended presentation and disclosure guidance is required only prospectively. Management does not expect ASU 2017-12 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-01, "Land Easement Practical Expedient for Transition to Topic 842" ASU 2018-01 applies to entities with land easements that exist or expired before an entity’s adoption of Topic 842, provided that the entity does not account for those land easements as leases under Topic 840. The amendments in this ASU permit an entity to elect an optional transition practical expedient to not evaluate under Topic 842 land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. An entity that elects this practical expedient should apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under Topic 840. Once an entity adopts Topic 842, it should apply that Topic prospectively to all new (or modified) land easements to determine whether the arrangement should be accounted for as a lease. An entity that does not elect this practical expedient should evaluate all existing or expired land easements in connection with the adoption of the new lease requirements in Topic 842 to assess whether they meet the definition of a lease. The amendments in this ASU affect the amendments in ASU 2016-02, which are not yet effective but may be early adopted. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in ASU 2016-02, which is for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Management does not expect ASU 2018-01 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-02, "Income Statement - Reporting Comprehensive Income" ASU 2018-02 applies to entities required to apply the provisions of Topic 220, Income Statement - Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires the effect of a change in tax laws or rates to be included in income from continuing operations is not affected. The amendments in this ASU also require certain disclosures about stranded tax effects. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. Management does not expect ASU 2018-02 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-07, "Compensation - Stock Compensation - Improvements to Nonemployee Share-Based Payment Accounting" ASU 2018-07 applies to all entities that enter into share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this ASU expand the scope of Topic 718, Compensation - Stock Compensation, to include share-based payments transactions to nonemployees. Changes to the accounting for nonemployee awards as a result of this ASU include: 1) equity-classified nonemployee share-based payment awards are measured at the grant date, instead of the previous requirement to remeasure the awards through the performance completion date, 2) for awards with performance conditions, compensation cost is recognized when the achievement of the performance condition is probable, rather than upon achievement, and 3) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting is eliminated. This ASU clarifies that Topic 718 does not apply to financing transactions or awards granted to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which the measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Management does not expect ASU 2018-07 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software" ASU 2018-15 applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, the amendments in this ASU require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Further, it requires the entity to expense the capitalized implementation costs over the term of the hosting arrangement. In addition, it requires the presentation of the expenses related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and the classification of the payments for the capitalized implementation costs in the statement of cash flows in the same manner as the payments made for the fees associated with the hosting element. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. Management does not expect ASU 2018-15 to have a material impact on the Company's financial statement and disclosures. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of September 30, 2018 (in thousands):
The Company’s money market instruments are reported at fair value based upon the daily market price for identical assets in active markets, and are therefore classified as Level 1. The Company’s debt securities and forward contracts are reported at fair value based upon model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. Management is responsible for estimating the fair value of these financial assets and liabilities, and in doing so, considers valuations provided by a large, third-party pricing service. For debt securities, this service maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. They use this information to structure yield curves for various types of debt securities and arrive at the daily valuations. The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency. The market participants are generally large commercial banks. The Company did not record an other-than-temporary impairment of these financial assets during the nine-month period ended September 30, 2018. The Company's contingent consideration liabilities are reported at fair value based upon probability-adjusted present values of the consideration expected to be paid using significant inputs that are not observable in the market and are therefore classified as Level 3. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving certain revenue milestones. The fair values of these contingent consideration liabilities were calculated using discount rates consistent with the level of risk of achievement, and are remeasured each reporting period with changes in fair value recorded in "Other income (expense)" on the Consolidated Statements of Operations. The following table summarizes the activity for the Company's liability measured at fair value using Level 3 inputs for the nine-month period ended September 30, 2018 (in thousands):
Non-financial Assets that are Measured at Fair Value on a Non-recurring Basis Non-financial assets such as property, plant and equipment, goodwill, and intangible assets are required to be measured at fair value only when an impairment loss is recognized. The Company did not record an impairment charge related to these assets during the nine-month periods ended September 30, 2018 and October 1, 2017. |
Cash, Cash Equivalents, and Investments |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents, and Investments | Cash, Cash Equivalents, and Investments Cash, cash equivalents, and investments consisted of the following (in thousands):
Treasury bills consist of debt securities issued by the U.S. government; corporate bonds consist of debt securities issued by both domestic and foreign companies; asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement; sovereign bonds consist of direct debt issued by foreign governments; municipal bonds consist of debt securities issued by state and local government entities; and agency bonds consist of domestic or foreign obligations of government agencies and government sponsored enterprises that have government backing. All securities are denominated in U.S. Dollars. The following table summarizes the Company’s available-for-sale investments as of September 30, 2018 (in thousands):
The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of September 30, 2018 (in thousands):
As of September 30, 2018, the Company did not recognize any other-than-temporary impairment of these investments. In its evaluation, management considered the type of security, the credit rating of the security, the length of time the security has been in a loss position, the size of the loss position, the Company's intent and ability to hold the security to expected recovery of value, and other meaningful information. The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before their effective maturity or market price recovery. The Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $283,000 and $17,000, respectively, during the three-month period ended September 30, 2018 and $306,000 and $43,000, respectively, during the three-month period ended October 1, 2017. The Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $646,000 and $111,000, respectively, during the nine-month period ended September 30, 2018 and $449,000 and $79,000, respectively, during the nine-month period ended October 1, 2017. These gains and losses are included in "Investment income" on the Consolidated Statement of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, are recorded in shareholders’ equity as accumulated other comprehensive income (loss). The following table presents the effective maturity dates of the Company’s available-for-sale investments as of September 30, 2018 (in thousands):
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following (in thousands):
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Amortized intangible assets consisted of the following (in thousands):
As of September 30, 2018, estimated future amortization expense related to intangible assets is as follows (in thousands):
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Warranty Obligations |
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Warranty Obligations | Warranty Obligations The Company records the estimated cost of fulfilling product warranties at the time of sale based upon historical costs to fulfill claims. Obligations may also be recorded subsequent to the time of sale whenever specific events or circumstances impacting product quality become known that would not have been taken into account using historical data. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers and third-party contract manufacturers, the Company’s warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. An adverse change in any of these factors may result in the need for additional warranty provisions. Warranty obligations are included in “Accrued expenses” on the Consolidated Balance Sheets. The changes in the warranty obligation were as follows (in thousands):
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments The Company’s foreign currency risk management strategy is principally designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. Currently, the Company enters into two types of hedges to manage this risk. The first are economic hedges which utilize foreign currency forward contracts with maturities of up to 45 days to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables. The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged. These economic hedges are not designated as hedging instruments for hedge accounting treatment. The second are cash flow hedges which utilize foreign currency forward contracts with maturities of up to 18 months to hedge specific forecasted transactions of the Company's foreign subsidiaries with the goal of protecting the Company's budgeted revenues and expenses against foreign currency exchange rate changes compared to its budgeted rates. These cash flow hedges are designated as hedging instruments for hedge accounting treatment. The Company had the following outstanding forward contracts (in thousands):
Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):
The following table presents the gross activity for all derivative assets and liabilities which were presented on a net basis on the Consolidated Balance Sheets due to the right of offset with each counterparty (in thousands):
Information regarding the effect of derivative instruments on the consolidated financial statements was as follows (in thousands):
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, "Revenue from Contracts with Customers," using the full retrospective method to present all periods reported on a consistent basis. Accordingly, prior-period results have been restated to apply the provisions of this ASC. As a result of this adoption, revenue for software-only products sold as part of multiple-deliverable arrangements are no longer deferred when vendor-specific objective evidence of fair value does not exist for the undelivered elements of the arrangement. This change results in earlier recognition of revenue. In addition, certain of the Company’s product accessory sales, which were reported on a net basis, are now reported on a gross basis as a result of applying the expanded guidance in the new standard related to principal versus agent considerations. This change results in the Company reporting higher revenue and higher cost of revenue when these sales are reported on a gross basis, although the gross margin dollars do not change. Furthermore, for arrangements that include customer-specified acceptance criteria, revenue is recognized when the Company can objectively determine that control has been transferred to the customer in accordance with the agreed-upon specifications in the contract, which may occur before formal customer acceptance. This change primarily impacts revenue recognition for arrangements in the logistics industry where certain customer solutions include installed products and results in earlier recognition of revenue. The adoption of the standard impacted our previously-reported results as follows (in thousands):
The following table summarizes disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands):
The following table summarizes disaggregated revenue information by revenue type (in thousands):
Costs to Fulfill a Contract Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $6,811,000 and $3,230,000 as of September 30, 2018 and December 31, 2017, respectively. Accounts Receivable, Contract Assets, and Contract Liabilities Accounts receivable represent amounts billed and currently due from customers which are reported at their net estimated realizable value. The Company maintains reserves against its accounts receivable for potential credit losses. Credit losses recognized on accounts receivable were immaterial for the three-month and nine-month periods ended September 30, 2018 and October 1, 2017, respectively. Contract assets consist of unbilled revenue which arises when revenue is recognized in advance of billing for certain application-specific customer solutions contracts. Contract liabilities consist of deferred revenue and customer deposits which arise when amounts are billed to or collected from customers in advance of revenue recognition. The following table summarizes the deferred revenue and customer deposits activity for the nine-month period ended September 30, 2018 (in thousands):
As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations, as our contracts have an original expected duration of less than one year. |
Stock-Based Compensation Expense |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | Stock-Based Compensation Expense The Company’s share-based payments that result in compensation expense consist of stock option grants and restricted stock awards. As of September 30, 2018, the Company had 20,246,002 shares available for grant. Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over four or five years based upon continuous service and expire ten years from the grant date. Vesting of restricted stock awards may be based on continuing employment and/or achievement of pre-established performance goals and objectives. Vesting for performance-based restricted stock awards and time-based restricted stock awards must not be less than one year and three years, respectively; however, awards with time-based vesting may become vested incrementally over such three-year period. The following table summarizes the Company’s stock option activity for the nine-month period ended September 30, 2018:
(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options. The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:
Risk-free rate The risk-free rate was based upon a treasury instrument whose term was consistent with the contractual term of the option. Expected dividend yield Generally, the current dividend yield is calculated by annualizing the cash dividend declared by the Company’s Board of Directors and dividing that result by the closing stock price on the grant date. Expected volatility The expected volatility was based upon a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock. Expected term The expected term was derived from the binomial lattice model from the impact of events that trigger exercises over time. The Company stratifies its employee population into two groups: one consisting of senior management and another consisting of all other employees. The Company currently applies an estimated annual forfeiture rate of 8% to all unvested options for senior management and a rate of 12% for all other employees. Each year during the first quarter, the company revises its estimated forfeiture rate. This resulted in an increase to compensation expense of $1,283,000 in 2018 and a decrease to compensation expense of $673,000 in 2017. The weighted-average grant-date fair values of stock options granted during the three-month periods ended September 30, 2018 and October 1, 2017 were $22.52 and $14.80, respectively. The weighted-average grant-date fair values of stock options granted during the nine-month periods ended September 30, 2018 and October 1, 2017 were $21.70 and $14.97, respectively. The total intrinsic values of stock options exercised for the three-month periods ended September 30, 2018 and October 1, 2017 were $17,985,000 and $28,462,000, respectively. The total intrinsic values of stock options exercised for the nine-month periods ended September 30, 2018 and October 1, 2017 were $50,975,000 and $100,913,000, respectively. The total fair values of stock options vested for the three-month periods ended September 30, 2018 and October 1, 2017 were $997,000 and $844,000, respectively. The total fair values of stock options vested for the nine-month periods ended September 30, 2018 and October 1, 2017 were $27,557,000 and $19,557,000, respectively. As of September 30, 2018, total unrecognized compensation expense related to non-vested stock options was $50,387,000, which is expected to be recognized over a weighted-average period of 1.61 years. The following table summarizes the Company's restricted stock activity for the nine-month period ended September 30, 2018:
The fair values of restricted stock awards granted were determined based upon the market value of the Company's common stock at the time of grant. The initial cost was then amortized over the period of vesting until the restrictions lapsed. These restricted shares became fully vested in 2018. Participants were entitled to dividends on the restricted stock awards, but only received those amounts if the shares vested. The sale or transfer of these shares was restricted during the vesting period. The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended September 30, 2018 were $9,143,000 and $1,654,000, respectively, and for the three-month period ended October 1, 2017 were $8,026,000 and $2,639,000, respectively. The total stock-based compensation expense and the related income tax benefit recognized for the nine-month period ended September 30, 2018 were $31,339,000 and $5,608,000, respectively, and for the nine-month period ended October 1, 2017 were $23,355,000 and $7,661,000, respectively. No compensation expense was capitalized as of September 30, 2018 or December 31, 2017. The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):
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Stock Repurchase Program |
9 Months Ended |
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Sep. 30, 2018 | |
Equity [Abstract] | |
Stock Repurchase Program | Stock Repurchase Program In April 2017, the Company's Board of Directors authorized the repurchase of $100,000,000 of the Company's common stock. As of September 30, 2018, the Company had repurchased 1,744,000 shares at a cost of $100,000,000 under this program, including 803,000 shares at a cost of $45,200,000 in the three-month period ended April 1, 2018. Stock repurchases under this April 2017 program were completed in the three-month period ended April 1, 2018. In February 2018, the Company's Board of Directors authorized the repurchase of an additional $150,000,000 of the Company's common stock. As of September 30, 2018, the Company had repurchased 1,947,000 shares at a cost of $97,062,000 under this program, leaving a remaining authorized balance of $52,938,000. Total stock repurchases in the nine-month period ended September 30, 2018 amounted to $142,262,000. The Company may repurchase shares under this program in future periods depending upon a variety of factors, including, among other things, the impact of dilution from employee stock options, stock price, share availability, and cash requirements. |
Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes | Taxes A reconciliation of the United States federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, was as follows:
On December 22, 2017, the United States Congress passed and the President signed into law the Tax Cuts and Jobs Act of 2017 (Tax Act). The Tax Act included a decrease in the U.S. federal statutory corporate tax rate from 35% to 21%, a one-time transition tax on unrepatriated foreign earnings, and limits on certain deductions. The Securities and Exchange Commission (SEC) released Staff Accounting Bulletin (SAB) No. 118 to provide guidance to companies on how to implement the accounting and disclosure changes as a result of the Tax Act. The Company made what it considered to be a reasonable estimate of the impact of the Tax Act in its financial statements for the year ended December 31, 2017. In the third quarter of 2018, the Company revised its estimate of the impact of the Tax Act based on additional regulatory guidance. The effective tax rate, as a result, was reduced by 9 percentage points and 4 percentage points for the three-month and nine-month period ended September 30, 2018, respectively. This significant estimate is highly judgmental and changes to this estimate could result in material charges or credits in future reporting periods. The Company will continue to review the guidance at the Federal and State levels through the end of 2018 and additional revisions to the estimates of the impact of the Tax Act may be required in the fourth quarter of 2018 as regulatory guidance continues to develop, specifically at the individual State level. The Tax Act subjects the Company to current tax on Global Intangible Low-Taxed Income (GILTI) earned by certain foreign subsidiaries. The Company has made an accounting policy election to provide for the tax expense related to GILTI in the year the tax is incurred rather than recognize deferred taxes for these temporary differences. The majority of income earned outside of the United States is permanently reinvested to provide funds for international expansion. The Company is tax resident in numerous jurisdictions around the world and has identified its major jurisdictions as the United States, Ireland, and China. The statutory tax rate is 12.5% in Ireland and 25% in China, compared to the U.S. federal statutory corporate tax rate of 21%. International rights to certain of the Company's intellectual property are held by a subsidiary whose legal jurisdiction does not tax this income, resulting in a foreign effective tax rate that is lower than the above mentioned statutory rates, although the reduced taxes overseas have been partially offset by changes in U.S. tax law. These differences resulted in a decrease in the effective tax rate by 7 percentage points for the three-month and nine-month periods ended September 30, 2018, and a decrease in the effective tax rate by 18 percentage points for the three-month and nine-month periods ended October 1, 2017. The excess tax benefit arising from the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes from stock option exercises resulted in a decrease of the effective tax rate by 4 and 7 percentage points for the three-month periods ended September 30, 2018 and October 1, 2017, respectively, and a decrease of the effective tax rate by 5 and 13 percentage points for the nine-month periods ended September 30, 2018 and October 1, 2017, respectively. Certain reserves for income taxes and other provision-to-return adjustments resulted in a decrease of the effective tax rate by 2 percentage points for both the three-month periods ended September 30, 2018 and October 1, 2017 and a decrease of the effective tax rate by 1 percentage point for both the nine-month periods ended September 30, 2018 and October 1, 2017. On January 1, 2018, the Company adopted Accounting Standard Update (ASU) 2016-16, "Income Taxes - Intra-Entity Transfers of Assets Other than Inventory." This Update requires the recognition of deferred income taxes for an intra-entity transfer of an asset other than inventory. As a result of this ASU, the Company recorded $5,961,000 through a cumulative-effect adjustment directly to retained earnings at the beginning of fiscal year 2018. During the nine-month period ended September 30, 2018, the Company recorded a $204,000 increase in reserves for income taxes, net of deferred tax benefit. Estimated interest and penalties included in these amounts totaled $33,000 for the nine-month period ended September 30, 2018. The Company’s reserve for income taxes, including gross interest and penalties, was $7,674,000 as of September 30, 2018, which included $6,646,000 classified as a non-current liability and $1,028,000 recorded as a reduction to non-current deferred tax assets. The amount of gross interest and penalties included in these balances was $773,000. If the Company’s tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period. As a result of the expiration of certain statutes of limitations, there is a potential that a portion of these reserves could be released, which would decrease income tax expense by approximately $1,200,000 to $1,300,000 over the next twelve months. The Company has defined its major tax jurisdictions as the United States, Ireland, and China, and within the United States, Massachusetts. Within the United States, the tax years 2015 through 2017 remain open to examination by the Internal Revenue Service and various state tax authorities. The tax years 2014 through 2017 remain open to examination by various taxing authorities in other jurisdictions in which the Company operates. |
Weighted-Average Shares |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Shares | Weighted-Average Shares Weighted-average shares were calculated as follows (in thousands):
Stock options to purchase 2,796,000 and 2,353,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended September 30, 2018, respectively, and 466,000 and 3,108,000 for the same periods in 2017, but were not included in the calculation of dilutive net income per share because they were anti-dilutive. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 29, 2018, the Company’s Board of Directors declared a cash dividend of $0.050 per share. The dividend is payable November 30, 2018 to all shareholders of record as of the close of business on November 16, 2018. In addition, on October 29, 2018, the Company's Board of Directors authorized the repurchase of an additional $200,000,000 of the Company's common stock. This new authorization will commence once the Company completes the February 2018 program. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers.” The core principle of ASC 606 is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The framework in support of this core principle includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the performance obligations are satisfied. Identifying the Contract with the Customer The Company identifies contracts with customers as agreements that create enforceable rights and obligations, which typically take the form of customer contracts or purchase orders. Identifying the Performance Obligations in the Contract The Company identifies performance obligations as promises in contracts to transfer distinct goods or services. Standard products and services that the Company regularly sells separately are accounted for as distinct performance obligations. Application-specific customer solutions that are comprised of a combination of products and services are accounted for as one performance obligation to deliver a total solution to the customer. On-site support services that are provided to the customer after the solution is deployed are accounted for as a separate performance obligation. These solutions are provided to customers in a variety of industries, including the consumer electronics, logistics, and automotive industries. Shipping and handling activities for which the Company is responsible under the terms and conditions of the sale are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the goods and are expensed when revenue is recognized. The Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract. If revenue is recognized before immaterial promises have been completed, then the costs related to such immaterial promises are accrued at the time of sale. Determining the Transaction Price The Company determines the transaction price as the amount of consideration it expects to receive in exchange for transferring promised goods or services to the customer. Amounts collected from customers for sales taxes are excluded from the transaction price. If a contract includes a variable amount, such as a rebate, then the Company estimates the transaction price using either the expected value or the most likely amount of consideration to be received, depending upon the specific facts and circumstances. The Company includes estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of revenue will not occur when the uncertainty is resolved. The Company updates its estimate of variable consideration at the end of each reporting period to reflect changes in facts and circumstances. Allocating the Transaction Price to the Performance Obligations The Company allocates the transaction price to each performance obligation at contract inception based on a relative stand-alone selling price basis, or the price at which the Company would sell the good or service separately to similar customers in similar circumstances. Recognizing Revenue When (or As) the Performance Obligations are Satisfied The Company recognizes revenue when it transfers the promised goods or services to the customer. Revenue for standard products is recognized at the point in time when the customer obtains control of the goods, which is typically upon delivery when the customer has legal title, physical possession, the risks and rewards of ownership, and an enforceable obligation to pay for the products. Revenue for services, which are not material, is typically recognized over the time the service is provided. Revenue for application-specific customer solutions is recognized at the point in time when the solution is validated, which is the point in time when the Company can objectively determine that the agreed-upon specifications in the contract have been met and the customer will accept the performance obligations in the arrangement. Although the customer may have taken legal title and physical possession of the goods when they arrived at the customer’s designated site, the significant risks and rewards of ownership transfer to the customer only upon validation. Revenue for on-site support services related to these solutions is recognized over the time the service is provided. In certain instances, an arrangement may include customer-specified acceptance provisions or performance guarantees that allow the customer to accept or reject delivered products that do not meet the customer’s specifications. If the Company can objectively determine that control of a good or service has been transferred to the customer in accordance with the agreed-upon specifications in the contract, then customer acceptance is a formality. If acceptance provisions are presumed to be substantive, then revenue is deferred until customer acceptance. For the Company’s standard products and services, revenue recognition and billing typically occur at the same time. For application-specific customer solutions, however, the agreement with the customer may provide for billing terms which differ from revenue recognition criteria, resulting in either deferred revenue or unbilled revenue. Credit assessments are performed to determine payment terms, which vary by region, industry, and customer. Prepayment terms result in contract liabilities for customer deposits. When credit is granted to customers, payment is typically due 30 to 90 days from billing. The Company's contracts have an original expected duration of less than one year, and therefore as a practical expedient, the Company has elected to ignore the impact of the time value of money on a contract and to expense sales commissions. The Company recognizes an asset for costs to fulfill a contract if the costs relate directly to the contract and to future performance, and the costs are expected to be recovered. Management exercises judgment when determining the amount of revenue to be recognized each period. Such judgments include, but are not limited to, assessing the customer’s ability and intention to pay substantially all of the contract consideration when due, determining when two or more contracts should be combined and accounted for as a single contract, determining whether a contract modification has occurred, assessing whether promises are immaterial in the context of the contract, determining whether material promises in a contract represent distinct performance obligations, estimating the transaction price for a contract that contains variable consideration, determining the stand-alone selling price of each performance obligation, determining whether control is transferred over time or at a point in time for performance obligations, and assessing whether formal customer acceptance provisions are substantive. |
New Pronouncements | Accounting Standards Update (ASU) 2016-02 and 2018-11, "Leases" ASU 2016-02 creates Topic 842, Leases. The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet, and disclosing key information about leasing arrangements. This ASU applies to any entity that enters into a lease, although lessees will see the most significant changes. The main difference between current GAAP and Topic 842 is the recognition of lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current GAAP. Topic 842 distinguishes between finance leases and operating leases, which are substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. For public companies, the guidance in ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. In July 2018, the Financial Accounting Standards Board issued ASU 2018-11 to amend ASU 2016-02 and provided an additional (and optional) transition method to adopt the new lease standard. This transition method allows entities to apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption instead of using the original modified retrospective transition method of adoption which required the restatement of all prior period financial statements. Under this new transition method, the comparative periods presented in the financial statements will continue to be in accordance with current GAAP (Topic 840, Leases). Management will adopt the new lease standard using this new transition method under ASU 2018-11. As of the date of this report, management has determined the scope of leases subject to the new accounting requirements, has selected a software package to assist with compliance, and has reviewed all leases in scope. Management is in the process of completing the implementation of the lease accounting software, training relevant employees, and finalizing the internal lease accounting policy and the related processes, internal controls, and disclosures. Accounting Standards Update (ASU) 2016-13, "Financial Instruments - Measurement of Credit Losses" ASU 2016-13 applies to all reporting entities holding financial assets that are not accounted for at fair value through net income (debt securities). The amendments in this ASU eliminate the probable initial recognition threshold to recognize a credit loss under current GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. In addition, this ASU broadens the information an entity must consider in developing the credit loss estimate, including the use of reasonable and supportable forecasted information. The amendments in this ASU require that credit losses on available-for-sale debt securities be presented as an allowance rather than as a write-down and an entity will be able to record reversals of credit losses in current period net income. For public companies, the guidance in ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. This ASU should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management does not expect ASU 2016-13 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2017-08, "Receivables - Nonrefundable Fees and Other Costs - Premium Amortization on Purchased Callable Debt Securities" ASU 2017-08 applies to all reporting entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. Under current GAAP, premiums and discounts on callable debt securities generally are amortized to the maturity date. If that callable debt security is subsequently called, the entity records a loss equal to the unamortized premium. The amendments in this ASU more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. For public companies, the amendments in ASU 2017-08 are effective for annual periods beginning after December 15, 2019, and interim reporting periods within fiscal years beginning after December 15, 2020. This ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption, and, in the period of adoption, the entity is required to provide disclosures about the change in accounting principle. Early adoption is permitted, including adoption in an interim period. Management does not expect ASU 2017-08 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2017-12, "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities" ASU 2017-12 applies to all reporting entities that elect to apply hedge accounting. The hedge accounting requirements under current GAAP sometimes do not permit an entity to properly recognize the economic results of the hedging strategy in the financial statements, and they are difficult to understand and interpret. The amendments in this ASU make certain targeted improvements to simplify the application of the hedge accounting guidance. Also, they better align the risk management activities and financial reporting for hedging relationships through changes to both 1) the designation and measurement guidance for qualifying hedging relationships and 2) the presentation of hedge results. For public companies, the amendments in ASU 2017-12 are effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those fiscal years. Early adoption is permitted including adoption in any interim period after issuance of the ASU. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this ASU. The amended presentation and disclosure guidance is required only prospectively. Management does not expect ASU 2017-12 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-01, "Land Easement Practical Expedient for Transition to Topic 842" ASU 2018-01 applies to entities with land easements that exist or expired before an entity’s adoption of Topic 842, provided that the entity does not account for those land easements as leases under Topic 840. The amendments in this ASU permit an entity to elect an optional transition practical expedient to not evaluate under Topic 842 land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. An entity that elects this practical expedient should apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under Topic 840. Once an entity adopts Topic 842, it should apply that Topic prospectively to all new (or modified) land easements to determine whether the arrangement should be accounted for as a lease. An entity that does not elect this practical expedient should evaluate all existing or expired land easements in connection with the adoption of the new lease requirements in Topic 842 to assess whether they meet the definition of a lease. The amendments in this ASU affect the amendments in ASU 2016-02, which are not yet effective but may be early adopted. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in ASU 2016-02, which is for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Management does not expect ASU 2018-01 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-02, "Income Statement - Reporting Comprehensive Income" ASU 2018-02 applies to entities required to apply the provisions of Topic 220, Income Statement - Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires the effect of a change in tax laws or rates to be included in income from continuing operations is not affected. The amendments in this ASU also require certain disclosures about stranded tax effects. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. Management does not expect ASU 2018-02 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-07, "Compensation - Stock Compensation - Improvements to Nonemployee Share-Based Payment Accounting" ASU 2018-07 applies to all entities that enter into share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this ASU expand the scope of Topic 718, Compensation - Stock Compensation, to include share-based payments transactions to nonemployees. Changes to the accounting for nonemployee awards as a result of this ASU include: 1) equity-classified nonemployee share-based payment awards are measured at the grant date, instead of the previous requirement to remeasure the awards through the performance completion date, 2) for awards with performance conditions, compensation cost is recognized when the achievement of the performance condition is probable, rather than upon achievement, and 3) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting is eliminated. This ASU clarifies that Topic 718 does not apply to financing transactions or awards granted to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which the measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Management does not expect ASU 2018-07 to have a material impact on the Company's financial statements and disclosures. Accounting Standards Update (ASU) 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software" ASU 2018-15 applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, the amendments in this ASU require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Further, it requires the entity to expense the capitalized implementation costs over the term of the hosting arrangement. In addition, it requires the presentation of the expenses related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and the classification of the payments for the capitalized implementation costs in the statement of cash flows in the same manner as the payments made for the fees associated with the hosting element. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. Management does not expect ASU 2018-15 to have a material impact on the Company's financial statement and disclosures. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of September 30, 2018 (in thousands):
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the activity for the Company's liability measured at fair value using Level 3 inputs for the nine-month period ended September 30, 2018 (in thousands):
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Cash, Cash Equivalents, and Investments (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Cash, Cash Equivalents, and Investments | Cash, cash equivalents, and investments consisted of the following (in thousands):
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Summary of Available-for-Sale Investments | The following table summarizes the Company’s available-for-sale investments as of September 30, 2018 (in thousands):
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Gross Unrealized Losses and Fair Values for Available-for-Sale Investments | The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of September 30, 2018 (in thousands):
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Effective Maturity Dates of Available-for-Sale Investments | The following table presents the effective maturity dates of the Company’s available-for-sale investments as of September 30, 2018 (in thousands):
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Inventories (Tables) |
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Schedule of Inventories | Inventories consisted of the following (in thousands):
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Amortized intangible assets consisted of the following (in thousands):
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Schedule of Intangible Assets, Future Amortization Expense | As of September 30, 2018, estimated future amortization expense related to intangible assets is as follows (in thousands):
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Warranty Obligations (Tables) |
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Changes in Warranty Obligations | The changes in the warranty obligation were as follows (in thousands):
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Derivative Instruments (Tables) |
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Outstanding Forward Contracts Table | The Company had the following outstanding forward contracts (in thousands):
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):
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Offsetting Assets | The following table presents the gross activity for all derivative assets and liabilities which were presented on a net basis on the Consolidated Balance Sheets due to the right of offset with each counterparty (in thousands):
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Derivative Instruments, Gain (Loss) | Information regarding the effect of derivative instruments on the consolidated financial statements was as follows (in thousands):
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Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The adoption of the standard impacted our previously-reported results as follows (in thousands):
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Revenue from External Customers by Geographic Areas | The following table summarizes disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands):
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Revenue from External Customers by Products and Services | The following table summarizes disaggregated revenue information by revenue type (in thousands):
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Deferred Revenue, by Arrangement, Disclosure | The following table summarizes the deferred revenue and customer deposits activity for the nine-month period ended September 30, 2018 (in thousands):
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Stock-Based Compensation Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity | The following table summarizes the Company’s stock option activity for the nine-month period ended September 30, 2018:
(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options. |
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Weighted-Average Assumptions Used in Estimating Fair Values of Stock Options Granted | The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:
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Nonvested Restricted Stock Shares Activity | The following table summarizes the Company's restricted stock activity for the nine-month period ended September 30, 2018:
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):
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Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of United States Federal Statutory Corporate Tax Rate to Company's Effective Tax Rate, or Income Tax Provision | A reconciliation of the United States federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, was as follows:
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Weighted-Average Shares (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Weighted-Average Shares | Weighted-average shares were calculated as follows (in thousands):
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Cash, Cash Equivalents, and Investments (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Cash and Cash Equivalents [Abstract] | ||||
Gross realized gains on sale of investments | $ 283,000 | $ 306,000 | $ 646,000 | $ 449,000 |
Gross realized losses on sale of investments | $ 17,000 | $ 43,000 | $ 111,000 | $ 79,000 |
Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 46,660 | $ 33,927 |
Work-in-process | 4,071 | 2,114 |
Finished goods | 43,304 | 31,882 |
Inventories | $ 94,035 | $ 67,923 |
Warranty Obligations - Changes in Warranty Obligations (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Movement in Standard Product Warranty Accrual [Roll Forward] | |
Beginning balance | $ 4,701 |
Provisions for warranties issued during the period | 3,376 |
Fulfillment of warranty obligations | (3,223) |
Foreign exchange rate changes | (117) |
Ending balance | $ 4,737 |
Derivative Instruments - Outstanding Forward Contracts Table (Detail) - Not Designated as Hedging Instrument € in Thousands, ₩ in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands |
Sep. 30, 2018
CAD ($)
|
Sep. 30, 2018
SGD ($)
|
Sep. 30, 2018
JPY (¥)
|
Sep. 30, 2018
KRW (₩)
|
Sep. 30, 2018
TWD ($)
|
Sep. 30, 2018
EUR (€)
|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2017
CAD ($)
|
Dec. 31, 2017
SGD ($)
|
Dec. 31, 2017
JPY (¥)
|
Dec. 31, 2017
KRW (₩)
|
Dec. 31, 2017
TWD ($)
|
Dec. 31, 2017
EUR (€)
|
Dec. 31, 2017
USD ($)
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Euro Member Countries, Euro | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | € 19,500 | $ 22,602 | € 0 | $ 0 | ||||||||||
Japanese Yen | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | ¥ 455,000 | 4,018 | ¥ 455,000 | 4,049 | ||||||||||
United Kingdom, Pounds | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | 2,100 | 2,742 | 1,650 | 2,232 | ||||||||||
Hungary, Forint | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | ¥ 700,000 | 2,513 | ¥ 545,000 | 2,110 | ||||||||||
Korean Won | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | ₩ 2,050,000 | 1,847 | ₩ 1,825,000 | 1,708 | ||||||||||
Taiwanese Dollar | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | $ 49,000 | 1,615 | $ 37,725 | 1,278 | ||||||||||
Canada, Dollars | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | $ 800 | 616 | $ 0 | 0 | ||||||||||
Singapore Dollar | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | $ 760 | 557 | $ 0 | 0 | ||||||||||
Switzerland, Francs | ||||||||||||||
Derivative [Line Items] | ||||||||||||||
Outstanding forward contracts | $ 0 | $ 0 | $ 1,365 | $ 1,401 |
Derivative Instruments - Schedule of Derivative Instruments in Statement of Financial Position, Fair Value (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 21 | $ 16 |
Derivative liability | 91 | 13 |
Not Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 21 | 16 |
Not Designated as Hedging Instrument | Accrued Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 91 | $ 13 |
Derivative Instruments - Offsetting Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts of recognized assets | $ 21 | $ 16 |
Gross amounts offset | 0 | 0 |
Net amount of assets presented | 21 | 16 |
Gross amounts of recognized liabilities | 91 | 13 |
Gross amounts offset | 0 | 0 |
Net amount of liabilities presented | $ 91 | $ 13 |
Revenue Recognition - Impact on Balance Sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | $ 27,687 | $ 30,683 |
Accrued income taxes | 8,974 | 11,503 |
Deferred revenue and customer deposits | 13,252 | 9,420 |
Retained earnings | $ 670,935 | 668,587 |
As previously reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | 30,800 | |
Accrued income taxes | 11,391 | |
Deferred revenue and customer deposits | 9,969 | |
Retained earnings | 668,267 | |
Adjustment | Accounting Standards Update 2014-09 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | (117) | |
Accrued income taxes | 112 | |
Deferred revenue and customer deposits | (549) | |
Retained earnings | $ 320 |
Revenue Recognition - Revenue Disaggregated by Geography (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 232,221 | $ 266,042 | $ 613,052 | $ 583,161 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 115,592 | 146,230 | 242,161 | 252,386 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 58,830 | 54,902 | 189,859 | 155,977 |
Greater China | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 32,796 | 35,546 | 101,130 | 84,764 |
Other Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 25,003 | $ 29,364 | $ 79,902 | $ 90,034 |
Revenue Recognition - Revenue Disaggregated by Products and Services (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Revenue from External Customer [Line Items] | ||||
Revenue | $ 232,221 | $ 266,042 | $ 613,052 | $ 583,161 |
Standard Products and Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 150,993 | 159,981 | 493,019 | 453,464 |
Application-Specific Customer Solutions | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | $ 81,228 | $ 106,061 | $ 120,033 | $ 129,697 |
Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Costs to fulfill contract | $ 6,811 | $ 3,230 |
Revenue Recognition - Deferred Revenue Activity (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Movement in Deferred Revenue [Roll Forward] | |
Balance as of December 31, 2017 | $ 9,420 |
Increases to deferred revenue and customer deposits | 55,408 |
Recognition of revenue | (50,590) |
Foreign exchange rate changes | (986) |
Balance as of September 30, 2018 | $ 13,252 |
Stock-Based Compensation Expense - Weighted-Average Assumptions Used in Estimating Fair Values of Stock Options Granted (Detail) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Risk-free rate | 2.90% | 2.40% | 2.90% | 2.40% |
Expected dividend yield | 0.32% | 0.39% | 0.32% | 0.39% |
Expected volatility | 39.00% | 41.00% | 39.00% | 41.00% |
Expected term (in years) | 5 years 4 months 24 days | 5 years 1 month 6 days | 5 years 3 months 18 days | 5 years 3 months 18 days |
Stock-Based Compensation Expense - Nonvested Restricted Stock Shares Activity (Details) - Restricted Stock $ / shares in Units, shares in Thousands, $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
$ / shares
shares
| |
Shares (in thousands) | |
Nonvested, shares | shares | 20 |
Granted, shares | shares | |
Vested, shares | shares | (20) |
Forfeited or expired, shares | shares | |
Nonvested, shares | shares | 0 |
Weighted-Average Grant Fair Value | |
Nonvested, in dollars per share | $ / shares | $ 17.03 |
Granted, in dollars per share | $ / shares | |
Vested, in dollars per share | $ / shares | 17.03 |
Forfeited or expired, in dollars per share | $ / shares | |
Nonvested, in dollars per share | $ / shares | $ 0.00 |
Aggregate Intrinsic Value (in thousands) | |
Vested | $ | $ 993 |
Nonvested as of September 30, 2018 | $ | $ 0 |
Stock-Based Compensation Expense - Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 9,143 | $ 8,026 | $ 31,339 | $ 23,355 |
Cost of Revenue | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 544 | 520 | 1,898 | 1,404 |
Research, Development, and Engineering Expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 3,197 | 2,765 | 11,166 | 8,090 |
Selling, General, and Administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 5,402 | $ 4,741 | $ 18,275 | $ 13,861 |
Taxes - Reconciliation of United States Federal Statutory Corporate Tax Rate to Company's Effective Tax Rate, or Income Tax Provision (Detail) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax provision at federal statutory corporate tax rate | 21.00% | 35.00% | 21.00% | 35.00% |
State income taxes, net of federal benefit | 1.00% | 1.00% | 1.00% | 1.00% |
Foreign tax rate differential | (7.00%) | (18.00%) | (7.00%) | (18.00%) |
Tax credit | (0.00%) | (1.00%) | (0.00%) | (1.00%) |
Discrete tax benefit related to Tax Act 2017 | (9.00%) | 0.00% | (4.00%) | 0.00% |
Discrete tax benefit related to stock option exercises | (4.00%) | (7.00%) | (5.00%) | (13.00%) |
Other discrete tax events | (2.00%) | (2.00%) | (1.00%) | (1.00%) |
Other | 1.00% | 1.00% | 1.00% | 1.00% |
Income tax provision | 1.00% | 9.00% | 6.00% | 4.00% |
Weighted-Average Shares (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Earnings Per Share [Abstract] | ||||
Stock options to purchase anti-dilutive common stock | 2,796,000 | 466,000 | 2,353,000 | 3,108,000 |
Weighted-Average Shares - Calculation of Weighted-Average Shares (Detail) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Oct. 01, 2017 |
Sep. 30, 2018 |
Oct. 01, 2017 |
|
Earnings Per Share [Abstract] | ||||
Basic weighted-average common shares outstanding | 172,189 | 173,234 | 172,613 | 173,052 |
Effect of dilutive stock options | 5,056 | 6,120 | 5,408 | 6,072 |
Weighted-average common and common-equivalent shares outstanding | 177,245 | 179,354 | 178,021 | 179,124 |
Subsequent Events (Details) - Subsequent Event |
Oct. 29, 2018
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Dividends (in dollars per share) | $ 0.05 |
Dividends payable, date payable | Nov. 30, 2018 |
Dividends payable, date of record | Nov. 16, 2018 |
Stock Repurchase Program, Value | $ 200,000,000 |
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